Date:

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DEPARTMENT OF ENVIRONMENTAL AFFAIRS REPUBLIC OF SOUTH AFRICA

Tel: +27 (012) 310-3788 Fax: +27 (012) 320-7561

24 JAUNARY 2012 File LS101358 nr:

DIRECTORATE: AUTHORIZATION AND From: DIRECTORATE: CORPORATE

WASTE DISPOSAL MANAGEMENT SUPPORT & LITIGATION

DIRECTORATE: ENFORCEMENT

DIRECTORATE: WASTE STREAM

MANAGEMENT

LEGAL

RE: OPINION :- COMMENCEMENT OF OPERATION OF FACILITY - ESKOM HOLDINGS LIMITED -

ASH DAM EXTENSION 3 AT KOMATI POWER STATION, MPUMALANGA

1. PURPOSE

1.1 We have been requesled to furnish an opinion relating to the commencement of operation

of the Ash Dam Extension 3 ("the Ash Dam") at Komati Power Station, Mpumalanga by

Eskom Holdings Limited ("Eskom"). We have been specifically requested to consider the

opinion furnished by Eskom and to consider the view that Eskom is required to obtain

authorisation to commence with operation of the Ash Dam in terms of the National

Environmental Management: Waste Act (No. 59 of 2008) ("NEMWA").

1.2. We have been furnished with the following documentation :-

1.2.1. Environmental Impact Assessment and Environmental Management Plan,

Volume 1 dated 31 March 2008 ("EIA");

RE OPINION - COMMENCEMENT OF OPERATION OF FACILITY - ESKOM HOLDINGS LlMITED­ASH DAM EXTENSION 3 AT KOMATI POWER STATION, MPUMALANGA

1.2.2. Environmental Authorisation dated 18 August 2008;

1.2.3. Legal Opinion prepared by Eskom's Corporate Legal Department dated 5

October 2011 ; and

1.2.4. Letter from Eskom dated 19 October 2011.

2. BACKGROUND

2.1. The background facts have been gleaned from the EIA - Eskom is re-commissioning the

Komati Power Station, located between Middelburg and Bethel in Mpumalanga Province.

The first unit at Komati Power Station is expected to be re-commissioned in 2008 with the

last unit being re-commissioned in 2010. It is anticipated that the Komati Power Station will

have an operational life of 20 years from re-commissioning. The combustion of coal at a

power station produces ash that is disposed of at engineered ash disposal facilities. The

return to service of Komati Power Station was granted environmental authorisation by the

Mpumalanga Department of Agriculture and Land Administration. However, the

authorisation did not permit any capacity increase. Thus, an environmental authorisation

was required for the new Ash Dam, namely Ash Dam Extension 3.

2.2. Eskom submitted an application for authorisation in terms of the National Environmental

Management Act (No. 107 of 1998) (UNEMA") and the Environmental Impact Assessment

Regulations.

2.3. The Department of Environmental Affairs and Tourism on 18 August 2008 issued an

Environmental Authorisation, the most important provision of which provided as follows :-

"By virtue of the powers conferred on it by the National Environmental Management

Act, 1998 (Act No. 107 of 1998) and the Environmental Impact Assessment

Regulations, 2006 the Department hereby authorises Eskom Holdings Limited _. _._._

to undertake the following activity/activities (hereinafter referred to as "the

activities ");

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RE: OPINION - COMMENCEMENT OF OPERATION OF FACILITY - ESKOM HOLDINGS lIMITED­ASH DAM EXTENSION 3 AT KOMATI POWER STATION, MPUMALANGA

No.R.386 of 2006 1(1). The construction facilities or infrastructure, including

associated structures or infrastructure for the transmission or distribution of above

ground electricity with a capacity of more than 33 kV and less than 120 kV;

NO.R.387 of 2006 1 (a). The construction of facilities or infrastructure, including

associated structures or infrastructure for the generation of electricity where the

electricity output is 20 MW or more;

NO.R.387 of 2006 1(1). The construction of facilities or infrastructure, including

associated structures or infrastructure for the transmission and distribution of above

ground electricity with a capacity of 120 kV or more ;

On the Farm Komati Power Station ... .... The proposed Ash Dam 3 will be constructed on Site 7 as recommended by the Environmental Impact Assessment ("EIR') dated March 2008".

2.4. After the authorisation was granted, the Ash Dam was constructed by Eskom and Eskom

intends to put the Ash Dam into operation during January 2012.

2.5. Also, subsequent to authorisation being granted under NEMA, NEMWA was promulgated

and brought into law on the 1 July 2009. The question that has therefore arisen is whether,

in light of the subsequent promulgation of NEMWA, Eskom is obliged to obtain authorisation

to commence with the operation of the Ash Dam in terms of NEMWA Eskom has provided

an opinion in terms of which its view is that, based on a number of grounds, it is not required

to obtain authorisation under NEMWA before operation of the Ash Dam may commence.

3. DISUCISSION

3.1 WHAT WAS ESKOM ENTITLED TO DO IN TERMS OF THE AUTHORISATION UNDER

NEMA?

3.1.1 Eskom, in its opinion, is of the view that the authorisation granted by the Department of

Environmental Affairs on 13 August 2008 gave it the authority to construct as well as

commence operating the Ash Dam. We are in agreement with this view.

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RE: OPINION· COMMENCEMENT OF OPERATION OF FACILITY - ESKOM HOLDINGS L1MITED ­ASH DAM EXTENSION 3 AT KOMATI POWER STATION, MPUMALANGA

3.1 .2. In terms of the Authorisation, the activities which Eskom was authorised to undertake are

set out in Notice No. R386 of 2006, Regulation 1 (I) Notice No. 387 of 2006 Regulations 1 (a)

and Regulation 1 (I);

3.1 .3. In these Regulations an important definition is "construction" which is defined as follows :.

"Means the building, erection or expansion of the facility, structure or infrastructure

that is necessary for the undertaking of an activity. but excludes any modification,

alteration or upgrading of such facility, structure or infrastructure that does not result

. in a change to the nature of the activity being undertaken or increase in the

production storage or transportation capacity of that facility, structure or

infrastructure". (Our emphasis).

3.1.4. This above quoted definition indicates to us that the activity for which authorisation is

required is not the construction itself. However, authorisation must be obtained to carry out

the activity before construction of facilities for that activity may take place. Thus, when

authorisation is given under these Regulations, the authorisation is given for building the

·infrastructure and for conducting the activity.

3.1.5. The Authorisation itself also clearly envisages construction of facilities as well as operation

of the facilities . The most obvious example is that there is a heading in the authorisation

"Construction and Operation of the activity" and under that heading under paragraph

1.16.10 there is a requirement that a "groundwater monitoring programme must be

maintained in all monitoring boreholes during the operation of the Ash dams".

3.1 .6. Our conclusion is that, but for the promulgation of NEMWA. Eskom would be entitled to

carry out the operation of the Ash Dams in terms of the Environmental Authorisation under

NEMA.

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RE: OPINION: - COMMENCEMENT OF OPERATION OF FACILITY - ESKOM HOLDINGS LlMITED­ASH DAM EXTENSION 3 AT KOMATI POWER STATION, MPUMALANGA

3.2. WHAT IS THE EFFECT OF THE SUBSEQUENT PROMULGATION OF NEMWA?

3.2.1 . Eskom has now built the Ash Dam but has not actually commenced operating it. NEMWA,

or at least the majority of the provisions of NEMWA, came into operation on 1 July 2009.

NEMWA governs waste management activities which are defined as follows :-

"waste management activity" means any activity listed in Schedule 1 or published by

notice in the Gazette under section 19, and includes :-

(a) the importation and exportation of waste;

(b) the generation of waste, including the undertaking of any activity or process

that is likely to result in the generation of waste;

(c) the accumulation and storage of waste;

(d) the collection and handling of waste;

(e) the reduction, re-use, recycling and recovery of waste;

(f) the trading in waste;

(g) the transportation of waste;

(h) the transfer of waste;

(i) the treatment of waste; and

Ol the disposal of waste".

3.2.2. The way in which NEMWA governs waste management activities is succinctly set out in

Section 20 which provides as follows :-

"No person may commence, undertake or conduct a waste management activity,

except in accordance with-

(a) the requirements or standards determined in terms of section 19 (3) for that

activity; or

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RE: OPINION: - COMMENCEMENT OF OPERATION OF FACILITY - ESKOM HOLDINGS L1MITED­ASH DAM EXTENSION 3 AT KOMATI POWER STATION, MPUMALANGA

(b) a waste management licence issued in respect of that activity, if a licence is

required"

3.2.3 Section 19 of NEMWA makes provision for the Minister to publish a list of waste

management activities which may require licensing . Schedule 1 of NEMWA, in terms of

Section 19(4), served as the list of waste management activities which may require

licencing when NEMWA was promulgated.

3.2.4 We cannot identify an activity listed in Schedule 1 of NEMWA under which the construction

and/or operation of the Ash Dam would fall. Schedule 1 of NEMWA was only in force and

effect for two days where after the Minister, in terms of Section 19(1) of NEMWA published

a list of waste management activities which replaced schedule 1, in Government Notice

718, Government Gazette No. 32368 of 3 July 2009 ("the NEMWA lisf') . In our view, the

NEMWA list does cover the activities of construction or operation of an Ash Dam. This

specifically we believe falls under Regulation 3(3), being the storage including the

temporary storage of general waste in lagoons. The question therefore is what effect does

this have on the current circumstances, given that authorisation was granted to Eskom to

construct the facilities under NEMA, but based on the above provisions would now also

require authorisation under NEMWA.

3.2.5 The first argument raised by Eskom that the activities in question do not require

authorisation under NEMWA is what we generally, and very loosely, term the argument

against retrospectivity. Accord ing to this argument, since authorisation was obtained by

Eskom under NEMA to commence construction and operation of the Ash Dam facilities, the

new NEMWA Act and the NEMWA list promulgated there under cannot retrospectively

preclude Eskom from continuing with exercising its entitlement, by virtue. of the

authorisation under NEMA, to operate the Ash Dam facility.

3.2.6 We are of the view that this argument against retrospectivity is not sound. It must be borne

in mind the nature of presumptions such as that a statute should be considered as being

applicable to future matters only and more especially that it should if possible be interpreted

as not to take away rights actually vested at the time of the promulgation. As was stated in

Adam Pol (Ptv) Limited vs Administrator, Transvaal 1989(3) SA 800 (A) at page 805

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RE: OPINION - COMMENCEMENT OF OPERATION OF FACILITY - ESKOM HOLDINGS LlMITED­ASH DAM EXTENSION 3 AT KOMATI POWER STATION, MPUMALANGA

"this rule is a presumption only - and it may be overcome either by express words in the

statute showing that the provision is intended to be retrospective, or by necessary and

distinct implication demonstrating such intention".

3.2.7. Our view is that NEMWA, as well as NEMA, do expressly deal with retrospective application

and NEMWA can, by necessary and distinct implication, be applied retrospectively.

3.2.8. NEMWA expressly deals with situations in which activities are currently being conducted.

Section 19(3)(c} provides that a notice (the NEMWA list) may contain transitional and other

special arrangements in respect of waste management activities that are carried out at the

time of their listing. In addition, Section 24L of NEMA and Section 44 of NEMWA specifically

indicates that an authorisation for a certain activity may be required simultaneously under

NEMA and NEMWA

3.2.9 To summarise the problem is not that Eskom had authorisation in terms of NEMA and that

this authorisation somehow has an effect on the operation of NEMWA, because

authorisation under both NEMA as well as NEMWA is expressly potentially a requirement,

the problem is whether in the circumstances Eskom is required to obtain authorisation

under NEMWA.

3.2.10 Section 20 of NEMWA is broad and fairly clear cut in that it states that no person may

commence, undertake or conduct a waste management activity. Based on this section in

isolation it would be unavoidably clear that Eskom would require authorisation. However,

one needs to consider how transitional arrangements have been regulated because, as

indicated, NEMWA expressly authorises regulation of transitional matters. The NEMWA list,

as envisaged in Section 19(3}(c} does deal with transitional arrangements and provides that

"Persons who lawfully conduct waste management activities listed in the schedule on the

date of the coming into effect of the notice may continue with those activities until such time

that the Minister by notice in the gazette calls upon those persons to apply for waste

management licences".

3.2.11 It would appear that the Minister has not by notice in the gazette called upon Eskom to

apply for waste management licence in respect of the Ash Dam. The crisp question to be

answered therefore is whether Eskom was lawfully conducting a waste management

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RE: OPINION - COMMENCEr~ENT OF OPERATION OF FACILITY - ESKOM HOLDINGS L1MITED­ASH DAM EXTENSION 3 AT KOMATI POWER STATION, MPUMALANGA

activity on the date of the coming into effect of the NEMWA list. If this is the case, then we

submit that Eskom does not need to obtain authorisation in terms of NEMWA, until such

time as the Minister calls upon Eskom to do so by way of notice in the Government Gazette.

3.3 WAS ESKOM ALREADY LAWFULLY CONDUCTING A WASTEMANAGEMENT

ACTIVITY?

3.3.1 We must point out at the outset that the relevant provisions dealing with this question are

not completely clear cut and are open to interpretation. We are, however, of the view that,

on balance, Eskom was not conducting a waste management activity at the time of

promulgation of the NEMWA list. The facts bear repeating - Eskom had commenced with

construction of the Ash Dam facility at the time of promulgation of the NEMWA list.

However, Eskom had not commenced with operating the Ash Dam facility at the time of the

promulgation of the NEMWA list. NEMWA defines waste management activity, which is

reproduced above, and as can be seen from this definition there is no reference to

construction of facilities. This definition of waste management activity also refers to the

NEMWA list, meaning that the activities described in the NEMWA list would constitute

waste management activities. Regulation 3(18) as well as Regulation 4(11) lists the

following activity :-

"The construction of facilities for activities listed in category A (or category B) of this

schedule (not in isolation to associated activity).

3.3.2 The NEMWA list defines construction as "the building, erection, establishment,

alteration or expansion of a facility, structure or infrastructure that is necessary for

the undertaking of a listed activity" . Note our emphasis on the undertaking of a listed

activity as definition. Our interpretation of these provisions in the list are as follows :-

A waste management activity is the actual managing of waste (to speak generally) such as

in this instance the operation of the Ash Dam facility. Construction of facilities is not an

actual waste management activity (according to the definition of construction in the NEMWA

list). The construction of facilities is listed but the purpose of this is simply to ensure that

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RE : OPINION: - COMMENCEMENT OF OPERATION OF FACILITY - ESKOM HOLDINGS LlMITED­ASH DAM EXTENSION 3 AT KOMATI POWER STATION, MPUMALANGA

authorisation for conducting waste management activity is obtained before construction of

facilities for such waste management activity may take place. This becomes apparent when

one has regard to Regulation 3(18) which provides that construction of facilities are "not in

isolation to associated activity". This portion of regulation inserted we submit to convey that

authorisation for activity must be obtained before construction commences but that

separate authorisation for the construction of the facility and for the operation of the facility

is not required.

3.3.3 There is in our view a sound rationale for the requirement that the actual managing of waste

must already have commenced. There may be numerous facilities possessed by persons

who have never received authorisation to conduct waste management activities. It would be

extremely problematic to find that, because such persons have constructed such facilities

they do not require authorisation under NEMWA and can commence operating that facility.

4. CONCLUSION

Consequently, our view is that by constructing a facility as at the date of promulgation of the

NEMWA list, Eskom had not yet commenced, undertaken or conducted a waste

management activity and, as a result, authorisation in terms of NEMWA will be required.

~ -=--~ MRS V BENDEMAN

DIRECTOR: CORPORATE LEGAL SUPPORT & LITIGATION

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