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New Zealand Journal of Environmental Law |
Last Updated: 30 January 2023
Lifting the Looking Glass: Tradable Occupation Could Facilitate Ocean Renewable Energy
Ian Boisvert*
With abundant ocean renewable energy resources New Zealand has the possibility of being a global leader in this emerging clean technology. However, its framework for allocating coastal space for renewable energy development, the Resource Management Act, suffers from paradoxes, inconsistencies, and too much discretion for local authorities. Coupling these issues with incentives for existing users to stymie new coastal applicants through drawn-out litigation is arguably discouraging ocean renewable energy development and encouraging coastal conflict. To tackle these challenges this paper recommends that ocean renewable energy developers, as a group, build a nationwide rapport, that local authorities strengthen their processes and accountability, and that the national government allow commercial and cultural coastal users the ability to privately trade occupation of coastal space among themselves. The last recommendation will encourage cooperation, build a new market, and generate new sources of public revenue to strengthen oceans governance.
He waka eke noa — Māori proverb1
*Ian Boisvert is a United States lawyer licensed in the states of California and Washington. He wrote this article while in New Zealand as an Ian Axford Fellow in Public Policy, a sevenmonth professional fellowship administered by Fulbright New Zealand. He appreciates the generous support he received from the Energy Efficiency and Conservation Authority, who hosted him for the fellowship, as well as administrative support from Fulbright New Zealand. He is indebted to all those who helped him through interviews and feedback, especially Michael Harte, John Huckerby, and Diana Tam. But most of all he is grateful beyond measure to Kathleen Kunzman Boisvert for her unconditional support and love. This article is a shorter version of his full policy paper written as an Axford Fellow, which can be accessed at <www.fulbright.org.nz>.
1 Translated as “a canoe which we are all in with no exception”. Maori.cl “Proverbs — Whakatauki” <www.maori.cl>.
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1. INTRODUCTION
When Māui fished New Zealand’s North Island from the ocean depths he probably did not worry about snagging his hook on a renewable energy device.2 Today he would. In the last few years Te Ika a Māui’s mouth has hosted wave energy devices3 and its gills host wind turbines.4 Renewable energy developers are looking to install even more devices in New Zealand’s oceans.
Ocean renewable energy includes wave power, tidal currents, and offshore wind.5 Wave power devices convert swell energy into electricity. The devices include the seafloormounted WaveRoller,6 the partially submerged Wave Energy TechnologyNew Zealand (WETNZ) “point absorber” device,7 and the floating Pelamis device.8 Tidal devices convert the tidal flows into electricity. These devices range from barrages, such as has existed in La Rance, France, since the 1960s, to turbines like the OpenHydro. Offshore wind turbines convert wind pressure into electricity. These are identical to onshore turbines with the exception of being Goliathsized.9 Collectively, these device developers promise they will tap untold amounts of clean power. New Zealand’s government appears willing to believe there is such potential.
In 2007 the government allocated NZ$8 million that the Energy Efficiency and Conservation Authority (EECA) has partially dispersed through its Marine Energy Deployment Fund.10 While that is the extent of the financial support, government policy has become increasingly supportive of renewable energy as a whole, and ocean renewable energy to a lesser extent. Last year the government published a revised New Zealand Coastal Policy Statement
Occupation Could Facilitate Ocean Renewable Energy 3
(NZCPS), a document required by the Resource Management Act (RMA).11 The NZCPS mirrors the RMA in its purpose of sustainable management of coastal resources.12 It contains new provisions that arguably promote, but at the very least address, ocean renewable energy development.13 The Draft New Zealand Energy Strategy (Draft NZES) echoes the NZCPS in terms of ocean renewable energy. Though, like any echo, it is distant and weaker in its support. It only promotes ocean renewable development “as appropriate”.14 Yet it also “embrace[s] ... new energy technologies”, a category in which all offshore renewable devices indisputably fall.15 Overall, governmental support for offshore renewable energy appears to be growing.Indeed, the government should support ocean renewable energy since, in line with its international obligations, New Zealand set an aspirational goal to generate 90 per cent clean electricity by 2025.16 The goal is not insurmountable.17 New Zealand already generates up to 70 per cent of its electricity from renewable sources.18 Hydropower dominates with generating capacity of 5,378 megawatts (MW) of New Zealand’s estimated total capacity of 9, 486 MW.19 Additional growth of hydropower, however, is unlikely.20 The next most prolific source is geothermal. New Zealand presently has a generating capacity of about 635 MW from its rich geothermal resources.21 Wind power, though, has the largest room for growth of onshore sources. Onshore wind farm generating capacity is only 496 MW.22 According to Professor Jonathan Leaver of Unitec’s Civil Engineering Department, untapped onshore wind has the potential to offer more than three times the total electricity New
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Zealand generates now.23 Emerging behind these established renewable energy generators are ocean renewable power developers.Even with government support, ocean energy faces two significant chal lenges in New Zealand. First is the commercial challenge. At present, existing marine renewable generating devices cannot commercially compete with onshore renewable devices.24 On cost alone, International Energy Agency “bestpolicy” estimates show that ocean renewable electricity will average US$281 per megawatthour (MWh) over the next decade.25 Onshore wind, on the other hand, will average US$85 per MWh over the same period. There is also competition against much more established designs with fewer operational or maintenance issues. Geothermal and hydropower plants have been around for decades whereas existing wave and tidal devices are prototypes of prototypes.26 Deploying and maintaining ocean energy devices is much more expensive because of the harsh marine environment. This is true even in the case of offshore wind turbines, which being larger than their onshore cousins generate more electricity per turbine and thus enjoy economies of scale.27 Direct subsidies or feedin tariffs could help ocean renewable developers overcome the competitiveness challenge,28 but the Nationalled coalition government declared it will not assist in this way because geothermal, hydro, and wind generation are economic without the support.29 Thus the burden falls on device developers to engineer more efficient designs, determine more costeffective installation and maintenance processes, or both.
The other significant challenge for ocean renewable energy generation is access to space. Ocean energy developers are building in a “commons”.30
23 Jonathan Leaver, professor, UNITEC (14 June 2011) pers comm. 24 International Energy Agency World Energy Outlook (2010).
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Inevitably, that means conflict. From iwi harvesting kaimoana to commercial fishers chasing quarry to surfers hunting waves, the users of the marine commons are diverse and numerous. Each wants to continue his or her preferred activity preferably without having to share with a new user, or be threatened with the degradation of the environment supporting his or her activity.At present the only way ocean renewable developers gain access to their preferred site is to seek Regional Council permission through a resource consent for coastal use (“coastal permit”).31 There are three reasons this is a flawed mechanism for allocating space.
First, far from resolving any conflict, it inflames it. Existing users will rightly see that the Regional Council’s approval of a coastal permit could displace their use of the space that the developer wants to occupy. Thus they use legal processes to stall, oppose, and change the developer’s plans.32
Commercial fishers’ limited legal property right in fish stocks and iwi aspirations to govern or own parts of the foreshore and seabed add further complications. However, Regional Councils can still displace these users without requiring compensation for their impacted rights. These parties are especially motivated to use the legal process to protect their rights. In these instances the impacted users twist the environmentaleffects focus of coastal permit applications from “effects to natural resources” to “effects to the natural resource that I, as a user, am invested in”.33
Arguably, the ocean energy developer has little incentive to negotiate with existing users because there is not much basis for trade. While it would be wise to collaborate with existing users, without either party having secure title over the space, there is a high risk such collaboration could fail. Indeed, Crest Energy experienced this exact scenario in its Kaipara Harbour project. Why go through pains to negotiate when an applicant knows that success in seeking the coastal permit means the Regional Council can displace those users anyway?
Second, even though Regional Councils allocate coastal space, they are reportedly underfunded and illequipped to manage ocean policy and science. They also differ in how much value they assign to renewable energy development in their RMArequired Regional Coastal Plans (RCPs) and Regional Policy Statements (RPSs). Environment Waikato, for example, recognises rich wave energy resources along its coastline even though it has
extend the resource consent regime as practised under the RMA to the EEZ. The newly formed Environmental Protection Authority is proposed to be the enforcing agency.
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no pending projects.34 By contrast, the Northland Regional Council does not recognise its ocean energy resources even though it is the only jurisdiction in the world, let alone New Zealand, to have permitted a commercialscale tidal energy development.35 Such incongruence between Regional Council approaches could send confusing and potentially wrong signals to ocean renewable developers about their openness to new projects.Third, combining the high potential for legal conflict with disparate Regional Council approaches to ocean energy creates high uncertainty, a disincentive to development. Even if developers were risktolerant, they would be unlikely to raise the capital to support their projects because institutional investors are unlikely to share that risk, or they would put such a premium on it as to effectively dissuade them.
The good news is that three practical steps could reduce these challenges. First, “cheap talk” is the lowestcost alternative. Ocean renewable energy developers as a cohesive group should invite existing ocean users who have the most to lose to meet for a weekend of roundtable discussions. The focus should be to generically identify what parts of the coastline have the greatest potential for wave, tidal, or wind power, and how the parties might resolve conflicts around those areas ahead of time. The goal of the meetings should be for ocean renewable developers to make themselves a welcome part of the existing ocean community. As new users, ocean renewable developers have the burden of making themselves welcome.
Second, Regional Councils should, among other things, adopt similar standards to ocean renewable energy development which the central government should undergird with an industrywide environmental impact assessment. National policy clearly supports the development, but the national government could strengthen it by comprehensively assessing how ocean renewable devices interact with the natural environment. That assessment would help Regional Councils standardise their approach. In addition, Regional Councils could write memoranda of understanding to share technical expertise and help each other overcome limitations in their approach to ocean renewable development thus reducing potential for regulatory arbitrage.
The third and most critical solution is for the government to create marine tradable occupation rights (TORs) within New Zealand’s coastal marine area. TORs would create constrained but tradable rights for commercial coastal users to allocate coastal space between themselves contingent on their use not violating ecological thresholds set broadly by the comprehensive environmental assessment and individually through coastal permits.
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The bases for TORs already exist in New Zealand. The RMA allows coastal permit holders to transfer occupation of their sites.36 Ocean property rights already exist with commercial fishing property rights in fish stocks,37 and the Marine and Coastal Area (Takutai Moana) Act (MCAA) allows Māori to apply for use rights.38 The problem is that there is no mechanism for coastal permit holders, commercial fish harvesters, aquaculturists, and Māori to trade occupation across their respective sectors. TORs would allow them to resolve space allocation between themselves, thus encouraging cooperation rather than conflict. TORs would also build a new market that could generate revenue to fund ocean policy and governance. New market opportunities could lead to viable ventures between ocean renewable developers and existing users, as seen in geothermal development. TORs could significantly reduce the economic waste endemic to the coastal permit process.Importantly, coastal permits would continue to regulate development thus ensuring no undue environmental effects will occur. However, the coastal permit process would be streamlined because applicants would already have secured occupation rights from existing users. In short, TORs would create equitable, transparent means to efficiently allocate ocean space while upholding ecological integrity.
Establishing TORs will not be easy. There are questions of allocation, scope of the tradable right, navigation, public access, and so on. Shying away from these questions avoids the conflict, but does not resolve it. This article addresses these questions after laying out the case in support of the proposed solutions.
Part 2 outlines the legal bases for siting ocean renewable energy projects. Part 3 analyses the advantages and disadvantages of New Zealand’s coastal permit process for ocean renewable development. Part 4, the heart of the article, offers recommendations for a new regime that could motivate renewable energy developers to trade occupation directly with existing occupants while respecting ecological thresholds and generating new sources of public revenue. Finally, part 5 discusses barriers to implementation.
2. COASTAL MARINE AREA LAW
New Zealand’s ocean energy developers are fortunate in one sense. The country’s legal framework for siting ocean renewable devices is straightforward
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when compared to the United States (US). A US developer has to sift over 140 pieces of federal legislation, possibly deal with three federal permitting agencies — not including federal agencies that have consultation requirements
Where the US legal framework is like playing simultaneous games of chess on multidimensional boards, New Zealand’s is more akin to a traditional chessboard where the RMA is the queen of the framework. Coastal permits, however, are the king since acquiring them is the ultimate goal. But the RMA makes it difficult for ocean developers to do so because a coastal permit is both permission to develop and a governmental allocation of public space, a tetchy issue.The RMA continues to magnify Regional Councils’ power to allocate space out to 12 nautical miles by also requiring them to plan coastal use through Regional Coastal Plans. Thus for ocean renewable energy developers, effec tively handling the RMA matters most of all.
Other legislation is also important — none more so than the recently enacted Marine and Coastal Area (Takutai Moana) Act. The MCAA establishes processes through which Māori can apply for customary ocean rights and to create independent coastal management plans.41 Other coastal legislation like the Territorial Sea, Contiguous Zone, and Exclusive Economic Zone Act establishes New Zealand’s jurisdictional limits over its oceans.42 The Marine Reserves Act gives the Department of Conservation the ability to establish “notake” marine reserves.43 The Fisheries Act establishes law for commercial fishing.44 The Aquaculture Reform (Repeals and Transitional Provisions) Act 2004 works in unison with the RMA and Fisheries Act to regulate aquaculture development.45 And there still is yet more legislation specific to certain industries like fishing and aquaculture.46
39 Stoel Rives LLP The Law of Marine and Hydrokinetic Energy (4th ed, Stoel Rives LLP, 2011) at ch 31–322 <www.stoel.com>.
40 Ibid, at ch 34–35.
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So while New Zealand’s legal framework for siting ocean renewable devices is like playing on a traditional chessboard, the rules more closely resemble those from Through the Looking Glass.
2.1 Resource Management Act
When Alice went through the looking glass she found a backwards world. The same holds true when a renewable energy developer goes from land to territorial waters. Unlike on land, the RMA presumes that development within the Coastal Marine Area (CMA) — mean high water springs out to 12 nautical miles47 — is prohibited unless explicitly permitted.48 The negative presumption reflects that the CMA is a Crownmanaged “commons”.49 And the RMA is the Red Queen that oversees that commons. Like the Red Queen, it is full of paradox, inconsistencies, and inefficiencies, and these apply especially for coastal development.
The RMA’s sole purpose is to sustainably manage all natural and physical resources.50 “Sustainable management” is an allencompassing balance to allow for present and future human use while protecting the “lifesupporting capacity” of resources by limiting adverse environmental effects.51 In short, it sets an effectsbased test for human use: only if an applicant can demonstrate that its project will avoid, remedy, or mitigate potentially adverse environmental effects does the applicant stand a chance of succeeding.52
The RMA does, however, allow development within the CMA. For example, to deploy a wave, wind, or tidal device within the CMA a developer needs to apply for a coastal permit. The developer’s application faces two hurdles. First is the effectsbased test. Second, because the application is a de facto request for spatial allocation in the CMA, it must withstand challenges from existing users.
The national government appears to understand the inefficiencies and conflict inherent in using the RMA in this way. In the last couple of years it amended procedures within the RMA, and has or is in the process of revising national policies that flow from the RMA.
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Like the Red Queen, the RMA sets the law but subordinate national policies and regional plans deliver it. Relevant national policies for ocean renewable energy include the NZCPS and the NZES. Just this year central government enacted a rare National Policy Statement (NPS) for renewable electricity generation. All 12 Regional Councils have Regional Policy Statements and Regional Coastal Plans.
(i) New Zealand Coastal Policy Statement
The only mandatory national policy statement under the RMA is the NZCPS.53 It provides national policies that further the RMA’s purpose in the CMA.54 Authorities considering coastal permit applications must have regard to relevant NZCPS policies.55 The NZCPS recognises the increasing demand for coastal space owing to activities such as energy generation, aquaculture, and sand mining.56 Additionally, the NZCPS explicitly values enabling ocean renewable energy because ocean resources are of significant value.57 Along these lines, providing for coastal energy, it considers ocean power generation and transmission infrastructure is as important for social, economic, and cultural wellbeing.58 Bolstering that recognition are policies that emphasise the potential value of ocean renewable energy generation to meet future demand.59 But the NZCPS fails to offer any meaningful way to resolve coastal conflict, which it paradoxically encourages through supporting new uses. If anything, it stirs conflict by promoting “the efficient use of occupied space”.60 Indeed, if coastal space were occupied, why would the current occupant see any other use
as more efficient?
The NZCPS also establishes the national significance of surf breaks in seven regions.61 The full extent of what this means is yet to be determined, but wave energy developers are wise to consider that “surf breaks” includes the “swell corridor” for these breaks, a massive window.62
62 Ibid, at glossary.
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In short, the NZCPS recognises and apparently promotes the potential value of ocean renewable energy generation. But it simultaneously sows coastal space conflict even as it promotes demand increases. It thus leaves room for material recommendations on how New Zealand might efficiently and equitably resolve coastal space conflict.
(ii) Draft New Zealand Energy Strategy
Last year the national government released a draft New Zealand Energy Strategy.63 Currently, the government is working on material changes to the NZES, but as of the printing of this article the changes have not been released; therefore, the version I review is from July 2010. Moreover, the Draft NZES is not derived from the RMA, but I put it in this section because it is a national government policy that advocates marine power development.
In describing the future, the Draft NZES discusses how marine resources could create a more robust power generation system.64 On its first priority, developing resources, two of the three ways the government promotes achieving that is by developing renewable energy resources and embracing new energy technologies.65 Undoubtedly, ocean renewable energy sources and the emerging technologies to harness those fit within these categories. Indeed, the Draft NZES says that the government should continue funding marine energy deployment.66
The document also says that resource consents and planning processes will be streamlined to reduce cost and delays.67 However, it does not explain in any detail how that will happen.
(iii) National Policy Statement
An NPS states objectives and policies on nationally significant matters relevant to achieving the RMA’s purpose.68 The RMA makes local authorities responsible for amending their policy statements and plans to follow an NPS, whether proposed or in effect.69
On 14 April 2011, the Ministry for the Environment gazetted a National Policy Statement for Renewable Electricity Generation (NPS REG).70 It requires Regional Councils to incorporate objectives, policies, and methods that
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provide for the development, operation, maintenance, and upgrading of tidal, wave, and ocean current energy sources to the extent applicable.71 The italicised phrase provides a potential escape clause for Regional Councils to determine that these energy sources are not applicable in their region. The NPS REG gives no further guidance for Regional Councils to make that determination or for interested parties to know on what basis the councils must make the determination. Any updates must happen within two years.72
(iv) Regional Coastal Plans
The RMA creates the planning framework, but Regional Councils implement it. Local policies relevant to ocean renewable energy are the Regional Policy Statement and the Regional Coastal Plan.
The RPS has the daunting purpose of enacting the RMA, describing regional resource management issues, and providing the policies and methods for an integrated management of the whole region’s natural and physical resources.73 RCPs have the no less daunting purpose of guiding Regional Councils and
the Minister of Conservation in achieving the RMA’s purpose as it relates to the CMA.74 Indeed, the coupling of national and regional oversight affords RCPs a unique position among the RMA’s constituent policies. Being the only legally required regional plan is another unique feature.75 Holding Regional Councils’ plans subject to the Minister of Conservation’s approval is a third unique feature.76 The impact of that oversight cannot be overstated: it empowers the Minister of Conservation to disregard Environment Court precedent so long as the Minister follows certain procedures.77
In yet another Looking Glass twist, where the RMA ab initio limits coastal development, RCPs can loosen that limitation by allowing activities so long as they do not have adverse environmental effects, or if they do, they follow conditions to avoid, remedy, or mitigate the effects.78 RCPs are also mechanisms for planning use in the CMA. Not all Regional Councils take full advantage of RCPs in this context, but some do. For example, the Northland Regional Council has created a “Use and Values” map that describes where certain uses are allowed or prohibited.79 To date, the Northland Regional Council uses CMA zoning largely as a way to delineate space where activities cannot take place.80
74 Ibid, s 63(2).
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While that may serve conservation efforts, the further constraint on space will only increase scarcity for other uses.Unfortunately, that scarcity is not valued appropriately. Even though Regional Councils can charge consent holders to use the CMA,81 they rarely do so.82 The Minister for the Environment has said this is because politicians fear the reaction of “a roomful of yachties” in opposition.83 That seems like a feeble reason to allow free riding on a public good. Failing to charge for occupying public commons is one example of why, notwithstanding incredible power over coastal use, Regional Councils are not efficiently managing the area.
If the RMA is the Red Queen, a coastal permit is the Red King. And like the Red King, it is best to quietly rather than boisterously go about getting it.
(i) Authorising activities, allocating space
Of all types of resource consents, coastal permits apply to ocean renewable power projects.84 Regional Councils, or other consent authorities,85 must test whether the appliedfor activity will or is likely to cause more than minor effects on the environment.86 If the activity will exceed the morethanminor test or the activity is for a restricted coastal activity, the Regional Council must notify the public of the application unless certain conditions apply.87 But not all coastal permits need to be publicly notified.88 If the application is publicly notified, any person (broadly defined) has the right to make a submission on the application.89 Whether an application is publicly notified or not will drastically change how involved and possibly contentious the submissions, hearing, and appeals process will be.90
88 Ibid, s 95A. 89 Ibid, s 96.
90 For example, Power Projects Ltd secured a nonnotified consent in Taranaki within the space of a few months for a pilot wave energy project. See Taranaki Regional Council “Consents issued between 5 March and 15 April 2010” <www.trc.govt.nz>. In comparison, Crest Energy battled for over six years to secure their publicly notified consent. Obvious crucial differences are that Power Projects Ltd sought consent to test only one device on a
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After the submission process the consent authority weighs its decision based on a mix of prescribed factors (eg national environmental standards, the NZCPS, and regional policy statements)91 and openended discretion of what is relevant and reasonably necessary.92 Following the consent authority’s decision, during which time it can impose conditions on the activity,93 the applicant, the submitting parties, or both can lodge an appeal against the decision.94In one of its more striking paradoxes the RMA maintains that coastal permits do not convey a real or personal property.95 However, coastal permits convey a set of property rights. They give the holder the following sticks of the property rights bundle: right to develop, right to access, right to remove, and right to exclude.96 The RMA also explicitly allows for coastal permits to pass as “personal property” on the death or bankruptcy of the holder.97 Moreover, a coastal permit holder may even charge a fee as though it were “personal property”.98
In comparison with landbased resource consents, coastal permits allocate space as well as permit the activity.99 They also give Regional Councils extraordinary power and discretion over which applicants can occupy the public space without necessarily having to pay for the occupation.
(ii) Transferability of coastal permits
The RMA allows coastal permit holders to transfer their interest in a coastal permit to another holder, but the transfer is only good for the original site.100 So long as the transferee stays within the boundaries of the original coastal permit it will not have to seek a new occupation consent.101 However, if the transferee’s proposed use of the site differs from how the transferor used the site, then the transferee has to seek new coastal permits for its proposed development.102
temporary basis whereas Crest Energy wanted consent for a commercialscale array of 200 devices for 35 years. See Crest Energy Kaipara Ltd v Northland Regional Council [2011] NZEnvC 26; [2011] NZRMA 420 (consent granted for 35 year term).
91 Resource Management Act 1991, s 104(1)(b). 92 Ibid, s 104(1)(c).
95 Ibid, s 122(1).
96 Section 3.2.1(a) below further discusses this point. 97 Resource Management Act 1991, s 122(2)(a)–2(b). 98 Ibid, s 122(2)(c).
99 Ibid, s 122(5)–(6) (limiting coastal permit holders’ authority over the occupied coastal space and ability to treat coastal resources as licences or profits a prendre).
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(iii) Call-in processA recent RMA amendment, the callin process centralises decisionmaking for coastal permit applications, changes, or renewals. It purportedly simplifies and streamlines103 the process if a proposed project is “nationally significant”, which, significantly, is undefined.104 Rather than establishing a legal test to guide decisionmakers, the RMA allows Ministers to consider “any relevant factor” to determine if a proposed project is nationally significant.105 Such factors include whether the project is likely to result in significant use of natural and physical resources, could affect or bear on New Zealand’s international obligations to the global environment, or will or could involve technology, processes, or methods new to New Zealand which may affect the environment.106
Ocean renewable power production is likely to be “nationally significant”. First, by generating clean power it is relevant to New Zealand’s Kyoto Protocol obligations.107 Second, it is an electricity technology and generating method new to New Zealand and may affect its marine environment.108 If an ocean renewable energy project developer can demonstrate its project is nationally significant, the applicant can bypass the “normal procedures” of a regional hearing and approval process and have a centralised decision made through the callin process.109
There are three ways an applicant may have his or her project calledin. First, if the applicant lodges the coastal permit application with a local authority, either the Minister of Conservation110 can exercise his or her own initiative or the applicant can petition the appropriate Minister to callin the application.111 Either way, after the Minister has the application he or she may directly refer the application to a Board of Inquiry or the Environment Court.112 Second, even if the Minister does not refer an application to the Board of Inquiry or the Environment Court, the Minister may still intervene by appointing a project coordinator whose role is to advise the local authority on anything related to
106 Ibid, s 142(3)(b), (d) and (f ). 107 Ibid, s 142(3)(d).
108 Ibid, s 142(3)(f ).
109 Ibid, s 142(3).
110 Ibid, s 148 provides that the Minister of Conservation is the appropriate arbiter for a project destined for the CMA.
111 Ibid, s 142(1).
112 Ibid, s 142(2).
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the application.113 Third, a person may lodge his or her application for resource consent directly with the Environmental Protection Authority (EPA).114 The EPA then sends the application over to the Minister who decides to refer the application to a Board of Inquiry or the Environment Court.115In all, the callin process resembles the Red Queen’s exclamation: “If you want to get somewhere else, you must run at least twice as fast as that!”116 That pace left Alice hot and thirsty, but no closer to her goal.
The RMA also grants Regional Councils the authority to put conditions not just specific on coastal permit applications but occupation of the CMA generally.117 The purpose is to allow Regional Councils to manage competition for coastal space.118 These powers include prescribing when coastal permits may be lodged, deciding as a matter of policy whether the Regional Council will simultaneously entertain coastal permit applications for the same or adjacent sites, and offering outright spatial authorisations for CMA users.119
2.2 Other Coastal Legislation
Although the RMA dominates what and how coastal development occurs, New Zealand has other important legislation over its territorial waters. In fact, New Zealand has experienced a recent surge in new and amended coastal legislation. Arguably, the single force driving the surge is the increasing demand for and hence scarcity of coastal space.120
As coastal space grows scarce its value increases. However, with coastal permits as the primary means for coastal space allocation, CMA users resort to the highly inefficient tactic of lobbying for new legislation to protect or enlarge their space within the CMA. How else to explain new aquaculture amendments and efforts to repeal the Foreshore and Seabed Act (or the passage of the MCAA
113 Ibid, s 140(5).
114 Ibid, s 145.
115 Ibid, ss 146–147.
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itself )? Even New Zealand’s marine energy association, AWATEA, argues for an entirely new allocation regime specific to its industry.121These lobbying efforts, although inefficient, are rational when one considers the only other means for acquiring coastal space is through a different sort of inefficient allocation, the coastal permit. Typically, if legislation is passed, it is not easily repealed. That will also hold true to the extent the legislation sets aside coastal space for a specific use. Wellfunded, politically connected special interest groups are canny to advocate for legislation protecting that group’s coastal use. Thus has the body of New Zealand’s coastal legislation grown.
The MCAA is the newest chapter in the Māori effort to secure legal recognition of what they perceive as their sovereign right over the foreshore and seabed.122 Enacted this year, the MCAA repeals the Foreshore and Seabed Act.123 Its purpose is twofold: to protect all New Zealanders’ interests in the coastal and marine environment; and, acknowledge the Treaty of Waitangi by recognising the inherited right or authority of coastal Māori by providing a way for them to exercise customary rights.124 The MCAA aims to achieve these purposes through three mechanisms.
First, it divests and denies any ownership, to include the Crown’s, in the common marine and coastal area.125 Removing ownership accords a “special status” to the common marine and coastal area presumably to protect all New Zealanders’ interests.126 Yet the MCAA lays out numerous exceptions to the
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rule against ownership.127 For example, the Crown still retains ownership over inter alia conservation sites, precious metals, fossil fuels, and abandoned structures.128 More importantly, the balance of the MCAA arguably creates a framework for limited property rights (admittedly distinct from a fee simple title) for iwi and hapū in the common marine and coastal area.On that, the second mechanism is the legal procedure that iwi or hapū can pursue for protected customary rights or customary marine title within six years from the passage of the MCAA.129 Applicants can use one of two procedural routes. The applicant can engage with the appropriate Minister to establish that the applicant meets certain criteria.130 If the Minister agrees, the Order in Council approves the application.131 Or the applicant can apply to the High Court.132
The legal tests for protected customary right and customary marine title are similar. To prove protected customary rights the applicant group must demonstrate it has exercised that right since 1840, that it continues to exercise that right in some related form, and that the right is currently legal.133 For customary marine title the applicant must show that it “holds” a specific coastal space in accordance with its customary rights and values, and that it has exclusively used and occupied that space without substantial interruption from 1840 to the present.134 Some consider this an onerous test.
The third mechanism is the exercise of a protected customary right or customary marine title. Protected customary rights afford the rights holder a few privileges. For example, the rights holder may transfer the right, commercially gain from exercising it, and curtail its own use of the right.135 More numerous, however, are the restrictions. Restrictions include fishing limitations, controls the Minister of Conservation decides to impose, accepting that consented activities may continue or newly start in areas that overlap with where the right takes place, and that the right conveys no legal interest in the space over which the right takes place.136
Customary marine title confers the following rights: (1) a conditional veto over resource consent applications where the appliedfor activity would overlap with a customary marine title area;137 (2) a conditional veto over
130 Ibid, ss 93–95.
131 Ibid, s 94.
132 Ibid, ss 96–97.
136 Ibid, s 53(2) and ss 56–58. 137 Ibid, s 64(1)(a) and ss 65–69.
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coastal conservation efforts that the Minister of Conservation proposes;138(3) a conditional ability to designate and protect wahi tapu (traditionally, spiritually, religiously, ritually, or mythologically sacred places);139 (4) rights related to marine mammal watching permits and becoming involved in the drafting of the NZCPS;140 (5) ownership over discovered taonga tūturu;141
(6) limited ownership over certain minerals;142 and, (7) the ability to create a customary marine title right planning document.143 In short, the customary marine title offers constrained property rights such as exclusion, management, and ownership.
The MCAA is new legislation, but it largely mirrors the Foreshore and Seabed Act which it repealed. If it does anything, it creates uncertain, fractured property rights and weak title while paradoxically claiming that no party can own the common marine and coastal area. That the MCAA will resolve or even ameliorate coastal space conflict is doubtful.144
2 2.2 Territorial Sea, Contiguous Zone, and Exclusive Economic Zone Act 1977
The Territorial Sea, Contiguous Zone, and Exclusive Economic Zone Act establishes New Zealand’s sovereignty over its adjoining oceans. Relevant to this article, the Act establishes New Zealand’s territorial sea as from roughly the lowwater mark out to 12 nautical miles.145 It also establishes that New Zealand may regulate the production of power derived from water, currents, and winds in the territorial sea.146
The Marine Reserves Act constrains usable space within the CMA. It allows the Department of Conservation to establish marine zones.147 No activity greater than scientific study can happen within the zones.148 Setting aside ocean habitat with unique biodiversity or significant ecological values is important. The Marine Reserves Act uses factors such as “distinctive”, “typical”, and
138 Ibid, s 64(1)(b) and ss 70–74.
139 Ibid, s 64(1)(c) and ss 77–80. See Historic Places Act 1993, s 2 (defining “wahi tapu”). 140 Marine and Coastal Area (Takutai Moana) Act 2011, s 64(1)(d) and ss 75–76.
141 Ibid, s 64(1)(e) and s 81.
145 Territorial Sea, Contiguous Zone, and Exclusive Economic Zone Act 1977, part 1. 146 Ibid, s 8(d).
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“beautiful” to assess these values.149 How “beautiful” is relevant to creating scientific study zones is difficult to understand. Fortunately, the Department of Conservation is thinking about how it could create mixeduse marine reserves that would allow more than scientific study.150 Until that time, as marine reserves increase, so will competition over the remaining space.
The Fisheries Act governs commercial fishing and to an extent aquaculture. It too can constrain coastal activities. Sometimes it imposes these constraints directly. For example, it allows for the creation of mataitai fishing reserves,151 wherein commercial activity can be prohibited.152 The Fisheries Act can also unintentionally constrain coastal activities. For example, it creates individual transferable quota (ITQ) which gives the owner of the quota a secure, tradable property right in a certain amount of a commercial fish stock, but not in the specific space of ocean that the quota owner or his or her agent typically uses.153 The ITQ owners thus have a distinct incentive to protect the space in which they exercise their ITQ or the environment they perceive as critical for the target fishery (eg hatchery grounds). The Fisheries Act is yet more legislation that protects a particular user group’s activities and access.
The Aquaculture Reform Act is probably the most emblematic in terms of a single group’s effort to lock away swathes of coastal space. The Act, in conjunction with the RMA, provides for creating Aquaculture Management Areas.154 Again, Regional Councils are vested with the power of creating these areas which must be “principally for aquaculture activities”.155 However,
149 Ibid, s 3(1).
150 Danica Stent, policy analyst, Department of Conservation (18 April 2011) pers comm. 151 Fisheries Act (1996), s 186.
152 Ibid, s 186(2)–(3).
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Regional Councils can approve activities to take place in these areas.156 In practice, though, creating these areas has proven difficult since no Regional Councils have created any in the last decade.157 Whatever the reason, giving Regional Councils the power to lock up areas for one single use is neither equitable nor efficient. Even Regional Councils do not have the expertise for this.158
3. ANALYSIS OF NEW ZEALAND OCEAN ENERGY SITING LAW
New Zealand’s legal framework for siting ocean renewable energy devices does have its advantages such as having a single government that can standardise policy down to the local level. Unfortunately, the disadvantages outweigh these advantages.
3.1 Advantages
New Zealand’s legal framework for siting ocean renewable devices enjoys at least two advantages. First, overarching national policy can direct Regional Councils in how to address ocean renewable development. Second, ocean renewable developers deal with a relatively streamlined permitting process as compared to the United States.
The RMA builds a national structure for strategically using natural resources. Various policies and statements give that structure form and influence specific natural resources decisions at the regional level.
The NZCPS leads New Zealand’s attempt to provide a uniform approach to ocean renewable development. Being the only statutorily required national policy, the NZCPS carries special significance. It drives how Regional Councils approach RCPs and uses within the territorial sea. It can also encourage development, as it does for ocean renewable energy. Likewise, it can announce
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new values for coastal uses that may not have received much attention, as it does for national surf breaks.159However, that it is the only statutorily required policy is not surprising. The territorial waters are the most significant portion of New Zealand’s jurisdiction subject to nearexclusive governmental control. That is, the government can regulate these waters without having to account much for international maritime law, as in the case for its Exclusive Economic Zone.160 Unlike on land, central government does not share the CMA with innumerable owners. (This point is further analysed below.) Establishing uniform policy for territorial seas is thus useful because it signals what the government will support for development (eg ocean renewable power) and conservation (eg national surf breaks).
RCPs flow from the NZCPS. Commentators appear to rate RCPs as having some effectiveness.161 While that effectiveness might not always filter down to the district level,162 it is valuable that coastal stakeholders can benchmark an RCP against the NZCPS to identify where any divergence might occur. Because of this, stakeholders can hold Regional Councils accountable for any RCP at odds with the NZCPS.
In short, having a hierarchy of policies creates some continuity through the levels of government as well as across the country. That continuity inures to the benefit of coastal users like ocean renewable developers.
Where the NZCPS and RCPs form the government’s overarching strategy for how the CMA should be managed, coastal permits are individual efforts to carve out one’s own position in the CMA. From that perspective it is notable how simple and straightforward the coastal permit process is.
Indeed, procedural simplicity is one advantage of coastal permits. The applicant only has to apply to one agency for the permit. This is advantageous in itself. However, that advantage seems to be contingent on the scale of the project. If the project is nonnotified or limited notified, as opposed to being publicly notified, the process is simpler and more straightforward; the applicant is unlikely to have to adjust his or her project because external parties raise issues. Moreover, it will cost the applicant very little in comparison to a publicly notified consent because the applicant will not have to attend and prepare for public hearings. In addition, the applicant is more certain to receive the consent
159 Department of Conservation “New Zealand Coastal Policy Statement 2010” (2010), sch 1
<www.doc.govt.nz>. 160 Smith, above n 83.
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without having to litigate at the Environment Court, which can add at least a year to a project.163Regional Councils are also well positioned to know users in proximity to project sites. Because locals make up the councils, they have a better understanding of local conditions than national agencies would. Therefore, coastal permit applicants can leverage Regional Council knowledge to identify the most appropriate local parties to consult with before the proposed project. And Regional Councils are willing to do this.164
Three New Zealand ocean renewable power developers exemplify these advantages.
Wave Energy TechnologyNew Zealand recently secured nonnotified consents to deploy a wave device near Lyall Bay, Wellington, and another one a few kilometres from New Plymouth, Taranaki.165 WETNZ acquired these consents in less than three months by taking advantage of all the features just described.166 It sought only nonnotified consents. It found out from the respective Regional Councils who the necessary parties would be to talk to. It did not overreach in terms of trying to deploy a lot of devices. It pursued sites that are close to urban areas and thus less likely to be perceived as “pristine”. For all these reasons, WETNZ minimised its costs and reduced opposition so that it could test its pilot devices.
Similarly, Neptune Power in the Cook Strait and Chatham Islands Marine Energy Limited secured their coastal permits within six months.167 These developers only proposed deploying a few (or less) devices, and both engaged with potentially affected parties and stakeholders early to ensure there would be little opposition. If there was opposition, they found a way to resolve it before applying for their coastal permits. In short, these projects demonstrate that getting a coastal permit is like getting the Red King: creating as little disturbance as possible is the best strategy to speedy approval.
These experiences show two things. First is that coastal permits are not barriers per se to ocean renewable generator device deployment. Second, in order to obtain a coastal permit with minimal cost the developer has to constrain the number of devices, the location, and thus the ability to succeed financially. As the next section explains, the latter point is but one of the disadvantages of using coastal permits to allocate coastal space.
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3.2 Disadvantages
Coastal resource consents combine the simple purpose of avoiding undue environmental effects with a much thornier function of allocating public space for (usually) private gain. The Crown (qua Regional Councils) cannot avoid these thorns as it is the sole decisionmaker over coastal space allocation. While its ambit is protecting coastal resources for the multitude of users, its record is far from perfect.168 Considering the vastness of the CMA and its importance to so many, the Crown ought to be forgiven for not always getting it right. But part of the problem may be the Crown’s reliance on using coastal permits as both protection against environmental degradation and for spatial allocation in the commons.
The “commons” is not a universally agreedupon term. It can variously mean universal access or public domain.169 Elinor Ostrom — whose three decades of studying commons resource management won her a Nobel Prize in Economic Sciences — has a more nuanced view. Ostrom separates “commons” into distinct categories of commonpool resources versus commonproperty regimes (eg information on the internet versus the regime governing use of and access to that information), resource systems versus resource units (eg rivers versus water extracted from rivers), openaccess regimes versus commonproperty (eg high seas versus a nation’s EEZ), and the sticks of the property rights bundle (eg access right, exclusion right, management right, and alienation right).170
(i) Coastal Marine Area as “commons”
Viewed through Ostrom’s model the CMA is a commonproperty regime because the government controls access over an area that is otherwise subject to widespread use with little scope for the permissible exclusion of others. Within
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that commonproperty regime the CMA covers the ocean, a resource system, out to 12 nautical miles from which users extract resource units like fish, fossil fuels, nutrients for aquaculture, and space for wave energy.In terms of what property rights user groups hold, there is a wide disparity but clear hierarchy within the CMA.171 The Crown sits atop the hierarchy because it holds the full range of rights.172 These include access rights, exclusion rights, management rights, and alienation rights. For example, the Crown can pilot naval ships through the CMA (ie access), mine for gold (ie extraction), regulate the CMA (ie manage), deny entry to foreign naval ships (ie exclusion), and lease fossilfuel extraction (ie alienation). Arguably, Māori might be considered the next user down the hierarchy chain. Māori can boat in the CMA (ie access), commercially, culturally, and recreationally harvest fish (ie extraction), keep others out of tapu areas (ie exclusion), and submit management plans (ie manage). According to Māori I have talked with, the strength of their management impact is debatable. Māori have the right to submit management plans, but Regional Councils only need to “have regard to” these plans.173 To the extent Māori management plans merely influence and do not actually regulate use, their management plans are unlikely to fall under Ostrom’s definition of “management”.174 Just below Māori are coastal permit holders. Although they lack any management right, they can have a robust extraction right (eg oil or gas), exclusion right (eg Crest Energy’s proposed exclusion zone), and a limited alienation right (eg transferability). Finally, recreational users occupy the lowest rung because they only have access rights to do things like sail, surf, or dive, and limited extraction rights for fish.
(ii) Coastal Marine Area governance
As a commonproperty regime the CMA suffers from classic dilemmas like multiuse conflicts and free riding. In the words of a New Zealand ocean policy
26 New Zealand Journal of Environmental Law
advocate, the marine policy engenders a “grave lack of trust among stake holders”.175 That lack of trust emerges primarily because of how CMA space is allocated.Ostrom has spent her career analysing and providing solutions for how resources within commons are managed. From over three decades of field and laboratory research Ostrom has concluded that solitary, central government control over common resources leads to failure.176 One might be tempted to argue that, because Regional Councils approve coastal permits and thus coastal resource use, Ostrom’s findings are not entirely applicable in New Zealand. However, that misses the critical point that Regional Councils are Crown agents. They derive their coastal governance power from the Crown and they follow central government law.
Indeed, sole Crown power over the foreshore and seabed has resulted in the ineffective and inefficient results that Ostrom’s work predicts. For example, an aquaculture “gold rush” of numerous applications for the same site immediately followed enactment of the RMA.177 That led to the inequitable and inefficient aquaculture moratorium. Regional Councils also show a pattern of overriding Māori coastal uses or ignoring Māori opposition to coastal permit applications overlapping with those uses.178 Importantly, the point is not that Māori per se have received inequitable treatment (although the pattern is striking) but that the coastal permit system gives the Crown qua Regional Councils carte blanche to disrupt or ignore existing coastal users. That situation creates uncertainty for investors, reduces incentives for development, and strains relationships and trust among ocean users and between the users and Regional Councils. This accords with Ostrom’s finding: “When resources that were previously controlled by local participants have been nationalised, state control has usually proven to be less effective and efficient than control by those directly affected, if not disastrous in its consequences.”179
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Ostrom also criticises the use of imposed markets as an exclusive strategy to manage commons.180 But what emerges in New Zealand is that stakeholders do not trust each other because the only recourse to solving coastal space conflict is resorting to legal remedies. Such recourse might be through the growing user specific legislation or through litigating coastal permit applications.In sum, relying on one strategy — whether central agency or imposed market — to control access, use, and tradability of a common resource is inefficient and ineffective. One major obstacle, though: agencies are loath to give up their powers.181
(i) Regional Coastal Plans
Regional Councils must produce RCPs to set a broad agenda reflective of the NZCPS for coastal use within their respective coastal regions. But the drafting and revising for RCPs makes it too inflexible to handle unforeseen technologies or growth. According to the Taranaki Regional Council it can take roughly five years to revise an RCP.182 During that time the council engages in a drawn out consultation process.183 If the Regional Council decides to divide up the CMA for specific commercial uses, like ocean renewable devices, that process also risks deteriorating into drawnout conflict and criticism.184 Conflict of this sort would divert ocean renewable developers’ resources to protect whatever patch the Regional Council proposes for their devices in this zoning process. Considering that these developers’ resources are costly, that seems a poor way for them to protect space they may not want in the future as their technology changes.
And the likelihood of changing technology raises another problem with RCPs as spatial allocation tools. Whatever RCP emerges from the consultation prevails over that region’s slice of the CMA for 10 years. But since major revisions take five years an RCP is actually in effect for 15 years.185 Predicting when new technologies will emerge or when existing technologies will change is difficult if not impossible. For example, ocean renewable generation barely existed 10 years ago. In another 10 years it is impossible to know how existing
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ocean renewable devices will change (and they will change), what new devices might be invented, and how resource needs and the footprint for any of these devices will grow or shrink. Therefore, relying on RCPs as tools to zone or allocate space for any one technology, especially one as nascent as ocean renewable power, is unwise.Moreover, RCPs can differ markedly across the nation notwithstanding that each is supposed to reflect the same hierarchical documents like the NZCPS. And yet a survey of Regional Councils’ Regional Policy Statements shows scant interest in ocean renewable energy development. Only Environment Waikato and the Greater Wellington Regional Council propose to recognise the value of ocean renewable energy in their upcoming RPS, but neither has done so yet.186 A patchwork approach to ocean renewable energy planning could easily lead to ocean renewable developers jurisdiction shopping. Renewable energy developers exhibit this behaviour in England by targeting the Cornwall Council because of its reputation for easier permitting.187 Regulatory arbitrage of this sort is not helpful because it means ocean renewable developers chase favourable permitters rather than the best resource for their devices. The result is that there is not the most optimal use of the resources.
In short, RCPs are not ideal tools to address coastal space allocation for ocean renewable projects.
(ii) Coastal permits
As mechanisms for allocating space, coastal permits are also problematic. The problem starts with Regional Councils, which being underfunded and poorly equipped to handle ocean policy and science are like the Looking Glass’s White Knight.
(a) Decisionmaking
The decisionmaking process is the chief problem why coastal permits cause so much distrust and conflict. First, the RMA gives consent authorities too much discretion. Coastal permit decisions must “have regard to” the NZCPS and the Draft NZES.188 With the support those policies offer for ocean renewable energy devices one might be tempted to think a coastal permit application for ocean renewable development stands a fair chance. But Regional Councils can follow the letter of the law and “have regard to” without coming out in favour of these policies or plans.189 That is because the RMA also allows consent authorities to
Occupation Could Facilitate Ocean Renewable Energy 29
have regard to any other relevant and reasonably necessary matter.190 Giving consent authorities this much leeway means applicants are less certain of knowing what to expect or how to prepare.Second, decisionmaking is marked by a common perception that Regional Councils lack oceans expertise and resources to manage multiple ocean uses. Across the spectrum of stakeholders I interviewed the prevailing opinion is that Regional Councils lack ocean policy expertise and the funding to hire such experts. When I asked Northland Regional Council about this they agreed it was generally true for Regional Councils.191 When asked whether Regional Councils should have a role in proposed EEZ permits, Hon Nick Smith said they should not because of their lack of specialisation.192 This is not to say that Regional Councils do not do the best with what they have. However, their reputation as decisionmakers on oceans issues is marred by a perception of inadequate understanding and funding.
Third, the decisionmaking process all the way from Regional Council to Environment Court hearings fails to recognise de jure or de facto property rights. De jure property rights are lawfully recognised and governmentally granted, the holder of which can resort to a government authority to enforce them.193 De facto property rights are less secure because government does not grant them nor will it necessarily enforce them. Rather, de facto rights emerge among resource users who regulate themselves.194 In the CMA, commercial fishing interests have de jure property rights in the form of ITQs, which are governmentally granted and enforced perpetual rights for the ITQ owner to a share of a fish stock.195 De facto rights exist among coastal users like surfers who enforce among themselves a custom of priority to catching waves.196
However, the RMA does not require recognition of either of these rights for coastal permit decisions. Newly consented activities cumulatively wear down these property rights.197 In turn, reducing the strength of these rights incentivises rights holders to increasingly litigate or lobby to protect their rights. Crest Energy’s tidal turbine project in Kaipara Harbour exemplifies this outcome because commercial fishing interests (de jure rights holders over
context, how Regional Councils can override the Treaty of Waitangi when weighing the full balance of interests for a specific resource consent application).
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snapper ITQ) and local iwi (de facto rights holders with a perceived right over the Kaipara Harbour) appealed the Northland Regional Council’s approval of Crest Energy’s application.In sum, neither applicants nor existing users have certainty around decisions about coastal permits.198 That a consent authority can consider anything “relevant and reasonably necessary” — but not existing property rights holders
(b) Submissions
The RMA allows any person to make a submission on a publicly notified con sent application.199 To paraphrase an energy insider, this virtually guarantees that any publicly notified project generates a swarm of submissions out of which at least one will appeal the Regional Council decision to the Environment Court, thereby adding at least one year to the project. An Environment Waikato official put it more succinctly: it encourages “vexatious comments”.200
The democratic premise underlying this inclusion is laudable. However, the unlimited openness — allowing submissions from anyone regardless of their proximity to or connection with the appliedfor project — could likely discourage ocean renewable development at the margins. First, it almost certainly increases the application time and costs both for the applicant, who will want to rebut adverse submissions,201 and the consent authority, who has to filter through the submissions to make sure a person is a “person A” or “person B”.202 Moreover, the applicant must pay most of the hearing process costs. Second, the more permissive the submission process the greater the likelihood of litigation because the only standing requirement for a nonapplicant to appeal a coastal permit decision is that the appellant made a submission.203
Applicants can limit submissions by getting the written approval of potentially affected parties beforehand.204 On land, the counterparties may have a distinct reason to sign their approval because they might own the land on which the renewable energy developer is leasing or buying space. Conversely,
202 Ibid, s 96(2)–(4).
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in the CMA no party may own the space; therefore, the incentive to sign away one’s right to submit and thus appeal is reduced.Again, Crest Energy’s experience in Kaipara Harbour is informative. Crest Energy approached Te Uri o Hau and the two parties entered negotiations over a joint venture.205 These negotiations quickly dissolved. A number of reasons may explain why. However, the question remains: would their negotiations have succeeded if Te Uri o Hau had a more secure right in the foreshore and seabed? In comparison, geothermal energy development often takes the form of joint ventures with Māori. Tellingly, Māori have a secure legal right over the geothermal resource.
Finally, whereas the RMA’s purpose is to protect the environment writ large, submitters that have a de facto or de jure property right in the ocean use the submissions process to protect their interest. This is because, as pointed out above, they have no other recourse to protect their right. For example, commercial fishing interests opposed the Kaipara Harbour tidal project because they believed that it would negatively impact the snapper stock. Undoubtedly, the permanent harvest right of an ITQ gives commercial fish harvesters a longterm perspective on protecting their fish stock.206 But these commercial harvesters and similarly placed rights holders must resort to the highly uncertain, indirect process of submissions and appeals to air their concerns with the proposed project.
The callin process brings decisionmaking power for coastal permits from the regional to the national level. While it might shorten the time between lodging the coastal permit application and the final decision, it is not necessarily going to reduce conflict. If anything, it might make it more intense.
The callin process opens procedural shortcuts for certain projects, but it does not change the substantive requirements of a coastal permit application. The applicant still has to prove that he or she will avoid, remedy, or mitigate any adverse environmental effect. Since calledin coastal permits will still allocate space they will likely continue to generate opposition as for a normal coastal permit. It might even increase the severity of that conflict because the truncated timeframe would put wellfunded and legally sophisticated opponents (ie those with the most to lose) in a much more vociferous defensive position from the outset.
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Moreover, the callin process might even raise the hurdle against the applicants because the Minister of Conservation is the arbiter. Unlike Regional Councils, the Minister of Conservation is under the mandate to conserve the coastal environment, a more restrictive outlook than the RMA’s sustainable management.207 But these commercial harvesters and similarly placed rights holders must resort to the highly uncertain, indirect process of submissions and appeals to air their concerns with the proposed project.On the other hand, the callin process may magnify inequity over coastal use decisions because it favours applicants who have the financial and legal wherewithal to prove “national significance”. Poorly funded applicants will be less able to take advantage of the callin process than wellresourced ones. Similarly, underfunded project opponents would have little chance of mounting effective opposition on their own. As an Auckland attorney described it, the callin process “railroads opposition” to make way for a nationally significant project.
3.3 Marine and Coastal Area Act Constrains Ocean Development
When New Zealand passed the Foreshore and Seabed Act in 2004 fury ensued.208 Four years later the National Party came to power along with a newly formed Māori Party in the wake of the furore.209 Part of their ascendancy rested on a promise of repealing the Foreshore and Seabed Act. The coalition government did so with the Marine and Coastal Area (Takutai Moana) Act 2011. The Act repeals the Foreshore and Seabed Act, constrains ocean development, and offers restrained control for Māori.
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The MCAA provides mechanisms for Māori to have comanagement over the common marine and coastal area.210 For example, it creates processes by which Māori can get a customary rights title, submit plans, and have a veto over certain uses in the common marine and coastal area.211 It also grants co management control through Māorispecific marine use plans.212 But all this existed in the repealed Foreshore and Seabed Act.213
The MCAA seems to do more to constrain these comanagement rights than allow for them. For example, it prohibits Māori from alienating their rights.214 Although some Māori leaders told me that the inability to sell their rights is not troublesome, alienability is not limited to an outright sale. It also includes leases such as those Māori use for farming and onshore renewable energy production. Leasing provides a useful comanagement tool without giving up longterm rights in the resource.
Moreover, the MCAA creates various ways for Māori to lose their co management rights in relation to proposed infrastructure. The Minister of Land Information, for example, can waive a customary marine title group’s permission right if the holder of that right fails to respond within three months to a Ministerial invitation to negotiate or if that group refuses to negotiate.215 Even more draconian, if the customary rights group agrees to a coastal permit that would “have the effect of preventing, in whole or in part, the exercise of a protected right” then that group essentially relinquishes that right.216 The troubling aspect here is that there do not appear to be any guidelines or definitions for how to determine whether an appliedfor coastal permit would prevent the exercise of a protected right. In fact, all Māori I canvassed told me that, if their group succeeds in getting a customary right, then they do not plan on relinquishing that right so long as their iwi or hapū exists. Thus even if their group accedes to a coastal permit with a 35year limit, it is unlikely that will prevent them from exercising their customary right in “whole”. Constraining customary rights holders in this way means they are less likely to agree with shortterm coastal permits even though they might not see those consented projects per se as interfering with their longterm use of the rights.
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The MCAA drastically limits incentives for customary rights holders to be willing participants in certain coastal permit projects. That is not the only constraint the MCAA puts on ocean development.
There is also the additional level of bureaucracy on top of the RMA. For example, the MCAA requires the proponent of a new nationally or regionally significant structure or infrastructure — categories in which ocean energy devices would fall — to go through additional levels of bureaucracy if the project will overlap with customary marine title area.217 When a project will overlap a customary marine title area it triggers a multiplicity of complications for the coastal permit process including additional consultation requirements,218 additional coastal permit requirements,219 and an additional layer of factors for the consenting authority to consider.220
The MCAA imposes a bias against development. In the context of cus tomary rights holder decisions there are provisions that would prevent those holders from retracting or appealing their permission for certain development, which will almost certainly make the rights holders extremely conservative and risk averse.221 Similarly, developers face a presumption of doubt when they are seeking approval for what is considered a deemed accommodated activity.222
In sum, the MCAA provides Māori some level of comanagement but that appears tempered by constraints on that control and more reasons not to cooperate with ocean renewable power development than to cooperate.
3.4 Kaipara Harbour Case Study
Of the New Zealand companies with or applying for permits to deploy ocean renewable energy devices, Crest Energy is the only one that has experienced (and continues to experience) severe opposition. The Environment Court said that Crest Energy’s consultation efforts were “extensive, considerable and meaningful”.223 What then explains the continued opposition to Crest Energy’s project proposal? The answer starts with the scale of Crest Energy’s proposal, but probably is rooted in the Te Uri o Hau’s unsettled property rights over the Kaipara Harbour mouth.
219 Ibid, ss 65 and 91(5)(b).
220 Ibid, sch 2(1).
221 Ibid, s 65(5) and s 67(2).
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As opposed to other New Zealand ocean renewable developers, Crest Energy took the daring chance of proposing to build a commercialscale array of 200 tidal turbines. It was the first in the world to receive consent to do so. Notwithstanding that the device it selected — the OpenHydro Turbine — is still undergoing testing and has never been mass manufactured, Crest Energy pushed ahead with its coastal permit application for a 35year term. The other New Zealand ocean renewable power developers propose deploying no more than a few devices (if that) and only for a temporary period. In short, Crest Energy went big.Size, though, may not have mattered as much as the lack of certainty Te Uri o Hau has over its interest in the Kaipara Harbour. The Environment Court noted that “the involvement of Te Uri o Hau rests on an underlying assertion of customary proprietary ownership of the seabed”.224 Indeed, Te Uri o Hau lodged a claim with the Crown for Territorial Customary Rights in 2009, three years after Crest Energy first applied for its coastal permit.225 It did so, according to the Interim Decision, because it was concerned about the effect a decision by the Northland Regional Council and subsequent commercial development might have on its ability to secure these rights.226 The Court dismissed these concerns as not having a basis in law because coastal permits are neither real nor personal property.227 However, the test for a customary protected right is “exclusive occupation” and that means that whether Crest Energy had a personal property interest in a coastal permit is beside the point. It would have occupied part of the site where Te Uri o Hau claimed its interest. That could have disrupted exclusive occupation.
Nevertheless, the Environment Court opined that “the heart of the appeal” was Te Uri o Hau’s commercial aspirations for the Kaipara Harbour.228 Even if that were true that would neither diminish nor refute the importance of securing customary rights. In fact, it would be logical to pursue the customary rights before beginning any commercial development so that the holder of those rights would be more secure in its pursuit of commercial activities over the customarily recognised area. A representative for Environs Trust (the organisation under which Te Uri o Hau brought suit) said if Te Uri o Hau had secured customary rights it would also have had an “effective right of veto over development proposals”. Undoubtedly, those rights would have mooted its motives to litigate against the Crest Energy project.229 Moreover, if Te Uri o
226 Ibid, at [40]–[41].
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Hau had secured rights, the tentative negotiations that Crest Energy entered into with the hapū over a joint venture may have actually been fruitful because both parties would have had more certainty over their relative bargaining position.230 But that did not happen.In the end, Crest Energy prevailed over Te Uri o Hau and the other appel lants who brought suit over ecological concerns. On 17 March 2011 the Minister of Conservation fully granted Crest Energy permission to conduct staged development starting with environmental surveys and then deploying a few turbines at a time in numerous stages.231 The process took nearly five years from the date Crest Energy first applied for its consents.232
When Alice went through the looking glass she found a topsyturvy world. Similarly, if renewable energy developers move from the land to the ocean they unknowingly move through a legal looking glass. On land, developers and their investors have certainty about who occupies what land or resource. Such certainty allows them to more precisely plan when, where, and how to apply for resource consents. In the ocean, though, the RMA upends that certainty. Developers and existing users alike struggle to understand who occupies what while Regional Councils keep shifting them around like chess pieces. Lifting that legal looking glass would remove an unnecessary distortion.
4. TIERED RECOMMENDATIONS
The following recommendations proceed in order of least cost, easiest to achieve, and most politically feasible through to a full paradigm shift that will require a lot of work and strong leadership. Their combined purpose is to create incentives to promote intersector trade as an alternative to the reigning paradigm of conflict. It does this by increasing the strength of the incentives from the admittedly anodyne meeting between stakeholders through to a gov ernment overhaul of how coastal space is allocated.
4.1 Ocean Renewable Energy: Meet Your Neighbours
Ocean renewable energy developers as an industry must overcome certain barriers before they can successfully capture ocean energy. Technical barriers, for example, such as lack of commercial competitiveness against onshore power
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production, can be overcome by engineering new designs. Community barriers are another issue. Coastal communities are starting to resist their presence.233 Therefore, an ocean renewable energy association would do well to make early and frequent endeavours to make themselves welcome in the community.Along those lines, ocean renewable energy developers should meet as a unified group with coastal users who have the most at stake as the industry develops. These users include coastal iwi and hapū, commercial and recreational fishing, aquaculture, shipping and navigation, and government bodies like the Department of Conservation, Ministry for the Environment, and Regional Councils. The purpose of the meeting ought to focus on building relationships with these users who, ultimately, all have a common interest in ocean use. Ocean renewable energy developers obviously have competitive commercial interests that they would rather not reveal. While they should not have to reveal those interests, they should not use that as an excuse not to participate. In fact, being able to exercise those interests depends a lot on how well they can work with other ocean users over site selection. Strategy should not stand in the way of overall success.
In short, as soon as possible the New Zealand ocean renewable energy association, AWATEA, should host a weekend of roundtable discussions with the abovementioned groups with the twofold aim of developing relationships with their maritime neighbours and building rapport towards cooperation rather than conflict.
4.2 Regional Councils: Strengthen the Process
Regional Councils are coastal gatekeepers. The RMA may not explicitly imbue them with this power, but the de facto function through coastal permits is clear enough. As gatekeepers, they ought to set similar standards so coastal developers and users know similar treatment awaits them around the country. Presently, they do not. To that end, Regional Councils should standardise their RCPs to reflect the national support for ocean renewable energy.
They can do this first by standardising their RCPs through interim updates. They can also sign memoranda of understanding (MOU) that specify how Regional Councils will assess applications for ocean renewable energy. This approach has precedence in renewable energy development. For example, the Environment Waikato and Bay of Plenty Regional Councils signed an MOU on geothermal development.234 Their MOU stresses common management and
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the need to share scarce technical knowhow and develop standardised policy approaches.235 No reason exists why Regional Councils could not apply this practical, commonsense solution in the context of ocean renewable energy development. It will encourage interregional communication, sharing of technical expertise, and reduce opportunities for regulatory arbitrage.Second, Regional Councils should have to explicitly recognise existing ocean property rights in commercial fish stocks and customary title, where applicable, during the coastal permit hearing phase. Two reasons explain why. First, it would reduce the ab initio tendency for these rights holders to resort to legal conflict because they would have assurance within the coastal application process that their explicit rights enjoy explicit recognition. Second, such recognition would strengthen the institutional framework on which any future rights depend. Thus ensuring the certainty and security of these rights builds trust in the underlying legal institutions which in turn encourages newcomers.236 Making this change will require amending the RMA’s sections that describe what Regional Councils must consider when considering coastal permit applications.
Third, central government should assist Regional Councils by developing a baseline strategic environmental impact assessment for all ocean renewable energy devices. Both Scotland and the United States completed fullscale environmental assessments for ocean renewable energy. The Scottish Strategic Environmental Assessment reviews the types of ocean renewable energy devices, records what the coastal environment includes, analyses possible impacts renewable devices might have on discrete features of the environment (eg marine mammals and seascape), analyses the quantity and quality of the offshore resources for renewable energy production, and addresses any cumulative effects.237 The American version covers much the same scope but also includes a section on potential mitigation measures that might reduce any impact that renewable energy devices may cause.238
Creating a similar document in New Zealand would have significant value. It would provide a baseline for Regional Councils to understand what is known and not known about ocean renewable energy and its potential beneficial and adverse impacts. It would also give Regional Councils a neutral benchmark against which they could test scientific and technical studies that project
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proponents and opponents submit. It would also provide Regional Councils the template to conduct their own such assessments. Moreover, it would provide a strategic overview for New Zealanders to know where their wave, wind, and tidal resources are strongest, but also where potential environmental concerns might be greatest. The National Institute of Water and Atmospheric Research already has a lot of this information.239 Finally, an overarching environmental assessment would demonstrate to New Zealand’s renewable energy entrepreneurs that the country is taking seriously its vast potential for offshore renewable power production and its reputation as clean and green.240
4.3 National Government: Allow Occupants Choice
Competition does not have to decay into conflict. Yachties race without fighting each other and both are stronger in the end because of it. Conversely, conflict always comes from competition. Facebook attacks Google, not Budweiser.241 The key is determining how to allow competition while minimising unnecessary conflict. Allowing coastal occupants choice to allocate space among themselves will go a long way toward that.
While New Zealand already practises a version of this in its oceans, commentators call for even more secure rights in the coastal setting. Regarding Māori use, Professor Magallanes says: “Rights based on title are more permanent and enduring and there is thus more need to provide for them in the longer term.”242 In the fishery context, Mark Gibbs of the Cawthron Institute argues that one way to reduce ocean conflicts is to extend property rights to small areas for fishing which they could accumulate.243 Even the Waitangi Tribunal has accepted that the recognition of exclusive occupation rights to parts of the coast extends back to before the Treaty of Waitangi.244 There is also international precedence for intersector tradability of ocean space. In
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Canada, licence holders of traditional herring weir sites sold the licence for aquaculture.245
Setting up tradable occupation rights in New Zealand will not be easy. Nor should it be. But if any country has an adequate basis for TORs it is New Zealand.
(i) New Zealand’s legal bedrock
New Zealand leads the world (along with Denmark and Singapore) in freedom from corruption.246 That is owed in no small part to robust and strong underlying legal institutions. The respect for these legal institutions and laws themselves allows rule of law to prevail in New Zealand. In a positive feedback loop, strong rule of law supports independent judiciaries which further strengthen the rule of law. The strength of New Zealanders’ property rights and trust in market transactions exemplifies the validity of this cycle.
(ii) Reasons for tradable rights
Going from a fiat marine spatial allocation system to one based on tradability should not be taken lightly. Five reasons explain why the transition is sound.
The first two reasons are that tradable, exclusive occupation rights maximise the efficient allocation of scarce resources247 and reduce rentseeking behaviour.248 Across disciplines, New Zealand experts note the increased scarcity of CMA space as more users enter it. Ocean renewable energy is the most recent entrant, but it will not be the last. The increasing scarcity raises the value of CMA space to existing and new users. These users reflect that value through increased litigation to slow down consent decisions.
By contrast, a tradable market would allow parties to engage in private transactions from which both would gain. That type of transaction as opposed to fiat decisions reduces the inefficiencies described above, and the money not spent during the coastal permit application can be spent on site enhancement, development, and so on.
Ecological Economics 309 at 313.
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Third, private transactions build trust between the transacting parties.249 As opposed to coastal permit consultations, a oneoff occurrence, market negotiations are based on longterm considerations because the participants are looking to future income and value of the present asset.250 These negotiations build ongoing relationships especially when the traded good is familiar to the transacting parties.251 These relationships thus have the potential to encourage mutual respect: a tenant depends on the landlord allowing access and the landlord depends on the tenant’s rents. While there never is perfect symmetry, both the tenant and landlord gain from each other so long as they both cooperate.Fourth, private transactions minimise externalities.252 Centralised distri bution of a public good such as ocean space distributes an asset at a variable, poorly valued cost to the applicant. Without coastal occupation charges or royalties the only cost the applicant faces is from the coastal permit application, which does not compensate the public or existing users for their lost value in the public space. That foists an externality on the public, which possibly bears the cost of losing partial or full access to a public space without remuneration. Fifth, and very important, is public revenue building. A TOR regime could provide a brandnew revenue source for government. Considering that many interviewees told me how few governmental resources there are for ocean policy and governance it would seem useful to generate such fees from commercial users of the coastal environment. Government could generate revenue from fees on licence applications, from taxes on transactions, and from coastal occupation charges. Comprehensively, these levies should not be set so high that they constrain TOR market liquidity. But they should be earmarked for ocean governance and distributed to Regional Councils and the central government body that would run the TOR programme. Finally, some of these
funds could be used to build the national registry structure.
(iii) Cultural considerations
Creating a tradable market system needs to consider the cultural context.253 Some ocean user groups may oppose the system. These especially include recreational fishers and boaters.254 Indeed, whether New Zealanders writ
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large will accept an expansion of the existing ocean property rights is open to question. For example, there appears to be an almost religiously held belief among the public that they should be able to freely access oceans and beaches.255 Moreover, according to the GNS Science Māori liaison, Rawiri Faulkner, the historical fracturing of land ownership among certain iwi caused by vesting individual versus collective title predisposes some iwi to view alienability sceptically.256 So any consideration of establishing TORs needs to carefully assess how different groups will react to the idea and how to modify TORs to account for those reactions.
Implementing TORs should be done in a staged approach that starts with defining what rights will be allowed, creating a transition phase to allow those rights to be realised, and culminating in allowing registered participants to fully express their rights.
(i) What rights in the ocean?
Creating a TOR regime will require deciding a number of questions as to what the TOR regime will allow and who can participate. The primary function of TORs should be to allow commercial ocean users the ability to trade their occupation of a certain site with any other interested, registered party. While the RMA already allows this, it limits the transfers to between coastal permit holders. The MCAA and Fisheries Act also allow rights or quota holders to transfer some level of their rights or quota.
Ideally, TORs should allow transferability, or alienability, across all commercial ocean uses. New Zealand policymakers should determine whether TORs alienability will take the form of longterm leases, subleases, or outright sale. However, they should bear in mind the importance of stability, security, and liquidity as factors for alienability.
Second, a TOR regime needs to be robust. Therefore, it should include as many participants as possible. Currently, there are a number of different property rights of type and kind in New Zealand’s territorial waters.257 However, there is no mechanism to allow, for instance, fishing interests to trade with coastal developers for space. Building a regime that allows all these users a single clearinghouse in which to conduct their trades will help develop robustness.
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Third, the TOR regime needs to recognise that territorial waters are ultimately a New Zealand public good. Therefore, participants must be a New Zealand entity with a majority percentage ownership by New Zealanders. Additionally, the amount of space that can be held by one entity should be capped to prevent monopolisation; however, it cannot be so small as to reduce the chance for a robust market to develop.Finally, there is little reason why a TOR regime could not thrive while allowing recreational fishing and boating access, as well as any commercial and New Zealand naval navigation. Therefore, TORs should be subject to two types of easements. The first should allow small boat navigation (eg under 15 metres) to recognise the public privileges of boating, fishing, and other enjoyment of the oceans. This easement might include limits on fishing gear types where renewable power devices are submerged. Individual TOR participants concerned about issues of public safety could apply to limit the easement over their site. The second easement should recognise the navigational needs of commercial and New Zealand naval traffic. In neither case should the underlying TOR holder be able to exclude or extract rent from passing vessels. In short, there is no reason a TOR regime could not coexist with navigation over territorial waters.
(ii) Transitioning to tradable occupation rights
The transition from the current system to a TOR regime could start by recognising the de facto property regime that already exists in the territorial waters. Doing so could assist commercial ocean users in developing a tradable regime mindset.
The first step could be for Regional Councils to start charging commercial coastal users as allowed under the RMA. That would begin to close the gap of providing a public good for free. It would also give government a means to more accurately measure the economic value of their territorial waters.
A second step could be creating a coastal registry system. The registry should include every coastal permit holder, every ITQ holder and the holders of any derivatives of ITQ, every port and harbour, every aquaculture farm, and all customary uses (ranging from mataitai to protected customary right to customary marine title). The registry should include at the very least the users’ geographic site in longitude and latitude, activity type, and contact information. This will build the platform of users to participate in a tradability regime, as well as catalogue for the government what assets and uses exist in the territorial waters.
A third step could be that before applying for a coastal permit an applicant must enter into goodfaith negotiations with registered users whose interests overlap with the footprint of the proposed development. These negotiations should establish a pattern and mentality of participants having to discuss their
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interests with existing users to possibly arrive at a compromise before the coastal permit hearing. It would also recognise what is now considered a best practice for coastal development. Importantly, the negotiating parties should not have to agree on anything, but they should be required to attest that they both entered into goodfaith negotiations.Advantages to doing this include that it would be politically feasible, it would formalise current “best practice”, it would create opportunities for parties to establish trust and gains from trade, and it would be easier to implement than a fullfledged TOR regime. The distinct disadvantage is that it would not create as strong an incentive for parties to reach any accord because their occupation of the site would still be subject to Regional Council decisions.
It may be that the transition phase is sufficient to cure the inefficiencies and ineffectiveness of the current regime. However, if it is not, the next step should be to create a full TOR regime.
(iii) Realising the market
TORs should be constrained, tradable rights that allow users to allocate coastal space between themselves so long as they do not violate ecological thresholds that will still be set through coastal permits. Other constraints should include a limit on how many TORs one entity can have, a holder must be a New Zealand entity or citizen, and TORs should be subject to a general public easement. On the other hand, there should be no limit to using TORs for private conservation. Based on the national marine registry established during the transition phase, the government should decide how it will allocate the initial right to the registered entities. New Zealand has experience in conducting these transitions. For example, the initial allocation of ITQs recognised the catch history of existing fishers and thereby allocated a share of fish stock based on that history. Arguably, the advantage of that system was that it was straightforward and based on known usage. The arguable disadvantage was that it privatised some of what was a public good without compensating the public. As another allocation example, the initial allocation of radio frequency used an auction system. That used a secondtier auction system that was novel but probably more complex than necessary.258 In the tradable occupation rights system, the government could do a hybrid allocation in which it tenders unoccupied space
but recognises occupied space users through some sort of allocation system.
The initial allocation system should recognise existing marine spatial rights as they are practised as well as legally prescribed. Failing to do so will almost certainly jeopardise participation and buyin from these rights holders. For example, commercial fishers have de jure and de facto components to their quotas. The de jure component is the legislatively delineated quota management
258 Basil Sharpe, Professor, University of Auckland (14 March 2011) pers comm.
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area (QMA) that establishes where quota holders may exercise their rights. These QMAs, however, encompass far more space than one would actually find some of the target species. Paua QMA boundaries, for example, extend well offshore but paua rarely thrive beyond six metres of water since they prefer shallow subtidal zones.259 The sedentary nature of species like paua results in a de facto spatial component to these quota rights where fishers resort to extra legal selfenforcement to protect the actual patches of seabed from which they harvest sessile or sedentary stock.260 The de facto nature of these quota rights may be more important than the de jure ones because it represents the spatial component that quota holders would be more invested in protecting since that is actually where the fish live and are caught.Similarly, some iwi have de jure rights in the coastal environment as well as de facto rights. Their de jure rights include fishing quota, mataitai, and, where demonstrated, rights flowing from the MCAA. De facto rights would include areas over which iwi litigate to protect a perceived ownership that has no formal legal recognition.
Recognising the full scope of these rights will be critical for four reasons. First, it will establish immediate trust by the rights holders that their interests are being recognised. Second, it will recognise the reality of ocean use rather than maintain a fiction that only the de jure rights matter to existing rights holders. Third, it will allow holders of these rights to act collectively on their respective rights. For example, if a tradable occupation right is established in a particular, welldefined area quota holders that have a right to fish within that area can bargain collectively to protect their rights, which will decrease transaction costs and increase a likelihood of success because there will be fewer competing interests. Fourth, recognising the de jure and de facto rights will make transparent actual usage of coastal waters which will assist in other resource management tools like marine spatial planning (MSP).
Whatever allocation mechanism the government selects, it should be straightforward and transparent. After initial site allocations the government should remove itself from managing the occupation of the allocated space and let the market begin to work subject to government enforcement, environmental monitoring, and revenue collection.
TORs should give registered users the ability to lease their registered site to a new or registered user for up to the term the coastal permit applicant is seeking (the maximum of which is currently 35 years). To create liquidity, holders ought to be able to sell their right to the TOR. Importantly, a TOR right
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should not convey a development right — coastal permits should still be used for that purpose.Another provision the government should consider is a licence to participate in the TOR regime. The licence should be a simple application with minimal requirements. Its primary function would be to ensure that the holder is a New Zealandregistered commercial entity or nongovernmental organisation with offices in New Zealand, or iwi or hapū trust, board, or other representative organisation. Licence holders should have access to the registry to see what TORs are for sale privately or being tendered by the government. The national registry should be established along the lines of FishServe. Indeed, FishServe’s ambit could easily be enlarged to include new participants and a new function.261 Extremely important are the conditions that should accompany any TOR trade, sublease or registration. These include that all trades must be registered with the national registry service, statutes of fraud should apply, title insurance should be required, and, where necessary, a decommissioning bond should be required. Equally important is that TORs should not convey a development, use, or extraction right. Applying for that right should still be done through coastal permits because they set the environmental standards for developers to adhere to. Finally, policymakers should consider geographic factors in establishing TORs. For example, it may be that a TOR regime is initially more useful in conflict “hot spots” than throughout all the territorial waters. These hot spots could provide test sites to work out the kinks a TOR regime will certainly have at the beginning. It may also be useful to consider places where no TOR regime should exist because that space is a marine reserve or the ecology is fragile and
rare and thus inappropriate for development.
In short, creating a TOR regime will require innovation, patience, and experimentation. However, the value of working through initial mistakes will provide commercial and customary ocean users a flexible model to resolve their spatial conflicts, build trust, and establish a new market.
(iv) Legal feasibility
The legal basis for creating a TOR regime exists in fractured parts in New Zealand’s legislation. For example, the RMA, the MCAA, and the Fisheries Act each have some level of transferability, but the transferability is confined to the parties governed by the respective Acts. The arguable exception is that the MCAA allows customary titleholders some level of permission to permit nonrights holders to conduct activities in customary use areas. Nonetheless there would still be a need for new legislation that allows intersectoral trading between all marine users for occupation of space.
261 Leslie Campbell, general manager, FishServe (4 April 2011) pers comm.
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In line with the vision Hon Dr Nick Smith laid out in his speech on the Bluegreens Agenda, the Environmental Protection Authority could be the governing body for the TOR regime.262 Indeed, to the extent any new legislation needs crafting it could be part of the coalitionled government’s initiative to expand the resource consent regime to the EEZ.When Alice finally arrived at the opposite side of the chessboard she became a queen, the game ended, and she returned to reality. Along the way she had to endure bizarre adventures like an irascible Humpty Dumpty, nonsensical Tweedledee and Tweedledum, and a carpenter and walrus gathering clams as friends only to bake them in the end. New Zealand ocean renewable energy developers face the potential for similarly bizarre encounters with arguments about dolphins that may or may not exist in certain waters, iwi who may or may not have legal title to tidal zones, and fishing interests protecting fish only so they can catch them later. For these developers it would be a boon not to have to endure so much uncertainty and bizarre behaviour. Fantasy fits well in children’s stories, but not in commercial reality.
5. BARRIERS TO IMPLEMENTATION
Eight years ago New Zealand was in the midst of comprehensive oceans policy reform. During that reform the government explicitly recognised the same problems this article outlines: intersector coastal conflict, uncertainty, high transaction costs, ownership issues, and so on.263 That ocean reform effort ultimately failed. Similarly, these policy recommendations, especially the tradable occupation regime, could fail unless barriers to implementation are recognised and effectively managed.
Probably the most significant barrier is existing conflict fostered by individual sector legislation and unfinished questions over foreshore and seabed ownership. Intersector conflict, as noted, appears because a mix of agencies carry out separate legislation at differing governance levels. This entrenches the regulated industry into protecting that specific piece of legislation as well as lobbying those relevant agencies.264 The 2003 Oceans Policy Secretariat recognised that “[t]here is poor integration of the Fisheries Act with other ocean
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statutes, in particular the Resource Management Act”.265 The same issue exists today albeit on a more complex level because of new and expanded legislation. To combat the barrier of conflict the proponents of these policies should consider highlighting three points: (1) the recommendations would not repeal any existing marine legislation and would fit within the existing regimes; (2) the recommendations are designed to encourage trade and more decentralised decisionmaking; and (3) the recommendations cut across marine legislation topromote dialogue about occupation between the sectors on their terms.
Public perceptions create another significant barrier. How the public perceives their “right” to unfettered beach and oceans access could prevent a tradable occupation regime. From the extreme end there is a selfpublished jeremiad staking out an unfounded position that the MCAA amounts to “apartheid” whereby the government will give away public beaches to a favoured minority.266 Notwithstanding poor logic, argument, and factual understanding, this book should indicate to policymakers the strength of perceptions, even distorted ones. Repeated often enough, perceptions can morph into myths and ultimately crystallise as fact. It would be a shame if public perception stood in the way of these proposals. To diffuse public opposition, policymakers should emphasise the following about this report’s proposals:
(1) they aim to reduce pressure on Regional Council time, effort, and resources;
(2) they could raise funds to compensate the state on behalf of the public for commercial coastal use; (3) these funds would be used for improving oceans governance; and (4) the public easement would minimise any interruption to boating or fishing.
Another barrier is lack of funding specific to oceans policy. To a large extent that should not be an issue because the RMA gives Regional Councils the means to initiate coastal occupation charges, but they generally fail to do so. However, raising funds through taxes and levies on participants in a tradable occupation regime would be another way to generate money to fund ocean policy, governance, and science. Opponents to this kind of charging are very likely going to be commercial ocean users who currently enjoy a free ride. They should accept the tradeoff that more secure rights offer them in return for their paying to use public goods.Finally, lack of leadership can be the stillbirth of any policy change. New Zealand’s politicians and policymakers should recognise that they have been grappling with these issues for nearly a decade. New Zealand governs more than 17 times more ocean area than it does land area.267 It is a maritime nation with a proud heritage extending back to its first human settlers. It can no longer
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afford more failure in terms of its ocean governance. Ocean renewable energy developers from around the world have told me how excited they are at the possibility of entering the New Zealand market. However, they are highly reluctant to invest here because of what they perceive as an intractable spatial allocation regime. New Zealand has all the tools to effectively create a rational, fair, marine tradable occupation regime. It is time for its leaders to recognise that ongoing spatial conflict limits economic opportunities and that allowing users themselves the chance to resolve conflict could promote trade, build a new market, and generate more public revenue.
6. CONCLUSION
Elinor Ostrom observes that “all policies [are] experiments”.268 An important component of experimentation is recognising when it is not achieving the soughtafter outcome. After nearly a decade of stalled ocean policy reform and unabating spatial conflict in New Zealand’s territorial oceans it may be time to change the policy. Allowing commercial ocean users the opportunity to figure out among themselves a rational way to resolve spatial conflict while regulating their uses for environmental effects could offer the missing flexibility in today’s policies.
Continuing the distorted incentives set up under the RMA’s coastal space allocation regime all but ensures conflict will continue. New Zealand risks turning away potential renewable energy developers and investors interested in commercial offshore projects. Lifting the legal fiction that the RMA sets up between the land and the ocean could likely reduce the conflict and provide more certainty where at present very little exists. Commercial, governmental, and indigenous stakeholders have all agreed that tradable occupation would be a welcome step in that direction.
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