NEW ENVIRONMENTAL LAWS FORCE DEVELOPERS TO COUGH UP

FINANCIAL PROVISIONING FOR REMEDIATING ENVIRONMENTAL DAMAGE

Photo by micheile henderson on Unsplash

With the new National Environmental Management Laws Amendment Act (NEMLAA), the scope of financial provisioning for environmental rehabilitation has been widened.

Prior to the NEMLAA, the National Environmental Management Act (NEMA), only compelled those in the mining sector to maintain and retain financial provisioning for the rehabilitation of environmental damage, prior to the issuance of an environmental authorisation or permit.

In terms of s24P of NEMA, the Minister for Environment or a provincial MEC may promulgate regulations which prescribe the instances for which financial provision must be set aside.

This means that not only those in the mining sector can be compelled to set aside financial provisioning, as the Minister or MEC may include other developers who propose development in environmentally sensitive or high-risk areas. Or at least, that is what would be the most sensible and practical thing to do !

Once the Minister or MEC has prescribed the instances, an applicant for environmental authorisation is compelled to determine the requisite financial provisioning mechanism for undertaking progressive environmental rehabilitation as well as :

• decommissioning,

• closure and post-closure activities, including -

  • the pumping and treatment of extraneous and polluted water, where relevant 

This must be done prior to the authority issuing the environmental authorisation.

RETROSPECTIVE APPLICATION OF THE FINANCIAL PROVISION

Section 24P(4) also makes provision for the retrospective application of the financial provisioning requirements.

Here, a holder of a mining or prospecting permit, an applicant, holder of an environmental authorisation as well as a holder of an old order right, can be compelled to provide financial provision for environmental rehabilitation, mitigation and the like.

Therefore, those holding environmental authorisations and prospecting or mining rights which were issued prior to the coming into effect of the financial provision requirements, will still be compelled to provide financial provision - if they fall under the “prescribed instances“.

Section 24P(5) makes it a peremptory requirement to undertake annual mitigation, remediation and rehabilitation measures.

FINANCIAL PROVISIONING VEHICLES

The Act also lays down the financial provisioning vehicles which must be used, namely:

1. cash deposited into an account administered by the Minister responsible for mineral resources; 

2. insurance; 

3. a financial guarantee;

4. a trust fund, and 

5. any other vehicle, identified by the Minister including :

   1. a closure rehabilitation company; 

   2. a parent company guarantee; and 

   3. an affiliate company guarantee. 

FAILURE TO REHABILITATE

Failure by a holder or holder of an environmental authorisation or holder of an old order right, to undertake rehabilitation, mitigation or remediation, will mean that the authority has the option of utilising all or part of the financial provision, to undertake the mitigation, remediation and rehabilitation.

PROHIBITION

… and then finally, the Act prohibits the use of the financial provision for any other purposes other than progressive rehabilitation, decommissioning, closure and post closure.