Proposal for Exclusive Economic Zone environmental effects legislation

Date: May 2011
Reference number:
Cab 07-C-0751

Office of the Minister for the Environment
Cabinet Policy Committee

Cab 07-C-0751

Proposal

  1. This paper seeks Cabinet approval of proposals to fill gaps in the regulation of environmental effects in New Zealand’s Exclusive Economic Zone (EEZ).

Executive summary

  1. The proposed EEZ legislation fills gaps in the regulation of the environmental effects of activities in the EEZ.  Existing laws for fisheries and maritime transport, for example, will continue to operate largely as at present, and activities fully regulated under those statutes will not be covered by the EEZ legislation. 
  2. Activities in the EEZ that would be covered by the new legislation include seabed mining, petroleum activities, energy generation, carbon capture and storage, and marine farming.
  3. New controls are proposed to manage currently unregulated environmental effects (such as disturbance of the seafloor through mining activities). New Zealand is entitled under international law to regulate such effects but does not at present have legislation in place to do so. 
  4. The legislation will also address conflicts between new activities regulated under the EEZ legislation and existing defined interests in the EEZ. 
  5. New Zealand’s rights in the EEZ arise from international agreements and law, primarily the United Nations Convention on the Law of the Sea (UNCLOS).  Under UNCLOS New Zealand has sovereign rights for exploring and exploiting, conserving and managing the living and non-living resources of the sea and seabed in the EEZ. New Zealand also has exclusive rights and jurisdiction regarding the construction of artificial islands, installations and structures in the EEZ and jurisdiction over marine scientific research and the protection and preservation of the marine environment.
  6. Sovereign rights are not the same as in New Zealand’s land territory, or territorial sea. Sovereign rights must be exercised compatibly with the rights and freedoms of other states specified in UNCLOS, including the freedom of navigation and overflight, and the freedom to lay submarine cables and pipelines.
  7. The purpose of the legislation will be to provide for uses of EEZ resources, and to regulate the effects of those uses in order to protect the environment and ensure that uses (or the effects of those uses, in the case of non-renewable resources) are environmentally sustainable.
  8. The purpose will be accompanied by other provisions that set out environmental objectives for the legislation and economic, cultural and social considerations for decision-makers.
  9. The legislation will contain provisions detailing how the proposals take appropriate account of the Treaty of Waitangi. I propose that the previous Cabinet decision regarding Treaty settlements be rescinded, and replaced with provisions that give more detailed guidance on how the legislation takes appropriate account of the Treaty of Waitangi, by:
  10. stating that nothing in the EEZ legislative regime limits or otherwise affects historic or contemporary Treaty of Waitangi settlements, expressly subject to the specific other provisions set out in this paragraph,
    1. including kaitiakitanga and cultural and traditional relationships in the purpose and principles section of the legislation,
    2. requiring consideration of Treaty settlements when developing the policy statement and regulations,
    3. applying a test that would prevent granting of an EEZ consent where it would have a significant adverse effect on Maori interests, including Treaty settlements, foreshore and seabed interests, and Maori cultural interests in the ocean,
    4. providing for a statutory Maori advisory panel to provide advice on Maori issues to decision-makers, and
    5. providing for iwi input and participation in development of the policy statement and rules, and in the consenting process.
  11. A policy statement prepared under the legislation will enable a more strategic approach to decision-making by identifying environmental objectives and bottom lines for the regime, identifying areas or activities that require special rules or standards, providing for better alignment across marine management regimes, and providing for better management of cumulative effects. 
  12. Measures are proposed to better manage the cumulative environmental effects of all activities taking place in the EEZ.  These measures include consequential amendments to other statutes, so that all management regimes operating in the EEZ will take the cumulative effects of all activities into account when managing the activities within the control of each statute.  The policy statement would also provide for decision-makers to take into account environmental standards set under other legislation when setting environmental standards for the EEZ legislation, to help to manage all activities to a consistent environmental bottom line.
  13. The Ministry of Fisheries notes the benefits of the EEZ legislation being able to set environmental standards that are binding on all legislation and activities operating in the EEZ, including the Fisheries Act 1996.  The Ministry for the Environment considers this beyond the scope of existing Cabinet directions, and that it would complicate implementation of the EEZ legislation.
  14. Activities will be regulated through a rules and consent framework.  Rules will define effect thresholds for different categories of activity: permitted, discretionary and prohibited. An ‘EEZ consent’ will be required for any discretionary activities. Low-impact activities will be permitted activities, and will not require an EEZ consent, if they comply with standards set in the rules.  Larger-scale proposals such as petroleum platforms would require a comprehensive assessment of their effects and an EEZ consent.
  15. The EEZ consent process will consider environmental effects, and also whether a proposed activity has a significant adverse effect on the following defined interests:
    1. any lawful existing activity in the territorial sea or EEZ that may be affected,
    2. resource consents issued under the Resource Management Act 1991,
    3. historical and contemporary Treaty of Waitangi settlements,
    4. Foreshore and Seabed Act 2004 instruments, and
    5. Maori cultural interests in the oceans.
  16. A precautionary approach that allows for the application of adaptive management tools will be used to mitigate any lack of information about the marine environment and the environmental effects of individual activities.  The provision for adaptive management will not restrict the ability of the consent authority to decline any application.  For example, new types of activity, if approved, could have a staged work programme, with stringent monitoring requirements and the ability to revoke permission if the environmental effects exceed set levels. 
  17. The legislation will be an enabling Act. It will set up the general framework for the EEZ regulatory system, but the specific environmental rules, standards and conditions will be set out in subsequent regulations and EEZ consents.
  18. I propose that the Minister for the Environment be responsible for the legislation, and make decisions on EEZ consent applications.
  19. The Ministry for the Environment will be the administering agency for the legislation, responsible for providing policy advice on the legislation, and for developing regulations and a policy statement for approval by the Minister for the Environment.
  20. I propose that a new unit is created in the Ministry for the Environment, headed by an ‘EEZ Commissioner’. The position of EEZ Commissioner will be a statutory office created by the legislation.  
  21. The EEZ Commissioner will make recommendations to the Minister for the Environment on EEZ consent applications. The Commissioner will also be responsible for the day to day operational administration of the legislation, including information management, monitoring and enforcement functions.
  22. I propose that the Environment Court be given jurisdiction to hear appeals against decisions on EEZ consents.
  23. Further work, including a capability review, will be undertaken on the capacity of the Ministry for the Environment to implement this new and expanded role, and to identify what additional resources are required. A Budget bid will be prepared for the Ministry for the Environment’s expanded functions.
  24. The legislation proposed in this paper is for effects management purposes, and is not designed to be used as a comprehensive dedicated marine protection tool for conservation purposes.
  25. There will, however, be provision for stringent rules and standards over particular areas (which may effectively close an area to the activities managed under the EEZ legislation) where this is needed to deliver on the purpose of the EEZ legislation, and to align with tools under other legislation such as benthic protected areas created under the Fisheries Act.
  26. The Ministry of Defence and the New Zealand Defence Force are determining the potential effect of the proposed legislation on current and future defence-related activities in the EEZ. I will consult further with the Minister of Defence during drafting of the Bill to confirm the appropriate coverage of defence activities.

Summary of Proposals

Text description of figure

Summary of proposed legislation

This flow chart summarises at a high level the detail of the proposals contained in the paper.

The purpose of the legislation is to provide for uses of EEZ resources, and regulating the effects of those uses in order to protect the environment and ensure that any uses (or the effects of those uses, in the case of non-renewable resources) are environmentally sustainable.

The scope is filling gaps in existing legislation re:

  • environmental effects on seabed
  • environmental effects in water column
  • effects of new activities on existing defined interests

The proposed legislation will include a policy statement to set high-level environmental objectives and bottom lines and promote consistent regulation across different legislation.

Outside scope is existing legislation, which continues to regulate effects of fishing, quota management, transport and marine pollution, species protection and allocation of minerals rights.

  • Any consequential amendments to existing legislation required to promote consistent regulation and to address cumulative effects will be made.

The operational detail of the legislation will be in regulations with rules that categorise activities by their effects, and standards which will set ongoing conditions for activities.

There will be three categories of activities under the proposed legislation:

  • Permitted activities: will usually not need an EEZ consent if the effects fall under defined thresholds and comply with standards in the regulations. There will be the ability, however, to require EEZ consents where multiple activities are having significant cumulative effects. In such cases, the process will be as for discretionary activities.
  • Discretionary activities: will require a case-by-case assessment through an EEZ consent of the effects on the environment and on existing defined interests
  • Prohibited activities:  cannot be approved by the legislation

For discretionary activities (and permitted activities where they are being treated as discretionary) there will be a decision as to whether an EEZ consent should be granted. There will be appeal rights to the Environment Court.

Governance

This diagram presents the three main governance roles created under these proposals:

  • Minister for the Environment: responsible for legislation and regulations, and makes decisions on EEZ consents.
  • Ministry for the Environment: administers the legislation and develops the regulations and policy statements.
  • EEZ Commissioner: makes recommendations on EEZ consents and is responsible for the day to day operational functions.

Background

Previous Cabinet consideration and scope of policy development

  1. In December 2005, the Cabinet Business Committee decided that oceans policy development should focus on fixing the most pressing of immediate problems in the short term, and put in place a long term programme to integrate the overall marine management system [CBC Min (05) 19/5]. 
  2. In October 2006, the regulatory gap in the EEZ was identified as the priority issue for oceans policy development [CAB Min (06) 37/1E].  In December 2006, Cabinet noted that there were currently gaps and inconsistencies in the regulation of environmental effects, and agreed to the development of a legislative option for an improved regulatory regime for environmental effects in the EEZ [Cab Min (06) 47/4B].
  3. The paper considered by Cabinet in December 2006 made it clear that the policy and legislative options to be developed were not intended to substantially change the existing fisheries, transport, maritime safety and protected species legislation.  Resource ownership and allocation issues were also excluded by Cabinet from the policy scope at this time.
  4. A discussion paper setting out proposals for a preferred legislative option was approved by the Cabinet Economic Development Committee in May 2007 [EDC Min (07) 10/4] and released in August 2007. 
  5. On 5 December 2007 the Cabinet Economic Development Committee noted the outcomes from consultation and invited the Minister for the Environment to report to Cabinet by the end of March 2008 with final policy proposals for the drafting of a Bill [EDC Min (07) 28/9].
  6. Cabinet also agreed that:
    1. to take appropriate account of the Treaty of Waitangi, the proposed EEZ legislation should require:
      1. input from, and participation with, iwi in the creation of environmental rules,
      2. input from, and participation with, relevant iwi on individual applications for EEZ consent, and
      3. decision-makers to act in a manner consistent with the provisions of Treaty of Waitangi settlement legislation,
    2. fishing activities would not need an EEZ consent, and
    3. policy development should address cumulative effects across different activities, including the effects of fishing (excluding quota management). 

The Exclusive Economic Zone and extended continental shelf

  1. The EEZ is the area of sea, seabed and subsoil from 12 to 200 nautical miles offshore.  The EEZ comprises 95% of the ocean over which New Zealand has jurisdiction.  A map of the EEZ is attached as Annex 1.
  2. New Zealand’s rights in the EEZ derive from international law, not domestic sovereignty.  The United Nations Convention on the Law of the Sea (UNCLOS) grants New Zealand sovereign rights, not sovereignty, in the EEZ.  New Zealand cannot exercise the same jurisdiction in the EEZ as it can on land and in the territorial sea.
  3. New Zealand’s sovereign rights under UNCLOS as a coastal state are for the purposes of exploring, exploiting, conserving and managing the living and non-living resources of the EEZ, as well as in relation to other activities for the economic exploitation and exploration of the zone, such as the production of energy from the water, currents and winds.  New Zealand also has jurisdiction in relation to artificial islands, installations and structures, marine scientific research, and the protection and preservation of the marine environment.
  4. The continental shelf is the seabed and the subsoil within the EEZ or, where a country’s submerged land mass extends further than 200 nautical miles, to the ‘outer edge of the continental margin’.  The outer edge is defined by UNCLOS according to a complex formula. 
  5. The ‘extended continental shelf’ is the area of continental shelf beyond the EEZ.  In that area, New Zealand has exclusive sovereign rights for the purpose of exploring the continental shelf and exploiting its natural resources.  These resources are limited to those found on or under the seabed – mineral and other non-living resources of the seabed and subsoil together with living organisms belonging to sedentary species – and do not include the resources of the water and air columns.
  6. In 2006, New Zealand submitted the outer limits of its extended continental shelf to the Commission on the Limits of the Continental Shelf, a United Nations body.  The Commission is currently considering New Zealand’s submission, and is expected to make a recommendation on the extent of New Zealand’s extended continental shelf before the end of 2008.  Although the Commission’s recommendations are not technically binding on New Zealand, they will have considerable authority and New Zealand will be expected to establish the final outer limits of the continental shelf on the basis of them. 
  7. New Zealand is also still to agree continental shelf boundaries with Fiji, Tonga, and possibly France (in respect of New Caledonia).  Accordingly, the EEZ legislation may require some transitional arrangements if the outer limits of the continental shelf have not been resolved before any legislation is passed.
  8. Other nations have freedoms and rights in New Zealand’s EEZ and extended continental shelf under international law (such as rights of innocent passage, the laying of international cables and pipelines, and marine scientific research).  It is likely that other nations will scrutinise the EEZ legislation when it is tabled to ensure that the proposals are consistent with international law as represented by UNCLOS. 
  9. Unless indicated otherwise, reference to the EEZ in this paper refers also to the extended continental shelf.

Comment

Problem Definition

  1. Fishing and shipping are the predominant uses of our EEZ.  New activities will develop as technology advances and cost barriers diminish.  There is interest in petroleum resources off Taranaki and in the Great South Basin, gold placer deposits off the west coast of New Zealand, and minerals resources on the Kermadec Ridge, where prospecting is already under way.  Future activities could include seabed mining (e.g. for gold and ironsands), energy generation, aquaculture, carbon capture and storage, and bioprospecting. 
  2. Environmental effects in the EEZ are currently managed on a sectoral basis:
    1. The Fisheries Act 1996 and associated tools provide for the management of fisheries, including the environmental impacts of fishing. 
    2. Marine pollution issues such as discharges from ships and offshore installations, oil spills and dumping of waste such as dredged material, are covered by Marine Protection Rules under the Maritime Transport Act 1994. 
    3. Licences granted under the Continental Shelf Act 1964 can specify environmental obligations. 
    4. Voluntary and non-enforceable guidelines exist for petroleum activities and seismic surveys.
  3. This sectoral approach means there are gaps and inconsistencies in the environmental management regime.  In particular there are gaps for:
    1. assessing effects of activities (other than fishing) on seafloor habitats and biodiversity (e.g. the effects of seabed mining),
    2. assessing effects of activities (other than fishing) on biodiversity in the water column (e.g. effects of seismic surveys on marine life),
    3. assessing effects of new activities on existing interests (e.g. effects of a petroleum platform on fishing and shipping),
    4. managing the cumulative effects of all activities in the EEZ, as they are regulated under multiple regimes with variable ability to take other sorts of activities into account in decision-making,
    5. managing the effects of activities on biosecurity in the EEZ (and any consequent effects on the territorial sea), and
    6. a dedicated and comprehensive marine protection tool that can offer a high level of protection from all activities for conservation or biodiversity purposes.
  4. The proposed EEZ legislation addresses all of these gaps except for a dedicated and comprehensive marine protection tool (see paragraphs 51-56 below).
  5. Filling the gaps in effects management will protect the environment from adverse effects, and encourage the development of environmentally sustainable industries in the EEZ by providing greater certainty to investors about regulatory controls. 
  6. The relationship between the proposed EEZ legislation and existing statutes is set out in a diagram at Annex 2.

Preferred policy approach to achieve outcomes

  1. The outcomes sought from the EEZ legislation were noted by Cabinet in December 2006; to help safeguard the integrity of oceans ecosystems, reduce uncertainty for industries operating in the EEZ, and promote sustainable development of New Zealand’s ocean resources.  As noted previously, these outcomes were to be sought through new legislation that would deal with currently unregulated activities, thereby addressing gaps and inconsistencies.
  2. The three main elements of the legislation are designed to contribute to these outcomes:
    1. A policy statement will contain provisions to help decision-makers to determine how to ensure ecosystem integrity, and to promote consistency with other management regimes in the EEZ.
    2. EEZ regulations will set detailed rules and standards for regulation of activities, thereby giving greater certainty to industry about what environmental effects are permitted, discretionary or prohibited.  The rules will also help to ensure ecosystem integrity and sustainable use of EEZ resources.
    3. EEZ consents, which will be required for discretionary activities, will also help to ensure ecosystem integrity and sustainable use of EEZ resources.  The conditions set on an EEZ consent will give industry clarity about present and future performance requirements.
  3. I consider setting the detail of the legislation in a policy statement and regulations is appropriate in the EEZ where limited information warrants an adaptive and flexible system that can change over time without needing to amend the primary legislation.  Setting the detail in a policy statement and regulations also enables thresholds for EEZ consent, and environmental standards, to be developed in one place rather than to be reconsidered in each consent application.

Remaining gaps in legislation in the EEZ – dedicated protection tools

  1. The legislation proposed in this paper will not fill all marine management gaps in the EEZ, and will not achieve comprehensive management of the EEZ.  In particular, the EEZ legislation is not intended to be a conservation statute, as its purpose is to protect the environment from the adverse effects of particular types of activities, rather than to be the tool by which a network of protected areas is identified and implemented in the EEZ.
  2. At present, there is no dedicated and comprehensive marine protection tool for the EEZ that can provide a very high level of protection from the effects of all activities for conservation purposes, rather than effects management purposes.  The Marine Mammals Protection Act 1978, which provides for marine mammal sanctuaries in the EEZ, offers high level protection but is not comprehensive in its applicability. 
  3. In the territorial sea, such high level protection can be conferred under the Marine Reserves Act 1971.  Tools such as marine reserves and marine mammal sanctuaries do not completely close areas to all activities, and allow for uses which have low environmental impacts.
  4. The Marine Reserves Bill currently before select committee makes provision for marine reserves in the EEZ.  The absence of such a tool in the EEZ makes it difficult for the government to fully implement the Marine Protected Areas Policy and Implementation Plan, which aims to establish a comprehensive and representative network of marine protected areas.  A network of areas under high level protection is needed to act as a ‘reservoir’ of marine resources, to ensure long-term sustainability and protect against unforeseen or irreversible losses to biodiversity and ecosystem services in the areas that are subject to human use. 
  5. Officials have considered whether to provide a dedicated protection tool as well as effects management tools as part of the EEZ legislation.  Their assessment is that providing for both would be contrary to the effects management purpose of the legislation.  It would also be inappropriate for the EEZ legislation to attempt to identify and establish a network of areas where there was a high level of protection from the effects of all activities, as this would require the legislation to regulate activities such as fishing.
  6. Nevertheless, EEZ regulations will provide for high levels of protection to be imposed where needed for effects management purposes. Areas protected in such a way would possibly qualify for inclusion under the Marine Protected Areas Policy if they were also managed to a similarly high level of protection from activities regulated under other regimes.  The policy statement also makes provision for specific area-based rules and standards to align with the protection given under other regimes with regard to the effects of other activities.

Fisheries management in the EEZ

  1. Many of the stakeholders consulted in the course of development of this policy, particularly those from the petroleum sector and environmental organisations, have raised concerns about the exclusion of fisheries management from the scope of the EEZ legislation.  Many feel that the environmental effects of fishing are being poorly managed, and that this is the most significant environmental effect that needs to be managed in the EEZ. 
  2. Some stakeholders also see a risk that fishing and other activities will be managed to different environmental standards, with higher standards applying under the EEZ legislation than fisheries legislation.  Some have registered dissatisfaction with the low level of consultation with non-fisheries stakeholders when making fisheries management decisions.  As a result, many would like the environmental effects of fishing managed under the EEZ legislation.
  3. Stakeholders acknowledge that the fisheries legislation has provisions that allow for the environmental effects of fisheries to be managed, but feel that these are not being implemented – particularly with regard to the effects of fisheries on wider ecosystems, rather than fisheries stocks. 
  4. The Ministry for the Environment’s view is that any problems with the ability to manage the environmental effects of fishing should be addressed through the implementation of (and any necessary amendments to) the Fisheries Act.  Earlier Cabinet papers noted that EEZ policy development would not involve major changes to fisheries legislation.  Cabinet has already decided that fishing will not need an EEZ consent.  Including the environmental effects of fishing within the scope of the EEZ legislation would require either regulation of the fishing industry under two different laws, or an extensive overhaul of fisheries legislation and management to transfer the regulation of environmental effects out of the Fisheries Act. 
  5. The Ministry for the Environment recognises that keeping fisheries management separate from the proposed new EEZ legislation will create challenges for consistent and equitable management across different sectors. This issue is addressed in Part D of this paper.

Structure of Paper

  1. This paper seeks agreement to the policy for drafting of legislation.  Proposals are presented in the following sections:
    • Part A: Purpose and Principles
    • Part B: Governance
    • Part C: Policy Statement
    • Part D: Managing Cumulative Effects
    • Part E: EEZ Environment Regulations
    • Part F: EEZ Consents
    • Part G: Appeals
    • Part H: Monitoring, Enforcement and Offence Provisions
    • Part I: Miscellaneous Provisions
    • Part J: Commencement and Transitional Provisions
    • Part K: Application to Defence Activities

Part A: Purpose and Principles of Legislation

  1. The purpose and principles of the legislation are important to shape decision-making throughout all aspects of implementation, and to capture the objectives the government seeks from the legislation.
  2. The introductory sections of the EEZ legislation should link strongly to UNCLOS, in order to make it clear that the legislation is an expression of New Zealand’s rights as a coastal state under international law.  The best means to achieve this will be determined during legislative drafting.
  3. In developing the proposed purpose and principles, the desirability of consistency with other relevant statutes (e.g. Resource Management Act 1991, Fisheries Act, Crown Minerals Act 1991) has also been taken into account, but in a manner that reflects the more limited nature of New Zealand’s jurisdiction in the EEZ.
    1. I propose that the legislation include:
    2. a purpose of providing for uses of EEZ resources, and regulating the effects of those uses in order to protect the environment and ensure that any uses (or the effects of those uses, in the case of non-renewable resources) are environmentally sustainable,
    3. provisions that list effects or activities excluded from the scope of the EEZ legislation because they are regulated under other statutes or provided for in international law,
    4. a description of which aspects apply to the extended continental shelf
    5. that the Act is to bind the Crown, except for specified defence activities (see the Legislative Implications section of this paper),
    6. a requirement for decision-makers to act in accordance with international obligations, and take into account the rights and duties of other states,
    7. a clause setting out the Treaty of Waitangi-related provisions of the legislation, particularly the relationship to relevant Treaty settlements,
    8. information principles and the precautionary approach (including adaptive management as a precautionary tool),
    9. a requirement for decision-makers to ensure that all decisions made under the legislation will contribute to specified environmental objectives, and
    10. a requirement for decision-makers to consider, as appropriate, other economic, social, and cultural values, including Maori relationships with the marine environment.
  4. All decisions must be consistent with international obligations, Treaty of Waitangi provisions and information principles (including the precautionary approach) in the terms set out above.  It is also my intention that the environmental objectives be given a very strong weighting, as these expand on the environmental aspects of the purpose of the legislation, and must not be breached.
  5. I propose that the economic, social and cultural matters be given a lower weighting, as they will not be relevant to every decision, and environmental protection must be the ‘bottom line’ for operation of the legislation.

Scope of the EEZ legislation

  1. The purpose of the legislation as set out in previous Cabinet papers was to fill gaps in regulation of environmental effects in the EEZ, rather than to develop a single regime to manage all activities.  The legislation will need to set out which activities are excluded because their environmental effects are already regulated.
  2. I propose that the legislation establish an umbrella jurisdiction over environmental effects in the EEZ, from which effects managed under existing legislative controls are then excluded.  These existing legislative controls include:
    1. the Fisheries Act 1996
    2. the Maritime Transport Act 1994
    3. the Marine Mammals Protection Act 1978
    4. the Wildlife Act 1953, and
    5. the allocation provisions of the Crown Minerals Act 1991 and Continental Shelf Act 1964.
  3. Some activities in the EEZ are partially regulated under existing law.  For example, a new petroleum platform would already be regulated under the Maritime Transport Act with regard to discharges and oil spill management.  The new EEZ legislation will cover those matters outside the scope of existing laws, for example assessment of the environmental effects of the platform's installation, and assessment of any ongoing effects on the environment and other defined interests.  The oil platform will need to comply with both statutes as they jointly cover all of its effects.
  4. Officials will need to ensure that, where activities require permissions under more than one piece of legislation, the processes involved are well coordinated in order to minimise compliance costs for industry. 
  5. Those activities that fall within the scope of the EEZ legislation will not be exempted from the provisions of any other relevant legislation or policy, such as conservation statutes.

Application to extended continental shelf

  1. The August 2007 discussion paper proposed that the EEZ legislation should also regulate activities on New Zealand’s extended continental shelf, to the extent possible.  Stakeholders agreed with this proposal.
  2. I recommend that, for the sake of clarity, specific provisions in the EEZ legislation make it clear which aspects of the regime do and do not apply to activities on the extended continental shelf. 

Purpose of legislation

  1. The purpose of the legislation should aim to achieve the desired outcomes of the policy, which are to protect the environment from adverse effects, and encourage the development of environmentally sustainable industries in the EEZ by providing greater certainty to investors about regulatory controls.
  2. I propose that the purpose clause reflects that the legislation will provide for uses of the natural and physical resources of the EEZ, and manage the effects of such uses in order to protect the environment and ensure that any uses are environmentally sustainable.
  3. Exact wording will be a matter for legislative drafting, but I expect the wording to make it clear that the legislation gives effect to both key aspects of UNCLOS: enabling resource use and environmental protection.The wording to be used with regard to sustainability will need to make it clear that, where the extractive use of non-renewable resources is involved, ‘sustainability’ refers to the environmental effects of those activities.  The sustainability of the rate of extraction of those resources is the concern of the allocation regimes under the Crown Minerals Act and Continental Shelf Act.
  4. The Ministry for the Environment’s original proposal in the August 2007 discussion paper was a purpose of ‘sustainable management’, as in the Resource Management Act.  Feedback on sustainable management was mixed – some supported consistency between this proposed legislation and the Resource Management Act (which applies only in the territorial sea), while others considered it too broad for an effects management regime.  The Ministry for the Environment agreed that a narrower purpose would better reflect the nature of the regime and its policy objectives.
  5. In January 2008 officials discussed with stakeholders a purpose based on protecting and preserving the environment by regulating the environmental effects of activities, and providing for environmentally sustainable uses.  Many had concerns about the use of the language ‘protect and preserve’.  This language is adopted from UNCLOS, but it has also been used in the definition of ‘conservation’ in the Conservation Act 1987.  As a result many stakeholders feel that ‘protect and preserve’ could push the legislation too much towards conservation rather than sustainable use.  Some have proposed a purpose of providing for activities and avoiding, remedying or mitigating any adverse effects, but officials consider this too narrow in its environmental scope, and its ability to take non-environmental matters into account.
  6. I consider that there is value in retaining a clear link to New Zealand’s international obligations under UNCLOS, even if the language of UNCLOS is not used verbatim.  The proposed purpose will take stakeholders’ concerns into account by making effects management the primary focus of the legislation. 

International obligations

  1. In addition to the general acknowledgment that the EEZ legislation gives effect to New Zealand’s rights under UNCLOS, I propose a clause to require decision-makers to act consistently with international obligations and take into account the rights and interests of other states.  A similar requirement regarding consistency with international obligations is included in the Fisheries Act.  This provision reflects that New Zealand has only sovereign rights in the EEZ, and that a number of activities in the EEZ have special status under international law.  I consider that this clause should be drafted broadly, so as to cover both current obligations and any instruments that are ratified by New Zealand in the future.
  2. For the sake of clarity and certainty for users, the legislation will also require provisions that set out how matters specifically provided for in binding international instruments such as UNCLOS will be handled by this legislation.  These include freedom of navigation, international communications cables, pipelines, and marine scientific research (although this term will need careful definition to ensure that commercial activities are not captured). 

Treaty of Waitangi provisions

  1. In December 2007 Cabinet agreed that the EEZ legislation should require decision-makers to act consistently with the provisions of Treaty of Waitangi settlements legislation.  This wording was based on a provision in the Fisheries Act that requires consistency with fisheries settlement legislation.
  2. Consequently, further advice was taken from the Crown Law Office.  [Withheld under OIA s 9(2)(h)]
  3. [Withheld under OIA s 9(2)(h)]
  4. [Withheld under OIA s 9(2)(h)]
  5. [Withheld under OIA s 9(2)(h)]
  6. During engagement with iwi and stakeholders as part of developing the proposals, there was strong advocacy from Maori and some stakeholders for a clause requiring decision-makers to give effect to or take into account the principles of the Treaty of Waitangi.  The main reasons put forward for a Treaty principles clause were to:
    1. acknowledge the full broad scope of the Crown-Maori relationship, and its applicability in the EEZ,
    2. acknowledge that any new issues that may emerge (given the current low level of understanding about how the EEZ may be used in the future) will be considered in accordance with Treaty principles, and
    3. maintain consistency with other marine management statutes that contain Treaty principles clauses (particularly the Resource Management Act, Crown Minerals Act and Conservation Act 1987).
  7. While I acknowledge the desire of Maori to reflect the Treaty relationship in the EEZ legislation, I do not agree that the inclusion of a Treaty principles clause is the best means to achieve this.  If new issues are to emerge in the future, the Crown’s ability to deal with these will not be affected by legislative provisions.  Treaty principles clauses of the type requested are also often perceived as vague and uncertain in their operation.
  8. [Withheld under OIA s 9(2)(h)]
  9. I recommend that, in light of Crown Law’s advice, the previous Cabinet decision regarding Treaty settlements be rescinded.  In the place of the previous decision, I propose provisions that give more detailed guidance on how the legislation takes appropriate account of the Treaty of Waitangi by:
    1. stating that nothing in the EEZ legislative regime limits or otherwise affects historical or contemporary Treaty of Waitangi settlements, expressly subject to the specific other provisions set out in this paragraph,
    2. including kaitiakitanga and cultural and traditional relationships in the purpose and principles section of the legislation (see paragraph 116),
    3. requiring consideration of Treaty settlements when developing the policy statement and regulations (see paragraphs 144 and 177-178),
    4. applying a test that would prevent granting of an EEZ consent where it would have a significant adverse effect on Maori interests, including Treaty settlements, foreshore and seabed interests, and Maori cultural interests in the ocean (see paragraphs 190 and 209-211),
    5. providing for a statutory Maori advisory panel to provide advice on Maori issues to decision-makers and contribute to the development of the policy statement and rules (see paragraphs 134-136), and
    6. providing for iwi input and participation in development of the policy statement and rules, and in the consenting process (see paragraphs 149 and 183-184).
  10. This provision will need to be carefully worded to avoid giving the impression that the matters listed are the only elements of the Treaty relationship that the Crown is prepared to acknowledge with regard to the EEZ, as such wording is likely to be opposed by iwi.
  11. I consider it is also important to offer protection at a similar level to the interests recognised under the Foreshore and Seabed Act 2004. I recommend a further provision stating that nothing in the EEZ legislation limits or otherwise affects the Foreshore and Seabed Act 2004, subject to the specific other provisions set out in this paper.

Information principles and precautionary approach

  1. I consider that clear decision-making principles are important to the effective functioning of the legislation.  The EEZ is an environment about which relatively little is known, and the decision-making framework for the legislation needs to acknowledge those uncertainties.  The Fisheries Act deals with this issue by using information principles to guide decision-makers.  A similar approach (but one which avoids some of the problems with the current wording of the Fisheries Act) would be useful for the EEZ legislation.
  2. I propose the inclusion of explicit information principles to be clear that decision-makers under the EEZ legislation must:
    1. take into account the best available information,
    2. consider any uncertainty or insufficiency in the information available, and
    3. not defer decisions to protect the environment simply because information is unavailable or uncertain.
  3. I also consider that a clear exposition of a precautionary approach is needed to ensure that decision-makers are cautious and act to protect the environment.
  4. A precautionary approach means that decision-makers should be more cautious, and favour environmental protection, where information is uncertain, unreliable, inadequate or unavailable. Higher levels of uncertainty will create a higher presumption of caution. Decision-makers also should not delay in taking measures to protect the environment when information is uncertain, unreliable, inadequate or unavailable.
  5. I do not propose that the legislation has explicit provisions setting out where the onus of proof lies when decision-makers are considering how to apply the precautionary approach.  In practice, however, the onus of proof will generally lie with the proponent of an activity.  Applicants for an EEZ consent will need to assess likely effects and risks, and the EEZ Commissioner will be able to commission an independent review of this assessment. A consent application may not be accepted if it contains inadequate information. 
  6. The definition and implementation of this precautionary approach needs to be balanced so that potential environmental risks are managed, but not so strictly applied that all activities are prohibited or declined on the basis that little is known about the EEZ.  The formulation needs to fit the purpose of allowing for sustainable uses and regulating effects in order to protect the environment. 
  7. For this reason, I consider that decision-makers should consider whether the risk of environmental damage can be managed and the precautionary approach applied by taking an adaptive management approach.  The combination of a precautionary approach and adaptive management has emerged as international best practice in recent years. 
  8. Adaptive management is a management tool expressly developed to deal with uncertainty.  It can be characterised as ‘learning by doing’ – applying provisional and reversible decisions, undertaking stringent monitoring, reviewing the results, and making subsequent management changes to reflect the observed effects of the activity.  Adaptive management could be implemented through strict, but reviewable, EEZ consent conditions that allow the activity to be scaled up or down (and even cancelled) depending on the effects observed.  Staged work programmes or pilot projects could also be used to manage uncertainty under the adaptive management approach.
  9. These provisions will need to be carefully drafted to ensure that adaptive management is applied as a tool for giving effect to the precautionary approach, not as an alternative to it.  The drafting will also need to ensure that there is not an obligation to impose adaptive management measures, and that the ability of the decision-maker to decline a consent application in part or full is not restricted.  There are many circumstances, such as proposals for activities in unique or vulnerable areas, where adaptive management may not be appropriate due to the consequences of any irreversible effects.
  10. Most stakeholders are supportive of the precautionary and adaptive management approaches being implemented together to manage the lack of information in the EEZ.  A simpler risk-based assessment was proposed by some stakeholders, but officials consider that this would not be sufficiently robust or well-informed to deal with some of the more novel situations likely to be met with in the EEZ.

Environmental objectives

  1. Protecting the environment is an important aspect of the purpose of the EEZ legislation.  I consider that decision-makers need some guidance on what environmental values they are required to protect, and the things they must do to ensure that the environment will be protected.
  2. I propose that decision-makers under this legislation be required to consider the following environmental objectives, and to ensure that all decisions made under the legislation (whether those be at a policy statement, rules or consenting level) will contribute to or be not inconsistent with:
    1. ensuring the integrity of marine ecosystems (including ecosystem complexity, structure, functioning, productivity, dynamism, natural variability and boundaries),
    2. maintaining biological diversity, including the physical features and biogenic structures that support biological diversity,
    3. protecting vulnerable areas or ecosystems from adverse environmental effects,
    4. avoiding, remedying, or mitigating the adverse effects of activities, and
    5. managing the cumulative effects of all activities on the receiving environment.
  3. In these proposals, the objective ‘protecting vulnerable areas or ecosystems’ does not necessarily mean that such areas or ecosystems will be shut off from use. It means that in meeting the purpose of the legislation, the regulation of environmental effects must consider and appropriately address such vulnerable areas or ecosystems. For example, the rules and standards around a vulnerable area may allow a far lower level of effect, or prevent certain types of effect.
  4. An alternative approach to the proposed environmental objectives would be to include narrower environmental conditions (particularly ‘avoid, remedy, or mitigate adverse effects’) in the purpose statement, to expand on what is meant by ‘protect the environment’.  Officials do not consider that this approach would contribute sufficiently to a move towards more coordinated, ecosystem-based management of the marine environment.
  5. The objectives are based on a biophysical definition of the environment, rather than the broader Resource Management Act definition that includes matters such as amenity values.  Stakeholders and officials are agreed that the biophysical definition is appropriate given the limited nature of human involvement with the EEZ.  The proposed objectives also draw on the principles of ecosystem-based management by encouraging protection of ecosystems rather than focusing on more localised or sectoral effects, and by considering cumulative effects. 
  6. The environmental objectives will be implemented in more detail through the policy statement and rules, which will be able to set more detailed characteristics, baselines and standards to define an acceptable degree of environmental health.  This clause is similar to section 9 in the Fisheries Act and section 6 of the Resource Management Act, which also give guidance to the environmental outcomes sought.
  7. The legislation will need to define both ‘ecosystem’ and ‘ecosystem integrity’.  I propose that the definition of ecosystem should be based on that used in the Convention on Biological Diversity: ‘a dynamic complex of plant, animal and micro-organism communities and their non-living environment interacting as a functional unit’.
  8. Ecosystem integrity is harder to define in a concise manner, but a suitable definition might be: ‘the capacity to support and maintain a balanced, integrated, adaptive ecological system having the full range of elements (genes, species, and assemblages) and processes (mutation, demo­graphy, biotic interactions, nutrient and energy dynamics, and meta-population processes) expected in the natural habitat of a region’. 

Responsibilities of persons operating in the EEZ

  1. I propose the legislation provide that EEZ operators, to whom this legislation applies, are responsible for their actions, and have a general duty to:
    1. protect the environment from their activities, including providing appropriate  training and supervision to employees in order to maintain compliance with the legislation, and
    2. provide sufficient resources to ensure compliance with the legislation, including establishing and following appropriate management systems.

Other matters

  1. The primary focus of the legislation is on managing the environmental effects of activities.  Since the EEZ is managed on behalf of all New Zealanders, I consider that it is also appropriate that the legislation have some scope to consider economic, social and cultural values. 
  2. I propose that decision-makers under this legislation should have the discretion to consider the following other matters:
    1. the present and future economic, social and cultural wellbeing of New Zealand,
    2. the relationship of Maori and their culture and traditions with their ancestral waters, sites, waahi tapu, and other taonga,
    3. kaitiakitanga,
    4. the efficiency of any use of natural and physical resources,
    5. existing uses, interests and values,
    6. improving information and knowledge of the marine environment, including the effects of human activity on the marine environment, and
    7. effects on the health and safety of people and communities.
  3. Some stakeholders have recommended that these other matters be incorporated with the environmental principles in a single section in the legislation.  I do not consider that these matters should have this level of weighting in decision-making, for two reasons.  First, the environmental objectives should not be outweighed by other considerations, as environmental bottom lines are not to be breached.  Second, not all of these matters will be relevant to every decision under the legislation, and some discretion in their application is needed.
  4. Some provisions are also proposed to provide a ‘hook’ for details of the legislation, such as imposing information or resource efficiency conditions on EEZ consents, or recognising existing interests and uses as part of the consenting process.
  5. Some stakeholders have commented that it is inappropriate to consider other values at all in an effects-management regime, which should consider only biophysical environmental effects.  I consider a focus only on biophysical effects would be too narrow and not provide for the necessary consideration of the economic, social and cultural aspects of EEZ activities.

Part B: Governance

Minister for the Environment

  1. I propose that the Minister for the Environment has the following functions, powers and duties:
    1. the Minister responsible for the proposed legislation,
    2. making decisions on EEZ consent applications,
    3. the ability to direct joint hearings under the Resource Management Act and the EEZ legislation for proposals that span the boundary of the EEZ and territorial sea, and
    4. preparation of a policy statement and regulations under the legislation.
  2. When a joint hearing process is used for a cross boundary proposal, decisions under the two laws would still need to be made separately, but a joint hearing would streamline the hearings process, and assist in aligning decisions under the two laws. There may be need to provide a specific exception to some existing statutory decision-making arrangements under the Resource Management Act and EEZ legislation.  For example, without consequential amendments, the different statutory time limits under the two laws may not make a joint hearing feasible. 

Ministry for the Environment

  1. I propose that the Ministry for the Environment administer the EEZ legislation, with the following functions, powers and duties:
    1. providing policy advice on the proposed legislation, including monitoring its effectiveness and advising any amendments, and
    2. developing regulations and a policy statement for approval by the Minister for the Environment.

Functions of the EEZ Commissioner

  1. I propose that a new unit is created in the Ministry for the Environment, headed by an ‘EEZ Commissioner’. This position of EEZ Commissioner will be a statutory office created by the legislation.  
  2. I propose that the EEZ Commissioner is appointed by the Secretary for the Environment, and will have the following functions:
    1. making recommendations to the Minister for the Environment on EEZ consent applications,
    2. monitoring operations and compliance of EEZ activities with the legislation,
    3. enforcement of the legislation,
    4. collecting and managing access to information on the EEZ,
    5. appointing and administering the Maori advisory panel, and
    6. promoting awareness of rights and obligations under the legislation.
  3. The Ministry for the Environment would continue to be able to provide general policy advice on all aspects of the EEZ legislation, including EEZ consent applications.
  4. The Secretary for the Environment will be responsible for ensuring that adequate resources, in line with the funding of existing Ministry functions, are available to enable the EEZ Commissioner to deliver their functions efficiently and effectively. Although the Secretary will not be directly responsible for those functions, the legislation should state that nothing prevents the Secretary from taking into account the performance or exercise of the EEZ Commissioner's functions and powers in monitoring and assessing his or her overall performance. The EEZ Commissioner, and any related staff, will conform to standard Ministry processes and procedures.
  5. There was strong feedback from stakeholders that, as there is currently so little information about the EEZ environment, information collection and management should be part of the new regime.  The EEZ Commissioner will have the responsibility for collecting and managing information (and providing access to it as necessary). The Commissioner will also be able to specify the information requirements for EEZ consent applications.
  6. This information role should be carried out in close consultation with other agencies that handle data on the marine environment.  There will be some (possibly significant) costs attached to this role. 

Resourcing issues                                                          

  1. These proposals represent a new and expanded role for the Ministry for the Environment. The Ministry cannot undertake these new functions without increased resources. I propose a capability review of the Ministry’s capacity to undertake the proposed new statutory functions, and to identify what additional resources are required. A Budget bid will be developed by the Ministry for the Environment for funding of implementation and ongoing administration costs, including those resulting from monitoring and enforcement activities not recoverable from operators. 

Maori involvement in governance structures

  1. In December 2007, Cabinet agreed that the EEZ legislation would require input from and participation with iwi in the creation of rules, and input from and participation with relevant iwi in consenting processes. 
  2. During the development of the proposals, iwi participants were asked what they expected from Cabinet’s decision to provide for ‘input and participation’.  There was general agreement that detailed processes needed to be set out in the legislation, rather than making unspecified provision for ‘participation’ or ‘consultation’.  It was also noted that, to be effective, these processes will need to be adequately resourced.
  3. There was also strong support for a model similar to Nga Kaihautu Tikanga Taiao, a statutory committee that advises the Environmental Risk Management Authority on Maori issues, and reports on applications which raise significant issues or interests for Maori. 
  4. Given the nature of the EEZ and the fact that issues will often be national rather than local in nature, we recommend providing for both participation by individual iwi and a Maori advisory panel to provide a specialist, cross-iwi perspective at the national level.  Any involvement by the Maori advisory panel would not preclude the entitlement of iwi to be involved in processes under the EEZ legislation and to speak to their own issues, as set out in the relevant sections later in the paper. 

Maori advisory panel

  1. The Maori advisory panel will be supported and funded by the Ministry for the Environment. The panel will have three main functions under the EEZ legislation:
    1. Advising the Ministry for the Environment on the scoping and drafting of the policy statement and regulations.
    2. Advising the EEZ Commissioner on EEZ consent applications with significance for Maori.  This could take the form of a written report or recommendations making the decision, or the panel could recommend an independent audit of any cultural impact assessment undertaken by the applicant.  Any involvement in the consent process would be at the discretion of the panel.
    3. Advising the Ministry for the Environment and the EEZ Commissioner on appropriate processes to seek iwi input and participation, and any other relevant matters.
  2. Members of the Maori advisory panel will be appointed because of their skills and experience in tikanga, marine management, Maori economic development, or other relevant areas.  Members will not be chosen as iwi representatives.
  3. I consider such a panel could add considerable value to the development and operation of the EEZ regime.  The rules framework in particular is likely to be quite technical and scientific in nature, as are parts of the policy statement, and specialist advice will be needed to ensure that Maori values and priorities can be adequately understood and translated into that technical language.  The Maori advisory panel could provide this advice.  Developing a policy statement and regulations that reflect Maori values is likely to reduce any possible contention over Maori values at the consenting level.

Part C: Policy Statement

  1. The August 2007 discussion paper proposed a management regime based on a rules and consent framework.  Since that time, it has become apparent that another tool is needed to bridge the gap between the purpose and principles of the proposed legislation, which set out objectives and priorities at a very general level, and the rules framework, which will be technical and detailed in nature.
  2. Some stakeholders, particularly environmental organisations and local government, support a comprehensive planning and policy regime similar to that of the Resource Management Act, with statutory and obligatory policies and/or plans.  I do not consider that is warranted at this stage for the EEZ, which has far fewer activities to be managed.  Most stakeholders considered that any EEZ policy statements or plans should be statutory and mandatory.
  3. I do, however, see merit in a policy statement. A policy statement would be an appropriate tool to identify high level environmental outcomes and environmental bottom lines and provide for better alignment across marine management regimes.
  4. To assist in identifying high level environmental outcomes and bottom lines, the policy statement also may be used to identify areas that:
    1. are important or vulnerable due to their biophysical characteristics,
    2. are important in relation to specific uses,
    3. require consistent regulation across different laws,
    4. encourage the concentration of activities through less stringent rules or standards,
    5. have potential for conflict between different activities, and
    6. face cumulative environmental pressures from different activities.
  5. The policy statement will guide how regulations and EEZ consents can achieve the purpose, principles and objectives of the legislation. For example, it could give detail on how to meet the environmental objectives of the legislation by defining high level environmental outcomes and bottom lines required to protect specific areas, habitats or species in the EEZ.
  6. High level environmental outcomes and bottom lines also will be used to assess and manage cumulative effects, and to achieve consistency across different activities, for example by taking into account (as much as is appropriate) fisheries standards set under the sustainability provisions of the Fisheries Act.
  7. The other matters that might be included in a policy statement should be left relatively open, but I recommend that the legislation specifically allow for the inclusion of:
    1. any additional policies that can be applied within the scope of the EEZ legislation to improve the management of cumulative effects of all activities on the marine environment, and on other activities and interests (see Part D below),
    2. policies or administrative measures to achieve better alignment and information-sharing with other management regimes and policies in the EEZ and territorial sea (such as Resource Management Act plans and policy statements, Fisheries Act, Crown Minerals Act, and Marine Protected Areas Policy),
    3. policies to apply to particular activities, particularly novel technologies,
    4. policies for applying the royalty and/or cost-recovery provisions of the legislation, and
    5. any other objectives or policies that are desirable to give effect to the purpose and principles of the legislation.
  8. I propose that, in drafting the policy statement, there must be consideration of the desirability of consistency with the provisions of other existing marine legislation and policy (including any relevant policy or planning documents), Treaty of Waitangi settlements, and relevant international law and best practice. 
  9. The policy statement will be an important part of the EEZ legislation’s contribution to ecosystem-based management of the marine environment, by improving consideration of the interconnectedness of environmental components and the effects of different activities managed under different regimes. 
  10. All rules and EEZ consents must have regard to the provisions in a policy statement.
  11. I consider that the policy statement should be mandatory, as it will be one of the main tools to contribute to better management of cumulative effects across all activities and achieve alignment with other marine management regimes.  I consider, however, that the policy statement is not crucial at the commencement of the regime, as development of rules to deal with activities expected in the short term must be the priority for implementation.  I propose that the policy statement be developed within three years of the commencement of the EEZ legislation.
  12. The policy statement should not have a fixed review period.  There should be provisions for the policy statement to be reviewed and amended as the Minister sees fit, rather than issuing an entirely new statement whenever changes are required. 
  13. I propose the same public consultation and notification provisions as proposed for the development of regulations, which allows for early involvement for iwi and key stakeholders (as set out at paragraphs 183-184 below).  I do not propose a right to appeal the contents of a policy statement, as the policy statement would be an expression of government’s priorities and policies for management of a public resource, developed after consultation with interested parties.

Part D: Managing Cumulative Effects

  1. In December 2007, Cabinet agreed that policy development would address cumulative effects across different activities, including fishing (but excluding quota management). 
  2. Managing cumulative effects when activities are managed under different legislation is challenging, but the status quo can be improved upon.  Fishing is by far the most common activity in the EEZ and, therefore, has the largest cumulative environmental effect. Fishing may have a proportionately lower impact in the future as new types of activity develop in the EEZ.
  3. In order to improve the management of cumulative environmental effects, decisions made under the different statutes applying in the EEZ need to take into account the total cumulative environmental effects across the range of activities in the EEZ – not just those of the particular activity being considered, or those of the activities regulated under that regime.  This will require better coordination and information-sharing between the different organisations managing activities within the EEZ.
  4. Some stakeholders see an equity issue for industries to be regulated under the EEZ legislation, as relatively minor effects from new activities may be seen as the cumulative ‘tipping point’ on top of the larger environmental effects of fishing (although this is consistent with how cumulative effects are managed within the territorial sea).  To protect the credibility of the EEZ legislation in the eyes of non-fishing industry stakeholders, the same requirement to consider overall cumulative effects when making management decisions will need to apply to the fishing industry.
  5. The Strategy for Managing the Environmental Effects of Fishing already gives some consideration to cumulative effects across all activities, by stating that the environmental effects of non-fishing activities should be taken ‘as a given’ when determining the acceptable effects of fishing activities.  If a species or habitat is affected by both fishing and non-fishing activity, the Ministry of Fisheries will manage fisheries to ensure that the overall environmental effect is in accordance with environmental standards set under the Fisheries Act.
  6. I consider that there needs to be better, more explicit consideration of cumulative effects across all statutes operating in the EEZ.  I therefore propose that:
    1. decision-makers under the EEZ legislation are required to consider the cumulative effects of all activities on the receiving environment in their decisions (whether that be at the policy statement, regulation or consenting level),
    2. EEZ regulations will contain any necessary provisions to manage a situation where individual permitted activities may have minimal effects, but could collectively have a significant environ­mental impact, and
    3. there be any consequential amendments required to other legislation regulating the environmental effects of activities in the EEZ to ensure that decision-makers under those laws can explicitly consider the cumulative effects of all activities when making management decisions.
  7. Better management of the cumulative effects of all activities will also require greater consistency in the environmental standards or bottom lines applied to decisions under different pieces of legislation.
  8. Bearing in mind the previous Cabinet decisions, and the scope of the EEZ legislation set out in previous papers, my preferred policy option is to make provision for greater coordination between management regimes with regard to environmental standards, rather than making the setting of standards and management of cumulative effects of all activities the responsibility of the EEZ legislation.
  9. To achieve this improved coordination, I propose that:
    1. Development of high level environmental outcomes and bottom lines in the policy statement under the EEZ legislation, will take into account the environmental controls set under other statutes (for example fisheries standards set under the sustainability provisions of the Fisheries Act), and
    2. there be consequential amendments to other legislation regulating the environmental effects of activities in the marine area, to ensure that all legislation is able to take into account the relevant policies and tools established under other legislation (as a means of achieving better alignment of objectives and environmental outcomes over time).
  10. The benefits of this option are that:
    1. it is consistent with the previous Cabinet decisions on the scope of the EEZ legislation, as it does not bring currently regulated activities into the EEZ regime,
    2. it does not create a tool outside the Fisheries Act that would affect the quota management system, and
    3. standards are developed to meet the needs of each regime, in a form that can be readily implemented with regard to the activities managed under that regime.
  11. There are also some inherent risks in taking an approach that is based on coordination across statutes, including the risk that
    1. consistent environmental standards will not be applied across statutes, at least in the short to medium term,
    2. environmental standards may never be completely consistent, given that standard setting and other management decisions are driven by the different purpose and principles of each piece of legislation, and
    3. inconsistency in standard setting could result in activities subject to stricter environmental standards missing out on development opportunities to those activities subject to weaker standards.

Advantages and disadvantages of standards that apply to all activities in the EEZ

  1. Given the risks outlined at paragraph 160, and the previous Cabinet decision requiring policy to address cumulative effects across all activities, the Ministry of Fisheries believes that Ministers should have the opportunity to consider a more stringent approach that would establish provisions for development and implementation of an overarching framework of environmental standards.
  2. This framework would be binding on all activities in the EEZ, and all other legislation managing activities in the EEZ.  When setting the standards, the Minister for the Environment would need to have regard to existing standards and consult with other Ministers.  The Ministry of Fisheries notes that these standards would probably need to reflect a spatial planning approach to environmental protection, similar to that reflected in the Marine Protected Areas Policy. 
  3. This overarching framework of environmental standards and the spatial planning aspects could build on the work already done for fisheries standards and marine protected areas.  The Ministry of Fisheries notes that the framework would need to be sufficiently high-level so as not to constrain obligations under existing legislation, but would also need to contain sufficient detail to guide the standards set under individual pieces of legislation.
  4. The overarching framework of environmental standards would be the basis for managing cumulative effects, by ensuring that all regimes were managing to the same environmental bottom line and thresholds for permissible cumulative effects. 
  5. The Ministry for the Environment agrees that there is considerable merit in the concept of a single set of environmental standards and a common approach to cumulative effects management across statutes.
  6. The Ministry for the Environment considers, however, that the compre­hensive standards and spatial planning approach proposed by the Ministry of Fisheries is unsuitable for inclusion in the EEZ legislation.  In the Ministry for the Environment’s view, the proposal:
    1. goes well beyond the scope set for the EEZ legislation by requiring substantial changes to other statutory management regimes and having a binding effect on the management decisions of other agencies, including the implementation of the quota management system,
    2. the Ministry of Fisheries notes that the comprehensive standards would probably need to be underpinned by spatial planning (which could potentially be of an allocative nature, if applied to all activities), which the Ministry for the Environment sees as more in the nature of one of the overall integration measures reserved for consideration at a future stage of oceans policy,
    3. would complicate the accountabilities of Ministers, and transfer much of the responsibility for the environmental outcomes of fishing to the Minister for the Environment without transferring any ability for that Minister to set fisheries controls for sustainability purposes,
    4. risks significantly altering the environmental standards under which the fisheries and transport sector operate given the different purpose and principles that will apply under the new EEZ legislation,
    5. risks legal challenge if environmental standards imposed on fisheries or the transport sector, due to the need to be consistent with the overarching standards, are inconsistent with those that would have been imposed under their own purpose and principles (Crown Law advice would need to be sought on this issue if Ministers wish to proceed with this option),
    6. could result in the development of tools under the EEZ legislation being driven by considerations regarding the environmental effects of fishing (and to a lesser extent transport), rather than the effects of the activities covered by the EEZ legislation, which could distort the regulations developed under the EEZ legislation, and
    7. may not be able to be implemented fully without a significant increase in expenditure for planning, marine research and monitoring.
  7. While my preferred proposal in this paper will improve management of cumulative effects, it will not address some of the allocation issues that may arise in the EEZ in the future if multiple industries seek to expand into the same space.  Cabinet has already decided that the EEZ legislation will not address allocation, but such issues may need to be considered in the future given the likelihood of increased activity in the EEZ over time.

Part E: EEZ Environmental Regulations

  1. The EEZ legislation will be an enabling law.  The primary legislation will not contain the detailed rules and standards to guide the day-to-day assessment of activities and their effects.
  2. I propose that the operational detail of the legislation be set out in statutory regulations, which may be made from time to time at the discretion of the Minister for the Environment. 
  3. I propose also that, where appropriate, some operational detail not appropriate for statutory regulations may be promulgated by the Ministry for the Environment.
  4. The drafting of regulations should be flexible enough to deal with priority pressures and areas in the EEZ.  I propose that regulations can be made over all or part of the EEZ and extended continental shelf, and apply to any of the effects to which this legislation applies.  Any regulations made over the extended continental shelf will need to reflect New Zealand’s more limited sovereign rights, which apply only to the resources of the seabed or subsoil. 
  5. I propose that the regulations contain rules and standards:
    1. Rules will set thresholds that categorise activities by their effects, as either permitted, discretionary, or prohibited.  This is similar to the approach in regional coastal plans under the Resource Management Act.
      For example, an EEZ regulation created to manage effects on the seafloor would contain rules that define when the effects of an activity will reach the threshold to require an EEZ consent. 
    2. Standards will set the ongoing conditions with which an activity must comply to be permitted or discretionary.
      For example, a regulation to manage the effects of seismic surveys could set standards with which the activity must comply to remain permitted, such as monitoring for the presence of marine mammals and low-power start-up of acoustic equipment. 
  6. Permitted activities will be allowed under this legislation without an EEZ consent if:
    1. the effects of the activity are below the threshold defined in the rules, and
    2. the performance of the activity complies with any standards defined in the rules.
  7. Permitted activities will still need to comply with the relevant requirements of any other legislation.  For example, if a proposed petroleum exploration is defined as a permitted activity, it still will require a petroleum exploration permit under the Crown Minerals Act.
  8. While permitted activities will not require EEZ consents, I propose that persons undertaking permitted activities will be required to notify their activities to the EEZ Commissioner, which will enable assessment of compliance with the legislation and cumulative effects of multiple activities.
  9. Discretionary activities will require approval through an EEZ consent.
  10. The thresholds in the rules which define an effect as discretionary would mostly relate to the environmental effects of individual activities.  I propose that the legislation should also provide that the regulations define effects or activities as discretionary:
    1. where necessary to manage the cumulative effects of activities (see paragraph 155), and/or
    2. where the activity would, or is likely to, have a significant adverse effect on the other defined interests (see paragraph 190) that must be considered under the significant adverse effect test in the consenting process.
  11. The latter provision offers protection to foreshore and seabed instruments that is consistent with the Resource Management Act.  Section 85A of the Resource Management Act states that plans must not describe an activity as a permitted activity if it is likely to have a significant adverse effect on the exercise of a customary rights order under the Foreshore and Seabed Act 2004.  This provision would also offer protection to Treaty settlement assets on the same basis.
  12. Activities with effects prohibited by the legislation cannot be authorised.  This enables clear guidance from government as to which activities will never be consented in New Zealand’s EEZ.
  13. Regulations may also be made closing an area to specified effects, if doing so is required to meet the purpose and principles of the Act.
  14. International law creates a more permissive regime for international cables and pipelines, and marine scientific research.  The legislation will need to recognise these activities through specific regulations that provide controls appropriate to their status in international law.

Process for preparing regulations

  1. I propose that the Minister for the Environment is responsible for development of draft regulations.  The Minister will notify the intent to develop regulations, which will enable identification of persons who wish to be involved. 
  2. I propose the following process for developing regulations:
    1. The Minister will publicly notify intent to develop regulations.  All key stakeholders and iwi will be directly notified and given the opportunity to express interest in participating in the scoping and drafting stages.
    2. The Ministry will work with relevant departments, iwi, and the Maori advisory panel to scope and develop a draft regulation, plus with key stakeholders who have expressed an interest.  The Maori advisory panel will be able to give advice on the best means of engaging with iwi at this stage.
    3. The draft regulation will be publicly notified, with a requirement to notify directly all key stakeholders, iwi, and local government.  There will be provision for written submissions and opportunities for submitters to be heard.
    4. Once submissions are received, there will be a requirement for the Ministry to consult relevant Ministers before finalising the regulation.
  3. I consider that making provision for iwi to be involved in scoping and drafting, as well as making submissions on a draft regulation, gives effect to Cabinet’s decision on iwi input and participation.  The Maori advisory panel will be able to oversee, and advise on, the processes set up by the Ministry to achieve this.  A process is needed that allows iwi to choose whether they want to commit resources to be involved.

Law and policy relevant to development of regulations

  1. I propose that when preparing regulations the Minister shall have regard to any relevant marine legislation and policies, and any relevant international law and best practice.
  2. I propose that regulations must be consistent with any policy statement prepared under this EEZ legislation.

Part F: EEZ Consents                           

  1. Annex 3 sets out the proposed EEZ consenting process in diagram form.

Applying for an EEZ consent

  1. Before an EEZ consent application is lodged, the EEZ Commissioner can give guidance to applicants on the level of information needed in the application.  Ideally this will be discussed prior to the application to avoid delays for seeking of further information.  Experience over time in dealing with EEZ activities will lead to refinement of the information requirements.
  2. An application for an EEZ consent must give the EEZ Commissioner all the information required to assess the proposal. The legislation will list obligatory matters of content and form. I propose the consent application describe all aspects of the proposal, and identify effects of the proposal on the environment and other interests, through an impact assessment statement.

Impact assessment statement

  1. The impact assessment statement is intended to identify the environmental effects of the proposal, and also the effects on other interests.  ‘Interests’ need to be defined by the legislation so it is clear what must be addressed in the statement.  I propose that the impact assessment statement should assess the effects of the proposal on the following interests:
    1. any lawful existing activity in the territorial sea or EEZ that may be affected,
    2. resource consents issued under the Resource Management Act,
    3. historical and contemporary Treaty of Waitangi settlements,
    4. Foreshore and Seabed Act 2004 instruments, and
    5. Maori cultural interests in the oceans.
  2. I propose that the content of the impact assessment statement be scaled to the size and significance of the effects that the activity may have on the environment and defined interests.  For example, a lower-impact activity with well known effects would likely require less information and analysis than a large-scale and novel activity.  The legislation will set out the required content of an impact assessment statement, which must be sufficient to enable consideration of:
    1. the actual or potential effect on the environment and defined interests,
    2. the consultation undertaken, and
    3. any possible alternative locations or methods for undertaking the activity to help to avoid, remedy or mitigate any adverse effects.

Applicant consultation in preparing an impact assessment statement

  1. It is preferable that early consultation occurs with interested persons to discuss possible impacts, and means to avoid, remedy or mitigate adverse effects.  
  2. Industry stakeholders have expressed a preference to first meet and discuss any such issues before entering into the statutory decision making process.  This enables negotiations of ‘best use’, and the acceptable level of impact on others, to be determined directly between the relevant parties.
  3. I propose that the legislation does not include a statutory requirement to consult with any particular persons, but requires that the impact assessment statement adequately identify effects on defined interests.  The applicant for EEZ consent will be responsible for assessing on the facts of their proposal who needs to be consulted.
  4. The EEZ Commissioner would offer advice to applicants on any parties, particularly iwi, that might be affected. 

Processing the consent application

  1. I propose that a consent application will be accepted only when it contains sufficient information.  There will be the power to decline acceptance of an application that is deemed incomplete, or to ask for further information from the applicant. 
  2. I propose that the EEZ Commissioner may seek independent audit of the impact assessment statement for peer review and to determine if is contains sufficient information. The Maori advisory panel may also recommend audit of any cultural impact assessment provisions.
  3. I propose that the EEZ Commissioner may also commission any independent advice considered necessary for consideration of the application.
  4. The EEZ is being managed at a national scale and it is appropriate that the opportunity to participate in the consideration of an EEZ consent is available nationally.  When an EEZ consent application has been accepted I propose that the EEZ Commissioner will notify the application publicly, and also directly to agencies, relevant iwi and persons with potential interest in the application.  I propose also that submissions on a consent application may be made by any person. 
  5. I propose that the EEZ Commissioner will present to the Minister for Environment a report that summarises the consent application, feedback from submissions, any information commissioned, and feedback from consultation with government agencies.  The report will make recommendations to the Minister on whether to accept or decline the condition, and what conditions should be placed on a consent.
  6. The Maori advisory panel could, at its own discretion, produce a report on the application.  This would sit alongside the EEZ Commissioner’s report and recommendations to the Minister.

Dispute resolution

  1. The submissions stage may reveal opposition to the proposal from persons who consider it will impact on their interests.  It is preferable to resolve these issues between the parties before the consent decision stage.
  2. I propose that, if submissions in opposition to a consent application indicate that other persons consider the proposal has a significant adverse effect on their existing interests, the EEZ Commissioner may direct the applicant and these persons to meet, or request they enter into mediation, for the purpose of resolving the issues.

Making the decision

  1. I propose that the applicant or any submitter may request a hearing with the EEZ Commissioner to present their application or submission, and give evidence in support. 
  2. The purpose and principles of the legislation will be the prime considerations for any decision.  I propose that when making a decision on an EEZ consent application the Minister for the Environment must apply the purpose and principles of the legislation and any relevant provisions in the policy statement or regulations.
  3. I propose that the Minister for the Environment must have regard to any submissions.  This means that when making a decision, there must be a record of the reasons for making a decision, and the conclusions regarding the issues raised in submissions.
  4. Decisions will need to examine the specific facts of each consent application.  When making a decision, and applying the purpose and principles of the legislation, I propose that the Minister for the Environment must also consider in their decision:
    1. the actual and potential environmental effects of the proposed activity, including cumulative effects and effects that may extend into the territorial sea or on land,
    2. existing defined interests likely to be affected (excluding effects on interests of other persons who have given written approval to the proposal),
    3. any decisions relating to the area or resource that are made under any other relevant legislation or policy, and
    4. proposals to avoid, remedy or mitigate any adverse effects.
  5. I recommend that the Minister for the Environment be excluded from considering any trade competition issues. 

Assessing effects on defined interests

  1. The impact assessment statement will identify effects on defined interests, proposals to avoid, remedy or mitigate these effects, and whether agreements have been reached with persons representing affected interests.
  2. These issues may have been addressed between parties at the pre-application stage, or following meetings or mediation.
  3. I propose that when making a decision on the application for EEZ consent the Minister for the Environment will determine whether any significant adverse effects to defined interests remain (assuming the applicant has not come to an arrangement with those affected).  The Minister may decline the application on the grounds that it will, or would be likely to have, a significant adverse effect, or grant the consent subject to conditions that avoid, remedy or mitigate the effects so they are no longer significant.
  4. I propose the following matters should be considered when determining whether adverse effects on defined interests are significant:
    1. any relevant principles of international law,
    2. the effects of the proposed activity on the defined interest,
    3. the area that the proposed activity would have in common with the defined interest,
    4. the degree to which both the proposed activity and defined interests must be carried out to the exclusion of other activities, and
    5. whether the defined interest can be exercised only in a particular area.
  5. I note that further work will be required during the development of drafting instructions to determine how the significant adverse effects test will work in practice.

The decision

  1. The Minister for the Environment can approve the consent, in whole or in part, and with or without conditions; or decline the consent.

Timeframes for decision-making

  1. The legislation will have statutory timeframes binding on both the statutory decision-makers and the applicant.  For example, there will be a set time to decide whether to accept or decline an application, and deadlines for appealing a decision.

Rights granted by an EEZ consent

  1. I propose that an EEZ consent be a use right to the holder, defined strictly by the nature and conditions of the consent.  It would not be legal or personal property.  Consent for an activity does not mean the holder owns the space or resource to which the consent applies.
  2. I propose a 35 year statutory maximum term for consents.  This mirrors the maximum term available under the Resource Management Act, and would allow an activity spanning the boundary of the EEZ and territorial sea to have the same maximum consent time.  On the expiry of the consent a new consent would be required to continue the activity.
  3. I propose that the consent term granted should meet the purpose and principles of the legislation, including the adaptive approach to management.  In the case of new activities with uncertain effects, a consent, if granted, could be for a short duration, and subject to strict monitoring and review provisions. The activity could ‘ramp up’ over time through subsequent consents.  Consent duration should also be linked to authorisations under other legislation, for example a permit issued under the Crown Minerals Act.
  4. I propose that the term of a consent can be reviewed and changed through the consent review process.
  5. I propose that consents can be transferrable if the conditions of the consent remain the same for the new holder and the location is unchanged.

Granted subject to conditions

  1. I propose that conditions can be set on a consent to define ongoing requirements for the consent to remain valid.  They also may relate to end-of-life or emergency considerations such as decommissioning, liability, and clean-up provisions.
  2. The power to set conditions should be flexible.  I propose that any conditions may be set on an EEZ consent that are considered appropriate to meet the purpose and principles of the legislation.
  3. Conditions will need to be coordinated with Rules under the Maritime Transport Act, which has a large number of existing controls, for example around discharges, oil spills, management requirements of vessels and installations etc.  Many activities will need approval under both Acts.  The administrative processing of consent conditions and Maritime Transport Act requirements should be closely coordinated by the agency to ensure as far as possible a ‘one stop shop’ for projects.

Review and cancellation of EEZ consents

  1. I propose that the EEZ Commissioner may initiate review of a consent where adverse effects have arisen that were not anticipated at the time of the decision, or where new information is available that materially would have influenced the decision on the consent had it been available at the time.  Change to an EEZ policy statement or EEZ regulations could also trigger review of a consent.
  2. I propose that the holder of a consent also can apply for changes to the conditions of consent.
  3. I propose that the conditions of a consent may be modified after review.  The process for reviewing and modifying would be the same as for the EEZ consent application process, and the Minister for the Environment will be the final decision-maker. When making minor modifications to consents there will be discretion to use a non-notified process, without the requirement for hearings. 
  4. In the case of large-scale review of consent conditions, it may be appropriate to hold a full public process with submissions and hearings. 
  5. I propose the power to cancel a consent will be exercised only in the following circumstances:
    1. the effects of the activity exceed the consent conditions and cannot be avoided, remedied or mitigated,
    2. no material efforts have been made to exercise the consent in five consecutive years,
    3. review of the consent reveals information that, if known, would have resulted in the consent not originally being granted, and cannot be addressed through modification of consent conditions, and/or
    4. non-compliance with conditions of consent.  This would be the final sanction; in most cases non-compliance should be addressed first though enforcement orders or the offences provisions.

Part G: Appeals

  1. EEZ consent decisions will have an effect on the interests and expectations of persons applying for EEZ consent, or those with interests affected by the proposed activity.
  2. I propose appeal rights of decisions on EEZ consents.  This will enable scrutiny and correction of first instance decision-makers, and maintain a high standard of public confidence in the system.
  3. I propose that decisions on the granting or review of an EEZ consent may be appealed, and that appeals may be lodged by applicants for consent, or submitters on a consent.
  4. An applicant would be able to appeal a decision to decline an EEZ consent in whole or in part, or appeal conditions placed on a consent.  Submitters to an EEZ consent would be able to appeal the decision to allow or decline a consent in whole or in part, or appeal the conditions placed on a consent.
  5. I propose that applicants and submitters may also appeal decisions to change consent conditions after review, or to cancel consents.
  6. I propose also that persons may appeal against enforcement orders and prosecution for offences under the EEZ legislation.
  7. I propose that appeals are heard by an existing body.  Establishing a new appellate body would be disproportionate to the low number of appeals forecast in the short to medium future.  It would be more efficient to bring in expertise as required to an existing body.
  8. I propose the Environment Court as the appellate body.  Appeal to the Environment Court is appropriate because of its existing expertise in hearing appeals of a nature related to those likely on EEZ consents.  The Environment Court has existing appeal jurisdiction over decisions under ten statutes.  The Court has particular experience in applying an environmental rules and consents framework, dealing with complex resource management issues involving competing interests, rights and values, and mediation processes.
  9. I propose that the legislation create a new jurisdiction for the Environment Court to hear appeals of EEZ consents and consent conditions, and any necessary powers required for enforcement and offences.  I propose that the appeal procedure be modelled on the existing Environment Court provisions for hearing Resource Management Act appeals, and that onward appeal rights be identical to those under existing Environment Court procedure. 

Part H: Monitoring, Enforcement and Offence Provisions

Monitoring

  1. A monitoring scheme is required to ensure that EEZ operators are complying with their legislative rights and responsibilities. Under the proposed legislation, monitoring will be required for:
    1. compliance of permitted activities with the rules and standards established in EEZ regulations,
    2. the cumulative effects of permitted activities, and
    3. compliance with EEZ consent conditions. 
  2. I propose a range of monitoring options:
    1. self-monitoring: the reporting requirements on EEZ operators set out for permitted activities, or in consent conditions,
    2. observer coverage of activities, if required by regulations or a consent,
    3. inspections, and/or
    4. audit of operations, including independent evaluation. 

Enforcement orders

  1. I propose that the EEZ Commissioner may issue enforcement orders in the event of non-compliance with the legislation.  Examples of circumstances where an enforcement order could be issued include non-compliance with the standards required of a permitted activity, or non-compliance with consent conditions.
  2. The enforcement orders could:
    1. require a person to cease, or prohibit a person from commencing, an activity, or
    2. require actions to ensure compliance with the legislation. 
  3. Non-compliance with legislation also may trigger review and/or cancellation of an EEZ consent.

Offence provisions

  1. I propose that the legislation contain offence provisions to address non-compliance with rules and standards in EEZ regulations, and non-compliance with consent conditions.
  2. I propose that the legislation establish scaled penalties for different categories of offence.  I propose that maximum statutory penalties be aligned with those under the Resource Management Act and Maritime Transport Act, which currently are a fine not exceeding $200,000, plus not more that $10,000 a day for continuing offences, those costs required to remedy or mitigate adverse effects, and possible imprisonment to a term not exceeding two years.
  3. I note that ongoing daily penalties are inconsistent with the Legislative Advisory Committee guidelines, that and officials will consider in the drafting of a Bill whether they are necessary for the proposed EEZ legislation.

Part I: Miscellaneous Provisions

Cost Recovery

  1. As most activities carried out in the EEZ have predominantly private (rather than public) benefits, there is no justification for full government funding of the EEZ consent application process or associated monitoring costs. 
  2. The following costs should be able to be recovered, in part or whole:
    1. the processing of an EEZ consent application,
    2. administering, monitoring and supervising the EEZ consent once granted,
    3. any other costs related to EEZ consent conditions,
    4. monitoring permitted activities, where this is provided for in the relevant rule, and
    5. enforcement actions.
  3. I propose that the legislation set out a general power for cost recovery, with the detail of fees and charges determined by regulations developed in consultation with stakeholders.

Royalties

  1. Almost all resources are already subject to royalties under the Continental Shelf Act or Crown minerals regime, or are living resources covered by the Fisheries Act.  Activities in the EEZ regulated under this legislation will continue to be subject to the royalty regimes of existing legislation (Crown Minerals Act and Continental Shelf Act) where applicable. 
  2. I propose that the legislation include provisions to allow the Crown to levy a royalty on extraction of any non-renewable, non-living resource in the EEZ that is not covered by royalty (or similar) provisions in other legislation.  One resource that may not be currently covered is minerals in suspension in the water-column.  Should cost-effective technology be developed to extract gold from sea-water, for example, it would be inequitable to not charge a royalty for this when royalties are payable on gold extracted from the seabed.  The policy statement could be used to give further guidance on whether such royalties were to be levied in particular circumstances.

User charges

  1. With regard to imposing more general ‘user charges’ for occupation of space in the EEZ or use of renewable resources, the limited benefits that would be gained do not seem to justify the uncertainties that could be created by such charges.
  2. Other parts of the legislation already manage some of the issues that a user charge or rent would often address.  These include:
    1. Scarcity of the resource, including exclusion of other uses: Scarcity of minerals resources is already managed through the allocation provisions of the Crown minerals regime.  There are few if any signs yet of pressures caused by demands for space or renewable resources by activities that will be regulated under the EEZ legislation.  The consenting process has provisions to assess the effects of new proposals on existing uses.  The ‘use it or lose it’ provisions for EEZ consents will also discourage speculators from acquiring space for the purposes of on-selling a consent rather than developing the resource. 
    2. Fairness and equity: The legislation will make provision for charges for use of non-renewable resources, but not renewable resources or other non-depleting uses.  This is consistent with the situation in the territorial sea and on land, where users are not charged, for example, for use of wind for energy generation. 
  3. There is already precedent for royalties in the EEZ, but no precedent for rents or user charges.  Imposing such charges could imply that the government was actively allocating the resources of the EEZ, and could raise resource ownership and Treaty of Waitangi questions.  Earlier Cabinet papers were clear that broader allocation questions were not to be addressed in this legislation.
  4. The legislation will not explicitly cover the royalties and benefit-sharing aspects of bioprospecting, as these will be dealt with through the Ministry of Economic Development’s current bioprospecting policy development. 
  5. Many stakeholders have suggested that any charges for use of EEZ resources – including a portion of existing petroleum royalty payments – could or should be used to fund the research required to administer the regime effectively.  The feedback from iwi was that they would have fewer Treaty concerns regarding rents or royalties if any revenue was recycled into environmental management and research rather than the Consolidated Fund.  Tagged charges can, however, reduce efficiency in collecting the charges and spending the revenue, and create an expectation that those paying the charges will have a greater influence on how the revenue is to be spent.

Biosecurity

  1. The arrival of structures and support vessels from overseas in conjunction with activities in the EEZ (such as oil and gas exploration and production) potentially poses a high biosecurity risk to New Zealand’s marine and terrestrial environments.  The Biosecurity Act 1993 provides MAF Biosecurity New Zealand with powers to regulate the entry of craft to New Zealand for biosecurity purposes, but the jurisdiction of the Act does not extend beyond the territorial sea to include the EEZ. There is one provision in the Act (section 31) which extends the jurisdiction of the Act outside the territorial sea but this is limited to the contiguous zone and does not extend to the EEZ.
  2. The Continental Shelf Act 1964 (CSA) extends the jurisdiction of the Biosecurity Act to the EEZ in respect of certain exploration and other activities but the CSA only applies in limited circumstances (due to the way that Act is defined) and does not enable the regulation of all activities or vessels within the EEZ.
  3. I propose this EEZ legislation make a consequential amendment to extend the jurisdiction of the Biosecurity Act to the EEZ. Managing the effects of activities on biosecurity will primarily focus on preventing invasive organisms entering the EEZ, but a wider range of biosecurity activities may need to take place in the EEZ (supported by the provisions of the Act), to detect and respond to the arrival of an unwanted organism, as appropriate.  
  4. I will consult with the Minister for Biosecurity during drafting of these provisions in the EEZ Bill.
  5. MAF Biosecurity New Zealand is already managing some activities in the EEZ that pose a biosecurity risk on a voluntary basis.  Implementing controls on a mandatory basis is not expected to require a material amount of additional resources at the present level of activity in the EEZ and will be undertaken with existing resources.

Other consequential amendments

  1. The statutes to be amended are likely to include:
    1. The Environment Act 1986 - to implement the new functions of the Minister and Ministry for the Environment.
    2. The Fisheries Act 1996 and the Maritime Transport Act 1994 - to allow for better management of the cumulative effects on the environment of all activities in the EEZ, and achieve better alignment across statutes.
    3. The Resource Management Act 1991 – to allow for the Minister for the Environment to direct joint hearings for applications which span the boundary of the EEZ and territorial sea.

Part J: Commencement and Transitional Provisions

  1. There will be a requirement for transitional provisions to address the time between the legislation passing into force and the development of regulations, and to address any existing activities at the time of the legislation coming into force.
  2. I propose that, until the relevant regulations have been developed, all new activities be deemed discretionary, i.e. an EEZ consent would be required for any new activity coming within the scope of this legislation.
  3. I propose that the EEZ Commissioner have the discretion to consider consent applications that are likely to have minor effects through a non-notified administrative process.
  4. Transitional provisions will need to address activities existing at the time when the EEZ legislation comes into force.
  5. I propose that where an existing activity, to which the EEZ legislation shall apply, has been approved under other legislation, the EEZ legislation should come into force from the date at which the existing approval expires. 
  6. I propose an exception to this when the EEZ Commissioner considers that the conditions of the existing approval are inconsistent with the EEZ legislation.  I propose that in such cases the activity will require a ‘transitional EEZ consent’.
  7. A transitional EEZ consent will require the persons responsible for the activity to align its operations to be consistent with the EEZ legislation within five years from the issuing of the transitional consent.
  8. There will also be discretion to make a decision on a transitional EEZ consent through an administrative non-notified process, if the effects of the activity are considered minor.

Part K: Application to Defence Activities

  1. The Ministry of Defence and the New Zealand Defence Force are currently determining the potential effect of the proposed legislation on current and potential future defence-related activities in the EEZ.
  2. I propose that the following matters should guide the legislation’s coverage of defence activities:
    1. the legislation should not adversely affect the ability of the New Zealand Defence Force to undertake its core functions,
    2. although New Zealand has sovereign rights with regard to the resources in its EEZ, other states enjoy high seas freedoms, including navigation and overflight, within the zone, and
    3. the EEZ legislation should not disadvantage the freedoms of New Zealand Defence Force platforms in relation to foreign-flagged platforms.
  3. I will consult further with the Minister of Defence during drafting of the Bill to confirm the appropriate coverage of defence activities by the EEZ legislation.

Next steps    

  1. I propose that the Ministry for the Environment issue drafting instructions to Parliamentary Counsel Office for drafting of a Bill.
  2. I propose to report back to Cabinet Legislation Committee by the end of July 2008 seeking approval for the draft Bill. 
  3. My intention is that the Bill be tabled in the House by the end of August 2008.

Consultation

  1. This paper has been developed in consultation with the following agencies: Department of Conservation, Ministry of Fisheries, Ministry of Transport, Maritime New Zealand, Ministry of Economic Development, Te Puni Kōkiri, Ministry of Foreign Affairs and Trade, Ministry of Justice, Office of Treaty Settlements, Ministry of Agriculture and Forestry, State Services Commission, Treasury, Ministry of Defence, New Zealand Defence Force, Department of Internal Affairs, New Zealand Customs Service, Land Information New Zealand, Ministry for Culture and Heritage, Ministry of Health, Ministry of Research, Science and Technology, Ministry of Tourism, and New Zealand Food Safety Authority.
  2. The Department of Prime Minister and Cabinet and the Crown Law Office have been informed of the proposals in this paper.
  3. The Ministry of Defence and the New Zealand Defence Force note that they have not yet fully considered the implications for defence activities of the proposed legislation. I will consult with the Minister of Defence on the drafting of defence-related provisions in the legislation.

Financial implications

  1. An indicative cost for the proposed functions of the EEZ Commissioner is a minimum of $1.5 million per annum. This includes consideration of cost recovery and is very much an indicative estimate. More analysis of the likely costs will be needed.  The indicative cost is based on an assumption of two applications for consent being processed per year and does not include transitional provisions. The figure also includes costs for appeals. 
  2. There will be costs associated with liaison with and support of the Maori advisory panel.  Indicative costs for this (based on the cost to the Environmental Risk Management Authority of supporting Nga Kaihautu Tikanga Taiao) are $140,000 annually. 
  3. The Ministry for the Environment will face costs estimated at upward of $1.5 million for developing regulations and a policy statement under the EEZ legislation. This assumes development of three regulations and a policy statement over approximately 18 months, and is benchmarked on the cost of developing National Environmental Standards and National Policy Statements under the Resource Management Act. 
  4. One area where I do not yet have indicative costings is for any additional information requirements that will be needed to implement the legislation, such as the costs of collating and making accessible existing information about New Zealand’s marine environment.  These costs will be scalable to a certain extent, but successful implementation of the legislation will require an additional investment in this area.
  5. I intend to develop a bid for additional funding in Budget 2009 to cover additional costs for the Ministry for the Environment. This will be informed by a capability review on the Ministry’s capacity to implement the proposed new statutory functions.

Human rights

  1. The Ministry for the Environment will work with the Ministry of Justice during the drafting of legislation to consider consistency of the proposals with the Human Rights Act 1993 and the Bill of Rights Act 1990.

Legislative implications

  1. An Environmental Effects (Exclusive Economic Zone) Bill is included as Priority 4 (to be referred to Select Committee this year) in the 2008 legislative programme.
  2. I propose that the legislation should bind the Crown.  If the legislation is to be effective in regulating environmental effects, and effects on existing EEZ interests, it needs to apply to the Crown in the same way as any other party.
  3. The implications for government departments of the EEZ legislation binding the Crown will be that a small number of government activities may be required to apply for an EEZ consent, and pay the costs of processing and monitoring any EEZ consent. Any additional costs to the Crown are unlikely to be significant.
  4. As noted at Part K of this paper, I will consult with the Minister of Defence in determining appropriate provision for defence activities.

Regulatory impact statement

  1. The Ministry for the Environment confirms that the principles of the Code of Good Regulatory Practice and the regulatory impact analysis requirements, including the consultation requirements, have been complied with. 
  2. A Regulatory Impact Statement was prepared and the Regulatory Impact Analysis Unit considers the analysis and the Regulatory Impact Statement to be adequate, but notes that the analysis is at a high level with little quantification and that further analysis of likely costs and benefits will be necessary as part of the preparation of regulations. 
  3. A draft version of the Regulatory Impact Statement was circulated with the Cabinet paper for departmental consultation. The final Regulatory Impact Statement was circulated with the Cabinet paper for departmental consultation.

Publicity

  1. I propose a post-Cabinet press release signalling the intention to develop EEZ legislation, and outlining key features of the proposals.

Recommendations

Annex 1: Map of the EEZ and extended continental shelf

Text description of figure

A large-scale map of New Zealand’s marine area, using lines and colour to denote the territorial sea (extends to 12 nautical miles from the coast), the Exclusive Economic Zone (extends from 12 to 200 nautical miles from the coast) and the extended continental shelf to its outer limits (which in some places extends beyond the Exclusive Economic Zone). This map also identifies the boundary of the New Zealand-Australian 2004 delimitation treaty.

Annex 2: Relationship between statutes managing effects of activities in the EEZ and territorial sea

Text description of figure

This diagram describes which statutes govern the management of environmental effects and resource allocation for the current range of activities being undertaken in the territorial sea and the Exclusive Economic Zone, indicating where there are gaps in the existing regulatory regime.

Marine protection is covered in the territorial sea by the Marine Reserves Act, and some Fisheries Act and Resource Management Act tools. In the Exclusive Economic Zone the Fisheries Act covers some aspects of resource allocation. There is no dedicated, comprehensive, high-level marine protection tool for environmental effects in the EEZ.

Resource allocation and the environmental effects of fisheries management is regulated in the territorial sea and EEZ by the Fisheries Act and Fisheries Settlement.

Resource allocation and the environmental effects of transport and marine pollution are regulated in the territorial sea and Exclusive Economic Zone by the Maritime Transport Act and the international law right of innocent passage.

For petroleum and minerals activities, resources are allocated under the Crown Minerals and Continental Shelf Acts. Environmental effects of these activities in the territorial sea are covered by the Resource Management Act. There is currently no provision for management of environmental effects of these activities in the EEZ.

In the territorial sea aquaculture is regulated by the Resource Management Act and the Aquaculture Settlement. The Fisheries Act may apply to aquaculture for allocation in the EEZ. There is currently no provision for management of the environmental effects of aquaculture in the EEZ.

Other new activities, e.g. tidal energy, are regulated by the Resource Management Act in the territorial sea. These activities and their environmental effects are currently unregulated in the Exclusive Economic Zone.

The diagram identifies the gap in regulation which the proposed EEZ environmental effects legislation should apply: the regulation of environmental effects in the Exclusive Economic Zone for petroleum and minerals activities, aquaculture, and new activities. For aquaculture and new activities, the regulatory gap marginally extends into the issue of resource allocation. The proposed EEZ environmental effects legislation will not address the gap of a dedicated marine protection tool for environmental effects. There also remains some gap in allocation of space for new activities in the EEZ.

Annex 3: EEZ consent process

Text description of figure

This flowchart works through a high-level overview of the three stages of the consent process.

Applying for an EEZ consent:

  • The applicant engages prior to application with the government to identify any affected parties, and then it identifies effects on the environment, other defined interests and any cultural impacts; and
  • The applicant makes the application for an EEZ consent, which will include an impact assessment statement.
  • If the application does not contain all the required information, the applicant will be required to gather further information and re-apply. If the application does contain all the required information it will go to the processing stage.

Processing the EEZ consent application:

  • When a complete application is submitted, the EEZ Commissioner will notify the public, government, council, iwi and key stakeholders of the consent application
  • The EEZ Commissioner will receive and analyse any submissions made in relation to the consent application
  • If any conflict resolution is required, due to opposition to the application, the EEZ Commissioner may require meetings and / or mediation to resolve the conflict
  • If there is no conflict, or once any conflict has been resolved, the EEZ Commissioner will commission an independent audit and / or scientific advice if required. This advice will be made available to the EEZ Commissioner and Maori advisory panel.
  • The EEZ Commissioner will produce a report which summarises the issues in relation to the consent (environmental effects, significant adverse effects on defined interests, economic / social / cultural) and make recommendations on what decision should be made.
  • The Maori advisory panel may also provide a report to accompany the EEZ Commissioner’s report.

Making the decision:

  • A decision of whether the application will be called into the Environment Court. If the application is called-in to the Environment Court, the Minister for the Environment will not make the decision on the application. If the application is not called-in to the Environment Court, the Minister for the Environment will make the decision through application of the purpose, principles and objectives of the proposed legislation. Consent can not be granted if there will be significant adverse effects from the proposed activity on defined interests.  
  • If the Minister’s decision is appealed, the appeal is heard by the Environment Court. If the Minister’s decision is not appealed, the decision will stand.

Cabinet Decisions