New Zealand: Clarity Of Resource Management Act Process Restored In Project Hayes Decision

Consent applicants under the Resource Management Act (RMA), territorial authorities and other RMA decision-makers will welcome the clarity of process provided by the High Court's ruling yesterday in relation to the Project Hayes wind farm.

The Court has ordered that the case be sent back to the same division of the Environment Court which declined the original resource consents and has imposed specific directions on how that Court will consider the matter, the effect of which is to return the Court's authority to the limits intended by the law.

High Court faults Environment Court's interpretation of the law

The Environment Court found that Project Hayes did not achieve sustainable management in terms of the RMA because the large quantity of renewable generation it would have delivered was not sufficient to outweigh the impact on the outstanding Lammermoor landscape.

In reaching this decision the Environment Court held that other sites should be investigated more fully first and that "realistic alternatives to a Lammermoor wind farm do exist and should have been considered". Integral to this was the Court's view that s 7(b) of the RMA "requires a comprehensive and explicit cost-benefit analysis of the proposal".

The Environment Court noted that, while it was not usually necessary to consider alternative uses of the resources in question, there were at least three exceptions to this rule:

  1. where the costs could not be fully internalised to the consent holder
  2. where there was no competitive market, or
  3. where a matter of national importance under Part 2 of the RMA was involved.

But the High Court found that this interpretation of s 7(b) was "erroneous in law" and "incompatible with the approach to alternatives expressly adopted by the RMA".

This finding should provide significant relief to consent applicants generally and to infrastructure providers in particular. The implications of the Environment Court's approach, had it been allowed to stand, would have been to significantly raise the bar in terms of the level of information required to support consent applications.

Chapman Tripp's earlier commentary on the Environment Court decision is available here.

Limits of the RMA spelled out

The High Court found that the Environment Court was entitled to require Meridian to provide evidence of alternative locations, but that it had overstepped the provisions and intention of the RMA in a number of respects.

The Court's authority to consider alternatives derived from cl 1(b) of Schedule 4 in the Act which provides that, where there is likely to be a significant adverse effect, the Assessment of Environmental Effects (AEE) should include "a description of any possible alternative locations or methods for undertaking the activity".

Given the size of the project, the High Court was satisfied that cl 1(b) was in play. However, it said that the provision was "very precise" in regard to what was required – namely "a description" of reasonable alternatives, not "a fine-grained analysis of the likely benefits and costs" of those alternatives.

Further, the High Court was "troubled" that the Environment Court had at various points in its judgment implied that the analysis of reasonable alternatives should extend beyond the territory covered by the Central Otago District Council. The RMA was clear that the functions accorded territorial authorities in s 31 were for the purpose of giving effect to the Act within their district.

The High Court also questioned the Environment Court's application of section 7(b) relating to "the efficient use and development of natural and physical resources". These are defined to include land, water, air, soil, minerals, and energy, all forms of plants and animals (whether native to New Zealand or introduced), and all structures".

The Court said that the list, while not exhaustive, was clearly focussed on tangibles but that the Environment Court had, incorrectly, included intangible landscape values. The High Court also rejected the notion that section 7(b) requires an explicit and comprehensive cost benefit analysis.

What now

The High Court has issued a series of specific directions to the Environment Court in reconsidering the case. Key among these are that:

  1. Meridian provide "a reasonably detailed description of alternative sites" (as required by cl 1(b) of Schedule 4)
  2. the Court consider this evidence as part of its s 104 analysis, not as part of the s 7(b) assessment. (In other words, it is to consider whether the same or a similar wind farm would generate less adverse environmental effects in an alternative site but will need to weigh this against "any diminution in the benefits of the project (e.g. poorer quality of mean wind velocity, distance from the grid etc), and any other relevant considerations such as the availability of the alternative site/s to Meridian"), and
  3. the Court not push the consideration of alternatives "too far", the High Court having explicitly rejected the proposition that Meridian must demonstrate that the Hayes site is "the best".

The High Court said the Environment Court could draw on the cost benefit findings that it reached when undertaking its s 104 evaluation, provided that it did not "penalise Meridian for failing to provide non market valuation evidence to landscape and heritage values".

With several large infrastructure projects likely to be tested through Council, Environmental Protection Authority, Board of Inquiry and Environment Court processes in the next few years, the decision provides welcome clarity about what the RMA requires in terms of the analysis of alternatives and consideration of benefits and costs.

The High Court has put the bar back to something realistically within reach for applicants and RMA decision-makers alike.

Our thanks to Patricia Herbert and Jessica Meech for writing this edition of Brief Counsel. For further information, please contact the authors on the right.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

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