The nature and implications of the High Court judgment on nuclear energy

15 May 2017

Background

Earthlife Africa and the Southern African Faith Communities’ Environment Institute commenced  legal proceedings against the Minister of Energy (the Minister) and the National Energy Regulator of South Africa (NERSA) in October 2015.  This action challenged two determinations relating to a nuclear energy programme made by the Minister and NERSA and the constitutionality of three inter-governmental agreements concerning nuclear energy, which were tabled in Parliament during 2015.  Judgment was delivered by the Court on 26 April 2017.

The two determinations for new electricity generating capacity required by the Electricity Regulation Act

The Electricity Regulation Act provides for the Minister to issue determinations for new electricity generating capacity.  The Minister is also able to determine the source of such new energy.  Such a determination then requires NERSA’s approval for it to be implemented. 

The 2013 determination

The first determination was signed by the Minister in November 2013, following the March 2011 adoption of an Integrated Resource Plan for Electricity for the period 2010 – 2030 (referred to be below as the IRP2010).   This determination specified that South Africa required 9 600MW of nuclear power, to be procured by the Department of Energy.  NERSA concurred on 17 December 2013. 

However, the National Energy Regulator Act requires all decisions by NERSA to be “taken within a procedurally fair process in which affected persons have the opportunity to submit their views and present relevant facts and evidence … “.  The Court referred to the far-reaching consequences and estimated expenditure (approximately R1 trillion, which was not disputed by the Minister’s legal counsel) and found that since no provision had been made for public input, NERSA’s decision failed to satisfy this requirement for public consultation and was therefore unlawful. 

In addition, the determination was gazetted only in December 2015, two years after the decision had been made and two months after litigation had been initiated.   It is clear from the judgment that it would not have been published in the absence of litigation.  The Court found that “the requirements of open, transparent and accountable government” were violated and the Minister’s 2013 determination was therefore judged to be unconstitutional and unlawful. 

The Court found it unnecessary to consider whether the Minister’s determination was also unlawful since it had been made in terms of the by then outdated IRP2010.

The 2016 determination

The second Ministerial determination was issued in December 2016, along the same lines as the previous one, except that it now identified Eskom as the procurer of the nuclear power plants.  The Minister’s determination was forwarded to NERSA for its approval, which was given a mere three days after receipt.  This latter determination was made public during the initial hearing of this case in the High Court in Cape Town on 13 December 2016, leading to postponement of the hearing for several months. 

The Court found that the 2016 determination did not specify whether the preceding 2013 determination had been repealed and the inherent conflict between the two determinations meant that the 2016 determination was irrational and therefore unlawful.  In addition, there was no question of any public participation process or any other external consultation by NERSA and was therefore also set aside on this ground.  It appeared from internal NERSA documents providing motivation for its approval of the Minister’s December 2016 determination, that it believed it would be acting in bad faith were it not to approve the Minister’s decision, which it saw as essentially the same as the 2013 one.  With reference to NERSA’s governing legislation’s requirements it must “act independently of any undue influence or instruction”, the Court found that its concurrence was unlawful.  

Finally, the Court did not want to specify whether the Minister has to follow a public participation process before making further determinations, but it confirmed that NERSA has to do so, before concurring in any Ministerial decision. 

Government action taken in terms of the determinations, is declared unlawful

Since both these determinations were judged to be unlawful and were set aside, the Court declared that any steps taken in terms of the determinations must suffer the same fate.  This refers in particular to the process that had been initiated by Eskom some months ago, where a “request for information” had been sent out to interested parties as an information-gathering exercise, prior to any requests for formal tenders. 

Inter-governmental agreements

The three inter-governmental agreements in question concern cooperation in the field of nuclear energy between South Africa and the USA, the Republic of Korea and the Russian Federation, concluded in 1995, 2010 and 2014, respectively.  They were tabled in Parliament only in June 2015.

The challenge in this regard relates to the requirements of Sections 231(2) and 231(3) of the Constitution for an international agreement to bind South Africa.  In brief, these constitutional provisions require full Parliamentary approval for international agreements to become binding agreements, unless they are of a technical or administrative nature (ie. more of a day-to-day routine nature), in which case they only need to be tabled in Parliament within a reasonable time.

Regarding the agreement with Russia, the Court found that, “ seen as a whole, it stands well outside the category of a broad nuclear co-operation agreement and, at the very least, sets the parties well on their way to a binding, exclusive agreement … “.  This agreement was not seen by the Court as being of a routine nature (in contrast to the other international agreements on this topic) and it therefore needed to be tabled and approved by Parliament.  The judgment makes the following comment:  “At best the Minister appears to have either failed to apply her mind to the requirements of Section 231(2) in relation the contents of the Russian IGA (inter-governmental agreement) or at worst to have deliberately bypassed its provisions for an ulterior and unlawful purpose.”

There was no dispute that the agreements with the USA and South Korea were of a routine nature, but the Court found that as they had been concluded twenty years (in the case of the USA), and four years (in South Korea’s case) before being tabled in Parliament, the delays were “of such magnitude that they could never qualify as reasonable … ”.  It was therefore found that the tabling of these two agreements had violated the Constitution and were set aside.

The Court found it unnecessary to decide whether the Minister had acted with an ulterior motive in tabling the agreements with the USA and South Korea in order to minimise the damage caused by revelations regarding the Russian agreement, or as the applicants put it, “to provide window dressing”.

What is one to make of this?

On reading the judgment, several questions arise as to why the Ministerial determinations and international agreements were not disclosed at an earlier stage and why other aspects were not dealt with in a lawful way.   Was there a definite strategy to hide the facts in order not to permit unwanted interest in a deal with the Russians?   Were officials unaware of the legal requirements that apply to their work?  Was it the impending litigation that began to focus their minds only from late in 2015?  Or was it just incompetence?   It is all very unclear.

On the other hand, in addition to confirming the general principles of rationality and legality which apply to the state’s administrative decisions, the judgment has made NERSA’s obligations very clear.   It not only has to run a public participation process before it makes a decision but also, in terms of its governing legislation, it has to ensure that every decision is “…  in the public interest (and) … explained clearly as to its factual and legal basis and the reasons therefor.”  

We should be grateful that Earthlife Africa and the Southern African Faith Communities’ Environment Institute went to the considerable effort of taking up this important case, which has once again emphasised that the Courts will act when confronted by unlawful, irrational and unconstitutional behaviour by Government.

As far as the next steps in Government’s nuclear strategy are concerned, we shall have to wait and see.  In any event, the Minister of Energy has confirmed that her department will not appeal against the Western Cape High Court’s decision.

Anton van Dalsen, Legal Counsellor, HSF, 15 May 2017