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Environmental Legislation: the Implications and Experiences for Inshore and Offshore Exploration and Development
presented by S Clarke and M Leggett
Woodward-Clyde (NZ) Ltd, PO Box 3367, Wellington
at the 1998 New Zealand Petroleum Conference
Marine Oil Response Strategies
Abstract
Over the last 10 years, the New Zealand Government has developed a comprehensive statutory regime for dealing with the effects of development on the environment. Different laws apply where petroleum exploration and development is concerned, depending on its location. On land and in waters within 12 miles of the coast, the provisions of the Resource Management Act 1991 (RMA) apply. Under that Act, regional and district councils establish their own rules and standards for environmental effects assessments and required degrees of consultation. Petroleum exploration and development outside the 12 mile limit comes under the Maritime Transport Act 1994 (MTA), administered by the Maritime Safety Authority. In order to ensure that New Zealand complies with its obligations as a signatory to MARPOL, the Government is making changes to both the MTA and the RMA to deal with the issues of marine pollution in both inshore and offshore locations. The status of these changes are outlined and updated.
Knowledge of the regulatory environment is essential for companies involved in exploration and production. A poor understanding of environmental obligations can lead to unforeseen costs, increased bureaucracy and project delays. The legislation has been in force for nearly a decade, and much experience has been garnered during this time by companies, consultants and councils about the best (and worst) ways of doing things. This paper aims to present a compendium of those experiences and identify the elements of good practice for the benefit of the industry.
Introduction
In granting exploration permits, the Ministry of Commerce is only the first in a long queue of regulatory authorities that will have a keen interest in such proposals. The requirements of the RMA and the MTA may at first appear daunting and incomprehensible, but this perception should fade with experience. Those initial experiences need not be entirely negative, and it is hoped that this paper assist in those early steps by giving the good oil on best practice.
The Resource Management Act
The RMA was enacted in July 1991 as the product of the biggest law reform exercise in New Zealand history. It was a component in a major restructuring of New Zealand into a market led economy that began in 1984. This included the removal of agricultural and manufacturing subsidies and protection, financial deregulation, local government reform, major restructuring of the public service, and the corporatisation of many departments.
The philosophy of the RMA is very much a product of our times. It reflects a desire to allow the market to get on with its business within a framework of good environmental practice. In this it is significantly different from previous legislation. The planning laws of the 1970s tended to give council staff the job of making investment decisions on behalf of business people and the public. As you can imagine, this did not prove to be entirely successful. Previous planning legislation also tended to ignore or gloss over the environmental problems that New Zealand undoubtedly faces, while allowing council staff to focus on more immediate concerns, such as the infiltration of carpet selling into industrial areas and motor mower noise on Sunday mornings.
The impact of such a fundamental shift in legislative philosophy has generated a considerable degree of investment uncertainty. Interestingly, in an atmosphere of deregulation, the RMA is often seen as one of the few remaining impediments to development. Despite the Government's best intentions at the time of enactment, the RMA is receiving ever more attention and criticism from resource users. Much of this is a reflection of the immense load the Act requires local councils to shoulder. This in turn has lad to extreme variability in the performance of local authorities. There are no shortages of horror stories.
However, it would be fair to say that some of criticism comes from those who are resistant to acknowledging their environmental obligations or are unaware of basic legislative requirements. The requirements of the RMA (and the councils that administer it) can be an unexpected and unpleasant shock for those who were otherwise unaware of its implications, especially those who plough ahead with project proposals without any slack built in for negotiating red tape. Although the Government is selectively reviewing the RMA and the performance of councils to determine what improvements can be made, there is much that resource users can do to ensure that the process works for rather than against them.
The RMA is administered by around 75 district and city councils and 16 regional councils. The two tiers are responsible for different parts of the environment. District and city councils tend to concern themselves with the way in which people and land uses relate to each other. They produce district plans which control such things as building design, appearance and proximity to other buildings, noise, glare, overshadowing, subdivision and other such matters that have a bearing on harmonious living and the protection of property prices.
Regional councils concern themselves with more fundamental aspects of environmental protection. The plans which they produce set `bottom lines' for the protection of water quality and quantity, air quality and soil health. They also have a statutory interest in the coastal environment, and their sphere of influence under the RMA extends out to the 12 mile (or 22 kilometre) limit off-shore. The Act requires regional councils to produce regional coastal plans, which deal with such issues as the exclusive occupation of coastal space, discharges of stormwater onto beaches, the dredging of channels, and the construction of wharves, jetties, marinas and the like. The regional coastal plans also control the placement of oil exploration platforms within this zone.
In preparing its coastal plan (or indeed any plan) the regional council is able to set out what aspects of the local environment it considers to be important, and therefore how development proposals should be dealt with. This tends to mean that each regional council produces a different set of requirements for what, on the face of it, may appear to be an identical proposal. Once a plan establishes a requirement to obtain a resource consent, the council turns into a consent authority. It will examine each application and determine whether or not it can go ahead. It may grant approvals subject to conditions which the consent holder must fulfil.
Direction as to how proposals should be assessed is provided by the New Zealand Coastal Policy Statement (NZCPS), developed by the Government soon after the enactment of the RMA. The NZCPS classifies a number of large scale projects such as exploration platforms, coastal oil terminals and marinas as restricted coastal activities. Where such activities are concerned both the Regional Council and the Department of Conservation act as consent authorities.
For example, the Regional Coastal Plan for Taranaki classifies the erection or placement of large structures for the storage or containment of petroleum products in coastal waters as a discretionary and restricted coastal activity. This means that consents are automatically required from both the Council and the Department of Conservation.
The Regional Coastal Plan for Taranaki also establishes a number of other requirements. Seismic surveys of the coastal marine area for the purpose of petroleum prospecting do not require a consent unless they occur in breeding areas for wildlife. Disturbance of the seabed by drilling and the discharge of drilling muds, cuttings and fluids and water recovered from the shaft are permitted without any consent requirement so long as the work complies with certain basic standards. The discharge of stormwater, sewage, garbage and cooling water from ships and off-shore installations is also permitted if certain conditions relating to the content of the discharges are abided by. The discharge of contaminants to air associated with the flaring of hydrocarbons during petroleum exploration or mining is also permitted if it occurs outside areas valued for their ecology or the flight paths for New Plymouth Airport. The use of chemical dispersants to clean up oil spills is (understandably) permitted, but controls are placed on the type of dispersants in order to ensure that their use does not itself create an environment problem.
In permitting activities subject to certain conditions, the Regional Council is indicating how such activities can be undertaken in an environmentally responsible manner, while reducing the number of potentially unnecessary, time-consuming and costly resource consent applications. This search for the least cost and most efficient set of policy options is an explicit requirement of the RMA, adhered to a lesser or greater extent by the councils concerned.
Where consents are required, both the RMA and the regional plans set out the sort of information that will be required from the applicant to help the Council make its decision. The most important requirement which must be fulfilled in all circumstances (whether for an oil rig or a front porch) is the preparation and submission of an assessment of environmental effects (commonly known as an AEE). This must set out in detail the nature of the proposal, an appreciation for the effects that the proposal may have on the environment, and the identification of any measures that could be taken to address those effects. The effort that is put into preparing an AEE should reflect the scale of the proposal in question.
Many AEE that are submitted are inadequate in that they do not accurately describe the proposal nor its potential effects. The submission of an inadequate AEE can be the cause of a significant amount of frustration for the applicant. The RMA requires councils to process applications within statutory timeframes. However, the identification of an inadequate AEE has the effect of `stopping the clock' and allows the council to kick back until the applicant has ferreted around and obtaining the necessary information to satisfy the authorities. This can lead to considerable delays in obtaining approvals, adding significantly to costs and project difficulties. It may not be an simple matter to prepare a suitably comprehensive AEE, but a failure to do so will only create problems later on.
Often resource users find themselves unexpectedly immersed in red tape because they are either unaware of the requirements of the legislation or they regard the consenting process as an obstacle to be overcome. This is an understandable reaction, given tight project timeframes and slim profit margins, but it is unlikely to prove a particularly pleasant experience.
The best approach is to regard the preparation of an AEE as part of the feasibility work for the project. It is something that needs to be built into the project plan, and is as essential as seismic testing. All that is really involved is the scoping of relevant environmental issues, an understanding of how the proposal may impact on these, and an assessment of how those impacts can be reduced or eliminated if need be. Such an approach will limit the number of unexpected and nasty surprises. The Ministry for the Environment is currently developing guidance on how to go about preparing and submitting AEE.
As regional councils not only write the rules but interpret them and also evaluate development proposals, it is only too obvious how important it is to develop a good understanding of their requirements. A good effort should be made to develop a healthy working relationship with key staff at the earliest possible opportunity. Most councils are only too happy to discuss proposals with their proponents. They should be able to provide guidance on what the AEE should contain, who the applicant should consult with (including local Maori), and what specialist assistance may be required. They can also point to examples of AEE that they consider are exemplary. After all, the last thing they want is to see newspaper headlines screaming about council incompetence from proponents who have just stumbled over an unexpected set of requirements.
It is also important to talk to the local office of the Department of Conservation, as it also maintains a consenting role itself, or if this does not apply in certain situations, then it is still likely to be consulted by the council. The council will also consult with the Maritime Safety Authority to ensure that all issues relating to navigation safety are addressed.
AEE for exploration wells commonly address such matters as the dumping of drill cuttings, the discharge of drilling fluids, treated sewage and oil separated water. In addition, the AEE should describe the influence that local wind, swell, current and seabed conditions are likely to have on the dispersal of materials. They should include a record of consultation, including the feedback received from local iwi. The regional council is likely to place conditions on the granting of approvals. These conditions typically relate to the provision and maintenance of sewage treatment plants, oily water separators, the helicopter removal of refuse and hazardous waste to shore, casing and blow-out prevention specifications, well capping, and the manner in which drill cuttings and fluids are discharged. They may also place controls on more aesthetic matters such as helicopter noise and the visual appearance of rigs if visible from the shore. Many of these conditions reflect the requirements of the Ministry of Commerce in obtaining petroleum permits, and are standard features of modern oil rigs. Similar conditions are enforced by the Maritime Safety Authority within their area of jurisdiction under the MTA.
The Maritime Transport Act
As indicated earlier, regional councils have no jurisdiction outside the 12 mile limit. Responsibility for ensuring the protection of the environment in the strip of coastal waters between the 12 mile line and the outer limit of New Zealand's exclusive economic zone (200 nautical miles from shore) falls to the Maritime Safety Authority (MSA). The MSA's powers and responsibilities are set out in the MTA.
The MSA operates a consenting process not unlike that established by the RMA. The submission of a formal application and AEE is once again required. Any part of the activity likely to have a bearing on marine pollution should be identified and addressed. This will include the sorts of matters that should be addressed in preparing an AEE under the RMA. It is fair to say that the process under the MTA may be less demanding as the distance of such facilities from shore does means that the environmental effects of exploration and prospecting activity will present less of a risk. However, this does not mean that issues can be glossed over. The regional council is likely to maintain an interest even where it has no jurisdiction, if only because of potential threat to the coastline from off-shore oil spills.
It is suggested, therefore, that proponents of off-shore projects consult not only with the MSA but also the relevant regional council, not only as a courtesy, but also as a useful `dry-run' for approaching the MSA. The MSA is also likely to place conditions on the granting of approvals similar to those required by regional councils.
Marine Oil Response Strategies
Measures to protect the marine environment from oil spills are specifically covered by the MTA. The MSA, regional councils and the exploration industry are allocated an extra set of responsibilities and obligations under the MTA's provisions. As with the RMA, the polluter pays principle applies. The devolution of responsibility to different tiers reflects the significance of the oil spill in question. The owners of shore-side industry with oil transfer sites, off-shore installations and all vessels are required to prepare marine oil spill contingency plans for their facilities. Regional councils are responsible for auditing and approving these site-specific plans (known as Tier 1 Plans). Vessels are required to have and maintain `shipboard oil pollution emergency plans', another type of Tier 1 Plan. These are audited and approved by the MSA.
Each regional council is also required to prepare and implement a regional marine oil spill contingency plan (Tier 2 Plans) for the area within their jurisdiction (i.e. to the 12 mile limit). The MSA is required to prepare a national marine oil spill contingency plan (a Tier 3 Plan) for the area extending to the outer limit of the exclusive economic zone.
The purpose of the contingency plans is to put in place a series of steps for reacting to oil spills. Plans need to identify the source of risk, procedures for initiating a response (including the mobilisation of people and equipment), the whereabouts of equipment, clean-up standards, and the appointment of an on-scene commander. The MTA also sets out the way in which oil spill events should be notified and reported to the appropriate authorities, and established a statutory basis for the oil pollution levy, which is used to fund New Zealand's preparations for oil spill responses. Significant progress has been made over the last few years in preparing response plans, training responders, and purchasing and distributing equipment.
The ability to demonstrate an active commitment to developing and adhering to marine oil spill contingency plans can form a powerful defence in the event that spillages do occur and enforcement action is initiated under the RMA.
New Marine Pollution Controls
The New Zealand Government is a signatory to the International Convention for the Prevention of Pollution from Ships, commonly known as MARPOL, and the London Convention. Both conventions aim to prevent marine and coastal pollution by setting standards for the design and operation of ships and off-shore facilities. New Zealand has yet to ratify MARPOL.
To be in a position to do so amendments have been made to the RMA. These changes will considerably strengthen present controls on pollution from ships and offshore installations. In particular, the control of pollution from foreign ships will be possible. The legislative amendments will lead to the development of Marine Pollution Regulations under the RMA and Marine Protection Rules under the MTA to control discharges of materials inside and outside of the 12 mile limit respectively. The Government engaged in a consultation exercise prior to amending the legislation. The Petroleum Exploration Association of New Zealand contributed to this process.
The intention is to create a seamless regime, whereby both the MTA rules and RMA regulations are consistent. Allowances will be made, however, in recognition that there is less risk and sensitivity regarding coastal waters beyond the 12 mile limit.
The regulations will override and replace the rules relating to marine pollution and the dumping of waste which are currently contained in regional coastal plans. The new regulations for inshore waters will still be administered and enforced by those councils, and the occupation of coastal space will still require consents from the regional councils in accordance with their regional coastal plans. The rules developed under the MTA for offshore waters will be administered and enforced by the MSA.
The rules and regulations will seek to control the risk of pollution associated with the recovery of petroleum by oil rigs and transportation of fuels by tankers, as well as sewage and garbage discharges from the ships and rigs themselves. Larger ships and rigs with specialised grinding equipment will be able to dispose of certain types of garbage so long as they are more than three miles from land. Smaller vessels without such equipment will be required to hold all garbage and sewage on board when they are in close proximity to shore. This will require the establishment of collection facilities at wharves and ports. Operators will be required to keep records of waste dumping and submit these to the appropriate regional council and the MSA on an annual basis. A limit on the oil content of discharges is likely to be established. The MARPOL standard of 15 parts per million is likely to be adopted.
The implications for off-shore drilling projects may not be hugely significant. Operators are already required to take steps under the consenting processes of the MTA and the RMA to control pollution. In setting strict standards, the rules and regulations will have the effect of reducing the level of discretion available to the administering authorities, and therefore the level of uncertainty surrounding issues of compliance. The same authorities will be involved in administering and enforcing the rules and regulations.
This year is UNESCO's International Year of the Ocean, and the New Zealand Government is keen to speedily develop the regulations and rules to ensure that New Zealand is seen to meet its international obligations. They are presently being developed by the Ministry for the Environment and the MSA and are likely to be approved by Order-in-Council during the middle of this year. The Government has obtained funds from the Australian and New Zealand Environment and Conservation Fund to assist in promoting and making people aware of the rules and regulations. Target groups include oil exploration interests, shipping companies and yacht clubs.
The Future
The RMA, its creators and those who implement it are under considerable pressure at the moment. Most significantly, so are the resource users caught up in its machinery. The lag between the enactment of the legislation and the growing criticism is a reflection of the time it has taken for regional plans to be developed and actually take effect. Time has also exposed some weak points in the bureaucracy that is responsible for implementing the legislation.
The Government is listening to resource users like never before. Now is an excellent time to approach the Ministers for the Environment, of Commerce and of Energy with any issues that you may have about the RMA's implementation. Examples of bad practice are easy to identify and if publicised have considerable value in shaming the local authorities concerned. However, people are most likely to learn from their peers, and in the long run it may be more helpful to point to examples of good process so that it can be applied elsewhere.
The information that must be gathered to help proponents met their statutory environmental obligations should be seen as an integral part of the overall project proposal. Inadequate homework by applicants will be marked accordingly. The importance of early and good communication with administering and consenting authorities cannot be over-stressed. A suitably comprehensive AEE is another key to ensuring that the process remains well oiled.
Whether we still have the RMA in five years or a National Development Act, some sort of regime for independent decision-making on environmental issues seems an inescapable conclusion. The legislation that we work to sets out the minimum that is required from all players. `Good practice' requires more than compliance with the legal minimum, but in the long run is likely to benefit resource users. It will also reduce the level of uncertainty inherent in a process where much of the decision-making is taken out of your hands.
Authors
Ms Clarke is a Chemical Engineer with experience in environmental projects from both within industry and as consultant, both in New Zealand and in the United Kingdom. She works predominantly in the area of environmental management, including auditing, the development of management systems and risk assessment.
Mark Leggett is a Planner with experience in policy development and other aspects of resource management both in New Zealand and in England. Before joining Woodward-Clyde he was part of a small team at the Ministry for the Environment that was responsible for monitoring the effect and implementation of the Resource Management Act and for developing programmes to up skill and improve the practice and performance of those involved in Resource Management Act processes.
Last modified: 26 Sept 2002
