Side agreements in the resource consent process: implications for environmental management

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.