As published in the Resource Management Journal (Issue 1, Volume X, March 2002).
IntroductionCompliance costs are currently a hot topic. Indeed, the Ministerial Panel on Business Compliance Costs (July 2001) made a specific inquiry into the question of why compliance cost reduction is important. The findings of the Panel were that:
"The very clear message that the Panel received from businesses was that some compliance costs can act as a brake on business growth. They are discouraging growth by reducing incentives to be innovative and by placing barriers in the way of expansion. Compliance costs are also diverting resources away from productive pursuits, including research and development. Some businesses suggest compliance costs are eroding New Zealand's international competitiveness."
It is also interesting to note before turning to look in more detail at the issues relating to notification, that one of the initial intentions which lay behind the enactment of the RMA was to "establish a more efficient, more certain and less costly process for making community decisions on resource management". It may be useful to bear that comment in mind, particularly when looking at proposed amendments to the RMA.
The vexed issue of public notificationSo, why is public notification under the RMA a vexed issue? An answer to this question was provided succinctly by Justice Priestley in the recent case of Sheppard & Bendall v North Shore City Council (High Court, Auckland, May 2001) when he stated:
"Developers will understandably want to avoid costs and delays which Resource Management Act processes entail. If the number of people whose views the consent authority has to consider can be restricted, the greater the control over the process which can be exercised by the land owner or developer. The costs and delays of appeals are additionally avoided." (p 23)
As a result there is a clear incentive for developers and land owners to seek that resource consent applications be processed on a non-notified basis to avoid costs and delay. These issues will be looked at further after taking a brief overview of public notification under the RMA.
Public notification: an overviewThere is a general presumption under the RMA of allowing public participation. In particular section 93(1)(g) provides that "every application for a resource consent [shall be] Publicly notified". However, like all general rules there are exceptions to this provision.
Section 94 of the RMA provides specific exceptions to notification:
Where the district or regional plan expressly permits consideration of applications for controlled and restricted discretionary activities without the need to obtain the written approval of affected persons (section 94(1)(b) and (1A) of the RMA). In the case of discretionary and non-complying activities, an application for resource consent need not be notified where the adverse effects will be minor, and written approval has been obtained from every affected person (section 94(2) of the RMA).Latest position from the courtsIn Sheppard the High Court usefully summarised the test for non-notification under section 94(2) of the RMA in respect of discretionary and non-complying activities. It confirmed that the test takes the form of two separate, sequential and cumulative parts:
First, the Council is obliged to make a general enquiry about effects on "the environment". Are there any which are more than minor? If the answer to this question is Yes, the application must be notified. If the answer is No, then the second part of the test is to be examined. Are there persons potentially affected in an adverse way? For this test, all potential (real) effects must be considered, not only those which are minor or worse. The Council may only disregard matters truly to be considered "de minimus" (or negligible).Additionally, the Court also provided some useful comment on the baseline for effects assessment in relation to the first part of the non-notification test referred to above:
In the Sheppard case resource consent had previously been granted for a similar proposal on the subject land on a non-notified basis. That consent remained valid and capable of implementation. The Court gave approval to the comparison between the application under challenge and the previous consent because the two proposals were substantially similar in terms of both activity and environmental effects. Confirmation of this point by the Court in Sheppard extends consideration of the baseline for effects assessment (where relevant) from one of merely considering permitted activities. A point which will be touched on again when looking at proposed amendments to the RMA. The Sheppard case also confirmed the importance of plan provisions. For example, where the controls in the plan do not specifically regulate or provide discretion to the Council. As a result the effects of complying with such plan provisions is deemed to have been anticipated by the community when the plan was prepared. Finally, when looking at the various effects of a proposed activity on the environment, the Court confirmed that a "holistic" approach should be preferred, rather than adopting a separate item by item approach for the effects assessment. The Court considered that a holistic approach would ensure that cumulative effects were also considered.Consequences of notificationThe consequences of notification can lead to increased costs, and the delays of appeals for land owners and developers. For example:
Any person can make a submission on the application. Submitters have the right to be heard by the consent authority (if they so desire). Any person who made a submission about an application can lodge an appeal with the Environment Court against the consent authority's decision.The impact of submissions and Council hearings has been recorded by the Resource Management Act: Annual Survey of Local Authorities 1999/2000 published by the Ministry for the Environment in May 2001. The survey recorded that on average 3% of land use consent applications are publicly notified nationally. There are, however, variations in these statistics across the country. For example, within the Auckland region the notification record of Auckland, Manukau, North Shore, Papakura, and Waitakere is well below the national average. The picture is, however, different in Franklin and Rodney where respectively 4.3% and 6.6% of land use consent applications are publicly notified.
Time limitsThe same research by the MfE also shows that notified land use consents are likely to take longer to process than non-notified applications. For example, in the case of Rodney only 68% of notified land use consents were processed within time, whereas 89% of non-notified land use consent applications were processed within the time limits prescribed by the RMA. Similarly, in the case of Waitakere only 33% of notified land use consent applications were processed within time, whereas 93% of non-notified land use consent applications were processed within time.
Beyond delays at the Council stage there is an additional risk of appeals to the Environment Court. The report of the Ministerial Panel on Business Compliance Costs noted that:
"One of the major causes for concern among businesses are the excessive delays in cases being heard before the Environment Court. Waiting times vary from 18 to 30 months and there is currently a backlog of approximately 3,000 cases."
"Risk" of non-notificationNon-notification is, however, not without risk. Should proceedings be lodged, land owners and developers face either delay whilst the proceedings are heard, or the risk attendant in proceeding with the development in the interim. The record of recent case law indicates that the risk of proceeding with development in the face of judicial review proceedings could be substantial.
For example, in the Bayley case the final outcome was that the developer needed to obtain an additional land use consent under the Transitional District Plan. In the Lowe case the effects of the High Court decision on the land owner were more significant - the grant of resource consent was declared by the Court to be invalid and the resource consent itself was set aside notwithstanding that the bulk of the work had been completed. In such circumstances a fresh application would be required, and would be likely to be notified.Even where successful, the cost of delay in proceeding with a development in the face of judicial review proceedings can be substantial. These costs cannot be recovered by the developer - unless the applicant for judicial review has sought an interim order restraining the development from proceeding.
In cases where an interim order is not sought and the developer is ultimately successful, only the costs involved in defending the proceedings can be recovered in accordance with the High Court Scales. Commonly this will result in a developer or land owner being able to recover somewhere between 10 and 30% of their legal and consultants' costs.
RM Amendment Bill 2001When introduced into Parliament the Resource Management Amendment Bill was heralded as a Bill intended to reduce duplication, uncertainty and costs of compliance, and to improve the practice and procedures of the RMA. However, over time the intention behind the Bill has been weakened. In particular:
Sections 93 and 94 of the RMA dealing with notification of applications, and the instances when notification is not required are to be repealed and substituted. As a result the position reached today with decided case law from the High Court is likely to be eroded, and replaced with uncertainty until such time as the new provisions have been interpreted and the subject of judgment by the Courts. Additionally, in relation to the baseline for effects assessment, the new provisions legislate for the "permitted baseline test" - as a result consideration of previous resource consents (as occurred in the Sheppard case) may be lost. The introduction of new provisions for "limited notification" - that is providing hearing rights for only those affected persons who have declined to give their written approval in respect of a proposal, has been struck out of the Bill by the Select Committee. This provision was originally described as one of the 10 key measures included in the Bill. Jurisdiction to hear notification challenges is also proposed to be transferred to the Environment Court. Additionally, where a challenge is successful, the Court is to be given extended enforcement powers to cancel the resource consent challenged. These amendments were viewed with some concern by the Ministerial Panel on Business Compliance Costs. The Panel stated in its report that:
"We note that … the ability to appeal a council's decision to non-notify a resource consent application to the Environment Court as opposed to the High Court is likely to increase costs."As a result the overall conclusion in relation to the RM Amendment Bill is likely to be that the Bill will represent more of a hindrance than an improvement.
Where to next?More recently Select Committee News reported in February 2002 that the Minister for the Environment, Marion Hobbs, intends to introduce a Supplementary Order Paper when the Bill is debated during the committee stages in the House of Representatives. It is now proposed that the jurisdiction to hear notification challenges should remain with the High Court, and that the Bill will also be altered to permit limited notification of resource consent applications for activities with minor effects. These announcements were made as part of a package responding to the report of the Ministerial Panel on Business Compliance Costs.
Compliance costs have now been a topic of debate since this latest review of the RMA was launched by the publication of Owen McShane's report Land Use Control under the Resource Management Act in April 1998. The pendulum of debate continues to produce a divergence of views, with a recently released study by the OECD suggesting that compliance costs are not a major issue for New Zealand firms. For example, a report in EDS News in January 2002 noted that the OECD study:
"...found that the average compliance costs for individual firms over the ten countries [surveyed] were lowest in New Zealand. New Zealand firms spent on average $US8,900 a year, compared with the ten-country average of $US27,500. Most significantly, the costs to New Zealand firms were less than half of those in Australia, our main trading partner. The study estimated that, for New Zealand firms, 42 per cent of the costs were incurred in meeting tax requirements, 32 per cent in dealing with employment rules and only 25 per cent in complying with environmental regulations."
As a result while reforms currently proposed in the RM Amendment Bill and the Minister's intended Supplementary Order Paper remain to be determined during the current Parliament, it is unlikely that the final result will lay to rest the ghost of compliance costs which has continued to haunt the implementation of the RMA.
It, therefore, appears that the Advice to a Young Tradesman given by Benjamin Franklin in 1748 - to "Remember that time is money" is likely to remain true insofar as land owners and developers are concerned for some time.
This paper was originally presented as part of Chapman Tripp's "Twilight" seminar series in August 2001. The writer also acted as junior counsel in the Sheppard & Bendall case before the High Court, and is a director of the Environmental Defence. For more information contact the author: Trevor Daya-Winterbottom at Chapman Tripp.
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Chapman Tripp21 Mar 2002