In this edition:

The Resource Management (Simplifying and Streamlining) Amendment Bill was passed in Parliament on Wednesday 9 September.  The House sat long hours in order to read the Bill under urgency, which allows both Parliamentary sitting hours to be extended and the normal timetable for passing legislation to be compressed. more ...

Precursor to the National Infrastructure Plan released
The National Infrastructure Unit of the Treasury has released an 'Infrastructure: Facts and Issues' paper ("Infrastructure Paper") and is approaching various organisations for feedback.  more ...

Improving access to New Zealand's mineral resources in conservation land
In a recent speech to the Australasian Institute of Mining and Metallurgy, Minister of Energy and Resources Gerry Brownlee outlined the Government's plans to encourage growth in New Zealand's mineral industry. more ...

Update on Emissions Trading Scheme
Charged by Minister of Climate Change, Nick Smith, with the task of designing an emissions trading scheme for New Zealand with cross-party support, the select committee chaired by the Hon Peter Dunne released its report on 31 August 2009. more ...

Draft Canterbury Water Management Strategy
Issues surrounding the management of New Zealand's fresh water resources have been on the agenda for New Zealand's policy makers for some time, and it is an area where there are no easy solutions. more ...

Local Government (Auckland Council) Bill
On September 4, the Auckland Governance Legislation Committee reported back to the House on the Local Government (Auckland Council) Bill ("Bill").  more ...

No Maori seats on the new Auckland Super City
On 24 August 2009, after much speculation and discussion, Cabinet decided against dedicated Maori seats for the new Auckland Super City. more ...

Auckland Council Establishment Update
The Auckland Transition Agency ("ATA") has released a draft project plan that outlines the project phases and work streams for the work required to manage the transfer from Auckland's current local government structure to the new Auckland Council that will come into existence on 1 November 2010. more ...

Getting Priorities Straight and Striking Them Out - the High Court's New Zealand Maori Council Decision
Priority between competing resource consent applications has been a relatively settled issue under the Resource Management Act 1991 ("RMA"), since the decision in Fleetwing Farms Limited v Marlborough District Council, where the Court of Appeal found that the application lodged first in time held precedence. more ...

URS New Zealand v Auckland Regional Council - discharges under the RMA
A recent decision of the High Court has confirmed that active control over operations that cause a discharge is not required for an illegal discharge under the RMA to be made out. more ...

The Resource Management (Simplifying and Streamlining) Amendment Bill was passed in Parliament on Wednesday 9 September.  The House sat long hours in order to read the Bill under urgency, which allows both Parliamentary sitting hours to be extended and the normal timetable for passing legislation to be compressed.

The House voted in favour of the recommendations of the Local Government and Environment Select Committee in the second and third readings, with some changes in the form of Supplementary Order Papers ("SOPs").  There were twelve SOPs altogether, only one of which - Hon Dr Nick Smith's amendments in SOP 39 - was adopted.

SOP 39 contained a raft of changes, most of which were technical / drafting amendments.  The main substantive changes were:

The Bill now awaits Royal Assent before it comes into force, the date for which is still set at 1 October 2009, coincidentally the same day on which the Resource Management Act 1991 ("RMA") came into force some 18 years earlier.

The National Infrastructure Unit of the Treasury has released an 'Infrastructure: Facts and Issues' paper ("Infrastructure Paper") and is approaching various organisations for feedback. The Infrastructure Paper is intended to be a basis for engagement with stakeholders while Treasury works towards developing the first National Infrastructure Plan by early 2010. 

The purpose of the Infrastructure Paper is to provide background and context on the content and direction of the National Infrastructure Plan.  To that end, the Infrastructure Paper includes:

The National Infrastructure Plan will be a 20-year plan, reviewed triennially, intended to help Ministers, agencies, local government and the private sector identify needs and prioritise investments to lift growth.  Feedback from the Infrastructure Paper will be incorporated into this Plan; the Paper itself is available here.  Written submissions are due by 5 October 2009.

In a recent speech to the Australasian Institute of Mining and Metallurgy, Minister of Energy and Resources Gerry Brownlee outlined the Government's plans to encourage growth in New Zealand's mineral industry.

According to the Minister, the Government sees natural resources as a significant contributor to improving economic growth and productivity rates, citing figures that estimate metallic mineral potential in New Zealand to have a gross in-ground value in excess of $140 billion.  Currently some 4650 people are employed in New Zealand's mining industry, producing minerals, coal and petroleum worth around $4 billion per year and contributing approximately $2 billion to exports.

The Minister named lack of access to land in the conservation estate as the major barrier to further growth in the mineral industry.  Accordingly, along with Minister of Conservation Hon Dr Nick Smith, Mr Brownlee has directed that officials from Crown Minerals and the Department of Conservation ("DoC") are to collaborate on improving access to conservation land in three ways which are set out below:

A review of Schedule 4 of the Crown Minerals Act 1991

It is estimated that DoC administered land contains 70% of New Zealand's mineral potential - about 40% of that land is listed in Schedule 4 of the Crown Minerals Act.  The Minister of Conservation currently must not allow any access arrangement relating to land described in Schedule 4, except in relation to certain low impact activities.  This effectively precludes all mining activities and most exploration activities on that land. 

The Minister has directed Crown Minerals to undertake a strategic review to:

determine areas possessing significant mineral potential that, with the removal of the access prohibition provided by Schedule 4, could through responsible mining techniques contribute considerably to New Zealand's prosperity.

The Crown Minerals Act sets out a process for amending Schedule 4 and consultation with affected interests will be necessary before any changes are made.

Improvements to DoC processes for access arrangements

Mining industry concerns over DoC processes include costs (both time and resources), lack of transparency, and unduly onerous conditions.  It has also been suggested that devolved decision making and the absence of generic processing procedures has resulted in inconsistencies between DoC conservancies.

To address these concerns, the Ministers of Conservation and Energy have stated they will require DoC and Crown Minerals to progress the development of mandatory nationwide DoC standard operating procedures for processing access arrangement applications under the Crown Minerals Act.

Consultation on the reclassification of DoC administered land

The Ministers have also directed officials to develop options to improve processes around DoC consultation with Crown Minerals on conservation land reclassification.  The Minister of Energy indicated his preference for a system where all DoC land reclassifications are referred to Crown Minerals prior to public notification so that an early review of the land’s mineral potential can be undertaken.

Combined with the streamlining of the RMA passed last week, Mr Brownlee's announcement will be of great interest to a mining industry already experiencing something of a mineral rush.  On the other hand, conservation interests are likely to be less pleased with the developments.

Click here to view the full speech.

Charged by the Minister of Climate Change, Hon Dr Nick Smith, with the task of designing an emissions trading scheme for New Zealand with cross-party support, the select committee chaired by the Hon Peter Dunne released its report on 31 August 2009.  Despite the nine month timeframe, the report of the Emissions Trading Scheme Review Committee (”Report") lacks cross-party consensus on key design features of the emissions trading scheme. Therefore, the main regulatory features of the scheme still require negotiation, leaving National not much closer to finalising its trading scheme.

Established by Dr Smith in December 2008, the select committee was asked to make recommendations on New Zealand's new climate change policy. The aim was to "build a broader consensus across Parliament." Citing the importance of the issue and the longevity of any climate change policy, Dr Smith called for "broader support for the direction forward".

The timeframe for deciding upon a new domestic policy is necessarily limited by the Copenhagen Negotiations which will take place in December 2009. The National Government will need to propose how New Zealand will achieve its greenhouse gas reductions, requiring a scheme to be finalised by this date. Domestically, both industry and stationary energy enter Labour's Emissions Trading Scheme on 1 January 2010. In addition, Prime Minister John Key has publicly acknowledged that a domestic scheme must be finalised as soon as possible.

Although marked by a lack of conclusions, the Report did establish that climate change is actually occurring; that New Zealand should use an emissions trading scheme to deal with this issue domestically, and that all sectors should be included in the scheme.

Yet members of the committee remained deeply divided along party lines on key conclusions such as when agriculture should be included; on what basis participants should receive a free allocation of credits; whether a short term price cap should be employed; and whether international trading of credits should be permitted.

However, the failure of the Report to reach any key conclusions has, oddly, left New Zealand closer than ever to achieving a cross-party emissions trading scheme. With both the ACT and Maori Parties opposing the introduction of an emissions trading scheme, National and Labour have agreed to enter negotiations in good faith.   With talks are scheduled for early next week and the December deadline looming, an outcome for New Zealand's Emissions Trading Scheme is not far away.

Issues surrounding the management of New Zealand's fresh water resources have been on the agenda for New Zealand's policy makers for some time, and it is an area where there are no easy solutions.  The Canterbury region is the flashpoint for this issue, with increasing pressure on the region's lakes, rivers streams and aquifers from various demands of hydro-electricity generation, agricultural production, dairy, drinking water and recreational and customary uses.  The Canterbury Region allocates 58% of the country's total water, it has 70% of the country's irrigated land and 65% of the nation's storage capacity for hydroelectricity.  Increasing demand for freshwater does not come without an environmental cost.  The effects of water abstraction and the land use intensification enabled by the use of that water are particularly troubling.  Cumulative effects such as nitrogen loading can be difficult to regulate under the RMA's effects based management of individual consents.

Given this background, a Draft Canterbury Water Management Strategy has been released calling for a "paradigm shift in water management".  Formulation of the Strategy has been led by the Mayoral Forum containing representatives from Environment Canterbury and the Canterbury Region's territorial authorities.  The Ministers of Agriculture and the Environment, as well as Ngai Tahu, have also been engaged in the development of the strategy.  The draft strategy has been released for public comment with the aim of producing a final document in late October 2009.

The chief recommendations of the Strategy include:

Any comments on the draft strategy can be submitted before 2 October 2009.

Please contact us should you wish to discuss preparing a submission or if you would like any further information on the draft strategy.

On 4 September 2009, the Auckland Governance Legislation Committee reported back to the House on the Local Government (Auckland Council) Bill ("Bill").  This is the second of the three bills that will give effect to the Government's reorganisation of the governance of Auckland. 

Key aspects of the Bill, as reported back, include:

The Bill, as reported back, has been met with mixed responses.  Labour, the Green Party and the Maori Party all issued dissenting minority views within the Committee report and have signalled they will continue to try and amend the Bill's contents. Strong local oppostition to the proposed boundary changes is also emerging with the Auckland Regional Council being the first to formally state its categorical opposition to the proposed changes. The Bill has been accorded priority in the House and is likely to pass its Second Reading this week.

On 24 August 2009, after much speculation and discussion, Cabinet decided against dedicated Maori seats for the new Auckland Super City.  This decision was reflected in the Local Government (Auckland Council) Bill of 4 September 2009 (discussed above) which stated that resolving the question of whether the existing legislation provides adequate Maori representation in local government should be dealt with at a national level, rather than solely in the Auckland context.

By way of background, the previous Labour Government commissioned a Royal Commission of Inquiry into Auckland's governance.  The Royal Commission reported back to the Government on 25 March 2009 and one of its recommendations was to have dedicated Maori seats on the Auckland Council.  Despite this recommendation, Cabinet decided against the seats and the Pirime Minister stated that it is now up to Local Government Minister the Hon Rodney Hide and Minister of Maori Affairs Honourable Pita Sharples to work together and recommend to Cabinet what will be the "most effective mechanism to enable Maori participation in the new Auckland super city council." 

The Maori Party has signalled that it intends to introduce amendments to create dedicated Maori seats for the  Auckland Council and they are hopeful that some National MPs will cross the floor in support.   Although it is hard to speculate whether or not this proposal will gain traction, at least one National MP, Tau Henare, has been voicing his dissatisfaction with the decision since it was made.  ACT would not support such amendments.

The move by Cabinet has been both criticised and supported by various sectors of the New Zealand public.  It will be interesting to see whether this decision, which clearly strengthens National's relationship with ACT, will have any bearing on the Government's formal response to the Foreshore and Seabed Act review (the Government's response to the review is still pending).  A positive response to the Foreshore and Seabed review could once again put the Maori Party back on side with the National government.

The ATA has released a draft project plan that outlines the project phases and work streams for the work required to manage the transfer from Auckland's current local government structure to the new Auckland Council that will come into existence on 1 November 2010.

The ATA intends to manage the project through three broad phases:

High Level Discovery Phase: A stock-take of existing organisations and their operating environments will be undertaken to provide the necessary information to enable the ATA to undertake the next phases of the transition.  This is the phase the ATA is currently in.

Strategy and Design Phase: This process will facilitate the eventual complete reorganisation of the Auckland Council.

Delivery Phase: Implementation of activities and tasks required for the Auckland Council to become operational on 1 November 2010.

The ATA proposes that the project be managed through 12 work streams, all of which have a Work Stream Leader responsible for delivering in their particular area.  The draft project plan is careful to note that the structure of the work streams does not imply a structure for the new Auckland Council.

The work streams are:

The ATA has begun its search for a Chief Executive for the Auckland Council. 

Priority between competing resource consent applications has been a relatively settled issue under the RMA, since the decision in Fleetwing Farms Limited v Marlborough District Council [1997] 3 NZLR 257, where the Court of Appeal found that the application lodged first in time held precedence.  Although the RMA is itself silent on the issue of competing resource consent applications for the same resource, the jurisprudence built around Fleetwing Farms has remained undisturbed - until now.

The High Court on 21 August 2009 released an interesting decision on an application by the New Zealand Maori Council ("NZMC") under the Declaratory Judgments Act 1908 for a declaration that: priority as between competing applications under the Resource Management Act 1991 for a finite resource should be determined through the exercise by consent authorities of a discretion.

This question and application were both fairly revolutionary: the question, because it directly challenged the decision of Fleetwing Farms, and the application because it was not related to an existing resource consent application.  Following the recently-settled appeal to the Supreme Court of Ngai Tahu Properties Limited v Central Water Plains, the application for a declaration by NZMC continued a legal question as to priority left unresolved by the abandoned substantive litigation, and as such was opposed by the three other parties who had been involved in the Central Water Plains cases.  These three parties (the Attorney-General, Trustpower Limited, and Meridian Energy) all applied to have the NZMC's application for a declaration struck out due to (generally) the absence of any underlying factual situation, and the inadequacy of, and dangers in, the question as posed.  No jurisdictional points were raised by counsel.

The strike-out applicants identified two grounds under Rule 15 of the High Court Rules under which they wished the Court to exercise its discretion to strike out the application: the proceedings disclosed no reasonably arguable cause of action, defence or case appropriate to the nature of the pleading, and that the proceeding was an abuse of process.  The NZMC contended that there was a legitimate public interest (and a particular Maori interest) in the question, and that the Declaratory Judgments Act 1908 does not require an actual dispute to underlie an application for declaratory judgment.

Simon France J considered a number of decisions dealing with strike-out applications for declaratory judgment, and found that the jurisprudence on the issue tended in favour of the strike-out applicant, but that "Courts have been increasingly willing to assist parties, particularly those exercising public functions, with clarification of their powers and obligations".  He then distinguished the precedent supporting the NZMC's approach, Greenpeace New Zealand Inc v Genesis Power Ltd on its facts.

Returning to the Rule 15 grounds advanced by the strike-out applicants, the Court found that there was no abuse of process (as the declaration question went to the legal test, and was not an attempt to relitigate Central Water Plains), but that asking the High Court to ignore the binding precedent of Fleetwing Farms was inappropriate in the circumstances.  This was reinforced by the fact that NZMC were not a party to a resource consent application, nor was there any attached fact scenario, and that the question was too abstractly phrased for a new rule to be adequately articulated.  Furthermore, the unorthodox nature of the NZMC's application (immediately turning to the Supreme Court for a decision on an abstract question, by-passing the Court of Appeal) and lack of urgency at hand added to the inappropriateness of the NZMC's declaration application.  The strike-out was granted.

As a result, the Fleetwing Farms' test - the application that is first in time - remains.  However, the Court in Fleetwing Farms was careful to note that there could be factual exceptions to this rule, hence the Central Water Plains cases involving a complex timeline of competing applications and their respective existences before becoming fully notified.  The comment of the Supreme Court in Central Water Plains that it "now wishes to hear argument on the... question of whether priority should be decided by a rule or through the exercise by consent authorities of a discretion and, if the latter, on what principles should the discretion be exercised" is ripe for litigation in the future - just not by way of a declaratory judgment in the absence of a specific factual context.

A recent decision of the High Court has confirmed that active control over operations that cause a discharge is not required for an illegal discharge under the RMA to be made out.  Importantly, a party can be liable for “causing a discharge” even if they commit an act (in this case puncturing an empty fuel line) and the discharge itself does not occur until sometime later, when combined with the act of another (in this case another party putting fuel back through the line), and at a time when the operations are outside the control of the defendant.  To defend this broader interpretation of an illegal discharge would require an argument that a defendant's initial acts are too far removed in terms of causation, or that there was some third party action that broke the chain of causation between the initial act and the subsequent discharge.

In URS New Zealand Ltd v Auckland Regional Council, the High Court dismissed URS New Zealand Ltd’s (“URS”) application for judicial review of a decision by the District Court on a submission during a summary trial by URS that, as the ARC had not provided proof that URS had active control of operations at a site at the time of a fuel leak, URS had no case to answer.  While dismissing URS's application for judicial review on jurisdictional grounds, the High Court addressed URS’s submissions in relation to its culpability.

The facts were as follows. In July 2007, URS, through its subcontractor Brown Bros (NZ) Ltd, drilled a number of bore holes to install ground water monitoring wells to investigate a partially decommissioned fuel retailing site for contamination.  Unknown to URS or its subcontractor, that drilling pierced and broke an empty fuel delivery line.  URS left the site following the completion of its investigations. Later that year, another fuel retailing company contracted Fuelquip (NZ) Ltd to re-commission the site.  That re-commissioning involved pumping fuel through the fuel line to purge it of air.  Fuelquip failed to test the line before pumping fuel through it, which resulted in 10 000 L of fuel escaping through the damaged fuel line and entering a nearby stream.  Fuelquip pleaded guilty to charges of discharging a contaminant under section 15 the RMA and was sentenced.

The Auckland Regional Council ("ARC") charged URS on the basis that URS, too, allowed the discharge to occur by virtue of its action that led to piercing the fuel line and failing to notice, or to investigate and take appropriate steps to prevent possible damage to the fuel line (precautions that a reasonably prudent person in the position of URS should have taken).

URS submitted that to cause a discharge for the purposes of section 15 requires that a party be in control of the relevant operations or contaminants at the time of the discharge.  URS sought that, as the ARC had not proved that URS was in charge of the operations at the time of the fuel leak, URS had no case to answer to and the case be dismissed.

The High Court adopted a broad interpretation of 'discharge' in section 15 and dismissed URS’s primary submission.  The High Court noted that the offence does not require that a party intend to commit the offence (it is a 'strict liability' offence), and held that, on the clear wording of section 15, there was no requirement that a party be in control of a contaminant, or the operations releasing the contaminant, at the time of a discharge. 

The High Court relied on the definition of ‘discharge’ in the RMA, which includes ‘allow to escape’.  That definition, the Court noted, extends potential liability to parties that exhibit a 'passive lack of interference' in respect of a discharge.

The High Court further relied on the scheme of statutory defences in the RMA to an offence under section 15.  Those defences, which require (among other elements) that the effects of an act were adequately mitigated or remedied by the defence, impose "an incentive on a party of potential liability to take prompt and effective steps to remedy the consequences of its acts or omissions" regardless of whether the party has control of the operations that directly created the offence.  The RMA is designed in that respect to promote self regulation and the acceptance of responsibility.

The result of the High Court’s decision is that a party who has a past connection to a site, and has made an act or omission that contributes to a discharge at a later point in time (albeit in combination with the acts of another party) can be held liable for allowing a discharge - even if it did not have control of the operations at the time that the actual discharge occurred.

The High Court accepted that URS may escape liability if it could establish that a third party (such as Fuelquip) committed an intervening act, between URS’s damaging of the fuel line (and inaction to investigate and take precautionary steps) and the discharge, which severed the chain of causation between URS and the discharge - ie so that URS’s actions no longer operated as the cause of the discharge, and were of merely historical importance.  The High Court confirmed that this question of causation is purely factual in nature, and has to be undertaken on all the evidence.  URS's submission that it had no case to answer, and the case should be thrown out, was therefore dismissed.

The High Court's decision confirms the self-regulation and accountability promoted by the RMA.  Operators should take notice that potential liability can extend from premises which have subsequently been vacated or divested, and from operations that the operator no longer has control over. 

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