11 April 2019

FERTASA Congress

By Theo Boshoff

Legislative Constraints

and Opportunities

Title of presentationFor today

• Draft Fertilizer Bill v Feeds and Pet Food Bill

• Climate Change legislation

• Waste Exclusion Regulations

• Competition law amendments

• Protection of investment Bill

• Regional facility of the permanent court of arbitration

www.members.agbiz.co.za

Need for an enabling environment

Regulation a necessity for any modern economy

• Public safety;

• Product quality / consumer rights;

• Environmental health;

• Guard against unfair / corrupt business practices;

• Clear framework for dispute resolution;

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Draft Fertilizer Bill

• The registration and regulation of fertilizers required for public safety;

• Currently regulated by Act 36 of 1947;

• Also regulates farm feeds, agricultural remedies and stock remedies;

• DAFF in the process of migrating to dedicated legislation;

• 1947 Act does not necessarily provide for modern, administratively just procedures.

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Fertilizer BillOpportunities

• Fertilizer Advisory Committee;

• Advise Registrar on regulation and operational matters;

• Formal platform for consultation and liaison with industry.

• Administrative Justice guarantees;

• Right to make inputs and provide evidence to support applications;

• Entitled to reasons for decisions;

• review or appeal decisions.

• Access to records and information;

• Product traceability measure to be prescribed;

• Foreign supplier accreditation;

• Export certification & assistance;

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Fertilizer BillChallenges - Duplicate registration requirements:

• Fertilizer products

• Product safety and standard concerns well understood;

• Facilities;

• Public safety and standards covered by product registration;

• OHS, Environmental concerns, water use etc. already covered by dedicated legislation and permitting requirements (LRA, OHSA, NEMBA, NEMQA etc.)

• Raw materials.

• Previous uncertainty regarding definition of ‘Fertilizer product’;

• Good to clarify definition but why register if it forms part of the end product?

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Fertilizer BillAssignment of functions

• Assignment of some functions can improve efficiency (e.g. services), but the wholesale assignment of any function under the Act fraught with risks;

• Precedent in many industries for assignees to

• Provide certain services;

• Inspect imported/exported goods;

• Conduct compliance audits; and

• Certify compliance with compulsory standards.

• Assignees do increate the costs of compliance, but where credible companies are appointed it can shorten waiting periods and streamline businesses processes by sourcing-in additional capacity for Government.

• However there are certain regulatory functions that should not be outsourced.

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Fertilizer BillChallenges

• The consideration of licences & permits

• Fundamentally a public function;

• = Administrative action reviewable by law (PAJA) – lawful decision? Reasons? Rational? Etc.

• The Registrar may be liable if decisions are reviewed, leaving DAFF very exposed.

• Levies

• Where services are rendered the ‘user-pays principle’ should apply, however it should not be used to fund the Regulator’s core mandate;

• Compliance

• Non-compliance leads to compliance directives, administrative penalties & criminal sanction;

• Justifiable to give search & seizure functions to a private company?

• Limitations on fundamental rights more appropriate for state entity v private;

• Conflicts of interest & perceptions of bias? – cannot be player and referee.

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Fertilizer Bill v Feeds & Pet Food BillFertilizer Bill

• Broad range of assignment;

• Possibility of core functions being assigned to external companies;

Feeds and Pet Food

• Same assignment provisions, but industry satisfied as to the functions that will be assigned;

• Promote self-regulating system;

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Collaborative effort key – Public, Private Partnerships with

credible industry bodies should be preferred over wholesale

assignment of functions

Climate change mitigation

• Internationally determined contribution under the Paris Agreement;

• 5 year transition period before compulsory emission reporting commences for ammonia, lime and soda ash production kicks in;

• Carbon budgets & carbon tax NB

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Climate change mitigation

• Environmental regulatory environment tightening up however there is room for innovation and flexibility:

NEMA Waste Act – Exclusion Regulations

• New regulations which enable companies to apply for exemptions to a waste licence where industrial waste can be re-used;

• Current applications include the reuse of soda ash from combustion for soil amelioration;

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Competition Law Amendments

• Competition Amendment Act & draft regulations published in January:

Prohibit:

• Abuse of ‘buyer power’;

• Imposing ‘unfair’ prices on smaller suppliers due to inferior bargaining power.

• Price discrimination;

• Intention to prevent large companies from discounting prices to the extent that SMMEs cannot compete;

• Discount for ‘bulk’ sale may come under spotlight.

• Drafts still subject to consultation and refinement.

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Investment security

Previous indications

• Bilateral Investment Treaties lapsed without renewal;

Protection of Investment Bill;

• Put SA policy imperatives ahead of international investment confidence;

• Subject all investors to same treatment and domestic courts –

• limit scope for international arbitration.

Ramaphoria

• Jobs Summit, Investment Summit, special envoys etc.

Government Gazette 25 January 2019

• Agreement between SA Government & Permeant Court of Arbitration (the Hague);

• Set-up regional ‘branch’ for Africa in SA;

• U-turn on 2015 PPI Bill.

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Summary

It’s a Mixed-bag

• Sector-specific legal framework requires some work - collaboration with DAFF to ensure equitable outcome;

• Environmental & commercial legislation tightening up in-line with international trends;

• Can be strict, but must be fair;

• U-turn on investment policy;

• The President that has set us on a path of inclusive growth and investment;

• Good signs, but still a lot of work to do. 18

Thank youtheo@Agbiz.co.za

www.Agbiz.co.za

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