By Lizel Oberholzer | Norton Rose Fulbright
On Wednesday, 18 October 2017, in John Douglas Stern v the Mineral of Mineral Resources, (2015) EC, the Eastern Cape High Court in Grahamstown granted an order setting aside the decision of the Minister of Mineral Resources to make the Regulations for Petroleum Exploration and Production, 2015 (the Regulations).
The Regulations regulate the exploration and production of petroleum through the use of deep drilling and hydraulic fracturing or “fracking”. The Regulations had been promulgated by the Department of Mineral Resources (DMR) notwithstanding an existing moratorium on the granting of licences to explore for petroleum by means of fracking.
The Applicants alleged that the promulgation of the Regulations was unlawful on the basis that the content of the Regulations was ultra vires, and the procedure followed by the DMR was procedurally unfair.
A lack of authority
The Applicants alleged that Regulations are unlawful as the Minister of Mineral Resources (Minister) lacked the authority to promulgate regulations relating to environmental matters concerning prospecting and mining minerals and exploring for and producing petroleum.
The Regulations state that they were passed in terms of section 107 of the Mineral and Petroleum Resources Development Act, 28 of 2002 (MPRDA). When the MPRDA commenced on 1 May 2004, section 107 included sub-section 107(1)(a), authorised the Minister to pass regulations dealing with related environmental matters.
However, the MPRDA was amended by the Mineral and petroleum Resources Development Amendment Act, 49 of 2008, (MPRDA Amendment Act) in 2013, which deleted paragraph (a) of subsection 107(1) of the MPRDA. The Regulations were passed in June 2015.
For this reason, the High Court found that, since the Regulations were promulgated in June 2015 the Minister lacked the authority to do so. As the individual regulations which related to environmental matters were integral and inextricable to the Regulations as a whole, Bloem J held that the Minister had acted unlawfully and the decision to pass the Regulations could be set aside.
Additionally, the Applicants contended that the DMR had failed to give effect to affected parties rights to procedurally fair administrative action.
While a notice and comment process allowing stakeholders to submit comments on the Regulations had been followed, a schedule to the Regulations listing hazardous substances prohibited in the fracking procedure had not been included in the draft regulations which had been published for comment.
The Court held that because the schedule did not form part of the proposed Technical Regulations, it cannot be said that the DMR took appropriate steps to communicate the administrative action to those likely to be materially and adversely affected as required by section 4 (3) (a) of the Promotion of Administrative Justice Act.
The Minister may appeal the ruling. In the event that the Minster elects not to appeal or if the appeal is not successful it is likely that new regulations will be draft by the Department of Environmental Affairs, in accordance with the provisions of the National Environmental Act. While the court made no substantive ruling relating to fracking as a practice in South Africa, we expect that the ruling will delay the granting of licences to explore for shale gas.