High Court clarifies petroleum permitting process

​The High Court’s judgment in upholding the process followed by Energy and Resources Minister Gerry Brownlee, in granting Petrobras deep water exploration rights in the Raukumara Basin, has provided a useful clarification of the boundaries of the Minister’s responsibilities under the Minerals Programme for Petroleum (MPP).

The effect of the decision should be to increase confidence in New Zealand’s permitting regime – especially with the imminent passage of the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill.

The case

Greenpeace and East Cape iwi Te Whanau a Apanui sought a judicial review of the Minister’s decision on 1 June 2010 to issue a permit to Petrobras granting it exploration rights over an area in the Raukumara Basin within the exclusive economic zone (EEZ).

Key to their challenge was that the Minister had not complied with the requirements of the MPP because he had failed to assess the potential environmental effects of the activity or to take into account New Zealand’s international obligations, including under the United Nations Convention on the Law of the Sea 1982.

The Court’s findings

The Court rejected both arguments, saying that they were outside the Minister’s obligations under the Crown Minerals Act (CMA) and the MPP.

“The Minister would have known of the possibility that offshore oil exploration and drilling might have an impact on the environment.  He was entitled to conclude that those were not matters for him to consider in the exercise of his mandated function and powers.  He knew they fell within the province of others.  Further, there existed a clear statutory scheme and regime, which provided functional separation.”

The Judge awarded the Minister and Petrobras costs and said that, even had he found that “reviewable error” existed, he would have exercised the Court’s rarely used discretion to decline relief on the basis of the 15 months’ elapse of time between when the permit was granted and when the legal challenge was filed. 

No reason was offered for the delay and there had been a clear prejudice to Petrobras which had spent up to $8 million on its exploratory programme, which it had to complete within two years. 

A gap in the legislative framework

Separately to the CMA, there is a raft of other legislation dealing with environmental matters and New Zealand’s international obligations, such as the Maritime Transport Act and Marine Protection Rules, Marine Mammals Protection Act 1978 and Health and Safety in Employment (Petroleum Exploration and Extraction) Regulations 1999. 

But the Court (and the Crown) acknowledged there is a hole in the law in that the Resource Management Act 1991 does not apply to activities in the EEZ but outside New Zealand’s territorial waters.

“If questions arise as to the extent to which New Zealand – as a State – met its international obligations that must be a matter upon which Parliament might choose to legislate.  It is not a matter upon which the Court can direct Parliament.  Nor could it be for the Minister to “plug any gap” because, in the end, the regulatory and statutory functions designed to deal with risks of harm, general to the environment, have by deliberate policy been entrusted to fall within the ambit of powers vested in other authorities.”

Gap about to be plugged

The Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill (and associated regulations) will fill this gap by extending a variant of the RMA to the EEZ.  Chapman Tripp’s commentaries on this legislation can be accessed here, here and here.

Our thanks to Teresa Weeks for writing this Brief Counsel. For further information, please contact the lawyers featured.

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