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.