As published in Counsel On 21 March 2002, Parliament passed the controversial Resource Management (Aquaculture Moratorium) Amendment Act, the culmination of a legislative process that began with the shock announcement on 28 November 2001 of a two year nation-wide ban on consents for new aquaculture activities. The growth of a burgeoning $280 million industry encompassing scientists, marine farmers and manufacturers, to name a few, was apparently stopped in its tracks.
However, while immediate and far-reaching, the moratorium still allows room for participation in the development of the aquaculture industry during the next two years.
WHAT SHOULD BE DONE NOW? Applicants with sites which (under existing regional coastal plans) have the status of controlled or discretionary activities can discuss with their regional council the possibility of lifting the moratorium early. Applicants whose pre-moratorium applications have been put on hold should ensure that their regional council includes their site in a Aquaculture Management Area (AMA). All persons with an interest in the industry should monitor the substantive reform package due for release in June this year and make submissions to the Select Committee. WHY WAS A MORATORIUM THOUGHT NECESSARY?In its Vision 2020 statement published last year, the New Zealand Aquaculture Council heralded aquaculture as a "revolution" which had brought together a remarkable combination of marine and freshwater farmers, fishers, enthusiasts, research scientists, seafood processors, equipment manufacturers and marketers.
Enthusiasm for aquaculture was not limited to industry players. In a May 2001 speech to the NZ Seafood Industry Conference, Fisheries Minister Pete Hodgson described the projected increase in aquaculture exports as "impressive", and the Vision 2020 document as "equally impressive". So why risk the health of the proverbial goose with a two year moratorium?
Ministerial briefing papers obtained under the Official Information Act (OIA) go some way to explaining the Government's rationale for imposing the moratorium. Work has been underway for some time in the Fisheries and Environment Ministries towards the development of a new regime for regulating domestic aquaculture activities and development. Later in this Counsel, we briefly describe the main planks of a proposed new system of regulating marine farming in New Zealand. For the moment, we note that the OIA papers reveal that:
The Government's preferred approach for reform of the current regime involves the adoption of a prescriptive framework of regional aquaculture zones called AMAs and the setting up of a tendering regime for the right to apply to establish marine farms in approved AMAs. The Environment and Fisheries Ministries considered that a moratorium would avoid the proposed aquaculture reforms being made ineffective by a rush of pre-emptive applications once the new policies were announced. There was a strong view in the Ministries that many existing regional plans give inadequate guidance to both applicants and council staff concerning the appropriateness of establishing marine farms in any particular areas of the region. This (it was thought) was placing an unreasonable burden on those councils to cope with a large number of applications made in the last two years. Officials believed that some councils urgently needed "breathing space" to address the effects of the "wave of new applications" (including applications for the relatively new concept of large, offshore marine farms which would, in some cases, occupy many hundreds of hectares of coastal space). KEY POINTS OF THE ACT The Act imposes a ban on the processing of marine farm applications made within the moratorium. The moratorium began on the 28 November 2001, and applied to all applications not publicly notified or accepted by the regional councils as non notified applications. The moratorium will last for two years from the Act coming into force on 26 March 2002. The Minister of Conservation can recommend to the Governor-General that the moratorium be uplifted earlier than the two year period. All those applications made to a regional council during the moratorium will be returned and not processed by the council. Once the moratorium is uplifted, applications will be processed under the planning law in force at the time, and will be considered in light of resource management effects and effects on the fishing industry. THE BILL AS INTRODUCEDShockwaves were felt by those involved in aquaculture up and down the country when, on 28 November last year, the Environment and Fisheries Ministers announced a proposed nation-wide two year moratorium on consents for new aquaculture activities. The moratorium was to be effective immediately, and confirmed by retrospective legislation that would follow soon after.
The Resource Management (Aquaculture Moratorium) Amendment Bill ("the Bill") was introduced in early December, and had its first reading on 18 December 2001. The Bill had the following objectives:
To prevent the consideration or approval of applications for coastal permits to occupy coastal marine areas (for which a hearing had not commenced), during the moratorium period. To specify a time limit for the moratorium, to commence on 28 November 2001 and end two years from the date on which the Bill became an Act. To allow the Governor-General (by Order in Council made on the recommendation of the Minister of Conservation), to uplift the moratorium in defined coastal marine areas before the expiry of the national moratorium. To prevent applications for which hearings had not commenced from being processed further or considered until the moratorium has ended (irrespective of the status of amendments to regional coastal plans). To prevent new applications submitted after the Bill had become an Act from being processed or considered. To prohibit any person from doing anything under a coastal permit caught by the moratorium (except those permits that relate to coastal marine areas lawfully occupied by the holder), and enable regional councils to review and amend at the end of the moratorium the conditions of permits granted during the moratorium. A PAUSE BEFORE THE LEAP: THE SELECT COMMITTEE PROCESSWhile Green MPs and environmental organisations such as the Royal Forest and Bird Protection Society welcomed the announcement of a moratorium as a sensible response to a "desperate gold-rush type grab for sea space"(1), predictably, strong concerns at the unexpected halt to further aquaculture development were voiced by a range of industry groups. Particular opposition to the moratorium was expressed by representatives of iwi groups involved in aquaculture projects, typified by the claim by Ngahiwi Tomoana (chairman of Ngati Kahungunu, a Hawke's Bay-Wairarapa iwi) of the perceived inconsistency of a government that "talked about regional development on one hand, but was strangling "cutting edge" economic development proposed by Maori with the other"(2).
Despite apprehensions that the Bill might be passed into law under Urgency, and perhaps in recognition of strong iwi and industry opposition to the retrospective ban, the draft was referred to the Primary Production Select Committee after its first reading on 18 December. The Select Committee was charged with receiving and hearing submissions on the Bill, and directed to report back to Parliament by 8 March 2002.
143 submissions were received relating to the Bill, representing a wide cross section of organisations and individuals with interests in the economic, environmental, cultural and legal aspects of aquaculture development in New Zealand.
CONCERN WITH RETROSPECTIVE EFFECTA number of submissions (including submissions on behalf of the New Zealand Law Society and the Resource Management Law Association of New Zealand) raised concerns with the retrospective effect of the Bill, observing that it is a long-accepted and fundamental principle of law that legislation should operative prospectively and not retrospectively, in a way that would adversely impact on existing and "accrued" rights. Aspects of the Bill that contravened this principle included provisions which:
Would prohibit regional councils from processing or making decisions on applications which had been filed, but which had not yet begun to be heard by 28 November 2001. Would prohibit applicants who may be granted permits between 28 November 2001 and the date on which the Bill came into force as an Act from relying on or exercising those permits. OTHER CONCERNSOther key issues raised in submissions on the Bill included:
Length of the ban: Government press releases issued at the time of the 28 November announcement emphasised that an underlying rationale for the moratorium was to allow a breathing space which would enable regional councils to put in place AMAs clearly defining where aquaculture can and cannot take place. Submitters pointed out that two years was far too short to enable the inevitably controversial task of defining AMAs to be completed. This raised the likelihood of pressure on Government to extend the ban for a much longer time. Economic impact on the industry: Concern was expressed by many industry submitters regarding the economic impact of the moratorium on the developing aquaculture industry in New Zealand. Particular concern was expressed at the risk of loss of premium export markets for the New Zealand GreenshellTM product. The Select Committee was warned that a hiatus in the ability to provide for increases in mussel farming would cause even greater pressure on suppliers, forcing processors to harvest and market smaller product, resulting in the loss of an historically major point of differentiation of the NZ GreenshellTM mussel - its large size. Disproportionate impact on Maori: In submissions to the Select Committee, and direct representations in Parliament, strong concern was expressed on behalf of iwi at the negative impact on Maori development that would occur if the moratorium was to proceed in the form provided for in the Bill. A number of significant iwi-driven projects for which applications had been lodged, but hearings not commenced by 28 November, would have been affected by the Bill. Intense lobbying took place with the objective of allowing those developments to proceed.
THE BILL AS REPORTED BACK
In its report to Parliament, the Primary Production Select Committee recommended a number of changes to the Bill. Some were to remedy drafting errors. Others related to matters of substance, and to a degree can be seen as a "backing down" by Government in the face of heavy opposition by iwi and industry groups to a Bill that was perceived as unfair and heavy-handed. Key recommended changes included:
Shifting the "cut off" point for applications caught by the moratorium, so that applications publicly notified (or accepted by regional councils as completed non-notified applications) before 28 November 2001 could continue to be processed. Clarifying that the "early lifting" mechanism could only be exercised after the Minister of Conservation has satisfied herself that:
- aquaculture is provided for by the regional coastal plan as a controlled or discretionary activity.
- the size of the aquaculture area and its location are such that it will avoid, remedy or mitigate the adverse effects (including cumulative) of aquaculture on the environment and coastal marine area.
- the lifting of the moratorium will not adversely affect the establishment of AMAs in the future. Clarifying that, on expiry of the moratorium, the consent authority must resume processing any applications "held over" from prior to 28 November 2001, but under the existing and proposed rules as they stand at the end of the moratorium (including any rule prohibiting an activity). Providing that, in developing the new AMAs, regional councils must have regard not only to the "usual" Resource Management Act (RMA) factors, but must also consider the potential impacts on fishing. Making consequential amendments to relevant fisheries legislation. Providing for circumstances where certain rules in new regional plans will not have effect until the plan becomes operative, through a resolution included with public notification of the plan. The Bill was referred, with the Select Committee's report, back to Parliament for its second and third readings in the second week of March 2002. With one or two minor procedural changes, the recommendations of the Committee were accepted by majority of the House, and the Bill was passed by Parliament on 21 March.
IMPLICATIONS OF THE ACTNational moratoriumClearly the Act has substantial implications for aquaculture development in New Zealand. The Act puts in place a compulsory nation-wide moratorium, which, until 27 March 2004 (unless extended by separate legislation) prevents:
Regional councils from processing, hearing or deciding applications for aquaculture activities which had not been publicly notified (or accepted as not requiring public notification) by 28 November 2001. Regional councils from processing or hearing new applications for aquaculture activities. Costs and delaysThere will undoubtedly be costs associated with the new moratorium, both in terms of time and money already spent on applications that are caught by the moratorium and loss of economic benefits from proposals, which may not now go ahead. In submissions to the Select Committee individual applicants cited "sunk costs" in applications put "on ice" by the moratorium as high as $620,000. A report by the New Zealand Institute of Economic Research produced by one submitter estimated that the moratorium would result in lost economic benefits of between $200 million and $400 million.
Revised aquaculture planning provisions may reduce some of the uncertainty and delay currently in the consenting system. Whether this benefit will off-set anticipated costs remains to be seen.
The benefits are, of course, dependent to a large extent on the speed and expertise of regional councils in implementing the AMAs. Resolution of submissions and references concerning marine farming have historically been amongst the most contentious and time-consuming of RMA issues to face councils and the Environment Court in New Zealand. Experience with other contentious planning documents suggests that there is little prospect of plan changes introducing AMAs being able to pass through the necessary consultation, development and planning process in anything like the two year "breathing space" allowed for in the Act.
The reality of the substantial periods necessary to finalise AMAs, the impact of that "time-lag" on the effectiveness of the moratorium, and potential impact on the aquaculture industry players and the economy appear to have been brushed aside by the majority of the Select Committee. Instead, in comments that can be described as, at best, naive, the Select Committee simply suggested that "any progress a council can make during the moratorium towards determining appropriate zones for aquaculture will be helpful", and "to make use of the moratorium, councils need to start defining AMAs as soon as possible".
Retrospective element of the Act softened but still of concernWidening the scope of those applications now exempt from the moratorium has added to the group of "winners" (including, significantly, a number of key iwi interests), and mitigated to some extent the retrospective element of the moratorium. Nonetheless, there remain a substantial pool of "losers" affected by the Act's retrospective effect on applications which had not been notified by 28 November 2001. While retrospective legislation is not a new advent, it is controversial, and, as noted above, repugnant to fundamental principles of law and justice.
Regional councils can, under the transitional provisions, revisit permits granted between the start of the moratorium (28 November 2001) and the Act coming into force (26 March 2002), where the permit is granted for an application caught by the moratorium. As these permits would have been granted under substantially different planning documents to those which will exist at the end of the moratorium, the consent authority can review and amend conditions to the permits to make them consistent with the new plan provisions.
However, if a permit granted between the start of the moratorium and the Act coming into force is found to relate to activities within a zone which prohibits those activities once the moratorium is lifted, this permit will cease to have any effect. This would be a harsh blow for those who will have spent time and money on an application for such a permit. However, given the relatively short period between 28 November and the Act coming into force, it is unlikely there will be many applications to which this transitional provision will apply.
Ban includes small-scale research projectsWhile new section 150B(5) does not preclude the making or granting of coastal permits for "the same activities in the same area" covered by an existing coastal permit, the moratorium is effectively absolute unless an "early lifting" is granted under section 150C. If an application is made now then the regional council cannot process or determine the application until the moratorium has expired. An application made to the regional council during the moratorium must be sent back to the applicant as soon as possible.
The Select Committee rejected calls by some submitters that aquaculture for genuine research purposes conducted on a small scale should be exempt from the ban. The reason cited in the Report for this stance was the anticipated difficulty in accurately defining what is and is not for research purposes, especially given that aquaculture is a relatively new industry where novel practices are still being trialed. Accordingly (so it was considered) exempting applications for research purposes could open the floodgates, and result in the type of ad hoc development the Act was designed to prevent.
Consideration of effects on fishingIn a significant departure from previous judicial interpretation of the RMA in the aquaculture context(3) the Act requires regional councils to take into account the adverse effects of aquaculture on both the environment and the fishing industry when developing AMAs.
The obligation in new section 68A(2) to consider effects on fishing is no doubt the fore-runner of the proposed substantive aquaculture reforms outlined on the last page of this Counsel. The Government has made clear its intention to abolish the current 2-tier regime which requires marine farmers to obtain a marine farming permit under Fisheries Legislation, in addition to any requisite consents under the RMA. If this further legislation suffers the fate of past and present initiatives to review and amend provisions of the RMA itself, those interested can have no faith that it will be promptly and efficiently dealt with. This will create in our view a high-risk of initial delays, even before regional councils initiate their work in developing AMA's.
In addition, we observe that the requirement that regional councils take into account matters which have, until now, been the legally exclusive domain of the Ministry of Fisheries will only add to their considerable AMA-development workload. That renders the likelihood of early notification of regional plan changes even more remote.
Coastal Policy StatementThe Select Committee Report refers to a planned new New Zealand Coastal Policy Statement ("NZCPS") which is intended to provide direction to the regional councils in implementing their respective plan changes. The Report suggests a "worst-case" scenario for completion of the NZCPS being 18 months to two years. Again, we can only view this as hopelessly optimistic. While national direction regarding aquaculture development would undoubtedly assist, it seems unlikely that this will arrive in time to make any meaningful difference to the timing of the first round of AMA development.
Uplifting the moratoriumThe moratorium cannot be lifted solely at the behest of the relevant regional councils. As noted above, the Minister of Conservation controls the uplifting of the moratorium. While each regional council can request its uplifting, the Minister would look carefully at set criteria before deciding whether to recommend this. Therefore, there is little opportunity for each regional council to control the moratorium or restrictions.
The Act does provide some transparency to the uplifting process by detailing factors which the Minister of Conservation must consider when deciding whether to recommend the moratorium be lifted early. Also, as the Minister must make this decision within 20 days of the request, there is less chance for additional delays once the regional council has decided to uplift the moratorium. The recommendation by the Minister in the High Court would presumably be subject to judicial review.
How will "held over" applications be treated at the end of the moratorium?The Act directs that at the end of the moratorium (early or otherwise) applications caught by the moratorium are to be processed under the rules in place at the end of the moratorium. These rules would be contained in both the regional plan in force and any proposed plan.
A serious issue facing persons whose pre-moratorium applications have been put on ice is the status of those applications at the end of the moratorium. The Government has made clear its intention to introduce a tendering regime, under which persons wishing to undertake aquaculture within approved AMAs competitively tender for the right to apply for permits authorising those activities. Assuming that the areas to which pre-moratorium applications relate are confirmed in AMAs, it is not clear whether, despite having invested large amounts of money and time in applications, it will be necessary for those applicants to compete in a tender round for the right to continue what was started prior to 28 November 2001.
We regard this aspect of the Act as creating a most unsatisfactory level of uncertainty for existing applicants, already hard hit by the moratorium. Close attention will need to be given to the issue by officials, law-makers and industry players during the forthcoming substantive reform process.
What about applications made during the moratorium?The Act does not have a procedure for the processing of applications made during the moratorium, once the moratorium has been uplifted. Therefore, an issue arises as to what will happen to those applications caught by the moratorium and made during the moratorium. There is no direction in the Act clarifying whether the submission of such an application, regardless of the fact that it gets returned straight away, grants priority rights once resubmitted at the end of the moratorium. This confusion is compounded by the simple fact that the Act does not prohibit the making of an application during the moratorium. Accordingly, assuming no priority rights are obtained by submitting an application during the moratorium, the regional councils face a potentially huge influx of applications upon the uplifting of the moratorium. Thus, although the aim of the Act was to prevent a rush of applications creating ad hoc development, lack of procedure for implementing processes after the moratorium ends means that delays can now be expected even once the moratorium ends.
CONCLUSIONS AND THE WAY FORWARDIt is generally accepted that the present system for regulating aquaculture in New Zealand would benefit from streamlining and greater clarity. Regulators, applicants and environmental interests alike appear to agree on one point at least: the present system needs improving, and the sooner that occurs, the better.
However, as outlined in this Counsel, there is a real risk that rushing through legislation implementing a retrospective moratorium on new aquaculture consents will neither achieve the goals expressed for the legislation, nor facilitate the fair and effective regulation of an industry which has been a success story in New Zealand primary sector development.
Through the Select Committee process, concerns have been raised regarding the arbitrary and unfair impact on particular applicants affected by the moratorium. This is in addition to predicted substantial losses to the economy generally as a result of even a short hiatus in new aquaculture development. Perhaps a greater concern is the "silent threat" of a delay in the resumption of "business as usual"; likely in our view to be much longer than the two years currently provided for in the Act.
A further potential sting in the tail for existing applicants is the amendment to section 150D which did not receive great publicity in the Select Committee process. While the provision is not free of ambiguity, it appears relatively clear that the Government intends that rules in proposed coastal plans prepared during the period of the moratorium identifying areas where aquaculture is prohibited are to be given full and immediate effect upon notification. If interpreted in this way, this would reverse a long-standing planning principle that rules prohibiting or regulating activities do not fully replace an existing regime and take effect until they have passed through the submission and reference process, and been made operative.
Finally, it should be noted that the proposed reviewed NZCPS, and substantive aquaculture reform package due in coming months will have significant implications on the future of the industry. Those with an interest in aquaculture development in New Zealand would be well advised to carefully monitor those processes, and take advantage of opportunities for involvement.
(Footnotes)
1) Press release by Marlborough-based Green MP Ian Ewen-Street, 29 November 2001
2) Ngahiwi Tomoana, chairman of Ngati Kahungunu iwi, quoted in the Dominion, 30 November 2001
3) The Environment Court has previously held that issues relating to the sustainability of fishing resources could not be considered in the RMA process, but fell under the jurisdiction of the Minister of Fisheries under separate Fisheries legislation: see Golden Bay Marine Farmers v Tasman District Council W42/2001, 27 April 2001, Judge Kenderdine. A CHECKLIST FOR ACTIONFor applicants whose pre-moratorium applications have been put on hold as a result of the Act, take pro-active steps with the relevant regional council to ensure that the proposed site is included in an AMA.
For applicants with sites which (under existing regional coastal plans) have the status of controlled or discretionary activities, discuss with the relevant regional council the possibility of invoking the "early lifting" provisions. For all persons with an interest in the industry, monitor the proposed substantive reform package (due June 2002) and make submissions to the Select Committee. For all persons with an interest in the industry, and management of the coastal marine area generally, monitor the preparation and notification of a proposed reviewed New Zealand Coastal Policy Statement, and make submissions on that document. We will be closely monitoring this issue and can assist you with dealing with regional councils, developing strategies for exisiting and future applications, preparing submissions to the Select Committee and providing advice on all aspects of aquaculture regulation in New Zealand. ON MENUSubstantive Aquaculture Regulation ReformsIn a series of Cabinet Minutes and Briefing Papers dated November and December 2001, an overview of the proposed substantive aquaculture reforms was outlined. A further summary, set out below, is contained as an Appendix to the report of the Select Committee on the Bill. Although Government Press Releases in November and December 2001 indicated that a separate Bill containing the draft substantive reforms would be introduced in April 2002, the latest advice from the Ministry of Fisheries is that it is expected that the Bill will be introduced in June 2002, with a Select Committee report to Parliament by October 2002.
The Government has announced its intention to introduce legislation that will:
Change the interface between the RMA and fisheries legislation so that regional councils are required to consider all environmental effects, including the impact that marine farming has on the aquatic environment and the use and sustainability of fisheries resources, when they are providing for aquaculture in RMA coastal plans Streamline the application and environmental assessment process for new marine farms by providing a single-permit approval process to be operated under the RMA Clarify the existing presumption against allowing occupation of coastal space to ensure that occupation of coastal space is controlled properly by plan provisions Provide regional councils with greater powers to manage and control (including staging) development within zones Require marine farm developments to take place within clearly defined "Aquaculture Management Areas" (AMAs) Provide for experimental aquaculture in AMAs tailored for that purpose Provide regional councils with additional rule-making powers to deal with competition for coastal space by all activities, including power to limit the coastal space that can be applied for in individual applications and power to determine appropriate mechanisms to allocate individual sites within zones, including AMAs Provide tendering provisions for regional councils to tender for the right to apply for coastal permits for space, including those for individual marine farm sites within each AMA, and as the default mechanism for the allocation of coastal space for aquaculture. Regional councils will retain 50 percent of the tender money Grandparent leases and licences under the Marine Farming Act into the new regime Provide policy guidance on the allocation of coastal space through a coastal policy statement, supported by the powers of the Minister of Conservation under the RMA and through involvement in the RMA processes; this will involve the Ministry of Fisheries and other agencies providing more input at the start of the planning process when identifying AMAs Improve co-ordination of Crown involvement in marine research and coastal planning to provide regional councils with guidance, support and information needed to implement the new approach to coastal planning. Authors: John Hassan (Partner), Trevor Gould (Consultant), Vernon Rive, Teresa Finlay, Nicky McIndoe, Jeremy Prebble
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