Environment, Planning & Resource Management

08 Jun 2012

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A "New Direction" for Freshwater Management

The Second Report (Second Report or Report) of the Land and Water Forum was released on Friday 18 May. With several hard-hitting specific recommendations for implementing a new direction in freshwater management, the Report has already been labelled a “landmark” in the media.

The most substantial recommendations include the adoption of a new and very different "collaborative" decision-making process for policy statements and plans relating to freshwater, the creation of a new National Environmental Standard (NES), and the suggestion that merit-based appeals on plan and policy statement decisions be seriously restricted. For those making investment decisions in the water space, it is pleasing to see the emphasis on the importance of certainty, but the details of key interest on methods and strategies for achieving limits and how to manage within limits (including trading) will be developed in the report coming out in September.

Broadly, the Report makes recommendations in six areas, which are to:

• strengthen the objectives of the National Policy Statement for Freshwater Management (NPS-FM), with the inclusion of two new objectives relating to iwi values and human health;
• set new national objectives and bottom lines and three bands above them to assist regional decision-making, with a new national instrument such as an NES;
• set limits on water takes and discharges, with strict measures for enforcing the limits, such as requiring resource consents for allocations close to the limit and prohibited activity status for takes exceeding it;
• make decision-making more collaborative, outlining a detailed "collaborative" alternative to the Schedule 1 process for decision-making about plans and policy statements regarding water management that give substantial power to new "collaborative stakeholder groups", and recommending that a legal presumption be created in favour of using that alternative process;
• increase the agility of the planning system, with less use of the Schedule 1 process for minor and technical updates to plans and policy statements; and
• use transition tools to address the risk of 'rush' to exhaust available capacity during the period in which appropriate limits are determined, such as interim limits, moratoria, and default limits.

What is the Land and Water Forum? And why has it created this Report?

The Land and Water Forum was established to directly engage the myriad stakeholders in water management, on the belief that a consensus was necessary for a sustainable way forward. The Forum accordingly draws together key players from the pastoral industry, iwi, forestry, horticulture, power generation, tourism, the recreational and environmental sectors and urban water interests. The range of competing interests of the parties involved in the Forum means that its consensuses are not reached easily, and that when they are, they are likely to receive widespread support.

The Forum released its First Report in September 2010 (First Report), which noted the deteriorating quality and availability of New Zealand's fresh water, and outlined high-level policy direction for addressing it. After the First Report was released, the Government released the NPS-FM, and established the Irrigation Acceleration Fund to support the development of irrigation infrastructure proposals. The Forum was then asked to continue its consensus-building efforts, with more specific direction as to how the goals indicated in the First Report might be implemented. The Second Report is the first of two reports that respond to this request.

Strengthening the objectives of the NPS-FM

The Report proposes to strengthen the objectives of the NPS-FM in two ways: by recognising iwi tikanga and values, and by recognising the need to protect human health. The iwi value recommendation is specific, recommending that the substantive content of an already created, iwi-developed set of defined "use values" be incorporated into the preamble of the NPS FM. The second is to recognise the human health risk presented by pathogenic micro-organisms and toxic contaminants such as heavy metals and organic compounds. The Report therefore recommends that an objective is added to the NPS-FM to help manage these risks to human health, for application to all water bodies.

National objectives, bottom lines and three bands above them

The Report recommends that a national instrument, such as a National Environmental Standard, be created to set tight 'bottom lines' (numerically, where appropriate) on a limited range of indicators, including those relating to biometry, physico-chemistry, physicality, human health, and fish productivity. These bottom lines would also help to provide guidance to regional councils on the meaning and intent of national objectives, allowing for greater clarity in setting the objectives and limits at a catchment level.

The Report recommends that a series of bands be included in the national instrument that set out fair, good and excellent standards above the bottom lines. Such a system would provide the opportunity for regional councils to create specific objectives for each of the three bands, allowing for them to take into account particular water body types and local values. In providing specific tiers of quality to be aimed for, the Report considers that a banded system would also guide regional councils in giving effect to Objective A2 of the NPS-FM - that overall quality of freshwater is "maintained or improved". Accordingly, the Report also recommends further definition of "maintain" and "improve" in the NPS-FM, which would link their meanings to the series of bands.

Although this refinement would clarify what maintain and improve mean, it would not clarify the ambiguity identified by some commentators about whether the term "overall" means that environmental offsetting across different parts of the same water body, or even separate water bodies, is acceptable.[1] We consider that clear direction about how "overall" modifies the maintenance or improvement that would otherwise be required is necessary if the NPS-FM is to be applied in a consistent manner across regions.

Setting limits and recommended measures to enforce them at a regional level

The Report recommends that regional councils include rules in regional plans to set limits on water abstraction, nutrient, sediment and toxic contaminant loads, micro-organisms and temperature, as rules in regional plans. The Report notes that the use of non-complying activity status in the past for resource use exceeding limits has resulted in adverse cumulative effects, or "death by a thousand cuts", of a resource, through limits being exceeded outside a Council's control. The Report accordingly recommends that once limits are close, resource consents should be needed for further use, with resource use exceeding limits managed using prohibited activity status. Where a limit is to be changed, that should occur through a plan change rather than a resource consent.

The Report recommends regional councils retain discretion for setting a timeframe for moving towards limits that would meet national objectives, particularly where water resources are already exhausted beyond that limit. Interim limits and regional plan targets, at no greater than five yearly intervals, are also recommended for moving towards national objectives.

Collaborative decision-making: a whole new ball game

The Report proposes in some detail a completely new "collaborative" approach to forming freshwater-related national instruments and the freshwater-related components of regional policy statements and regional plans. Decision-makers would still retain discretion, after engaging mana whenua, stakeholders and the community, about whether to use the proposed collaborative approach or a more traditional Schedule 1 approach. Although, that discretion would be subject to a statutory presumption that the collaborative approach is used.

The proposed approach would create an intermediary "collaborative stakeholder group", consisting of representatives of the various interest-holding groups in freshwater management. Members of the group would work to create consensus on the matters which it is asked to address, constantly consulting their constituencies about policy alternatives, and working with the decision-maker (ie regional council or Minister) to create written provisions for the matters on which the group reaches consensus. The decision-maker would create written provisions for matters on which the group could not reach consensus. Where disputes were not already resolved by mediation, the hearing of submissions and further submissions on the proposed provisions would be conducted by an independent panel (available for regional documents only). The relevant council or minister would make the final decision on the content of the document.

The Report also recommends significantly restricting merit-based appeals on plans and policy statements, although this was the one issue on which a consensus could not be reached. Nonetheless, the Report recommends restricting appeals on regional documents to matters of law only, to the High Court, in order to give greater incentive for early engagement in the collaborative process. Leave could be granted by the Environment Court for appeals on the merits in only two circumstances - where the decision either does not give effect to the consensus position of the collaborative stakeholder group, or where it would have material implications for a matter of national significance. For national documents, appeal-rights would be restricted to judicial review only. The Report considers the same restrictions would not be appropriate for resource consent appeals.

The Report recommends that eight specified principles of collaborative freshwater management be included in a national instrument, in order to guide collaborative processes. It also acknowledges that collaborative processes are unlikely to be cheaper than the status quo in the short term, but expects them to be faster, more efficient and more equitable.

We can understand the synergies the Report identifies as being associated with a collaborative process and how they would potentially speed up plan and policy statement decision-making. For example, the pooling of resources for joint commissioning of expert scientific and legal advice with the goal of reaching a policy consensus, rather than retaining them separately for court processes, could make the process more efficient. The tight restrictions placed on merit-based appeals to the Environment Court also means the process is likely to be faster because of decreased litigation. Although there would likely be some teething problems in implementing a collaborative approach due to its high degree of difference from the status quo, we broadly agree with the Report's assessment of the benefits associated with the collaborative process.

Increased agility of planning system

Another benefit of the collaborative process, the Report considers, is that the process could create agreement on circumstances in which minor and technical updates to plans and policy statements could occur without using the RMA Schedule 1 process. The Report recommends that the significance of the effects of plan changes should guide the degree to which consultation of stakeholders needs to occur, before the document can be changed. In line with this, the Report also recommends that the RMA should be amended to enable minor and technical updates to documents, methods and models that are incorporated by reference without the need for a plan change process.

In our view, this is a sensible recommendation in light of the dynamic nature of water flows and knowledge about them. A proposal to agree on objective parameters within which plan updates can occur, to allow them to accurately reflect this stream of new information and knowledge, is unlikely to be controversial. However, this recommendation would entail resources being shifted from the later, more adversarial Schedule 1 process post drafting of a change, to negotiation of the parameters under which plan changes can occur before they are contemplated.

Transition Phase

The Report raises the concern that problems are likely to arise, such as a "gold-rush" to capture available freshwater, in the transition period before appropriate limits are determined. It considers that three existing tools for dealing with this problem - interim limits, the transitional policies in the NPS-FM, and the moratoria powers in Canterbury - each have their shortcomings. Interim limits would take some time to introduce. The transitional NPS-FM policies only require regional councils to "have regard to" the impacts of new consented activities on the life supporting capacity of freshwater, and the moratoria powers only exist (and may only be appropriate) in the particular circumstances of Canterbury. The Report also suggests two possible further tools for dealing with transition risks, which are default limits set through the proposed NES on Ecological Flows, and the creation of additional moratoria powers. However, it defers detailed consideration of these measures until its next report.

We agree that the transitional NPS-FM policies would not be a particularly effective mechanism for addressing transition risks, because the requirement to "have regard to" them means that action inconsistent with the policies could lawfully be taken. We also agree with the Forum that the NES default limits would need modification before being appropriate. Expanding moratoria powers would be a particularly draconian step, given the stifling effect it could have on new users, and we agree with the Forum that it is not urgently required. Whether such a tool is necessary should be given further careful consideration. In any event, the Forum's next report is likely to give further detail on potential transition tools and is therefore likely to be the more appropriate focus for evaluating them.

What next?

The Second Report only proposes to address the first two areas tasked to the Forum in its terms of reference which relate to what is needed to effectively implement limits, and what more efficient and improved decision-making structures might look like. This leaves the remaining two areas of achieving limits and targets through managing land use, and the particularly challenging issue of allocation regimes, for a third report to be released in September. These are the areas that will be of particular interest to those wanting to progress irrigation infrastructure projects.

The Second Report has received widespread support from across the political spectrum, including from the Government, with the main point of difference between interested parties being when action should be taken to implement the Report, not if. The Government has signalled that it will wait to receive the Forum's third report before making any amendments, so as to consider the recommendations as a whole, although others have suggested that implementation should be more immediate. Regardless, the volume of support that the Report has garnered suggests the significant reforms it recommends to RMA freshwater decision-making processes are likely to occur in the not-too-distant future.

Authors

Heather Ash

Partner - Public Sector

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Duncan Laing

Partner - Public Sector

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Gerald Lanning

Partner - Public Sector

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Bill Loutit

Partner - Public Sector

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Padraig McNamara

Partner - Public Sector

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James Winchester

Partner - Public Sector

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Joanna Lim

Senior Associate - Corporate & Commercial

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