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Proposed revisions to water use licensing legislation envisage significant reforms

By Garyn Rapson, Partner, Paula-Ann Novotny, Senior Associate, Nonhlanhla Mnengi, Associate, Kelsey Levieux, Candidate Attorney & Hassan Mahlawe, Candidate Attorney from Webber Wentzel

Amended procedural requirements for water use licence applications have been drafted and published. Some proposals are positive, although some will be onerous.

On 19 May 2023, the Minister of Water and Sanitation published draft regulations that will amend the procedural requirements for water use licence applications (WULA) and amendments under the National Water Act, 1998 (“NWA). The proposed changes seek to repeal and replace the Water Use Licence Application and Appeals Regulation, 2017 and propose various changes to the administrative regime. Some positive and some negative impacts are envisaged.

Among the most significant changes, the proposed revised regulations envisage:

  • A reduction of the 300-day timeframe for processing WULAs to 90 days, allocating shorter timeframes to each of the application stages. While this is a welcome change, the responsible authority is unlikely to adhere to these reduced timeframes in practice. The proposed changes expressly permit an extension of a prescribed timeframe if it is affected by downtime of the e-WULAAS system (the extension could run indefinitely if the e-WULAAS remains down).
  • A new requirement in draft regulation 4(5), providing that the “[a]pplicant must have lawful access to a property(ies) in respect to the application“.  This new requirement will be onerous and may be unlawful as the NWA gives the State the right to grant rights to water, irrespective of ownership.
  • A new draft regulation 4(6), providing that “[a] water use licence shall lapse if the holder fails to exercise the authorised activities within three years after the issuance of the licence“.  This is another onerous provision, and no provision has been added to seek the extension of this time limit.
  • Draft regulation 5, which makes it a requirement to follow an integrated WULA if the application requires authorisations in terms of the Mineral and Petroleum Resources Development Act, 2002 (MPRDA), National Environmental Management Act, 1998 (NEMA) and or any specific Environment Management Act (SEMA) to be obtained as well.  The WULA can thus only be submitted after the other applications have been submitted.  This proposal is, however, aligned with current processes.
  • Chapter 5 (Consideration of a Decision for WULAs to Promote Equity and Redressing Past Racial and General Discrimination) was added to address historical allocations of water (where, according to statistics drawn from WULs issued since 1998, 75.93% of water has been allocated to historically advantaged individuals, leaving only 24.07% allocated to historically disadvantaged individuals).  Notable proposed changes include (i) a requirement for the responsible authority to give preference to WULAs from black people (as defined), followed by women; and (ii) for consumptive WULAs (i.e., NWA section s21(a), (b) and (d) water uses), applicants must demonstrate prescribed black shareholding requirements, subject to proposed permissible exemptions for mining and related industries.  Concerns have been raised that the B-BBEE shareholding requirements are onerous and beyond what is required under other B-BBEE legislation.  It is also unclear what mining-related activities / industries would be granted exemption in these circumstances.
  • Amendment and renewal applications will be governed by Chapters 6 (Application for Early Renewal or Amendment of a WUL) and 7 (Processing of an Application for Amendment of a WUL), read with Annexures B (Timeframes), G (Processing Fees) and J (Table to be completed for amendments, with cover letter and motivation).  It is also proposed that early renewal applications must be initiated at least 250 days before the WUL expires.  This is the first time there is regulatory certainty around the procedure to be followed for WUL amendments and renewals, and it is a welcome change.
  • A new proposed draft regulation 19 (Security by Applicant), which requires that certain applicants are required to provide security for post-WUL rehabilitation.  Such applicants will be required to sign a Deed of Suretyship, in the prescribed form, and it must be in place for at least five years after the WUL activities have lapsed.  Although the draft regulation proposes mining-related applicants should be exempt from this requirement, Annexure H II setting out the applicants which must comply with this requirement expressly includes mining-related activities in respect of NWA section 21(j) water uses.
  • A Chapter 10 (Public Participation) providing for the public participation (PP) requirements for WULAs.  The categories of applications for which PP must be conducted and the way the PP must be conducted will be prescribed in Annexure C (Summary of PPP required for different WULAs). These requirements must be conducted jointly with any requirements for authorisations in terms of the MPRDA, NEMA and any SEMA.  The new PP requirements are standard and will be achieved in any integrated permitting application.  A notable proposed provision is that draft regulation 24 (Applications in properties under land claim) provides that, if there is a gazetted land claim over a property, the applicant must obtain written comments from the land claimants and Land Claims Commissioner, which must indicate whether or not they object to the granting of the WULA.
  • Chapter 9 (Transfer of water use authorisations) is introduced to outline the process for the temporary transfer of a water use entitlement in terms of section 25 of the NWA, following the Constitutional Court judgment handed down in Minister of Water and Sanitation v Lotter N.O on 15 March 2023.  The CC found that found that (i) in the context of section 41 WULAs, holders may, on request by the water management institution, transfer their water use entitlements to third parties to allow use of some or all of that water on another property in the same vicinity for the same or similar purpose; (ii) a holder may surrender part, or all, of that water use entitlement to facilitate a particular WULA for the use of water from the same resource in respect of other land for the same or similar purpose, with the condition of such a surrender being that it only becomes effective when such WULA is granted by the authorities and transfer may be subject to an inserted condition in the WUL that, upon the success of a WULA by a third party (the new licensee), the new licensee will be liable to pay a fee to the old licensee; and (iii) there is no provision which expressly prohibits trading in water use entitlements between private individuals.  While the proposed new Chapter 9 in the draft regulations clarifies the position to some extent, it is notably brief in the context of the CC’s judgment and the stated purpose of the revised regulations. In future, there may be abuses of the wide ambit of section 25 due to the transactional nature of this section, where holders may use this interpretation to leverage a premium amount when selling their farms to make exorbitant profits, thus further entrenching inequality.
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