This discussion presents some of the key subjects that emerged in the investigation. Many of these subjects are interactive. For example, the legislation rightly has an effect on the nature of consent conditions and the capacity for enforcement. It is difficult to consider one issue without considering its ramifications.
There is no New Zealand legislation specifically designed to deal with contaminated site management and remediation, and so the environmental effects of the Mapua clean-up were managed using the Resource Management Act. This is not necessarily ‘best-fit’ for the issues to be handled in a case like Mapua – The Act has a strong focus on the ‘externalities’ of site operations; does not support a statutory audit process; and does not provide key conceptual tools for the management of contamination – ‘CUTEP’ (clean up to the extent practicable), for example.
There are other issues that might be more effectively addressed with more specific legislation to deal with contaminated sites, but the value for effort should be evaluated. Contaminated sites legislation may be considered a low priority for New Zealand, given the limited number of seriously contaminated sites. Some attention to the legislation may address some of the key ‘blind spots’ in the process – eg the clean up criteria, ownership and responsibility for remediation, narrow attention to ‘hazardous wastes’ in the consent process documentation.
Commercial in Confidence arguments have provided a barrier to the efficient evaluation and effective monitoring of the process. As I understand it, an informal arrangement was made that the site auditor was able to access information on the reagents used in order to design effective monitoring requirements. In some other jurisdictions there are legal protections in environmental legislation that prevent officers communicating commercial-in-confidence information to outside parties. In some cases this involves jail terms as a maximum penalty. This provides the protection needed to manage a fully informed approval process.
Crown immunity provided additional difficulties in the Mapua process. While the RMA30 binds the Crown in a formal sense, key elements of enforcement and compliance are not available to the enforcement body. This left the TDC with a more limited range of tools than normal to assure compliance.
Potential Conflicts of Interest
There has been much attention to potential conflicts of interest that arise in the Mapua case.
In making observations arising from the review it is important to recognise that there is no intended implication that the potential conflicts of interest were material. It is important to recognise that the potential is difficult to avoid in complex orphan sites, and practices should be adopted to ensure that roles of the participants are clearly recognised, and potential conflict acknowledged.
Contaminated sites legislation and regulation in NSW and Victoria emphasise the importance of the independence of auditing and review processes, particularly when carrying out statutory functions and certification. In a more ‘usual’ clean-up the site owner might commission a clean-up of the site by a contractor. Government regulation acts to assure that the clean-up is to a ‘fit-for-purpose’ condition, so that the health and well being of future users or owners of the site are protected. Independent audit is a key tool to assure satisfactory completion of the remediation.
The Mapua FCC site has a long and complex history. As an ‘orphan’ contaminated site with a land value less than the cost of clean-up it predictably required significant intervention by government at both local and national level to rectify the legacy of years of contamination.
The TDC acted as both the landowner seeking site remediation, and as the enforcer of clean-up standards and practices. This might suggest that the owner’s interest in minimising the cost of clean-up may conflict with the enforcer’s interest in minimising risk. In this case however, the TDC had established a maximum contribution it was prepared to make ($NZ 2m), and costs over this amount were essentially the responsibility of the Ministry for the Environment. There is no suggestion that TDC was less than diligent in pursuing its enforcement responsibilities.
The Ministry for the Environment also had some conflicts to deal with. As a Consent Holder its interest is in completing the clean-up rapidly while minimising costs, consistent also with its interest to manage appropriations on behalf of the government. However, the Ministry had to balance its financial interests with expectations of the community, and its responsibilities to provide advice to government on environmental matters and the application, operation and effectiveness of the Resource Management Act As an agency with a largely policy role and history it had to create capacity to manage the remediation operation.
Many of the issues that arose during the Mapua clean-up would have been easier to manage had there been clearer separation of the respective roles and more explicit recognition of these potential conflicts of interest.
Initial consent conditions and application
‘Hazardous substances’ dealt with in the AEE and in the consent appear to focus on those associated with normal site management (diesel, flocculants etc, and operating chemicals for the EDL process identified at the time). The production of hazardous ‘treatment’ waste does not seem to have been resolved early in the project. In particular, the disposal of the spent carbon filter and the baghouse dust are not addressed as hazardous waste in the documentation. Thiess work practices related to hazardous substances similarly deal with ‘imported’ substances31.
The consent requires the “identification of potentially hazardous substances”, and that Management Plans should address “management of hazardous substances so as to ensure compliance with all statutory and regulatory requirements32”. While this clause is comprehensive, it lacks specificity and guidance for compliance and enforcement.
The Air section of the consent package requires the Environment Management Plan to include “Provision in the MCD Plant for appropriate filters33”, but does not specify the conformation for the air management system. The General section of the Resource Consent34 requires “Unless otherwise specified by consent conditions, the consent shall be carried out in general accordance with the Consent Holders Assessment of Environmental Effects dated May 2003, supporting documentation lodged with the AEE and the evidence presented at the consent hearing.” Without examining the transcripts of the evidence presented at the hearing, reliance on this condition for the purposes of compliance would be fraught with difficulty. The evidence presented at hearings of appeals of this sort is rarely consistent, and there would be considerable interpretation of the intended conditions.
The consent conditions recognised the potential to form dioxins in the process, and applied conditions related to the dryer temperature to avoid de novo synthesis. In practice, these proved difficult to measure because of the configuration of the plant.
The consent also dealt with uncertainties in the technology to be applied by requiring the ‘Proof of Performance’ trial under the review of the Peer Review Panel.
The lack of specificity of the consent conditions had consequences for the management of the project and for the enforcement of conditions of the consent.
Role of the Peer Review Panel
Shortly after the Consent was issued the Peer Review Panel was established. This provided a useful means of accessing the expertise needed to review and advise on a complex series of interacting environmental issues. Their role in the review of monitoring and environmental management plans and in the review of the Proof of Performance testing was essential to the quality and focus of the environmental monitoring. Importantly, it was also an essential underpinning to the adaptive management approach required in such a complex site. It allowed the project to be approved, while still providing for a refinement of the technology and monitoring design to the conditions of the site.
PRP’s role was to make recommendations to the TDC Environment and Planning Manager and Compliance Coordinator. The intent was that TDC would then give effect to the recommendations, if it accepted them. With the original project responsibilities, TDC would have used its enforcement powers in respect to a private business, and so ensure compliance with the consent. As the project was eventually carried out, TDC’s capacity to ensure compliance was more limited, both by the legislation and more subtly, by the close partnership between TDC and the Ministry. Although the Crown is subject to the Resource Management Act, many of the tools of enforcement are specifically excluded.
The PRP’s role was a difficult one. It had to provide advice and oversight using its expertise, without the capacity to put its recommendations into effect. In some cases its recommendations and conclusions could not be developed without preliminary work, which was debated.
Transfer of Consents
In organizing the transfer of the consents from Thiess, the evidence shows that the Ministry carried out appropriate ‘due diligence’ in assessing whether to assume responsibilities for the project. It evaluated its risks, project structure and resources. It assessed the resources available both inside and outside the Ministry, and concluded that it could run the project “exactly as Thiess was planning to carry out the proposal”35.
It was acknowledged that the Ministry lacked widespread expertise in the practical aspects of contaminated site clean-up (although it had some), but had considerable skills in contract management, and well-defined project documentation and design inherited from Thiess. Contracts were let efficiently once the Ministry assumed responsibility and there appeared to be minimal delays in pursuing the project.
Importantly, the Ministry met with the TDC to resolve their respective roles, and in particular, the monitoring requirements and enforcement process36. I have been unable to locate any documented agreement setting out the joint understanding reached.
A key assumption seems to have been that the Thiess documentation would serve as an adequate project plan for the Ministry. However the Ministry is an entity with responsibilities different from Thiess, in its private capacity as a Consent Holder and manager of a remediation project. While the ‘remediation project’ had clear project management documentation, the ‘Ministry project’ appeared to be managed using the established structures within the Ministry. These included a clear project structure and responsibilities, redeployment of key staff resources, project tracking via monthly ‘Group Managers Meetings'. However, there was no formal project plan apparently developed and adopted. Project tracking and oversight was weaker.
The threshold question to be asked in this ‘due diligence’ process is whether the Ministry should have considered it appropriate to take on this operational role. The need for some arrangement to pursue the remediation was considered compelling, and delays undesirable.
The Environment Act appears to provide little guidance for the Ministry acting in an operational capacity as a consent holder. The decision to assume this responsibility clearly had government sanction, as evidenced by continuing appropriation for this purpose. This appropriation was made in the clear knowledge of the extent of the contribution by TDC37.
During the operational phase the site management appeared to function effectively, with good oversight of the works, responsive management and good communication with the local community. There has been some suggestion that the site manager was not sufficiently able to act on site, because of the need to confirm expenditure with the Ministry. It is difficult to establish whether this had material effect.
More difficulties arose in dealing with management decisions that were less clearly formalised. The relatively imprecise nature of the consent in describing the air management system, the need to prove the performance of the technology, and the need to consider the recommendations of the PRP, demanded a responsive and adaptive approach to the management of the project and the consent requirements.
It is clear that the Ministry resisted the TDC and PRP requests to sample the carbon filter for dioxins. The expense was clearly not the significant issue, since the Ministry did not initially accept that TDC could sample the filter itself. It appears that Ministry had genuine concerns about raising the dioxin issue when it was not a key factor in the current performance of the plant. It had expert advice to suggest significant dioxin release was “not a high risk”. However the focus of its arguments on close interpretation of the consent conditions and the right of TDC to take samples diminished its key argument. In retrospect, perception of the Ministry that was created appears to be one of obstruction, rather than of showing good judgment.
The Ministry at times was slow to respond to action items proposed by the PRP. This was due to a number of factors. In part, it reflected some lack of clarity in the PRP requests, which needed some considerable design and interpretation to implement. The process of PRP making recommendations to TDC, which evaluated them and sent requests to the Ministry, which then responded (often seeking further clarification) was relatively clumsy and contributed to delays.
The Ministry at times appeared to lack resources for the project. In part, this reflects the project management discipline applied. Much information was being presented to the Ministry by the PRP, and suggestions for action were frequent. At the same time the Ministry staff were managing contractors and preparing a substantial amendment to the RAP, which also had to be reviewed by the PRP prior to submission to the site Auditor and TDC’s Compliance Manager.
While the management of the original transfer of the consents was handled well by the Ministry, ongoing elements of project management seemed weaker. The lack of a project plan for the Ministry’s internal governance of the project contributed to this problem. The change of project management structure on the departure of the original Project Manager did not seem to be documented, and it seems that resources to interpret and manage technical information was not always readily available after this. The project was said to be reporting monthly to the Group Managers meetings. This may have been done informally, but a search of the Group Managers meetings by Ministry staff found few formal records or papers.
The issue of the expertise available to the Ministry has been raised. The lack of depth in specialized fields was recognised in project establishment, but it was judged that the Ministry’s expertise in contract management could access expertise as needed. The loss of the Project Manager reduced the practical site experience available to the Ministry, and it is not clear that the Ministry considered the expertise needed to pursue the project.
Public Consultation was a key feature of the project’s delivery. This seems to have lapsed somewhat as the project progressed. Nevertheless, the Ministry still has some outstanding commitments to public consultation, including the site “history”. The finalisation of the project provides a number of useful opportunities to re-engage with the community.
Current requirements of the Ministry.
There are remaining clear requirements for the Ministry to close off the Mapua site clean-up. The Site Validation Report is currently in draft form, and the Site Auditors Report, and Dilapidation Survey are required to be completed by the Ministry under the terms of the Financial Deed.
The Parliamentary Commissioner for the Environment38 has recommended the inclusion of copper as an element of the review. I endorse this. In particular the copper analyses used should distinguish the chemical form of the copper, which will significantly affect its mobility and toxicity. I expect the auditor would require this.
Beyond these formal requirements the Ministry has a number of obligations it might choose to address. It has initiated a history of the site and its clean-up involving the local residents, creating some expectations in the community. It may consider contributing to some of the continuing monitoring to be a valuable exercise, and it may have some obligations arising out of the site audit and validation processes. There is an outstanding set of recommendations from Dr Bill Glass about follow-up blood tests of the employees found to have elevated blood levels of OCPs.
Role of the Ministry for Environment in Managing Contaminated sites
Orphan contaminated sites are not uncommon, and governments around the world have wrestled with the problems of clean-up and ongoing use of the sites. It is common for governments to have to intervene to make sure the sites are cleaned up to reduce community health and environmental risk. In most cases, the site is ‘orphan’ because the cost of clean-up does not cover the likely financial benefit to the landowner.
New Zealand is fortunate in having identified only two sites that could be categorized as seriously contaminated, and which might be considered ‘orphan’. One of these, Mapua, has been remediated. Arrangements seem well in hand for the other, Tui mine, without the Ministry having to adopt an operational role. This limited number of sites implies that New Zealand may not need a strictly defined structure to deal with these circumstances. Extensive legislative review or the creation of specific bodies to handle such a rare event appears inefficient.
However, the Ministry needs to be able to respond to future contingencies. It can learn a great deal from the experience of Mapua. There are several options that might be examined, each with its own management challenges.
Limited policy and advisory role.
If the Ministry acts in strict observance of functions of the Environment Act, and does not assume any similar operational role, it has the current structure of responsibilities to manage this process.
Limited in this way, the Ministry would be acting in the role it took prior to the transfer; a role it handled well. Despite taking a non-operational role, it could provide some useful additional guidance for the efficiency of the RMA.
The Mapua history shows the value of an effective shared understanding of enforcement and how it is to be implemented. A clearly defined agreement for enforcement and monitoring would usefully inform Consent Holders, Regional Government and the public. The Ministry could lead a process to develop such agreements in conjunction with the Regional Councils.
The Ministry also has a role to define environmental standards and to prepare policy. It is currently developing a National Environmental Standard for Contaminated Land. This work might well be expanded to deal with some of the issues in contaminated land management that are currently unspecified in legislation. The PCE suggests that this might be used to define the requirements for environmental auditors.
There are other unspecified areas within the legislation. An example of comprehensive guidance can be seen in Model Procedures for the Management of Land Contamination. (2004) Department for Environment, Food Agriculture and Rural Affairs (DEFRA), UK. While this is a detailed guide suitable for large sites, this approach could be tailored to apply to a range of suitable applications in New Zealand.
The Ministry did not intend to act as an operational agency at Mapua, and yet it found itself in that position. Should the Ministry involve itself in a similar situation there are some important safeguards that could ensure best management.
To ensure an effective separation of roles there is the option under New Zealand law to create crown entities of various types. Non-Corporate Crown Entities seem to be a suitable class of body. Crown entities may be subject to normal legal instruments of enforcement. They have separate reporting requirement from normal departmental budget reporting. It has been argued that the financial responsibility for budget appropriations is at least as strict as normal corporate reporting. This may be true, but the assignment of staff to an independent entity sends some strong messages about clear separation of functions and responsibilities.
More subtly, staff allocated to such entities have defined and focused goals and roles that help manage conflict of interest. A model of this sort should limit the conflict of roles identified in the Mapua case. The creation of such an entity is not difficult, provided a clear rationale can be presented39.
A formal project management structure should be established and maintained. The key elements of effective project management were completed – risk analysis, financial planning, allocation of resources and responsibilities, key products, signoff etc, but overall project documentation and tracking did not appear to be strongly pursued. The project management structure for the Ministry’s Mapua involvement relied heavily on the Thiess documentation. This of course focused on the operational role of the consent holder, not on the broader responsibilities of the Ministry. The key is to separate the operational project management from the other roles of the Ministry. Clear separation could be achieved using a crown entity.
The Peer Review Panel provided very useful and important access to expertise. However, the views of the PRP were not rapidly evaluated and acted on. In the case of Mapua a number of issues contrived to slow the response to the PRP and limit its effectiveness. There was considerable frustration in the PRP regarding how to express their views, and to have them acted on. In part, this related to a lack of resolution of the process of enforcement, and the focus on the specific conditions of the consent by the holder. In part, it resulted from a lack of understanding of the mechanisms available (and not available) to the PRP. In Dec 2005 the PRP inquired about how its recommendations would be dealt with, and made its first formal recommendation. From this point it was much more precise in its recommendations.
Finally, the ‘partnership’ approach to the clean-up by TDC and the Ministry may have clouded their legal roles.
Enforcement and Compliance
There is comprehensive guidance provided for “council practitioners and consultants, environmental managers and others involved in resource management practice under the RMA”40. This details the interpretation of the RMA and its powers, processes for enforcement and case history interpreting the Act and its implementation. The Quality Planning Website is a very useful resource for those immersed in the details of RMA implementation, and this appears its key audience. However, its detail and complexity may make it less useful to new consent applicants and consent holders.
Some enforcement and monitoring issues can only be resolved at a site and project level, particularly since “each local authority has different procedures and guidelines for staff, it is recommended that you (the regional council) insert your internal guidelines and procedures for enforcement in any hard copy of this section you print off for easy reference.”41. It is apparent that there were misunderstandings during the project on the issues of enforcement and monitoring. Effective communication and understanding between the consent holder and the enforcement agency benefit both parties. In the case of Mapua, the Ministry (as the consent holder) and TDC (as the enforcer) met to discuss the monitoring and enforcement arrangements for the remediation. This agreement was not documented, although there was considerable correspondence and negotiation on the issue.
The model of enforcement intended by the Ministry is implied in the project establishment documentation. The PRP makes recommendation to the TDC Compliance Manager (as specified in the resource consent). If the TDC determines to take action it acts to control activities by the “Site Management Team” and the contractors on site. The Ministry is not seen to be the subject of enforcement action. During the remediation there appeared to be confusion by the Ministry and its contractors about the rights of access of the TDC compliance function, and the capacity of TDC to give directions. If this is a common problem in administering the Act, greater clarity about the rights and obligations of consent holders and the enforcement body would be valuable.
One of the issues raised during the investigation by the Parliamentary Commissioner for the Environment was the potential for TDC to benefit from the sale of land42. This is possible, depending on land prices and development in the area. However at the time of making this decision the TDC was using a valuation prepared in March 2001 by Telfer Young43. The total value of the site was assessed to be $1,250,000 at that time, on the assumption that the site was fully remediated and with no memorials or encumbrances placed on the title.
TDC is likely to place such limitations on site use, including height limitations and restrictions on underground works, so the value estimate would be discounted for these restrictions on the use of the sites. Importantly, the TDC has committed to retaining at least 40% of the land in public ownership. The original valuation was for 100% of the site.
TDC limited its financial contribution to the project to $2 million, conscious of its potential liability to service loans provide for this44. It clearly took that position in August 2004 during the negotiation of the transfer. TDC estimates45 that, in addition to the $NZ 2 million contribution agreed with MfE, TDC spent approximately 2.8 million on site investigations and preparation, prior to the clean-up, of which the Ministry contributed approximately $800,000. There is a remaining component that will be returned to the Ministry in accordance with the Financial Deed. TDC estimates that its total expenditure is of the order of $NZ 4.8 million. Even if the land has appreciated since the 2001 estimated value, it seems unlikely that the Council made its decision to remediate the site for the purposes of financial gain, nor that it will realise a substantial financial gain on the sale of land.
Whether in principle the Crown should have required a greater financial contribution by TDC is moot, but the government continued to provide appropriation for the clean-up aware the funding arrangements.
Conduct of the Ministry
The Ministry took on a range of roles in the development of the project.
In the early development it functioned well in its comfort zone, providing advice, commissioning investigations and participating in advisory forums.
It handled the transfer from Thiess remarkably quickly and effectively, using a good project planning process to carry out the transfer. The detailed site project plan inherited from Thiess became the primary project planning documentation. The broader governance and project responsibilities of the Ministry were handled by a ‘Business As Usual’ processes. Management challenges were always likely to lie in this latter area, which had to respond to the dynamic nature of the project, and the changes to monitoring requirements as the project evolved.
While the transfer process was handled well, there were gaps in project management in the establishment and execution. The details of enforcement and monitoring and the requirements of the consent holder were not resolved, and in particular the process to respond to contingencies. The process of concluding the Financial Deed with TDC seemed to be a low priority.
Project oversight within the Ministry seemed less stringent than expected. The regular Group Leaders Meetings did not provide a close formal monitoring of the project, and changes were not well documented. This may have contributed to the lack of rapid response in some circumstances. The lack of a formal replacement for the Project Manager was clearly a governance decision taken within the Ministry, but it seemed to confuse the management arrangements, certainly among the other participants.
The Ministry appeared obstructive in some cases, although its rationale was largely sound and considered. In a number of areas the Ministry went beyond the consent requirements.
The site Is now restored and grassed, and awaiting formal audit processes. In recent times the Ministry has acted decisively and quickly to resolve its remaining obligations for the site, and for the issues surrounding the management of Mapua. The Financial Deed is now signed, and the remaining ‘close out’ obligations are being addressed by a ministry project team established for the purpose.
Addressing the legacy of activities at Mapua was always going to require a significant contribution from the Government, and was likely to create potential conflicts of interest within spheres of government responsibilities. A clear separation of responsibilities and roles would have enabled more focused management, and more effective project tracking. In the records an often-used term to describe the relationships in the project was ‘partnership’. While this is a commendable and inclusive approach, it reflected an informality in project arrangements that obscured the legal and contractual responsibility of the participants.
The extended process of negotiation of the Financial Deed also reflects the informality in some elements of project governance and execution. As the project developed the details of the Deed may have been uncertain, but it seems a long period of time to rely on an informal understanding. This may have been influenced by a determination that the site was to be remediated, and the expectation that the government would fund that remediation, but there was not an obvious exit strategy should costs escalate disproportionately.
The financial return to TDC on the sale of land does not seem likely to result in a substantial financial gain for the Council. In fact, it is not certain that there will be any positive financial return.
One of the factors that has not been closely considered in other reviews is the effect of the consent conditions. The PRP process of review and development of the details of the operation and the proving of equipment was extremely valuable as a means of permitting the remediation while adapting to the ‘unknowns’ in the project. Some other areas of the consent, particularly the “in general accordance” requirement did not provide sufficient certainly to rely on when managing the consent. This provided a focus for debate and uncertainty during the project. In some cases the PRP was called on to ‘interpret’ the consent conditions to provide a practical means of meeting the consent.
There was a certain informality in some aspects of the project. This was exemplified in the arrangements for the Financial Deed, but was also manifest in the ‘partnerships’ that the Ministry developed and described. Ministry representatives described its relationship with TDC (its consent regulator, co-funder, and owner of the land) and EML (its contractor) as partnerships. There was not a clear separation of these conflicting roles.
30 Resource Management Act 1991 S4. Act to bind the Crown---(1) Except as provided in subsections (2) to (5), this Act shall bind the Crown. and 5) No enforcement order, abatement notice, excessive noise direction, or information shall be issued against the Crown.
31 Thiess Management Plan – Work procedures. Hazardous substance management. TS-OPS-LR4042-WP11. 2004
32 eg RM030521 S10(m)(i)
33 RM030523 Air 10(e)iii
34 RM030521 General 17
35 Memo: Ministry Project Manager to Project Sponsor. 9 Sep 2004.
36 Memo Ministry Project Manager to Project Sponsor. 9 Sep 2004.
37 Former CE, Ministry, interview conducted 24 Sep 2008..
38 Investigation into the remediation of the contaminated site at Mapua. July 2008. Parliamentary Commissioner for the Environment
39 Executive director, Crown Corporation Monitoring Unit. Interview 16 Sept 2008
42 Letter 22 Sep 2008. AG office to author.
43 Letter Telfer Young (Nelson) Ltd to Manager EDL, 16 March 2001
44 Planning and Environment Manager, TDC: Interview 19 Sep 2008.
45 Planning and Environment Manager, TDC. Pers comm.