The Star Early Edition

Court challenge is new hur­dle for com­mence­ment of frack­ing

- San­dra Gore, Gareth Howard and Neo Tshikalang­e Ar­ti­cle by San­dra Gore, di­rec­tor, and Gareth Howard, as­so­ciate, Neo Tshikalang­e, as­so­ciate des­ig­nate, Cliffe Dekker Hofmeyr.

THE PLANS of com­pa­nies seek­ing to com­mence with deep drilling or hy­draulic frac­tur­ing (frack­ing) in parts of the Ka­roo ex­ceed­ing 120 000km² hit a stum­bling block af­ter the East­ern Cape High Court de­clared the Reg­u­la­tions for Petroleum Ex­plo­ration and Pro­duc­tion (the frack­ing reg­u­la­tions) in­valid on Oc­to­ber 17, 2017, in the case of John Dou­glas Stern NO and Oth­ers ver­sus the Min­is­ter of Min­eral Re­sources.

The court held that the min­is­ter of min­eral re­sources lacked the author­ity to pro­mul­gate the frack­ing reg­u­la­tions and that they were not pub­lished in a pro­ce­du­rally fair man­ner.

The ap­pli­cants, which com­prised sev­eral farm­ers and farm­ers’ or­gan­i­sa­tions from the greater Ka­roo area (ap­pli­cants), sought an or­der re­view­ing and set­ting aside the min­is­ter’s de­ci­sion to pro­mul­gate the frack­ing reg­u­la­tions, al­ter­na­tively declar­ing his pro­mul­ga­tion of the frack­ing reg­u­la­tions, al­ter­na­tively the con­tent of the frack­ing reg­u­la­tions, in­con­sis­tent with the con­sti­tu­tion.

The ap­pli­cants’ challenge to the frack­ing reg­u­la­tions’ va­lid­ity es­sen­tially was that:

The min­er­als min­is­ter was not au­tho­rised un­der the Min­eral and Petroleum Re­sources Devel­op­ment Act, No 28 of 2002 (the MPRDA) to pro­mul­gate the frack­ing reg­u­la­tions and there­fore acted un­law­fully, ren­der­ing them in­valid.

The frack­ing reg­u­la­tions’ pur­pose was to reg­u­late the en­vi­ron­men­tal con­se­quences of frack­ing. How­ever, the author­ity to reg­u­late the en­vi­ron­men­tal as­pects of frack­ing fell out­side the min­is­ter’s pow­ers, as this power was removed from the scope of his author­ity as part of the amend­ments made to the MPRDA dur­ing 2013.

The frack­ing reg­u­la­tions were not pub­lished in a pro­ce­du­rally fair man­ner, as its “Sched­ule 1” (which listed the sub­stances pro­hib­ited from use as ad­di­tives to frac­tur­ing flu­ids dur­ing the frack­ing process) was not in­cluded in the draft frack­ing reg­u­la­tions when they were ini­tially pub­lished for com­ment from in­ter­ested and af­fected par­ties.

The frack­ing reg­u­la­tions’ pur­pose was to: (a) con­serve the en­vi­ron­ment; (b) man­age the en­vi­ron­men­tal im­pacts of the pro­duc­tion operations; (c) re­ha­bil­i­tate dis­tur­bances of the sur­face of land where they take place due to frack­ing; and (d) pre­vent, con­trol and com­bat pol­lu­tion of air, land, sea or other wa­ter (in­clud­ing ground­wa­ter).

Among other things, they also pre­scribed cer­tain tech­ni­cal spec­i­fi­ca­tions and re­quire­ments in re­la­tion to (a) con­duct­ing en­vi­ron­men­tal im­pact as­sess­ments; (b) well de­sign and con­struc­tion; (c) con­duc­tor cas­ing, sur­face cas­ing, in­ter­me­di­ate cas­ing and pro­duc­tion cas­ing re­quire­ments and com­pres­sion strength tests; (d) in­stal­la­tion and pres­sure test­ing of blowout preven­tion equip­ment; (e) per­mit­ted drilling flu­ids; (f) man­age­ment of frack­ing operations; (g) con­tain­ment and man­age­ment of frac­tur­ing flu­ids; (h) man­age­ment and stor­age of flow­back and pro­duced flu­ids and frack­ing flu­ids; and (i) de­com­mis­sion­ing and well clo­sure.

Against this con­text, the court found that:

The min­er­als min­is­ter was not au­tho­rised un­der the MPRDA’s re­pealed pro­vi­sions to pro­mul­gate the frack­ing reg­u­la­tions.

Un­der the Na­tional En­vi­ron­men­tal Man­age­ment Act, No 107 of 1998 (Nema), the min­is­ter of en­vi­ron­men­tal af­fairs is em­pow­ered by leg­is­la­tion to set the reg­u­la­tory frame­work and norms and stan­dards for en­vi­ron­men­tal mat­ters. By con­trast, the min­er­als min­is­ter is only em­pow­ered to im­ple­ment pro­vi­sions of Nema and its subor­di­nate leg­is­la­tion in­so­far as it re­lates to frack­ing.

The min­er­als min­is­ter con­tra­vened Nema by at­tempt­ing to set the reg­u­la­tory frame­work and norms and stan­dards gov­ern­ing the en­vi­ron­men­tal-re­lated as­pects of frack­ing by pro­mul­gat­ing the frack­ing reg­u­la­tions.

The frack­ing reg­u­la­tions were not pub­lished in a pro­ce­du­rally fair man­ner, due to the fail­ure to at­tach Sched­ule 1.

The court ruled that the min­er­als min­is­ter acted un­law­fully in pro­mul­gat­ing the frack­ing reg­u­la­tions and set them aside ret­ro­spec­tively.

It also or­dered that the mat­ter be re­mit­ted to the min­er­als min­is­ter for re­con­sid­er­a­tion.

The min­er­als min­is­ter has not yet con­firmed whether the Department of Min­eral Re­sources will ap­peal the court’s rul­ing and it is also un­clear whether and when the en­vi­ron­men­tal min­is­ter and the Department of En­vi­ron­men­tal Af­fairs will be re­draft­ing the frack­ing reg­u­la­tions un­der Nema.

What­ever the fi­nal out­come, it is nev­er­the­less ap­par­ent that the ap­pli­ca­tion for and the pos­si­ble grant­ing of any ex­plo­ration or pro­duc­tion rights will re­main con­tentious.

This par­tic­u­larly prior to re­vised reg­u­la­tions be­ing pub­lished, and the mat­ter is likely to still give rise to nu­mer­ous chal­lenges in the fu­ture.

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 ?? PHOTO: REUTERS ?? A wind­mill pumps wa­ter from a bore­hole near Graaff-Reinet in the Ka­roo in this file pic­ture. Stretch­ing across the heart of South Africa, the Ka­roo has stir­red emo­tions for cen­turies, a stun­ning semi-desert wilder­ness, fit mainly for artists, hunters...
PHOTO: REUTERS A wind­mill pumps wa­ter from a bore­hole near Graaff-Reinet in the Ka­roo in this file pic­ture. Stretch­ing across the heart of South Africa, the Ka­roo has stir­red emo­tions for cen­turies, a stun­ning semi-desert wilder­ness, fit mainly for artists, hunters...

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