Environmental regulatory framework
1. What are the key pieces of environmental legislation and the regulatory authorities in your jurisdiction?
The main statutory provision relating to the environment is section 24 of the Constitution of the Republic of South Africa Act (Constitution) (No. 106 of 1996) (environmental right), which is stated as the right to an environment that is not harmful to health or well-being. To achieve this right the Constitution also provides that government must take reasonable legislative and other measures to (section 24(b), Constitution):
- Prevent pollution and ecological degradation.
- Promote conservation.
- Secure ecologically sustainable development.
- Use natural resources while promoting justifiable economic and social development.
A number of statutes focussing on dealing with environmental issues have developed over the last 14 years, principally the National Environmental Management Act (No. 107 of 1998) (NEMA), which is a framework statute that:
- Provides for co-operative governance and decision making in matters affecting the environment.
- Is based on the international environmental law principles of sustainable development and integrated environmental management.
- Provides for listed activities that trigger the requirement for prior environmental authorisation for which an environmental impact assessment (EIA) is required, which includes specific public participation procedures.
- Is the origin of the enforcement and compliance mandate of the environmental management inspectorate (EMIs).
- Imposes a general duty of care for the environment (that is, every person has the duty to avoid pollution and environmental degradation) (section 28, NEMA). Both civil parties and the government rely on this duty when enforcing environmental obligations. The duty of care has retrospective effect, meaning that the duty is imposed on anyone who causes, has caused or may cause significant pollution or degradation of the environment.
The following statutes, among others, fall under the NEMA framework legislation:
- Environment Conservation Act (No. 73 of 1989).
- National Water Act (No. 36 of 1998) and National Environmental
Management (NEM) legislation, including:
- NEM: Air Quality Act (No. 39 of 2004) (NEM: AQA);
- NEM: Protected Areas Act (No. 57 of 2003) (NEM: PA);
- NEM: Biodiversity Act (No. 10 of 2004) (NEM: BA);
- NEM: Integrated Coastal Management Act (No. 24 of 2008) (NEM: ICMA);
- NEM: Waste Act (No. 59 of 2008) (NEM: WA).
The Ministry of Water and Environmental Affairs administers this legislation through the Department of Water Affairs (DWA) and the Department of Environmental Affairs (DEA). The Constitution also provides for the following three spheres of government responsibility:
- Functional areas of concurrent national and provincial legislative competence.
- Functional areas of exclusive provincial competence.
- Certain executive and administrative authority at municipal level.
A number of aspects of environmental management span these three spheres of responsibility. For example, depending on the listed activity for which an EIA must be undertaken, the competent authority to which the application for environmental authorisation must be submitted is either at the provincial or national level. However, applications for atmospheric emissions licences (AELs) are dealt with at the municipal level, unless the municipal authority has been subsumed by or delegated up to the provincial level. Consequently, when dealing with issues related to the environment it is essential to determine which sphere of government is relevant to a particular environmental enquiry or application for authorisation to undertake an activity that may impact on the environment.
2. To what extent are environmental requirements enforced by regulators in your jurisdiction?
For some years after 1996 (the date of the Constitution) government focused on its constitutional obligation to legislate on behalf of the environment, and this focus tended to be to the detriment of enforcing compliance with those laws. However, for the past five years enforcement and compliance have been the responsibility of the Environmental Management Inspectorate (Inspectorate), which was created by an amendment to chapter 7 of NEMA. The Inspectorate was established as a network of environmental enforcement officials from the three spheres of government (national, provincial and municipal), with its main administrative centre located in the DEA. The national Minister (of Environment) and a Member of a Provincial Executive Council (MEC) with responsibility for the environment can designate Environmental Management Inspectors (EMIs). EMIs are increasingly present in their compliance and enforcement role and have won a number of victories, both through the courts and administratively against persons and entities purportedly straying from their environmental legal obligations.
3. To what extent are environmental non-governmental organisations (NGOs) and other pressure groups active in your jurisdiction?
Environmental NGOs are very active and in 1999 the extent of the constitutional environmental right was tested in a landmark court case that was prosecuted by an NGO (Save the Vaal Environment). In Director: Mineral Development, Gauteng Region and Sasol Mining v SAVE 1999 2 SA 709 (SCA) the court held that the inclusion of the environmental right in the set of fundamental human rights indicated that environmental considerations must be given appropriate recognition and respect in administrative processes. Civil society has shown itself willing and able to utilise the range of legal and administrative tools at its disposal, including:
- Engaging actively in the legislated public participation process required for EIA.
- Using administrative and court processes to obtain information relevant to environmental issues using the Access to Information Act (No. 2 of 2000).
- Requiring that the administrative officials perform their duties in a just, responsible and reasonable manner by approaches to the courts under the Promotion of Administrative Justice Act (No. 3 of 2000).
The following are among the most active NGOs:
- Wildlife and Environmental Society of Southern Africa.
- Earthlife Africa.
- Endangered Wildlife Trust.
- Conservation International.
- Friends of the Earth.
- Greenpeace International.
An example of how NGOs have direct influence on environmental decisions is evident in relation to proposed hydraulic-fracturing (fracking) in the Karoo (a semi-arid series of unique biomes (areas with similar kinds of communities and climates) located in the south-western part of South Africa). The proposed activities resulted in national disquiet and strong legal challenges to the environmental permits that had been issued to certain large petro-chemical companies to proceed with exploration activities intended, eventually, to lead to full-scale fracking. This disquiet and the legal challenges were among the reasons that the National Department of Mineral Resources placed a moratorium on these activities that lasted for about 17 months. The moratorium on exploration was lifted in September 2012. However, NGOs continue their opposition.
4. Is there an integrated permitting regime or are there separate environmental regimes for different types of emissions? Can companies apply for a single environmental permit for all activities on a site or do they have to apply for separate permits?
Integrated/separate permitting regime
Traditionally, undertaking an activity that may impact on the environment has required a range of different permits and licences, with applications made to various authorities that operate largely without reference to one another. This piecemeal approach has often resulted in the misalignment of processing time frames and permitting requirements.
There is currently a movement towards integrated permitting that provides for joint exercise of administrative powers by administrative authorities where, for example, a listed activity (for which prior environmental authorisation and EIA is required under NEMA) is also regulated by another law or a specific environmental act (section 24L, NEMA). The joint-exercise of administrative powers may result in separate authorisations or an integrated environmental authorisation. In addition, a competent authority that grants environmental authorisations for the undertaking of listed activities may take into account the provisions of an authorisation granted under other legislation that meets the relevant NEMA requirements.
An example of the integrated regime is provided for in the NEM: AQA, which seeks to align the processes required for granting environmental authorisations with those required for granting AELs. Another example is where waste is managed and/or discharged into a freshwater resource. In this instance, there is the possibility for the granting of an integrated waste and water licence (see below, Single/separate permits) (sections 44 and 50(3), NEM:WA).
However, full integration of administrative processes is not the norm. Most commonly, permit applications are administered with little or no point of contact between various processes.
The legal regime applicable to single/separate permits depends on the environmental medium likely to be impacted by a proposed activity, for example, water, air, waste, biodiversity.
The following is a representative list of single/separate permits, licences and authorisations:
- Environmental authorisation required under NEMA to undertake a listed activity (and for which EIA and regulated public participation is also required).
- AEL required for listed activities under NEM: AQA (the NEM: AQA listed activities are different from NEMA).
- Waste management licence (WML) required for listed waste management activities under the NEM: WA (listed waste management listed activities are different from those listed in NEMA and NEM: AQA).
- Water use licence required for water use activities under the National Water Act.
- Biodiversity permits in terms of NEM: BA for undertaking certain activities in relation to threatened and/or protected species, alien or invasive species and bio-prospecting.
- NEM: PA requires permissions or exemptions for the undertaking of certain activities within protected areas.
- A permit is for the undertaking of certain activities affecting heritage resources in terms of the National Heritage Resources Act 10 of 1999.
- A coastal waters discharge permit, general authorisation,
dumping permit, coastal lease or coastal concession in terms of the
5. What is the framework for the integrated permitting regime?
Permits and regulator
There is provision in legislation for a move towards integrated permitting (see Question 4). However, this is not currently general practice.
Length of permit
Generally, (not related specifically to integrated or single/separate authorisations):
- Permit length is determined by the administrative authority when the permit is granted and is usually provided for in the written authorisation, which is a legally binding instrument.
- For environmental authorisations (for which prior EIA is required), the written authorisation usually provides for a time period within which the authorised activity must begin and, if the activity does not begin within this time period, the authorisation lapses. Generally, an extension can be applied for before the authorisation expires. The competent authority can require assurances that the circumstances in which the authorisation was originally granted have not changed significantly.
- Most single/separate permits, licences and authorisations (see Question 4, Single/separate permits), have a limited time within which they remain current. A formal application for their renewal is required.
Restrictions on transfer
Generally, (not related specifically to integrated or single/separate authorisations) there are no absolute prohibitions to the transfer of permits from one person/entity to another. However, transfers are typically regulated by different statutes that require different formal processes for transfer:
- NEM: WA, which permits transfer of a WML on application to the relevant licensing authority. However, under the NEMA principle of "cradle-to-grave" (meaning from generation to final disposal) responsibility for waste, a transfer of a WML does not automatically transfer environmental liabilities incurred by the original holder of the WML to the new holder;
- NEMA, which permits transfer of environmental authorisations (for which a prior EIA is required) on application to the competent authority (for example, by way of changing the name of the applicant for the authorisation);
- NEM: AQA, which permits the transfer of an AEL on application to the licensing authority. There are various conditions under NEM: AQA, which must be taken account of in the granting of an AEL, including that the holder of an AEL must be a "fit and proper person" (section 44(5), NEM: AQA). These considerations must also be taken into account when the authority considers an application for an AEL transfer.
Permits issued by the National Nuclear Regulator are not transferable.
Most environmental statutes provide for penalties specific to the statute, including:
- NEMA, which provides that anyone criminally convicted of an
offence under a statutory provision listed in NEMA Schedule 3 can
be subject to civil liability (section 34(1), NEMA). Fines
can also be imposed for certain offences, for example a
contravention of the environmental duty of care can invoke a fine
of up to ZAR1 million and/or one year's imprisonment. The
contravention of a condition in an environmental authorisation, or
a failure to obtain such an authorisation can invoke a fine of up
to ZAR5 million and/or ten years' imprisonment (sections 28
and 24 F, NEMA):
- NEM: AQA: provides for a fine of up to ZAR5 million and/or five years' imprisonment for, among other things, contravening or failing to obtain an AEL;
- NEM: WA: provides for a penalty of up to ZAR10 million and/or ten years' imprisonment for failing to obtain or contravening a WML.
- NEM: BA provides for a penalty of up to ZAR10 million and/or ten years' imprisonment for failing to obtain or contravening the conditions of a permit granted under the act. For an offence relating to a threatened or protected species the penalty may be increased to as much as three times the value of that species, whichever value is the greater.
- NEM: PA provides for penalties as high as ZAR5 million and/or five years' imprisonment for contravention of the act. Civil liability can also arise from an action that has a detrimental impact on the environment. However, the person/entity who seeks damages must prove that the person/entity who committed the action that resulted in the financial loss was negligent.
6. What is the regulatory regime for water pollution (whether part of an integrated regime or separate)?
Permits and regulator
The following water uses require a water use licence (WUL) (section 21, National Water Act):
- Taking water from a water resource.
- Storing water.
- Impeding or diverting the flow of water in a watercourse.
- Engaging in a stream flow reduction activity (as identified in section 36, National Water Act).
- Engaging in a controlled activity as identified in sections 37(1) and 38(1), National Water Act.
- Discharging waste or water containing waste into a water resource through a pipe, canal, sewer, sea outfall or other conduit.
- Disposing of waste in a manner that may detrimentally impact a water resource.
- Disposing of water that contains waste from or which has been heated in any industrial or power generation process.
- Altering the bed, banks, course or characteristics of a watercourse.
- Removing, discharging or disposing of water found underground if it is necessary for continuing the activity efficiently or for the safety of people.
- Using water for recreational purposes.
All freshwater in South Africa belongs to the state, regardless of where in the hydrological system it is found. The authorities' consent is required to use that water unless it is an existing lawful water use or a permitted use. The National Water Act contains sections dealing with conservation of water resources and prohibition of unauthorised pollution of water resources. A waste discharge charge system is being developed based on the polluter pays principle, which will provide for payments for pollution caused to a water resource (section 56, National Water Act).
Prohibited activities are those that unlawfully pollute water resources. An owner, controller, occupier or user of land in respect of which land a situation exists that causes, has caused or is likely to cause pollution of a water resource must take all reasonable measures to stop that pollution or prevent it from happening (section 19, National Water Act), and the relevant authorities can request parties to undertake certain anti-pollution and remediation measures (section 19(2), National Water Act). The government can enforce this duty of care by issuing remediation directives to persons/entities who/that cause pollution to water resources (section 19(2), National Water Act).
These directives are common and are a useful administrative tool for the government, which has used them with great effect. Their validity has been challenged in the courts, which have decided that they are validly authorised by legislation (Harmony Gold Mining Co Ltd v Regional Director: Free State Department of Water Affairs and Forestry and another  JOL 17506 (SCA)). The continued validity of these directives post-sale of land was challenged in a more recent case following on from the decision in the 2006 Harmony Gold judgment. In this subsequent matter (Harmony Gold Mining Company Ltd v Regional Director: Free State Department of Water Affairs and Others (68161/2008)  ZAGPPHC 127 (29 June 2012) (unreported)), the court held that a seller of land can remain liable for remedial obligations imposed under a directive that was issued to the seller before the sale of the land was concluded, despite the fact that the land had been sold to another, particularly when the obligations remain to be fulfilled. The buyer does not, therefore, always inherit liability for those obligations.
All persons who own, control or occupy land on which there is water pollution or degradation must take steps to avoid and remedy that pollution or degradation (section 19, National Water Act) and the competent authority can (section 19, National Water Act):
- Issue directives to persons to remedy any pollution or degradation.
- Recover the costs of remedial action from that person if they do not comply with the directive.
Anyone who commits an offence under the National Water Act is liable on first conviction to a fine ZAR60,000 in a district court or ZAR300,000 in a regional court or imprisonment for up to five years, or both (section 151(2), National Water Act). In addition, they can be liable for the costs of remediation. Subsequent convictions are subject to the same fine or imprisonment for up to ten years, or both.
7. What is the regulatory regime for air pollution (whether part of an integrated regime or separate)?
Permits and regulator
NEM: AQA permits the identification of listed activities that have or may have a significant detrimental effect on the environment and which require an Atmospheric Emission Licence (AEL) (section 21, NEM: AQA).
The relevant municipality is the licensing authority under NEM: AQA and the set of listed activities and their minimum emission standards were published on 31 March 2010 (GN 248 GG 33064). A person/entity who intends to undertake any of these listed activities must obtain an AEL and a NEMA environmental authorisation (which also requires prior EIA).
Listed activities that require an AEL cannot be undertaken without a licence. The conditions of the AEL determine the operating parameters of the particular emitting installation. It is prohibited to manufacture, use and sell certain controlled fuels unless specific controlled fuels provisions are complied with (section 28, NEM: AQA). NEM: AQA introduces a number of innovations to the management of air quality, including ambient air quality standards (sections 9, 10 and 11, NEM: AQA).
The main purpose of the ambient standards is as a measure of the air quality in particular areas. If the ambient standards are compromised, this may trigger the declaration of Priority Areas (air quality "hotspots") and the compilation of Air Quality Management Plans. These plans are typically given the force of law by being made into regulations under NEM: AQA at which point the provisions of these regulations become binding on emitting installations in the Priority Area.
It is quite likely that an Air Quality Management Plan will seek to impose limitations on certain emitting behaviour. It is therefore important for an emitting installation to determine whether it lies within a Priority Area and whether an Air Quality Management Plan has been devised for that area.
NEMA imposes a retrospectively applicable general duty of care on all persons to prevent or minimise pollution of the environment, including air pollution (section 28(1A), NEMA).
Penalties for non-compliance with NEM: AQA can include fines up to ZAR5 million or imprisonment for up to five years, or both. A second or subsequent conviction is subject to fines up to ZAR10 million or imprisonment for up to ten years, or both.
Climate change, renewable energy and energy efficiency
8. Are there any national targets for reducing greenhouse gas emissions, increasing the use of renewable energy (such as wind power) and/or increasing energy efficiency (for example in buildings and appliances)?
South Africa has made a self-determined pledge to reduce its greenhouse gas emissions by 34% below a business as usual emissions growth by 2020 (business as usual is the baseline which assumes that future development trends follow those of the past and no changes in policies will take place), and a 42% reduction by 2025. The achievement of the target is made contingent on South Africa's receiving appropriate finance, technology and capacity building support from developed countries.
The White Paper on Renewable Energy (November 2003) set out a policy objective for the uptake of renewable energy of 10,000 gigawatt hours (GWh) contribution to final energy demand by 2013. Some progress has been made towards achieving this target. However, government messages in relation to this have often been confusing. For example, after two years of development the Renewable Energy Feed-In Tariff (REFIT) was transformed into a bid-and-offer system due to lack of legal rigour in the processes establishing the Feed-In Tariff and a resulting challenge to REFIT's legal basis.
The first of (at least) four phases of the bid-and-offer system will be finalised before the end of 2012.
The Integrated Resource Plan 2010 to 2030 (IRP 2010) sets out the proposed electricity generation new-build for South Africa for 2010 to 2030, which includes non-binding targets for renewable energy contribution. The IRP 2010 favours wind power, followed by hydro and concentrated solar power and anticipates an energy mix, including power imports, to 2030 as follows:
- 9.6 Gigawatts (GW): nuclear.
- 6.3GW: coal.
- 17.8GW: renewables.
- 8.9GW: other generation sources.
Despite policy objectives, Eskom's (the national power utility) current build programme is coal heavy although the proposed new coal plants (Medupi, currently under constructions and Kusile, construction of which is still to be commenced) make use of super-critical technology. Carbon Capture and Storage (CCS) is also part of the Department of Energy's policy mix and a South African CCS Centre ha s been established as part of the South African National Energy Research Centre.
9. Is your jurisdiction party to the United Nations Framework Convention on Climate Change (UNFCCC) and/or the Kyoto Protocol? How have the requirements under those international agreements been implemented?
South Africa is a Non-Annex I country party to the UNFCCC and it is also party to the Kyoto Protocol 1997.
A Designated National Authority for the Clean Development Mechanism (CDM) was established in 2005 and South Africa currently leads the African continent in registrations of CDM projects and programmes.
The country commits itself to being a good international corporate citizen and the emissions reduction pledge (see Question 8) is an indicator of this commitment. Various policy processes are being elaborated to achieve these reductions, the most recent of which is the National Climate Change Response Policy (October 2011) (National Policy). The National Policy is the latest in a number of milestones in climate change policy development, including:
- National Climate Change Response Strategy (September 2004).
- SA National Climate Change Conference (November 2005).
- Long Term Mitigation Strategy Scenarios (2006 and beyond).
- ANC Polokwane Summit (December 2007).
- SA Climate Change Policy Summit (March 2009).
- Green Economy Summit (May 2010).
- National Climate Change Response Green Paper (November 2010).
The National Policy reiterates the aim of achieving the government's macro-economic policy objective of job creation and poverty alleviation as a focus of climate change policy. It seeks to facilitate the alignment of and integration between different governmental departments and economic sectors of climate change governance issues. Both mitigation and adaptation responses are provided for. In addition "climate change resilient development" is provided for, which acknowledges the need for overlapping mitigation and adaptation responses to climate change.
Under adaptation, the National Policy focuses on risk-based assessments, with particular attention to priority sectors, that is, water, agriculture and forestry, health, biodiversity and human settlements. In the case of mitigation the National Policy:
- Utilises the idea of a national emissions trajectory against which to measure mitigation responses ranges.
- Provides for the definition of desire emissions reduction outcomes for significant sectors and sub-sectors.
- Provides for the development and implementation of a wide range
of mitigation approaches, including:
- policies and measures;
- the deployment of economic instruments;
- national emissions data collection and a suite of near-term
priority flagship programmes (for example, the Renewable Energy
Flagship Programme and the Energy Efficiency and Energy Demand
Management Flagship Programme).
10 . What, if any, emissions/carbon trading schemes operate in your jurisdiction?
The National Climate Change Response Policy (October 2011) mentions emissions trading in South Africa. However, there are currently no formal plans to establish an emissions trading scheme. The country has a relatively well-developed CDM industry and has introduced an income tax incentive for primary sales of certified emissions reductions (CERs) from CDM projects located in South Africa. A carbon tax is proposed for the 2013-14 financial year. The current tax rate is planned to be ZAR120/tonne of CO2e. A basic tax-free threshold of 60% (with additional concession for process emissions and for trade-exposed sectors) has been proposed with the provision for use of carbon offset of between 5% and 10% to comply with a carbon tax obligation. The National Treasury is currently considering the design features of the tax, including how offsets may be applied to the tax obligation.
Environmental impact assessments
11. Are there any requirements to carry out environmental impact assessments (EIAs) for certain types of projects?
NEMA listed activities require prior environmental authorisation before they begin. Applications for prior authorisation must include the results of, either:
- A basic assessment (short EIA process).
- A scoping and environmental impact report (EIR) (longer EIA process).
The type of activity determines which of the processes must be followed.
The legal requirement for EIAs has existed in legislation since the late 1980s but was only activated through regulation in the late 1990s. Since then a series of legal regimes has been implemented, all of which required an EIA for authorisation of a listed activity. The most recent iteration of the EIA legal regime includes various regulations (set out in NEMA and in Government Gazette 33306 of 18 June 2010) (NEMA EIA 2010 regulations).
The NEMA EIA 2010 regulations and their listing notices replace the EIA regulations of 2006 and their listing notices. Three listing notices were published in conjunction with the new regulations. The full set of regulations is as follows:
- EIA Regulations (Government Notice R.543 in Government Gazette 33306 of 18 June 2010).
- Listing Notice 1 (Government Notice R.544 in Government Gazette 33306 of 18 June 2010): sets out the activities that require a basic assessment. Typically, these are activities that have the potential to impact negatively on the environment. However, due to the nature and scale of these activities, these impacts are generally known.
- Listing Notice 2 (Government Notice R.545 in Government Gazette 33306 of 18 June 2010): sets out the activities that require both scoping and EIR. Typically, these are large scale or highly polluting activities and the full range of potential impacts must be established through a scoping exercise before the activity begins.
- Listing Notice 3 (Government Notice R.546 in Government Gazette 33306 of 18 June 2010): identifies activities that will only require an environmental authorisation through a basic assessment process if the activity is one of the specified geographical areas indicated in the listing notice.
- Environmental Management Framework Regulations (Government Notice R.547 Government Gazette 33306 of 18 June 2010).
Permits and regulator
In addition to environmental authorisation, other environmentally related permits may be required for a project to begin, for example:
- Water use licences.
- Permits that originate in other areas of the law, for example, occupational health and safety law.
It is an offence to commence a NEMA-listed activity without authorisation. If an activity begins without authorisation, an offender can be liable to a fine of up to ZAR5 million or to imprisonment for up to ten years, or both. In addition, the relevant authority can order the offender to stop the unlawful activity, either totally or partly, and to remediate the area.
12. What is the regulatory regime for waste?
Permits and regulator
The NEM: WA introduces a number of changes for waste management. It also represents some alignment between the waste regime and the NEMA regime for environmental authorisation and EIA. Integrated waste management legislation for waste throughout its life cycle includes:
- Extended producer responsibility for products that can have an impact on the environment. This relates to the NEMA duty of care (section 28, NEMA) and extends a producer's duty in relation to the product produced to include a financial or physical responsibility for the post-consumer stage of the product.
- Issuing WMLs for listed waste management activities with a link to the NEMA EIA regime.
- Setting out two categories (A and B) of waste management activities for which WMLs must be obtained.
To obtain a WML the person who wants to begin, undertake or conduct that activity must:
- In respect of Category A: conduct a NEMA basic assessment
process as part of the application (see Question 11).
Category A activities include:
- storage of waste;
- reuse, recycling and recovery of waste;
- treatment of waste;
- disposal of waste;
- storage, treatment and processing of animal waste;
- construction, expansion or decommissioning of facilities and associated structures and infrastructure.
- In respect of Category B: conduct a NEMA scoping and EIR as
part of the application (see Question 11). Category B
- reuse, recycling and recovery of (mainly hazardous) waste;
- treatment of (mainly hazardous) waste;
- disposal of (mainly hazardous) waste on land;
- construction of facilities and associated infrastructure.
Applications for WMLs are submitted to the national Department of Environmental Affairs in the case of hazardous wastes and the provincial environmental departments in the case of general waste.
Listed waste management activities cannot take place without a WML or otherwise in accordance with NEM: WA.
When granting a WML the competent authority must determine whether the applicant is a "fit and proper person". A person may be deemed not to be "fit and proper" if, among other things, they are found to have contravened NEM: WA, NEMA or other environmental laws, or have held a suspended or revoked WML on account that it was not complied with. Further requirements on holders of WMLs, such as the requirement for financial security for remediation, will be provided for the terms and conditions of the WML (section 51(2), NEM: WA).
Special rules for certain waste
Hazardous waste is also regulated by the Hazardous Substances Act (No. 15 of 1973) (HSA). The hazardous waste substances are grouped according to their hazardous characteristics, for example:
- Electrical equipment.
- Radioactive equipment.
- Other waste with hazardous characteristics.
Generally, a permit is required under the HSA for any of the following with a hazardous substance:
NEM: WA penalties (which can apply in addition to applicable penalties under NEMA) depend on the type of breach. The minimum penalty is a fine of up to ZAR5 million or imprisonment for up to five years, or both. The maximum penalty is a fine of up to ZAR10 million or imprisonment for up to ten years, or both.
In addition, NEM: WA also provides for a fine and imprisonment for up to six months, or both in circumstances when a person or entity has failed to provide information necessary to prepare an industrial waste management plan or a waste information system (section 68(3), NEM: WA).
13. What is the regulatory regime for asbestos in buildings?
Asbestos is generally regulated under general environmental law principles in the Constitution and NEMA, and is specifically regulated by the:
- Occupational Health and Safety Act No. 85 of 1993.
- Asbestos Regulations published under GNR 341 in Government Gazette 30904 of 28 March 2008 (Asbestos Regulations).
The Asbestos Regulations prohibit the:
- Processing, packaging, repackaging or manufacturing of any asbestos or asbestos-containing product.
- Import or export of any asbestos or asbestos-containing product, unless importation is only for transit through South Africa. A person transporting asbestos or asbestos-containing materials through South Africa must register with the DEA and provide certain information annually.
- Import of any asbestos-containing waste material, other than from a member of the South African Development Community for the sole purpose of safe disposal locally, subject to submitting certain information annually.
The Asbestos Regulations do not prohibit the continued use of asbestos-containing materials (for example, asbestos cement roof sheets or ceilings) that are already in place. However, they should be replaced over time with asbestos-free materials in terms of the phase-out plan. Regulations relating to exposure of employees to asbestos in the workplace also apply (for example, asbestos regulations under the Occupational Health and Safety Act).
Activities involving asbestos must be registered with the (then) Department of Environmental Affairs and Tourism (now the Department of Environmental Affairs) within 120 days of the Asbestos Regulations coming into effect (28 March 2008) (regulation 4, GNR.341 of 28 March 2008: Regulations for the prohibition of the use, manufacturing, import and export of asbestos and asbestos containing materials)). A phase-out plan must be submitted for approval by the Minister of Environmental Affairs within one year of when the Asbestos Regulations came into effect. The plan must identify the reasons for continuing to use the product and a time frame and activities for the phase-out of identified products. A registered person must display the registration number on all trading documents.
A failure to comply with the Asbestos Regulations is subject to a fine of up to ZAR100,000 or to imprisonment for up to ten years, or both. In addition, a fine of up to three times the commercial value of "anything" in relation to which the offence was committed can be imposed.
14. What is the regulatory regime for contaminated land?
Regulator and legislation
Section 28 of NEMA and section 19 of NWA (to the extent there is contaminated water linked to land) require reasonable measures to prevent "significant" pollution from occurring, continuing or recurring, and if it cannot be stopped, to minimise and rectify that pollution. To date no standards have been set that specify what qualifies as significant pollution, although in terms of case law, it is understood to have a low threshold. The remediation of contaminated land will also be significantly affected by Part 8 of NEM: WA when it comes into effect. Part 8 has retrospective application and specifically applies to contaminated land. It will establish a regime in terms of which investigation areas are proclaimed in respect of land on which high risk activities are taking place or have taken place that may lead to contamination or areas where the Minister or MEC may believe to be contaminated. Once an investigation area is proclaimed, a site assessment is undertaken, which is then considered by the relevant authorities to decide on further steps, including a remediation order. There are also notification requirements in Part 8 of NEM: WA for the transfer of contaminated land.
Investigation and clean-up
The remediation of contaminated land is a listed activity in terms of the NEM: WA and requires a waste management licence in order for remediation to take place.
The failure to obtain a waste management licence can be subject to a penalty of up to ZAR10 million and/or ten years' imprisonment. Further penalties may also be imposed in terms of Section 28 of NEMA if contamination that amounts to significant pollution is occurring and the duty of care in respect of that pollution has been breached. These include administrative measures, for example, the issuing of a compliance-notice by the relevant authorities to undertake the remedial measures specified therein. It is also a criminal offence to breach the duty of care, which may be subject to a fine of ZAR1 million and/or one year's imprisonment.
15. Who is liable for the clean-up of contaminated land? Can this be excluded?
Anyone who causes, has caused or may cause significant pollution or degradation of the environment is strictly liable and must take reasonable measures to prevent the pollution or degradation from occurring, continuing or recurring (section 28, NEMA). This liability is imposed on land owners, persons in control of land and persons who have a right to use land, among others.
If a person fails to take the required measures, state officials can take those measures and claim compensation for their cost from the person who should have taken them, including:
- Persons who were responsible for or contributed to the pollution.
- Persons who owned the property at the time the pollution occurred or their successors in title.
- Any person who negligently failed to prevent the activity or process from being performed or the situation from coming about.
NEM: WA will in future also impose liability on the owner of the contaminated land or a person who undertakes an activity that caused the land to become contaminated.
Liability can be imposed on land owners, persons in control of land or persons who have a right to use land provided those persons have caused significant pollution or degradation (section 28, NEMA).
If a land owner did not cause the contamination he must show who caused it to avoid liability. For example, this can be a person (other than the owner) who was in control of the land at the time that the contamination occurred.
NEM: WA will, when the relevant provisions come into effect, impose liability on the owner of the contaminated land or a person who undertakes an activity that caused the land to become contaminated. In this case the land owner must show who caused the contamination to avoid liability.
Previous owner/occupier liability
Anyone who causes, has caused or may cause significant pollution or degradation of the environment is strictly liable and must take reasonable measures to prevent the pollution or degradation from occurring, continuing or recurring (section 28, NEMA). Owners or occupiers that caused contamination in the past can be liable as section 28 has retroactive effect.
NEM: WA, when Part 8 comes into effect, retrospectively imposes liability on the owner of contaminated land or a person who undertakes an activity that caused the land to become contaminated.
Limitation of liability
There is no limitation of liability. However, limitation is provided for in relation to responsibility for the pollution or degradation as no one, including the state, is liable for damage or loss caused by (section 49, NEMA):
- Exercising a NEMA-related power or duty.
- Failure to exercise that power or duty unless the exercise or the failure to exercise the power of duty was unlawful, negligent or in bad faith.
The following also apply in relation to liability:
- The Mineral and Petroleum Resources Development Act (No. 28 of 2002), which includes the requirement to make a provision for adequate financial contribution to undertake rehabilitation of the environment or for management of negative environmental impacts caused by a particular mining operation.
- Section 51(2)(f) of NEM: WA, which provides that a WML can
require specific financial arrangements that the WML holder must
make in relation to remediation work:
- during the operation of the waste management activity; or
- when the activity is decommissioned.
16. Can a lender incur liability for contaminated land and is it common for a lender to incur liability? What steps do lenders commonly take to minimise liability?
There is no provision for lender liability under environmental legislation. In addition, there is no case law in which environmental liability has been imputed to a lender in relation to land contamination.
However, NEMA and the National Water Act provide for liability for environmental pollution relating to the level of control exerted in relation to the pollution (see Question 15). Depending on the circumstances, this level of control liability may extend to a lender. However, proof of control would need to be shown and does not arise automatically through legislation.
To minimise liability the lender should undertake due diligence investigations before funding is advanced, in the case of NEMA and the National Water Act. Similarly, financing agreements should be structured to ensure that the lender's relationship to the borrower would not amount to one that would render it "in control" of the borrower's land or premises. Careful structuring and legal advice in this regard is recommended.
17. Can an individual bring legal action against a polluter, owner or occupier?
Where there has been pollution or environmental degradation as a result of a contravention of environmental legislation or as a result of failure to comply with licence conditions, the state may bring an action against the contravening entity.
Individuals can also bring legal action in the public interest or in the interest of environment protection. Therefore, any person can institute and conduct a prosecution if both (section 33, NEMA):
- A breach (or threatened breach) of a duty under national or provincial environmental legislation concerning the protection of the environment has occurred.
- The breach is a criminal offence.
The costs of a private action must be paid by the person convicted as a result of that action, including the costs of any appeal against the conviction or a sentence imposed (section 33, NEMA).
A party that suffered harm can also bring an action based on the common law of delict (tort), in which the following elements must be proved:
- Damage was suffered.
- The damage caused was as a result of the defendant's actions (causation).
- The conduct that caused the harm was unlawful (unlawfulness).
- The defendant was at fault (through negligent or intentional conduct).
- The defendant had the capacity to carry out the action.
Environmental liability and asset/share transfers
18. In what circumstances can a buyer inherit pre-acquisition environmental liability in an asset sale/the sale of a company (share sale)?
Buyers can inherit pre-acquisition environmental liabilities if the purchased asset is either contaminated or is causing environmental contamination. For example, if a buyer buys contaminated land and the authorities are unable to trace the seller, the new owner may be liable for the contamination if the authorities want the contamination cleaned up. Under NEM: WA, when Part 8 comes into effect, the seller will need to inform the buyer that the land is contaminated (section 40, NEM: WA).
Buyers inherit environmental liabilities of companies as they remain with those companies post-sale. Consequently, if a buyer acquires the controlling interest in a company that has pre-existing environmental liabilities, the buyer can become liable for those environmental liabilities, particularly if the seller is difficult to trace or is an entity with insufficient financial means.
In both an asset sale and a share sale it is advisable for the buyer to protect itself contractually. Buyers should also obtain indemnities and warranties based on financial and environmental due diligence (EDD) investigations from the seller. However, liability can only be limited contractually to a certain extent and it is not a complete defence. Commonly, contractual remedies only provide the buyer with the option to seek financial relief from the seller in certain circumstances. Contractual remedies do not release the buyer from its statutory environmental duties.
19. In what circumstances can a seller retain environmental liability after an asset sale/a share sale?
Sellers remain jointly and severally liable with buyers in an asset sale and cannot contract out of statutory, criminal or civil liability. Sellers should therefore limit liability contractually with the buyers.
If the relevant authorities have themselves undertaken the remedial measures to the environment, then they may recover the costs from any person who negligently failed to prevent the activity or the process being performed or undertaken or the situation from coming about (section 28 (8)(d), NEMA). Subsection (9) also provides for these costs to be claimed from any other person who benefited from the remedial measures undertaken by the authorities. In these circumstances is it notionally possible for the relevant authorities to claim these costs from shareholders who held shares at the time that the pollution occurred and who benefitted from that pollution not being remediated before the sale, or who were under a legal duty to remediate at the time they held the shares. It is considered unlikely that such liability would be imposed; however it is possible in law. Therefore, sellers should attempt to define and limit their liability contractually through appropriate indemnities and warranties.
20. Does a seller have to disclose environmental information to the buyer in an asset sale/a share sale?
There is no statutory environmental provision that deals with the obligation of a seller to disclose environmental liabilities in either asset sales or share sales.
When Part 8 of NEM: WA comes into effect, sellers will be required to notify buyers if land is contaminated (section 40, NEM: WA). However, this issue is more commonly dealt with under contract law. If the seller knows of an environmental liability and does not disclose it to the buyer, this may amount to a material misrepresentation and breach of contract. This matter is therefore best dealt with contractually and the buyer should ensure that the seller confirms that all environmental information has been disclosed to the buyer.
Share sale See above, Asset sale.
21. Is environmental due diligence common in an asset sale/a share sale?
EDD is common in both asset sales and share sales. The scope of EDD depends on the size and nature of the transaction, as well as the nature of the activity conducted by the entity or the asset being sold. EDD is usually wide in scope and includes any issue that can be problematic, which includes investigation of:
- The set of permits, authorisations and licences required to undertake the activity, whether they are within their time periods and their transferability.
- The level of compliance with these permits, authorisations and licences and the risks, liabilities and claims/disputes that can arise as a result of possible non-compliance.
Types of assessment
Clients can request any type of due diligence investigation that they believe is appropriate in the circumstances. However, the most common investigations include:
- Phase one assessment: typically a desktop study, where the activities of the business or asset are examined, and potential liability issues are identified.
- Phase two assessment: on-the-ground, physical testing and sampling of areas identified as problematic, and that require further investigation.
Environmental consultants (environmental assessment practitioners (EAPs)) are commonly used in EIAs and due diligence processes.
EAPs must be independent of the entities who want to undertake the EIA. EAPs must formally declare their independence in the environmental impact assessment reports and specialist reports, which they compile and submit to the environmental authorities.
A registration authority for EAPs is required under NEMA (section 24H, NEMA). The Environmental Assessment Practitioners Association of South Africa (EAPSA) was established in 2011 with a view to making an application to the Minister of Water and Environmental Affairs to fulfil this requirement (www.eapsa.co.za). The Board of EAPSA has drafted a proposal for registration of a registration authority but has not yet made the application to the Minister.
When an EAP is appointed, the appointment letter should address the following, among other things:
- Level of qualification of the professional staff that will undertake the investigation.
- Professional indemnity insurance.
- Time frames for completion and deliverables.
- Level at which the investigation will be undertaken (phase one or two) (see above, Types of assessment).
- Registration of the EAP with EAPSA.
22. Are environmental warranties and indemnities usually given and what issues do they usually cover in an asset sale/a share sale?
Environmental warranties and indemnities are commonly given in sale contracts for both asset and share sales. The issues that are dealt with depend on the activities of the business entity or the nature of the asset.
See above, Asset sale.
23. Are there usually limits on environmental warranties and indemnities?
Time limits and financial caps are becoming more common when environmental warranties and indemnities are given. The time limit on the indemnity and warranty, and the financial cap depends on the type of business or the nature of the asset being acquired. In addition, if EDD is carried out, the time limits and financial cap may be based on its results.
Reporting and auditing
24. Do regulators keep public registers of environmental information? What is the procedure for a third party to search those registers?
Currently, there is no integrated contaminated land register available to the public. However, the Minister of Water and Environmental Affairs must establish a National Contaminated Land Registry when the relevant provision in NEM: WA is in effect (section 41, NEM: WA). This development is likely to have implications for the banking and property sectors, particularly when the obligation to reveal land contamination before its sale is considered. Environmental permits are located with the regulator responsible for the particular environmental issue. In practice, therefore, it is often difficult to find the location of these permits or to obtain copies of them.
Third party procedures
Access to information about environmental permits is set out under the Constitution and the Promotion of Access to Information Act 2000 (PAIA), which provides that the public can access records held by both private institutions and government bodies. If a permit is not on a public record, a request can be made under the PAIA or through one of the Specific Environmental Management Acts (for example, the National Water Act and the NEM: AQA) for access to the permits or environmental records. There is a minimal fee payable when making an application for access to information in terms of PAIA.
25. Do companies have to carry out environmental auditing? Do companies have to report information to the regulators and the public about environmental performance?
There is no statutory obligation to carry out environmental auditing. However, many companies carry out environmental auditing due to international certification bodies to which they subscribe (for example, the International Organization for Standardization) (ISO). In addition, environmental auditing can occur indirectly as companies must ensure that they comply with all environmental laws. To do this, companies often use attorneys to draw up compliance documents that they then use to manage risk and ensure environmental compliance.
Companies must often include provisions for rehabilitation or asset revaluation or depreciation relating to environmental issues in their annual financial statements. Many South African companies, especially the larger listed companies, also subscribe to the Global Reporting Initiative (www.globalreporting.org). South African Generally Accepted Accounting Principles (GAAP) incorporate international accounting standards, which also require disclosure of environmental obligations and other environmental issues. In terms of the Johannesburg Stock Exchange Listing Requirements, listed companies are contractually bound to adopt the King Code and Report on Governance in South Africa (King III). An annual integrated report is required in terms of King III that focuses on the impact of the organisation in its economic, social and environmental spheres, with an emphasis on sustainability reporting.
26. Do companies have to report information to the regulators and the public about environmental incidents (such as water pollution and soil contamination)?
Typically, when a company is authorised to emit pollutants into a resource it is controlled through a permit. Most permits require that when the conditions of the permit are not complied with (for example, if an additional pollutant is released), these incidents must be reported to the regulators. In addition, commonly, companies that are granted permits must regularly report emissions as a condition of the permit. Section 30 of the NEM: AQA, for example, allows an air quality officer to submit an atmospheric impact report if there is reasonable suspicion of contraventions of licence conditions or the NEM: AQA. Emergency incidents must also be reported to the relevant authorities (section 30, NEMA).
27. What access powers do environmental regulators have to access a company?
EMIs monitor compliance with and enforce the provisions of the specific environmental management acts (see Question 24). EMIs can:
- Perform routine inspections (entering premises to ascertain compliance and seizing evidence of non-compliance).
- Investigate (questioning witnesses, copying documents, inspecting and removing articles or substances, taking photographs and audiovisual recordings, taking samples and removing waste).
- Enforce environmental laws, including search and seizure of premises, containers, vessels, vehicles, aircraft and pack animals.
- Establish roadblocks and arrest.
- Issue compliance notices, among other administrative duties.
- Enforce any authorisation permit issued under their mandated legislation, for example, permits, licences and environmental authorisations (for which EIA is required).
28. What types of insurance cover are available for environmental damage or liability and what risks are usually covered? How easy is it to obtain environmental insurance and is it common in practice?
Types of insurance and risk
It is possible to obtain environmental risk insurance. However, due to the difficulty with predicting the consequences of environmental damage and the potential amount of money required to repair that damage, this type of insurance is very expensive and is rarely used in practice.
Insurance cover is more commonly used where an event can be specifically defined, both in terms of time and geographical area. Insurance companies provide insurance for ongoing environmental damage. However, this is commonly prohibitively expensive at the national level. Some environmental insurance is provided by overseas insurers.
29. What are the main environmental taxes in your jurisdiction? Environmental levies
The following levies apply:
- General fuel levy for petrol (197.50 South African cents a litre) and diesel purchases (177.50 South African cents a litre).
- Non-renewable electricity generation tax levy for non-renewable based electricity generation. The tax is levied on producers of electricity from non-renewable sources in electricity generation plants with a capacity exceeding five megawatts. However, it does not apply to electricity from co-generation, whether or not from non-renewable resources. The rate is ZAR0.035/kW (3.5 South African cents).
- Renewable energy allowance included in the Eskom Tariff to fund the purchase of renewable energy in the Renewable Energy Independent Power Producer Procurement Programme (REIPP) programme as per the Eskom Multi Year Determination (MYPD2).
- Motor vehicle emissions levy for purchases of new motor vehicles. The rates are:
- ZAR75.00gCO2/km for each gCO2/km exceeding 120gCO2/km (passenger vehicles);
- ZAR100.00gCO2/km for each gCO2/km exceeding 175gCO2/km (double cabs).
- Incandescent globe levy for purchases of incandescent light bulbs. The rate is ZAR3.00 per bulb.
- Plastic bag levy for certain plastic bags. The levy also applies to importers, licences issued to warehouses, clearing agents and manufacturers. The rate is ZAR0.04 per bag.
- A carbon tax has been mooted for introduction in the 2013/2014 financial year.
Environmental tax incentives
The following tax incentives apply:
- Income tax exemption for revenues earned from primary sale of CERs generated by CDM projects. These are exempt from income tax.
- Accelerated depreciation for renewable electricity generation, purchase of energy efficiency equipment and biofuels production. Various rates apply.
- Income tax benefit for the following:
- various R&D tax incentives, including for green technologies. Up to 150% income tax deduction is available;
- biodiversity conservation;
- certain environmental activities, for example, greenfield projects under the Income Tax Act.
- Tax deductions for mining companies that are permitted tax
deductions for contributions to mining closure and remediation
funds. Tax allowances for expenditure for environmental treatment
and recycling assets and environmental waste disposal assets (a
liquid or solid waste disposal site, dam, dump or reservoir). The
applicable rates are:
- 40%, 20%, 20%, and 20% of expenditure as a ratio over four years; and
- straight-line deduction of 5% of the acquisition cost for 20 years.
30. What proposals are there for significant reform (changes) or environmental law in your jurisdiction?
The most significant reforms are those anticipated with regards to the remediation of contaminated land (see Question 15). Part 8 of NEM: WA, which contains these provisions, has not come into effect, and it had been anticipated that it would during the second half of 2013. However, this may now take place in 2014 once the necessary standards and regulations have been finalised. Further reform has also been proposed in the amendments to the Mineral and Petroleum Resources and Development Act 28 of 2002 (MPRDA) to align certain of its provisions relating to environmental protection with the environmental authorisation process contained in NEMA. While amendments necessary for this effect have been assented to, they have not yet come into operation. It is not yet known when they will, as these amendments to the MPRDA were assented as far back as April 2009.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.