Deer Farmers help fight Regional Council

LAKE ROTORUA DRAFT NITROGEN RULES

1 We advise Protect Rotorua, a group of land owners from the Lake Rotorua catchment who are concerned with the process undertaken by the Bay of Plenty Regional Council (‘the Regional Council’) regarding the development of the Lake Rotorua Draft Nitrogen Rules (‘the Draft Rules’).

2 Protect Rotorua comprises deer, sheep, beef and dairy farmers, horse owners and small block owners. Appendix A includes a list of current members of Protect Rotorua, although members continue to join every week. While each member has different factual circumstances, all have in common that they have been detrimentally affected by fundamental errors in the preparatory stages of the Draft Rules.

Summary of concerns and requirements of the Regional Council

3 Protect Rotorua is concerned that the Regional Council has failed to undertake a lawful consultation process by its refusal and/or failure to provide all relevant information to affected parties to make an informed and intelligent response, before consultation closed on the Draft Rules. In particular:

(a) At the outset of the consultation process, many landowners were not provided the rate of nitrogen loss for their property (calculated by Overseer), which was required to assess the impact of the Draft Rules on them and to be able to respond in an intelligent and informed manner;

(b) The data underlying the Draft Rules has materially changed since the consultation closed in October 2014 such that those affected need to be consulted again because what they were consulted on is no longer apposite;

(c) Despite several land owners seeking information from Land Use Advice and Support as to the rate of nitrogen loss for their property, this information was not provided to them so as to enable them to properly engage in the consultation process prior to the closing date and the consideration of the Draft Rules by the Regional Council with an open mind;

(d) Although Fiona McTavish (General Manager Strategy, Regional Council) has now informed us last Thursday on 13 August 2015 that the Regional Council has yet to set a date for notification, this is contrary to what key affected parties have been told that notification would happen in early September. Furthermore, the consultation finished almost a year ago in October 2014, so the concern is that the decision on the substance of the Draft Rules has already been made. Thus, any further submissions our clients make to the Regional Council prior to notification will not be received with an open mind, so it won’t have any effect on the substance of the Draft Rules.

Way Forward

4 I therefore request on behalf of my clients an urgent without prejudice meeting on 1 September 2015 to discuss these legal concerns and what needs to be done to redress these breaches. Please confirm whether this date is suitable and, if so, a suitable time, or please propose another time if this date is not suitable.

5 Given the legality concerns raised in this letter, we ask that the Regional Council undertakes not to notify the Draft Rules until after the without prejudice meeting has occurred and any legal breaches have been addressed. Please confirm that will be the case.

6 If the Regional Council will not provide this undertaking and proceeds to notify the Draft Rules without addressing Protect Rotorua’s legal concerns, my client will consider its legal options including, but not limited to, applying to the Court for interim relief.

7 Although the Draft Rules have not been notified, the process may still be challenged. As stressed in the cases of Waikato Tainui Te Kauhanganui v Hamilton City Council and Ngati Kahu v Tauranga District Council , consultation under the RMA cannot be meaningful and effective unless it takes place before notification. This is because the preparation stage of the plan concludes at the time of notification, at which point the “judicial phase” of determining submissions begins.

8 I look forward to hearing from you regarding my client’s request for a without prejudice meeting with the Regional Council.

LGOIMA response required

9 By letter dated 12 August 2015 to the Chief Executive, we requested the release of information relating to the Draft Rules held by the Regional Council under the Local Government Official Information and Meetings Act 1987 (‘LGOIMA’). As the information requested is relevant to the concerns raised in this letter, we asked that the information be provided as soon as possible in order to ensure that all issues could be included in this letter. We have received an initial response from the Regional Council with respect to our request, but we are still working with the Regional Council towards receiving a full response.

10 Given the upcoming Regional Council meeting, scheduled for 26 August 2015, we have been instructed to raise Protect Rotorua’s concerns with you as soon as possible so that they can be considered at that Regional Council meeting. We anticipate that the full LGOIMA response will result in further matters of relevance to the legality of process concerns raised in this letter. Protect Rotorua will write to you again if it needs to update or amend this letter following receipt of all the requested information.

STATUTORY REQUIREMENTS

11 As you know, the Regional Council approved the Draft Rules for consultation on 24 June 2015. Following this, consultation was purported to be carried out between mid-July and the end of October 2014. To assist in this process, a consultation document was released which gave information on the Draft Rules and invited rural landowners, iwi and the wider community to provide input on the Draft Rules. A feedback form was attached to the consultation document. In November 2014, a report was released summarising the consultation process and all feedback received.

12 The Regional Council is bound by the Resource Management Act 1991 (‘RMA’), and its Regional Policy Statement. Under the RMA, a local authority may consult anyone during the preparation of a proposed policy statement or plan (schedule 1, clause 3(2)). However, as stated in schedule 1, clause 3(4), where a local authority undertakes consultation, it must do so in accordance with section 82 of the Local Government Act 2002 (‘LGA’).

13 Section 82(1) of the LGA states that the Council must undertake consultation in accordance with the following principles (emphasis added):

(a) that persons who will or may be affected by, or have an interest in, the decision or matter should be provided by the local authority with reasonable access to relevant information in a manner and format that is appropriate to the preferences and needs of those persons;

(b) that persons who will or may be affected by, or have an interest in, the decision or matter should be encouraged by the local authority to present their views to the local authority;

(c) that persons who are invited or encouraged to present their views to the local authority should be given clear information by the local authority concerning the purpose of the consultation and the scope of the decisions to be taken following the consideration of views presented;

(d) that persons who wish to have their views on the decision or matter considered by the local authority should be provided by the local authority with a reasonable opportunity to present those views to the local authority in a manner and format that is appropriate to the preferences and needs of those persons;

(e) that the views presented to the local authority should be received by the local authority with an open mind and should be given by the local authority, in making a decision, due consideration; and

(f) that persons who present views to the local authority should have access to a clear record or description of relevant decisions made by the local authority and explanatory material relating to the decisions, which may include, for example, reports relating to the matter that were considered before the decisions were made.

14 The Regional Council can comply with these principles in “such manner as the local authority considers, in its discretion, to be appropriate in any particular instance” (section 82(3)).

15 The discretion of the Regional Council however is limited. As stated by Simon France J in Karaka Point Environs Residents Inc v Malborough District Council (at [36]) (emphasis added):

… how the Council complies with its statutory obligation is a matter for its judgement, but the Act makes it clear that the exercise of its discretion is to be informed by these considerations of notice, information and the opportunity and encouragement to participate. When assessing its consultation obligations in a particular case the Act also requires that the Council have regard to the significance of the decision to the persons affected.

16 Under method 28 of the Regional Policy Statement, the Regional Council is required to undertake consultation to identify water quality standards and targets for the Rotorua Te Arawa Lakes. In particular, it must “consult by actively providing for the timely exchange, consideration of and response to relevant information by all parties with an interest in setting water quality standards for the Rotorua Te Arawa Lakes” (emphasis added). The Regional Council must also (emphasis added):

As widely as practicable, encourage all parties undertaking resource use, development and protection activities within the Rotorua Te Arawa Lakes’ catchments to participate in the preparation and review of relevant water quality standards proposed for inclusion in the regional plan.

17 In Waikato Tainui Te Kauhanganui v Hamilton City Council where the plaintiff successfully challenged the failure of the City Council to properly consult in the preparatory stage of the proposed variation to the District Plan, the Court found that consultation under schedule 1 of the RMA:

must be a meaningful process which enables the party consulted to be adequately informed so that it can make intelligent and useful responses….The primary purpose of consultation is to enable decision makers to make informed decisions … Furthermore, the party required to consult must approach the consultation with an open mind.

18 The Regional Policy Statement also provides specific direction to the Regional Council as to how it would achieve this aim. In particular:

Policy WL 5B: Allocating the capacity to assimilate contaminants: Allocate among land use activities the capacity of Rotorua Te Arawa lakes and other water bodies in catchments at risk to assimilate contaminants within the limits established in accordance with Policy WL 3B having regard to the following principles and considerations:

(a) Equity/Fairness, including intergenerational equity;

(b) Extent of the immediate impact;

(c) Public and private benefits and costs;

(d) Iwi land ownership and its status including any Crown obligation;

(e) Cultural values;

(f) Resource use efficiency;

(g) Existing land use;

(h) Existing on farm capital investment; and

(i) Ease of transfer of the allocation.

19 Protect Rotorua’s main concern is that the unlawful process adopted to date means the Draft Rules will fail to meet the above criteria, and especially the need to be fair and equitable in the nitrogen reduction required between affected landowners. Their objection is not making fair and equitable Nitrogen Discharge Allocations to protect Lake Rotorua.

FAILURE TO PROPERLY CONSULT

Inadequate information

20 Protect Rotorua is concerned that, at the outset of the consultation process, many landowners were not provided the rate of nitrogen loss for their particular property (benchmark), and thus could not respond in an informed and intelligent manner.

21 The impact of the Draft Rules on landowners is based, inter alia, on the rate of nitrogen loss for their property, which is determined by Overseer. We are told that, at present, most people on small blocks do not know what their current rate of nitrogen loss is. If landowners do not know the rate of nitrogen loss for their property, they cannot know how the rules will affect them as this determines whether they will require a resource consent or not, and if so, how much they will have to alter their land use in order to meet the applicable Nitrogen Discharge Allowance.

22 For example, one member of Protect Rotorua who has a horse breeding property in the Lake Rotorua catchment area which is 7.4 hectares has been informed (in late 2014) by the Regional Council that she will not need to apply for a resource consent until 2022. Until recently, she considered that it was unlikely that she would need to apply for a resource consent at that point, as she runs her horse breeding unit without bringing additional feed onto the land; the property grows all its own winter feed, and sells off the surplus. However, based on the Overseer calculations of a similar property, it appears that the property will have to drastically reduce its operation to remain a permitted activity. Members of Protect Rotorua tell us that most small block owners are in a similar position to this landowner in not knowing how the Draft Rules will affect them. There has also been a lack of clarity about which version of Overseer has applied to the advice given by the Regional Council to affected landowners.

23 This lack of clarity has been compounded by confusion regarding who the Draft Rules will apply to. Protect Rotorua is of the view that many have mistakenly understood that the Draft Rules will not apply to them, when they will. In the consultation material, the Draft Rules were to apply to properties 2 hectares and over. The consultation document specifically noted that “[p]roperties under 2 hectares will have no nutrient limit rules or reporting requirements.” However, in the latest Draft Rules released (and provided to the Lake Rotorua Stakeholder Advisory Group (‘StAG’) on 21 July 2015), the Draft Rules appear to impose nutrient limits and reporting requirements on all properties, including those under 2 hectares. This is a significant change, as owners of properties 2 hectares and under would not have engaged in the consultation process on the understanding that the Draft Rules did not impose limits on their land use.

Changed proposal

24 The data underlying the Draft Rules consulted on in 2014 has changed so materially after consultation closed that the consultation process cannot still be considered relevant / useful, and consultation needs to be undertaken again on the new data.

25 The Regional Council prepared the Draft Rules for consultation by reference to version 5 of Overseer, as noted in the consultation document which states that “[a]ll nitrogen discharge numbers referred to in this document are based on estimates using versions of Overseer 5.” We understand that it was under this version of Overseer that the rate of nitrogen loss for most landowners in the Lake Rotorua catchment was also calculated.

26 Since commencing the consultation process, the Regional Council has confirmed that recent work with StAG around allocation has used an updated version of Overseer (version 6.1.3), and that the most recent Draft Rules are based around allocation decisions using version 6.2.0. We understand that Land Use Advice and Support consultants are now using Overseer 6.2.0.

27 The different versions of Overseer have produced significantly different data with respect to the nitrogen assessment of properties in the Lake Rotorua catchment, and thus the amount of nitrogen reduction required.

28 The extent of the change is illustrated by reference to an example of one property in the Lake Rotorua Catchment, Love Red Deer. The owner of this property sought information regarding the rate of nitrogen loss on her property from both the Regional Council and Land Use Advice and Support. Since the start of the consultation process she has seen an almost 300% increase in her nitrogen assessment by recourse to different versions of Overseer. Using the same base files for each different version, the rates are as follows:

(a) Overseer 5 – 26;

(b) Overseer 6.1.3 – 68.7; and

(c) Overseer 6.2.0 – 77.

29 As a result, Love Red Deer has been unable to determine with any level of certainty how the Draft Rules will in fact affect its business. I have advised Love Red Deer that the size of the changed nitrogen assessment requires it to be consulted on Overseer 6.2.0 given the material difference to Overseer version 5. I have come to that advice after discussing with Love Red Deer the very different submissions they would make now given the results under Overseer 6.2.0 as compared with the results under Overseer 5.

30 The change in Overseer has also impacted on the consultation material provided by the Regional Council. I am instructed that a table set out in the Fact Sheet: Stocking table for Lake Rotorua Draft Permitted Rule (‘Stocking Table’) is incorrect as it has not been updated following the updates to Overseer which have significantly impacted on nitrogen benchmarking. The Stocking Table states that the “10 kgN/ha/yr limit is based on Version 5 of the Overseer model and it will change when converted to Version 6. However, the indicative stocking rates above should remain about the same.” As set out in paragraph 28 above, this cannot be factually correct.

31 Further, when used by a deer farmer to assess permitted stocking levels under the Draft Rules, I am told that the results are clearly inaccurate. For example, with reference to one of the Love Red Deer farms (Kaharoa) (this is one of the only dry stock properties for which Overseer measurements have been provided), it is clear that the nitrogen loss rates estimated in the Stocking Table are wrong. According to the Stocking Table, the property could farm 922 under one-year-old hinds, and remain under the 10 kgN/ha/yr limit. However, based on Overseer readings calculated with the assistance of a consultant from Land Use Advice and Support, a property supporting this amount of deer would only generate a nitrogen loss rate of 38 kg/N/ha/yr for the property – which far exceeds the 10 kgN/ha/yr limit.

Animals / ha Farm size

(Kaharoa) Animals on farm Nitrogen Loss

Stag 4.9 32ha 157 19

Hind <2 years 8.8 32 ha 282 24

Hind fawn < 1 year 28.8 32 ha 922 38

32 The concerns with Overseer raise questions about the probative value of the Draft Rules based on them. It also undermines the probative value of the consultation material, also based on Overseer 5.

33 If how the Draft Rules will affect landowners has significantly changed for landowners since the commencement of the consultation process, the consultation process must be done again, especially given the significant detrimental impact that the nitrogen reductions under the latest version of Overseer would have on affected landowners in Protect Rotorua. In this instance, the disparity between the Overseer calculations on which the scheme of the Draft Rules are based has so materially changed that the input provided on the Draft Rules cannot be treated as still applicable.

34 This concern was raised at a meeting of StAG earlier this year, where members were asked to consider the ranges for Nitrogen Discharge Allocations. At this meeting, the minutes record that StAG members “expressed concern at the complexity of information presented and the limited time to absorb and make recommendations.” As recorded in the minutes, it was acknowledged “that time was pressing and StAG should aim to give as much direction as possible, despite complex and incomplete information.” The Regional Council cannot delegate to StAG its obligation to consult properly.

35 The StAG meetings are also not a fulfilment of the Regional Council’s obligation to consult with affected landowners because:

(a) StAG was formed by a shoulder tap exercise and is not representative or proportionate in terms of those most seriously affected. For example, despite small block holders (being properties between 10-40 hectares) representing 25% of the properties affected by the Draft Rules, there was only one small block representative on StAG (Karl Weaver) until October 2014 (after consultation on the Draft Rules had already been completed). In October 2014, Karl Weaver resigned because he was concerned that he was not democratically appointed and that StAG was not representative of the sector. In addition, on 31 October 2014, small block owners wrote to the Regional Council (along with other Te Arawa Lakes Programme partners) stating that they did not feel that small block owners had been adequately represented on StAG. Subsequently, Sharon Love and two other small block holders were appointed to StAG, but this was too late as consultation was already closed.

(b) We understand that StAG initially considered the appropriateness of the Draft Rules on the basis of Overseer 5, but that version has been overtaken by Overseer 6.1.3 and 6.2.0, which yield significant materially different results concerning nitrogen reduction.

Failure to adequately respond to request for information

36 In July 2014, Land Use Advice and Support was offered in the feedback document provided to the general public at the outset of the consultation process. This service was only made available to landowners from March 2015. On 10 March 2015, Ms Love, on behalf of several affected land owners, sought assistance from Land Use Advice and Support on behalf of the Deer Association and Protect Rotorua, to determine the rate of nitrogen loss for four ‘sample properties’ to enable them to properly engage in the consultation process.

37 The allocated consultant from Land Use Advice and Support was only available from June this year to provide the assistance sought, well after consultation closed in October 2014. As at 16 June 2015, the parties still did not know the rate of nitrogen loss on their properties. Ms Love now has an indication of what the rate of nitrogen loss is for one of her properties, but the process is still being done, and they are the first dry stock farm in the advice process to receive assistance.

38 However, the consultation period on the Draft Rules closed in October 2014, and the Draft Rules have now substantively been determined by the Regional Council – making it impossible for these persons to properly engage in the consultation process.

39 The Regional Council would need to show genuine evidence that it still retained an open mind on the substance of the Draft Rules to render any further consultation effective in August 2015. Obviously relevant information would also have to be provided.

ECONOMIC REPORT

40 Finally, Protect Rotorua puts the Regional Council on notice of its concerns with the report commissioned by the Regional Council, ‘Economic Impacts of Rotorua Nitrogen Reduction’ (‘the Economic Report’).

41 The Economic Report appears to exclude relevant economic data from the region. Protect Rotorua is therefore concerned that the Economic Report is incomplete and thus misrepresents the economic impact of the Draft Rules. For example, we are instructed that data regarding deer farms in the Lake Rotorua catchment has not been included in the economic modelling.

42 Protect Rotorua understands that the Economic Report may still be in draft, but the draft Evaluation Report prepared under section 32 of the RMA relies on the Economic Report. The draft Evaluation Report has already been released to affected parties. Thus, it is critical that the Regional Council remedies the mistakes in the Economic Report to prevent further legal concerns as the process moves to the judicial phase.