Minister of Mineral Resources v Stern and Others; Treasure the Karoo Action Group and Another v Department of Mineral Resources and Others

On 3 June 2015, the Minister of Mineral Resources (Minerals Minister) promulgated the Regulations for Petroleum Exploration and Production, 2015 (Petroleum regulations) under section 107 of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA). Between 2008 and 2010, three companies applied to explore for shale gas in the Karoo using hydraulic fracturing (fracking). Public participation processes elicited numerous objections regarding environmental impacts and lack of proper regulation. The Minerals Minister imposed a moratorium and established an inter-departmental task team. Draft regulations were published in October 2013, revised, and promulgated on 3 June 2015. Two separate applications challenged the validity of the Petroleum regulations: the Stern matter (Eastern Cape High Court, Grahamstown) and the TKAG matter (Gauteng High Court, Pretoria). Bloem J in the Stern matter found the regulations invalid and set them aside. Dippenaar AJ in the TKAG matter found for the respondents and dismissed the application. Both matters were appealed to the Supreme Court of Appeal and consolidated.

• Whether the Minister of Mineral Resources was empowered by section 107(1) of the MPRDA to make the Petroleum Regulations for Petroleum Exploration and Production, 2015
• Whether the Petroleum regulations fell within the exclusive regulatory competence of the Minister of Environmental Affairs under NEMA
• Whether the repeal of section 107(1)(a) of the MPRDA pursuant to the One Environmental System divested the Minerals Minister of power to make regulations regarding environmental matters
• Whether the Petroleum regulations could be severed to preserve valid provisions
• Whether the making of the Petroleum regulations was procedurally fair
• Whether PAJA applied to the making of the Petroleum regulations (not ultimately decided)
• Whether there was a non-joinder of necessary parties in the Stern matter

In the Stern matter: Appeal dismissed with costs, including costs of two counsel. In the TKAG matter: Appeal upheld with costs, including costs of two counsel. The order of the court a quo set aside and replaced with: (a) The Regulations for Petroleum Exploration and Production, 2015 that came into effect on 3 June 2015, in accordance with Government Notice R466 in Government Gazette 38855, are reviewed and set aside. (b) The respondents, jointly and severally, are ordered to pay the costs of this application, including the costs of two counsel.

The binding legal principles established are: (1) Following the implementation of the One Environmental System and the consequential repeal of section 107(1)(a) of the MPRDA, the Minister of Mineral Resources has no power to make regulations relating to the management of environmental impacts of petroleum exploration or production, or the process and requirements of applications for environmental authorisations. (2) These regulation-making powers vest exclusively in the Minister of Environmental Affairs under NEMA, particularly sections 24(5), 24(10) and 44(1). (3) The deliberate repeal of a specific enabling provision (section 107(1)(a)) cannot be circumvented by reliance on a general enabling provision (section 107(1)(l)) for matters "necessary or expedient" to achieve statutory objects. (4) Regulations made by a Minister without statutory authority are ultra vires and invalid. (5) Where the task of separating invalid from valid provisions of regulations is complicated and impractical, and would result in an incoherent remainder, the entire set of regulations must be set aside. (6) Regulations purporting to implement or cross-reference other legislation do not constitute lawful exercise of regulation-making power where the regulator lacks substantive authority over the subject matter.

The court made several non-binding observations: (1) The court declined to decide whether PAJA applies to the making of regulations by a minister generally, noting that the issue did not require resolution for determining the appeal and that "the final word on this subject may not have been spoken" following Mostert NO v Registrar of Pension Funds. (2) The court accepted, without deciding, that an environmental authorisation under NEMA is essentially the same as an environmental management programme/plan under the repealed section 39 of the MPRDA. (3) The court noted that the procedural fairness challenge in the Stern matter (regarding the list of prohibited substances) appeared to have some substance based on the Minister's response, but did not decide the issue given the conclusion on vires. (4) The court observed that the argument against suspending the declaration of invalidity - that exploration for petroleum by hydraulic fracturing should not take place before lawful regulation - was "compelling." (5) The court noted that most provisions of the Petroleum regulations dealing with technical aspects of hydraulic fracturing were, in context, aimed at protecting the environment and thus fell within environmental regulation.

This judgment is significant in South African environmental and administrative law for several reasons: (1) It clarifies the division of regulatory powers between the Minister of Environmental Affairs and the Minister of Mineral Resources following the implementation of the One Environmental System; (2) It establishes that NEMA is the principal environmental statute for regulating environmental aspects of mining and petroleum activities, and that environmental regulation-making powers vest exclusively in the Environment Minister; (3) It demonstrates that the repeal of enabling provisions has substantive legal effect and cannot be circumvented through reliance on general powers; (4) It confirms the principle that cooperative government does not permit organs of state to exercise powers not conferred upon them; (5) It provides guidance on when severance of invalid regulations is impractical; (6) The case has important implications for hydraulic fracturing (fracking) regulation in South Africa, as it effectively halted the regulatory framework for shale gas exploration pending proper lawful regulation under NEMA. The judgment reinforces constitutional principles of separation of powers and legality in the context of environmental governance.