November 1998
Report summary
This investigation examines the environmental implications of agreements made between resource consent applicants
and persons having the status of 'affected persons' under the RMA. By enabling applicants to circumvent statutory
requirements e.g. public notification, side agreements may result in activities receiving consent without a proper
assessment of environmental effects.
Commissioner's preface
The RMA creates a climate where there are clear incentives to enter into private agreements for a variety of reasons with potentially positive or negative environmental outcomes. The incentive to enter into agreements is particularly strong in relation to avoiding notification of an application, or minimising costs and delays if an application is notified.
It was my unease regarding New Zealand's record for managing complex systems, and a general propensity to focus on private rights rather than community or collective (frequently environmental) rights, as much as specific concerns regarding side agreements with affected parties under the RMA, that prompted me to initiate this investigation.
Executive summary
What are Side Agreements?
People or bodies engaging in activities covered by the Resource Management Act 1991 (RMA) will frequently require resource consent from a consent authority. If the environmental effects are significant, the application for this consent must be notified (publicly advertised) whether or not all those affected given written approval. Where the environmental effects are likely to be minor, the consent authority may decide that the application need not be notified provided that the applicant obtains the approval of those likely to be affected. If an applicant provides financial or non-financial incentives to secure the approval of these affected parties, they are entering into a side agreement.
Side agreements are any agreements entered into to obtain the written approval of an affected person.. Side agreements may avoid notification of an application, seek to mitigate adverse environmental effects, or to realise an opportunity for financial gain. Use of the term in this report does not indicate a judgement as to whether such transactions are good or bad
Uncertainty over the effects
It is probably too early in the life of the RMA to tell what impact side agreements are having on environmental management and the achievement of environmental benefits. This difficulty in defining impacts arises from the lack of an effective reporting system to record the number and magnitude of side agreements made. It is also difficult to predict with any accuracy what would have happened in the absence of such practices.
However, there is enough uncertainty over the effects of many side agreements to indicate that a potential risk to the environment exists. This risk should not be ignored. This is in spite of widespread awareness of side agreements and a generally relaxed attitude towards the practice by those working with the RMA.
Identifying the affected persons
The identification of those affected is linked to the occurrence of side agreements. The provisions of the RMA encourage applicants to consult and discuss their proposals with others. A natural consequence of the parties discussing the issues is that, in some cases, agreements will be made. Some of these agreements will probably lead to positive environmental outcomes; others may not.
Consent authorities should determine who the affected parties are solely on the basis of the facts and their best judgement. The determination should be independent of whether or not side agreements are likely to occur, or whether some objector is demanding payment for approval.
Disclosure of side agreements
Most practitioners interviewed agreed that the terms of many side agreements are not disclosed to consent authorities. Some practitioners have suggested that any risk side agreements pose to good environmental management would be minimised if the agreements were transparent.
The Parliamentary Commissioner believes that if the consent authority knows that those affected received compensation in consideration of their approval, it is less likely to assume that there is no environmental risk.
Findings & recommendations
Risks to environmental management
The environmental risks associated with side agreements depend on the council's knowledge and treatment of any contractual arrangements by consent applicants. Good practice by the consent authority can help to minimise these risks. For example, where a private agreement does not necessarily result in effects on the environment being mitigated, consent authorities should impose appropriate conditions to mitigate these effects.
Many incentives for side agreements are about satisfying individual or private rights, rather than about good environmental outcomes. Individuals may well be compensated. However, the sum of these individual compensations does not necessarily equate to better environmental outcomes for the wider community.
Agreements in the nature of property transactions tend to pose fewer risks to environmental management than those which involve financial gain or the purchasing of silence.
Disclosure of side agreements and their context has the potential to reduce risks to effective environmental management.
Scrupulous performance by a consent authority of its RMA obligations should reduce the risk that side agreements might pose. A rigorous evaluation of an applicant's AEE should determine the nature and scale of effects and those affected. The evaluation should then lead to consent conditions being set to adequately avoid, remedy or mitigate adverse effects.
Recommendations
To the Minister for the Environment
- identify the extent, nature and potential negative effects on the environment of side agreements between resource consent applicants and those affected by a proposed activity.
- ensure that there are no restrictions placed on consent authorities to require resource consent applicants to disclose the existence of side agreements.
To all local authorities
- ensure that they are fully informed of all the environmental effects of the proposal before deciding whether the consent application requires notification, irrespective of side agreements.
- a standard approval form be provided to encourage those affected by a proposed activity to describe any adverse effects on the environment.
