New draft Regulations may increase the risks of the imposition of a maximum R5 million administrative fine (on first conviction) on "culpable applicants" under s24Gof the National Environmental Management Act, 107 of 1998 ("NEMA").
Section 24G regulates applications for rectification by parties who have unlawfully commenced with an activity without the required environmental authorisation ("EA") or waste management license ("WML"). The new draft Regulations propose criteria for determining fines and the procedure to be followed ("Draft Section 24G Regulations").
Under the Draft Section 24G Regulations where a culpable applicant, as defined in the Regulations, submits a s24G application, the "fines recommendation committee" (to be established under these Regulations) must recommend to the competent authority that the applicant pay the maximum fine of R5 million. Whether an applicant is culpable would be assessed on, among other things, if it had knowledge of the unlawfulness of commencing an activity without the required EA or WML.
The proposed s24G application form allows applicants to include representations regarding the quantum of the fine. It is proposed under the Draft Section 24G Regulations that consideration must be taken of several factors including: impacts or potential impacts caused by the activity; applicant's compliance history (including whether a final administrative enforcement notice has been issued to the applicant); and whether any of the directors of the applicant are or were involved as directors of another entity responsible for a contravention. A director would include members of a close corporation or partners in a partnership. The competent authority would also consider whether any previous s24G application had been received from the applicant.
These factors would be used in a "fine calculator," that would include a formula for the determination of an appropriate fine. This formula is not included in the Draft Section 24G Regulations.
The Draft Section 24G Regulations provide that where more than one listed activity commenced without a required EA or WML a single fine may be imposed in certain circumstances.
There has been significant uncertainty as to the criteria considered by the environmental authorities when determining an appropriate administrative fine under s24G of NEMA. The Draft Section 24G Regulations are welcomed, as they will provide more credibility and clarity on the process used to determine the fine imposed. It will also provide applicants with grounds upon which to challenge the reasonableness of any s24G fines. This is provided that the formula included in the fines calculator will be published and circulated for public comment.