The Impact of NEMLA
Financial provisioning rework
Under NEMLA, legislation has been strengthened to ensure that as far as possible, polluters are liable for the damage caused, and makes provision for that liability.
Mines will be affected by the changes to financial provisioning requirements. Mines and other specifically identified activities, must, before they obtain their environmental authorisation, determine the financial provision which is required for undertaking rehabilitation of any negatively impacted areas.
You are compelled to make financial provisioning for the environmental damage that you cause, whether you obtained your mining licence during the current legal regime or the previous one.
Penalties may be imposed twice
This will make it more important than ever to ensure that all licensing is correctly in place before projects begin. The costs associated with non-compliance have escalated. When you apply for a licence after the fact, you are liable for an administrative fine. Even after you’ve paid that fine, however, you can still be held liable criminally because the fine that you’ve paid was not a judicial fine imposed by a court.
In a well-publicised case, a multinational oil and gas company was accused of contravening environmental-law requirements related to the construction and management of filling stations without environmental authorisation. The contraventions were held to have taken place between 1998 and 2005, and the multinational company submitted ‘rectification’ applications in 2005, paid administrative fines, and was issued with ‘after the fact’ environmental authorisations. Despite this, the company was found guilty of the contraventions, and penalties are in the process of being determined.
Interestingly, in this case the mere submission of the so-called rectification application was regarded by the courts as an admission of guilt. The court said that nothing else had to be proved, since the company had admitted contravening by signing the rectification application form. In effect, you can be penalised twice for the same issue, and receive both an administrative and judicial fine, potentially of up to R10 million each.
Cessation of activity under review
The scope of those who may submit a rectification application has widened and, crucially, the competent authority is now required to direct the applicant to cease the unlawful activity while the application is considered, except if there are reasonable grounds to believe the cessation will result in serious harm to the environment.
A housing developer, for example, could thus be forced to halt operations while they prove that there is not a severe impact on the environment, even if contractors stand idle and banks demand payment. There are significant additional potential cost impacts for any capital investment which should be considered early in the project-planning process.
Personal liability
Directors can only be held liable for doing things in the normal course and scope of their duties in specific circumstances. When it comes to environmental law, if it is found that they did not take all reasonable steps to prevent an offence, then they can be held liable in their personal capacity, not only for the fine or jail time, but also for all rehabilitation costs if that is ordered by the court.
There is thus an increased onus on the directors and management of a company to maintain oversight of environmental risks and impacts.
Increased municipal oversight
Another significant development is that the Act now allows municipalities, alongside provincial and national government, to issue instructions or directives to cease activities or to take reasonable steps to prevent environmental degradation. Municipalities will no longer be restricted to policing their own bylaws and will comprise an additional layer of monitoring and enforcement. This makes sense: environmental law is necessarily a matter of local conditions, and this change to the law allows authorities closer to the issue greater scope to enforce legislation.
Change of the definition “waste”
The new definition of waste may result in a vast range of substances, materials or objects now being classified as waste. If certain thresholds are exceeded, waste management licences may be required for these “new” waste products and companies will have to apply for such licences within 60 days of the commencement of the act, which may lead to a flood of licence applications.
Preparing for NEMLA
The repercussions of the NEMLA Act on companies are likely to be felt in terms of higher costs and additional points of control. It is important that companies familiarise themselves with these provisions and undertake careful planning in order not to run afoul of a significantly altered legal landscape.
Author, Morne Viljoen
[Environmental law adviser at Inlexso Legal Solutions]
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