Allocation of Water Between Productive Uses

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Allocation of Water Between Productive Uses

• (Resource Management Law
• Association Conference 2003)

Philip Milne
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Summary

• Scarce resource
• Valuable public good
• Allocated largely first come first served
• RMA can deal with in stream versus out of stream
• Deals poorly with allocation between productive
  uses
• Consent process deals poorly with efficiency and
  equity issues

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Some topical issues

• Provision for reasonably foreseeable future
  needs.
• Where does efficiency fit in?
• Do existing consent holders have a legal priority
  over newcomers ? (a right to exclude?)
• What weight should be given to effects on
  existing consent holders?
• Is it only effects on viability and security of
  supply which are relevant, or are effects on
  profitability and capacity relevant?
• When is a water resource "fully allocated"?

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A beginners guide

• Sole right to take, use, dam and divert water
  vested in the Crown
• Previous common law / riparian rights to water
  have been extinguished
• Restrictive presumption for use of water
• Both "use" and "take" are restricted
• Regional councils may consider the effect,
  purpose, efficiency and necessity of the take and
  end use water
• Water permit a right to take/use but not to
  exclude.

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First come, first served

• Consent applications are allocated on a first
  come, first served basis (Fleetwing Farms Ltd)
• The first come, first served principle is
  qualified by the following
• In-stream values come first
• Sustainable management and Part II principles
• Provision for the reasonably foreseeable needs of
  future generations
• Section 7(b) allows inefficient (but not less
  efficient?) takes/uses to be declined or
  restricted

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• Water conservation orders
• National or regional plans or policy statements
• Upstream consent holders have a practical
  priority
• Environment effects of new proposals considered
• Including effects on existing users.

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Part II gets us some of the way but.

• Enabling "people and communities to provide for
  social, economic and cultural wellbeing."
• " managing the use, development, and protection
  of natural and physical resources in a way, or at
  a rate, which enables people and communities to
  provide for their social, economic, and cultural
  wellbeing and for their health and safety while
• Sustaining the potential of natural and physical
  resources to meet the reasonably foreseeable
  needs of future generations and

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• . to ensure that resources are not allocated in
  such a manner so as to preclude reasonably
  foreseeable future needs being met (Trio Holdings
  Ltd v Marlborough District Council 1997 1 NZRMA
  97, 112).
• the grant should be in such a form that provision
  is reserved for the reasonable needs of those
  already entitled to take water from points lower
  down the river or stream from the proposed point
  of taking and due regard should be given to such
  future demands upon the water of that river or
  stream as are reasonably foreseeable." ( Stanley
  v SCCB )

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Section 7(b) does it help?

• Particular regard must be had to "the efficient
  use and development of natural and physical
  resources".
• Efficiency issues may extend to the efficiency of
  the end use of water (D L Newlove Ltd v Northland
  RC).
• Does not involve any assessment of the relative
  efficiency of one use as against possible
  alternative uses.
• Applications must be considered on their own
  merits.
• Extends to effects on efficiency of existing
  infrastructure (but not profitability).

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The Climate change Bill(Slopes the playing field
ever so gently!)

• (ba) the efficient use of energy from minerals
  and other sources of energy ..(which includes
  hydro energy).
• (j) the benefits to be derived from the use and
  development of renewable energy.

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Will an allocation plan help?

• All applications called in and put on hold
• Board of Inquiry to make preliminary allocation
  decisions
• To formulate an allocation plan (what status?
  regional plan?)
• Will consider national regional and local costs
  and benefits
• Will compare efficiencies of various existing
  and proposed uses of water
• Will make the big calls
• (how much for irrigation versus energy and which
  irrigation?)

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• Subject to section 32?
• What terms of reference?
• What criteria?
• Rights of appeal on points of law only?
• Applications will then be heard (by
  commissioners) on their merit with first come
  first served prevailing.
• Consent authority will be bound by the allocation
  plansome will miss out.

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The issues that lead to the call in

• Insufficient water to go around
• 50 applicants most behind Aqua (at least one is
  ahead)
• Any takes upstream of Kurow will affect
  Meridian's generation capacity (about 33
  applicants)
• Project Aqua would preclude or limit alternative
  irrigation options downstream of Kurow

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• Lack of Part II or NPS guidance
• The lack of any allocation plan for the
  catchment
• Inability of first come first served to
  adequately take into account future needs
• Comparative efficiency not part of consent
  process

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• Perceived inability of the consent process to
  properly weigh national and local costs and
  benefits
• Concern that the effects of upstream proposals on
  Meridian's existing activities might not properly
  be taken into account
• Concern that national security of supply will be
  affected by irrigation consents and may not be
  adequately addressed by the consent process

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Do Meridians existing rights preclude thegrant
of any further consents upstream ofKurow?

• Is there anything to allocate upstream of Kurow?
• Is a right to store and/or use all water, a right
  to exclude others?

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The rights of existing consent holders

• The grant of a water permit is not a guarantee
  of water.
• Subject to subsequent grants made to up stream
  users.
• A right to use, not to exclude.
• Nor do existing users "have a right, in
  priority, to the use of natural water by virtue
  of their geographic location"
• (Jordan v Marlborough Regional Water Board).

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Right to object to up stream applicants

• in allocating water resources, it may be
  necessary to have regard to the rate at which
  that water should be drawn off to avoid adverse
  effects on others those effects must be
  considered in any particular case. (Jordan)

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• In considering the effects in the future of
  allowing the proposed abstraction, we hold that
  we have to consider the environment as it is
  likely to be from time to time, taking into
  account further effects of past abstraction, and
  effects of further abstraction authorised by
  existing consents held by Contact or by others.
• (Contact Energy v Waikato DC)

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The Meridian proposition right to exclude?

• The RMA operates on a "first come first served"
  basis in relation to the grant of consents of
  finite resources. The granting of prior rights
  to Meridian to take and use the water in the
  Waitaki for electricity generation precludes the
  grant of later consents to an up-stream user for
  the taking of the same water
• Various decisions of the Courts have confirmed
  that a later consent cannot erode a consent
  granted earlier in time. (Meridian submissions
  on Urquhart application)

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• DRSL has legal rights by virtue of its resource
  consent. I do not accept that such rights may be
  depreciated because they are not founded in land
  law. They remain rights which may not be denied
  or eroded by imposition of a condition on another
  persons resource consent.
• (HC - Dart River Safaris Limited v Kemp)

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• "A person who is subjected to obtaining a
  water right to take water from under the land has
  a reasonable expectation that the Council will
  not destroy the expectation of security the water
  right provides by allowing activities that
  significantly compromise the source of supply."
• (Carter Holt Harvey Forest Ltd v Tasman DC)

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Judge Jacksons view

• (1)..that the water permits entitle Meridian as
  a matter of law to all water in the Waitaki
  catchment (subject to existing water permits to
  third parties) above the tailrace of Lake
  Waitaki..
• "proposition (1) is most likely to be wrong."

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• (2)Meridian is entitled to oppose each and every
  fresh application for a water permit in the
  Waitaki catchment and the CRC is obliged to take
  that submission and the Meridian water permits
  (amongst others) into account in deciding whether
  to grant more.

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• proposition (2) may well be correct. The Court
  and the Planning Tribunal before it under the
  WSCA, has long reminded authorities to be
  concerned not to over-allocate water resources.
• But What effects are relevant?
• Is it consent authorities role to protect
  financial investment?

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Is the resource upstream of Kurowfully allocated?

• ..in many ways those permits (together with any
  existing water permits currently held by third
  persons) already constitute a working allocation
  plan for much of the water of the catchment at
  least down to the point downstream of the Lake
  Waitaki tailrace. Any new application is likely
  to be opposed by Meridian in order to protect the
  economic (but not real or personal property)
  right constituted by its water permits

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• .it is difficult, at first sight, to see how
  much scope there is for a plan carrying out the
  Regional Councils' functions under section
  30(1)(e) of the RMA which one could call a
  "water allocation plan" except to confirm the
  water permits referred to below, together with
  any existing water permits held by others, and
  state whether there is any spare water for anyone
  else in future. Only if there is, can further
  water be allocated.

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Urquhart decision

• Granting this application would erode Meridians
  rights if only to a minor degree. However, while
  Meridian may not at any given point in time be
  fully exercising its consents Meridian has a
  right under those consents which it should be
  able to fully exercise and which should not be
  deprecated by any subsequent grant of consent. (
  ECan decision on Urquhart application).

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Some questions

• Does a water permit provide an "economic
  right"/"allocation" which should be protected?
• Is a resource "fully allocated" if any new
  consent would decrease (even slightly) the
  availability of water to existing consent
  holders?
• Meridian has a right to dam all of the water in
  Lake Tekapo and then to use such of it as it
  arrives downstream.
• Does that mean that Lake Tekapo and its
  headwaters are already fully allocated?

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• Are effects on viability and national security of
  supply during dry years relevant?
• Are effects on generation capacity and
  profitability relevant? If so how much weight
  should they be given?
• If a subsequent upstream or upgradient applicant
  would affect the availability / profitability of
  an existing users use of water, must consent be
  declined? I think not.
• Is it the function of the consent process to
  protect financial investment?

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CONCLUSION

• The RMA can deal adequately with the protection
  of in stream values.
• Consent process does not deal well with the
  allocation of public resources between
  private/productive use.
• The current Waitaki debate brings a number of
  issues into sharp focus.
• The Minister, the Board of Inquiry (and perhaps
  the Courts) will need to deal with some critical
  preliminary issues, including