Environment Protection Authority v BHP Steel (JLA) Pty Ltd
[1999] NSWLEC 127
•4 June 1999
Land and Environment Court
of New South Wales
CITATION:
Environment Protection Authority v BHP Steel (JLA) Pty Ltd [1999] NSWLEC 127
PARTIES
PROSECUTOR
Environment Protection AuthorityDEFENDANT
BHP Steel (JLA) Pty Ltd
NUMBER:
50072 of 1998
CORAM:
Pearlman J
KEY ISSUES:
Environmental Offences :- water pollution - s 9 considerations - sentencing principles - penalty
LEGISLATION CITED:
Environmental Offences and Penalties Act 1989 s 9, s 4(1)
Clean Waters Act 1970 s 16(1)
DATES OF HEARING:
04/19/1999
DATE OF JUDGMENT DELIVERY:
06/04/1999
LEGAL REPRESENTATIVES:
PROSECUTOR
Mr B G DockingSOLICITORS
Environment Protection AuthorityDEFENDANT
SOLICITORS
Mr M P Brennan
Blake Dawson Waldron
JUDGMENT:
IN THE LAND AND 50072 of 1998
ENVIRONMENT COURT Pearlman J
OF NEW SOUTH WALES 4 June 1999
- Prosecutor
- Defendant
Introduction
1. The defendant has pleaded guilty to an offence against the Environmental Offences and Penalties Act 1989 (“the EOP Act”). The charge alleges that, on or about 25 April 1997, at Port Kembla, the defendant polluted waters contrary to s 16(1) of the Clean Waters Act 1970.
2. The plea of guilty carries with it an admission of the essential legal ingredients of the offence ( R v O’Neill (1979) 2 NSWLR 582) and the Court is thus presently concerned only with penalty and costs.
3. In the presentation of the case to the Court, the parties relied upon an agreed statement of facts, from which I have principally derived the findings that I have made (although I have also had regard to the affidavits which were formally read). It is important, however, that I make some remarks about the agreed statement of facts. It was in parts ambiguous, unclear and internally inconsistent. I have resolved any doubts arising from it in favour of the defendant ( R v O’Neill at p 588)
The manufacturing process
4. An understanding of the incident which gave rise to the offence with which the defendant is charged requires an outline of the manufacturing process in which the defendant is engaged.
5. At its premises, the defendant produces steel strip. In this process, steel is flattened by rollers which generate heat on their surface. The rollers are cooled and lubricated by spraying them with an oil and water substance known as “roll coolant” . After spraying, the roll coolant is collected and purified before being transferred to two Alfa Laval AK 20 FG heat exchangers where it is systematically cooled before being resprayed onto the rollers.
6. Inside the heat exchangers, the roll coolant is passed through a series of cavities created by the compression of a number of corresponding vertical metal plates. At the top and bottom of the plates, a continual flow of salt water is pumped through circular channels causing the roll coolant to lose heat. The roll coolant is separated from direct contact with salt water by the plates, which are sealed with a series of rubber seals known as gaskets.
7. The design of the gaskets incorporates two seals, one called an “o” ring seal and the other a field seal. The seals are separated by a void which contains three emergency relief slots. Normally, if the “o” ring seal or the field seal fails, liquid is discharged through the emergency relief slots to the exterior of the heat exchanger.
The incident
8. At some time between 5.45 am and 6.40 am on 25 April 1997, a tear occurred in the field seal in one of the heat exchangers, allowing roll coolant to enter the void, from where it would normally exit through the emergency relief slots. However, on this occasion, the “o” ring seal lifted, allowing the roll coolant to enter the salt water channel of the heat exchangers.
9. The roll coolant discharged into Lysaght’s drain at a discharge point designated as “S3” in the defendant’s pollution control licence. The discharge flowed into a tributary creek to Allans Creek, and thence into Allans Creek (collectively “the waters”).
10. The roll coolant consisted of the following proportions of substances:
95.5% water
3.7% Quakerol A 2626Pk
0.8% tramp oil
iron particulates
11. Quakerol is a steel rolling oil, and tramp oil is a combination of oils of the nature of general engineering oil or motor oil.
12. The total quantity of roll coolant which was discharged into the waters was about 5500 litres. About 480 litres discharged to the floor (called “the cellar floor”) in the vicinity of the heat exchangers, through the emergency relief slots in the gasket. It is unclear from the evidence as to whether this amount of 480 litres was part of the 5500 litres which discharged, or whether it was an additional amount. It appears to be an additional amount, because the parties agree that only 247 litres of the discharge comprised oil, as a consequence of the proportionate composition of the roll coolant which I have described (applying the proportionate figures of 3.7 per cent and 0.8 per cent to 5500 litres yields 247 litres). About 75 per cent (185 litres) of the amount of 247 litres floated to the surface of the water and was visible as black oily droplets, whilst the other 25 per cent (62 litres) created a milky or cloudy green emulsion which flowed downstream.
13. The milky white emulsion and floating oil was observed by an employee of the defendant in the tributary creek at 6.40 am. Between that time and 6.50 am, the heat exchangers cut out on two occasions due to an automatic circuit indicating that the level of roll coolant in the system was low. They were restarted each time, but at about 7.00 am, an employee of the defendant observed roll coolant being discharged on to the cellar floor. He observed roll coolant in the inspection pit to the underground pipe which led from the heat exchanger salt water channel to the S3 discharge point, and he then shut down the heat exchangers.
14. A clean up operation then ensued, carried out in part by the defendant and in part by the Port Kembla Ports Authority. The clean up utilised booms, skimmers, adsorbent pads and pumping out and it continued for the whole of the remainder of the day on 25 April and for part of 26 April 1997.
15. The clean up operation effectively removed the oil float, but it could not remove the cloudy emulsion, which remained in the waters for several hours after the incident.
Section 9 considerations
16. In imposing a penalty for the offence with which the defendant is charged, the Court is required, by s 9 of the EOP Act, to take into account a number of specified considerations. I deal with each in turn.
(a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence;
17. There was evidence of visual pollution in the waters. Visual pollution falls into the definition of “environment” in s 4(1) of the EOP Act, which provides that the term “environment” means all aspects of the surroundings of human beings, including, amongst other things, the aesthetic factors of those surroundings, such as appearance.
18. On 25 April 1997, Mr P D Jamieson, an officer of the prosecutor, made a number of observations as to the visual impact of the discharge. He saw an oily substance and oily sheen in the tributary to Allans Creek, black floating oil and a rainbow sheen at discharge point S3, and cloudy green water and black oily droplets in Allans Creek.
19. There was no evidence of actual harm to organisms in the waters which were affected by the discharge. Mr Jamieson actually observed what he termed “juvenile fish” in the waters of Allans Creek.
20. Harm to organisms was, however, a likely result of the discharge of the roll coolant. Evidence about the consequences to marine organisms was given by Dr J C Chapman, an ecotoxicologist in the employ of the prosecutor, and by Mr M Julli, an officer of the prosecutor experienced in assessing the toxicity of chemicals and effluents.
21. Dr Chapman’s opinion was that the discharge would have been likely to harm the environment in the following ways:
(i) likely localised toxicity from the cloudy oil emulsion component of the discharge to planktonic organisms in the upper water layers of Allans Creek for a day or two after the incident;
(ii) likely smothering effects to biota cased by the black float oil component before completion of the clean up;
(iii) likely toxic effects to benthic fauna caused by residual black oil float material remaining under rocks;
(iv) temporary setback of the recovery of Allans Creek, which he noted as being an area with a history of environmental damage but which has shown signs of steady improvement in the aquatic environment.
22. Mr Julli tested some samples of roll coolant obtained after the incident from the defendant’s premises. He concluded that the discharge of large quantities of roll coolant would be a “toxic insult to a marine aquatic system” . It would, in his opinion, be likely to cause a setback in any improvement of the environmental quality of that system.
(b) the practical measures which may be taken to prevent, control, abate or mitigate that harm;
23. I am not satisfied beyond reasonable doubt that there were any practical measures which the defendant might have taken to prevent, control, abate or mitigate the environmental harm.
24. The prosecutor contended that two practical measures might have been taken, namely, the defendant could have operated the heat exchangers with the full design complement of plates, and the defendant could have adopted better maintenance procedures.
25. The heat exchangers are designed to operate with 129 plates. The defendant adopted a practice of operating the heat exchangers with less than 129 plates as part of a process of removing the plates to be sent back to the manufacturers, Alfa Laval, for gasket reconditioning. The defendant removed plates from the heat exchangers from time to time, and stockpiled them until an amount had accumulated which could be sent to Alfa Laval for reconditioning. At the time of the incident, the heat exchanger in which the gasket failed was operating with 65 plates (and the other heat exchanger, which did not fail, was operating with 93 plates).
26. However, it appears that it was possible to operate the heat exchangers without the full complement of plates, provided that any increased pressure on the gaskets created by the reduction of plates was within the pressure design limits that the plates could withstand. Alfa Laval had provided to the defendant a formula for achieving an appropriate alteration of pressure in such circumstances. The defendant furnished calculations designed to demonstrate that, with 65 plates installed while maintaining an exit supply pressure of 1100 kpa, the heat exchanger was operating below the design pressure of 1600 kpa as indicated by Alfa Laval.
27. I find it very surprising for two reasons that the heat exchangers could operate properly with less than the full complement of plates. First, chapter 8 of the operation manual supplied by Alfa Laval indicates only that a single damaged plate may be taken out for repairs “for a short period of time” . Secondly, after the incident, Alfa Laval recommended that the heat exchangers be operated with a full complement of 129 plates and the defendant has implemented this recommendation. But no evidence was adduced by the prosecutor to show that the defendant’s calculations were incorrect, or that its claim to be able to operate without the full complement of plates is flawed. Accordingly, I accept the defendant’s claim.
28. I turn, next, to the defendant’s preventative maintenance procedures. The defendant implemented a procedure of gradual replacement of the seals of the gaskets. At the time of the incident, 241 out of 258 gaskets had been replaced, and the gasket which failed was one which was near, but not yet at, the end of its scheduled life. A more satisfactory preventative measure (and one which might prevent or mitigate environmental harm) might have been to implement a mass change of the whole bank of gaskets. This was suggested at a conference after the incident between representatives of the defendant and the prosecutor. However, there was no evidence that this was a design specification or a recommendation from Alfa Laval, and I do not place any weight upon it as a measure which the defendant might have implemented to prevent the environmental harm.
(c) the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence;
29. The defendant had experienced a number of operational difficulties with the heat exchangers from May 1993 to February 1997. Some 19 incidents were identified, although some incidents were related to others and therefore there were no more than 10 failures of the heat exchangers.
30. None of these incidents involved a tear in a field seal (as occurred in the particular incident in this case) but they all involved leakage of roll coolant. Most leakages were on to the cellar floor, but one incident, on 3, 5, and 6 February 1997, involved leakage of the roll coolant at the S3 drainage point.
31. Records of these incidents show that leaks of varying magnitude occurred intermittently but fairly regularly over a period of time. They show a history of plate and gasket failure of some kind or another.
32. The defendant had a system of monitoring the S3 drainage point, where it observed discharges at that point, arising out of the February 1997 incident, and its observations of the water at that time were recorded as “milky” , “cloudy” , “oily” and “opaque” .
33. Given the history of operational difficulties and the monitoring of the S3 discharge point (designed to check if there was any environmental harm of the kind that did occur on 25 April 1997), I am satisfied beyond reasonable doubt that the defendant could reasonably have foreseen the harm caused or likely to be caused by a failure of the heat exchanger system and a consequential discharge of roll coolant.
(d) the extent to which the person who committed the offence had control over the causes which gave rise to the offence;
34. There was no argument that the defendant was in control of the operation of the heat exchangers at its premises.
Other factors
35. In the defendant’s favour, I take into account the following factors:
(i) In accordance with s 439 of the Crimes Act 1900, the defendant’s plea of guilty, although I note that the plea was not entered until 17 February 1999, some eight months after the first return date of the summons;
(ii) the defendant’s prompt reaction to the discharge of the roll coolant in commencing clean up operations;
(iii) the defendant’s acknowledgment of liability for clean up costs, in respect of which it has paid the sum of $9256.42 to the Port Kembla Port Authority;
(iv) the defendant’s cooperation with the prosecutor, in particular in providing detailed written answers to the prosecutor’s questions;
(v) the obtaining of a report on the incident from Alfa Laval, and the defendant’s implementation of the recommendations in that report, in particular, the operation of both heat exchangers with the full design complement of 129 plates; and
(vi) the amount of costs payable by the defendant, which have been agreed at $25000.
36. There are some other factors which are relevant to consider. In his written submissions, Mr Brennan outlined at considerable length the environmental policy of the defendant’s parent company, Broken Hill Proprietary Company Ltd. The defendant is said to have diligently pursued that policy. None of that material appeared in the agreed statement of facts, nor was it the subject of any affidavit. The prosecutor took no objection to Mr Brennan’s submissions in this respect, but, in the absence of any evidence, I do no more than take into account that the defendant has adopted the environmental policy of its parent company and takes its environmental responsibilities seriously.
37. However, I also take into account, as evidence that the commission of this offence was not an uncharacteristic aberration ( Veen v The Queen (No 2) (1988) 164 CLR 465), the fact that the defendant has previously been convicted of an offence under s 16(1) of the Clean Waters Act, and it was fined $27000 for that offence ( Environment Protection Authority v BHP Steel (JLA) Pty Ltd, Bannon J, 9 September 1996, unreported). In that case, approximately 12450 litres of roll coolant discharged into Allans Creek and Port Kembla Harbour.
38. Mr Docking also brought to the Court’s attention the case of Jones v John Lysaght (Australia) Limited (McClelland J, 16 December 1983, unreported), which involved a breach of the Clean Air Act 1961. It was claimed that the defendant in that case has some corporate identity with the defendant in this case. However, I disregard this case as irrelevant. There is no evidence to establish that the defendants are in effect the same. Nor is it clear, from the copy of the reported decision, what penalty was ultimately imposed, although Mr Docking submits that it was $5000.
Penalty
39. The maximum penalty prescribed for this offence is $125000.
40. Mr Brennan brought the Court’s attention to a number of cases which, although not identical on their facts, should, in his submission, be taken into account in the exercise by the Court of its duty of “evenhandedness” , that is, giving full weight to “the collective wisdom of other sentencing judges … manifested in the general pattern of sentences …” ( R v Oliver (1982) 7 A Crim R 174, per Street CJ).
41. Four cases in particular were cited. They each involved breaches of s 16(1) of the Clean Waters Act, and in respect of each of them, the maximum penalty was $125000. In Environment Protection Authority v Shell Refining (Australia) Pty Ltd (Stein J, 9 March 1994, unreported), the penalty imposed was $42000 in relation to a spill of eight to 10 tonnes of crude oil into Sydney Harbour. In Blandin de Chalain v Katen & Heath Pty Ltd (Stein J, 5 April 1994, unreported) the penalty was $15000 in relation to a spill of about 2800 litres of diesel oil into a creek. In Environment Protection Authority v Pioneer Road Services Pty Ltd ( 3 February 1995, unreported) I imposed a penalty of $10000 in relation to a spill of about 14000 litres of diesel oil into a creek. In Environment Protection Authority v Wyong Shire Council (Stein J, 18 September 1996, unreported), the penalty imposed was $18750 in relation to a spill of lube oil and diesel fuel oil of an unknown but significant amount into a watercourse.
42. I have had general regard to these and other cases involving prosecutions for a breach of s 16(1) of the Clean Waters Act. But each case must be regarded on its own facts, and previous penalties can only assist in a general and limited way in the application of the “evenhandedness” principle ( Axer Pty Ltd v Environment Protection Authority , Court of Criminal Appeal, 22 November 1993, unreported).
43. Taking into account the serious nature of the offence, the amount of roll coolant which was discharged, the factors under s 9 which I have set out, and the mitigating and other factors which I have noted, I consider that an appropriate penalty is $25000.
Orders
44. My formal orders are as follows:
(1) The defendant is convicted of the offence with which it is charged.
(2) The defendant is fined the amount of $25000 to be paid to the Registrar of the Court within one month.
(4) The exhibits may be returned.(3) The defendant must pay the costs of the prosecutor in the amount of $25000.
0
4
2