Dear Nicola WASTEWATER CONSENT APPLICATIONS - DURATION AND SCOPE

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1 DLA Piper New Zealand Chartered Accountants House Customhouse Quay PO Box 2791 Wellington 6140 New Zealand DX SP20002 WGTN T F W Our ref: May 2015 Nicola Arnesen Senior Resource Advisor Environmental Regulation Greater Wellington Regional Council MASTERTON By Dear Nicola WASTEWATER CONSENT APPLICATIONS - DURATION AND SCOPE 1 You have asked for our advice on the recommendation contained in the Report to the Hearing Committee (Report) that the consents be granted for a term of 25 years, as opposed to the 35 years sought by the applicant for the Martinborough wastewater treatment plant (MWWTP). 2 This advice covers the following issues: 2.1 The ability to limit the consent duration to 25 years as recommended; 2.2 The requirement to consider the current level of investment, future investment and other financial considerations; 2.3 Whether the alternative proposal put forward by the applicant, which relates to a reduced scale of activity and a 20 year time frame, is within scope of the application; and 2.4 The ability to impose environmental bottom line conditions in respect of in-stream water quality. 3 You have provided us with a copy of the Report, Kerry Geange's evidence, and excerpts from the evidence of Paul Crimp and Mark Allingham, all for the applicant, which we have reviewed as relevant. scope_ _2 DLA Piper New Zealand is an independent law firm. It is associated with DLA Piper, a global law firm operating through various separate and distinct legal entities.

2 Summary 4 It is at the Commissioners' discretion whether consent is granted, and if so on what term. The Commissioners have the ability to grant consent on a reduced term, such as the 25 years proposed in the Report, if they consider it to be appropriate. The reduction in duration itself is an available constraint that does not raise any concerns with the scope of the consent. Current investment is one of the matters that can be a factor in determining duration, but it is not determinative. 5 Whether the alternative proposal from the applicant can be granted by the Commissioners depends on whether it is within scope of the original application or not. Further evidence is required before a determination as to scope of the alternative proposal is required. Initial input from Dr Olivier Ausseil is that the total effects proposed will now be different, as the positive benefits of Stages 2A and 2B will not be realised. It will result in adverse effects on the river for a longer period of time. Until further information is produced, the Commissioners cannot be satisfied that the proposal is within scope and will be unable to grant that consent as a result. 6 It is possible for the Commissioners to grant the consent on the basis of conditions that set environmental bottom lines for in-stream water quality. The applicant has stated in its application that the activity will be undertaken in a way that the effects on in-stream water quality will be limited to a set level. Effects up to that level are all that can be allowed by the consent if granted. Even through the applicant has not proposed in-stream conditions itself, putting in place conditions that confirm those levels is entirely appropriate as it provides certainty as to the scope of the consent granted. If those levels are no longer considered to be appropriate by the applicant, it will need to amend its application to reflect the new levels of effect. Whether or not it is within scope of the current application to amend the proposal it in such a way will be factually dependent and further information will be required. Until that information is provided, the Commissioners cannot be satisfied that the changes to in-stream water quality are within scope, or whether the new proposed level of effect is appropriate. 7 We now set out the reasons for these conclusions. BACKGROUND 8 An application was made to GWRC for the MWWTP in April It sought a 35 year consent term for discharges to water and land which involve (generally): 8.1 Stage 1A - minor upgrades to plant to improve performance. 8.2 Stage 1B - 24% discharge to land adjacent to MWWTP. 8.3 Stage 2A - 42% discharge to land (Pain farm). 8.4 Stage 2B - storage system to be constructed (on site or Pain farm), which will result in 100% removal of discharges to water. scope_ _2 2

3 9 In the Report, dated 8 April 2015, it has been recommended that the proposal be granted subject to conditions. One of those conditions is that consent is granted for 25 years, as opposed to the 35 years sought by the applicant. 10 The reasons for this condition are outlined in section 15 of the Report: 10.1 It will allow the applicant to operate with a high degree of certainty and allow them to complete all stages to an operational level, while allowing the Council to ensure the level of uncertainties with the application and the level of risk associated can be controlled Uncertainty around the ability of Pain farm to be able to take all of the effluent proposed and further land or storage may be needed By giving less than 25 years, the Council would be limiting the applicant from a solely risk based approach rather than an effects based one The proposal is still predominantly a discharge to water proposal, and 35 years is too long for that type of proposal Need for strict compliance with consent conditions and close monitoring A poor compliance history in the past has led to significant adverse effects and public concerns with a 35 year term years is a long period when considering changes to the planning framework Ensures that the discharge to land aspect of the proposal follows the best practical option and achieves the best environmental outcomes as technological advances occur. 11 The reduction in time itself does not impact on the scope of the application, as it is the same project just over a shorter timeframe. 12 The applicant, through its evidence, has raised concerns with this timeframe. It considers that there is no reason to limit the duration to 25 years on the basis of an assessment of the actual and potential adverse effects. The applicant states that the limitation to 25 years does not provide it with sufficient investment security, as the final 10 years of the consent have the least potential adverse effect and the greatest benefit. It has proposed in the alternative, if consent for the MWWTP is not granted for the full 35 year term sought, that it should be limited to Stages 1A and 1B and granted for a term of 20 years. 13 As with the potential 25 year term, the alternative timeframe proposed by the applicant does not raise any concerns with scope. Potential issues with the scope of the alternative proposal will only arise if the proposal is for a different activity, or if the level of effects arising from that activity are greater than originally proposed. 14 First we address the position on duration before turning to matters of scope. scope_ _2 3

4 DURATION 15 The Report recommends that the application be granted on conditions, including a condition that limits the duration of the resource consent to 25 years, as opposed to the 35 years sought by the applicant. 16 Section 123 of the Resource Management Act 1991 (RMA) provides that consents of this type can be granted for a period not exceeding 35 years. That maximum duration can be limited through conditions of consent under section 108 of the RMA. It is common for proposals to be granted on terms less than 35 years. 17 It is the accepted position that the duration of a resource consent should be determined by sound resource management practice and the sustainable management purpose of the RMA. 1 If duration is limited for other reasons, it is likely to be found to be unlawful if challenged. 18 The Report has given many reasons for the proposed 25 year duration of consent. It has considered whether a term shorter than 25 years is appropriate and has concluded that it is not, due to a range of matters including the investment required and certainty for the applicant. It considered that a term of more than 25 years is also not appropriate for a range of reasons. Although some of the reasons given do not, on the face of them, directly link to resource management purposes, the reasons given clearly all relate to potential adverse effects and the need/ability to avoid, remedy or mitigate those effects. The uncertainty of the ability for the proposed land to cope with the level of discharge, the staged approach, certainty and the risks associated with non-compliance with conditions of consent have all been considered. After 25 years, stage 1A, 1B and 2A will be complete, with the MWWTP operating in accordance with stage 2B. It is at stage 2B where the main environmental concerns relating to Pain farm arise. A shorter duration, which only affects that stage, has been recommended as a result. A shorter duration has been recommended to be suitable in this case based on those matters. We see no reason why that recommendation is not sound and available to the Commissioners. 19 It is not unusual for a resource consent to be granted for a shorter term than sought. Another mechanism that is available to decision makers is a review condition under section 128 of the RMA. Review conditions are limited in effect. They are a mechanism by which a consent authority can amend existing conditions to ensure that they do no become outdated, irrelevant or inadequate. It is not a mechanism that enables a consent authority to impose new conditions or amend conditions in a way that prevents the activity for which consent was sought. 2 1 Ngati Rangi Trust v Genesis Power Ltd [2009] NZRMA 312 (CA). 2 Medical Officer of Health v Canterbury Regional Council [1995] NZRMA 49 (PT); Minister of Conservation v Tasman District Council HC Nelson CIV , 9 December scope_ _2 4

5 20 In this case, one of the main effects reasons for limiting the duration of the consent is that it is unknown whether Pain farm can receive the levels of discharge proposed. It may be that further storage or an additional land discharge area is required. If that is the case, a new consent will be required. We do not consider it to be suitable to use a review condition to give effect to this change. 21 In respect of the duration of the resource consent, the level of investment and the resultant need for certainty is a matter for consideration. 3 This can relate to security for current and future investment by the applicant. 4 Significant investment does not necessarily result in a 35 year term. 5 Evidence needs to be produced on this component before any real weight can be given to that argument. We understand that this evidence has not yet been produced. The Report has, even in absence of that evidence, considered the level of investment in reaching a position on duration. The certainty required as a result of the applicant's investment is the reason given in the Report for not recommending a term shorter than 25 years. 22 Consideration of investment is not only limited to the question of duration, it is also relevant to the decision whether to grant consent or not. When considering whether to grant an application to which section 124 of the RMA applies, which is the case here, the Commissioners must have regard to the value of investment of the existing consent holder under section 104(2A) of the RMA. Before assertions of prior investment can be given weight under this subsection, the applicant must provide robust evidence as to the value of the investment If the Commissioners are inclined to grant the proposal, they can do so on the conditions they consider to be appropriate, including in respect of duration, or review. If the Commissioners were minded to grant the proposal on the conditions recommended by the Report, we see no legal concern with the 25 year duration condition as proposed. SCOPE OF THE APPLICANT'S ALTERNATIVE PROPOSAL 24 Consent can only be granted for an activity that is within the scope of the original application. The applicant, in response to the recommended shorter consent term of 25 years has suggested that an alternative result would be for consent to be granted for a term of 20 years and cover only Stages 1A and 1B (which would result in a longer time for the 3 Te Rangatiratanga O Ngati Tangitihi Inc V Bay of Plenty Regional Council (2010) 16 ELRNZ 312, refer paragraphs [85] - [93]. 4 Ibid. 5 See for example Te Rangatiratanga O Ngati Tangitihi Inc V Bay of Plenty Regional Council (2010) 16 ELRNZ Marr v Bay of Plenty Regional Council [2010] NZEnvC 347 at [173] - [178]. scope_ _2 5

6 activity to be operating at stage 1B). Whether the Commissioners can grant consent on this basis will depend on whether it is within scope of the original application. 25 We have already provided advice to the Council on this matter on 16 February 2015 when the applicant was suggesting a similar reduction in duration and scale. 7 That advice confirmed that the scope of the application is defined by the original application together with any documents incorporated into it by reference. Amendments to design and other details can be made until the close of the hearing, as long as they are within the scope defined by the original application. If amendments go beyond that scope, by increasing the scale or intensity of the proposed activity, or by significantly altering the character or effects of the proposal, a fresh application is required. 8 Amendments to an application cannot be within scope of the application if they result, in substance, in a different application While there is no 'bright line' test, there have been many cases that have considered this issue. The principles that are consistently applied are: Whether the intensity and scale of any adverse effects would be greater (or lesser) as a result of the change in the proposal, and 26.2 Whether it is fairly and reasonably contemplatable or plausible that other informed and reasonable persons not before the Court but interested in the area would have still stayed out of the proceeding if they knew of the change to the proposal. 27 The outcome will depend on the facts of each case. The Courts have been clear that the above considerations are only factors to be taken into account and are not to be applied as strict legal tests, so caution must be exercised. 11 The effects of the proposal 28 When considering the change in effects, we consider that the proposal as a whole, as it was applied for, needs to be looked at and compared against the amended proposal. This means that a comparison between a proposal that will result in no discharges to water is being compared with a proposal that results in 76% being discharged to water. 29 It is not enough to say that Stage 1A and Stage 1B were always part of the proposal, and as that is all that is being sought now (although for an extended period), there is no change in 7 Refer to our letter of 15 February 2015 to Shaun Andrewartha. 8 Darroch v Whangarei District Council A018/93. 9 Waitakere City Council v Estate Homes Ltd [2006] NZSC 112, at Mead v Queenstown Lakes District Council [2010] NZEnvC Ibid, at 25. scope_ _2 6

7 activity or effect. It would, in our opinion, be artificial to look at it in this way, especially given the positive effects arising from the later stages. 30 An effects assessment needs to be undertaken to determine what effects will be different between the two. If the effects of the new proposal (20 years, 2 stages and a longer time operating at stage 1B) are at a scale and intensity that are greater than the effects of the proposal contained within the application (35 years, 4 stages) then the new proposal will likely be outside scope of the application and cannot be granted. 31 We understand from your discussions with Dr Olivier Ausseil, that without completion of Stages 2A and 2B, the overall effects of the proposal will be different and uncertain, with potential adverse effects on the river for a longer duration than originally proposed. The positive effects of Stages 2A and 2B will not be realised. Further evidence is required before a conclusion on scope can be reached. 32 If the effects are not greater in scale and intensity (they are similar or less), the next question is whether they are different. Are the effects proposed different in type or character that alter the proposal to a different activity or affect different people? This is addressed by the second consideration referred to in case law above. Potential for other parties to be interested 33 The question here is ultimately whether there are other people out there that would have submitted if the new proposal was what was being pursued by the applicant. The major difference in this regard is that the overall result of the project is no longer a 100% discharge to land (as was originally proposed), it is 76%/24% water/land. 34 If there are other people out there who would have submitted if this was the proposal that was originally notified then this again leads towards the new 20 year proposal being out of scope of the original application and not able to be granted by the Commissioners. Conclusion on scope 35 The outcome of this question is entirely dependent on an effects assessment. If the effects are greater in scale and intensity then consent cannot be granted, as you cannot grant consent for more than what was sought. We understand that this information is not currently before the Commissioners but that the initial position on the information provided is that the amendments are likely to result in potential adverse effects on the river occurring for a longer time than originally proposed. We consider that further evidence would be required before the Commissioners could make a finding on this point. 36 If evidence was produced, and the application passes through the scale and intensity assessment, then it is likely that consent could be granted. Unless there is some different effect arising that we are not aware of, if the application passes through the scale and intensity assessment, we consider that the amended proposal is likely to be within scope and therefore could be granted by the Commissioners. It is unlikely that the change in the application (from a 100% discharge to land to a 76%/24% discharge to water/land split) is of the nature that others who are not already involved would have got involved. scope_ _2 7

8 IN-STREAM WATER QUALITY 37 We have not reviewed the application for resource consent or the accompanying assessment of environmental effects. Based on the information you have provided, we understand that as part of the assessment of environmental effects the applicant claimed that the effects on in-stream water quality will be limited to a certain level. Through the Report, the Council has proposed conditions that limit in-stream water quality effects in line with the proposed levels contained in the application. The applicant is now saying that it is not able to meet those levels, and in any event, at law the conditions are not required. 38 We agree with the applicant that the conditions are not strictly required at law, but consider that they would be a useful reinforcement of the applicant's obligations as reflected in the application. The reason for this is that the consent, if granted, cannot be granted for something more than what was sought. In the application, the applicant has stated that the activity it is proposing will be limited to a certain level of effect. Resource consent cannot be granted for more than that. Any effect above that level could be found to be outside the scope of the consent, resulting in a breach of resource consent if that effect were to arise. 39 A condition of consent requiring the consent to be exercised in general accordance with the application reinforces this fundamental position. It also means that any breach will be actionable as a breach of consent conditions, and not just as a breach of resource consent generally (which could be argued in the absence of the condition). 40 The imposition of specific conditions of consent setting the in-stream water quality levels (at the level that the applicant has said they will meet in the application) is further reinforcement of what the applicant's obligations and restrictions are. It is not limiting the consent in a manner over and above how it is limited in the application. Instead it provides clear articulation of the consent requirements and will assist in reducing any arguments as to scope of the resource consent if enforcement action or other dispute were to arise. 12 The conditions set the standards that compliance will be assessed against, as opposed to having to determine what the standards are from the general application material before making an assessment as to compliance. 41 In this case, if there are concerns about water quality, and the conditions are put in place for a resource management purpose, then conditions to address that matter are suitable. Whether that obligation is imposed through a condition or a management plan is a matter to be determined. However, caselaw establishes that consent conditions set the parameters of the consent, with management plans addressing the process as to how those parameters are to be met or monitored. It is not appropriate to leave the setting of effects parameters to management plans Palmerston North City Council v New Zealand Windfarms Ltd (2014) 18 ELRNZ 149 (CA). 13 Mount Field Ltd v Queenstown Lakes District Council [2012] NZEnvC 262, at [77]. scope_ _2 8

9 42 If the applicant is of the opinion that by setting such conditions the consent would be frustrated, as they are not going to be able to comply, then it needs to amend its application. The applicant has said its activities will only result in that level of effects within its application and it is limited to that application in terms of scope of the activity going forward. At this stage, it can only make amendments that are within scope of the original application material as set out above. An effects assessment will need to be undertaken to determine the effects of the water quality levels that are now proposed by the applicant. That further information is required before the Commissioners can determine whether it is within scope of the application to grant consent on that basis. Without that information, scope cannot be determined and consent cannot be granted to that activity. CONCLUSION 43 The Commissioners can grant the consents for whatever duration they consider relevant, provided the duration is no more than 35 years and any further limitations on duration are to address a resource management purpose. 44 Whether or not the alternative proposal put forward by the applicant, including in respect of staging and in-stream water quality, is within scope of the original application is factually dependent. Further information will be required before the Commissioners can make this determination. Consent cannot be granted for an activity that is outside scope of the original application. Yours sincerely Emma Manohar Senior Solicitor Direct emma.manohar@dlapiper.co.nz Stephen Quinn Partner Direct stephen.quinn@dlapiper.co.nz scope_ _2 9