Environment Protection Authority v Delta Electricity

[2009] NSWLEC 11

Land and Environment Court

of New South Wales

CITATION:	Environment Protection Authority v Delta Electricity [2009] NSWLEC 11
PARTIES:	PROSECUTOR Environment Protection Authority DEFENDANT Delta Electricity
FILE NUMBER(S):	50068 of 2008
CORAM:	Pain J
KEY ISSUES:	PROSECUTION :- sentence - breach of environment protection licence condition - failure to minimise or prevent the emission of dust from premises in accordance with licence condition - whether environmental harm - level of culpability where specialised contractor responsible for dust control of flyash under contract - mitigating factors
LEGISLATION CITED:	Crimes Sentencing Procedure Act 1999 s 3A(b) s 21A s 22 s 23 Protection of the Environment Operations Act 1999 s 64(1) s 241(1) State Owned Corporations Act 1989
CASES CITED:	Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 Bentley v BGP Properties Pty Ltd (2006) 145 LGERA 234 Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 Environment Protection Authority v BHP Steel (AIS) Pty Ltd (NSWLEC, Talbot J, 19 April 2000, unreported) Environment Protection Authority v BHP Steel (AIS) Pty Ltd [2003] NSWLEC 46 Environment Protection Authority v Coastal Recycled Cooking Oils Pty Limited [2008] NSWLEC 242 Environment Protection Authority v Lithgow Coal Company Pty Ltd [2003] NSWLEC 430 Environmental Protection Authority v Incitec Limited [2003] NSWLEC 381 Environment Protection Authority v Nowra Chemicals [2008] NSWLEC 187 Environment Protection Authority v Shoalhaven Starches Pty Ltd [2003] NSWLEC 107 Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299 Gittany Constructions Pty Ltd v Sutherland Shire Council (2006) 145 LGERA 189 R v Thomson; R v Houlton (2000) 49 NSWLR 383 R v Sharma (2002) 54 NSWLR 300 Veen v The Queen (No. 2) [1988] HCA 14; (1988) 164 CLR 465
DATES OF HEARING:	4 February 2009
DATE OF JUDGMENT:	11 February 2009
LEGAL REPRESENTATIVES:	PROSECUTOR Mr M Kelly (solicitor) SOLICITOR Environment Protection Authority DEFENDANT Mr C Leggat SC with Ms H Irish SOLICITOR Middletons

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

11 February 2009

50058 of 2008 Environment Protection Authority v Delta Electricity

JUDGMENT

1 Her Honour: The Defendant is charged that on 14 September 2007, at or near Wallerawang Power Station (WPS) in New South Wales, it committed an offence against s 64(1) of the Protection of the Environment Operations Act 1997 (the POEO Act) in that it was the holder of Environment Protection Licence 766, condition 03.1 of which was breached. That condition provides:

The premises must be maintained in a condition which minimises or prevents the emission of dust from the premises.

The breach was a failure to maintain the premises in a condition which minimises or prevents the emission of dust from the premises.

2 The Defendant has pleaded guilty and has therefore admitted the essential elements of this offence. The offence is one of strict liability so that mens rea is not an element of the offence.

3 The maximum penalty applicable to offences under s 64(1) of the POEO Act is $1 million for a corporation. The penalty for this offence was increased to $1 million from $250,000 in May 2006.

Background

4 The Defendant is a statutory state owned corporation incorporated under the State Owned Corporations Act 1989. It has all the powers and responsibilities of a natural person. The Defendant is a “public authority” for the purposes of the POEO Act. The Defendant is a wholesale electricity generator. The Defendant holds Environment Protection Licence number 766 (the licence) relating to the Mt Piper Power Station located at 350 Boulder Road, Portland NSW and WPS located at 1 Main St Wallerawang NSW. The licence includes the Kerosene Vale Flyash Repository (the KVAR). Flyash is a by-product of burning coal for electricity production.

5 The parties usefully agreed to a lengthy Statement of Agreed Facts (the SOAF). The essential elements of this are as follows:

· Ensuring that any exposed areas of flyash remain moist, typically through the use of sufficient numbers of sprinklers and/or water carts and/or water cannons to maintain sufficient moisture content to stabilise the flyash.

· Compaction and wetting of the flyash once it is emplaced.

· Covering exposed areas of flyash with a temporary cap, being a material that is more stable than flyash (“temporary capping”). Temporary capping is a coating on the ash and dust in areas where works are not complete. This normally consists of a sprayed on coating of lignosulphate or tar and, when required, dust can be loaded on top of this capping.

· Where the area has reached the limits of its boundaries it is covered with material that can promote natural growth as well as being supplemented with flora to reduce environmental and visual impact (“permanent capping”).

View of Area Surrounding the KVAR from the Mound

Operations at the KVAR

The Contract

The Management Plan

· Section 1.0 Appendix A – Organisation Charts identifies that 2 men will work at the KVAR during the day.

· Section 3.0 identifies compliance with Part 3 of the Licence as a key requirement.

· Section 3.4.1 identifies that Delta is responsible for the implementation of all licences and permits relating to the workplace which Thiess will operate.

· Section 3.7.2 identifies that a water cart and sprinkler system shall be used to minimise flyash and dust emissions from the KVAR. Thiess supervisor staff are to monitor KVAR operations daily to ensure that flyash and dust generation is minimised and appropriate suppression measures implemented as necessary.

· Section 3.16.2 sets targets for air quality and section 3.16.5 for compliance with the Licence.

· Section 3.16.11 refers to sprinklers and a water cart as methods of managing dust and flyash – performance targets include no non-conformance from Delta and no complaints from neighbours.

· Section 7.0 sets out the management plan for the KVAR.

· Section 7.3 contemplates permanent capping at a minimum of once per year with fast growing grasses as a management strategy.

· Section 7.4.2 sets out the method of placement and compaction of flyash, focussing on the addition of water to flyash on the working face. The working face is to be minimised in area as far as practicable. Filling is to be undertaken progressively to the finished level commencing at the western portion of the Mound and extending in an easterly direction. Capping takes place in a staged manner.

· Dust control is set out in section 7.4.4.

· Section 7.4.7 states that daily inspections are required with the results to be recorded on a daily inspection form.

Staff at the KVAR

· were approximately 2 truck drivers per shift who would deliver ash to the Mound.

· were 2 Mobile Plant Operators. Mr Ray Driscoll and Mr Bret Dobel performed the role on a rotating 5 days on, 5 days off, 2 days on, 2 days off basis.

· was a full time Water Cart Operator. This role was performed by Mr Willy Wright until the role was terminated in or around June 2007. Delta was not made aware the role was terminated.

· was a site manager responsible for the Mound. The site manager was based at the Wallerawang Power Station and Delta expected that he would spend 50% of his time on the Mound. The site manager was responsible for the operation, maintenance and overall management of the Mound.

Duties Performed by the Water Cart Operator

…

Duties Performed by the Mobile Plant Operator

[sic] at the KVAR the Mobile Plant Operator would commence by pushing the loads that had been dumped during the night.

Supervision of the Contract by Delta

Prior Problems with Dust Emissions at the KVAR

a) 18 July 2007
b) 19 July 2007
c) 20 July 2007
d) 21 July 2007
e) 22 July 2007
f) 5 August 2007
g) 9 August 2007
h) 29 August 2007
i) 30 August 2007
j) 31 August 2007
k) 14 September 2007

Works in Relation to the Mound by the Prior Contractor

Works in Relation to the Mound by Thiess prior to the Incident

Capping Works at the KVAR prior to the Incident

Batter Rectification Works at the KVAR prior to the Incident

The Incident

· dust was billowing from the western batter;

· flyash containment measures on the western side of the Mound were minimal, with a maximum of 12 sprinklers operating;

· a lone employee was operating the sprinklers near the base of the Mound, but he was below the area from which the dust was rising;

· there were no sprinklers on the eastern side of the Mound; and

· there was no sprinkler system on the eastern, north eastern or south eastern side of the Mound.

Incident Response

· Liaised with Thiess to address the Incident.

· Arranged for additional staff and equipment from the Mount Piper Ash Dam to attend the KVAR. The additional equipment included two additional water carts which arrived at 2:00 pm.

· When Delta staff visited the site on the morning of the 14 September 2007, they directed Thiess staff to take additional and immediate action to ensure ash did not leave the Mound in accordance with the Contract.

Mr Day first contacted Mr Hines and left a message on his phone.
He then attended the site office and spoke with Mr Aussell and expressed his concern to him.
He also forwarded an email to Thiess to confirm his concerns in relation to the management of the Mound.

· Ensured that key staff members did not finish work at the KVAR until they were sure that dust emissions were under control.

· Requested reports from Thiess on the causes of the Incident and conducted further site inspections.

· By 17 September 2007 installed a water cart with a water cannon on top of the Mound.

· By 17 September 2007 sourced and paid for additional irrigation equipment.

Causes of the Incident

· The failure of Thiess to progressively cap, either temporarily or permanently, large areas of the Mound leaving large areas of exposed flyash. Temporary or permanent capping of all parts of the Mound should have been done progressively and would have minimised dust emissions from all parts of the Mound other than those areas of the Mound that were operational.

· Temporary capping was a key initiative contemplated by Thiess. Thiess had been preparing parts of the Mound for temporary capping meaning that a larger area than normal of flyash was exposed. However, dust from these areas could have been minimised or prevented by use of adequate irrigation equipment.

· The recent works carried out on the western batter also exposed significant amounts of flyash. However, dust from these areas could have been minimised or prevented by use of adequate irrigation equipment.

· The exposed flyash was not sufficiently damp as there were an inadequate number of sprinklers at the KVAR generally, including an inadequate number of sprinklers on all batters above the areas capped by the prior contractor including on top of the Mound. Also, sprinklers installed on the top of the Mound and on some areas of the batter were not in service.

· The exposed flyash was also not sufficiently damp because the water cart was not in service on the day and had not been operated for some time.

· Strong, gusting winds.

· Thiess’ inadequate management, including inadequate staffing, at the KVAR.

Post-Incident

142. On Monday 17 September 2007, around 12 noon, the Officer returned to the KVAR to inspect the effectiveness of any control measures that had been implemented.
143. The Officer observed that:

· There was a water cannon in operation at the top of the Mound. However, according to the Officer the water cannon did not dampen the flyash sufficiently and the Mound continued to emit dust.

· There were no sprinklers in place on the southern slope.

· Sprinklers in place on the northern slope were not operating.

· Sprinklers had been put in place on the eastern side of the Mound but they were not operational so the flyash remained dry and flyash emissions continued.

· Sprinklers in place on the south western slope were operational and were containing dust effectively.

· Flyash dust emissions from the Mound were substantially lower than on 14 September 2007.

· Further irrigation equipment arrived on 17 September 2007.

144. In the 4 to 5 weeks after the Incident 80% of the Mound was capped with gravel. After permanent capping was placed on the Mound, dust emissions from the Mound ceased.
145. DECC is now satisfied that the management of dust emissions at the KVAR is adequate.

6 The Defendant relied on an affidavit of Mr Saladine dated 23 December 2008 which explains that the Defendant undertakes substantial electricity generation functions. It owns four coal fired power stations in NSW, including WPS near Lithgow. The substantial size of WPS and the scale of the power generation is set out at par 22-26. The production of flyash and therefore need to store substantial amounts of it is set out at par 27-42. Each month 50,000 tonnes of flyash is produced at WPS. The management by skilled contractors of the disposal of that flyash is discussed at par 43-55. Paragraph 45 emphasises that specialised knowledge is required to manage flyash stockpiles. A complex system is necessary, inter alia, to ensure the design and stability of the ash mound, determine the amount of moisture that has to be added to maximise the strength of the completed mound, coordinate flyash removal from the plant and delivery to the mound, and determine and implement the most suitable rehabilitation of the mound’s external surface. The job of managing flyash is usually contracted out by entities such as the Defendant.

7 The process of selecting Thiess by tender is discussed at par 56-69 of Mr Saladine’s affidavit. Selection followed checks of Thiess clients and site inspections of sites managed by Thiess to determine its capability to undertake flyash stockpile management. Mr Saladine’s involvement on the day of the offence is set out at par 70-80 and included checking whether dust was being blown over neighbouring properties. In relation to the western barrier the Defendant engaged geotechnical advice and developed a plan to enable extraction of the soil and reinforcement of the slope with ash safely. Henry Plant Hire was engaged in late August 2007 (par 81-82) to undertake the work.

8 At paragraphs 84-89, Mr Saladine describes the appointment of a new contractor for the KVAR on 1 December 2008. The new contractor has implemented regular inspections and audits plus appointed additional staff who receive training and regular weekly briefings on management of the flyash mound. There is regular communication with the Defendant. The affidavit also identifies at par 100-115 the large number of community activities which Mr Saladine has undertaken on behalf of the Defendant in areas where it operates power stations and more generally community outreach by the Defendant in the western region. He is authorised at par 116 to state on behalf of the Defendant that it accepts responsibility for its actions, including for a breach of a condition of its licence, understands the seriousness of the offence and is remorseful for the offence.

9 The second affidavit of Mr Saladine dated 28 January 2008 gives additional factual evidence in relation to par 136 of the SOAF concerning events on 17 September 2007. He clarifies what efforts had or were being made by the Defendant to manage dust at the KVAR, such as providing more sprinklers, and states that dust was not leaving the site. On inquiry to the Mayor of Lithgow and the Member for Bathurst, the Lithgow City Council or Member for Bathurst has received no further complaints about dust from the Defendant’s operations since the offence. The Defendant has received no complaints since the new contractors commenced on 1 December 2008.

Relevant sentencing considerations

10 The Crimes (Sentencing Procedure) Act 1999 (the CSP Act) (in particular, Pt 3 Div 1) contains provisions relevant to sentencing procedures. Section 21A of the CSP Act sets out aggravating, mitigating and other factors to be taken into account in sentencing. Section 22 requires the Defendant’s early guilty plea to be taken into account. Pursuant to s 23 the Court may also impose a lesser penalty than it would otherwise impose, having regard to the degree to which the Defendant has assisted, or undertaken to assist, law enforcement authorities in the prevention, detection or investigation of, or in proceedings relating to, the offence concerned.

11 An appropriate sentence is to be determined after consideration of each of these matters bearing in mind that:

…a basic principle of sentencing law is that a sentence…imposed by a court should never exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in the light of its objective circumstances (see Veen v. The Queen (No. 2) [1988] HCA 14; (1988) 164 CLR 465, at pp 472, 485-486, 490-491, 496).

per Hoare v R (1989) 167 CLR 348 at 354 (Mason CJ, Deane, Dawson, Toohey and McHugh JJ).

12 In Bentley v BGP Properties Pty Ltd (2006) 145 LGERA 234 at [163] and Gittany Constructions Pty Ltd v Sutherland Shire Council (2006) 145 LGERA 189 at [110] relevant factors to determine the objective gravity of an offence were identified for offences under the EP&A Act. The factors include the maximum penalty, the objective harmfulness of the defendant’s actions, the reasons for the commission of the offence and the state of mind of the offender. These factors are also relevant to offences under the POEO Act. Another relevant factor can be consideration of the statutory scheme in which the offence provision appears.

13 In terms of the statutory scheme, the importance of complying with licences issued under the POEO Act has been recognised by this Court on numerous occasions. In Environmental Protection Authorityv IncitecLimited [2003] NSWLEC 381 McClellan J observed at [49], in relation to specific deterrence for a second offender, that:

A licence provides a privilege, permitting the holder to pollute within the terms of that licence. It carries with it an obligation to ensure that any pollution is kept within the parameters provided by the licence conditions.

14 Considering s 241 of the POEO Act, Pearlman J emphasised that contravention of a pollution licence involves a breach of public trust in Environment Protection Authority v Shoalhaven Starches Pty Ltd [2003] NSWLEC 107. Her Honour stated at [49]:

The defendant is entrusted, by its pollution licence, to pollute and that places it in a special category so far as other members of the public are concerned. But that permission is conditional upon the standards and limits specified in the pollution licence.

15 Section 241(1) of the POEO Act identifies the following factors to be taken into consideration in imposing a penalty for offences committed under that Act (so far as they are relevant):

(a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence

16 The SOAF identifies agreement on environmental harm at 146-149 as follows:

146. There is no evidence that the Incident caused actual harm to the environment except that dust emitted from the Wallerawang premises on 14 September 2007 did impact on the general public’s visual amenity. However, the dust did not affect any member of the general public’s visual amenity in their immediate vicinity.
147. There is no evidence that the physical amenity of any member of the general public was in fact affected by the dust emissions from the Wallerawang premises on 14 September 2007.
148. However, the dust emissions had the potential to cause harm to the physical amenity of members of the general public by settling on personal property such as motor cars. The potential for the dust emissions to affect the physical amenity of the general public was not substantial.

149. While the concentrations of dust seen at the KVAR on 14 September 2007 had the potential to get into peoples eyes and cause discomfort, there was no potential for this to happen to persons outside of the Wallerawang premises. The potential for dust to get into people’s eyes and cause discomfort was not substantial.

17 In addition to the potential for harm recognised in the SOAF, the Prosecutor submitted that there was actual harm caused to the environment because of the visual amenity impact from the dust when viewed from neighbouring land particularly the town of Lidsdale to the west, Blackmans flat to the north and Wallewerang to the south west. Complaints were received by the Department of Conservation and Climate Change (DECC) from all three locations on the day of the offence. In view of the size of the mound, its proximity to Lidsdale and that dust was blowing for a considerable period over the day, actual harm occurred. This is encompassed by the definition of harm to the environment in the dictionary to the POEO Act. The Prosecutor relied on Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299 at [145]-[146], [147] and [149] to the effect that harm can include adverse impacts on quality of life. The Prosecutor accepted that in the decisions in Environment Protection Authority v BHP Steel (AIS) Pty Ltd (NSWLEC, Talbot J, 19 April 2000, unreported) and Environment Protection Authority v BHP Steel (AIS) Pty Ltd [2003] NSWLEC 46 harm from dust was described as inconvenience or discomfort. There was no reference to visual impact constituting environmental harm.

18 The Defendant submitted that the SOAF identifies the extent of environmental harm and the Court need not go further than that agreement. The potential for harm was not substantial and there was no actual harm.

Finding

19 It is agreed by the parties that there was potential for the dust emissions to cause physical harm to members of the general public by settling on surrounding land. There is no evidence of the physical amenity of any member of the public being affected by dust. The potential for such harm was not substantial.

20 The Prosecutor has submitted there was actual environmental harm due to the visual impact of dust in the air because this had an impact on the quality of life for some residents in nearby townships, the site being visually prominent (SOAF par 31, 32). I accept that impact on quality of life resulting from visual impact could be encompassed by harm to the environment as defined in the POEO Act. That could theoretically include visual impact but in order to be taken into account as actual environmental harm would need to be more sustained than in this case. The dust which was seen was at some distance from the nearby towns and was present for a relatively short time. I do not consider actual environmental harm resulted from this offence.

(b) the practical measures that may be taken to prevent, control, abate or mitigate that harm

Prosecutor’s submissions

21 The Prosecutor submitted that based on the causes of the offence referred to in the SOAF par 139 there were a range of practical measures that could have been taken to ensure the premises were maintained in an adequate condition. Instead these measures were not taken and there were several failures by Thiess to properly manage the flyash. These included the failure to temporarily and permanently cap large areas of the flyash mound, failure to use a water cart for sometime prior to the offence and on the day of the offence, and inadequate staffing. The Defendant continued to have responsibility for compliance with the licence conditions regardless of the contractual arrangements with Thiess. In addition, the contract gave the Defendant the right to intervene, and the Defendant had two employees at the KVAR every day to monitor implementation of the contract. The Defendant should have been aware of the inadequate management of the mound. The Defendant could have itself taken measures to prevent the offence giving rise to the harm.

22 Measures that should have been taken to ensure that the mound was sufficiently damp were ensuring an adequate number of sprinklers were operating on the mound and that a water cart was constantly in service. Non-operational areas of the mound could have been temporarily or permanently capped. The SOAF demonstrates that large areas were not operational at the time of the offence and had not been for several months.

23 Further, the Defendant should have responded more promptly on the day of the offence. Its first response was to liaise with Thiess. While substantial measures were made in response, many of the steps taken should have been implemented much earlier, several weeks or months before the offence.

Defendant’s submissions

24 The Defendant argued that under the contract Thiess was responsible for the operation of the KVAR, the operation and maintenance of the flyash and dust system at WSP, development of the necessary management plan and all aspects of flyash management (SOAF par 37-39, 40, 49-50,92). The contract awarded to Thiess was about $3.5 million over 2.25 years. The work is highly paid because of its technical nature requiring specialised knowledge. A key issue is the control of moisture on the mound so that dust is suppressed but without too much water being used which potentially affects the stability of the mound. Thiess provided plans to the Defendant of how it intended to manage the KVAR. The SOAF (par 74-80) refers to the active management of Thiess by employees of the Defendant including a contract administrator and a team leader who were on site several times a week and inspections by senior managers when high winds were forecast. Thiess appointed a site manager who was permanently at the premises and the KVAR. As identified in the SOAF Thiess proposed capping of the steep western batter in November 2006 and permanent capping of the mound, but these works were not ultimately progressed. The Defendant sought geotechnical advice about the western batter and engaged another company to carry out rectification work (SOAF par 106-110). Minimisation of dust in this area remained the responsibility of Thiess (SOAF par 111). Thiess terminated the full time water cart operator in June 2007 but the Defendant was not aware of this. After this termination, the mobile plant operator also had to operate the water cart. In any event, the Defendant was relying on Thiess’ expertise as to the appropriate amount of water needed on the mound and could not be expected to be aware of whether the water cart should be operating or not. While two employees of the Defendant were monitoring Thiess’ work, Thiess was supposed to have the expertise needed for the job.

25 Thiess changed the approach to depositing flyash from that used by the previous contractor who had used bunding walls throughout the process of building the mound. The Defendant was aware of this change and did raise concerns in relation to which Thiess took desultory steps and gave assurances to the Defendant. No capping of the mound took place in the 14 months Thiess operated the KVAR but it was managed so that a crust was formed on the mound surface which remained stable while moisture was present. It would dry out in windy conditions and emit dust if not capped or irrigated (SOAF par 68).

26 The concerns raised by Thiess employee Mr Driscoll about the lack of time he had to work on both the mobile plant and the water cart once the full time water cart operator position was terminated, and the numerous hazard reports and complaints he lodged with Thiess (see SOAF par 82-86), were not made known to the Defendant. In any event, the Defendant raised proactively with Thiess in the two months before the offence its concerns about potential for dust to rise off the exposed batters on the north and north west sides of the mound. The Defendant received assurances from Thiess that they were controlling dust emissions (SOAF par 87-88). In early September 2007 the Defendant expressed further concerns about the ongoing method being used and the lack of capping (SOAF par 112). Arrangements were in place for a replacement water cart operator to commence work after the offence occurred (SOAF 62). The steps taken by Thiess in relation to arrangements for the capping of parts of the mound and the fact that did not occur are identified in the SOAF (par 92-98). The request by the Defendant to Thiess for a plan and timetable for capping on the mound is also identified in the SOAF (par 99).

27 The offence was caused by several factors agreed in the SOAF (par 139) concerning Thiess’ management of the KVAR in addition to the unseasonal strong winds on the offence date. The steps taken by the Defendant on the day of the offence when its staff became aware that high winds were forecast included prompt inspection at 8.45am when dust was seen rising and then falling onto the mound but not travelling off site. Steps were taken to contact Thiess in the course of the morning and action was implemented such as bringing equipment from the Mt Piper power station to the KVAR.

28 The Defendant is not trying to evade its responsibilities for complying with the licence condition and does not seek to rely on any defence under s 64(2). The Defendant does however seek to stress that it took steps to administer the contract with Thiess proactively. There was no systemic failure on the Defendant’s part and it acted reasonably in relying on Thiess’ expertise. The Prosecutor’s submission that the Defendant should have ensured the flyash was sufficiently damp to prevent it flying up in the wind and ensuring that the mound was temporarily or permanently capped is not reasonable in the circumstances of the contract with Thiess (see par 45(b) Saladine’s first affidavit).

29 The Defendant submitted there had been a prompt and substantial response to the offence on the day contrary to the Prosecutor’s submissions. The Defendant’s response is detailed in the SOAF and the first affidavit of Mr Saladine at par 76-77 when the Defendant’s employees first attended the site the dust was rising and settling down again onto the site and not leaving the site (the latter being a breach of the licence condition).

Finding

30 In terms of events leading up to the offence date, there were practical measures which could have been taken to prevent and control dust emissions from the KVAR as specified under the requirements of the contract between the Defendant and Thiess (SOAF par 36-44). The purpose of that contract was to manage flyash from WPS in such a way the dust emissions were minimised and the licence condition 03.1 complied with. The Defendant had awarded the contract to Thiess believing it had the necessary skills to implement the contract. I accept the submissions of the Defendant above (par 24-26) that, based on the SOAF and the evidence of Mr Saladine concerning the specialised nature of managing a flyash repository such as the KVAR, the Defendant is not guilty of systemic failure in its management of the contract with Thiess. The Defendant believed Thiess was adequately skilled to undertake the specialised work specified in the contract for which skills it was paying substantial amounts under that contract. Employees of the Defendant were actively managing the contract and, although not itself specialist in that area of flyash management, those staff had raised concerns with Thiess about possible problems with dust before the offence occurred. The Defendant had received assurances that all was well or would be, and was unaware of the issues raised internally by Thiess’ staff member, Mr Driscoll. While Thiess had changed its approach to managing the KVAR from that used by the previous contractor (SOAF par 89-91) the use of moisture on the mound was an important part of dust management and the SOAF states that a hard crust formed on the mound.

31 The Prosecutor has argued that the Defendant carelessly managed the contract with Thiess and should have realised the extent of the potential dust problem because the KVAR staffing was inadequate, the water cart was not being used and the number of sprinklers was inadequate, and should have told Thiess to do more. The Defendant itself could have undertaken to do work, as the contract with Thiess provided.

32 Given the complexity of managing flyash on such a large scale and that the Defendant was actively engaged in managing the contract and raising concerns with Thiess before the incident, I do not consider that the Defendant was careless in its management of that contract, while confirming it had overall responsibility for compliance with the licence condition. While the Defendant accepts responsibility for compliance with the licence conditions, the Defendant’s culpability is at the low end of the possible spectrum.

33 In terms of the abatement or mitigation of the harm (potential for harm in this case) as a result of the offence, I consider that substantial efforts were made by the Defendant and Thiess on the day of the incident and following as outlined in the SOAF (par 142-144) and in Mr Saladine’s first and second affidavits. The Prosecutor accepts the management of dust emissions at the KVAR is now adequate (SOAF par 145).

(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

34 The Prosecutor submitted the harm caused by the offence was reasonably foreseeable by the Defendant. Given the history of concern on the Defendant’s part in relation to the emission of dust from the mound (SOAF par 87-88) and while Thiess provided assurances to the Defendant, the Defendant failed to ensure that Thiess delivered on those assurances. For example, the only sprinklers on the mound on the offence date were on the western batter and the Defendant agreed that the number of sprinklers was inadequate. The lack of sprinklers should have been apparent to employees of the Defendant given the size of the mound. More should have been done by the Defendant in light of the foreseeability of harm.

35 The Defendant submitted that the cause of the offence was poor management by Thiess in various ways and the unseasonal wind. The Defendant has accepted in the SOAF that the emission of dust was foreseeable in these circumstances but submits that the level of foreseeability is at the lower end of what could be reasonably expected. In the absence of unseasonal wind there may well not have been any offence as any windborne dust would have been likely to stay on the mound and there would not have been a breach of condition 03.1 of the licence.

Finding

36 The finding I have made in the previous section that the Defendant did not manage the contract with Thiess carelessly is also relevant in relation to s 124(1)(c) concerning the foreseeability of harm. The harm caused by the offence was foreseeable by the Defendant but it had taken steps to try and ensure that no such harm would occur through awarding the contract for managing the KVAR to specialist contractors and having employees engaged in ongoing management of that contract. The Defendant had raised concerns with Thiess before the offence about the potential for dust emissions from the KVAR. In light of the matters agreed in the SOAF concerning the contract implementation by Thiess and the cause of the offence relating largely to the failures under that contract by Thiess, in addition to the unseasonal strong wind from an unusual direction at that time of year, I accept the Defendant’s submissions set out above at par 35 so that I consider the level of foreseeability of harm on the Defendant’s part is low.

(d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence

37 The Prosecutor submitted that the Defendant had control over the causes of the offence as the licence holder and in retaining powers in its contract with Thiess that it undertake necessary work. The Defendant’s consent to the departure from the previous contractor’s approach of using bund walls throughout the build up of the mound and the lack of temporary capping suggests that it had control over the cause of the offence. In addition, employees of the Defendant who could have foreseen the potential for harm caused by the lack of sprinklers and should have taken greater action.

38 The Defendant relied on its earlier submissions in relation to the nature of the contract with Thiess and the management plan developed by Thiess. It was unaware of all the difficulties Thiess was on notice about from Thiess employees. It accepts that is had control over the cause of the offence but argues there are ameliorating circumstances in this case.

39 I consider that while the Defendant had ultimate control over the causes giving rise to the offence that the Defendant did attempt through Thiess to properly manage the KVAR. All the problems experienced by Thiess in doing so were not known to the Defendant through no fault of its own. It was reasonable for the Defendant to rely on Thiess’ expertise under the contract and I have found that the Defendant did not carelessly manage that contract. The level of culpability in relation to this subsection is low.

(e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee.

40 This provision is not relevant.

41 The level of seriousness of the offence in relation to the factors in s 241 is low.

Other objective circumstances
Culpability

42 Regard must be had to the culpability of the Defendant and the individual circumstances which led to the commission of the offence. The Prosecutor submitted the offence was serious given the failure of the Defendant to properly supervise the Thiess contract in an adequate manner. Thiess should have been required by the Defendant to do more as the management of dust was inadequate given the lack of capping of the mound over a 14 month period, the lack of sprinklers, the failure to use the water cart and the inadequate staffing.

43 The Defendant submitted that this was not a case where it failed to adequately manage the risks from its operations or, knowing the risk, the Defendant chose to act in the face of those risks. The Defendant did seek to address the risks, not all of which were known to it at the time of the offence and were only discovered subsequent to an investigation. Their failure to be aware was not a result of the Defendant’s own actions.

44 I have largely accepted the Defendant’s submissions in light of the evidence before me in relation to the factors under s 241 of the POEO Act and I consider those findings also apply in relation to the circumstances of the offence generally. The Defendant’s culpability is at the low end of the spectrum of seriousness of offence.

45 In setting a penalty the Court should have regard to the maximum penalty applicable, as this is an expression of the seriousness Parliament attributes to the offence: see Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at [698] and [701] respectively that:

The task of a court is to assess the relative seriousness of the offender’s particular offence in relation to a worst case for which the maximum penalty is provided…

..the more serious the lasting environmental harm involved the more serious the offence and, ordinarily, the higher the penalty.

General/specific deterrence

46 Section 3A(b) CSP Act states that one of the purposes for a court in imposing a sentence is to prevent crime by deterring offenders. Sentences imposed in relation to environmental offences must embrace powerful considerations of general deterrence: see Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357, per Badgery-Parker J at 367. In Axer, Mahoney J stated at 359:

The quantum of the fines which the legislation allows to be imposed has no doubt been fixed not merely to indicate the seriousness with which such pollution is regarded but also to deter those engaged in such activities and to procure that they will take the precautions necessary to ensure that it does not occur.

47 The Prosecutor also argued that specific deterrence was an important factor to ensure the Defendant complied with its licence conditions. The Defendant argued it was not an important factor because positive steps have been take to ensure that there is no reoffending. Control measures are now in place, much of the mound has been capped since the offence date, different contractors who have extensive management systems in place have been appointed, there are regular inspections and audits and a risk review of potential incidents has been carried out. DECC is now satisfied that the management of dust emissions at the KVAR is adequate (SOAF par 145).

48 This is the first offence by the Defendant. It operates and has done so in one guise or another for many years, several large potentially polluting facilities. It has taken measures to ensure there will be no repeat of this kind of offence and the offence did not cause substantial environmental harm. While it is important that holders of licences under the POEO Act comply with their conditions I consider the Defendant is well aware of its obligations in that regard. There is no need for specific deterrence to be reflected in the penalty imposed.

Mitigating factors

49 A number of mitigating factors that should be taken into account to reduce that penalty as provided for in s 21A(3) of the CSP Act.

Guilty plea s 21A(3)(k), 22 CSP Act

50 The Defendant pleaded guilty at the earliest opportunity. A plea of guilty entitles the Defendant to a discount in penalty under s 22 of the CSP Act in the range of 10-25 per cent: R v Thomson; R v Houlton (2000) 49 NSWLR 383; R v Sharma (2002) 54 NSWLR 300. The Prosecutor accepts that there has been a guilty plea at the earliest opportunity. There should be a large discount on this basis.

51 The Defendant has expressed remorse through the affidavit of Mr Saladine and I accept that expression of remorse on behalf of the Defendant (s 21A(3)(i) CSP Act).

Assistance to law enforcement authorities – s 21A(3)(m)

52 There has been full cooperation with the Prosecutor in relation to the offence, once reported and in relation to the preparation for this hearing as evidenced by the SOAF.

53 The Defendant has no previous convictions (s 21A(3)(e) CSP Act) and is unlikely to reoffend (s 21(3)(g)).

Evenhandedness

54 The principle of evenhandedness requires that the Court consider if there is any sentencing pattern for like offences in order to determine a consistent approach to penalty. This principle must always be applied subject to the particular circumstances of the case before the Court. The parties referred to several cases with some factual similarity to this matter.

55 In Environment Protection Authority v BHP Steel (AIS) Pty Limited Talbot J found the defendant company guilty of contravening a similar licence condition requiring prevention of dust emissions. The water spray system used to dampen the stockpile surface did not operate adequately in the windy conditions and dust emissions occurred. A resident of the area reported feeling coal dust blowing into his face when visiting the site and a complaint was made of dust “covering everything”. The potential for harm was reasonably foreseeable to the defendant. The defendant had received pollution infringement notices on at least two occasions due to a history of difficulties with the watering system that the company was aware of. In addition, the potential for harm was self-evident. On the issue of the defendant contracting out management of the stockpile, Talbot J stated that the defendant company was owner of the site and operator of the colliery so had ultimate control and responsibility for meeting the obligations under the licence. In considering the penalty, Talbot J noted that the company had been convicted of 29 environmental offences but considered this in light of the extent of its operations. Its efforts to implement remedial measures after the offence and its early guilty plea were also considered. Talbot J was satisfied that the penalty should be in the lower range and the defendant was fined $14,000. The maximum penalty for the offence at the time was $125,000.

56 Environment Protection Authority v BHP Steel (AIS) Pty Ltd per Lloyd J related to the same site after another failure to control dust emissions. The computerised dust suppression system failed after planned maintenance which did not restore sufficient pressure to the hoses. In considering the penalty to impose, Lloyd J noted that the failure of the system did not lead to actual environmental harm or the likelihood of environmental harm. However the defendant’s implementation of further controls after the offence demonstrated that the defendant could have prevented the breach. Lloyd J considered the defendant’s early guilty plea, the low chance of recurrence and its good environmental record in light of the company’s extensive operations. The defendant was fined $30,000. The maximum penalty for the offence at the time was $250,000.

57 In Environment Protection Authority v Lithgow Coal Company Pty Ltd [2003] NSWLEC 430, the defendant company contravened a licence requiring the company to prevent dust emissions from the site. The offence was a result of unexpectedly forceful winds and a failure on the part of the defendant to remove dust material effectively. Talbot J recognised the unusually close proximity of a pre-existing township created a heightened responsibility upon the defendant to avoid the harm and so the offence was not in the lowest range. Talbot J recognised the defendant’s early plea of guilty, its co-operation with the investigation, the absence of any prior offences and the company’s expression of remorse in mitigation. Talbot J also considered the absence of a real prospect of re-occurrence of the offence after precautionary steps had been taken. The defendant was fined $30,000. The maximum penalty enforceable at the time for a corporation was $250,000.

58 In Environment Protection Authority v Coastal Recycled Cooking Oils Pty Limited [2008] NSWLEC 242, the defendant company twice breached a licence condition concerning plant and equipment. The defendant had failed to adequately maintain and operate its waste water system. This led to an emission of an odour from a storage tank on two occasions. For the first offence, I applied s 10 to dismiss the charge. It was a first offence, trivial in nature, the problem was remedied and caused minimal amenity impact. The company was of good character given its environmentally beneficial activity and actions in cleaning up the system. For the second offence, I noted that imposing a penalty required consideration of the worst case as representing a maximum penalty by which the relative seriousness of the offence could then be judged. The absence of prior convictions, the defendant’s good character, evidence of its remorse, a guilty plea at the earliest opportunity, its cooperation with authorities and the steps taken to improve its waste water operations were all mitigating factors. The defendant was fined $18,000. The maximum penalty at the time was $1 million.

59 Other offences under s 64 of the POEO Act with quite different facts have been considered by the Court since the maximum penalty of $1 million was imposed. A list supplied by the Prosecutor showed a range of penalties including Environment Protection Authority v Nowra Chemicals [2008] NSWLEC 187 in which the penalty was $100,000 for a less serious matter but I note the circumstances of that case involved far greater environmental harm as a result of errors in the storage of chemicals. That case is entirely different to the matter before me.

60 The Defendant has agreed to pay the Prosecutor’s costs of $ 35,000.

61 In all the circumstances I think that the Defendant’s penalty should be $45,000. While the Defendant suggested that the facts in Coastal Recycled Cooking Oils were similar I consider the potential for harm in this matter was greater given the size of the KVAR and the need for adequate management over a long time frame to ensure compliance with the licence condition 03.1. A greater penalty is warranted in this matter. I have allowed a substantial reduction in penalty in light of the numerous mitigating circumstances outlined above.

Orders

62 The Court orders that:

1. The Defendant is convicted of the offence with which it is charged.

2. The Defendant is fined the sum of $45,000 to be paid to the Registrar of the Court within 28 days of today's date.

3. The Defendant must pay the Prosecutor’s costs of the proceedings of $35,000.

4. The exhibits may be returned.