The Supreme Court has delivered its much anticipated Sustainable Ōtākiri judgment.^[1] In this article, we briefly describe the issues before the Supreme Court and its decision. 

A little background

The appeal originated from an interim decision of the Environment Court granting resource consents (subject to conditions) for the expansion of Ōtākiri Springs Ltd’s (OSL) bottling plant. The proposal increases extraction capacity from 1.9 million litres of water bottled per annum to 580 million litres and increases bottling capacity to 1.35 billion bottles per year for the next 25 years.

The decision to grant the consent was appealed by Sustainable Ōtākiri Inc (SOI), a group representing the interests of local residents. The two grounds of appeal related to the adverse environmental effects from the disposal of plastic bottles (discussed in this article) and the purported incorrect classification of the activity as a discretionary “rural processing activity” rather than a non-complying “industrial activity” (not discussed here). 

The High Court and Court of Appeal upheld the Environment Court’s decision. Those courts found that pollution from plastic bottle disposal was not a relevant effect under the Resource Management Act 1991 (RMA) due to remoteness from the primary production activity. The Supreme Court decision, which comes two and a half years after the Court granted leave,^[2] largely upheld the findings of the lower courts and dismissed SOI’s appeal.

The result of the case only tells part of the story as the Supreme Court’s reasoning diverged from the lower court decisions in some key respects. While the lower courts held that plastic bottle disposal is not a relevant effect because of remoteness from the primary activity, the Supreme Court unanimously held that pollution from plastic bottle disposal could be a relevant effect of plastic bottle production. 

The Supreme Court decision

The majority made up of Ellen France, Williams and Kós JJ dismissed the appeals. The minority, Winkelmann CJ and Glazebrook J, would have allowed the appeals and remitted the proposal back to the Environment Court for reconsideration. 

Is plastic bottle disposal a relevant environmental effect under the RMA? 

The bench was unanimous in its finding that there is broad scope to consider environmental effects under the RMA. Significantly, the majority held that remoteness of indirect effects is a matter of fact and degree and there is “no hard and fast rule excluding the indirect effects of allowing an activity”. The majority held that “[the] effects that will be relevant in any particular case will depend on the controlling objectives, policies and rules (if there are any) and on the facts as determined by the consent authority.”  

This approach to the remoteness issue is a shift from the findings of the lower courts. The Supreme Court also distinguished the present facts from those in Buller Coal (a previous decision of the Supreme Court about the relevance of scope 3 greenhouse gas emissions).^[3]  The Court followed the approach taken in a recent decision by the United Kingdom Supreme Court (UKSC) in Finch.^[4]

The majority held the following factors do not preclude an adverse effect from consideration:

• Extra-territoriality: The majority noted that environmental impacts do not follow legal borders, “and environmental effects of activities undertaken in New Zealand will sometimes be insensitive to those borders.”
• Third-party intervention: An adverse impact resulting from a third-party act does not preclude consideration, particularly if that act is inevitable, for example in Finch, where the UKSC was considering the inevitable effect of oil extraction, namely, oil being burned by downstream purchasers and contributing to GHG emissions and climate change.
• Legality: The fact that an adverse effect occurs from a lawful activity, such as disposal of plastic bottles in a landfill, is irrelevant. The factual effect is separate to the legal status of the activity. 

Notably, the majority also rejected arguments related to substitutability in precluding the consideration of certain environmental effects. This is the argument that if the Applicant does not partake in the activity resulting in adverse effects, some other actor will in order to meet demand.

So, what “effects” are to be considered through a consent application?

The majority held that effects are factual things constrained only by the carve outs in the RMA itself (such as those in s 104(3)(a)(i)).  The court said “They are the actual or potential consequences of defined activities-consequences that are ascertainable (with varying degrees of confidence) through evidence”.  As applied to water bottling, the majority agreed that plastic bottle disposal could constitute an adverse effect in principle. 

The majority said the real question was whether the effects are relevant in fact. They held that the evidence before the Court was too sparse and generalised and that the procedural history of the case was such that the case need not remitted back to the Environment Court because of the late stage in the proceedings. The minority judgment would have remitted the case to the Environment Court. 

Insights

This decision has important implications for councils and resource consent applicants: 

• Providing evidence: As the Court has determined that relevant effects, including indirect effects, have a wide scope, and remoteness is a matter of fact and degree, the evidential onus on applicants, consent authorities and submitters may increase beyond the familiar resource management issues in situations that involve indirect effects.
• The onus to create plan provisions: The Court rejected the proposition that a wider view of effects will be too burdensome for councils in the absence of national direction, finding that councils may need to “consider developing relevant objectives, policies, and rules” for plastics disposal, and implicitly other indirect effects.
• Litigation risk: The prevailing approach to considering actual and potential environmental “effects” of a resource consent has been considered as “fact-sensitive”. A case-by-case analysis means that resource consent applications will need to be carefully assessed on their own facts, evidence and planning context. While this allows flexibility and responsiveness to the context of resource consent applications, it also creates uncertainty for applicants and councils, particularly for emerging activities that may have indirect effects. 

Get in touch

Please get in touch if you would like to know more about what the decision means for you. 

Special thanks to Tanmeet Singh and Jasmine Setchell for their help preparing this article.