RMA Reform Series: Compliance, Monitoring & Enforcement

Home Insights RMA Reform Series: Compliance, Monitoring & Enforcement

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Contributed by: Kristen Gunnell

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Published on: November 26, 2020

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The Resource Management Review Panel rightly notes that effective and efficient compliance, monitoring and enforcement (CME) are "hallmarks of a well-functioning regulatory system" –  but that the RMA's CME system is not meeting that objective. 

In our experience, Councils often seek to impose a vast suite of conditions at the front end of the consent process but then fail to focus on monitoring and enforcement of those conditions. This has the effect of penalising those who comply (we will leave the separate discussion on whether councils impose unnecessary consent conditions to another day). If CME was given due focus and funding, the RMA system may not be as "broken" as the general consensus would have it be.  

The Panel identifies two main categories of issues facing CME: those arising from current institutional arrangements and those arising from legislative deficiencies.  

Institutional arrangements

The Panel considers that the devolution of CME functions to a large number of small local authorities with operational and jurisdictional overlaps has created a fragmented system that results in confusion, duplication and inefficiency. Relationships are unclear between CME functions under the RMA, and other legislation such as the Hazardous Substances and New Organisms Act 1996, the Building Act 2004 and bylaws made under the Local Government Act 2002.

The Panel considers that local authorities are hamstrung by a lack of resources, biases and conflicts of interests, and competing functions, with CME having a lower priority. There is a perception that formal enforcement action is not seen as desirable by some elected officials and that conflicts of interest can arise when a Council is both the regulator and regulated party. The differences in resourcing between local authorities can also result in an uneven application of the law between areas. The Panel records the low number of FTE employees allocated to CME functions in New Zealand – 11 local authorities have no FTE for resource management CME, while 24 have one or fewer employees tasked with this work. The Ministry for the Environment only has one FTE dedicated to resource management CME issues.

The lack of cost recovery mechanisms for compliance monitoring in relation to permitted activities was also raised as an issue by the Panel, which means this monitoring is either not undertaken or is funded from the general ratepayer base rather than from the resource user. 

Legislative deficiencies

The Panel notes that deterrence is the primary enforcement strategy to ensure compliance with the RMA and that for deterrence to be effective, there needs to be a general perception that the laws are enforced with meaningful punishment being meted out to any wrongdoer. RMA penalties are low in comparison to international jurisdictions (in the UK, corporate environmental fines are £3 million compared to a maximum penalty of $NZ600,000 under the RMA). In many cases, the low fines set under the RMA mean that the commercial gain far outweighs the potential fine. Defendants can also insure against environmental penalties undermining the deterrent effect even further.

Recommendations

The Panel recommends establishing regional CME hubs with assistance and oversight from central government. Each hub would take on CME functions on behalf of all the local authorities in the region with support from the EPA, and would report to the relevant regional joint planning committee. Mana whenua involvement in CME would be improved, and there would be better coordination between regional CME hubs and central government to develop best practice. As a part of this, company CME track records would be accessible by the general public.

Legislative changes proposed by the Panel include: 

  • substantially increasing the maximum financial penalties to bring them in line with other countries and other New Zealand regulatory regimes; 
  • specifying commercial gain as an aggravating factor; 
  • prohibiting insurance against prosecution fines and infringement fees; and 
  • providing the opportunity for creative sentencing, such as offenders contributing capital or labour towards cleaning up the environment.  

The Panel also recommends enabling recovery for costs of permitted activity monitoring and for costs associated with the investigation of unauthorised activities in some circumstances. The Panel considers this is particularly necessary given the anticipated increase in the use of permitted activity status with attached performance standards. Other Panel recommendations in this space include: 

  • reconsidering statutory limitation periods for offences; 
  • creating a new offence for contravention of conditions of consent; and 
  • establishing a new power to allow a regulator to apply for a consent revocation order in response to serious or repeated non-compliance.


Comment 

The CME system currently suffers from inconsistency and a general lack of resourcing and prioritisation. CME is in many ways an easy fix. The Panel's recommendations in this area are much more targeted and specific than some of the other chapters of its report. 

We generally support the Panel's recommendations, in particular, the regionalisation of CME to address issues of resourcing and local biases. The economies of scale created by the new hubs should be able to be leveraged to unlock efficiencies at the front end of the consent process. This will enable CME to be focused where it is of most use, in identifying and pursuing bad actors.

Ultimately, the success of the new system will turn on the adequacy of the funding provided and input from the Ministry to enable centralisation of data and meaningful monitoring. We are not convinced that cost recovery provisions and funding from local authorities will be sufficient to change the status quo in relation to resourcing. In practice, cost recovery takes up valuable administrative time. Given the huge effort that will be needed to overhaul the existing system, we also query whether there will be sufficient resources available to police permitted activities. 

The effectiveness of CME will depend on the quality and quantity of the resources available to it and, as with other parts of the RMA reform, the willingness of central government to commit adequate funds will be critical.


This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.

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