The application of Trans-Tasman Resource (TTR) to go looking for heavy minerals off the West Coast captured few headlines when it was announced last month.

It quickly sank below notice amid the tack and gybe of business journalism. Not even the National Business Review took much notice.

From a newsworthiness point of view, this is understandable. In practical terms, TTR has only applied for a licence to look for minerals, not mine them. The application was probably only newsworthy because of the firm’s failed bid to mine ironsands off the coast of Taranaki last year.

But from a policy perspective it has the potential to lead to an interesting comparison of the two pieces of legislation that govern resources use in New Zealand (albeit highly speculative at this stage).

That is because the 4436km2 area of ocean floor that TTR wants to prospect lies between one kilometre of the West Coast shoreline and the 12 nautical mile territorial limit, which falls under the Resource Management Act (RMA).

If the area TTR wanted to explore lay beyond the 12-mile mark, the project would fall under the purview of the Exclusive Economic Zone and Continental Shelf Act 2012 (EEZA). This legislation aims to open up undersea minerals to development. But to date the law has proved to be a difficult threshold for start-up firms. TTR was the first to submit an undersea mining consent application under the EEZA and the first to be declined.

What makes the matter interesting is that TTR is looking to use the same mineral harvesting technology on the West Coast as it proposed using in Taranaki. This potentially allows for an apples-for-apples comparison between the two consenting regimes should commercial mineral deposits be found.

The two areas that will stand out in a comparison of the respective regulatory regimes will be the use of adaptive management and the procedural fairness of each.

On the first, both the RMA and EEZA take a precautionary approach when assessing consent applications, and applicants have to show how they will avoid, mitigate or remedy any potential risks to the environment from an activity.

Where this cannot feasibly be done, such as where emerging technologies are being introduced, both regimes allow for adaptive management. This is a “learning by doing” approach that allows small-scale development and monitoring to take place as a means of answering any uncertainties.

Yet this is where the two regulatory regimes diverge.

The RMA does not specifically mention adaptive management but the practice is allowed under the legislation and has been applied to commercial projects such as Golden Bay Marine Farmers, Transmission Gully and the Wairau Hydro Electric Power Scheme.

Adaptive management

In contrast, the EEZA does make mention of adaptive management as a mechanism for giving answers to unknowable risks associated with a project. It also goes further than the RMA in spelling out how regulators should approach uncertainties, namely to err on the side of environmental caution. However, overly tight drafting of the uncertainty principle appears to have choked off use of adaptive management techniques.

The result is regulation that has zero tolerance for environmental uncertainties, even on adaptive management, a mechanism that was designed to give answer to these uncertainties. The details of this can be found in a discussion document on mining lobby Straterra’s website, a position I agree with.

The other area a comparison is likely to shed light on is the process by which consent decisions are reached.

The EEZA stipulates that the Environmental Protection Authority (EPA) is responsible for assessing consent applications or, more specifically, the EPA’s Decision Making Committee. Appeals are allowed to the higher courts but only on points of law.

Under the RMA, TTR will have to first have to seek consent from the West Coast Regional Council which, if granted, can be appealed in the Environment Court. Environment Court decisions can be appealed to the higher courts on points of law.

It remains unclear at this stage which is the better avenue for the firm to pursue.

The protracted manner by which Bathurst Resources secured its consents to mine high-grade coking coal on the Denniston Plateau raises obvious concerns about the RMA process, particularly as it allows open-ended challenges in the courts. However, Environment Court processes are well established, and there is a vast body of case law to draw on, and the procedural fairness of the system is not in doubt.

The EPA process was designed to be much faster but the regime’s lack of maturity and teething problems have raised questions over its procedural fairness. TTR, for example, abandoned an appeal to the EPA’s decision on the grounds that it limited its ability to submit further evidence. And in any case, the courts might be so constrained by the lack of EEZ case law that the matter gets referred back to the EPA – a circular process that enriches lawyers at the expense of shareholders.

These two areas – adaptive management and procedural fairness – are by no means the only issues that a comparison between the EEZ Act and the RMA will reveal. Neither piece of legislation is a policy panacea as judged by the level of development that has been enabled by the respective regulatory regimes.

Any expectations that a comparative exercise will lead to regulatory change in the short-term need to be tempered with reality. TTR is merely prospecting in the region. The chances of the work proceeding to a mining consent application are a thousand to one, according to the industry rule of thumb.

Still, even at this stage it is clear the regulatory divergence between the two pieces of legislation is problematic when it comes to harvesting undersea minerals.

First, it locks up undersea resources in the EEZ that would otherwise have benefited New Zealanders. Second, it arbitrarily and unfairly discriminates between undersea projects.

Why is it that activities on one side of an invisible line should be allowed to quantify risks using adaptive management techniques, while on the other side the uncertainty principle means “learn by doing” is off the table?

But perhaps the biggest value from a comparison will be in showing what the regimes have in common: convoluted regulation that screams to investors “take your investments elsewhere. New Zealand’s undersea resources are closed for business.”