Part III: An analysis of the Detrimental Effect of the Expropriation of Surface (land) Rights

The expropriation of subsurface land rights as it relates to the petroleum industry may be instrumental in transforming the industry by eliminating neo-colonialism and the influences of apartheid. However, the expropriation of surface rights for the development of the petroleum industry may yield detrimental results for certain communities.

In 2020, the Minister of Mineral Resources and Energy announced that an estimate of 390 trillion tcf of technically recoverable natural gas has been discovered in the Karoo basin spanning the Eastern, Western and Northern Cape provinces. The state and various TOCs argue that the extraction of natural gas through hydraulic fracturing will facilitate socio-economic development by increasing energy production, job creation and various other economic benefits for the country.[1] However, these parties fail to acknowledge the socio-ecological damage fracking may cause in the Karoo that could directly interfere with the landowners and lawful occupiers standard of living. Should the state confer exploration and production rights in respect of the shale gas in the Karoo, the conflicting interests of the TOCs and the landowners may lead to further disputes. Section 54 of the MPRDA protects the right holder in this regard and provides that they may notify the Regional Manager should the landowner owner or lawful occupier refuse to grant them access to the land. Section 54(5) further states that, upon consideration of the representations made by the landowner or lawful occupier as well as the issues raised by the right holder, if the Regional Manager believes that further negotiation may impede the objects of the MPRDA, he or she may recommend to the Minister that such land be expropriated in terms of Section 55.

An estimated one million people reside in the Karoo and about 33.5 per cent of the population in the Central Karoo District Municipality work in the agricultural sector and 20.8% in the community service sector.[2] The Karoo is also a water-stressed region and its farming community relies on water retrieved from boreholes for both human and livestock consumption. Further, it was determined that 49.54% of the population was living in poverty in the year 2019, using the “upper poverty line definition”.[3] These statistics indicate that a vast majority of the population is dependent on arable land for the generation of income and food security. The water-intensive fracking procedure may increase the competition for access to water in the Karoo which may negatively impact agricultural processes and destroy the community's livelihoods.[4] These issues have a detrimental effect on the objects of the MPRDA, specifically the promotion of employment and the advancement of the socio-economic welfare of all South Africans. Therefore, the land that is subject to these rights may be expropriated by the Minister in terms of sections 54(5) and 55 of the Constitution.

As explained above, the agricultural sector is the primary economic driver in the Karoo. Even though, in the event of an expropriation, the compensation afforded to the landowner may be just and equitable as prescribed by section 25(3) of the Constitution, the landowner, who is likely a farmer, would have lost a consistent and sustainable source of income. The subsequent loss of grazing land means that farmers will not be able to adequately maintain their livestock. Furthermore, loss of the agricultural land may also force the landowners and interested parties to adapt their lifestyles and cultural identities that were once influenced by the rich history and environment in the Karoo. Murcott and Webster explain that this may lead to a disruption in social cohesion as well as a loss of a sense of belonging.[5]

Although the apartheid legacy of unequal land distribution is still prevalent today and 71 per cent of private-owned farmlands in South Africa is still owned by white, it is important to note that a majority of the individuals with an interest in the land are farmworkers and labour tenets who are historically disadvantaged individuals and have the least protected interests. Farmworkers and labour tenants are dependent on the operation of the farm to earn a living. It goes without question that the expropriation of land will result in job losses in the agricultural sector and increase the high unemployment rate in the country. Expropriation of surface rights may intensify the poverty levels and poor standard of living among vulnerable people living in the Karoo. Labour tenants are persons whose tenure of land are historically insecure, therefore, the expropriation of the farmland on which they live may leave with no housing or shelter.

It is clear that the purposes of sections 25(1) and (2) of the Constitution protects private property ownership. Therefore, the landowner is entitled to any payment of compensation in the event of an expropriation. Neither the MPRDA, nor the Constitution makes provision for the compensation, for vulnerable and less-protected people who have interest in the land. Thus, the MPRDA is developed to allow for lawful occupiers of the land and those who have sufficient interest thereof the opportunity to claim damages for the loss of income against the state.

Conclusion and recommendations

The UN General Assembly Resolution 1803 recognised the right of a state to permanent sovereignty over their natural resources as a basic right to self-determination after abolishment of colonisation and the liberation of colonized states. The right to self-determination afforded to states includes the right to expropriate and nationalise mineral and petroleum rights in order to eliminate any prevalence of neo-colonialism and apartheid in the oil and gas industry. Under certain circumstances, the expropriation of exploitative petroleum agreements may be beneficial in the pursuit of improved socio-economic development in developing states. Therefore, developing states must revise their legal, social and financial institutions and before expropriating subsurface rights. The domestic legislation and policies must recognise the biodiversity, well-being and livelihoods of the country’s citizens.

On the other hand, the expropriation of surface rights for the development of the petroleum industry may be detrimental to vulnerable communities who live on or around the natural resource reserves. The ownership of property is a historically contentious issue in South Africa, and the expropriation of land occupied by historically disadvantaged individuals. The petroleum industry activities have far-reaching consequences for the citizen’s occupations and settlement. Therefore, in accordance with the transformative spirit of the constitution, the legislature must strive to strengthen the access to land and protect land tenure and other interests in from unjust interference or deprivation.