IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY CIV-2016-454-000035 [2016] NZHC 2948
UNDER the Resource Management Act 1991
IN THE MATTER OF an appeal from the decision of the Environment Court on the New Zealand Energy Limited applications for consents relating to the ongoing operation of the Raetihi Hydro Electric Power Scheme
BETWEEN NGĀTI RANGI TRUST Appellant
AND MANAWATU-WHANGANUI REGIONAL COUNCIL Respondent
NEW ZEALAND ENERGY LIMITED Applicant
Hearing: 3 October 2016
Counsel: J P Ferguson and H K Irwin-Easthope for Appellant N Jessen and M W G Riordan for Respondent G P Malone for Applicant
Judgment: 7 December 2016
JUDGMENT OF COLLINS J
Introduction
[1] The gravamen of this appeal is contained in the following question:
Did the Environment Court make material errors of law when considering appeals brought by New Zealand Energy Ltd (NZEL) and the Ngāti Rangi Trust (the Trust) from decisions made by the Manawatu-Whanganui Regional Council (the Regional Council)?
NGĀTI RANGI TRUST v MANAWATU-WHANGANUI REGIONAL COUNCIL [2016] NZHC 2948 [7 December 2016]
[2] The decisions in question were made in response to applications for resource consents sought by NZEL to vary the terms on which it could take water from certain water-ways for one of its hydro-electric power plants.
[3] This judgment explains why the answer is “yes” to the question posed in [1] and why I am quashing the decision of the Environment Court1 and directing it to reconsider its decision in light of this judgment.
Background
The parties
[4] The Trust represents Ngāti Rangi, an iwi whose rohe (traditional tribal area) is centred in the southern and western areas of Mount Ruapehu. It includes the townships of Waiouru, Ohākune and Raetihi.
[5] The Regional Council is a statutory body as defined in s 5 of the Local Government Act 2002. It was responsible for receiving, considering and deciding whether or not to issue the consents that are the focus of this proceeding.
[6] NZEL is a company that was incorporated in 1999. It owns and operates a number of small hydro-electric power schemes, one of which it acquired from the Raetihi District Council in 1999.
The Raetihi hydro-electric power scheme
[7] The Raetihi hydro-electric power scheme (the scheme) was constructed in 1918. It is located approximately six km north of Raetihi and approximately 10 km west of Ohākune. The scheme takes water from four sources namely, the Makotuku River, the Makara Stream, the Makaraiti Stream and an unnamed tributary of the Mangaone Stream (the Mangaone Tributary). Water is diverted from these rivers and streams, along a series of weirs and canals to a headpond from which it drops 116 m through a penstock into the powerhouse. After passing through the powerhouse turbine the water is discharged into the Orautoha Stream.
1 New Zealand Energy Ltd v Manawatu-Wanganui Regional Council [2016] NZEnvC 59.
[8] The scheme generates around 1.75 GWh per annum,2 which equates to enough electricity to sustain approximately 220 households per year.
Consents
[9] On 28 September 2001, NZEL applied to the Regional Council for its first resource consents under the Resource Management Act 1991 (the Act) concerning the rate of water it could take (take consents) from the rivers and streams that supply the scheme. NZEL applied to increase its take consents from the Makotuku River to 600 litres per second (L/s), a similar rate of abstraction from the Makara Stream, 300 L/s from the Makaraiti Stream and 5 L/s from the Mangaone Tributary. NZEL wanted its new take consents to be for a period of 35 years.
[10] On 17 January 2003 the Regional Council responded to NZEL’s application by issuing resource consents for the scheme for a period of five years. Those consents allowed for the following water takes and flows in connection with the generation of hydro-electricity at the scheme:
River/stream Maximum “water takes” Minimum/residual flows
Makotuku 300 L/s 50 L/s
Makara 300 L/s 25 L/s
Makotuku and Makara 450 L/s combined
Makaraiti 150 L/s 5 L/s
Mangaone Tributary 5 L/s and 500 m3 / day 5 L/s
[11] On 31 May 2007, the Regional Policy Statement and the Regional Plan (referred to as the “One Plan”) was notified. The One Plan became operational on
2 Gigawatt per hour. This is a unit of electrical energy often used for measuring large amounts of electricity. One GWh equates to one billion watt hours.
19 December 2014. The policies in the One Plan provide for upper allocation limits for hydro-electricity.3
[12] Rule 16-7 of the One Plan provides:
[Controlled Activity Rule:]
The take, use or diversion of surface water pursuant to s 14(2) [of the Act] by existing consented hydro-electricity generation schemes for which replacement consents are sought.
Terms:
(a) The consent application is to replace existing consents that are expiring and there is no increase to the existing volume or rate of take or diversion.
…
Control is reserved over:
(a) The volume and rate of water taken and the timing of the take.
3 The relevant policies state: Objective 5-3(a)(ii) Takes and flow regimes for existing hydro-electricity are provided for before setting minimum flow allocation regimes for other uses. Policy 5-14(b) Takes and flow regimes lawfully established for hydro-electricity generation as at 31 May 2007 must be provided for prior to [setting core allocations and supplementary takes]. Policy 5-15(a) The taking of water from rivers must be managed in accordance with the minimum flows and cumulative core allocations set out in Schedule C. Policy 5-15(b) The minimum flows and cumulative core allocations set out in Schedule C must be set after providing for any takes and flow regimes lawfully established for hydro-electricity generation as at 31 May 2007. Policy 5-16(a) Where good hydro-electrical information such as a specific water resource study or a long-term flow record is available, it must be used to set minimum flow and core allocations in Schedule C. Policy 15-17 In addition to the core allocation set out in Policy 5-15, a supplementary allocation from rivers may be provided: (a) in circumstances where water is only taken when the river flow is greater than the median flow and the total amount of water taken by way of a supplementary allocation does not exceed 10 per cent of the actual flow in the river at the time of abstraction; and (b) in circumstances where it can be shown that the supplementary allocation will not: (i) increase the frequency or duration of minimum flows; (ii) lead to a significant departure from the natural flow regime …; (iii) cause any adverse effects that are more than minor and on the Schedule B values of the water body or its bed; (iv) limit the ability of anyone to take water under a core allocation; (v) derogate from water allocated to hydro-electricity generation.
(b) The location of the take.
(c) Intake velocity and screening requirements.
(d) Measures to avoid, remedy or mitigate any adverse effects on the values of the water body at and below the point of take.
(e) Measures to avoid, remedy or mitigate any adverse effects on the in- stream geomorphological components of the natural character of the water body.
(f) Effects on rare habitats …
(g) Compliance with minimum flows.
(h) Measures to avoid remedy or mitigate adverse effects on tangata whenua matters.
(i) Duration of consent.
(j) Review of consent conditions.
(k) Compliance monitoring.
[Notification] Resource consent applications under this rule will be notified to those parties who are adversely affected in relation to the matters over which control is reserved. This clause does not preclude full public notification at the council’s discretion in accordance with the Act.
[13] On 18 June 2007 NZEL applied to the Regional Council to replace two of its water permits as part of its plan to upgrade the scheme and in furtherance of its intention to increase the electricity generated by the scheme. NZEL sought to lift its maximum takes and vary certain conditions.
[14] On 5 November 2009, the Regional Council informed NZEL that it did not support parts of NZEL’s application. The Regional Council set out options for proceeding with NZEL’s application.
[15] On 22 September 2011, NZEL applied to the Regional Council for discharge permits associated with the scheme. On 11 October 2013, NZEL amended its application to volunteer increased residual flows and a flow sharing scheme relating to the proposed water take and flow volumes. NZEL’s amended application is explained in the following table:
River/stream Maximum “water takes” Minimum/residual flows
Makotuku 600 L/s with a 75:25 flow 80 L/s sharing regime implemented from 330 L/s.
Makara 500 L/s with a 75:25 flow 50 L/s sharing regime implemented from 250 L/s.
Makotuku and Makara 1,100 L/s combined
Makaraiti 300 L/s. 10 L/s.
Mangaone Tributary No limit 5 L/s.
[16] The Regional Council appointed an independent commissioner4 (the Commissioner) who conducted hearings from 12 November to 4 December 2013.
[17] On 13 January 2014, the Regional Council adopted the report of the Commissioner. As a result the following consents were issued:
4 Appointed under the Resource Management Act 1991, s 34.
River/stream Maximum “water takes” Minimum/residual flows
Makotuku 306 L/s 80 L/s 1 December to 30 April 95 L/s 1 May to 30 November
Makara 300 L/s 45 L/s
Makotuku and Makara No limit combined
Makaraiti 156 L/s 5 L/s
Mangaone Tributary No limit 5 L/s 1 May to 21 December
The consents were granted for a period of 23 years.
The Environment Court
[18] On 31 January 2014, NZEL filed its notice of appeal challenging conditions on the water permits that limited the rate of take and the minimum residual flows for the scheme. NZEL sought to significantly increase the takes for the Makotuku River and the Makara and Makaraiti Streams beyond that provided in the Commissioner’s report. NZEL also sought changes to operational monitoring and review conditions.
[19] On 3 February 2014, the Trust filed its appeal seeking minimum rates of take and minimum flows for the major rivers and streams which feed the scheme, consistent with the One Plan. In particular, the Trust sought to impose a limit on the total combined take from the Makotuku River, Makara and Makaraiti Stream at 610 L/s. The Trust also sought various conditions on the consents to mitigate alleged adverse effects. The duration of the consent was also challenged.
Key issues before the Environment Court
[20] The key issues in the hearing before the Environment Court were:
(1) Whether NZEL should be granted water take consents that exceeded the take limits in its existing consents and the water allocation limits in the One Plan.
(2) Whether NZEL needed to address any adverse effects from the existing take consents.
[21] The parties adopted different positions concerning the meaning of the take limits in the One Plan and the effects of NZEL’s existing and proposed takes and minimum flow rates. This prompted the experts relied upon by the parties to identify eight scenarios which fell into two broad categories, namely:
(1) those that exceeded the allocation limits in the One Plan; and
(2) those that permitted NZEL to use its existing take consents (but with varied other conditions).
[22] The eight scenarios are explained in the appendix to this judgment.
[23] It appears to have been accepted by the parties in the Environment Court that:
(1) The water take applications sought by NZEL were to be assessed as discretionary activities. This is because when NZEL lodged its application in 2001, the relevant rule under the then operative Land and Water Regional Plan classified the takes of water proposed by NZEL as discretionary activities.
(2) Had NZEL applied for its proposed water takes under the One Plan, they would have been non-complying activities.
(3) Similarly, had NZEL applied for consents under the One Plan on the basis they were “like-for-like” to its existing take consents, then, NZEL’s application would have to have been assessed as controlled activities under the One Plan.
[24] In its judgment the Environment Court records that NZEL’s preferred option was Scenario one explained in the appendix to this judgment and that if necessary, NZEL could accept Scenario six. The Environment Court records that “in a final twist” NZEL submitted that if Scenarios one or six were not to be granted, “NZEL’s ‘fall back’ position was for its current consents to be renewed as a controlled activity at the same rate and flows”.5 This “fall back” position was advanced for the first time in NZEL’s closing submissions and had not been addressed by the Trust or Regional Council.
[25] The Environment Court recorded that the Trust did not support any increase in takes, but that if this was to occur the relevant provisions of the One Plan “should prevail”.6
[26] The position advanced by the Regional Council was that any allocation of additional water for this scheme must be in accordance with the provisions in the One Plan and that “Scenario 4 best represented these provisions”.7 The Regional Council’s position was underpinned by its concern that under s 104 of the Act, the assessment of NZEL’s application had to include the environmental effects of granting the consents. The Regional Council submitted that the environmental effects had to be considered by assessing the environment as if the consented activities did not exist.
[27] The Environment Court rejected this aspect of the Regional Council’s case. The Environment Court said:8
5 New Zealand Energy Ltd v Manawatu-Wanganui Regional Council, above n 1, at [25]. 6 At [26]. 7 At [29]. 8 At [48].
Under normal circumstances of renewal of consents for water take we would agree with Mr Jessen [counsel for the Regional Council], however the circumstances in this case lead us to a contrary conclusion, in particular:
• The fact that the take has been in place for nearly 100 years;
• The provisions of Objective 5-3(a)(ii) and Policies 5-14(b) and 5- 15(b) of One Plan which seek to provide for existing electricity takes and flow regimes prior to other allocations;
• The fact that the allocation regime established in One Plan has been set after recognition of the effects of existing electricity takes;
• The controlled activity status given to renewal applications for hydroelectricity takes.
[28] The Environment Court considered this was an “unusual case”9 and the analysis required under s 104 of the Act involved assessing the scheme as it currently operated. The environmental effects of the existing scheme and the effects of further allocations were then considered by the Environment Court.10
[29] In its interim decision11 dated 3 March 2016 the Environment Court declined to award take consents that exceeded the limits in the One Plan. The Environment Court considered that its decision needed to be consistent with the very specific objectives of the One Plan and that as NZEL’s proposal was outside the allocation parameters of the One Plan, its proposal would be declined.
[30] The Environment Court proceeded however to consider and then grant the existing consents as replacement consents under the “like-for-like” provisions of r 16-7 of the One Plan and in accordance with NZEL’s “fall back” position. In doing so the Environment Court treated the consents as applying to a controlled rather than a discretionary activity. The replacement consents expire on 30 December 2037.
9 New Zealand Energy Ltd v Manawatu-Wanganui Regional Council, above n 1, at [49]. 10 At [50]-[78]. 11 An appeal lies from an interim decision where the Environment Court has made a determination: Rodney District Council v Eyres Eco-Park Ltd [2007] NZRMA 1 (HC) at [10].
Grounds of appeal
[31] The Trust has advanced multiple grounds of appeal.12 The Regional Council support most aspects of the Trust’s appeal.
[32] The Trust’s appeal alleges the Environment Court erred in law in the following ways:
(1) by failing to assess all relevant scenarios;
(2) when it treated NZEL’s “fall back” position as a controlled, rather than a discretionary activity;
(3) by acting outside its jurisdiction in considering NZEL’s “fall back” position and granting the replacement consents;
(4) when it said the existing environment assessment includes the scheme as it currently operates;
(5) by misconstruing the effect of the policy regime in the One Plan for existing hydro-electricity schemes; and
(6) when it misconstrued its powers under r 16-7 of the Regional Plan concerning replacement consents for take consents.
[33] The Environment Court also failed to properly take into account the conditions and terms of the existing consents.
[34] The Trust has also appealed against a statement of the Environment Court that the Trust had not appealed the Regional Council’s decision to vary the discharge permit relating to the Orautoha Stream. The parties agree that this was an error by the Environment Court as the Trust had appealed this aspect of the Regional Council’s decision.
12 An appeal to the High Court must be on a question of law: Resource Management Act 1991, s 299.
[35] In his helpful submissions for NZEL, Mr Malone said the Environment Court correctly identified that the applications were for discretionary activities and that it appropriately identified the relevant factors and principles it was required to take into account. Mr Malone argued that after hearing evidence and submissions from the parties, it was open to the Environment Court to issue replacement consents for controlled activities on a “like-for-like” basis. Mr Malone suggested that in reaching its conclusion the Environment Court considered all scenarios and did not commit any error of law of the kinds submitted by the Trust and the Regional Council.
Analysis
Failure to assess all relevant scenarios
[36] In its judgment the Environment Court briefly identified the eight scenarios before it and recorded that “it was common ground that all of the scenarios … were within the scope of the two appeals”.13
[37] The Environment Court proceeded, however, to assess Scenarios one and six, which were the two scenarios that were “acceptable” to NZEL:14
NZEL has clearly indicated that only two of the scenarios [Scenarios one and six] are acceptable to it and that if either of these is not granted the application is to be considered as a renewal of the existing consent .... We take from this position that there is little to be gained from any detailed examination of any of the alternative scenarios other than [Scenarios one and six].
[38] The scenarios presented to the Environment Court were compiled by the technical experts to enable the Environment Court to assess the parties’ competing positions. Each scenario contained an explanation of the environmental and economic effects of the scheme, as well as an explanation of the consistency of each scenario with the policy provisions in the One Plan. The evidence from the various experts was encapsulated in the eight scenarios provided to the Environment Court.
[39] The scenarios were developed in the context of appeals relating to the appropriateness of the conditions granted by the Regional Council. These included
13 New Zealand Energy Ltd v Manawatu-Wanganui Regional Council, above n 1, at [21]. 14 At [30].
maximum daily take conditions, minimum flows, flow regulation conditions and combined cap conditions.
[40] The Environment Court retained broad control over the final form of the consents, which permits a consent authority to impose “… any condition that [it] considers appropriate”.15 Nevertheless, the Environment Court was required to assess the effects of the conditions which the parties considered were appropriate, including the extent to which they submitted the proposed conditions mitigated effects; whether they were proportionate and whether the proposed consents were consistent with the relevant provisions in the planning document. Part 2 of the Act also required the Environment Court to have regard to the appropriateness of any conditions it imposed.
[41] The Trust and the Regional Council say that it is not clear why the Environment Court considered there was little to be gained from examining the other scenarios. I share this concern. The Environment Court was required to evaluate the appropriateness of the conditions that the Regional Council had imposed. The Environment Court needed to discharge this responsibility by properly considering all relevant evidence. The evidence was encapsulated in the scenarios, including the six scenarios which the Environment Court consciously placed to one side.
[42] By not taking into account six of the eight scenarios, the Environment Court failed to take into account relevant considerations. Had the Environment Court made its decision in accordance with one or more of the scenarios which it ignored, the conditions which the Environment Court is likely to have granted would have been materially different from those that it ultimately elected to approve. In particular, consents consistent with one or more of the scenarios that were not considered would, in all likelihood, have resulted in significantly higher minimum flow restrictions for both the Makotuku and Makara stream takes.
[43] The Environment Court’s error in not considering all relevant scenarios was compounded when it decided to issue consents that reflected NZEL’s “fall back” position. I discuss this as a separate ground of appeal at [48]-[54].
15 Resource Management Act 1991, s 108.
[44] The first ground of appeal advanced by the Trust, which the Regional Council fully supports, goes to the heart of the Environment Court’s decision. The error made by the Environment Court when it failed to consider all relevant scenarios was fundamental to its decision and leads me to the conclusion that I must set aside the Environment Court’s decision in its entirety. As a result, I must direct the Environment Court to reconsider its decision in light of my judgment.
[45] In view of my conclusion on the first ground of appeal, I can deal with the remaining grounds succinctly.
Treating NZEL’s “fall back” position as a controlled activity
[46] NZEL’s 2007 application for a resource consent was lodged under the then extant Land and Water Regional Plan, which specified the taking of more than 15 m3 of surface water a day was a discretionary activity.
[47] Under s 88A of the Act, where an application for a resource consent has been lodged it continues to be dealt with as an application for the type of activity that applied at the time the application was lodged. NZEL’s application was therefore, in relation to a discretionary activity.
[48] The Trust and Regional Council are therefore correct when they say the Environment Court erred in law when it said that it was able to “consider renewal of the current consents as controlled activities”.16
Considering and granting the replacement consents
[49] The Regional Council submitted that the Environment Court should not have even considered the “fall back” position because this was beyond the scope of NZEL’s resource consent application and the Environment Court lacked jurisdiction to grant replacement consents on a “like-for-like” basis. The Trust adopted the Regional Council’s submission in relation to this ground of appeal.
16 New Zealand Energy Ltd v Manawatu-Wanganui Regional Council, above n 1, at [32].
[50] NZEL submitted that it was within the Environment Court’s jurisdiction to grant NZEL’s consents on the same basis as was granted in 2003. NZEL says the existence of its possible “fall back” position was known before the hearing and at the hearing all parties accepted it was within the scope of the appeal.
[51] I have concluded that the replacement consents were outside the scope of the Environment Court’s jurisdiction for three reasons.
[52] First, the replacement of the 2003 consents on a “like-for-like” basis was not included in NZEL’s Notice of Appeal nor referred to in NZEL’s opening submissions. NZEL’s application on appeal was limited to a change or cancellation of specified conditions in the existing consents granted by the Commissioner. There was no indication that the Trust or the Regional Council would need to directly address NZEL’s “fall back” position as a scenario in its own right, until the issue was raised for the first time in closing submissions, by which stage the Regional Council and the Trust had no opportunity to respond.
[53] Second, the value of the reference scenarios was in relation to an assessment against the baseline environment for the purposes of s 104(1)(a) of the Act. The reference scenarios were not put to the Environment Court as appropriate arrangements of conditions but were put forward for comparative purposes. I therefore consider that NZEL’s “fall back” position was not properly in the contemplation of the Environment Court as a resource consent scenario.
[54] Third, the minimum flow restrictions of NZEL’s “fall back” position was outside the scope of its appeal to the Environment Court as they are lower than their modified application to the Commissioner and the minimum flow limits imposed by the Commissioner.17 In its Notice of Appeal, NZEL did not appeal against the minimum flow thresholds imposed. It was therefore not fairly and reasonably within the contemplation of the Trust or the Regional Council that NZEL would seek to reduce the minimum flow restrictions. This is reinforced by all of the scenarios
17 In 2007, NZEL sought to keep minimum flow restrictions the same as they were in the 2003 consents, namely 50 L/s for the Makotuku and 25 L/s for the Makara. The modified application in 2013 sought 80 L/s for the Makotuku and 50 L/s for the Makara. The Commissioner imposed minimum flow limits as set out in the table at [17].
having minimum flow rates that were equal to, or higher than, those imposed by the Commissioner.
[55] It was possible for NZEL to file a new resource consent application which would have been processed as a controlled activity pursuant to the One Plan. However as NZEL had not elected to take this step, the Environment Court could not fill the void by upholding NZEL’s last minute “fall back” position.
The existing environment
[56] Section 104(1)(a) of the Act prescribes that a consent authority must take into account the actual and potential effects on the environment of allowing the activities to which the application for consent relates. Section 104(1)(b) of the Act requires the consent authority to also have regard to relevant provisions of a regional policy statement when considering an application for a resource consent.
[57] Under s 104(2) of the Act, a consent authority may disregard an adverse effect of the activity on the environment if a regional policy specifically provides for this consequence.
[58] A significant issue in the appeal was whether the Environment Court, when assessing the possible effects on the environment of the proposed consents, was required to have regard to the existing scheme or the effects on the environment by assessing the environment prior to the construction of the scheme.
[59] In Port Gore Marine Farms v Marlborough District Council18 the Environment Court said, in relation to an application for resource consent for three marine farms that:19
… we need to bear in mind that we must imagine the environment, for the purposes of section 104(1)(a) of the Act, as if the three marine farms are not actually in it …
18 Port Gore Marine Farms v Marlborough District Council [2012] NZEnvC 72. 19 At [140].
[60] A different approach had previously been taken by the Environment Court in Marr v Bay of Plenty Regional Council.20 In that case the Environment Court said:21
… the existing environment of the river must take into account the effects which have already occurred from lawful discharges …
[61] Marr v Bay of Plenty Regional Council followed Rodney District Council v Eyres Eco-Park Ltd22 in which Allan J held that existing use rights could be construed as part of the environment for the purposes of s 104(1)(a) of the Act. Allan J said:23
Existing use rights, however, still have an important part to play in the assessment of the adverse effects of a proposed activity, because an activity carried on pursuant to existing use rights will of course form part of the receiving environment against which the effects of a proposal will be assessed under s 104(1)(a) …
[62] Mr Ferguson, senior counsel for the Trust, and Mr Jessen, for the Regional Council, distinguished Marr v Bay of Plenty Regional Council and Rodney District Council v Eyres Eco-Park Ltd on the grounds that Allan J was considering whether activities benefiting from existing use rights under s 10A of the Act formed part of the existing environment in the particular context of a land use and subdivision application. That is quite different from the present case. Water take permits are not permanent and do not carry existing use right protections.
[63] Applying the approach taken by the Environment Court in Marr v Bay of Plenty Regional Council to the circumstances of this case would cut across the sustainable management objectives of the Act. The effect of not following the approach adopted by the Environment Court in Port Gore Marine Farms Ltd v Marlborough District Council when assessing the environmental impacts of a proposed consent is to lock in hydro-electricity water takes and flow rates for so long as the controlled activity status is retained thereby preventing adverse effects being avoided or mitigated.
20 Marr v Bay of Plenty Regional Council [2010] NZEnvC 347. 21 At [62]. 22 Rodney District Council v Eyres Eco-Park Ltd, above n 11. 23 At [36].
[64] I therefore agree that the approach taken by the Environment Court in Port Gore Marine Farms Ltd v Marlborough District Council was the approach which the Environment Court should have adopted in the present case.
[65] I am reinforced in my conclusion by two reasons. First, the learned authors of Environmental and Resource Management Law note a principle has emerged in which it should not be assumed that existing consents with finite terms will be renewed or renewed on the same conditions. The text says:24
Accordingly, the existing environment cannot include, in the context of a renewal application, the effects caused by the activities for which the renewal consents are sought, unless it would be fanciful or unrealistic to assess the existing environment as though those structures authorised by the consent being renewed did not exist …
[66] Second, the reasons given by the Environment Court for departing from the usual consideration of the existing environment as not including the scheme in current operation are not particularly compelling. The fact that the take has been in place for nearly 100 years is less relevant when it is appreciated that the resource consents issued in 2003 were granted for a period of five years. The relevant consents have not been granted in perpetuity as recognised in the One Plan and the controlled activity rule. They are not in relation to permitted activities. The context is a re-consenting application and in my view the 2003 consents should have been treated as having expired when determining the appeal.25 The context is different to the line of authorities on the existing environment that has evolved from the Court of Appeal’s decision in Queenstown Lakes District Council v Hawthorn Estate Limited,26 where it was determined that the existing environment may include activities in which a decision-maker has no control over, such as granted resource consents that are likely to be implemented.
24 Derek Nolan Environmental and Resource Management Law (5th ed, Lexis Nexis, Wellington, 2015) at 610. 25 Re-consenting is a process where new consents are granted rather than renewals. This is reinforced by s 124(3) of the Act. See also Koha Trust Holdings Ltd v Marlborough District Council [2016] NZEnvC 152 at [59]: “We find that [counsel’s] submission that “the scheme of the Act recognises that there is a distinction between a resource consent for a wholly new activity and an activity that has an existing consent at the time of a renewal application”, is inapt … the Act does not use the term renewal. Each permit is a new one to be implemented in the terms on its face.” 26 Queenstown Lakes District Council v Hawthorn Estate Limited [2006] NZRMA 424 (CA).
[67] The Environment Court’s reasoning in reference to the One Plan provisions, outlined above at [27], is not directly relevant to the mandatory analysis of environmental effects under s 104(1)(a) of the Act. Although the One Plan broadly limits the scope of analysis under s 104, its provisions are considered under s 104(1)(b) and not under s 104(1)(a).
[68] In my view, the controlled activity rule is more appropriately applied when the effects on the existing environment are considered without weighing the existing consents in the balance. To analyse the existing environment as excluding the scheme as it currently operates in these circumstances is also feasible. The Makotuku River can be assessed immediately upstream of the NZEL take in order to disregard the current scheme.
Effect of policy regime on the environment
[69] The Trust submitted the Environment Court misunderstood the hydro- electricity provisions of the One Plan when dealing with the relevant policies in the One Plan. The Environment Court said it need look no further than Objectives 5- 3(a)(ii) and Policies 5-14 and 5-15 in the One Plan:27
(supported by Rule 16-7 for a renewal of hydroelectricity generation conditions as controlled activities) to find that NZEL can reasonably expect that its current operating takes and flow regimes are secure.
[70] The Trust submitted that, in essence, the Environment Court proceeded on the basis the policies in the One Plan it referred to were determinative of the existing environment.
[71] I agree with the Trust that the policies in the One Plan must not be determinative of controlled activities. The Environment Court was required to assess the environmental impact of the proposed consent and not proceed on the basis that policies in the One Plan determined the decision which the Environment Court had to make under s 104(1)(a) of the Act.
27 New Zealand Energy Ltd v Manawatu-Wanganui Regional Council, above n 1, at [42].
Matters reserved for control under r 16-7 of the One Plan
[72] I also agree with the Trust when it submitted that the approach which the Environment Court took to the controlled activities rule in r 16-7 of the One Plan treated the water takes as if they were permitted rather than controlled activities. As a result, the Environment Court erred in law by failing to give the requisite consideration to the matters reserved for controlled activities in r 16-7 of the One Plan.
Failure to take into account conditional nature of limited term of the grant of the existing conditions
[73] Mr Ferguson acknowledged this was not a significant aspect of the Trust’s case.
[74] If it is the Trust’s submission that the Environment Court was obliged to take into account the conditions of the existing consent when determining the appropriateness of NZEL’s application then, I respectfully disagree. To the extent that Mr Ferguson’s submission appears to be based on a concern that the provisions of the One Plan were drafted without contemplation of the conditional nature on which the 2003 consents were granted, the consultation process of the One Plan provisions is outside the scope of this appeal. It is difficult to see any discrete question of law arising from this aspect of the Trust’s appeal.
Failure to consider one of the Trust’s grounds of appeal
[75] All parties acknowledge the Environment Court erred when it said that the Trust had not appealed the Regional Council’s variation of the discharge permit relating to the Orautoha Stream (variation 101992/1).28 The Trust had appealed against the variation of the discharge permit on the basis that “appropriate monitoring recognises the intrinsic values of the Orautoha Stream, and a turbidity limit that provides a yardstick against which adverse effects on the water quality of the Orautoha Stream can be measured are required.”29
28 New Zealand Energy Ltd v Manawatu-Wanganui Regional Council, above n 1, at [104]. 29 Notice of Appeal, 3 February 2014 at 8.10(b).
[76] This oversight can be remedied by requiring the Environment Court to consider this aspect of the Trust’s appeal when it reconsiders its previous decision.
Conclusion
[77] The appeal is allowed.
[78] The decision of the Environment Court is quashed.
[79] The Environment Court is directed to reconsider its decision in light of the contents of this judgment.
[80] The Trust and the Regional Council are entitled to costs on a scale 2B basis.
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D B Collins J
Solicitors: Kahui Legal, Wellington for Appellant Crown Law Office, Wellington for Respondent Solutions Law Office, Nelson for Applicant
APPENDIX
S1 NZEL preferred. Flow sharing for the Makotuku and Makara of 75:25 (75% of available flow abstracted, 25% left instream) when the flow is between 300 litres per second and 600 litres per second and 250 litres per second to 500 litres per second respectively. Maximum take from Makaraiti 300 litres per second and Mangaone tributary no limit. Minimum flow Makotuku split 82 litres per second, October to April and 94 litres per second May to September. Makara minimum flow 70 litres per second. Makaraiti and Mangaone tributary minimum flow 5 litres per second.
S2 Existing consented take limits with minimum flow set as for S1.
S3 Existing consented take limits, minimum flows as for S1, but the split for Makotuku to change to 82 litres per second, December to April and 94 litres per second May to November.
S4 One Plan limits. Existing consented take, plus supplementary take as provided for in the One Plan. Minimum flow of 95 litres per second year round Makotuku, and 77 litres per second Makara.
S5 NZEL’s second option. Existing consented take, no combined cap, minimum flows as set out for S1 and supplementary take as provided by the One Plan.
S6 Flow sharing option introduced by the Court. Takes and minimum flows as for S1, but for a flow sharing of 75:25 to apply at all times above the minimum residual flow for the Mokotuku and Makara.
S7 Introduced by Ngāti Rangi. Maximum takes as consented, minimum flows as for S4, combined cap and flow sharing of 50:50 to apply at all times above minimum residual flow.
S8 As for S7, but with flow sharing of 75:25.