Paper F: Transition To New Aquaculture Regime

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The Chair
Cabinet Committee on Finance, Infrastructure and Environment

Proposal

1.  This paper proposes that a moratorium be placed on applications for resource consents under the Resource Management Act 1991 (RMA) for the occupation of coastal space for
aquaculture.

2.  This paper is additional to the five papers seeking Cabinet approval to policy for reforming the management regime governing aquaculture development in New Zealand. The moratorium would avoid the aquaculture reforms being made ineffective by a rush of pre-emptive applications once the new policy is announced.

Executive summary

3.  The aquaculture reform proposes prescriptive planning with the use of Aquaculture Management Areas (AMAs), within which aquaculture will be permitted, and prohibited zones outside these areas. However, as soon as the proposed reforms are announced, there will be strong incentives for aquaculture interests to pre-empt the reforms by applying for remaining coastal space on a speculative basis. The use of prohibited zones will not be effective if applications can be lodged in respect of space within potential prohibited zones while plans are being prepared. Tendering within aquaculture management areas also requires there to be no existing applications or occupation within the tender area.

4.  This paper therefore seeks agreement to the following:

Background

5.  The Finance, Infrastructure and Economic Committee approved the release of the discussion paper on aquaculture in July 2000 and invited the Minister of Fisheries to report back to FIN on the outcome of the consultation process, further analysis, and recommendations for change (FIN (00) M 20/2 refers).

6.  The proposals in this paper are intended to cover the transitional period between the announcement of the proposed aquaculture reforms (Papers A–E) and the coming into force of the legislation proposed to be introduced in 2002 to give effect to those reforms.

Comment

Problem

7.  One of the main objectives of the proposed aquaculture reforms is to provide local authorities with an improved ability to control aquaculture development and manage its cumulative effects around the New Zealand coastline. Papers A–E propose that this be achieved through the use of more prescriptive planning establishing aquaculture management areas (AMAs) and prohibiting aquaculture in areas outside of AMAs. However, if these reforms are to be effective, there is a need to recognise the existing pressures on councils regarding aquaculture development, the current state of coastal plans, and the time it will take to pass the legislation implementing the reforms.

8.  Many regions have problems with large numbers of existing applications that have yet to be considered. Some councils urgently need breathing space to properly address the cumulative effects of the wave of new applications and to ensure new marine farms do not affect existing ones. In some regions, such as Tasman, most space available for marine farming has already been applied for. In such cases, the establishment of an AMA and prohibited zone is only likely to assist in negating some existing applications. If existing applications have priority in any AMA then tendering of individual marine farming sites within the AMA is unlikely to be possible.

9.  It is hoped that these types of problems can be minimized in other areas. The effectiveness of the more prescriptive planning approach will be undermined in other areas if applications can be lodged in currently unallocated coastal space prior to the completion of new or revised regional coastal plans. New applications in many coastal areas around New Zealand can be expected from those keen to avoid the limits that the new regime will impose once the new approach is announced. Councils would be forced to consider and possibly approve applications in what might turn out to be prohibited zones for aquaculture. Alternatively, where the applications were for space destined to be part of an AMA, this would pre-empt the ability of councils to tender the free space within the AMA.

10.  Therefore, there is a need to implement measures to forestall any increase in the number of applications for the occupation of coastal space for either marine farming or spat catching that could pre-empt the zoning proposed under the new regime prior to its implementation.

EXISTING PRESSURE

11.  There is already great pressure on coastal space for spat catching and marine farming. This pressure is likely to increase over time. For example, mussel farming is regarded as a relatively low risk, high return activity. At present there are applications for either mussel spat catching (and holding) or mussel farming over 35,000 hectares of space (exact figures are not available as the area covered by specific applications can change and some applications overlap).

12.  Many current coastal plans do not limit the areas in which aquaculture and spat catching can be applied for. This means that when councils consider the applications it is solely on a case-by-case basis that makes it difficult to assess cumulative effects. This is a concern to existing marine farmers and others, as over-allocation of space can result in a decrease in nutrient availability and slower growth of mussels as well as having an impact on the whole ecosystem.

13.  While conflicts concerning aquaculture and occupation of coastal space to date have been over developments taking place in sheltered waters, applications are now beginning to be received that are much larger and are for areas further from the shore and in more exposed areas. New technologies, which are in use overseas, will enable marine farming in these areas and plans need to provide for this while preventing a rush for space. Even plans with tight zoning in sheltered waters have tended to zone these offshore areas more loosely so that applications can be lodged and must be considered on their merits.

NEW APPLICATIONS

14.  Since 2000, the pattern has been for a number of large applications to be made in a region in a short space of time. The size of individual applications has increased over those of earlier years. Companies now act at a national level. This gives councils little warning of demand for space in their region and no time to consider amending plans to make proper provision for aquaculture.

15.  While the potential high returns from mussel farming partially explains the large number of applications, the first-come first-served process of the RMA has exacerbated the rush of applications. One application may lead to others where aspiring marine farmers feel that there is a risk that their future plans will be compromised by the available sea space being already taken.

16.  In other areas, where there are concerns about over-allocation, marine farmers may seek additional space to maintain total production in the face of falling nutrient levels or to allow an existing farm to spread out, which prevents others gaining space that could impact on growth in an existing farm.

EXISTINGMORATORIA

17.  There are existing local moratoria on marine farm development (but not spat catching) over parts of the coast, including Tasman and Golden Bays, the Hauraki Gulf and parts of Southland. These have provided a period with little marine farm development in some regions. Other areas, notably Canterbury and North Island west coast harbours, have no moratoria.

18.  These existing moratoria were imposed by Gazette notice issued under s4 of the Marine Farming Act 1971. This section has been repealed, but transitional provisions in the RMA (s 370 and s 371) mean that these moratoria remain in effect until new coastal plans become operative. These plans should have provided suitable rules for managing aquaculture and adequately controlling the spread of applications. However, as noted above, regional moratoria only apply to limited areas around the New Zealand coastline and, in those areas where moratoria do occur, the coastal plans have taken longer than expected to develop.

19.  In Marlborough, until 1999, there was also a moratorium over the Sounds that was instituted under the coastal tendering provisions of the RMA, although the tender itself did not proceed. When the moratorium was lifted, all parties assured DoC that provisions of the plan would be adequate to control aquaculture. Since then large areas have been applied for in areas where this was not foreseen; in offshore and mid-bay locations where aquaculture is non-complying. The rules applying to the non-complying zone in the coastal plan have not been sufficiently restrictive to place a limit on marine farming in that zone.

20.  The existing moratoria do not cover spat catching applications. Recently significant spat catching applications have been made in many regions where there are moratoria on marine farming. These applications will make zoning difficult, and, as more applications are received, the difficulty increases. Spat catching applications have been received over large areas in the Firth of Thames and in Tasman and Golden Bays. These applications could potentially make any new AMA zoning difficult and some spat catching is similar to marine farming in practice. However, spat catching permits under the Fisheries Act 1983 have a maximum term of 5 years.

21.  Concerns about toxic organisms and the effect of subsequent restrictions on the movement of spat and about the long-term sustainability of Kaitaia spat (which is New Zealand’s main source and is harvested from seaweed washed ashore) has also increased demand for alternative spat catching areas in the coastal marine area in other parts of the country.

RMA PROCESS– REGIONAL COASTAL PLANS

22.  Coastal plans should provide a framework for assessing applications and a set of rules under which marine farming development will occur. However, as noted in Paper B: “Improvements to the Coastal Planning Regime for Aquaculture”, the RMA only provides limited ability to councils to establish rules that limit the amount of space that can be developed. Coupled with a reluctance to be prescriptive in plans this has resulted in most current operative and draft plans having limited criteria against which to assess applications. In this situation councils have to consider the full range of issues when determining each application that is received for marine farming.

23.  If the overall aquaculture reforms are to be successful, the reform will need to provide contingency measures to stop a rush of applications being lodged. Even where councils have recognised that their plans are deficient, little can currently be done to stop the tide of applications while the new provisions of the RMA that are proposed in Paper B are enacted. Without contingency measures, and until the main reform Bill is enacted prohibiting aquaculture in areas outside of AMAs, councils can only deal with applications by changing their existing coastal plans or varying their proposed plans to provide AMAs.

24.  As the new tools to assist with prescriptive zoning will not be available to councils until after the main Bill is passed the rules applying to these zones may not be as effective as is intended.

25.  Variations to plans can also take some time to develop and implement. Plan changes or variations have some effect as soon as they are notified, and gain weight as they go through the submission and hearing, and possibly reference stages before becoming operative. Developing a plan change or variation should be possible within 6 months to a year. Auckland Regional Council is working on a plan change. Some councils could implement changes more rapidly as they have draft plans or variations going through the RMA process where the issues concerning aquaculture are not finally decided. As an example, Environment Canterbury have done this for harbours around Banks Peninsula. These councils could make some rapid changes to parts of their plans that could become operative as soon as any references to the Environment Court are determined and the Minister of Conservation has approved all or part of the regional coastal plan.

26.  In areas where plans have only weak rules that do not clearly specify AMAs then, under the proposals in Paper B, aquaculture would not be able to develop until the plan is revised to properly provide for AMAs. This will provide an incentive for applications to be made in such areas as soon as the new approach in Paper B becomes public knowledge. Without a moratorium in place these applications would be dealt with under the existing law and plans.

27.  Without any transitional measures the full implementation of the new approach to aquaculture management under the RMA could take between 1 and 5 years after enactment of the main aquaculture reforms. This will depend on where in the process of preparing a coastal plan regional councils are, how much of a problem competition for space is in each region, and how proactive the councils are.

Main Options

28.  There are three broad options for dealing with the initial period in which the new provisions for managing aquaculture are developed. These are: 

• Option 1: implement an immediate nationwide moratorium (to be lifted no later than 2 years after implementation) by legislation prior to enactment of the main aquaculture reforms
• Option 2: implement the main aquaculture reforms and make no provision for moratorium
• Option 3: provide councils with the ability to implement local moratoria as part of the enactment of the main aquaculture reforms.

29.  The problem of the rush for space is created by applications for new farms and extensions to the area of existing farms. The moratorium would therefore not cover applications for the continuation of an existing aquaculture operation over an existing site.

30.  Applications that have already been lodged with councils prior to the moratorium taking effect will create a problem in any moratorium. There are two possible alternatives:

31.  Given the issues outlined below, alternative (b) is favoured. Alternative (b) would also resolve issues arising from large spat catching applications, especially in Tasman and Auckland, and offshore marine farming applications in some other regions.

32.  Under alternative (a) zoning could go ahead and existing applications would be determined largely under existing plans. The end result would be very limited ability to tender space under AMAs in Marlborough, Tasman, the harbours of Banks Peninsula and South Westland because of the extent of existing applications. In the Firth of Thames, the Auckland Regional Council would have limited capacity to define an AMA and the applications could impact quite heavily on the viability of the small AMA already defined by the Waikato Regional Council for the eastern side of the Firth. Approvals could be granted in areas that more prescriptive zoning could identify as either prohibited or very restricted. These areas include parts of Marlborough (offshore and mid bay sites), east of the Coromandel Peninsula, offshore in the Bay of Plenty and Hawkes Bay and in Canterbury parts of the Banks Peninsula and Pegasus Bay.

33.  Under alternative (b) the bulk of existing applications would be put on hold. The moratorium would not negate the applications but would have the effect of ensuring that they were considered under the rules in new plans once the moratorium was lifted. This would mean that only those existing applications on which no decisions had been reached and that fell in AMAs would normally be approved. All of those in new prohibited zones would be declined. Based on an initial assessment many of the problems noted in Auckland (the Firth of Thames), Marlborough, Hawkes Bay, Bay of Plenty, Waikato and Canterbury (except Akaroa Harbour) would be resolved. Tendering would still be likely to be pre-empted in Tasman and possibly in South Westland and part of the Bay of Plenty. In Tasman the problem of applications outside of the preliminary AMAs identified by the Environment Court would be resolved, as these would be declined. Alternatively, applicants would be free to withdraw their applications, for example if it became clear from a proposed plan variation that their application covered a prohibited zone for aquaculture. Where applications had not been considered, a refund of fees from could be sought form the Council.

34.  With alternative (b) there could be argument about the costs applicants have sunk in applications. The further through the process an application had progressed, the greater the cost to the applicant should the application be put on hold. To mitigate these concerns, it is proposed that applications (including those for restricted coastal activities) which have reached the stage of being heard by regional councils, or which are further through the process than that, should be allowed to continue unaffected by the moratorium. Similarly, appeals relating to council decisions on coastal permits should be allowed to continue unaffected.

Analysis of Options

OPTION 1: NATIONWIDEMORATORIUM

35.  Option 1 is officials’ favoured option as it would address:

36.  Option 1 is the quickest way to implement a moratorium and would provide the maximum gain in terms of enabling proper planning and zoning to be undertaken without allowing decisions on zoning and tendering to be pre-empted. The Crown can implement a moratorium from the date of introduction of the moratorium legislation, whereas councils (Option 3) could only implement regional moratoria once legislation is in place.

37.  A disadvantage with Option 1, and to a lesser extent Option 3, is that it would delay all new applications while appropriate planning provisions are developed. Even with the moratorium the aquaculture industry will still be able to grow in the short term. The pool of existing approved coastal permits is significant.

38.  For example, since the moratorium was lifted in Marlborough in 1999, the Council has approved 2035 hectares of new marine farms, which is only slightly less than the total area currently occupied by mussel farms in the Marlborough Sounds. Currently under appeal to the Environment Court are 1646 hectares of the approved area and a further 457 hectares that was declined by the Marlborough District Council. To put these numbers into perspective, established farms occupy approximately 4000 hectares (with 2300 hectares in Marlborough) and the Aquaculture Council’s growth strategy (“Vision 2020”) envisages the whole industry occupying 17,000 hectares by the year 2020.

39.  In some areas the moratorium could be of relatively short duration. Where existing regional coastal plan provisions are adequate, even if only in specific zones, the moratorium could be lifted rapidly. Some plans, including Waikato, Auckland and Southland, are nearing completion and the moratorium could be lifted from parts of the region once the plan becomes operative. For example, in the Firth of Thames, the Waikato plan, which is not yet operative, has a prescriptive approach and an aquaculture zone, which reflects the approach being proposed in the overall reforms.

OPTION 2: IMPLEMENT THE AQUACULTURE REFORM PACKAGE AND MAKE NO PROVISION FOR MORATORIUM

40.  Option 2 would lead to significant problems with implementation of the new policy, particularly in the key regions for aquaculture.

41.  In some regions, such as Auckland, the draft plans do not have robust provisions for managing aquaculture but have significant applications lodged or pending. This means coastal plans must be amended if the aquaculture reforms are to be effective.

42.  Failure to address the short-term issues could therefore have the following consequences:

OPTION 3: COUNCILS PROVIDED WITH THE ABILITY TO IMPLEMENT LOCAL MORATORIA

43. Option 3 would allow local decisions to be made on both implementing moratoria and when they are lifted.

44.  The main disadvantage with Option 3 is that councils will not be in a position to declare moratoria until some time after the enactment of the legislation. During this period, large areas of coastal space would be subject to new applications for marine farm development. This contrasts with a Government moratorium retrospective to the date of introduction, which provides notice to potential applicants as to how their applications will be treated.

45.  The concerns over the delay in introduction of regional moratoria, could be mitigated by enabling councils to impose moratoria retrospective to the date of introduction of the legislation. The delay between announcing the legislation and the moratorium being fully implemented would be longer than where the Crown implemented the moratorium (Option 1). Option 3 would therefore increase the risks concerning the retrospective nature of the moratorium. Giving councils powers to impose retrospective moratoria also raises legal and constitutional issues.

46.  A further risk with allowing councils to establish regional moratoria is that some councils may use moratoria as a longer term management tool to prevent any use of coastal space for aquaculture rather than as a mechanism to provide some breathing space while they amend or implement their regional coastal plans.

Lifting the moratorium
 
47.  Any moratorium should be of limited duration and it should be lifted for each area once appropriate plan provisions are in place. It is proposed that the nationwide moratoria would last for two years from the date upon which the moratorium Bill comes into force unless it is lifted earlier in a particular region by Order in Council.

48.  Any extension to the moratorium would require legislation. Paper B proposes that aquaculture be prohibited except in discrete zones (ie AMAs) that will be identified in plans. This means that, provided the legislation implementing the wider aquaculture reforms is in place, marine farming development could not occur unless suitable plan provisions are in place. An extension to the moratorium would, therefore, only be required if it took longer than two years for Parliament to pass the main aquaculture legislation.

49.  It is envisaged that lifting the moratorium before the end of two years would be initiated locally, although formally the Order in Council would be recommended by the Minister of Conservation. Councils would apply to the Minister of Conservation for the moratorium to be lifted over their region or specified parts of their region. Such applications could be made in respect of operative regional coastal plans or in association with requests to approve a new regional coastal plan or plan change. The Minister would be able to recommend an Order in Council to lift the moratorium subject to being satisfied that:

50.  Currently seven regional coastal plans are operative. These are Wellington, Taranaki, Manawatu/Wanganui, Hawkes Bay, West Coast, Chathams and Otago. Little marine farming is found in these regions and it is likely that plan changes will be needed to align them with provisions of the main reform Bill. Some other regions have almost completed their coastal plans and those are likely to be forwarded to the Minister of Conservation for approval during the term of the moratorium. Where these plans contain adequate provisions controlling aquaculture, then the Minister could recommend an Order in Council lifting the moratorium over either the whole region or over parts of it. This will mean that plans (such as Auckland’s) that deal with the bulk of coastal planning matters can be implemented while variations to implement the AMA approach for aquaculture are prepared.

51.  In many regions with nearly completed plans, the problems often relate only to part of the coastal area. For example, in Marlborough the most general concern is about the zone where aquaculture is a non-complying activity. Similarly in Waikato the proposed plan zoning for the Hauraki area appears to be robust. However, on the west coast (of the North Island) and open sea to the east of the Coromandel the council may need to review the rules in the plan.

52.  As well as rules concerning zoning, coastal occupation charges may be applied through provisions of a coastal plan. Some councils may decide that imposing such charges could help moderate demand, and may address this issue with variations to their plans along with amended zoning.

Ensuring institutional capacity
 
53.  The issues dealt with in this paper surrounding the status of regional coastal plans with respect to the intended outcomes of the aquaculture reforms, and the imposing and potential lifting of moratoria, are complex. It is proposed that officials report to Cabinet by August 2002 on how to deal with any issues arising relating to the capacity of departments and councils to implement the new policy.

Urgency required in enacting the legislation
 
54.  It is proposed that the nationally implemented moratorium should be imposed retrospective to the date the legislation is introduced. However, until the legislation is enacted, councils will not be able to refuse to receive and process applications lodged after the introduction of the legislation. This means that marine farmers could apply for coastal permits for aquaculture after the introduction of the legislation, and, under normal circumstances, the council would have considered and decided the applications before the legislation was enacted.

55.  There are two methods for addressing this problem.

• Either the legislation could be introduced, and passed under urgency so that there would not be time between the date of introduction and the date of enactment for applications to be lodged and determined; and with retrospective application to nullify any applications that were lodged during that period,
• Or the legislation could be passed without urgency and take effect retrospectively to negate applications lodged and resource consent decisions granted.

56.  Speedy enactment is preferable because the retrospective negation of applications can involve a complicated rescinding of the consents already granted and activities already commenced. The recommended course minimizes the retrospective element of the package.

Treaty issues

57.  The purpose of the moratorium is to prevent applications from being lodged while the new zoning and tendering regime is implemented. Its effect will be to delay all applications, including those made by iwi. However, it is expected that more prescriptive zoning will make rules clear and reduce delays and uncertainties in the consideration of applications.

58.  Some treaty settlements (eg Ngai Tahu) have provisions concerning the right of first refusal by iwi on areas subject to coastal tendering. By preventing tendering from being preempted by applications, the moratorium will facilitate the delivery of these commitments.

Financial implications

59.  The imposition of the moratorium would not have financial implications for Government beyond the cost of preparing and passing the legislation. It is expected that the costs would be met out of existing baselines.

Human Rights Implications

60.  The proposals in this paper are unlikely to have implications in terms of the Human Rights Act 1993, and are unlikely to be inconsistent with the New Zealand Bill of Rights Act 1990. A final view as to whether the proposals comply with the Bill of Rights Act will be possible once the legislation has been drafted.

Consultation

61.  This paper was prepared by the Ministry for the Environment and the Ministry of Fisheries in consultation with Treasury, the Department of Conservation and the Department of Justice. Wider consultation on the proposals in this paper was not undertaken because of the sensitivity of the content.

62.  During consultation on the aquaculture discussion paper a number of people and groups made some general comments and suggestions on moratoria. As these addressed no particular proposal (it was not addressed by the discussion document) the weight of opinion cannot be gauged from this comment. Some council staff would welcome the space created by a moratorium. Other council staff, notably from Marlborough, indicated that they consider that moratoria do not resolve issues and that they prefer to work through the normal planning process. Others, including some marine farmers, environmental groups and residents groups have indicated a desire for a moratorium. Canterbury Regional Council has written to Ministers seeking a moratorium in Canterbury.

Legislative Implications

63.  The proposals in this paper will require legislation.

64.  At this stage there is no slot in the 2001 legislative programme for the measures outlined in this paper. It would be highly desirable for the moratorium legislation to be passed this year if possible. The remainder of the aquaculture reform package is intended to be on the 2002 legislative programme.

Regulatory Impact and Business Compliance Cost Statement

65.  A regulatory impact and compliance cost statement is attached. The main benefit of Option 1 is that it will allow the full net benefit to be realised from implementing the new regime for aquaculture. This is because the moratorium will restrict the amount of coastal space that can be allocated for new marine farm development before the new regime for aquaculture is put in place. The Regulatory Impact and Business Compliance Cost Statement for the overall aquaculture reforms in Paper A provides a fuller statement of the costs and benefits involved.

66.  There are no business compliance costs associated with the imposition of a moratorium on new marine farm developments. As the moratorium prevents any new developments taking place, this precludes the generation of costs for existing and new marine farming business.

Publicity

67.  No public information will be released prior to the introduction of the legislation.

68.  A publicity plan will be prepared to guide the release of information to councils and interested parties. Information on the operation of the moratorium and its impact on planning will need to be provided to regional councils as soon as is practical after the Bill’s introduction. If applications are lodged councils will have to receive them because the legislation will not yet be in force, so they will have to advise applicants that the legislation will nullify their applications once it is enacted.

Recommendations

69.  It is recommended that the Committee:

1  agree that a short Marine Farming Moratorium Bill be introduced to:

2  agree that the intent of the moratorium is to prevent councils from processing coastal permit applications for aquaculture until such time as they have satisfactorily developed rules in their coastal plans providing for zones for aquaculture outside of which aquaculture is prohibited, consistent with the intended outcomes of aquaculture reform

3  agree that the moratorium cover both:

4  agree that the moratorium not cover both:

5  agree that the moratorium will last for two years from the date upon which the legislation comes into force unless it is lifted earlier for specific regions or parts of regions by Order in Council, recommended by the Minister of Conservation, taking into account such matters as the adequacy of the rules in the operative regional coastal plan with respect to aquaculture

6  note that it is envisaged that the process for considering early lifting of the moratorium for specific regions or parts of regions would be initiated by councils and would allow consideration of community expectations

7  agree to seek the earliest possible slot in the legislative programme for introducing the proposed Marine Farming Moratorium Bill

8  agree to seek urgency for the introduction and passage of the Bill to avoid there being time for coastal permit applications to be lodged and decided in the period between introduction and enactment

9  note that Councils will not be able to refuse to receive and commence processing applications lodged after the introduction of the legislation, until the legislation is enacted.

10  direct the Ministry for the Environment, in consultation with other departments to prepare drafting instructions for Parliamentary Counsel for a Marine Farming Moratorium Bill to give effect to the decisions in this paper that require legislative change in time for introduction to Parliament in 2001

11  direct officials from MfE, DoC and MFish to jointly prepare information for councils on the moratoria and the process for lifting it

12  direct officials to report back to the Committee by August 2002 on any issues arising relating to the capacity of departments and councils to implement the moratorium and the more prescriptive approach to coastal planning