The Department of Water and Sanitation has promulgated draft revised regulations for applications for Water Use Licences (draft Revised Regulations for WULAs) in terms of the National Water Act 36 of 1998 (NWA) on 19 May 2023, which can be downloaded here. Comments can be submitted until 18 July.
These draft Revised regulations can unfortunately not be regarded as conducive to good water governance. There are several issues with the draft Revised Regulations, both from a procedural and substantive perspective. Some of these are highlighted in this discussion.
You are welcome to use these comments and elaborate on them if you would like to also submit comments to the DWS.
Procedural failures in the draft Revised Regulations for WULAs
The draft Revised Regulations for WULAs purport to address all the relevant procedural arrangements associated with all types of applications for WULs, but there are significant procedural gaps in these draft Revised Regulations, some of which are discussed below.
Five different WUL Application processes
The NWA makes provision for the following types of WUL applications:
- application for a new water use license (WUL) under section 41 of the NWA (including those associated with a section 25(2) transfer of a water use authorisation, or the declaration of a water use as an ELU under section 33);
- major amendment applications in terms of section 52(2) of the NWA involving the addition of new water uses or water uses requiring authorisation under a WUL that had previously been excluded, which should follow the same process us prescribed under section 41, with slight procedural differences;
- major amendments to conditions of WULs in terms of section 50(1)(a) or section 52(1) of the NWA without the addition of new water uses;
- renewal and minor amendments applications in terms of section 50(1)(b) or correction of clerical errors in terms of section 158 of the NWA; and
- compulsory licence application processes in terms of section 43 of the NWA.
Each of these five different types of WUL applications require different procedural steps (illustrated below), as they are initiated by different parties under different circumstances, and the processing of each type of application will be associated with different timeframes. The draft Revised Regulations does not distinguish procedurally between these different types of processes, and contains no procedural steps for the process to dispense with the need for a WUL as provided for under section 22(3) of the NWA, or for the transfer of an existing authorisation under section 25(2). The different procedural steps, roles, and responsibilities for each of these different types of applications, and the sub-processes within each, should be clearly outlined, and this is not the case in the draft Revised Regulations.
Missing critical initial assessment step to determine the need for a WUL
The biggest procedural gap in the draft Revised Regulations relates to the lack of a step to determine the need for a WUL. Section 22 of the NWA establishes a tiered water use authorisation system to optimise the regulation of water use: In accordance with subsection 22(1), a water use as described under section 21 must be authorised by means of a WUL, unless such water use is permissible under (i) Schedule 1 of the NWA, or (ii) the continuation of an Existing Lawful Use (“ELU”) of water under section 32 – 35 of the NWA, or (iii) in terms of a General Authorisation (“GA”) issued under section 39 of the NWA by Notice in the Government Gazette by the Minister in respect of a group of water users or a specific geographical area, or (iv) the Minister of the DWS has dispensed with the requirement for a WUL (if the water use has been authorised in terms of another law that will address the requirements of the NWA), as provided for in subsection 22(3) of the NWA).
The need for an application for a WUL is therefore determined by a process of elimination, which firstly entails determining if an activity is indeed a water use as described under section 21 of the NWA, and if it is a water use, by determining whether or not it is authorised under Schedule 1, as ELU, or under the GAs.
This process of elimination is an important procedural step that precedes the process of an application of a WUL as prescribed under section 41 of the NWA. This requires an assessment of:
- whether activities undertaken can be regarded as water uses as described in section 21 of the NWA – this is not a straightforward determination, as the identification of some water uses require a floodline determination or riparian area delineation (water uses as described under section 21(i)) and others may require a hydrogeological investigation (water uses as described under section 21(g) and (j). Determining if the description of water uses under section 21 is applicable to site-specific circumstances can be quite complex and requires proper investigation from both a legal and scientific perspective.
- whether water uses identified in the previous step are authorised under Schedule 1 of the Act, or under the GAs, or as ELUs. This determination is also not straightforward, and may require an indepth investigation into metrics such as volumes, or even into historic title deeds, servitudes, or aerial photographs dating back to the 1930s.
Unfortunately, the process as provided for in the draft Revised Regulations makes no provision for such an assessment, and simply states in subregulation 7(2) that “that “during pre-application engagement contemplated in sub regulation (1) the responsible authority must advise the applicant on the need for an authorisation, type of authorisation and procedural requirements and required information for such”
The officials of the Department cannot make this determination of what the type of authorisation is that applies to a specific situation during a meeting, it is a much more complicated exercise, and can easily lead to persons being forced to apply for a WUL where none is required. Unscrupulous consultants will then charge water uses ridiculous amounts of money to prepare a WULA “because the Department said its a water use that needs a license“, where no such application was actually necessary. This ridiculous situation places an enormous financial burden on especially small and emerging businesses and is completely unnecessary and unlawful.
In this respect, it is recommended that the determination of the need for a WUL should be built out as a proper procedural screening step, as was indicated in the original Guideline for WULAs, published by the DWS in 2002, which indicated that a Water Use Assessment Report should be compiled that clearly (a) identifies activities that are regarded as water uses, and (b) determine which of these identified activities require authorisation under a WUL.
The engagement with the DWS in a WULA process should therefore be initiated by the submission of such a Water Use Assessment Report, and only in the event that the assessment has indicated that a WUL is indeed require for an identified water use.
Electronic application system (eWULAAS)
Subregulation 8(2) of the draft Revised Regulations states that all applicants must use the electronic Water Use License Application and Authorisation system (eWULAAS) for the submission of applications.
Unfortunately, in its current format, the eWULAAS reflects a total lack of understanding of the complexities associated with the different processes associated with the application for a WUL, and poor programming. The forms on the eWULAAS system appears to have been compiled by someone creating a system for the registration of a motor vehicle (not even the licensing of the driver!), and they are certainly not designed for an application for a license to use water. For example, groundwater is not even recognised as part of the water resource on many of the forms, and the forms are extremely cumbersome. In addition, the map that the user of the eWULAAS is being forced to use is not user friendly at all and does not capture the coordinates where the water uses are occurring correctly, and no provision is made for manually correcting this incorrect information.
Instead of simplifying the process of using water under the GAs, the DWS has complicated it and conflated the registration of water use already authorised under the GAs or as ELUs (as prescribed by regulations made in terms of section 26(1)(c)) with the process of applying for a WUL (as prescribed by regulations made in terms of section 26(1)(k). This forces those wishing to register a water use authorised under the GAs or as an ELU to follow the same cumbersome process as those wishing to apply for a WUL.
The eWULAAS system should also not be employed for both the WULA process and the registration of water uses authorised under the GAs and that are ELUs, as the registration of GAs and ELUs is completely different to the authorisation of water use under a WUL, and this unlawful integration of two different systems creates significant problems for both the user and the Department.
Absence of any procedural arrangements relating to Appeals
Although the heading of Chapter 8 of the draft Revised Regulations creates the impression that the procedure to be followed for appeals against decisions regarding WULs would be addressed, there are no subregulations in the draft Revised Regulations that deal with such appeals. This is a significant oversight, as the existing Regulations did contain such procedures, which should have been addressed and improved upon in the Revision.
Appeal procedures against decisions by the Department in relation to any aspect associated with any type of application for a WUL should be clearly outlined, specifically appeals against the requirements under subregulation 19 relating to the provision of security in respect of a WUL, and appeals against decisions to reject applications, discussed in more detail below.
Rejection of Applications and the payment of a significant Application Fee
In terms of the NWA, application fees can only be charged for new applications, major amendment applications to which new water uses are added, and compulsory license applications under section 43 of the NWA.
The draft Revised Regulations however makes all applications subject to a significant application fee (up to R15,000, which can be paid in cash(!)), and the specification of application fee for amendment applications without the addition of new water uses, and for renewals and minor amendments is therefore unlawful. (In addition, the banking details provided in Annexure G of the draft Revised Regulations is for an entity that ceased to legally exist 5 years ago (“Department of Human Settlements, Water and Sanitation”), which indicates poor drafting of the draft Revised Regulations.)
Furthermore, the draft Revised Regulations specifies that payment must be made before initial acceptance of the application by the DWS, and that the DWS can then outright reject the application. This is untenable, as the DWS regularly “rejects” applications for non-substantive reasons or based on information requirements that are only communicated after the application has been submitted.
There is also no procedural opportunity created to rectify a minor oversight in an application, just outright rejection, which is not procedurally fair. The WULA process should not be seen as a fundraising opportunity, and as the draft Revised Regulations are currently written, it will become exactly that. Unless the process is changed significantly, with the payment of the application fee only becoming applicable once the application is accepted for processing, the application fee should be refunded when the application is rejected. It is recommended that the process should therefore make provision for basic completeness and administrative checks before an application is accepted and an application fee becomes payable. This will avoid the very real scenario that the Department rejects applications and force applicants to reapply just to gather more money from application fees.
In addition, the process by means of which an application can be made to waive an application fee is not clearly described, and there is no designated person or office in the Department to which such application can be submitted, or timeframes within which a decision should be taken with regard to an application to waive the fee. This implies that an application from an indigent person could be held back indefinitely, which is unacceptable.
To avoid the creation of opportunities for corruption, the process should make provision for the issuing of an invoice by the Department to the applicant once the application is accepted for processing, and the actual processing of the application then commences once the invoice has been paid. And payment in cash should never be an acceptable option, considering the large amounts of money involved. These are basic principles of proper and ethical accounting.
Substantive aspects unlawfully included in the draft Regulations for WULAs
Section 26 of the NWA provides the Minister of DWS with the power to make regulations. Section 26(1)(k), in terms of which these draft Revised Regulations are promulgated, provides the Minister with the power to prescribe procedural requirements for license applications. Section 26(1) is subject to section 26(4), which states that when making regulations, the Minister must take into account all relevant considerations, including the need to (a) promote the economic and sustainable use of water; (b) conserve and protect water resources or instream and riparian habitat; (c) prevent wasteful water use; (d) facilitate the management of water use and waterworks; (e) facilitate the monitoring of water use and water resources; and (f) facilitate the imposition and recovery of charges.
In the first instance, despite the clear instruction that regulations must prevent the wasteful use of water, the draft Revised Regulations do not contain a procedural step in which an applicant is required to demonstrate how the water they intend using will not be wasted, or how the use of water will be efficient and beneficial in the public interest. This is a significant oversight.
In spite of the clear difference between process and substance, and in spite of the clear guidance in section 26(4) of the aspects that should be taken into account when making regulations, the draft Revised Regulations contain several provisions that are unrelated to the process associated with a water use license application as provided for under section 26(1)(k) of the NWA, but which relates to substantive aspects which will certainly not meet the requirements of section 26(4). Substantive requirements will differ depending on site-specific circumstances or the type of water user or water use sector, and should be outlined in guidelines, and not per regulation. In this respect, it would be prudent for the Department to review the Constitutional Court decision in Minister of Finance v Afribusiness NPC [2022] ZACC 4, in which Regulations promulgated by the Minister of Finance were set aside as he acted ultra vires with the relevant empowering provisions.
The mandate of the Minister of the DWS is clearly outlined in sections 2 and 3 of the NWA: s/he is the ‘public trustee’ of the nation’s water resources, who has the duty “to ensure that the nation’s water resources are protected, used, developed, conserved, managed and controlled in a sustainable manner”, by amongst others “promoting the efficient, sustainable and beneficial use of water in the public interest” and facilitating social and economic development, This mandate is based on the Fundamental Principles for Water Law published in the 1997 White Paper on a New Water Policy for South Africa, which states that “The objective of managing the quantity, quality and reliability of the Nation’s water resources is to achieve optimum, long term, environmentally sustainable social and economic benefit for society from their use”.
The South African society is complex and diverse, and large components of her population still suffer from the economic disparities created by centuries of colonisation and decades of Apartheid. For this reason, the requirement of ensuring that water use is efficient and beneficial in the public interest is reiterated under section 27(1)(c) of the NWA, where it is listed as one of the factors to be considered by the responsible authority when taking decisions regarding the issuing of WULs or GAs are taken. Another factor that must be considered when issuing a WUL or a GA, listed in section 27(1)(b), is how the issuing of such a WUL or GA will “redress the results of past racial and gender discrimination“.
In subregulation 12 of the draft Revised Regulations, the DWS is apparently attempting to introduce a substantive “quota system” that appears to relate to the assessment factor listed under section 27(1)(b). This subregulation indicates that “enterprises” applying for WULs to authorise water uses under sections 21(a), (b), and (d) of the NWA, must “comply” with a certain percentage “shares allocated to blacks” (sic) – no mention is made of past gender discrimination.
In a “clarifying statement” issued by the DWS on 15 June 2023, an attempt was made to indicate that the “transformation requirements as envisaged in the current review of Regulations are only applicable to applications for new water use licenses and are not applicable to renewal of existing water use licenses, nor to the water use applications which will arise out of compulsory licensing” and claims that the introduction of these “quotas” is necessary because their “statistics on water users with WULs” indicate that most of the currently authorised water users are white. Assuming that “transformation requirements” in this “clarifying statement” refer to the quota system introduced under subregulations 12(1) and 12(2), these statements are both untrue:
- The term “applicant” is defined in subregulation 1(a) to mean “a person or a representative of that person who makes an application for a water use licence or an application for an amendment of a water use licence in terms of the Act”, and there is no distinction made in the draft Revised Regulations between different types of applicants for the different types of WUL applications outlined above.
- The term “application” is not defined in the draft Revised Regulations nor in the NWA, so if the DWS wants subregulation 12 to only apply to new WULs, they have failed to make any distinction between new WUL applications, and other types of applications, including major amendment applications, renewal and minor amendment applications, and compulsory licence applications. The statement is also contradicted by subregulations 4(1), 12(1), 12(2), and 12(5) in the draft Revised Regulations.
- It seems that those who are keeping the statistics on the demographics of authorised water uses, consider only water users that are authorised by means of WULs as ‘authorised water users’, and no statistics are being kept or reported on the number and demographics of registered water users who use water under the GAs, or the number and demographics of water users who use water under authorisation of a registered ELU. Furthermore, many of the currently licensed enterprises who appear to be regarded as “white”, actually already have a majority black shareholding. This lack of proper recordkeeping creates a misleading impression regarding the demographics of authorised water users, which is to the detriment of reform initiatives in the water sector. As the Department does not have any statistics on the demographics of water uses authorised under authorisations other than WULs, or of the shareholding of uses authorised under WULs, it can therefore not make the claim that “most authorised water users are white”.
It seems that the DWS is under the false impression that all that is required to redress the results of past racial and gender discrimination is % shareholding of the “enterprise” undertaking the water use, and that such a “quota system” will ensure beneficial use of water in the public interest. This is naive and languid, and completely disconnected from the realities of the South African society: It is estimated that in 2023, the de facto (expanded) unemployment in South Africa is at 43% (including people who are discouraged from actively seeking employment), with the youth unemployment rate hovering at 60%. This correlates with the 47% of people in South Africa that rely on some form of social grant. This implies that almost 50% of South Africans dont have the means to obtain shares in a B-BBEE company, and that 50% of South Africans dont have the means to buy shares in an existing enterprise that uses water to produce food or goods.
The quota system as proposed in the draft Revised Regulations therefore effectively excludes more than 50% of South Africans from benefitting with the issuing of a WUL. The introduction of these “quotas” is a very indifferent and blunt attempt at addressing injustices of the past, but in effect, does not address any such injustices at all, and will merely lead to severe economic damage to a number of sectors, which will increase unemployment and deepen the hardships for the poorest of the poor. This is untenable.
As far as could be established in the time available, no socio-economic impact assessment (“SEIA”) has been undertaken in accordance with the Socio-Economic Impact Assessment System (“SEIAS”) prior to the publication of the proposed Revised Regulations, and this is regarded as a significant oversight. If not an oversight, then it seems that the quota system as proposed in the draft Revised Regulations is intentionally aimed at favouring large-scale commercial Level 1 and 2 B-BBEEs above other historically disadvantaged individuals, especially women. This will lead to further corruption and fronting by tenderpreneurs.
It would also appear that the DWS is ignoring the requirements of the NWA, and is attempting to legislate outside of their mandate under the NWA in order to “legalise” previous unlawful decisions that had been overturned by the Courts (see Guguletto Family Trust v Chief Director, Water Use, Department of Water Affairs and Forestry, unreported case A556/10 (GNP), and Goede Wellington Boerdery (Pty) Ltd v Department of Water Affairs and Forestry, unreported case number WT W23/02/2009 as well as Goede Wellington Boerdery (Pty) Ltd v Makhanya NO (56628/2010) (2011) (ZAGPPHC 141). These Courts found that section 27(1)(b) is not the only factor to be taken into consideration when evaluating an application for a WUL, and indicated that there are various ways in which transformation in both areas of race and gender can be achieved. Meeting the requirements of section 27(1)(b) will not happen through an increase in participation in the shareholding of the ownership and/or management of businesses.
In addition, the failure of the Department to utilise existing provisions of the NWA to facilitate the transformation of the water sector, has been noted by a number of authors. For example, GAs provide an opportunity to lighten the administrative burden with regard to the licensing of water use, while continuing to protect water resources in accordance with the objectives of the NWA, and can be used to allow access to water by previously disadvantaged water users. These water users or potential water users should not have to go through a strenuous WULA process, but could easily be authorised under the GAs. This can be achieved under the current provisions of the NWA by simply publishing GAs specifically aimed at previously disadvantaged water users in the Government Gazette. This simple mechanism to transform the water sector has however never been implemented by the DWS, and the failure to implement this simple mechanism is to the detriment of previously disadvantaged individuals in South Africa.
The racial profile of the shareholding of an applicant for a WUL is unrelated to the redress of past racial and gender discrimination through the authorisation of a water use by means of a WUL. There are quite a number of factors that should be taken into consideration when determining whether a WUL will be redressing the results of past racial and gender discrimination, which goes way beyond the slothful consideration of only percentage black shareholding. These factors also include much more than just “number of jobs created” or “employment opportunities offered”, but requires a real determination, on a case-by case basis, of exactly how the allocation of a water use licence will address past injustices, and not just to the benefit of those black people who already have economic power after almost 30 years in a new South Africa. For example, are the people employed by the enterprise renumerated appropriately, what provision are made for access to housing and services, what is being done to address literacy, to name but a few considerations.
It is strongly recommended that the DWS develop, based on existing tools for intersectionality, a discrimination index or scale that does not just focus on a single component (% black shareholding), but that functions across multiple axis of institutionalised discrimination on the basis of race and gender to determine how the authorisation of a water use will redress such discrimination. Such a tool could then be used to give advantage to a poor black woman living in an area without water supply or sanitation services above a rich Level 1 B-BBEE company where the children of the directors attend private schools in Sandton, for example.
It is obvious that such a tool cannot be included in a Regulation aimed at prescribing the process to be followed when making an application for a WUL, but should be described in a guideline given to prospective applicants that relate to the substantive aspects to include in a WUL application. In addition, it is recommended that the DWS revise the current GAs to ensure that these properly create opportunities for South Africans still suffering the effects of past racial and gender discrimination to alleviate them from the burden of having to go through a cumbersome process to obtain a WUL.
Conclusion
Unfortunately, in their current format, the draft Revised Regulations do not in any way or form meet the requirements of the Constitution, or of the mandate of the DWS as outlined in sections 2 and 3 of the NWA, and are inconsistent with the rule of law. In addition, the draft Revised Regulations do not meet the basic procedural requirements for WULAs, or for the issuing and amendment of WULs as prescribed by the relevant sections in the NWA.
The implementation of the draft Revised Regulations in their current format will not ensure the efficient and beneficial use of water in the public interest of all South Africans and will not redress the results of past racial and gender discrimination in South Africa. It will instead lead to economic collapse in a number of sectors, and significant increases in unemployment and hardships for those who are already marginalised. This will imply that the Minister of Water Affairs will not be exercising its duty as public trustee of our country’s water resources. In this respect, the Supreme Court of Appeal judgement in Mostert v The State, (SCA Judgement of 1 December 2009, case number: 338/2009) is of note, where the Court stated that if the state does not comply with the constitutional and statutory duties established to fulfil its administrative role, the courts are empowered to review state conduct and ensure that trusteeship duties are complied with.
The draft Revised Regulations should therefore be redrafted in its entirety, using the inputs of appropriately qualified specialists in water use license application processes, to avoid unnecessary hardship to the people of South Africa, and to actually ensure that the mandate of the DWS is met as public trustee of water resources, and that water is managed in an efficient and beneficial manner in the public interest of all South Africans.
Carin Bosman, 8 July 2023
