Two major developments have occurred recently in relation to the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill ("Bill").  The Select Committee has reported on the Bill after hearing submissions and the Ministry for the Environment ("MfE") has issued a discussion document on the regulations proposed under the Bill and is seeking feedback on a number of questions.  A brief update on each development is provided below.

The Bill

The Bill was reported back to the House from the Local Government and Environment Select Committee on 15 May 2012.  The Committee recommended that certain amendments be passed but was unable to agree that the Bill be passed.  While members from Labour, the Green Party and NZ First agree that a Bill to this effect is necessary, they do not support the Bill in its current form.  This report provides a brief summary of the main amendments and a brief outline of the reasons for the discontent.

Perhaps the most significant change to the Bill is in relation to the assessment criteria the Environmental Protection Authority ("EPA") must take into account in deciding on applications for marine consent.  Previously, clause 61(2) of the Bill gave the EPA discretion to grant an application for marine consent if the activity's contribution to New Zealand's economic development outweighed the activity's adverse effects on the environment (and to refuse consent should it not).  This clause has been removed from the Bill and replaced with clause 59, which provides a lengthy list of matters the EPA must take into account.  The matters listed under clause 59 are those which were previously in the purpose sections (clauses 12 and 13) of the Bill and include matters such as the cumulative effects of allowing an activity, the importance of protecting biological diversity and rare and vulnerable ecosystems, efficient use and development of natural resources, and the economic benefit to New Zealand of allowing the application.  The EPA must also take into account any other matter it considers relevant and reasonably necessary to determine the application, under new clause 59(m).  The effect of these changes confers a much wider discretion on the EPA when deciding on applications, allows a far broader range of matters to be taken into account in decision making, and removes the requirement that a simple balancing test be used to weigh up competing matters.

Another significant change has been to the format of EPA hearings.  Previously the Bill did not allow for the questioning of witnesses by any party other than the EPA.  This was a concern to many submitters on the Bill who felt that it may lead to evidence presented at EPA hearings not being robustly tested.  This concern has now been remedied with new clause 53(4), which provides for the examination of witnesses at hearings, by leave of the EPA.

Other changes include requiring that the Crown gives effect to (as opposed to "take appropriate account of") the principles of the Treaty of Waitangi; regional councils have been included in the list of those who will be directly notified before the Minister makes a recommendation on regulations to the Governor-General; provision has been made for the use of abatement notices and the transition period for existing activities requiring a marine consent has been extended until 1 May 2013, or six months after the Act comes into force, whichever is later.

The main concerns of the minority parties (Labour, the Green Party and NZ First) are that the Bill fails to provide adequate protection for the environment and fails to give the public confidence that any risks associated with offshore activities can be effectively managed and mitigated.  Environmental protection should not be balanced against economic development, due to the major impact an environmental disaster from a high-risk activity in the EEZ (for example deep-sea drilling) could potentially have on the environment.  Instead, the default setting should be robust environmental protection, introducing economic development conditional upon minimal environmental risk.  In short, the balance is out of kilter and needs to be revisited.

Members from Labour and the Green Party also expressed concerns that the Bill is inconsistent with New Zealand's international obligations under the United Nations Convention on the Law of the Sea, and with the Resource Management Act ("RMA").  Concerns were raised about the requirement to "favour caution" with members being unsure whether this is meant to be more or less stringent than the usual "precautionary approach".  Concern was also expressed about the definition of "adaptive management" and its role in decisions under the Bill.  Uncertainty in the terminology can lead to costly legal action to ascertain the meaning of the terms and, to the extent possible, consistency with the RMA is desired. 

Other concerns were that the Bill creates more barriers and restrictions for submitters than for applicants and there is no right of appeal to the Environment Court.  The members from Labour and the Green Party believed the penalties for breaching the regulations were inappropriate and would not act as a disincentive.

The Bill was interrupted during its second reading in the House on 30 May 2012, and again on 12 June 2012.  The second reading is scheduled to resume on 19 June 2012 with six speakers remaining.

Regulations under the Bill

The Bill sets in place the general framework for the EEZ regulatory system and allows the classification of activities to be set out in regulations as permitted, discretionary or prohibited activities.  While the regime is set in the Bill, the detail will be set out in regulations.

The MfE has prepared a discussion document for the purpose of seeking feedback on two key areas: the proposed policy framework; and proposals for regulations, including classifying activities and cost recovery mechanisms.  It poses 63 specific questions on which MfE is seeking specific feedback.

One of the key points in the document is the use of this flowchart to determine what activity status an activity will be given:

Click here to view the flowchart

Two interesting points to note in relation to the flowchart are that:

  • Activities will only be classified as permitted if the effects are minor (compared to clause 29(4) in the Bill which prevents activities being classified as permitted if the effects are "significant".
  • Activities will only be classified as prohibited if the effects will be unacceptable in every case.

MfE have used this flowchart throughout the document to assess what activities should be permitted, discretionary or prohibited.  Only activities that are currently occurring or are likely to occur within the next five years have been assessed in this way.

The discussion document suggests the following activities can be permitted within the EEZ, subject to conditions:

  • Seismic surveying;
  • Submarine cabling;
  • Marine scientific research;
  • Prospecting for oil and gas; and
  • Prospecting for seabed mining.

Activities that do not meet the thresholds set by the conditions of those permitted activities, and any other activities, are discretionary.

Interestingly, the discussion document concludes that no activities should be listed as prohibited at this time because of the limited information available on the environmental effects of some industries.  The document suggests it would be pre-emptive to prohibit any future activities before the methods to implement them have been fully developed, tested and monitored through an adaptive management regime. 

The questions ask for submitters' opinions on all aspects of the discussion document, including the following matters:

  • the proposed assessment criteria and the way it has been arranged (ie international obligations first, followed by environmental effects and then other matters);
  • the proposed environmental thresholds for a permitted activity (being a minor environmental effect);
  • the net impacts of the proposed classifications;
  • what the potential volumes of activities in the EEZ should be;
  • whether submitters agree with regulations being grouped by industry rather than effects.  The document considered grouping regulations based on industry or environmental effects and concluded that grouping by industry would be clearer for users, iwi and the public as classifications relating to each industry could be found in one place;
  • whether submitters agree with objectives for setting conditions on permitted activities;
  • what information should be used for monitoring by the EPA and how this should be collected;
  • options that should be considered in relation to engagement with iwi;
  • whether regional councils and unitary authorities should be notified where the effects of a permitted activity  might cross the boundary with the territorial sea;
  • whether each activity listed should be classified as it has; the proposed conditions on activities and whether there are any other activities that should be covered under the scope of the EEZ; and
  • what cost recovery method would be the most equitable, efficient, transparent and justified.

Submissions on the discussion document close on 29 June 2012 at 5pm.