Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill

Thank you very much for the opportunity to take a call around Part 1A. I want to focus this contribution on two elements of the Minister for the Environment’s Supplementary Order Paper 100. These are the amendments to clause 17 and the new clause 17A. These are two clauses that are representative of the concerns that were raised by members of the Opposition during the debate on Part 1 around matters being included in the Supplementary Order Paper that we believe need more attention, certainly need more explanation, and could have benefited from a referral back to the Local Government and Environment Committee.

In particular, in that regard I want to note the amendment to clause 17, which does not even rate a mention in the Minister’s explanatory note of her Supplementary Order Paper. Clause 17 does not get a mention there. I am just checking right to the end of the explanatory note, and no—no mention whatsoever of the justification for the amendment to clause 17. It manages to get new clause 17A in there briefly, but there is absolutely nothing in the explanatory note to tell the Parliament why there should be the replacement of clause 17(3) that has been suggested in the Supplementary Order Paper. That is why the Opposition parties want this Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill referred back to the Local Government and Environment Committee, because in the amended clause 17(3) we have a change that appears to create a very large loophole. There is no explanation from the Minister in her explanatory note. She has just dumped it on the Table and said: “Accept this.”

Well, if we have a look at the proposed new clause 17(3) that is here, we see in it, among other things: “If the person undertaking the activity applies for a marine consent within the period described in subsection (2), the activity may continue after the period has expired until the application—… (b) is returned as incomplete under section 42 and any objections and appeals are determined.” So what that clause could be doing is saying that if someone has an application and it is returned by the Environmental Protection Authority as being incomplete, that process can carry on. That process can actually carry on ad infinitum, because when you look at the referenced clause 42, it actually says that every time it is returned—if it is incomplete and then it is returned—it is considered to be a new application. So we could be launching into a continuous process here for an application that is returned as incomplete.

But we have got no explanation from the Minister as to why we should be agreeing today to allow for a situation that would see an incomplete application simply carry on—no explanation whatsoever from the Minister for that. There may well be a good explanation. This may well not be the giant loophole that it looks like, but from this side of the Chamber it is very hard to tell. An incomplete application is an incomplete application. It has not met the rules. It should not be being processed, except that under this provision it gets an exception, and then it gets to come back again as a new application. So the Minister may want to take a call and explain to the Committee, having completely failed to put any explanation in the explanatory note on this matter, why that clause has arrived.

💬 Gareth Hughes: Maybe she has an old legal opinion about it.

A legal opinion! That would be right. We had a bit of a struggle with that along the way. I hope the Minister does take a call, because this is the problem with dropping a large Supplementary Order Paper like this on the Table without the opportunity for proper select committee analysis of it.

Then we come to the new clause 17A, which at least does get a mention in the explanatory note. This is a clause that allows for planned petroleum activities to commence and continue. Let us be absolutely clear about what this new clause is doing. It is talking about planned activities—not just existing activities, but planned activities. So what this does is it says they both “may commence and continue”. What stage are some of the activities around New Zealand up to at the moment—whether they are existing or planned? This clause is effectively saying that if it is planned, it can carry on. It is the green light for some projects that have potentially been causing concern around New Zealand.

So we have got two clauses here in Part 1A that I believe have come to this Committee without adequate explanation, and that appear to me to look like clauses that are loopholes. We have to, I believe, have a more adequate explanation.

One of the most eloquent submissions that we had at the Local Government and Environment Committee was actually the last submission. That was from a masters ecology student, Lan Pham, from Otago University, and she said: “[You can] acknowledge that the economic benefits which may stem from utilisation of resources contained in the EEZ and [extended continental shelf] may be enormous, but the ecological consequences associated with some activities would dwarf those economic benefits.”

The costs associated with the Deepwater Horizon blowout in the Gulf of Mexico—and that, of course, was an exploratory well, not a production well—were well over US$15 billion. That reflects the huge environmental and economic risks associated with deep-sea oil drilling. That is why my colleague Gareth Hughes’ Supplementary Order Paper 102, which would prohibit deep-sea oil and gas exploration or production in depths of more than 200 metres, is essential. We have seen, with the grounding of the Rena, just how difficult it is to manage an oil spill. That, of course, happened close to New Zealand’s largest port, it occurred in good weather, and it was within the one-in-100-year spill event for which New Zealand has a capacity to respond.

The Government will claim that the bill, the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill, is not about oil spills, and that is because it is in a state of denial that oil spills are a potential consequence of deep-sea oil exploration and oil drilling. When the Ministry of Economic Development did a comparative review of the management of offshore petroleum operations after the Deepwater Horizon disaster in the Gulf of Mexico, it had a number of important conclusions. That review highlighted that these accidents, of course, were unpredictable and that we had very limited resources and expertise available in New Zealand to regulate or seek to control these sorts of disasters.

So when you combine this with the findings of last year’s formal review of our oil pollution response capability, which concluded that we have got unpredictable sea conditions around New Zealand and that this and our low sea temperatures mean that controlling an offshore oil spill would be “extremely difficult”, and that we have got in New Zealand the potential for a similar breakdown in oversight as occurred in the United States, because you have got several different agencies having varying responsibilities, that is why this Supplementary Order Paper in Gareth Hughes’ name needs to pass.

The Government is spending several billion dollars on responding to the Christchurch earthquakes. That is a major cost on our economy. Why would we contemplate having a similar economic cost from a disastrous oil spill from deep-sea oil drilling and exploration? That is why the Supplementary Order Paper should pass. Thank you.

I have a small announcement to make. The votes on Supplementary Order Papers 96 and 101 were incorrectly announced. The result should have been 48 in favour and 71 against, in each case. There is no change to the outcome of the vote and the record will show the correct result. My apologies to the Committee.

I want to talk about the Minister’s amendments set out on Supplementary Order Paper 100, and I want to start with new clause 17A, which is for planned activities, not just existing activities, and I should say that these are transitional arrangements. This is recognising that there is already some activity taking place in the exclusive economic zone. Obviously, there needs to be some way of bringing them into this legislation, without being too disruptive to those who are already carrying out activities.

When we were discussing the transitional provisions at the Local Government and Environment Committee, there were some concerns that we had around those existing activity provisions. We just wanted to make sure that there were not going to be any gaps that might result in some kind of accident because it fell through a gap that we put in when we put these transitional provisions in place. We were reassured, I think, by and large—I mean, there were some arguments around some of the time frames and whether it was too short or too long, and industry had one point of view and the environmental organisations had another point of view. But, ultimately, I think we got to the point where we thought: “OK, well, the provisions for existing activities—probably there are not too many gaps in those.”

The reason that we were convinced of that is that it kept being raised time and time again that this was not about stuff that was just planned—this was about stuff that was already happening. So if we were to just shut that down, it would mean actually stopping something that was already happening, as opposed to something where someone had said: “Well, we’re intending to do this, but we haven’t started yet.” That was the point that reassured us. So to suddenly see that in this Supplementary Order Paper we are now extending out transitional provisions for planned activities, which we were reassured at the select committee would not happen, is really concerning—very, very concerning.

I would like the Minister to take a call on this, in all sincerity. I just want to read this out. The definition of “planned petroleum activity”, it says here, “means an activity involved with the exploration, prospecting, or mining for petroleum if, before the new regulations come into force,—(a) the exploration, prospecting, or mining for petroleum with which the activity is involved is authorised by a permit”—basically under the Crown Minerals Act—“and (b) the activity has not commenced.”

What I would like to know from the Minister is what this means for the permit that has been issued on the East Coast of the North Island to Petrobras. At the moment it has carried out seismic surveying, so that would be considered an existing activity, and there are clauses to deal with that and that is all fine and good. It has not yet done any drilling. I want to know whether this transitional provision means that because it has been given a permit by the Crown under the Crown Minerals Act, and because that activity has not yet continued, is it going to be able to go out and drill in the Raukūmara Basin, which is 3,000 to 4,000 metres deep, without having to get a marine consent and without having to go through a full process that involves public consultation and the ability for the community that I live in on the East Coast to have a say?

Maybe I have got that wrong, but my reading of the bill is that that could be how this is interpreted. I would really like the Minister to reassure me that this is not saying that just because something was planned, and someone has been given a permit, they are now basically exempt and will not have to go through the processes that we are setting out in this piece of legislation—they will not have to go through those processes because it was a planned activity.

That is very different from an existing activity, where someone is already doing something, and it would be unreasonable to say: “You now have to stop and go through all these processes.”, because they have made investments, and that is absolutely fine and good. But where they have not started that activity, and where the structures are not currently in place, they should have to go through the full processes in this piece of legislation.

I would like some clarity from the Minister around that, because obviously that will be very concerning as we have the Government going out and issuing more and more permits under the Crown Minerals Act. Before this legislation has gone through Parliament, before the regulations have been finalised, it is out there issuing permits. That now suddenly carries much greater legal weight than this clause in the Minister’s Supplementary Order Paper, because under the bill as it came back from select committee that did not mean that just because they had the permit they were going to be able to avoid the processes in this bill. They would still have to go through them because they were not already doing that activity. This now says—or suggests to me—that they do not have to go through those processes, that they could just go out there and drill in the Raukūmara Basin without going through a process that ensures that environmental protection is considered before they start carrying out those activities. I would like the Minister to respond to that.

And then clause 17, and replacing clause 17(3) and introducing a major loophole, is also an issue. Maybe even if there was a time frame that was inserted within that clause—

💬 Hon Amy Adams: There is.

The Minister says there is—

I am happy to take a call and clarify that matter, and I have just double-checked it between Mr Robertson’s first contribution on it. The way that the wording of clause 17 works is that if, in fact, the application is returned as incomplete, then they have an ability to submit a new application but within the original 6 months, which was provided in clause 17(2) in the original bill. So it is not circular—it cannot go on and on. They can submit a new application, but the provisions in clause 17(3) and (4), as set out in the Supplementary Order Paper, make it clear that that can happen only in the original time frame set out in clause 17(2), which is the original 6 months.

I thank the Minister for the Environment for that clarification. Unfortunately, section 17(2) actually says: “The activity may continue without a marine consent for a prescribed period or, if no period is prescribed for the activity, for 6 months from the date …”. One of the other issues that I wanted to raise was the extensive use of regulation in this area. Right through the bill we talk about prescribed periods. We were assured at the Local Government and Environment Committee that that prescribed period would pretty much be fewer than 6 months, but we do not have any certainty around that. The prescribed period could be longer than 6 months, in which case that would become a concern.

On the issue that the Minister has just clarified, and I thank her for doing that—and I am going to have to go back and have another read through it in light of what the Minister has said—I do think it might be good, because I know that clause 40, I think, which is around the incomplete applications—

💬 Hon Member: 42.

—42—does not have a time period in it. I wonder whether for clarification it might be useful, because although I take on board what the Minister has said, I am not necessarily convinced. As I said, I will have to go back and have a read of it, but maybe having a time frame in there just to clarify that there is not a loophole will be in everyone’s best interest. We will certainly go away and have a look at the amendments, but the amendments might be better if they are drafted by the Minister and her very, very able—

💬 Hon Amy Adams: PCO.

—Parliamentary Counsel Office. That would be useful. But I do think that would just clarify it, because when I read through it—and we did a lot of work on clause 17 at the select committee—it did not jump out to me that it was that absolutely clear that once it was sent back as an incomplete application, that time period still applied. Maybe clause 42 is where that clarification can be put in to say that this does not now suddenly just become never ending. I thank the Minister for that.

Coming back to the issue of clause 17, I think it is a very real issue about what that means. I am sorry the Minister did not clarify new clause 17A about planned activities and what that might mean where permits are now currently issued, because I know that there is deep concern amongst a lot of communities around the country that suddenly this is providing an awful lot more legal protection around the permits that are given out under the Crown Minerals Act, or legal weighting, and the ability to go on perhaps without having to go through the processes that we are setting up here. I would be, as I said, very, very concerned if on the East Coast of the North Island, where the activity has not started, where structures are not in place, the companies that have been issued the Crown Minerals Act permits were suddenly able to just go ahead and carry out drilling, when in fact none of that has been done and we understood that they would have to go through this process. I look forward either tonight or the next time we discuss this to the Minister actually being able to address that.

It is good to hear that contribution from the Minister for the Environment that it is not circular, and I agree with the recommendation by the member Moana Mackey that maybe it could be clarified a bit, because what we do not want to see is a whole bunch of legal challenges—a feeding frenzy for lawyers—as we try and work out what these laws actually mean. But it would be good to get more clarity from the Minister around new clause 17A. What does it actually mean—

I am sorry to interrupt the member. The time has come for me to report progress.

House resumed.

The Chairperson reported the Appropriation (2012/13 Estimates) Bill without amendment and progress on the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill.

Report adopted.