IN THE ENVIRONMENT COURT ENV-2020-AKL- AUCKLAND I MUA I TE KOOTI TAIAO I TE TĀMAKI MAKAURAU ROHE IN THE MATTER of the Resource Management Act 1991 ("RMA") AND IN THE MATTER of Clause 14(1) of Schedule 1 of the RMA BETWEEN FONTERRA LIMITED Appellant AND HAMILTON CITY COUNCIL Respondent NOTICE OF APPEAL TO THE ENVIRONMENT COURT AGAINST DECISION ON PROPOSED PLAN CHANGE 2 TO THE HAMILTON CITY DISTRICT PLAN – TE AWA LAKES PRIVATE PLAN CHANGE 29 APRIL 2020 D J Minhinnick | T W Atkins P +64 9 367 8000 F +64 9 367 8163 PO Box 8 DX CX10085 Auckland 4075363 1 To: The Registrar The Environment Court AUCKLAND FONTERRA LIMITED ("Fonterra") appeals against the decision of the Hamilton City Council ("Council") to approve Proposed Plan Change 2 to the Hamilton City District Plan – Te Awa Lakes Private Plan Change ("PPC2"). Background and decision appealed 1. Fonterra made a submission on PPC2 on 29 November 2017 and a further submission on 2 February 2018. Fonterra presented evidence to the Independent Hearing Commissioners on a range of matters raised in its submission. 2. Fonterra received notice of the Council's decision on PPC2 on 13 March 2020 ("Decision"), with that notice directing that any appeals should be filed within 30 working days. 3. Fonterra is appealing the Decision to grant PPC2 in its current form, for the reasons given below. 4. Fonterra is not a trade competitor for the purposes of section 308D of the RMA. Fonterra's role in Hamilton and the wider Waikato Region 5. Fonterra is the largest farming co-operative in New Zealand, with over 11,400 staff based in New Zealand. Fonterra exports its products to more than 100 markets worldwide and operates 25 milk processing sites throughout New Zealand, collecting more than 17 billion litres of milk in 2019. 6. Fonterra has significant interests and assets in Hamilton City and throughout the wider Waikato Region, including eight dairy factories. The key site affected by PPC2 is the Te Rapa Dairy Factory, which is a critical asset for Fonterra with a replacement value of almost $1 billion. 7. The Te Rapa Dairy Factory was established at Te Rapa North in 1968, due primarily to its location away from the city centre and, in particular, sensitive land uses such as housing. The Te Rapa Dairy Factory has since developed to become a regionally significant industrial operation for Waikato. During peak season, the Te Rapa Dairy Factory processes over 7.5 million litres of milk 4075363 2 each day and approximately 325,000 tonnes of milk powder and cream products each year. The dairy manufacturing industry also contributes more than $2 billion to the Waikato Region's GDP. General reasons for appeal 8. PPC2, in its current form: (a) does not promote the sustainable management of the natural and physical resources in Hamilton City or the Waikato Region, and is therefore contrary to or inconsistent with Part 2 and other provisions of the RMA; (b) does not meet the reasonably foreseeable needs of future generations; (c) does not enable the social, economic and cultural wellbeing of the people of Hamilton or the Waikato Region; (d) does not avoid, remedy or mitigate actual and potential adverse effects on the environment; (e) does not give effect to the Waikato Regional Policy Statement ("WRPS"); and (f) is not the most appropriate way to achieve the objectives of the Hamilton City District Plan ("District Plan") in terms of section 32 of the RMA. 9. In addition to the general reasons outlined above, Fonterra also appeals the Decision for the specific reasons set out below. Reverse sensitivity 10. PPC2, in its current form, will enable the establishment of over 1,000 new dwellings and visitor accommodation within the Te Rapa North Strategic Industrial Node, in close proximity to Fonterra's Te Rapa Dairy Factory. In the absence of appropriate land use and design controls, the development of such a large number of sensitive land uses in this location will result in significant reverse sensitivity effects on the Te Rapa Dairy Factory and other established industrial uses within this area. 4075363 3 Concept of reverse sensitivity 11. Fonterra does not agree with the Council's conclusion that "any potential for reverse sensitivity effects is appropriately minimised by the PPC2 provisions".1 This conclusion is based on an incorrect understanding of reverse sensitivity. 12. The Decision refers to the "generally accepted definition of reverse sensitivity", which was postulated by Perry Group Limited ("Perry"), as being centred around the adverse environmental effects of an established activity which may be required to be mitigated so as to not adversely affect a new "benign activity".2 However, this interpretation reverses the widely accepted understanding of reverse sensitivity as a resource management effect. 13. Reverse sensitivity refers to adverse effects generated by a new sensitive land use that establishes in proximity to an existing, effects-generating activity, on that existing activity, as recognised in numerous district plans and case law.3 These effects arise as a result of complaints or objections from the new sensitive land use regarding the lawfully generated effects of the existing activity. Such complaints can lead to significant constraints on the operation and / or development of the established activity. As such, when considering the effects of reverse sensitivity, the focus is rightly placed on the effects caused by the establishment of the new, sensitive land use, not the effects of the established activity. This is because it is often the perception of effects, rather than actual adverse effects, which can lead to complaints from sensitive neighbours, which, in turn, give rise to issues of reverse sensitivity. 14. The WRPS definition of reverse sensitivity reinforces this interpretation of reverse sensitivity. It expressly recognises that reverse sensitivity effects arise when a new activity or land use seeks to restrict the operation or require mitigation of the effects of a lawfully established activity due to the potential, actual or perceived effects of the established use on the new activity.4 1 Decision, at [99]. 2 Decision, at [88]. 3 See for example the Southland District Plan and Waipa District Plan as well as Independent News Auckland Ltd v Manukau City Council (2003) 10 ELRNZ 16 (EnvC) at [57]; Affco New Zealand v Napier City Council NZEnvC Wellington W 082/2004, 4 November 2004 at [29]; Tasti Products Ltd v Auckland Council [2016] NZHC 1673 at [60]. 4 See WRPS, page G-9: Reverse sensitivity – is the vulnerability of a lawfully established activity to a new activity or land use. It arises when a lawfully established activity causes potential, actual or perceived adverse environmental effects on the new activity, to a point where the new activity may seek to restrict the operation or require mitigation of the effects of the established activity. 4075363 4 Adverse effects on Fonterra and other industrial operations at Te Rapa North 15. The scale and diversity of the Te Rapa Dairy Factory's manufacturing footprint is critical to Fonterra's operations, both regionally and nationally. It is vital that this site is able to operate 24 hours a day, 365 days a year, and that these operations are not unduly compromised by complaints or objections from sensitive neighbours. 16. PPC2 will allow a significant number of new residential dwellings to establish in close proximity to the Te Rapa Dairy Factory. Without the inclusion of sufficient land use and design controls to manage the potential for reverse sensitivity, the development enabled by PPC2 is likely to lead to constraints on Fonterra's operations. In the immediate term, complaints received from sensitive neighbours will potentially result in significant disruption to Fonterra's manufacturing and processing operations, including: (a) increased staff time spent on addressing neighbour concerns and / or resolving complaints, at the expense of their ability to carry out their daily tasks; (b) increased time and money spent on communication mechanisms and liaison with community members to explain activities that are anticipated and permitted within a heavy industrial area; and (c) reduced operating hours, processing capacity and / or diversity due to the need to limit the times during which, or locations on-site where, manufacturing operations are carried out. 17. The risk of disruption caused by these factors will be exacerbated during the peak milk period (November / December) when spare capacity is limited across Fonterra's North Island manufacturing network. In order to avoid or minimise this risk, Fonterra would have to redistribute elsewhere (to other dairy manufacturing sites). Over time, the additional time and cost involved in restructuring the manufacturing process and network could lead to new and / or re-investment being directed away from the Te Rapa Dairy Factory, towards other sites where the policy and planning framework provides greater certainty for Fonterra and lower risk for reverse sensitivity effects. These effects of reverse sensitivity have already been experienced by Fonterra across multiple sites throughout the country, where new sensitive activities have been allowed to establish near its manufacturing sites without corresponding reverse sensitivity controls. 4075363 5 18. Fonterra's other milk processing plants in the Waikato Region already operate at or near capacity. If Fonterra were forced to direct investment away from the Te Rapa Dairy Factory, such that it was required to downsize, or even close down, Fonterra would need to move the operations south to Lichfield or Whareroa to make up the lost capacity. As a result, the Hamilton economy would lose significant employment opportunities, income and expenditure as Fonterra would be forced to relocate its operations away from Te Rapa North. 19. By their nature, residential activities are not compatible with heavy industrial operations.