Applicants beware! Ensure that licensing authorities comply with the letter of the law

Written by Thapelo Mbita and Morné Viljoen

(Environmental Department)

(Proper participation and consultation must be afforded to affected and interested parties)

Background

In the matter of Normandien Farms (Pty) Ltd v South African Agency for the Promotion of Petroleum and Exploration SOC Ltd and others [2017] ZAWCHC 53 (3 May 2017), Normandien challenged the decisions of the South African Agency for the Promotion of Petroleum and Exploration SOC Ltd (“PASA”) to accept the exploration right application and scoping report submitted to it by Rhino Oil and Gas (Pty) Ltd (“Rhino Oil and Gas”) in respect of properties in which it owned in the magisterial districts of Newcastle and Dannhauser in KwaZulu-Natal.

Rhino Oil and Gas’ application for exploration right was accepted by PASA a month after its application. PASA had the obligation to send the notice of the application to the Magistrate’s court in the area where Rhino Oil and Gas planned to prospect, alternatively, PASA could publish the notice in the provincial gazette or in regional newspaper – in order to publicise the decision and to allow for public consultation.

The law

The application for an exploration right is done in terms of section 79 of the Mineral and Petroleum Resources Development Act No. 28 of 2002 (MPRDA). Section 79 provides that an application made to the designated agency (in this case PASA) in the prescribed manner, must be accepted if;

… no other person holds a technical co-operation permit, exploration right or production right for petroleum over any part of the area.[1]

The section goes further to provide for an instance where an application for an exploration right is accepted.

The designated agency must within 14 days notify the applicant in writing to;

… consult in the prescribed manner with … any interested and affected party and include the result of the consultation in the environmental reports to be submit in terms of Chapter 5 of National Environmental Act, 1998, within a period of 120 days from the date of the notice.[2]

Section 10(1)[3] of the Act also imposes a duty on the Department of Minerals & Energy, within 14 days of accepting an application to:

make known that that an application … has been received respect of the land in question; and
call upon interested and affected persons to submit their comments regarding the application within 30 days from the date of the notice.

Issues and facts

Normandien sought relief on the grounds that PASA had failed to notify it, as an affected party, that an application for an exploration right had been lodged by Rhino Oil & Gas. Rhino Oil & Gas, had in the meantime obtained and submitted to PASA a scoping report and was in the process of compiling an Environmental Impact Assessment Report.

At some stage PASA sought to rectify its admitted failure to provide proper notice to Normandien by publishing a notice in the Provincial Gazette. This notice did not fall within the time prescribed for the giving of notices as set out above.

The decision

The court found that PASA did not comply with the peremptory obligations of the MPRDA, the MPRDA Regulations (2004) and NEMA: Environmental Impact Assessment Regulations (2014) in the application and acceptance process. The decisions of PASA to accept an application for an exploration right and Rhino Oil & Gas’ scoping report were therefore found to be unlawful and set aside.

The court also found that the time periods set out in the Act[4] were peremptory and that Normandien had been prejudiced by not being notified of the application and subsequently, it was not able to participate in the consultation processes set out in the MPRDA.

Therefore, the court set aside the acceptance of the application for an exploration right, and interdicted Rhino Oil & Gas from submitting an Environmental Assessment Report and Environmental Management Programme to PASA.

Conclusion

The above ruling by the High Court indicates yet again that proper participation and consultation must be afforded to affected and interested parties. Strict compliance with time periods, as well as the opportunity for proper participation and consultation as set out in the Act[5] should be followed.

Applicants for licences should be vigilant and not only manage their side of the application process, but ensure that the licencing authorities comply with the letter of the law. Failure to comply may severely prejudice an applicant, even leading to substantial financial losses.

[1] S79(2)

[2] S79(4)

[3] Mineral and Petroleum Resources Development Act No. 28 of 2002

[4] 28 of 2002

[5] 28 of 2002