June 2014 Māori Law Review

Māori in the seafood sector (fisheries and aquaculture) – the year in review

Justine Inns, partner at Ocean Law, reviews Māori involvement in the seafood sector.

Discussion

The economic state of the sector

Commercial seafood production accounts for around 3.5% of New Zealand’s total national exports, and the Ministry for Primary Industries has estimated $1.51 billion in seafood export earnings for the year ended June 2013. 1 Export markets are diverse, but China has become the sector’s largest single export market in recent years, accounting for more than 20% of earnings and certain to increase in importance for some time yet.

This level of earnings is fairly static compared with preceding years, but seafood export earnings are forecast to increase by an annual average of 4.5%, rising to $1.8 billion by 2016/17.  This prediction is based primarily on achieving higher prices and assumes only modest increases in the volume of wild capture and aquaculture that will be exported over the period.

Wild capture fisheries

The export volume of wild capture fisheries is only expected to increase by 0.2% per annum, with growth coming from fish stocks that have completed rebuild programmes, and may have higher catch limits set to increase use.  It is generally accepted that there is little potential for further growth in wild capture production beyond this.

It is therefore essential to develop new and higher-priced products and markets in order to increase export revenue.  Research initiatives, such as the Precision Seafood Harvesting programme, 2 are seen as key to increasing the value of seafood products. The programme began in April 2012 and is focused on developing new harvesting technology to land fish fresher and in better condition.  It is jointly funded to the tune of $52 million (over six years) by the country’s three largest fishing companies: iwi-owned Aotearoa Fisheries Limited (AFL), the Sealord Group, and Sanford, as well as the Government’s Primary Growth Partnerships (PGP) fund.

Overall financial results for AFL for the year ended 30 September 2013 are mixed.  AFL’s own operations, focused on inshore fishing, pāua, kōura (crayfish), and farming of Pacific Oysters (through its Pacific Marine Farms subsidiary) performed strongly, reporting a gross profit of $14 million; $2 million more than the previous year and 7% above budget.

However, once AFL’s 50% share in Sealord Group was factored in, the picture became less rosy, with Sealord reporting a total loss of $46 million.  As a result, AFL reported an overall loss of $6 million, its first loss since the company was formed in 2004.  The Māori Fisheries Act 2004 (MFA04) requires AFL to distribute 40% of its net profit to iwi, by way of a dividend.  Unsurprisingly, AFL was unable to pay in 2013.

The Sealord loss resulted from the disposal of its interests in Argentinian company, Yuken, after several years of loss on the investment.  This was due in part to rampant inflation in Argentina increasing fishing costs by as much as 75% per annum.  Low local catches of squid, Southern Blue Whiting, and other pelagic species also contributed to the loss, though total catch across all species exceeded expectation.

In October 2013, AFL, Sealord and Te Ohu Kaimoana (Te Ohu) collaborated to purchase key assets of Auckland-based Anton’s Seafoods Limited, including a large processing facility and a significant package of quota, particularly in the Orange Roughy fishery.  The quota package was shared 50/50 between Sealord on the one hand, and AFL and Te Ohu on the other, with the latter package recently offered for sale to iwi wishing to partner with Sealord for a more active involvement in the industry.

Aquaculture

Aquaculture comprises only 17% of total seafood exports and suffered declines in both volume and value for the year ended June 2013, although the value of exports from this sector is forecast to increase by an annual average of 6% over the next 3-4 years.

Mussels, oysters and salmon are the three main species farmed in New Zealand, with green-lipped mussels accounting for around three-quarters of the sector’s earnings.  Mussels suffered a decline in export volume for a number of reasons, including La Niña weather conditions and drought, while the availability and quality of mussel spat has increasingly constrained development.  Another PGP-funded project, SpatNZ, is attempting to address this issue through selective breeding of spat in hatchery conditions. 3

Oyster farmers continue the slow process of recovery from the OsHV-1 virus that hit farms in Northland in 2010, causing the loss of up to 80% of juvenile oysters on some farms, with level of production remaining well below historic highs.  This appears to be a worldwide issue, with decreased international production similarly attributable to disease issues.  Reduced international supply and strong demand raised export prices, largely offsetting lower volumes.

Similar issues with global salmon supply since 2009 have seen demand for New Zealand-farmed salmon grow strongly.  The gruelling experience of The New Zealand King Salmon Company, New Zealand’s largest salmon farmer, in applying for consent to significantly increase their number of farm sites in the Marlborough Sounds (see below), has resulted in some pessimism about the capacity of the sector to expand.

Sadly, late 2013 saw the demise of one of New Zealand's largest mussel farming companies.  Greenshell New Zealand, which had been named Food and Beverage Exporter of the Year by industry group ExportNZ only months earlier, was placed in receivership by its bankers.  Iwi-owned mussel farms in the Hauraki Gulf that had been involved in joint ventures with Greenshell were impacted by this receivership, and the ultimate purchase of the bulk of the company’s assets by Sanford marked another stage in the continuing consolidation of the aquaculture industry by a small number of large, vertically-integrated companies.

Commercial fisheries developments

The Fisheries (Foreign Charter Vessels and Other Matters) Amendment Bill continued its slow progress through Parliament in 2013-14.  The Bill, introduced in February 2013, is the Government’s response to concerns about employment conditions of crew on foreign-owned and operated vessels chartered by New Zealand companies to fish in New Zealand waters. The primary objective of the Bill is to require all vessels fishing in New Zealand waters after 1 May 2016 to be ‘New Zealand-flagged’ (registered under the Ship Registration Act 1992).  In addition, the Bill would significantly expand the role of the Chief Executive of the Ministry for Primary Industries (MPI), through new powers and discretions to refuse, suspend, cancel, or place conditions on the registration of vessels under s 103 of the Fisheries Act 1996 (FA96).

The Bill prompted concern that these measures would adversely impact the value of the Fisheries Settlement quota owned by iwi. It was feared that the policy would result in a reduction in the total number of ships in the deepwater fleet (reducing competition to purchase ACE), increased compliance costs and decreased certainty, which would discourage investment.  An Iwi Leaders’ Group (ILG) was convened to engage with the Government.  While strongly committed to fair employment practices and to maintaining New Zealand’s international reputation, the ILG sought to ameliorate the potential negative impacts of the Government policy.

It seemed that these concerns had been heard and addressed, at least to some extent, when the Primary Production Select Committee reported the Bill back to Parliament on 25 July 2013. 4  The Committee recommended a number of amendments to constrain the powers of the Chief Executive of MPI, by limiting their application to foreign-owned vessels, adding provision for a review and appeals process for those parties affected by a suspension, and removing the power to cancel registration.

The Select Committee considered, but ultimately rejected, industry submissions (supported by the ILG) that advocated an alternative to the re-flagging policy that would see all vessels in New Zealand waters legally “deemed” to be operating under New Zealand jurisdiction.  This alternative was seen as a means of achieving the Government’s objectives, while reducing the risk that vessels from some countries would be unable to re-flag to New Zealand as a result of domestic legal complications.

The Committee did, however, recognise the need to introduce some flexibility in certain circumstances and recommended the addition of provisions for exemptions to the re-flagging requirement where the Chief Executive of MPI considered an exemption would be in New Zealand’s interest, the vessel would come under sufficient local control and:

  • The vessel is fishing for tuna on a short-term, seasonal basis;
  • The vessel will be used for fishing-related research approved by MPI;
  • A significant proportion of the ACE caught by the vessel operator as at 30 April 2012 was derived from Fisheries Settlement quota, with this exemption available only until 2020; or
  • Exceptional circumstances specified in an Order in Council exist.

In respect of the settlement quota exemption, the Select Committee report included the extraordinary statement that:

The committee received amendments immediately prior to deliberation. Unusually the committee did not receive written departmental advice pertaining to these amendments. Acting on reliance on the oral advice we received from officials we have recorded below our questions and their responses.

We were concerned that unless clearly defined, that clause could result in operators with only a relatively small proportion of Annual Catch Entitlement (ACE) derived from settlement quota, or those that might seek to acquire a settlement quota could seek to qualify for an exemption beyond the intent of the Act.

We note that the exemption is limited to ACE held on 30 April 2012, which effectively means the holdings cannot be manipulated post implementation of the Act.

We note that settlement quota is only quota defined as such in the Act and the Maori Fisheries Act.

It appears that the Committee’s recommendation of an amendment to provide for a limited ‘settlement quota’ exemption came as a result of a very late recommendation by officials from MPI.  It seemed surprising, therefore, that the Minister apparently distanced himself from the recommended amendment within hours of the Select Committee report being tabled in Parliament, with media reporting that “he had some concerns and would be seeking further advice.” 5  The issue soon saw the Government caught between its support parties, with the Māori Party refusing to support the Bill if the settlement exemption was removed. This saw the Bill languish low on the Order Paper for many months.

When the Bill received its Second Reading on 15 April 2014, the Minister (in a speech read on his behalf by the Associate Minister, Hon. Jo Goodhew), 6 announced that it was the Government’s intention to remove three of the four exemptions recommended by the Select Committee, leaving scope for foreign-flagged vessels to be used only for fisheries-related research approved by the Chief Executive of MPI.

It is likely that the Bill will be passed prior to the 2014 election in the form proposed by the Government, making changes in the make-up and control of the deepwater fishing fleet almost inevitable in the lead-up to the May 2016 implementation date.

A recent decision of the Court of Appeal underlined the fact that chartering vessels to fish in New Zealand is far from a risk-free proposition for foreign owners. In The Ministry for Primary Industries and another v Sajo Oyang Corporation and others [2014] NZCA 46, the Court considered who had standing on the question of whether there existed “special reasons relating to the offence,” such that the Court should order that forfeiture of a vessel or other property not occur.  Virtually all serious offences under the FA96 include, as a mandatory penalty, forfeiture of property used in the commission of the offence.  Such forfeiture is an automatic consequence of conviction unless “the Court for special reasons relating to the offence orders otherwise.” 7  In the situation from which the Sajo Oyang case arose, officers operating the vessel in question had been charged and convicted of serious offences involving the illegal discarding of fish.  Before convictions were entered (on one of the officer’s convictions at least), the vessel’s Korean owner, Sajo Oyang Corporation, and New Zealand charterer,  Southern Storm Fishing (2007) Ltd, sought to intervene and put evidence before the Court in an effort to persuade it that special reasons existed, such that forfeiture should not occur.  As the Court of Appeal noted ([2014] NZCA 46 at [37]):

Prior to the present case, it appears that the issue for determination has not been the subject of detailed consideration by the higher courts.  The probable reason is that, until recently, the Ministry has not objected to third parties making representations to the Court under the special circumstances exemption.

Judge Saunders, in the District Court at Christchurch, declined the owner and charterer leave to appear, a decision that was subsequently set aside in the High Court by Dobson J on judicial review.  The Court of Appeal summarised Dobson J’s reasoning for finding that the District Court had erred at [21]:

Dobson J concluded that the first and second respondents ought not to have been precluded from addressing the Court on the special reasons exception. He saw a distinction between the “core elements” of the criminal proceedings which he viewed as involving determination of whether the charges were established,  and  the  consideration  of  the  appropriate  penalties including forfeiture.  It would, the Judge said, be inconsistent with the right to natural justice recognised by s 27 of the New Zealand Bill of Rights Act 1990, and more generally with minimum standards of fairness, to deny standing to non-parties to criminal  proceedings  who  have  an  interest  in  preserving  property  that  is vulnerable to forfeiture.  He noted the concession made on behalf of the Ministry that the requirement to establish manifest injustice on an application for relief from forfeiture under s 256 is materially more difficult for an owner of property than establishing special reasons for non-forfeiture under s 255C.  He concluded that the right to natural justice could not properly be vindicated by the opportunity to be heard on a later application for relief against forfeiture.

The Crown succeeded in having Dobson J’s decision overturned by the Court of Appeal, with the higher court ruling that a non-defendant owner had no standing on the issue, being particularly swayed by the need to protect the fair trial rights of the defendant ([2014] NZCA 46 at [49]):

Another important contextual factor relevant to the contention of fairness is that the third party’s rights ought not to trump or conflict with those of the defendant in criminal proceedings. We have concerns that the defendant’s rights to a fair trial under s 25 of the New Zealand Bill of Rights Act could be compromised by the intervention of a third party at the stage the court is considering the special circumstances exception.

The Supreme Court subsequently refused leave to appeal the Court of Appeal decision. 8

The deepwater fisheries sector has also had to grapple with the implementation of the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (the EEZ Act) over the past few months, after regulations were promulgated defining activities that would be permitted under the EEZ Act and those for which a marine consent could be sought on a non-notified basis. 9  Applications to the Environmental Protection Agency (EPA) for consent to carry out seabed mining activities have caused consternation for fishing interests.

An application by Trans-Tasman Resources Ltd was made to undertake an iron sand mining project in an area covering 65.76km2 in the South Taranaki Bight, 22 to 36km offshore from Patea.  The proposal was for excavation of up to 50 million tonnes of seabed material per annum for a term of 20 years, with the excavated material taken aboard a processing vessel, where iron sand would be extracted and other material (around 45 million tonnes per year) returned to the seabed.  Fishing interests, including iwi, expressed intense concern about the application and the proposal’s potential effect on aquatic habitats. 10

Hearings concluded on 19 May 2014. The decision-making committee of the EPA issued its decision on 18 June 2014. Marine consent was declined. 11 Trans-Tasman Resources Ltd has appealed from that decision.

The application by Chatham Rock Phosphate Ltd to mine phosphate nodules from the Chatham Rise is perhaps even more ambitious. The permit would initially cover an 820km2 area, but could potentially extend over as much as 10,192km2 depending on monitoring results and environmental investigations.  At least 30km2 of seabed would be targeted annually, with the company having an annual minimum production target of 1.5 million tonnes of phosphate nodules.  The application was lodged on 14 May 2014 and its completeness (in terms of s 39 of the EEZ Act) is currently being assessed by the EPA. 12

Even at this early stage in the process, fishing interests have expressed concern with the application, drawing particular attention to the anomaly that allows the potential for mining activities to be conducted in Benthic Protection Areas (BPAs) created under fisheries legislation. 13  The BPAs were created in 2007 at the instigation of the fishing industry and were designed to protect representative and untouched ocean biodiversity on the seafloor.  Fishing within BPAs is closely monitored and methods that could damage the seabed are prohibited within them.  While the logic of the fishing industry position has force, it is difficult to see how this anomalous position could be resolved without legislation.

The tragic loss in March 2012 of the Easy Rider and eight of the nine people aboard sent shockwaves through the close-knit Tītī (Muttonbird) Island community of Murihiku (Southland).  The Easy Rider was a small fishing vessel owned by AZ1 Enterprises Ltd, and was on a voyage transporting passengers and equipment to the Tītī Islands when it was lost.  The sole shareholder and director of that company was Gloria Davis, the partner of the vessel’s skipper, Rewai Karetai.

On 18 March 2014, Ms Davis and the company were each convicted of:

  • Two charges under the Maritime Transport Act 1994 (of operating the vessel knowing that Mr Karetai did not hold the appropriate skipper qualification, and permitting it to be operated in a manner which caused unnecessary risk to those aboard); and
  • One charge under the Health and Safety in Employment Act 1992 (of failing to take all practicable steps to ensure no contractor or sub-contractor aboard the vessel was harmed). 14

The company was recently sentenced to fines totalling $204,500, and Ms Davis to a $3,000 fine and 350 hours of community service.

Ms Davis, who defended herself, argued that the voyage in question was not a commercial one and that the standards applied to it by Maritime New Zealand failed to take into account the Easy Rider’s “multi-functional” purpose.  While the decision refers to submissions that the voyage in question was for ‘recreational’ purposes or a ‘pleasure voyage’, submissions made to the Court by the Rakiura Hananui Whanauka Incorporation o Mamoe, expressing concern that the outcome of the decision might affect the right of Rakiura Māori to participate in the annual tītī harvest, indicate that the relationship between voyages such as this and the exercise of customary rights was in many minds.

More broadly, the decision has served as a sobering reminder to many other ‘mum and dad’ fishing operations of the very real exposure of family members who are principals in name only, but who can very easily be left facing the legal consequences for the errors of others.

Review of Māori Fisheries Act entities

Iwi attention is increasingly turning to the upcoming review of entities established under the MFA04, with Mandated Iwi Organisations (MIOs) and other entities being called upon to appoint a Committee of Representatives by 21 May 2014.  The role of the Committee of Representatives will be to set the Terms of Reference for the review, appoint the reviewer, receive the report of the review, and distribute the report to MIOs and the entities under review.

Provision for a review was included in the Act largely as a result of lingering iwi discomfort with the way in which the debate over allocation of fisheries resources had been resolved.  The scope, requirements, and procedure for the review is set out in Part 2, Subpart 6 of the MFA04, which requires the review to be completed by the end of the 11th year after the MFA04’s commencement.

The entities to be reviewed are:

  • Te Ohu Kai Moana Trust (Te Ohu) – the body primarily responsible for allocating the Fisheries Settlement (and, latterly, the Aquaculture Settlement) assets to MIOs and, more broadly, to advance the interests of iwi individually and collectively, primarily in the development of fisheries, fishing, and fisheries-related activities (MFA04 s 32);
  • Aotearoa Fisheries Limited (AFL) – the wholly-owned commercial subsidiary of Te Ohu, created to manage the collectively-owned assets acquired as a result of the Fisheries Settlement (including the 50% shareholding in the Sealord Group) and to return dividends to MIOs in accordance with the ‘income shares’ held by them;
  • Te Putea Whakatupu Trust – the Trust established to hold and manage funds derived from the Fisheries Settlement so as to promote education, training and research, including matters that relate to fisheries, fishing and related activities (MFA04 s 81);
  • Te Wai Māori Trust – the Trust established to hold and manage funds derived from the Fisheries Settlement to advance Māori interests in respect of freshwater fisheries (MFA04 s 94).

The scope of the review, as prescribed in s 122 of the MFA04, is to consider and report on:

  • The effect on each of the entities of the governance arrangements provided for by the MFA04 as those arrangements relate to:
  • The performance of each entity in achieving its duties and functions;
  • The ability of each entity to deliver benefits to its beneficiaries; and
  • The ability of each entity to contribute to achieving the purposes of the MFA04.
  • The effect of the restrictions on the disposal of settlement assets as they relate to the ability of:
    • MIOs to deliver benefits to the members of their iwi; and
    • AFL to deliver benefits to its income shareholders.
  • Whether, without creating an inconsistency with the purposes of the MFA04 or with the purpose of Te Ohu, the interests of the beneficiaries of the Deed of Settlement would be better served by changes to:
    • The governance arrangements of any entity; and/or
    • The restrictions on the disposal of settlement assets.

There are, however, a number of restrictions placed on the recommendations the reviewer can make (MFA04 s 124):

  • The reviewer may not recommend any change to the manner in which the assets of any of the entities are distributed to iwi, in the event that they are wound up.
  • If the reviewer finds that the interests of the beneficiaries of the Deed of Settlement would be better served by changes to the restrictions on disposal of settlement quota, the review must include that finding in its report, but the recommendation may not be adopted unless supported by a further review, carried out not more than five years later.
  • If, in conducting a review of Te Putea Whakatupu Trust or Te Wai Maori Trust, the reviewer finds that the entity continues to fulfil its purpose under this MFA04, the reviewer must not recommend that the relevant trust be wound up.

Once appointed, the reviewer has six months to conduct the review, after which its findings and recommendations are distributed to the entities reviewed and MIOs.  Each entity under review may prepare a plan specifying the actions it intends to take to address the findings and recommendations of the reviewer, with that plan also being distributed to Te Ohu and MIOs.

MIOs may resolve to adopt all or some of the reviewer’s recommendations, or all or part of any plan, or amend and adopt any of those recommendations or plans, with such resolution being binding only if supported by 75% of MIOs representing at least 50% of the total notional population of all iwi combined (as set out in the MFA04).

Meanwhile, it is business as usual for Te Ohu, with only two of the 57 iwi or iwi groupings recognised under the MFA04 yet to establish MIOs that are entitled to receive and manage their share of Fisheries Settlement assets.  In addition, further progress has been made in concluding coastline agreements between iwi as a pre-condition to the allocation of inshore quota. 15

Customary (non-commercial) fisheries

Implementation of the Fisheries (Kaimoana Customary Fishing) Regulations 1998 (in respect of the North Island) and the Fisheries (South Island Customary Fishing) Regulations 1999 continues, with just over 400 tāngata tiaki/kaitiaki (including two committees) appointed under the Kaimoana Regulations.  Under the South Island regulations, a total of 140 tāngata tiaki/kaitiaki are appointed to manage general customary food-gathering areas and a further 13 appointed to manage mahinga mātaitai/mātaitai reserves.

Customary fishing regulations received attention from the Court of Appeal recently in the case of Tapsell v R [2014] NZCA 122. The case involved an appeal from a sentence for convictions arising from illegal fishing, conducted on the basis of fraudulently obtained and misused authorisations issued under the regulations.  After being convicted of 15 charges relating to commercial dealing in between 395kg and 526kg (meat weight) of pāua between May 2010 and March 2011, the appellant had been sentenced to four years’ imprisonment, with a minimum sentence of two years (at [6]-[7]).

The Court of Appeal decision has become one of the leading authorities on sentencing principles as they apply to offences under the FA96, particularly with respect to the relationship between sentencing and the forfeiture of property used in the commission of the offence (in this case motor vehicles, a small boat and other property, to an estimated total value of $5,000).  While the Court ultimately determined that the appeal should be allowed and substituted a sentence of three years, two months (quashing the minimum sentence), it recognised the context of the customary fisheries regime as a significant factor in sentencing ([2014] NZCA 122 at [34]):

The second factor is the effect of the offending on the overall scheme of fisheries control imposed by the Act. The special relationship between tangata whenua and places of importance for customary food gathering are expressly recognised in the Act. Section 186 enables regulations to be made regulating customary fishing. The Fisheries (Kaimoana Customary Fishing) Regulations 1998 [sic 16.], created pursuant to s 186, give effect to this special relationship. The regulations give a considerable measure of autonomy to those responsible for the issuing of customary authorisations. That level of autonomy carries with it a responsibility to exercise the power to authorise customary taking in a way which meets the legitimate needs and expectations of persons entitled to invoke customary rights, while maintaining the integrity of the fisheries regime, and recognising the legitimate rights and expectations of other participants in other aspects of that regime. Any abuse of the customary authorisation process is accordingly to be viewed as a potential threat to the proper administration of the fisheries regime.  For this reason, the appellant’s fraud in obtaining special privileges to which he was not entitled, perpetrated against the Tangata Tiaki by whom the authorisations were issued, adds significantly to the culpability of the commercial taking of paua offending.

The network of mātaitai reserves expanded slightly (from 29 to 30, with a handful of others approved by the Minister and yet to be Gazetted) in the course of 2012-13.

Meanwhile, iwi continue to pursue innovative and collaborative means of exercising their rights and responsibilities as kaitiaki.  The Kaikōura (Te Tai-o-Marokura) Marine Management Bill, introduced to Parliament on 17 March 2014,is the most recent example of this approach.  The Bill would establish a suite of marine management measures over the Kaikōura coastline, including a marine reserve, whale, and fur seal sanctuaries, taiāpure, mātaitai, and regulations for recreational fishing regulations.  It would also establish a local advisory committee, comprising iwi and community representatives, and representatives of environmental, tourism, and fishing interests.

The Bill had its genesis in the Kaikōura Marine Strategy 2012, 17 which resulted from seven years of effort by Te Korowai o Te Tai o Marokura (the Kaikōura Coastal Marine Guardians).  Te Korowai encompassed iwi and representatives from the community and marine industries and developed the strategy as a vision for the area after reaching a consensus on how the coastal and marine environment of the area should be managed.  Te Korowai described this as a “gifts and gains” process, where each stakeholder group gifted concessions “to sustain the integrity of the whole resource for the future.”

The influence of Ngāi Tahu hapū Ngāti Kurī’s perspectives on kaitiakitanga are apparent in the vision agreed by Te Korowai, as described in the Explanatory Note to the Bill:

Te Korowai's vision is that, by perpetuating the mauri and wairua of Te Tai-o-Marokura, the Kaikoura community, as kaitiaki of Tangaroa’s taonga, is sustaining a flourishing, rich, and healthy environment where opportunities abound to sustain the needs of present and future generations. Te Korowai’s core objectives for seeking integrated management of this area are that—

  • traditional fishing areas of special significance to Ngati Kuri are restored and maintained and traditional knowledge and customs are utilised to protect the fisheries of Te Tai-o-Marokura;
  • the marine treasures of Te Tai-o-Marokura are protected so that future generations can experience the area as it is today;
  • there are abundant fish, aquatic life, and seaweed in Te Tai-o-Marokura for present and future generations;
  • the quality of the coastal and marine environment of Te Tai-o-Marokura is sustained.

The Bill is currently being considered by the Local Government and Environment Select Committee, which is due to report back to Parliament by 20 September 2014.  The Minister of Conservation has expressed confidence that the Bill will be passed before the end of the year, so that the measures can come into effect in 2015. 18

In March 2014, the continuing implementation of iwi-driven fisheries management regimes was exemplified when the first set of bylaws was approved under the Waikato-Tainui (Waikato River Fisheries) Regulations 2011, (promulgated pursuant to s 186 of the FA96 and s 93 of the Waikato-Tainui Raupatu Claims (Waikato River) Settlement Act 2010).  The bylaws would apply certain traditional management practices to commercial eel fishing, by imposing:

  • A prohibition on the taking of female migrant longfin eels;
  • Minimum and maximum weights for commercially harvested eels;
  • A seasonal prohibition on taking of any eels from specific streams and rivers during the annual eel migration; and
  • Provision for rāhui (temporary prohibition) on fishing for a period after a human death in the vicinity.

Aquaculture

Continuing litigation has dominated the aquaculture legal scene over the past year, in respect to applications by The New Zealand King Salmon Company Ltd (NZKS) to expand its operations in the Marlborough Sounds.  NZKS had applied for consent to farm nine new sites, only one of which was in an area where salmon farming was permitted under the Marlborough Sounds Resource Management Plan.

The Board of Inquiry, appointed by the Minister for the Environment to consider and determine the applications (the Board), released its final decision on 22 February 2013, which allowed the plan change and consented to applications for four of the sites, declining the remaining five applications.  The Board’s decision was appealed by the Environmental Defence Society Inc (EDS) and Sustain Our Sounds Inc (SOS), and the subsequent High Court decision was further appealed to the Supreme Court.  The Supreme Court’s decisions on the appeals were issued on 17 April 2014. 19

The Supreme Court dismissed the appeal by SOS 20, upholding the EDS appeal which related to only one of the four sites approved by the Board.  The decision is seen as having far-reaching implications for aquaculture and other coastal developments.

The EDS appeal focused on concurrent plan change and consent applications for a site at Papatua in Port Gore.  The Board had found that the proposed farm would have significant adverse effects on the outstanding natural character and landscape of the area and would not comply with policies 13(1)(a) and 15(1)(a) of the New Zealand Coastal Policy Statement (NZCPS).  Those policies require persons exercising functions and powers under the Resource Management Act 1991 (RMA) to:

  • Preserve the natural character of the coastal environment and protect it from inappropriate subdivision, use, and development, to avoid adverse effects of activities on natural character in areas of the coastal environment with outstanding natural character; 21 and
  • Protect the natural features and natural landscapes (including seascapes) of the coastal environment from inappropriate subdivision, use, and development, to avoid adverse effects of activities on outstanding natural features and outstanding natural landscapes in the coastal environment.

Notwithstanding this finding, the Board approved the plan change for the Papatua site on the basis that it was required to give effect to the NZCPS “as a whole” 22, including objectives and policies supportive of aquaculture and appropriate economic development in general.

The Supreme Court rejected the ‘overall judgment’ approach adopted by the Board, noting: 23

A danger of the “overall judgment” approach is that decision-makers may conclude too readily that there is a conflict between particular policies and prefer one over another, rather than making a thoroughgoing attempt to find a way to reconcile them.

The Court took a different view on the fundamental question of the how the provisions of the NZCPS should be applied, finding: 24

Give effect to” simply means “implement”. On the face of it, it is a strong directive, creating a firm obligation on the part of those subject to it.

And ([2014] NZSC 38 at [96]):

...we consider that “avoid” has its ordinary meaning of “not allow” or “prevent the occurrence of”. In the sequence “avoiding, remedying, or mitigating any adverse effects of activities on the environment” in s 5(2)(c) [of the RMA], for example, it is difficult to see that “avoid” could sensibly bear any other meaning. Similarly in relation to policies 13(1)(a) and (b) and 15(a) and (b) [of the NZCPS], which also juxtapose the words “avoid”, “remedy” and “mitigate”.

And, to the extent that the relevant NZCPS refers to the need to preserve the natural character of the coastal environment and protect natural features and natural landscapes by avoiding “inappropriate” use and development ([2014] NZSC 38 at [101]):

We consider that where the term “inappropriate” is used in the context of protecting areas from inappropriate subdivision, use or development, the natural meaning is that “inappropriateness” should be assessed by reference to what it is that is sought to be protected.

The decision will almost certainly have an impact on proposals to establish new aquaculture operations adjacent to outstanding natural features, or areas of outstanding natural landscape or outstanding natural character.  Of particular concern to the industry is the fact that this decision will almost certainly impact on ‘renewal’ 25 of consents for operational farms in such areas, unless plan rules designate those farms as controlled activities such that consent cannot be declined. 26  Regional councils are required to progressively amend their Regional Coastal Plans to give effect to the NZCPS (under s 67(3) of the RMA).  Until then, they are only required to have regard for the NZCPS, along with a number of other matters (s 104 of the RMA). Therefore, the full impact of the NZKS decision will not be felt until councils seek to amend their plans.

In a decision released within a week of the NZKS decision, the Environment Court confirmed the grant of resource consents for a proposed 70ha mussel farm on the western coast of Stephenson Island in Northland’s Whangaroa Bay. 27 While both the applicable District Plan and the proposed regional policy statement (RPS) classified Stephenson Island as an outstanding natural landscape, neither the operative RPS nor regional coastal plan did so. 28  The Environment Court therefore formed its own view of the landscape in question, on the basis of expert evidence presented to it and reached the conclusion: 29

The evidence before us must be said to demonstrate that the islands concerned are not an outstanding natural landscape or feature.  They do not exhibit outstanding natural character or qualities.  The imperatives of … Policies 13 and 15 of the NZCPS are therefore not triggered, particularly when proper consideration is given to the context of what might or might not be “inappropriate” in the context of the analysis of the present landscape in terms of them.

While deftly avoiding the need to grapple with the impacts of the NZKS decision, the Environment Court did place considerable weight on the potential economic benefits of the proposed marine farm, in light of the significant economic disadvantage suffered in the region 30 and the fact that Stephenson Island is administered by the Ririwha Ahu Whenua Trust, on behalf of over 500 beneficial owners.  The Trust was to be a 50% partner in the mussel farm applied for, and gave evidence of the economic and cultural benefits that the farm would provide, including generating income to support the Trust’s ecological restoration projects. 31

New space settlements

The Māori Commercial Aquaculture Claims Settlement Act 2004 (the MCACSA) gave statutory recognition to iwi claims in respect of:

  • “Pre-commencement space” – first given approval for aquaculture activities between 21 September 1992 and 31 December 2014, provided that approval was still in force at the latter date, or for which a consent was applied for prior to that date and subsequently granted; and
  • “New space” – within an Aquaculture Management Area (AMA) established after 1 January 2005.

Law changes in 2011 scrapped the AMA concept and went back to managing applications for aquaculture space on a ‘first come, first served’ basis.  Amendments to the MCACSA as part of the2011 reform package preserved the original iwi entitlement to 20% of new space in principle, but introduced new mechanisms for delivery of that entitlement, with the emphasis on tailored regional agreements between Iwi Aquaculture Organisations (IAOs) and the Crown.  Regional agreements operate on the basis of regional council boundaries and must include all IAOs with coastal interests in the relevant region.  They must also provide for redress based on the level and type of anticipated new aquaculture development in the region, not just ‘new space’ that has already been granted a resource consent.

While the great majority of entitlements in respect of pre-commencement space have now been addressed, focus turned to new space entitlements in the course of 2013, as a result of statutory timeframes for concluding regional agreements.  The MCACSA requires the Crown to use its best endeavours to conclude regional agreements within two-tier timeframes:

  • For four priority regions in which aquaculture development seemed most likely in 2011 (Northland, the East Coast/Hauraki Gulf part of the Waikato region, Tasman and Marlborough): within two years after the commencement date of the 2011 amendments, that is by 30 September 2013.
  • For all other regions, whichever is the later of:
    • Two years from the receipt of the first new resource consent application for aquaculture activities after 30 September 2011; or
    • 30 September 2014.

Section 11(4) of the MCACSA allows the Minister responsible for Aquaculture (currently the Minister for Primary Industries) to extend these periods one or more times, provided that she or he is satisfied, after consultation with affected IAOs and Te Ohu, that reasonable steps have been taken to progress a regional agreement and that the proposed extension is likely to enable an agreement to be entered into. In September 2013, after consulting IAOs in the four priority regions, the Minister extended the period for negotiation of agreements, with respect to those regions, to 30 June 2014.

In addition, relevant resource consent applications were made in the Auckland, Waikato west, and Canterbury regions prior to 30 September 2012, meaning that the current negotiation period for those regions concludes on 30 September 2014.  More recent applications in the Chatham Islands and the Southland region mean that the negotiation period for those regions will end during 2015.  For all other regions, the negotiation period will not commence until two years after first new resource consent applications have been made for aquaculture activities.

If no agreement is reached for a region within the relevant timeframe, s 11(5) of the MCACSA provides that ‘default’ redress must be transferred to iwi (via Te Ohu), unless the Minister extends the relevant timeframe.  Default redress would comprise:

  • Authorisations convening the exclusive right to apply for resource consent in any Gazetted Aquaculture Settlement Areas in the relevant region, plus a sum of money assessed to reflect the likely higher cost of obtaining resource consents to use the space for aquaculture under the current regime, as opposed to the regime that applied before the 2011 amendments; and
  • If there are no Gazetted areas in a region, or the extent of them is less than the total anticipated new space in the relevant region, then payment of the financial equivalent value of that space.

Somewhat belatedly, (s 14(1) of the MCACSA required that preparation of this plan should begin before 31 December 2012) the Minister issued a draft plan for consultation in February 2014, outlining a proposed approach to achieving regional agreements in the priority regions by 30 June 2014. 32  Section 14 provides that such a plan should establish “processes and methods for determining the value of the settlement assets to be delivered” and, further, that those processes and methods should enable an assessment to be made of:

  • The amount of anticipated new space in each region,
  • The value that would be representative of each of the types of aquaculture expected to be developed in that space,
  • The overall productive capacity of that space,
  • The value of the ‘top up’ that should accompany any authorisation issued to iwi under the MFA04, i.e. the difference in value between:
    • The current costs of obtaining a resource consent that will allow aquaculture activities to commence; and
    • The costs of obtaining a resource consent in relation to an AMA as at 1 January 2005.

Section 14 includes the proviso that those processes and methods should avoid increasing the demand for coastal permits, which would increase the value of space, reduce the risk of collusion, and be cost effective for the Crown.

It is fair to say that the draft plan, released for consultation in February 2014, fell somewhat short of meeting the objectives set out in the MCACSA. The document reviews what it describes as five “core elements of the new space settlement process”:

  1. The New Space Plan – the original intention was to consult IAOs and Te Ohu on the Plan between the release date of 26 February 2014 and 7 April 2014 and to finalise it sometime thereafter.  The consultation period was subsequently extended out to 30 May 2014 and it is not clear when the Plan will be finalised.
  2. A National Forecast Model – the draft Plan outlines the approach to be adopted in forecasting anticipated new space over the next 20 years in very broad terms and indicates that the Crown’s forecast model would be completed by the end of March 2014.
  3. A National Valuation Methodology – the draft Plan does little more than state that a valuation methodology will be developed by an independent contractor, under the guidance of a joint MPI/Te Ohu Steering Group.
  4. Authorisations (including those created through Gazettal of Aquaculture Settlement Areas and any created through regional council processes) – the draft Plan records that 15 Aquaculture Settlement Areas were Gazetted in the months after the 2011 amendments were enacted.  Although the 214ha that these areas cover is likely to fall far short of the total amount of anticipated new space liable to be estimated by the Crown forecast model, the draft Plan does not indicate any intention by the Crown to Gazette further areas at present.
  5. Negotiation and completion of regional agreements – the draft Plan refers to both IAOs (assisted by Te Ohu) and the Crown being at the stage of preparing for the negotiation of regional agreements, and confirms the 30 June 2014 timeframe for concluding regional agreements within the four priority regions.

Before the end of the consultation period, the draft plan was largely overtaken by approaches made to iwi to consider a proposal that the Minister further extend the timeframes for concluding regional agreements. Extensions to those timeframes, until 30 June 2015 for the four priority regions and 30 November 2015 for others, were notified in the Gazette on 26 June 2014. 33

The year ahead

It seems inevitable that the negotiation of regional aquaculture agreements and the statutory review of Te Ohu will dominate the Māori seafood sector over the coming year. The general election will, of course, punctuate the year and the possibility it presents for a change of government (or a change in the composition of the government) could produce any number of new challenges and opportunities.

 

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Notes:

  1. http://www.mpi.govt.nz/news-resources/publications
  2. http://www.precisionseafoodharvesting.co.nz/
  3. http://www.mpi.govt.nz/agriculture/funding-programmes/primary-growth-partnership/spatnz
  4. http://www.parliament.nz/resource/en-nz/50DBSCH_SCR5951_1/f315341f319aa6bc77d2e465e155901933cf5e81
  5. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10903916
  6. (15 April 2014) 698 NZPD 17281.
  7. See for example, FA96, s 225C(2).
  8. Sajo Oyang Corporation v Ministry for Primary Industries [2014] NZSC 73.
  9. Exclusive Economic Zone and Continental Shelf (Environmental Effects—Permitted Activities) Regulations 2013 and Exclusive Economic Zone and Continental Shelf (Environmental Effects—Non-notified Activities) Regulations 2014.
  10. See, for example, the submission by Te Ohu: http://teohu.maori.nz/documents/submissions/2014/TTR%20sub%20TeOhu%2028Jan14.pdf
  11. http://www.epa.govt.nz/EEZ/EEZ000004/Trans_Tasman_Resources_decision_17June2014.pdf.
  12. http://www.epa.govt.nz/EEZ/chatham_rock_phosphate/Pages/default.aspx
  13. http://www.deepwater.co.nz/dwg-release-call-to-for-seabed-legal-anomalies-to-be-resolved/
  14. Maritime New Zealand v AZ1 Enterprises Limited & Another CRI-2012-025-00242, District Court Invercargill, 18/3/14.
  15. Annual Report 2013 Te Ohu Kaimoana/Māori Fisheries Trust, pages 16-17. (http://teohu.maori.nz/documents/publications/corporate/TOKM_AR13_WebVersion.pdf).
  16. Note that the authorisations in question were, in fact, granted under the equivalent regulations applying to the South Island, theFisheries (South Island Customary Fishing) Regulations 1999.
  17. http://www.teamkorowai.org.nz/docs/Kaikoura_Marine_Strategy_lo_res.pdf.
  18. http://www.beehive.govt.nz/release/bill-establish-new-marine-protected-areas-passes-first-reading.
  19. Environmental Defence Society Incorporated v The New Zealand King Salmon Company Limited [2014] NZSC 38 and Save Our Sounds Incorporated v The New Zealand King Salmon Company Limited [2014] NZSC 40.  In a third decision, released on the same day, the Court dealt with the appellants applications for leave to appeal: Environment Defence Society Inc v New Zealand King Salmon Company Ltd [2014] NZSC 41.
  20. Though the Court did usefully articulate in that decision the principles to be applied when assessing whether the adoption of an adaptive management approach will be an appropriate response to uncertainty.  See [2014] NZSC 40 at [125] and [129].
  21. NZCPS, Policy 13(1)(a).
  22. Board of Inquiry, New Zealand King Salmon Requests for Plan Changes and Applications for Resource Consents, 22 February 2013 at [1179] to [1182].
  23. [2014] NZSC 38 at [131].
  24. [2014] NZSC 38 at [77].  The Court did go on to note that there were some caveats to that “in principle” finding – see [88].
  25. While reference to renewing consents is common, the RMA, in fact, makes it clear that any application to replace a consent at the end of its term is treated in the same way as any other application for a consent.
  26. Clearly, aquaculture will not be the only activity affected by this decision, with Federated Farmers already calling for changes to the NZCPS: http://www.stuff.co.nz/marlborough-express/news/10034514/Farmers-want-coastal-changes.
  27. Whangaroa Maritime Recreational Park Steering Group v Northland Regional Council [2014] NZEnvC 92.
  28. [2014] NZEnvC 92 at [79].
  29. [2014] NZEnvC 92 at [86].
  30. [2014] NZEnvC 92 at [31].
  31. [2014] NZEnvC 92 at [38] to [42].
  32. Māori Commercial Aquaculture Settlement (Draft) – Consultation with iwi organisations and Te Ohu Kai Moana Trustee Ltd on draft New Space Plan, February 2014, MPI Discussion Paper No.2014/09.
  33. Notice No. MPI 350, NZ Gazette No.68 at 1924.
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Author: Justine Inns

Justine is a partner at Oceanlaw New Zealand. She has been with the firm since January 2005 when she joined as a Senior Associate. Prior to joining Oceanlaw, Justine spent more than a decade as an advisor to various iwi (tribes), including several years with the Ngāi Tahu team responsible for negotiating, then implementing, the iwi’s $170M Treaty of Waitangi claim settlement.

For the past 6-7 years, Justine’s focus has been on various aspects of the fishing industry and other Maori commercial enterprises. Her specialist areas are aquaculture and Māori fisheries (customary and commercial), but she also advises on a wide range of resource management, fisheries and aquaculture issues.