Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill Initial Briefing for the Local Government and Environment Committee Prepared by the Ministry for the Environment 9 February 2012 CONTENTS KEY POINTS... 1 1. THE EEZ AND CONTINENTAL SHELF... 3 2. REASONS FOR THE BILL... 5 3. PURPOSE AND PRINCIPLES... 7 4. SCOPE OF THE BILL... 9 5. EPA GOVERNANCE... 11 6. CONSENT APPLICATION AND HEARING PROCESSES... 13 7. DECISION MAKING... 15 8. MONITORING AND REVIEW... 17 9. ENFORCEMENT AND PENALTIES... 18 10. COMMENCEMENT AND TRANSITIONAL PROVISIONS... 19 11. OTHER MATTERS SUBMITTERS MAY COMMENT ON... 21 KEY POINTS This paper provides an introduction to, and overview of, the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill (the Bill). The Bill sets up an environmental management regime for New Zealand s Exclusive Economic Zone (EEZ) (12-200 nautical miles offshore) and continental shelf. The Bill will remedy the current lack of an environmental management regime beyond the territorial sea (out to 12 nautical miles offshore). Both environmental NGOs and industries that use the EEZ agree on the need for legislation. The Resource Management Act 1991 (RMA) applies to the territory of New Zealand including the territorial sea. Under the RMA, regional councils have environmental management functions in the territorial sea. The Bill fills gaps in the environmental management regime in the EEZ and continental shelf. It does not duplicate or extend existing legislation. For example, the Fisheries Act 1996 will continue to manage fisheries in the EEZ and the Maritime Transport Act 1994 will still manage shipping, oil spill planning and response. The Crown Minerals Act 1991 and 1
Continental Shelf Act 1964 will continue to operate as the resource allocation regimes for petroleum and minerals in the EEZ and continental shelf. Activities covered by the Bill include seabed mining, some aspects of petroleum activities, energy generation, carbon capture and storage, and marine farming. New Zealand does not have full sovereignty over the EEZ and continental shelf and cannot exercise the same jurisdiction there as it can on land and in the territorial sea. The Bill acknowledges New Zealand s rights and obligations under the United Nations Convention on the Law of the Sea (UNCLOS). Coastal States have the sovereign right to explore and exploit the natural resources in the EEZ and continental shelf as well as an obligation to protect and preserve the marine environment. The Bill aims to achieve a balance between the protection of the environment and economic development. It also includes a general duty for adverse effects to be avoided, remedied, or mitigated. The Bill sets up a consent regime to regulate activities. Activities will be classified as permitted, discretionary, or prohibited by regulations. The default position in the Bill is that all activities are discretionary. For discretionary activities, persons will need to apply for a marine consent. An impact assessment will form the basis of an application and will allow the Environmental Protection Authority (EPA) to assess the effects on the environment and existing interests. The EPA will be the decision-maker for all marine consents. The independence of EPA decision-making is assured by the Bill. The Minister cannot direct the EPA in relation to marine consent applications or enforcement of the Bill. The Bill provides for public participation in decision-making, greater transparency, and improved regulatory certainty for industry. The Treaty of Waitangi relationship is provided for under the Bill. The Bill provides for Māori participation in decision-making through use of the Māori Advisory Committee of the EPA. At least one member of the EPA board must have knowledge and experience in relation to the Treaty of Waitangi and tikanga Māori. The Minister must consult iwi before making any regulations. Decision-makers must have regard to existing interests include Treaty settlements, customary marine title and protected customary rights granted under the Marine and Coastal Area (Takutai Moana) Act 2011. Iwi authorities, customary marine title groups, and protected customary rights groups will be notified directly of marine consent applications that may affect them. The Bill is an enabling piece of legislation that sets high level purposes, principles and processes for decision-makers. The technical details on the treatment of different activities will be set out in regulations. Regulations will be promulgated under the Bill and may prohibit certain activities or make them permitted with or without controls. Permitted activities will not need to apply to the EPA for a marine consent. The Bill will not become operational until the first set of regulations has been promulgated. A discussion document on the proposed content of these regulations is planned for public consultation in early 2012. 2
1. THE EEZ AND CONTINENTAL SHELF UNCLOS defines the EEZ as the area beyond and adjacent to the territorial sea. It extends from 12 to 200 nautical miles offshore. The continental shelf is defined as the seabed and subsoil of the submarine areas that extend beyond the territorial sea throughout the natural prolongation of a State s land territory to the outer edge of the continental margin (the point where the shelf drops into deeper water). Figure 1 shows a cross section of the marine environment and the different areas of jurisdiction. Figure 1: Cross section of the EEZ and Continental Shelf New Zealand s EEZ is one of the largest in the world at over 4 million square kilometres. In 2008, the United Nations Commission on the Limits of the Continental Shelf confirmed New Zealand's rights over 1.7 million square kilometres of seabed beyond 200 nautical miles. Figure 2 shows the extent of New Zealand s EEZ and the continental shelf where it extends further than 200 nautical miles. UNCLOS grants New Zealand sovereign rights for the purpose of exploring and exploiting natural resources in the EEZ but does not confer full sovereignty. This means that New Zealand cannot exercise the same jurisdiction in the EEZ as it can on land and in the territorial sea. In addition to the sovereign right to explore and exploit their natural resources in the EEZ, under UNCLOS States also have an obligation to protect and preserve the marine environment. On the continental shelf New Zealand has exclusive sovereign rights for the purpose of exploring the continental shelf and managing, conserving, and exploiting its natural resources. These resources are limited to those found on or under the seabed. Fishing and shipping are the predominant uses of the EEZ. On the continental shelf there are existing petroleum production platforms in Taranaki. There is further interest in petroleum resources off Taranaki, the Great South Basin, and the East Coast of the North Island. Seabed mineral resources are also being explored. These resources include iron sands, precious metals and phosphates. There are also submarine telecommunications cables in the EEZ and on the continental shelf. The Southern Cross fibre-optic cable network already exists and there are further projects underway for trans-tasman and Pacific cables. Marine scientific research projects also occur in our EEZ and continental shelf. 3
New activities in the EEZ and continental shelf may develop as technology advances and cost barriers diminish. For example, mineral exploration may develop into mining; marine energy generation, aquaculture, carbon capture, and biodiscovery may become economically viable in the EEZ or continental shelf. Other States have freedoms and rights in New Zealand s EEZ and continental shelf under UNCLOS such as the right to freedom of navigation and over flight, the right to lay international cables and pipelines and, in general, the right to carry out marine scientific research. Therefore a more permissive regime is required for these activities. Figure 2: Extent of New Zealand s EEZ and Continental Shelf Source: National Institute of Water and Atmospheric Research 4
2. REASONS FOR THE BILL The benefits of environmental effects legislation for the EEZ and continental shelf are not only environmental. While the Bill will provide environmental benefits filling the current gaps in the environmental management regime and ensuring adverse effects of activities are avoided, remedied or mitigated it also provides for public participation in decision-making, greater transparency, and improved regulatory certainty for industry. As well as granting New Zealand sovereign rights for the purpose of exploring and exploiting natural resources, UNCLOS confers an obligation on New Zealand to protect and preserve the marine environment in the EEZ and continental shelf. At present environmental effects in the EEZ and on the continental shelf are managed on a sectoral basis: The Fisheries Act 1996 provides for the management of fisheries, including the environmental impacts of fishing Marine pollution issues such as discharges from ships and offshore installations, oil spills and dumping of waste such as dredged material, are covered by Marine Protection Rules under the Maritime Transport Act 1994 Safety inspections for offshore petroleum structures are covered by the Health and Safety in Employment Act 1992 Licences granted under the Continental Shelf Act 1964 can specify environmental obligations, although there is no guidance in the Act on how to do so. The current regulatory regime has significant gaps, including: assessing effects of activities (other than fishing) on seafloor habitats and biodiversity (eg, the effects of seabed mining) assessing effects of activities (other than fishing) on biodiversity in the water column (eg, effects of seismic surveys on marine life) assessing effects of new activities on existing interests (eg, effects of a petroleum platform on fishing and shipping) managing the cumulative effects of all activities in the EEZ and continental shelf, as they are regulated under multiple regimes with variable ability to take other sorts of activities into account in decision-making. Current levels of activity in the EEZ and continental shelf are low, and current indications suggest that New Zealand will not see a large number of new operations in the EEZ or continental shelf in the next ten years, as commercial and technical viability are barriers to developing resources. However, the development landscape is changing quickly and there is the potential for activity levels to accelerate at relatively short notice. The gaps in the environmental management regime mean there is a lack of statutory process to assess environmental effects and grant approval for some activities. There is potential for unregulated activities to cause environmental harm, impacting on marine life, habitats, and biodiversity. Due to the nature of the activities, these effects could be severe for example destruction of significant benthic communities. 5
In the absence of an environmental management regime for the EEZ, it may be difficult for New Zealand to fully meet its obligation to protect and preserve the marine environment under UNCLOS. This creates a potential reputational risk for New Zealand. 6
3. PURPOSE AND PRINCIPLES The intent of the legislation is to manage the adverse environmental effects of activities in the EEZ and continental shelf while recognising that these activities bring economic benefits to New Zealand. The purpose and principles are set out in Part 1, Subpart 2 of the Bill (clauses 10-14). This subpart must be taken into account by the Minister when developing regulations under the legislation (clause 33), and by the EPA when making decisions on consents (clauses 59 and 71). Clause 10 sets out the purpose. The Bill seeks to achieve a balance between the protection of the environment and economic development, and requires the adverse effects of activities on the environment to be avoided, remedied, or mitigated. The purpose clause is intended to align with New Zealand s UNCLOS rights and obligations. While the Bill is environmental legislation, it operates within the context of development of resources in the EEZ and continental shelf. The purpose of the Bill is not to enable or promote development of resources as that is already provided for through, for example, the Crown Minerals Act regime. Rather, the Bill recognises the benefits of development, while managing the environmental effects of such activities. The intent is to strike the right balance between the development rights and environmental obligations conferred by UNCLOS. Clause 11 requires anyone acting under the legislation to act consistently with New Zealand s international obligations under UNCLOS. Clause 12 sets out the matters to be taken into account to achieve the purpose. As the purpose relates to balancing environmental and economic considerations, whilst imposing a general duty to avoid, remedy, or mitigate adverse environmental effects, the matters include environmental and economic considerations. These are: a. the adverse effects on the environment of all activities undertaken in an area of the exclusive economic zone or the continental shelf, including the effects of activities not regulated under this Act b. the economic well-being of New Zealand c. the efficient use and development of natural resources d. the effects of activities on existing interests e. the effects on human health that may arise from adverse effects on the environment f. the nature and effect of other marine management regimes g. the protection of the biological diversity and integrity of marine species, ecosystems, and processes h. the protection of rare and vulnerable ecosystems and the habitats of threatened species. Clause 13 sets out information principles. It requires decisions to be based on the best available information and for any uncertainty or inadequacy in the information available to be taken into account. The clause requires decision-makers to favour caution and 7
environmental protection if, when making a decision that affects the environment, information is uncertain or inadequate. It also introduces an adaptive management approach. Adaptive management is a management tool expressly developed to deal with uncertainty. It can be characterised as learning by doing applying provisional and reversible decisions, undertaking stringent monitoring, reviewing the results, and making subsequent management changes to reflect the observed effects of the activity. For example, adaptive management could be implemented through strict, but reviewable, consent conditions that allow the activity to be scaled up or down (and even cancelled) depending on the effects observed. However, while adaptive management is a management tool expressly developed to deal with uncertainty, it does not negate the need to exercise caution in situations where there is a threat of serious or irreversible environmental damage occurring. Clause 14 is the Treaty of Waitangi clause. It notes what the Bill does in order to recognise the Crown's responsibility to take appropriate account of the Treaty of Waitangi. The following provisions of the Bill give effect to the Treaty relationship. Clause 26 of the Bill provides for the Māori Advisory Committee to advise the EPA so that decisions may be informed by a Māori perspective. The Māori Advisory Committee will be able to provide advice and assistance on matters relating to policy, process, and decisions under the Bill. Clause 32 of the Bill requires the Minister to establish and use a process that gives iwi adequate time and opportunity to comment on the subject matter of proposed standards and regulations. Clauses 33 and 59 require all persons performing functions and duties or exercising powers under the Bill to have regard to existing interests to the extent that they are relevant. Existing interests include Treaty settlements, customary marine title and protected customary rights granted under the Marine and Coastal Area (Takutai Moana) Act 2011. Clause 46 of the Bill states that the EPA is required to notify iwi authorities, customary marine title groups, and protected customary rights groups directly of marine consent applications that may affect them. In this way consultation with iwi, will be a feature of the marine consent decision-making processes. 8
4. SCOPE OF THE BILL The Bill fills the gaps in the environmental management regime in New Zealand s EEZ and continental shelf. It will regulate the environmental effects of activities that take place in the EEZ and continental shelf that do not currently have their effects regulated. The effects of these activities may extend to the territory of New Zealand or the high seas, and these effects are covered by the Bill however the Bill s scope is defined by where the activity takes place and this is limited to the EEZ and continental shelf. The effects of activities taking place in the territorial sea are managed by regional councils under the RMA. The Bill does not cover the effects of fishing or shipping as these are covered by the Fisheries Act 1996 and the Maritime Transport Act 1994 respectively. In addition to shipping, the Maritime Transport Act regulates discharges from offshore installations and pipelines and dumping occurring within the EEZ and the waters above the continental shelf. After the Bill was introduced, Cabinet approved the transfer of discharge and dumping functions from Maritime New Zealand (under the Maritime Transport Act), to the EPA (under the EEZ Bill). It has not been determined when this transfer will take place. Maritime New Zealand is also responsible under the Maritime Transport Act for oil spill response functions. These functions are outside the scope of this Bill. Oil spill response is not a legislative gap to be filled by this Bill. Furthermore as these functions require specialist expertise and equipment, and they do not sit well with the purpose of the EEZ Bill or the capability and resources of the EPA. Further information on oil spills is contained in section 11 of this briefing. The Bill establishes a consenting regime for activities in the EEZ and on the continental shelf. Clause 15 of the Bill sets out the specific activities that the legislation will apply to. These include placing a structure, cable or pipeline on or under the seabed, destruction, long-term mooring or anchoring of structures in the EEZ, damage or disturbance to the seabed, and causing vibrations or explosions in the water column of the EEZ. Because not all activities will have the same environmental effects, the Bill sets up a system for some activities to be permitted, some to be prohibited and the others to be discretionary thus requiring a marine consent from the EPA. Due to the complexity involved, details regarding these activities will be set out in regulations made under the Bill. However, by default all activities will be discretionary unless otherwise classified in regulations. Clause 15 states that activities cannot be undertaken unless the activity is a permitted activity or authorised by a marine consent. As the Bill is gap-filling in scope, some of the effects of activities requiring marine consents will already be regulated under other statues. Clauses 40(4) and 62(3) enable the EPA to consider the effects of an activity holistically, while preventing it from imposing any conditions on a marine consent that overlap with requirements under other legislation. Specifically, when deciding a marine consent the EPA will need to consider all effects of the activity and any measures taken to avoid, remedy or mitigate those effects, even if those measures are required under other statutes. For example, the EPA will be able to consider the risk of an oil spill in allowing an activity, but will not be able to impose any conditions on a marine consent that overlap with requirements under the Health and Safety in Employment Act 1992, which for example might relate to oil well design. Figure 3 below displays the range of legislation operating in the marine space and the gap that the Bill seeks to fill. 9
Figure 2: Overview of Legislation for New Zealand Marine Jurisdictions 10
5. EPA GOVERNANCE The Bill provides that the EPA will decide applications for marine consents and monitor and enforce compliance with the Bill. The EPA was established as a Crown agent under the Environmental Protection Authority Act 2011. The EPA has a Board of between six and eight members appointed by the Minister for the Environment. The Environmental Protection Authority Act 2011 also provides for Māori involvement in the governance of the EPA. The Board of the EPA must include at least one member with knowledge and experience relating to the Treaty and tikanga Māori. Section 9 of the Environmental Protection Authority Act 2011 also requires the Board members to collectively have knowledge and experience related to the Treaty of Waitangi and tikanga Māori. The Board has the ability to delegate decision-making under the Bill to a specialist committee. The Crown Entities Act 2004 requires at least one member of a committee to also be a board member. This provides accountability to the Board for all decisions. The EPA will also be supported by the Māori Advisory Committee of the EPA; this committee is known as Ngā Kaihautū Tikanga Taiao. The committee is required to provide advice and assistance to the EPA on matters relating to policy, process and decision making. This advice and assistance must be given from a Māori perspective and come within terms of reference set by the Board. The EPA Board and all committees are currently supported by a Chief Executive and over 150 staff members. Staff members at the EPA have created a project team to prepare for taking on the functions under the Bill. Figure 3 shows the governance structure of the EPA for decision-making under the Bill. Figure 3: EPA Governance Structure for EEZ Functions Minister EPA Board M?ori Advisory Committee Decision-Making Committee EPA Chief Executive EPA Staff The independence of EPA decision-making is assured by clause 22 of the Bill, which states that the Minister cannot direct the EPA in relation to marine consent applications or enforcement of the Bill. 11
The EPA will fund its functions under the Bill as far as possible through cost recovery. Any functions that cannot be cost recovered from applicants (such as enforcement) may be funded through an appropriation from Parliament. 12
6. CONSENT APPLICATION AND HEARING PROCESSES Marine consents are required before any activity classified as discretionary can proceed. A marine consent application must include an impact assessment which details the proposed activity and its anticipated effects on the environment and existing interests, among other matters. The impact assessment must also specify measures that the applicant would take to avoid remedy, or mitigate any adverse effects of the activity (if the consent were granted); this includes measures required under other legislation. The level of detail of the information to be included in the impact assessment must reflect the scale and significance of the effects that the activity may have on the environment and existing interests and be sufficient to enable the EPA and persons whose existing interests may be affected to understand the nature of the activity and its effects. The EPA may return a marine consent application as incomplete, request an applicant provide further information, and/or seek independent advice on any aspect of the application or activity the application relates to. The consenting process set out in the Bill is a public process; all applications for consents must be publicly notified. In addition the EPA must serve notice on: Ministers with relevant responsibilities; Maritime New Zealand; iwi authorities, customary marine title groups, and protected customary rights groups that may be affected by the application; persons with existing interests that may be affected; and regional councils whose regions may be affected. Any person may make a submission and the EPA may hold a hearing if it chooses to do so, but must do so if requested by the applicant or a submitter. Clause 53 requires a hearing to be held in public unless there are grounds for excluding the public under clause 146(3)(a). The EPA must establish a fair and appropriate procedure for a hearing that is not unnecessarily formal. The Bill sets out an obligation for the EPA to deal with applications promptly, and sets timeframes for all stages of the consenting process apart from the hearing. Clause 147 and 148 allow the EPA to extend timeframes in certain circumstances. Cross-boundary applications Activities at the interface of the EEZ and the territorial sea may require consents to operate in both areas a marine consent for the activity taking place in the EEZ, and a resource consent (under the RMA) to operate in the territorial sea. For example petroleum operations in the EEZ may have pipelines running back to shore, or iron sand mining may take place in an area overlapping both the EEZ and the territorial sea. If both RMA and EEZ consents are required for an activity, the Bill provides for a crossboundary process where the application and processing of the consents may be combined upon agreement of the EPA and the relevant resource consent authority. The Bill allows the applicant to prepare one application covering both consents. The EPA and resource consent authority would jointly: publicly notify the application receive submissions hold hearings (if applicable). 13
The EPA and relevant consent authority may jointly agree, at any time in the process, to either initiate a joint process or separate a joint process, if it is considered administratively efficient to do so. In some instances it may be administratively inefficient to hold joint processes, for instance if the EEZ consent application requires a hearing but the RMA resource consent does not. Decisions on these consents will not be made jointly; only the administration of the application and hearing process may be combined. As consent decisions are to be made under separate statutes with different considerations for decision makers, the EPA and the relevant RMA consent authority should not be required to decide the consents jointly. If the RMA component of a cross-boundary proposal is considered nationally significant under the RMA and a board of inquiry is the decision-maker for a resource consent, the EPA may delegate its marine consent decision-making functions to a committee made up of the same members as the board of inquiry. As the Environment Court s role under the EEZ legislation will relate only to enforcement orders, it is inappropriate for the Environment Court to determine EEZ consents. Therefore, if the Environment Court is the decision-maker for a resource consent that is part of a crossboundary proposal, the EEZ component of the proposal will be determined by the EPA through the usual process the two consents will be dealt with entirely separately. 14
7. DECISION-MAKING Marine Consents The EPA will decide applications for marine consents and will be fully independent in relation to these decisions. Clause 22 of the Bill provides that the Minister must not direct the EPA to give effect to a Government policy when the EPA is making decisions on applications for marine consent or making decisions in relation to objections, appeals, or enforcement. The EPA Board will have ultimate responsibility for marine consent decision-making. However, it is expected that the EPA will delegate the power to decide an application for a marine consent. The EPA may only delegate to an expert committee appointed under the Crown Entities Act 2004 or a board of inquiry appointed under the Resource Management Act 1991 to decide an application for resource consent where part of the activity is in the coastal marine area and part of it is in the EEZ or on the continental shelf. In deciding an application for a marine consent the EPA must consider the matters in subpart 2 of Part 1 including the: Purpose of the Bill International obligations Adverse effects on the environment Economic well-being of New Zealand Efficient use and development of natural resources Effects of activities on existing interests Effects on human health Nature and effect of other marine management regimes Protection of the biological diversity and integrity of marine species, ecosystems and processes Protection of rare and valuable ecosystems and the habitats of threatened species. The EPA must also have regard to submissions, evidence, advice, reports, and information it has received in relation to the application and best practice in relation to the industry or activity involved. The EPA must not consider trade competition or the effects of trade competition, the effects on climate change of discharging greenhouse gases into the air, or any effects on an existing interest if the person whose interest it is has given written approval to the activity. The effects on climate change of discharging greenhouse gases into the air must not be considered as the Emissions Trading Scheme is in place to regulate greenhouse gases at point of discharge. The focus of the Bill is on activities and their effect on the seabed and water column, not the end-use of any resources produced. After considering all the required matters an application for a marine consent may be granted or refused. The EPA may grant an application for marine consent if the activity's 15
contribution to New Zealand's economic development outweighs the activity's adverse effects on the environment. The application may be refused if the adverse effects of the activity on the environment outweigh the activity's contribution to New Zealand's economic development. The EPA may also refuse an application if the EPA does not have adequate information to determine the application. The EPA may grant a marine consent subject to whatever conditions it deems appropriate to deal with the adverse effects of the activity. All decisions will be in writing and publically notified. Regulations The Bill empowers the Governor-General to make regulations on the recommendation of the Minister for the Environment. Before making a recommendation to the Governor-General, the Minister must notify the public, iwi authorities, and persons with existing interests affected by the proposed regulations. A process must be established which the Minister considers gives people adequate time and opportunity to comment on the subject matter of the proposed regulations. A discussion document on the proposed content of the first regulations is planned for public consultation in early 2012. Appeals The Bill provides for appeals to the High Court against decisions of the EPA on applications for consent. Appeals can only be made on questions of law. This is appropriate as the EPA will be the national level technical decision maker with appropriate expertise in relation to any given application. If, for example, the EPA fails to have regard to a mandatory consideration, then appeals on that point of law will be available to address the issue. The Bill provides for additional appeals from the High Court to the Court of Appeal. 16
8. MONITORING AND REVIEW The EPA will be responsible for monitoring compliance with the Bill, regulations and marine consents. The remote nature of the EEZ and continental shelf create challenges for the monitoring of compliance. The EPA has a range of monitoring tools available to it. For example the EPA may: set conditions on a marine consent that require the consent holder to self monitor and report on the exercise of the marine consent and the effects of the activity it authorises appoint an observer to monitor the activity authorised by the consent and its effects on the environment make records related to the activity authorised by the consent available for audit. More direct monitoring action can be carried out by enforcement officers appointed and warranted by the EPA. The EPA may appoint its own employees or other persons with the appropriate experience, technical competence, and qualifications. For example, the EPA may decide to appoint officers from the Ministry of Agriculture and Forestry, Department of Labour, Department of Conservation, Maritime New Zealand, New Zealand Defence Force or any other agency with marine capabilities. Enforcement officers have powers of entry and inspection for the purpose of monitoring compliance with the Bill, regulations, marine consents, or enforcement orders. The various monitoring tools can be used in conjunction with an adaptive management approach and the ability to review a marine consent. Adaptive management means that the EPA may allow an activity to commence under rigorous monitoring conditions. The effects of the activity can then be assessed over time and a decision made as to whether the activity should be discontinued on the basis of the effects. The EPA may review the duration or conditions of a marine consent at any time specified for that purpose in the consent or to deal with any adverse effects on the environment or existing interests that arise and that were not anticipated when the consent was granted. A review may also occur where the application contained inaccuracies that materially influenced the decision made on the application or if information becomes available to the EPA that was not available to the EPA when the consent was granted. 17
9. ENFORCEMENT AND PENALTIES The EPA or an enforcement officer may apply to the Environment Court or an Environment Judge for an enforcement order. An enforcement may require a person to do something or stop doing something to ensure compliance with the Bill or avoid, remedy or mitigate any actual or likely effects that result from a breach of the Bill. In urgent situations an interim enforcement order may also be made by an Environment Judge or District Court Judge. It is an offence under the Bill to breach an enforcement order or do any restricted act from clause 15, unless it is permitted by regulations or a marine consent. The maximum penalty for a breach of clause 15 or an enforcement order is $300,000 for a natural person and $600,000 for any other person. Continuing offences attract an additional maximum penalty of $10,000 per day or part of a day. These penalties are aligned with those under the Resource Management Act. Less serious offences under the Bill attract a maximum penalty of $10,000 and $1,000 per day, and offences of obstruction or breach of a summons or order to give evidence are punishable by a maximum fine of $1,500. In addition to a monetary penalty, the court may make an enforcement order or an order requiring the EPA to review the relevant consent. Such an order may result in the amendment or revocation of a marine consent. Alongside enforcement orders and prosecutions for offences are a range of other penalties and liability regimes. Under the Bill the EPA may require bonds as a condition of a marine consent. A bond may be claimed by the EPA for non-compliance or can be used to remedy harm to the environment. Outside of the Bill, the Maritime Transport Act provides that persons in charge of a marine operation or the owner of a marine structure or ship are liable in damages for all pollution damage in the EEZ, continental shelf and waters above the continental shelf caused by the discharge of harmful substances or any waste that is dumped. Liability can only be limited in respect of owners of ships, salvors and their insurers as agreed in the International Convention on Civil Liability for Oil Pollution Damage and International Convention on Civil Liability for Bunker Oil Pollution Damage. The Maritime Transport Act also requires operators to hold minimum levels of liability insurance. For example, in the case of offshore installations the minimum level of insurance is approximately NZ$30 million. The Maritime Transport Act also provides that the Crown, Maritime New Zealand, regional councils, and port companies who incur costs in cleaning up oil spills or taking preventive measures can proceed against the liability insurer. All of these mechanisms provide incentives for compliance and ensure that the Crown and ultimately the New Zealand tax payer will not pay the costs of any breach of the Bill. 18
10. COMMENCEMENT AND TRANSITIONAL PROVISIONS The Bill will come into force on a date appointed by Order in Council. The Minister has expressed a desire for the Bill to come into force once the first set of regulations has been developed. It is expected that this will happen in the second half of 2012. There is a sunset clause in the Bill, which means the Bill will come into force by 1 July 2013 at the latest. There are a number of existing activities in the EEZ that will be affected when the Bill comes into force: 4 petroleum mining permits 24 petroleum exploration permits 3 applications pending for petroleum exploration permits 3 minerals prospecting licences 2 proposals to construct submarine telecommunications cables with landing points in New Zealand The existing Southern Cross Cable Network provides international bandwidth between Australia, New Zealand, Hawaii and mainland USA. The Bill contains transitional provisions that seek to minimise the risk of disruption to existing activities. Any disruption could cause significant costs to companies operating in the EEZ or continental shelf. The Bill provides that lawfully established activities may continue without a marine consent for 6 months after the Act comes into force. This grace period will only apply where the effects of the activity are of the same or similar character, intensity, and scale as the effects that existed before the Act came into force. If the person carrying on a lawfully established activity applies for a marine consent within the 6 month grace period, then the activity may continue until the application is decided or any appeals are determined. A number of voluntary mechanisms are in place to manage the environmental effects of petroleum exploration before the Bill comes into force. To manage the environmental effects the government has asked industry to prepare environmental impact assessments and provide them to the EPA for review. The voluntary regime has been agreed with industry. The Bill will also exempt some already established activities from its requirements. Existing petroleum production platforms in the Taranaki basin will not have to comply with the requirements of the Bill for the duration of the mining permits. Similarly, minerals prospecting licences will be exempt for the duration of the licences. For petroleum platforms, the cessation of production pending a marine consent would cause significant economic losses to the companies involved and to the public through loss of royalties and taxes. Companies have invested in these production facilities in the understanding that their operations will be able to continue under the existing mining permits. Petroleum production platforms are already operational and their ongoing operation is managed under the Health and Safety in Employment Act and Regulations as well as the Maritime Transport Act. For minerals prospecting, the licences are for limited duration and already contain detailed environmental obligations as a compulsory aspect of the work program. 19
The exemption from the requirements of the Bill only applies to petroleum platforms and minerals prospecting as currently permitted or licensed. Any alteration, extension, removal, or demolition of a structure or pipeline associated with the activity or alteration of the activities allowed under a licence will not be exempted. 20
11. OTHER MATTERS SUBMITTERS MAY COMMENT ON Oil spills The Rena incident has led to misconceptions about the role of the Bill in relation to oil spills. Responsibilities are split between the EPA and Maritime New Zealand (MNZ). The EPA is the decision maker for all marine consents. MNZ is responsible for oil spill planning and response. The Bill does not affect the way in which MNZ manages oil spill planning and response. Oil spill planning is done through a discharge management plan, which operators are required to submit to MNZ at least 2 months before commencement of operations. MNZ must approve the plan before operations commence. The plan must provide information on: oils stored on the installation oils produced by the installation the likely fate of spilled oil description of all the on board processes which present a risk of pollution all potential environmental impacts resulting from a spill from the installation. The discharge management plan must also contain emergency spill response procedures, including: guidance on safety of personnel guidance on actions to stop, minimise and mitigate the effects of a spill details of response options available to the installation procedures to report marine oil spills by the fastest means of communication available to the director (or regional council if the spill occurs within 12 miles of the coast) duties of personnel responsible for dealing with spills. The owner of the installation must: ensure personnel assigned responsibilities for dealing with spills are appropriately trained before commencing operational duties and must keep records of the training carried out maintain access to equipment to deal with a spill justify to the Director of MNZ, if called on to do so, any spill response option in the discharge management plan as effective and achievable test emergency response procedures not less than once every 12 months 21
review the effectiveness of response procedures after tests, or their use in responding to a spill, record the result and notify the Director of MNZ. Any modifications to increase discharge management plan effectiveness must be submitted to the Director of MNZ for approval and then implemented. In the event of a major accident the operator will implement their emergency procedures to help or rescue injured or endangered personnel, maintain the safety of the installation or persons at the installation, reduce the danger to the installation or persons at the installation, and retrieve or attempt to retrieve the bodies of the deceased. If primary well containment is lost, and the blowout preventer fails to contain the flow of oil into the environment, then the operator will need to notify the Rescue Coordination Centre New Zealand and take immediate steps to control the spill. The Rescue Coordination Centre is a dedicated 24/7 service that is operated by MNZ. If the spill is outside the Territorial Sea, and beyond the capability of the operator to respond, control of the response passes directly to MNZ. In addition to the powers of an on-scene commander in charge of an oil spill response, the Director of MNZ has wide-reaching powers to issue instructions and take measures in respect of an offshore installation that is discharging, or is likely to discharge oil, to avoid, reduce, or remedy pollution, or a significant risk of pollution. The National Marine Oil Spill Response Strategy identifies the role and responsibilities of the operator, MNZ, local government, and other agencies in response to a major offshore incident. For example, the Department of Labour seconds its senior specialist petroleum resource to the response team. New Zealand has a formal agreement with Australia to provide assistance should it be needed. There are also other arrangements where New Zealand would be able to call on specialist resources from international companies. Other regulation for managing offshore petroleum development It is likely that some attention will be focused on the petroleum related aspects of the Bill. The Bill forms just one part of the wider regulatory regime for offshore petroleum developments. Some of the other key regulatory instruments will be summarised below. As a starting point all resources in the continental shelf are owned by the Crown under the Crown Minerals Act 1991. Resource rights can be allocated for petroleum exploration and mining through permits issued under the Crown Minerals Act 1991. The allocation process is managed by New Zealand Petroleum and Minerals, a division of the Ministry of Economic Development. The allocation process uses block offers in which companies bid competitively for rights to pre-designated areas. A permit grants rights to explore a given resource or to extract the resource. A permit operates as an agreement between the Crown and permit holder and contains commitments that must be met by the permit holder to show that they are making use of the resource. Permits at the mining stage also contain agreements as to royalty payments to be made to the Crown. Once rights to a resource have been secured an operator will need to comply with regulation on the health, safety and environmental implications of the project. The Health and Safety in Employment (Petroleum Exploration and Extraction) Regulations require offshore operators to prepare a safety case. A safety case is required for the design 22
and construction, operation, or abandonment of any petroleum installation. This includes any wells and any system of pipelines. The safety case includes a comprehensive assessment of risks, identifies control measures and develops appropriate processes and procedures. The safety case is the primary regulatory tool used to minimise the risk of a blow out. Although the Health and Safety in Employment Act 1992 and Regulations are focused on human health, measures to ensure well integrity also help to protect the marine environment from the risk of a spill. A copy of the safety case must be sent to the Department of Labour at least two months before operations commence. The safety case is reviewed by the Department of Labour s petroleum specialists in the High Hazard Unit to ensure that the risks are as low as reasonably practicable. Petroleum specialists visit installations to monitor ongoing implementation and compliance with the safety case. The Maritime Transport Act 1994 requires operators to prepare a discharge management plan prior to operations. The discharge management plan establishes procedures and practices aimed at reducing the environmental impacts from discharges including oil. In approving a plan, the Director of Maritime New Zealand must be satisfied that the operator has adequate systems, procedures and equipment in place. The discharge management plan also contains spill planning and response scenarios, the details of these requirements have been discussed earlier in this part. Wider Oceans Policy Reform Environmental groups have focused their attention on wider regulatory reform such as replacing all existing marine legislation with one integrated Act. In the long term the government may investigate options for regulatory reform for increased efficiency. However, in the short term the Bill is intended to fill existing regulatory gaps and resolve priority issues. There is no intention for this Bill to reform existing legislation and institutional arrangements. 23