In this edition:

Electricity Industry Bill
In December 2009, the Electricity Industry Bill was introduced to Parliament. more ...

Discounts for delays in processing
The Ministry for the Environment has recently released the Discount Regulations: Issues and Options Paper. more ...

Auditor General Report on Environment Canterbury's Councillors' conflicts of interest
In December 2009 the Auditor General released a report Investigation into conflicts of interest of four councillors at Environment Canterbury ("Report") which investigated breaches of section 6 of the Local Authorities (Member's Interests) Act 1968 ("Act") in relation to four councillors' pecuniary interests in water. more ...

Revised Deed of Settlement signed between the Crown and Waikato-Tainui
On 17 December 2009 the Crown and Waikato-Tainui signed a revised Deed of Settlement ("revised Deed") in relation to historical Treaty claims over the Waikato River. more ...

Reforming official information law
Nearly 30 years after the introduction of the Official Information Act 1982 ("OIA") and Parts I to VI of the Local Government Official Information and Meetings Act 1987 ("LGOIMA"), the Law Commission is undertaking a wider review of how effectively the current official information laws are operating. more ...

A green light for New Zealand's first marine energy generation project?
The first proposed marine energy farm in New Zealand, the Crest Kaipara Energy Project ("Project"), is one step closer to approval following an interim decision made by the Environment Court on 22 December 2009. more ...

In December 2009, the Electricity Industry Bill was introduced to Parliament.  The Bill seeks to implement recommendations made in the Electricity Technical Advisory Group's review of the electricity industry undertaken in 2009. It is intended to improve competition and security of supply and to reform governance arrangements in the industry.  A suite of changes have been included in the Bill that will affect electricity generators, network operators, and retailers.  These changes include:

1. abolishing the Electricity Commission and replacing it with an Electricity Authority which will have a narrower set of functions and objectives;
2. allowing lines companies back into electricity retailing;
3. transferring Meridian Energy's Tekapo A & B Power Stations to Genesis Energy and the Government owned Whirinaki Power Station to Meridian; and
4. requiring the three state-owned electricity generators (Meridian, Genesis, and Mighty River Power) to undertake a virtual assets swap over 15 years to provide for more competition in both the North and South Island.

The Electricity Technical Advisory Group's review concluded that the Electricity Commission's multiple objectives (which included environmental sustainability and promotion of electricity efficiency) complicated rule making.  As a result, the Bill provides a more limited role for the scaled down Electricity Authority with an objective of "promoting competition in, reliable supply by, and the efficient operation of, the electricity industry for the long term benefit of consumers."   The review concluded that the Electricity Commission's wider environmental objectives could be dealt with through other mechanisms and, in particular, that promotion of energy efficiency should be incorporated into the Energy Efficiency and Conservation Authority's role and that environmental sustainability issues should be addressed through environmental policies and law, namely the Resource Management Act 1991 ("RMA") and climate change policies and legislation. 

The proposed transfer of assets between state-owned electricity generators is intended to provide more competition in the market. Certain resource management and climate change issues will also arise as a result of these transfers.  Of note, the transfer of electricity generation assets such as Tekapo A & B will require the transfer of relevant resource consents such as Meridian's water take permits in the highly contentious Waitaki River system. 

The reallocation of assets to create a more even portfolio across the North and South Islands will also impact on industry participants' obligations under the Emissions Trading Scheme Legislation.  Under the Emissions Trading Scheme, "stationary energy" includes all fuels used in electricity generation.   As of 1 January 2010 the stationary energy sector was required to report its emissions and to surrender emission units for emissions that occur from 1 July 2010.  The reallocation of generation assets, which includes both renewable and non-renewable sources, will directly impact on electricity generators' obligations under the Emissions Trading Scheme.  

The Bill has been referred to the Finance and Expenditure Committee and the closing date for submissions is 26 February 2010.

The Ministry for the Environment has recently released the Discount Regulations: Issues and Options Paper.  The Options Paper identifies the key issues to be considered in developing regulations for discounts on administrative charges associated with processing resource consents, when the local authority responsible for the application does not process it within the statutory time period.

The proposed discount regulations have arisen as a result of the recent amendments to the RMA which provided for regulations requiring local authorities to provide a discount on administrative charges associated with processing resource consents when the local authority is responsible for the processing delay.  The intent of this change was to address concerns over late consent processing by providing a degree of compensation for the inconvenienced applicant. However, the amendments did not specify what methods must be used to calculate the discount or how the discount is to be applied by councils.

The Ministry has therefore invited feedback on the Options Paper, which includes the following issues and suggested solutions:

Issue 1 - Method of calculating a discount: A sliding scale percentage discount where longer delays require a larger discount is preferred by the Ministry in the Paper. Other options proposed include a fixed percentage discount or a discount calculated using a formula.

Issue 2 - Value of discount: The Ministry proposes a sliding scale percentage discount on a daily basis up to a cap of 80% (60 working days or more). The percentage discount proposed to be applied to each of the first five working days is 5% and a discount on a weekly (five working day) basis after the first five working days.

Issue 3 - How is local authority ‘fault’ determined: The Ministry's preferred option is to provide an explanation of what constitutes ‘fault’ for a delay within the Regulations. Other options considered include leaving ‘fault’ to the discretion of local authorities to determine, or allowing applicants and local authorities to discuss and agree ‘fault’.

Issue 4 - Identifying the timeframes after which a discount will apply:  The Ministry's preferred option is for the relevant timeframe to be the sum of all individual parts of the consenting process (ie these timeframes will be added together to a reach a total that will be subject to the Regulations). The other option proposed in the Options Paper would require each individual statutory timeframe to be subject to the Regulations.

The Ministry is calling for feedback on the Options Paper by 5 February 2010.  The Options Paper can be viewed here.

In December 2009 the Auditor General released a report Investigation into conflicts of interest of four councillors at Environment Canterbury ("Report") which investigated breaches of section 6 of the Local Authorities (Member's Interests) Act 1968 ("Act") in relation to four councillors' pecuniary interests in water.  

The Report, which responded to a complaint lodged in July 2009, condemned the actions of the four councillors who participated in discussing and voting on a proposal looking at alternative means to assist with cost recovery for managing water resources in Canterbury ("the proposal"). The four councillors held pecuniary interests in water resources in the Canterbury region.

The potential for conflicts of interest was initially identified by the Council Chairperson, Kerry Brownlee, in relation to two Councillors.  Those concerns were based on the councillors having water resource permits or being shareholders in companies that would be financially affected by the Council's proposal to manage the issue. However, the councillors remained participants in the matter.

The proposal, looking at alternative funding sources to supplement general rates for water management costs, was premised on charging holders of certain types of consents under section 38 of the RMA.  This would have cost consent holders $2.2 million and significantly contributed toward the council's spend of $7.1 million on water management.

The Report criticised the participation of the councillors when voting against the proposal, which resulted in a successful motion to defer decision making on the proposed charges for 12 months to allow for discussion with major stakeholders. Because of this delay, no final decision has yet been made, and so no final decisions have been affected by the findings of the Report.

Section 6 of the Act prohibits councillors from discussing or voting on any matter at a council meeting in which they have, directly or indirectly, any pecuniary interest other than a common interest with the public.  Pecuniary interest is not defined in the Act but is referred to by the Auditor General in the Report as:

whether, if the matter were dealt with in a particular way, discussing or voting on that matter could reasonably give rise to an expectation of a gain or loss of money for the member concerned.

Section 6 specifies that pecuniary interest includes the member or member's spouse owning shares that amount to 10% or more of a company. All four councillors fell within the definition as they would have been directly financially affected, albeit minimally.

The Report states that the term "interest in common with the public" must be contextually analysed, but that an interest held by a large group of people is not distinguished from the public. The Report found that the councillors were not perceived to be in a position similar to the public in relation to the potential financial consequences of the proposal.

The Act provides for an exception in section 6(1A), which permits councillors to participate in discussing and voting on matters where they hold a pecuniary interest if they were elected, or appointed to represent, any activity, industry, business, organisation, or group of persons, with an analogous pecuniary interest. Two of the councillors unsuccessfully argued that they were elected to represent South Canterbury, which has a large rural sector that irrigates significantly, and would be affected in the same manner as their pecuniary interests.

Moving forward, a viable option for the councillors may be to consider applying for a section 6(3)(f) exemption under the Act which allows a member to apply for exemption from the prohibition in section 6(1) because the member's financial interest is too insignificant to affect their decision making on the issue.

While the Auditor General and the Crown Law Office found that prosecution of the councillors was not warranted in the circumstances, the Report is a timely reminder for councillors to be very aware of potential interests which may require them to excuse themselves from certain decision making processes.

On 17 December 2009 the Crown and Waikato-Tainui signed a revised Deed of Settlement ("revised Deed") in relation to historical Treaty claims over the Waikato River.  This agreement supersedes the earlier Waikato-Tainui River Deed ("previous Deed") signed with the Labour Government in mid 2008.  

The previous Deed reflected co-management arrangements for the Waikato River ("River") between Waikato River iwi Ngāti Maniapoto, Ngāti Raukawa, Te Pumautanga o Te Arawa, Ngāti Tūwharetoa and the Crown.  The overarching purpose of the collaboration was to restore and protect the health and wellbeing of the River through a shared vision for River stakeholders. 

The previous Deed was the first of the co-management arrangements to come into effect.  Other Waikato River iwi were yet to conclude individual negotiations with the Crown when Waikato-Tainui put pen to paper.  That Deed provided for $210 million to be invested in clean up and governance of the river over a 30 year period.

The National Government approached Waikato-Tainui earlier in 2009 in an effort to "seek more effective and economically efficient arrangements" than those provided for under the existing deed.  However, both the Crown and Waikato-Tainui co-negotiators, Tukuroirangi Morgan and Lady Raiha Mahuta, have stated that the proposed changes will not affect the integrity of the previous Deed.

Key features of the revised Deed are:

Under the revised Deed, all Waikato River iwi will continue to have representation on the Waikato River Authority and it is intended that they participate in the co-governance arrangements. However, reaching deeds of settlement with iwi has proved difficult. It has been reported that Ngāti Maniapoto cancelled the signing of its deed of settlement the week before the Waikato-Tainui signing because it felt the Crown could not guarantee the protection of Maniapoto interests.  Additionally, while Ngāti Raukawa has joined Waikato-Tainui in signing the revised Deed, Te Arawa and Ngāti Tūwharetoa also remain in negotiations. 

The revised Deed is likely to be given effect to by way of amendment to the bill that gives effect to the previous Deed, rather than by returning to the drawing board.  The Maori Affairs Committee is due to report back on the amended Bill in June 2010.

In terms of wider application of the agreement reached between iwi and the Crown in respect of the Waikato River, it was recognised at the signing of the revised Deed that there was no "one size fits all" approach.  However, Minister for Treaty of Waitangi Negotiations, Hon. Chris Finlayson, said negotiator Lady Mahuta commented that other river iwi would likely be able to draw on, and benefit from, the Waikato River enhanced model.  This is proving true, with iwi leaders from the Whanganui River having already expressed interest in how this model works. 

The revised Deed, and resultant Bill, are likely to create an important precedent for the co-management of fresh water resources with Maori.  The negotiation processes, however, will need to remain flexible to reflect the different relationships other iwi have in relation to other water resources. 

Nearly 30 years after the introduction of the Official Information Act 1982 ("OIA") and Parts I to VI of the Local Government Official Information and Meetings Act 1987 ("LGOIMA"), the Law Commission is undertaking a wider review of how effectively the current official information laws are operating. 

The Law Commission has released two information / questionnaire documents to assist with the initial stages of the review, but at this stage it is not calling for detailed submissions.  Rather, it is seeking initial feedback from those regularly involved or familiar with the operation of the OIA or LGOIMA, including officials and requesters, to identify where problems lie and to propose ideas for further exploration or reform to improve the operation of the Acts. 

The topics identified for comment include: the case by case application of the Acts; reasons for withholding information; the scope of the Act; dealing with information technology; administrative compliance and issues; and the role of the Ombudsman.

It is apparent that issues are being faced under both the current Acts, with marked inconsistencies in how agencies are managing and responding to both requests for information, and requests that information is withheld.  For example, some agencies are adopting a blanket-approach policy in assessing documents of a particular nature rather than the undertaking the more time-intensive case by case approach prescribed by legislation.  Other agencies are reportedly withholding whole documents rather than considering part release or summaries of material.   Problems have also been encountered when trying to obtain drafts copies of documents, settlement documents, and electronic records.

Particularly in respect of LGOIMA requests for information relating to plan changes and resource consent applications, issues regularly faced include non-compliance with the statutory timeframes; lengthy delays in the processing of requests; receiving incomplete information; high administrative costs; and a lack of clarity over where agencies are likely to accede to a request to withhold information.   

Victoria University Fellow in Law and Journalism, Steven Price, has undertaken research into official information law in New Zealand (which was used in the preparation of the Law Commission Survey) and notes that requesters are cynical about the use of the withholding clauses in the Acts.  His research concluded that when information was withheld, "assertions of 'confidentiality', 'commercial sensitivity' and 'privacy' abounded", with little evidence that the conclusions were justified.  Given the contentious nature of what information should be withheld, this topic particularly is likely to draw significant comment.

The review provides an opportunity for these views to be further canvassed, for limitations to be recognised and addressed, and for effective OIA and LGOIMA provisions and principles to be further extended and enhanced. 

The OIA and LGOIMA are powerful tools and their successful operation is a desirable objective in the transparency of government operations for both public and private interests.  Public participation in this review process is important to achieving such an outcome.             

Responses are required to be sent to the Law Commission by 15 February 2010, and an Issues Paper presenting options for improvements to the Acts and seeking further comments / submissions is to be published in early 2010.

The first proposed marine energy farm in New Zealand, the Crest Kaipara Energy Project ("Project"), is one step closer to approval following an interim decision made by the Environment Court on 22 December 2009.  The Court indicated a possible positive recommendation to the Minister of Conservation regarding the Project, subject to certain conditions being met.  The Project would see the construction of up to 200 submerged marine tidal turbines located near the entrance of the Kaipara Harbour in Northland, one of the largest harbours in the world.  Stage one of the Project would see the installation of 20 turbines producing an initial 20MW.  Maximum generating capacity of the Project after all proposed stages is estimated to be at 200MW, contributing 3% of New Zealand's power supply.

As the application for the Project was lodged under the RMA prior to the recent 2009 RMA amendments, the Minister of Conservation's ("Minister") power to make decisions on applications for coastal permits in relation to restricted coastal activities (commonly referred to as 'Ministerial veto') still applies.  Therefore, it is likely that the Environment Court will make its recommendation to the Minister once Crest has fulfilled the conditions the court set out in its interim decision.  The right of 'Ministerial veto' was removed by the 2009 RMA amendments.   

The interim decision displayed positive findings by the Environment Court on the Project's ability to meet the section 5 requirement of 'sustainable management' and related provisions under Part 2 of the RMA.  The Court commented that the evidence had satisfied them without doubt that harnessing the energy of the tides in the Kaipara Entrance would result in the protection of resources in a way, and at a rate, that would enable provision for economic wellbeing.  The Court further commented that the Project would sustain the potential for natural and physical resources to meet the reasonably foreseeable needs of future generations, as well as maintaining public access along the coastal marine area with navigation channels and buffer areas incorporated into the proposal.      

While all indications are for a grant of consent, the Environment Court identified a number of uncertainties which remain to be resolved before the Court will make such a recommendation to the Minister.  The potential for adverse effects on fish stocks; related ecosystems; and the commercial fishery in the area were all causes for concern. The Court has called for more evidence on these issues.

Potential acoustic impacts on marine fauna, and effects on mammals such as the endangered Maui dolphin, were also raised. The Court has held that these issues could be dealt with by appropriate conditions of consent and a well-drawn Environmental Management Plan ("EMP"), with a suggestion that the EMP should include baseline and on-going monitoring on the effects of the Project on the Harbour and its inhabitants.  Maori cultural issues were held to be adequately and appropriately addressed by Crest, subject only to the production of clear conditions of consent to secure these interests.

Director of Crest Energy, Anthony Hopkins, has stated that the indication of a positive recommendation is great news after more than four years of work.  It appears that, upon satisfying the Court with further evidence, the approval of revised conditions of consent and an altered EMP, the green light could be on for New Zealand's first marine energy generation project.        

© Russell McVeagh 2009. All rights reserved. www.russellmcveagh.com