The Minister for the Environment, the Hon Nick Smith, announced yesterday that the Government is to introduce new legislation for the Exclusive Economic Zone (EEZ) and the Extended Continental Shelf (ECS).

This announcement was widely anticipated and seems to be almost universally accepted in principle. Although New Zealand's EEZ and ECS are nearly 20 times our land area (our EEZ is one of the largest in the world) there has been no clear framework for environmental assessment and regulation of activities which parties may seek to establish in the EEZ or ECS.

This hasn't been a problem to date with only a relatively small number of offshore petroleum and gas fields in production in New Zealand waters. However, given the increasing interest in exploration for oil, gas, and other minerals within the EEZ and ECS, the new legislation will need to strike an appropriate balance between encouraging investment and providing investment certainty in this sector, and ensuring appropriate environmental management and protection of our oceans.

The new Environmental Protection Authority (EPA) will be the agency responsible for decisions on consent applications, operation of the legislation, monitoring and enforcement. The Ministry for the Environment will be responsible for the legislation and development of regulations.

The legislation is to be enabling, with the detail to be confirmed by regulations. The regulations, to be prepared through public consultation, will establish rules and standards. Activities are to be classified as permitted, discretionary, and prohibited. Discretionary activities will require consent from the EPA. Seismic surveying is likely to be a permitted activity, but subject to compliance with specific requirements. We anticipate offshore drilling will require consent.

For discretionary activities, applicants will be required to prepare an impact assessment statement to identify the environmental effects of the proposal, and effects on other interests. Applications will be publicly notified, submissions invited, and hearings held if requested. This is not dissimilar to the Resource Management Act (RMA) "fast track" consenting regime.

The purpose of the legislation is to provide for the development of natural resources in the EEZ and ECS, while protecting the environment from adverse effects. Like the RMA, there will be an obligation to avoid, remedy or mitigate adverse effects. When making decisions on applications, the EPA will consider the following principles:

  • The present and future economic wellbeing of New Zealand.
  • Effects of the heath and safety of people.
  • Protecting existing uses, interests and values.
  • Safeguarding the biological diversity and integrity of marine species and ecosystem processes, protecting rare and vulnerable ecosystems as well as the habitat of the depleted, threatened or endangered species.
  • Managing the cumulative effects of activities on the receiving environment.
  • The efficient use and development of natural and physical resources.
  • Improving information and knowledge of the marine environment, including the effects of human activity on the marine environment.

The legislation will acknowledge the lack of information on habitat, species and biodiversity within the EEZ and ECS. The EPA will have to take into account the best available information, and exercise caution when information is unavailable or insufficient. However, through the application process research and the information base on our ocean environment is expected to increase.

There will be no right of appeal on the merits of a decision by the EPA, and only appeal rights on points of law to the High Court. There will however be a right of appeal on the merits to the High Court against enforcement orders and conviction for offences.

The Bill is currently being drafted by parliamentary counsel and is expected to be introduced to Parliament in July. It will then be referred to the Local Government and Environment Committee. It is intended to come into force on 1 July 2012, although it will not fully come into force until the first complete set of regulations has been developed.

It is possible that the Act will have transitional provisions, with existing activities to be issued with a transitional consent. Transitional arrangements will be of particular interest to those who may have committed to drilling or other work programmes, where these are not to take place until after the new regime comes into effect. It has been advised that new consents will not be required for existing oil and gas production installations and associated infrastructure.

The Minister also announced the new board of the EPA. It will be chaired by Kerry Prendergast, joined by David Faulkner, Anake Goodall, Tim Lusk, Graham Pinnell, Taria Tahana, Richard Woods and Gillian Wratt. The Minister considers the board has the right mix of skills to oversee the EPA with strong expertise in environmental sciences, infrastructure, renewable energy, tikanga Maori, governance and risk management.