5. Transfer of Crown Water Rights to Electricorp

The State-Owned Enterprises Act 1986 provided for the transfer of assets, including water rights, to State Owned Enterprises. The Sale and Purchase Agreement between the Electricity Corporation of New Zealand (later known as “Electricorp”) and the Crown signed 31 March 1988 (but retrospective to 1 April 1987) provided for the sale of all of the Crown’s interest in the assets and managing of the contracts. Prior to this time (from 1 April 1987) the Corporation had been using the assets and managing the contracts under a licence agreement.

The abolition of the National Water and Soil Authority and the MOW and Development on 1 April 1988 saw the administration of all water allocation transfer to the Regional Water Boards. The 1988 Amendment to the Water and Soil Conservation Act that came into effect on 1 April 1988 abolished the separate category of Crown water rights (previously granted under section 23) and deemed them to be water rights granted by the Regional Water Board but its savings provisions included:

“S58 (3) The Order in Council called Rights Conferred on the Minister of Electricity to Dam, Use, Discharge, and Divert Waters of, or into Lakes Tekapo, Pukaki, and Ohau, published in Gazette, 1969, Volume 2, at page 1560 shall continue to have full force and effect as if section 23 of the principal Act had not been repealed.”

The 1988 Amendment made no reference to the 1968 Order in Council and this could perhaps be considered repealed with the repeal of the statutory basis for a declaration of waters of national importance and the omission of any explicit savings clause referring to it. The Amendment meant that applications for water rights involved an objection/submission process, and a decision by the Waitaki Catchment Commission with the right of appeal to the Planning Tribunal. While the Order in Council was explicitly saved, the procedure for exercising the right of renewal was not specifically addressed. The procedure for renewing water rights effectively required an application for a new water right under section 21 of the Water and Soil Conservation Act and this could be argued to apply. There is the question of why the specific savings provision was included given that Crown water rights were deemed to be water rights granted by the Regional Water Board. This could raise the possibility of an argument that these water rights were in a different category and subject to different considerations (and also processes) in terms of renewal. For the Order in Council there could be also be an argument that the reason for the specific savings was the allocation reserved for other uses, putting it in a different category from other Crown water rights.

Sale and Purchase Agreement

The Sale and Purchase Deed defined the “permits and licences” included in the assets as “all statutory or regulatory permits and licences held by the Crown as at 31 March 1988 in relation to the activities and functions previously carried on or proposed to be carried on by the Division including but not necessarily limited to all rights or existing uses whatsoever under the Water and Soil Conservation Act 1967 … “.

The Deed (p24) stated that:

“It shall not be a breach of this Deed if those existing water rights or authorisations (forming part of the Permits and Licences), which are currently held or issued for a term in perpetuity are reduced to a term of 35 years from the date hereof.

Subject to any new provisions to be effected by the revision of Resource Use Statutes; the Corporation hereby records that it intends to apply for formal water rights to replace those water rights or authorisations (forming part of the Permits and Licences) which are currently held or issued for a term in perpetuity, and that it will use its best endeavours (having regard to the availability of specialist expertise, Regional Water Board resources, and programming factors) to lodge such applications within 15 years from 1 April 1988 and that it will pursue such applications with good faith and due diligence until finally determined.”

The creation of State Owned Enterprises was done at a very high level and this has made it difficult to obtain a clear picture of events. While the background to these clauses is not known, it is believed that the situation with respect to some water rights or authorisations was unclear. It is also possible that there was general concern about transferring rights to the State Owned Enterprise. A draft Water and Soil Bill to consolidate the Water and Soil Conservation Act 1967, the Soil Conservation and Rivers Control Act of 1941 and related legislation that had been circulating widely for some years had indicated the likely demise of water rights and authorisations in perpetuity. A redraft had been completed in 1986. During 1987, with the imminent abolition of MWD and NWASCA, the Government had signalled the integrated Resource Management Law Reform process that resulted in the Resource Management Bill of 1990.

The transfer took place in the background of the amendment of the Water and Soil Conservation Act repealing the provision for Crown water rights and waters of national importance. The Corporation would have had to renew the Upper Waitaki water rights granted under the 1969 Order in Council by 1990 and this could have allowed input by those with an interest in ensuring water continued to be allocated or available for irrigation. This was likely to involve a different decision making process to the one used to obtain the 1969 Order in Council, although there could have been argument about whether the express savings provision in the Water and Soil Conservation Act allowed the re-evaluation of the allocation in the rights.

The transfer may not have specifically considered the allocation for irrigation in the Crown water right granted by the 1969 Order in Council and the allocation process. It was an allocation of water that could be accessed through making an application to the Regional Water Board and not a right exercisable by the Corporation. Under the OIC the Minister of Electricity had to release the water when wanted (and consented to by the Regional Water Board) for irrigation.

5.1. In Summary:

The Crown water rights under the 1969 Order in Council held by the Minister of Electricity were transferred to the Electricity Corporation of NZ on 1 April 1988.

The Deed of Sale and Purchase Agreement recorded the Corporation’s intention to apply for those rights held or issued in perpetuity within 15 years.

The Deed recognised that the life of such rights in perpetuity may be restricted to 35 years in future.

The transfer process may not have considered the allocation for irrigation and the allocation process involving the Waitaki Catchment Commission (and Regional Water Board) in the Crown water right granted by the 1969 Order in Council. The water right granted the right to use 15 cumecs for electricity generation until such time as it was required for irrigation.

The Water and Soil Conservation Amendment Act 1988 repealed section 23 Crown water rights and the power to declare waters of national importance. An express savings provision was included with the 1969 Order in Council to “continue to have full force and effect as if section 23 of the principal Act had not been repealed”.