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The Environment Court recently released its decision in Blue Grass Limited v Dunedin City Council [2024] NZEnvC 83 which deals with the definition of Highly Productive Land (HPL) in the National Policy Statement for Highly Productive Land (NPS-HPL). The Court has found that it is not open to applicants in consent processes to challenge the Land Use Capability (LUC) of their land as mapped by the New Zealand Land Resource Inventory (NZLRI), even if more detailed site investigations conclude that land is not LUC 1, 2 or 3. Put another way, land zoned rural that the NZLRI has mapped as LUC 1, 2 or 3 is ‘stuck’ as HPL for the time being, until regional councils introduce changes to their regional policy statements. The Environment Court was tasked with answering the question of whether more detailed mapping undertaken by consent applicants since the commencement of the NPS-HPL (17 October 2022) using the LUC classification system could prevail over the identification of land as LUC 1, 2 or 3 as mapped by the NZLRI. This would in turn determine whether land is classified as HPL. The Court’s answer was no. The NPS-HPL provides that regional councils must undertake mapping of HPL within its region and as soon as is practicable (but not later than 3 years from the commencement date of the NPS-HPL) notify a proposed regional policy statement that identifies all HPL by way of maps. Regional councils are still undertaking this mapping and until this is completed cl 3.5(7) of the NPS-HPL sets up the interim definition of HPL as being land which “at the commencement date” of the NPS-HPL is (with some exclusions): (i) zoned general rural or rural production; and (ii) is identified as LUC 1, 2 or 3. Dunedin City Council’s position was that the qualifier of “at the commencement date” in cl 3.5(7) means that the LUC mapping must have been in place at the commencement date. Its submission was that this creates a holding position for protection of HPL until the Otago Regional Council completes its long term mapping and undertakes a change to the RPS as required by clauses 3.4 and 3.5 of the NPS-HPL. That argument was accepted by the Court – the interim definition was intended to create a holding position protecting all land that may be classified as HPL by regional council mapping, until that mapping does occur. Ultimately, what this means is that landowners and consent applicants are unable to undertake their own mapping of specific sites to seek to lessen the LUC of their land and therefore remove it from an HPL classification, in turn easing the consenting pathway. They must instead wait for the relevant regional council to notify a change to its regional policy statement relating to HPL, and then participate in that process if they seek to argue that their land is not HPL. Alternatively, land owners and consent applicants will need to rely solely on the exceptions for use and development of HPL contained in cl 3.6, 3.8, 3.9 and 3.10. We expect applicants will seek to test the boundaries of these exceptions in light of this decision. Knowing the LUC classification of rural land as per the NZLRI mapping will have increased importance for purchasers considering potential development opportunities, given the restrictions the NPS-HPL contains and its lack of ‘wiggle room’. If you require any assistance with or wish to discuss this decision or the NPS-HPL generally, please feel free to get in touch with a member of our specialist environment law and resource management team.

Last year, the New Zealand Emissions Trading Scheme (ETS) was brought under the spotlight after a High Court hearing and Labour government led review. We have previously explained the ETS here.  The ETS is governed by the Climate Change Response Act 2002 (the Act), putting a price on carbon emissions which certain industries must participate in.  Every tonne of carbon emissions costs a credit, called a New Zealand unit (NZU).  Participants who are emitters need to buy and surrender NZUs to the government to account for their emissions.  NZUs can be invested or traded on the NZ ETS market.  In 2021, auctioning was introduced where the Government sells NZUs to successful bidders. Auctioning allows the government to control the supply of NZUs, and therefore the emissions of participants, to meet its emissions reductions plan. The plan outlines the strategies and policies intended to achieve the emissions budget for 2022-2025.  Five year emissions budgets are mandated by the Act to assist New Zealand’s overall goal of net-zero greenhouse gas emissions by 2025. The Climate Change Commission’s advice regarding Amendment Regulations to the Act in July 2022 recommended allowing NZU prices to increase, and to maintain consistency with the emissions reductions plan. The Labour government declined to follow this advice in the Climate Change (Auction, Limits, and Price Control for Units) Amendment Regulations 2022, instead depressing the market, by artificially reducing the price of NZUs in the emissions reduction plan, leading to plummeting NZU prices and a judicial review. On 13 July 2023, the High Court found that Minister for Climate Change James Shaw made an error with his recommendations concerning the unit level and price control settings for 2023-2027 adopted in the Amendment Regulations.  The Minister admitted not complying with the relevant requirements.  The settings favoured by Cabinet did not accord with the 2025 target, and did not accord with or justifiably deviate from the emissions budgets and New Zealand’s contribution under the Paris Agreement.  The Minister was directed to reconsider the decision. Around this time, the Labour government launched a review of the ETS on 19 June 2023.  A summary of that review can be found here.  There was consideration given to forestry restrictions, to drive up the price of NZUs, creating uncertainty in the future of the forestry market. The Government failed to sell the 15 million NZUs it made available during the four ETS auctions in 2023, as the clearing price was not reached.  The units were consequently removed from the market.  The failure to clear was largely due to the significant excess of units currently in circulation. On 6 December 2023, the day of the final auction of 2023, the honourable Minister Simon Watts put out a press release.  He said that the  new coalition government is scrapping Labour’s ETS Review. They want a “strong and stable” ETS that gives “businesses certainty and confidence”. The Minister held these as the reasons of the NZU auction failure.  There was no suggestion of another review. On 12 December 2023, the Minister put out a second press release.  The Government is considering a report from the Climate Change Commission as they prepare a second emissions reduction plan and have started “work on doubling renewable energy production”. What does that mean for forestry? Our current Government’s focus on “certainty” and “business” implies no significant changes will be made to the ETS in relation to forestry for the foreseeable future (presumably, within the next three years at least).  Renewable energy seems to be the new government’s vehicle on the path to solving issues with the ETS. Forestry investors, and relevant stakeholders, can put to rest any concerns related to Labour’s review.  It appears as though forestry is not a key focus that the current Government has in relation to the ETS.  For now, all obligations and legal implications around carbon credits and offsetting remain unchanged.  If you have any questions around these obligations, please contact our expert team here.

The new government’s coalition agreements gives a clear indication of its plans in relation to its resource management legislative reform for the next three years. With Labour’s legislation to be scrapped in favour of a return to the Resource Management Act 1991 (RMA) (with some amendments), and further significant reform on the horizon, it is going to continue to be an interesting and transitional time in the RMA space. The coalition agreements are clear, as National was prior to the election, that the Natural and Built Environment Act 2023 (NBEA) and the Spatial Planning Act 2023 will be repealed by Christmas, and the RMA will be reinstated, with amendments. These amendments are intended to ensure that it is easier to consent new infrastructure (including renewable energy projects), streamline the plan preparation process, and importantly establish a ‘fast track, one stop shop’ for consents and permitting processes for regional and national projects of significance (the process will involve a referral by Ministers for suitable projects). This fast track process is intended to be introduced for first reading in the first 100 days of the Government, no doubt to replace the fast track process currently contained in the NBEA. In the longer term, the intention is for the RMA to be replaced with new resource management laws that are based on enjoyment of property rights as their guiding principle. What this will look like remains unclear, but is likely to mean less regulation and control on what can be done as of right. Also under review will be the National Policy Statement on Indigenous Biodiversity, with a particular focus on reconsidering the mapping of significant natural areas that is required by the current policy statement. The National Policy Statement on Freshwater Management and the National Environmental Standards on Freshwater Management will be replaced, to “better reflects the interests of all water users”, putting the focus squarely on use rather than preserving and restoring where degraded the state of water bodies, as is the current priority. There is a strong focus on infrastructure, with a National Infrastructure Agency to be established to coordinate government funding, connect investors with New Zealand and improve funding, procurement and delivery to prioritise projects of regional and national significance. All work on Three Waters will stop immediately, with assets to be returned to council ownership. A review of all legislation that refers to the ‘principles of the Treaty of Waitangi’ will also be conducted, with all such references to be either repealed or replaced with specific words relating to the relevance and application of the Treaty. Interestingly, the Minister for the Environment is now a Minister outside of Cabinet – Penny Simmonds, with Act’s Andrew Hoggard, the Associate Minister, also outside of Cabinet. The more powerful Ministerial positions who will deliver RMA reform look to be Chris Bishop who will take the new Ministerial position of Minister Responsible for RMA Reform as well as Minister of Housing and Minister for Infrastructure, and will be supported by Act’s Simon Court who will also be a Minister Responsible for RMA Reform. Shane Jones will be Minister for Resources (a new position).