EEZ Bill passes into Law

The Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill ("Bill") passed its third reading in the House last week by 72 votes to 49 (with Labour, the Green party and Mana opposed) and received Royal Assent on 3 September (to become the "Act").  The Act will enable comprehensive environmental management of activities within New Zealand's exclusive economic zone and continental shelf ("EEZ") for the first time.  It is intended that the Act will only come into force once the first set of regulations are promulgated.

The changes made to the Bill at the Select Committee stage were summarised in our June Mining Update, which can be accessed here.  Further developments to the Bill at the Committee of the Whole House stage have included:

  • amending the purpose of the Bill to promote "sustainable management";
  • increasing the maximum penalty from $600,000 to $10 million for companies that undertake activities in breach of the legislation, or breach rules in marine consents; and
  • confirming that planned petroleum activities for the 2013 / 2014 drilling season will be covered by a transitional period.

At the Committee of the Whole House stage, Minister for the Environment Amy Adams announced some major amendments to the Bill, which addressed some of the key criticisms remaining after the Select Committee stage.  A major concern of the minority parties at the Select Committee stage was the purpose of the Bill, which sought to achieve a balance between environmental protection and economic development within the EEZ.  It was contended that this balancing test failed to provide adequate protection for the environment, and establishing environmental "bottom lines" beyond which economic activity would be prohibited would be more appropriate.  This concern was also highlighted in a report by the Parliamentary Commissioner for the Environment.

As a result, the purpose clause (clause 10) has been amended to now be: "to promote the sustainable management of the natural resources of the exclusive economic zone and the continental shelf", reflecting a similar purpose to the Resource Management Act 1991.  This change satisfied the concerns of NZ First and ensured their support in the final reading of the Bill. 

Another concern following the second reading of the Bill was that the penalties for breaching marine consents would not act as a disincentive.  As a result, clause 125(1)(b) has been changed, increasing the maximum fine for companies that undertake activities in breach of the legislation, or do not comply with marine consent rules, to $10 million (from $600,000). 

Finally, the transitional period has been extended to include the 2013 / 2014 deep sea drilling season.  Previously, planned petroleum activities could only continue without a marine consent until the later of either: 6 months after the Bill comes into force, or 1 May 2013.  As a result of the change, the transitional period is now the later of either: 12 months after the Bill comes into force, or 1 May 2014.  This change was made to account for the long lead in times to secure a drilling rig. Operators of petroleum activities during the transitional period will still be required to provide an Impact Assessment to the Environmental Protection Authority.

EEZ Regulations

As noted above, the Act will only come into force once the first set of regulations is promulgated.  The period for public submissions on the Ministry for the Environment's Discussion Document on the regulations proposed under the Bill has now closed.  The Government is currently considering those submissions prior to preparing draft regulations.  We will update you on any developments with the draft regulations.

Just blowing smoke

The High Court has dismissed the appeals by The Royal Forest and Bird Protection Society and West Coast ENT Incorporated (together the "appellants") against the Environment Court's decision that the downstream effects of coal combustion are not to be taken into account in determining the consent applications by Buller Coal Ltd ("BCL") and Solid Energy New Zealand Ltd ("Solid Energy") for two new coal mine projects on the West Coast. 

The ultimate issue for the High Court was whether the Resource Management (Energy and Climate Change) Amendment Act 2004 ("Amendment Act") removed the jurisdiction of consent authorities to consider the effects on climate change of the discharge of greenhouse gas emissions from the end use of coal.  The appellants argued that the Amendment Act circumscribes consideration of the effects of greenhouse emissions in a precise and specific way, amending only the provisions regarding discharge permits under s104E of the Resource Management Act 1991 ("RMA"), but not other consent applications subject to s104(1)(a) (which requires consent authorities when considering any application for resource consent to have regard to the actual and potential effects on the environment of allowing the proposed activity).  The effect of this argument, if successful, would be to require the Buller District Council (and Environment Court on appeal) when considering the consent applications by BCL and Solid Energy to take into account the effects on climate change from the combustion of coal by customers in China, India, Brazil and South Africa after it has been exported from New Zealand.

The High Court rejected the appellants' arguments in their entirety.  In particular, the Court held that the Amendment Act removed climate change matters from a local or regional level and placed those matters at a national level for assessment.    This was clear from the express purpose of the Amendment Act, which as set out by the majority of the Supreme Court in Genesis Power Ltd v Greenpeace New Zealand Inc [2009] 1 NZLR 730 (SC), requires local authorities to plan for the effects of climate change, but not to consider the effects on climate change of discharges into air of greenhouse gases.  The unambiguous policy of the Amendment Act is therefore to secure the coherent regulation of greenhouse gas emissions at a national level.  District-level control of greenhouse gas emissions via the resource consenting process, without any national and then regional guidance, is therefore not permissible under the RMA.  The High Court accordingly concluded that the effect of the combustion of coal on climate change is not a relevant consideration under s104(1)(a) of RMA when considering the actual and potential effects on the environment of BCL's and Solid Energy's resource consent applications.

Whata J's decision will be welcomed by the mining industry.  Had the appellants been successful in their appeals, the Buller District Council would effectively be enabled to impose controls on BCL and Solid Energy purporting to regulate the discharges of greenhouse gases by their overseas customers in China and elsewhere, or decline consent on the basis that the adverse effects of these overseas emissions cannot be adequately avoided, remedied, or mitigated.  It is obviously implausible to ask local authorities in New Zealand to apply the sustainable management principles to overseas jurisdictions and questionable whether any such controls could ever be enforced.  If such "end use" effects did need to be taken into account, the prospect of obtaining resource consent for new projects proposing to export non-renewable energy sources from New Zealand would be called into serious question.  As the High Court prudently noted, "one leviathan of environmental law (ie the RMA)" is already more than enough for industry, lawyers, experts, local authorities and the Courts to navigate in this country, without adding another impossible layer of assessment as to whether the end use of coal in Cambodia or a province of China will be subject to appropriate regulatory control.

It remains to be seen whether the appellants will seek leave to take the matter to the Court of Appeal.