In this edition:
Bunnings expands into Queenstown after a frosty welcome
Recent decisions released by the Environment Court in relation to a new Bunnings store in Queenstown address trade competitions' involvement in proceedings and the application of the Court of Appeal's assessment in Davidson regarding the "subject to Part 2" test when considering resource consent applications.
Substantive decision
The application for a trade supplier activity on a site in Frankton Flats was for a non-complying activity. Consent had been declined at Council level. The key issues of concern at Council level (landscaping and design concerns) had been resolved through mediation. However, the Council opposed the application on land supply and planning issues and the case proceeded to the Environment Court. The Environment Court found that the economic effects (on industrial land supply) were no more than minor, meaning the proposal passed the effects gateway test under section 104D of the Resource Management Act 1991 (RMA). The Court did not consider that it was necessary to consider the second gateway test, but noted that Bunnings' planner recognised that the proposal was contrary to certain policies of the Queenstown Lakes Operative District Plan that sought to exclude retail from the industrial zone. Overall, the Environment Court found that consent should be granted.
Two interesting aspects of the decision centred on the application of the "subject to Part 2" assessment of the Court of Appeal decision in Davidson; and the attempt to reconcile the relevant objectives and policies provided in the National Policy Statement on Urban Development Capacity 2016 (NPS-UDC) with the Operative District Plan and Proposed District Plan in Queenstown.
In determining whether a decision maker needs to resort to Part 2 in assessing a resource consent application under section 104, the Environment Court endorsed the test introduced by the Court of Appeal in Davidson as being whether "the policies are coherent with clear environmental outcomes". However, the Environment Court also raised concerns, with having to assess whether a plan "has been prepared having regard to Part 2" and "competently prepared" under the RMA. The Court was concerned that framing the test in this way would focus on retrospectively "reviewing" the process that led to the applicable provisions, rather than applying the provisions themselves, which the Environment Court could foresee producing difficulties. Consent authorities and the Environment Court would be reluctant to find that a plan had not been "competently" prepared, particularly where it was a result of decisions by an Environment Court.
The Environment Court also addressed the consideration of effects on industrial land supply. The Court was concerned by the "inconsistency in approach" between the policies in the Operative District Plan and Proposed District Plan, and the tendency of Council to conflate the amount of land zoned industrial with the supply of industrial land. To aid in resolving the inconsistency, the Environment Court sought direction from the NPS-UDC. The decision includes detailed consideration of the NPS-UDC and the economic principles underlying it, which will be useful for later consent and plan-making processes. Given the Operative District Plan provisions were drafted prior to the introduction of the NPS-UDC, the Environment Court felt that the Plan was inadequate to grapple with the type of considerations that decision makers were required to make as mandated by the NPS-UDC.
The Environment Court ultimately placed greater weight on the NPS-UDC and, on Part 2, and went so far as to suggest that reversion to Part 2 would be appropriate in this instance, given the relevant plan provisions may not have been "competently prepared" in the technical Davidson sense, because they did not reflect the shift in policy required by the NPS-UDC.
A warning for trade competitors
Prior to the Environment Court hearing for the substantive appeal, Bunnings sought an order that a section 274 party, H&J Smith Limited, was a trade competitor and joined the proceedings, contrary to section 308B(2) of the RMA. The question of whether H&J Smith Limited was a trade competitor was premised on the relationship between H&J Smith Limited and Mitre 10 Mega; H&J Smith's parent company, H&J Smith Holdings Limited, has a long history of owning Mitre 10 Mega stores through subsidiaries (including at Frankton Flats approximately 500 metres from the proposed Bunnings Site).
Given that these companies all had common shareholding and directors (bar one shareholding), the Environment Court found that the "common directorship can be regarded as acting for a common purpose", and should be treated as "one person" under the RMA for the purposes of the trade competition provisions. The Court considered that taking a broad approach to "person" was appropriate and agreed that "the structure or form a would-be competitor chooses to adopt is irrelevant". H&J Smith Limited was held to be a trade competitor.
The Court also concluded that H&J Smith Limited had failed to prove that it was directly affected by an effect of the proposed Bunnings that adversely impacted the environment and did not relate to the effects of trade competition. H&J Smith Limited's section 274 notice was struck out.
Bunnings subsequently sought indemnity costs from H&J Smith Limited for the strike out proceedings. The Court awarded indemnity costs on the basis that H&J Smith Limited was a trade competitor motivated to delay or prevent a competitor entering the market. Given that the RMA specifically seeks to control such anti-competitive behaviour from imposing extra costs on legitimate applicants, the Court found that it was an appropriate case for full indemnity costs.
Daniel Minhinnick and Georgia Cameron
Disclosure: Russell McVeagh acted for Bunnings in these proceedings.
The Zero Carbon Bill is here
Earlier this month, the Government introduced the Zero Carbon Bill to Parliament. While this was initially proposed as a standalone Bill, it has been introduced as an amendment to the existing Climate Change Response Act 2002. The Bill proposes the establishment of a Climate Change Commission, a long-term target for 2050, emissions budgets and the adaptation framework. You can read the Bill here.
Climate Change Commission
As expected, the Bill proposes the establishment of an independent Climate Change Commission that will operate across as an advisory and monitoring body for New Zealand's targets. The Commission has been set up in part already as the Interim Climate Change Committee which has provided recommendations on what surrender obligations should apply if agricultural methane and nitrous oxide emissions are introduced into the scheme. Going forward, the Commission will also provide advice on unit supply settings for the Emissions Trading Scheme.
Long-term target for 2050
During the consultation stage on the Bill, there were several options proposed for the long-term legislative target for 2050. As opposed to a target that required "net-zero" emissions of all greenhouse gases, the Bill treats biogenic methane emissions separately to all other greenhouse gases. Biogenic methane is produced from livestock as well as the treatment of waste. The Bill sets targets to reduce:
- gross emissions of biogenic methane within the range of 24% to 47% below 2017 levels by 2050, with an interim requirement to reduce emissions to 10% below 2017 levels by 2030; and
- net emissions of all other greenhouse gases to zero by 2050.
This target can be reviewed if, for example, there is a significant change in scientific understanding or significant technological advances.
Emissions budgets
The Bill requires each emission budget to be set for a five-year period, with three budgets in place at any given time. Both the budget setting and associated plans for meeting them will be developed by the Minister responsible, based on the advice of the Commission experts. It is proposed that borrowing from the subsequent budget will be limited to up to 1%, while excess abatement of emissions from earlier budgets is not limited and can be banked for future budgets. However, both adjustments would follow special processes and criteria on the advice of the Commission.
Adaptation
The Bill also requires National Climate Change Risk Assessments at least every six years, with a follow up National Adaptation Plan no more than two years later. There will also be an adaptation reporting power, under which the Minister can require "reporting organisations" to produce a report of how current and future climate change effects will affect the function of their organisation. Reporting organisations include local authorities and crown entities as well as lifeline utilities such as water, energy and telecommunications providers.
Comment
The Bill will be viewed in light of increased pressure for global action on climate change through the Paris Agreement in 2015 and the recent special report from the Intergovernmental Panel on Climate Change in 2018. While the Bill seeks to achieve clear and stable climate policy, it has also been criticised for its perceived toothlessness. There is no avenue for enforcement via the courts for a breach of the 2050 target or emissions budgets, although a declaration from the courts could be sought, and the Bill also allows emission budgets to be revised in some circumstances. The lack of enforcement mechanisms may have implications for certainty and long-term progress on climate change.
The first reading of the Bill took place on 21 May 2019 and public submissions are now open until Tuesday 16 July 2019.
Please contact one of our experts if you would like to discuss the Bill in further detail.
Allison Arthur-Young and Georgia Cameron
Setting the criteria for RMA Reform
The Environmental Defence Society (EDS) has recently released its 'Working Paper 1: Criteria for reform' – the first paper in Phase 2 of the Society's continuing 'Reform of the Resource Management System' project. You can view the working paper here. Phase 1 of that project resulted in a report in February of this year, which outlined options for various reform measures and considered broad system models. Phase 2 now seeks to select and progress a particular model, beginning by identifying what the system wide criteria for selection of a preferred model for reform might be, and what synergies and conflicts there might be between desirable criteria.
The report considers that a balancing approach or pursuing multiple outcomes is no longer sufficient and we need to consider which criteria are accorded priority by, or how criteria interact under, the new system. That relationship needs to be sufficiently precise to be useful.
The report distinguishes between substantive and pragmatic criteria. Substantive criteria might include outcomes relating to the protection of the environment or resources. For example, a criterion might be safeguarding the resources of aspects of the natural environment on which humans (present and future) rely on for survival (or perhaps for wellbeing) or the criterion might focus on the intrinsic value of ecosystems. We might also consider criteria focused on utilisation of resources for economic or social wellbeing, or the criteria might include outcomes relating to the Treaty of Waitangi, private property rights or an efficient (or certain, or flexible or participatory) process. It will be apparent here, as the report notes, that argument between substantive criteria is likely to be about the relative desirability of, and the priority to be accorded to, specific criterion.
Pragmatic criteria are focused on the process of reform, and include considerations of political will, social acceptance, and levels of acceptable disruption – all of which may change over time (and which the report notes should not be used as an excuse for lack of ambition, particularly given the scale of environmental challenges we are facing).
The working paper sets out a range of examples of criteria that could be used, covering matters such as environmental or resource protection, utilisation of resources, and process outcomes. There are criteria for human survival, intrinsic ecosystem values, heritage protection, fair allocation, biophysical (or economic or social) resilience, efficiency, economic or social wellbeing, certainty, flexibility, and participation, among many others.
The report then goes on to consider the relationship – both in terms of synergies and conflicts – between various criteria (for example between safeguarding resources for human survival and safeguarding resources for collective wellbeing, or between survival / collective wellbeing and promoting economic wellbeing). There are also obvious process conflicts between certainty and flexibility, and between efficiency and participation, that need to be resolved. Reading the list of criteria, it is difficult to escape the conclusion that, while there are some synergies, hard choices need to be made.
Recognising that there are any number of potential combinations, the report then sets out three possible sets of criteria for comment and feedback as a first attempt at developing a way to test and measure the choices we need to make. The 'Progressive Criteria' set prioritises human survival, intrinsic values of indigenous species, and collective wellbeing, in that order. Fairness – including inter-generational fairness – is important. The 'Transformational Criteria' set prioritises the intrinsic value of the environment, with human survival and wellbeing, following that. Under this set, fairness is still important but includes fairness to the natural world and the set also proposes measures to actively promote positive environmental outcomes. The 'Market Led Criteria' set recognises the need for human survival and wellbeing but drives for clarity and efficiency, and does not concern itself with distributional fairness. It does not actively require positive environmental outcomes and does not include the concept of intrinsic environmental values. The three sets detail the complex interaction of various criteria – each with its own flowchart – and warrant detailed examination.
The EDS Working Paper provides helpful clarity on the matters that those interested in RMA reform should be considering – and a frank analysis of the difficult trade-offs facing us as a nation that lives off its environment at a time of significant environmental challenge. EDS are encouraging comment and feedback. While this is not a government led process, it is supported by the New Zealand Law Foundation, the Employers and Manufacturers Association, the Property Council, and Infrastructure New Zealand, and we would encourage anyone interested in RMA reform to participate.
Please contact one of our experts if you would like any further details or assistance with any feedback.
Cameron Law and Kristen Gunnell