Environment Protection Authority v Energy Services International Pty Limited
[2001] NSWLEC 59
•06/15/2001
Land and Environment Court
of New South Wales
CITATION: Environment Protection Authority v Energy Services International Pty Limited [2001] NSWLEC 59 PARTIES: PROSECUTOR
DEFENDANT
Environment Protection Authority
Energy Services International Pty LimitedFILE NUMBER(S): 50036; 50037 and; 50038 of 2000 CORAM: Cowdroy J KEY ISSUES: Environmental Offences - Prosecution :- Defendant storing hazardous waste in premises without necessary local government approval and without licence required by Waste Minimisation and Management Act 1995 - storage deliberate and undertaken with knowledge that the premises required approval - prosecution for breaches of Chemical Control Order - defendant conducting treatment of non-scheduled PCB material without approval in writing as required by order - hazardous waste produced - penalty LEGISLATION CITED: Environmentally Hazardous Chemicals Act 1985 s 26
Environmental Offences and Penalties Act 1989
Protection of the Environment Operations Act 1997 s 241
Waste Minimisation and Management Act 1995 s 5CASES CITED: Camilleri’s Stockfeeds Pty Limited v Environment Protection Authority (1993) 32 NSWLR 662 ;
R v Thomson; R v Houlton (2000) 49 NSWLR 383 ;
R v Holder [1983] 3 NSWLR 245 ;
Veen v The Queen [No 2] (1988) 164 CLR 465DATES OF HEARING: 26/3/01, 27/03/01 DATE OF JUDGMENT:
06/15/2001LEGAL REPRESENTATIVES:
PROSECUTOR
Mr S Simmington (Solicitor)SOLICITORS
Environment Protection AuthorityDEFENDANT
SOLICITORS
Mr R Wilcher (Solicitor)
Baker & McKenzie
JUDGMENT:
IN THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALESMATTER No. 50036-8 of 2000
CORAM: Cowdroy J
DECISION DATE: 15/06/01
The charges
1. Three separate charges are brought against Energy Services International Pty Limited (“the defendant”) by the prosecutor (“the EPA”). The defendant has pleaded guilty to each charge and the Court is required to impose a penalty in respect thereof.
Charge 50036/00
2. The summons alleges that the defendant committed a breach of s 26 of the Environmentally Hazardous Chemicals Act 1985 (NSW) (“the EHC Act”) in that it unlawfully carried on a prescribed activity namely the processing of a prescribed chemical at Baulkham Hills on 30 June 1998. The chemical is identified as polychlorinated biphenyl (“PCB”) as defined in the ‘Chemical Control Order in Relation to Material and Wastes containing Polychlorinated Biphenyl’ published in the New South Wales Government Gazette on 21 July 1997 (“the CCO”) which relevantly provides:-
The act of … processing … PCB material or PCB waste, or any act related to any such act is prohibited unless carried out in accordance with the conditions of the CCO .
Clause 6.2.4 of the CCO provides:-
The processing of non-scheduled PCB material and non-scheduled PCB waste is allowed by a process approved in writing by the EPA.
Charge 50037/00
3. The summons alleges that the defendant committed an offence against s 26 of the EHC Act in that it did, on the 24 August 1999 at Wombarra in the state of New South Wales process the same substance in breach of the CCO without the approval in writing of the EPA for that process.
Charge 50038/00
4. The summons alleges that the defendant committed an offence against the Environmental Offences and Penalties Act 1989 (“the EOP Act”) in that, being the occupier of land known as Lot 1790, DP 754611 located at Chillingworks Road, Young (“the Young premises”) it caused such premises to be used as a waste facility for the storage of waste known as ‘Fuller’s Earth’ contrary to s 64(1) of the Waste Minimisation and Management Act 1995 (“the WM&M Act”) between 14 April 1997 and 9 March 1999.
The facts
5. The defendant conducts the business of testing and recycling transformer oil. Transformer oil is a dielectric fluid used as an insulator in transformers. Some transformers use oil for this purpose containing PCB to render the oil more durable.
6. The defendant first conducted its recycling operations in approximately 1996 and purchased equipment known as mobile rigs which could be used for this purpose. One such rig was acquired from S D Meyers in early 1997 and is known as the ‘Meyers rig’. This rig was used in the process the subject of charge 50036/00. In the reclamation process the Meyers rig uses Fuller’s Earth. Fuller’s Earth (hydrated aluminium silicate) is a highly absorbent sand or clay. At the end of each recycling operation using the Meyers rig, fresh Fuller’s Earth is required and the old Fuller’s Earth requires disposal.
7. As a consequence of the use of the Meyers rig, Fuller’s Earth contaminated with PCBs was produced which required disposal (“the waste”). Fuller’s Earth was classified for the purposes of the Waste Minimisation and Management Regulation 1996 (“the 1996 Regulation”) as ‘hazardous waste’ within the meaning of that definition contained in Pt 3(1) of the 1996 Regulation. A publication entitled ‘Environmental Guidelines: Assessment, Classification and Management of Non-Liquid Waste’ issued by the EPA and current as at June 30 1997 classifies waste material. Fuller’s Earth constitutes ‘hazardous waste’ pursuant to such classification.
8. The process the subject of charge 50037/00 involved the use of equipment known as a Fluidex rig. The Fluidex rig also enables transformer oil to be recylced using Fuller’s Earth. However the Fuller’s Earth used by the Fluidex rig process is automatically re-activated in percolating columns thereby enabling its re-use. Before the re-activation process begins, excess oil is removed from the Fuller’s Earth on the Fluidex rig by heat and then air purge. After completion of the re-activation process the Fuller’s Earth is dry and contains no residual oil or solvent.
9. The defendant acknowledges by its pleas of guilty that both the Meyers rig and the Fluidex rig were used to process transformer oil containing PCB without the approval of the EPA in writing as required by the CCO.
10. A shed had been constructed upon the Young premises for the purpose of ‘trade and storage of wool’ for which the consent of the local authority, namely the Young Shire Council was granted on 20 October 1993. Such use was permissible pursuant to the provisions of the Young Local Environmental Plan 1993. A council officer, namely Ms Laura Schweiger had inspected the Young premises during 1994 and on several occasions during 1996 to confirm that the use of the shed complied with the grant of consent. On those occasions Ms Schweiger observed activities being conducted therein consistent with the use for which consent had been obtained.
11. During 1998 Ms Schweiger observed a white semi-trailer parked at the shed and noticed that the trailer portion was enclosed. She had also noticed trucks bearing the name of the defendant parked at other premises on Temora Road at Young. Ms Schweiger believed that the defendant had some association with the shed. Accordingly she made inquiries of the defendant and was informed by it that it wished only to park its vehicles at the shed. In consequence Young Council advised the defendant that no development consent was necessary for such use. In fact the defendant had obtained a lease of the shed and was commencing to use it for the purposes of storing drums containing Fuller’s Earth.
12. Clause 5.1 of the CCO provides:-
The act of manufacturing, processing, keeping, distributing, conveying, using, selling or disposing of PCB material or PCB waste, or any act related to any such act is prohibited unless it is otherwise permitted by, and carried out according to the conditions of, this chemical control order.
13. At all relevant times a licence was required by s 45 of the WM&M Act for the storage of the waste. Clause 4(1) of the 1996 Regulations required a ‘controlled waste activity’, as defined in cl 5, to be licensed in accordance with s 5 of the WM&M Act unless it was exempted pursuant to cl 4(2) of the 1996 Regulations. No exemption was granted to the defendant’s operations.
14. The defendant progressively increased the number of drums stored at the shed from 1997. On 29 September 1998 an internal memo records the concern expressed by Mr David Strongman, an employee of the defendant, concerning the storage of waste that was accumulating at the Young depot. The memo is addressed to Mr Zahari Bin Osman, the managing director of the defendant and records the fact that there had been discussions on many occasions concerning the disposal of the waste and the fact that the Meyers rig would be decommissioned as the Fluidex technology was more widely used. A target date for that objective was set for the end of 1998 when it was anticipated that another Fluidex regeneration plant would be required to treat PCB contaminated transformers. Mr Strongman stated:-
We are adding to the problem by continuing to provide the disposable process and stock-piling the waste. In May this year we had over one hundred 200 L drums in storage and I understand we’ve now arranged to stack the drums several layers high.Retention of the waste Fuller’s Earth particularly contaminated material is, I believe, unacceptable to our organisational philosophy and practice.
The memo continued:-
I know Lawrence has been trying to minimised the impact of disposal of this oil soaked Fuller’s Earth by considering ways and means of reducing the oil content and thereby the disposal cost, etc. I am sure however that, with his current workload and our emphasis on production, this matter, of necessity has had less a priority.
The memo expressed concern that the intervention by the Young Shire Council and the EPA would prove embarrassing.
15. On 9 March 1999 Mr Mark Alexander Robertson, an environment protection officer inspected the shed and saw approximately one hundred and thirty 200 L drums stored on pallets outside the shed. Some of the drums were labelled as containing ‘Fuller’s Earth’. Mr Robertson observed weeping of a liquid at the bottom seal on some of the drums which had stained the soil beneath the pallets on which the drums were stored. Inside the shed he could see other drums stacked upon one another and up to 4 drums high.
16. Another inspection took place on 16 March 1999 when Mr Robertson spoke with Mr Chetty. Mr Chetty informed Mr Robertson that the drums contained Fuller’s Earth from the regeneration of transformer oil. When asked whether the Fuller’s Earth had been contaminated with PCBs Mr Chetty replied that approximately 30% of the drums would have concentrations of PCBs greater than 2 ppm. Mr Robertson counted 507 drums in the shed. Random sampling was undertaken of drums within the shed. Testing showed that ten of the 22 drums sampled contained levels of PCBs between 2 and 50 mg/kg. In consequence the material constituted ‘non-scheduled waste’ as defined in the CCO.
17. Mr Peter Jonathon Gwynn became the Operations and Project Manager of the defendant on 12 April 1999. He became aware of the storage of the drums of waste at the shed on the Young premises shortly after his appointment. One of his duties was to explore avenues for its disposal. By the date of his appointment, the prosecutor had been notified of the presence of the drums of Fuller’s Earth at the shed.
18. Another memorandum, also addressed to Mr Osman dated 24 March 1999 from Mr Chetty warned Mr Osman of the fact inter alia, that the defendant was operating in violation of the CCO by storing the waste. The memorandum also refers to a meeting held between Mr Ashley Watson of the EPA and Mr Chetty on Monday 15 February 1999 and states:-
Prior to this, I nor anyone else within the organisation knew that we could not reclaim oil that was classified as non-scheduled, without the approval of the EPA.… I came to know that we required an approval from the EPA to maintain oil and transformers that contain PCB between 2 ppm and 50 ppm.
19. Mr Watson has a diary note recording a conversation with Mr Chetty on 6 November 1998 when Mr Chetty made an inquiry of the EPA concerning the approvals which would be required when the defendant commenced its oil treatment operations in New South Wales. It had been already engaged in such activity in Queensland. Surprisingly, there is no evidence of any attempt by the defendant to ascertain the procedures required to obtain written approval.
20. A National Protocol had been published in July 1994 which was available from the EPA and from the waste management secretariat in Canberra setting out the requirements concerning waste management and the specific information to be provided for approvals. Although such information was readily available there is no evidence that the defendant made inquiries to obtain a copy of such Protocol nor of the CCO, prior to the 29 June 1999. On that day a copy of the CCO was provided to Mr Gwynn. However it was not until the 26 August 1999 that Mr Gwynn wrote to the EPA seeking approval for the defendant’s operations. Such letter did not contain the detail as set out in the National Protocol and was written in ignorance of it. On 12 October 1999, the EPA wrote to the defendant advising it that no approvals were held by it to treat non-scheduled material.
21. The CCO defines ‘non-scheduled PCB material’ as ‘PCB material containing PCB at a concentration below 50 mg/kg’ (see 4.12 of clause 4 thereof). Clause 4.13 of the CCO defines ‘non-scheduled PCB waste’ as ‘PCB waste containing PCB at a concentration below 50 mg/kg’.
Findings
Charge 50036/00 and 50037/00
22. From the date of the gazettal of the CCO on 20 June 1997 approval in writing was required pursuant to cl 6.2.4 of the CCO for the processing of non-scheduled PCB material. According to Mr Gwynn he held numerous discussions with Mr Mark Robertson of the EPA and he believed that the defendant had oral approval for the use of the Meyers and Fluidex rigs to enable them to continue to operate to treat transformer oil containing PCB. He states that he did not receive a copy of the CCO until the 29 June 1999 whereupon he informed Mr Osman that approval in writing was required for the Fluidex rig. Mr Gwynn says that in the numerous conversations held with Mr Robertson there was no mention of the requirement for written approval of the use of Meyers rig or the Fluidex rig. However Mr Robertson was not aware that the rigs would be used, in the absence of approval, for the treatment of non-scheduled waste.
23. The Court is satisfied that the defendant, prior to the engagement of Mr Gwynn ought to have known of the requirements of the Act since it was engaged in the very activity to which the CCO was directed, namely the treatment of materials which were hazardous.
Charge 50038/00
24. The defendant has used the Young premises as a ‘waste facility’ as defined in s 5 of the WM&M Act which defines such a facility as ‘any premises used for the storage, treatment, reprocessing, sorting or disposal of waste’. In addition to the absence of the requisite licence pursuant to the WM&M Act, no consent had been given by the Young Council to the storage of the waste in the shed.
25. The difficulty faced by the defendant lies in the fact that, having produced the waste, there was no economical means available for its disposal. Mr Russell Healey, who was the Managing Director of the defendant between 1995 and May 1998 was present at company meetings held on 1 and 2 May 1997 where it was decided by the defendant to continue to use both the Meyers rig and the Fluidex rig even though there were no ready known means for disposal of the waste. Mr Healey said that his intention to comply with the requirements of the legislation was greatly diminished because of financial constraints placed upon the daily operation of the defendant. The defendant is a foreign controlled corporation and instructions had been received that no expenditure was to be made without express approval of Mr Osman, who in turn was bound by instructions from the overseas principal.
26. The storage of waste at the Young premises constituted a flagrant breach of the provisions of the WM&M Act. No approval was sought from the Young Shire Council for the use of the shed for the purpose of storage of the waste. When queried concerning its use, a misleading response was provided by the defendant that the land was merely being used for the parking of trucks. Second-hand drums were used for storage some of which were leaking. The defendant appeared, either through lack of knowledge or lack of available funds, to have no means of disposing of the waste it produced. The breach of the WM&M Act came to the attention of the authorities only as a result of notification by a former employee whose employment was terminated because he expressed concern, inter alia, for the safety of the defendant’s operations. The inference can be drawn that without such information, the defendant’s operations would have continued.
Mitigation
27. In respect of charges 50036/00 and 50037/00 the defendant claims that it was unaware that written approval was required and believed that it had oral approval to conduct the operations the subject of these charges. The Court does not accept such excuse. The defendant was conducting such operations without having an adequate appreciation of the requirements of the CCO.
28. In relation to charge 50038/00 the evidence establishes that the storage of waste resulted primarily from economic considerations. The defendant was simply not prepared to pay the costs of its disposal, despite warnings from its employees that its activities were illegal. There is conflict concerning the avenues presently available for the treatment of the waste. A facility in Western Australia has now closed down. Inquiries by the defendant suggested that the cost of such treatment was excessive.
29. The Court takes into consideration the matters referred to in s 241 of the Protection of the Environment Operations Act 1997 as a useful means of considering the potential impacts of the offences. The Court is satisfied that there was a likelihood of harm to the environment if any accident occurred during the processing operation. The waste was contaminated and the potential for damage and environmental harm from the escape of such waste is apparent. It was classified as ‘hazardous waste’. Any approval would have minimised such harm as a result of conditions likely to be imposed as part of the approval.
30. In respect of charge 50038/00 the Court considers that there existed a potential for harm to occur if the drums storing such waste ruptured. The defendant had full control over the stock-piling of the drums and continued to do so in spite of warnings by its employees of the seriousness and illegality of the activities.
31. All waste has now been removed from the site in consequence of a Notice of Preventive Action which is dated 10 December 1999. The drums are now awaiting disposal at a facility in Sydney.
32. The defendant has pleaded guilty to the three charges at any early stage. In accordance with the principle of R v Thomson; R v Houlton (2000) 49 NSWLR 383 the Court is entitled to provide a discount in penalty for an early plea. In this case a discount of 20% will be allowed. The Court is also required to take into consideration the totality principle namely, that the defendant has pleaded guilty to more than one charge. In respect of the charges relating to the use of the two rigs, they are similar in nature. The charge relating to the storage of the waste is a separate matter but is nevertheless taken into consideration. The Court is also mindful of the principles of sentencing listed in Camilleri’s Stockfeeds Pty Limited v Environment Protection Authority (1993) 32 NSWLR 662 at 683, 700 - 702.
33. Charges 50036/00 and 50037/00 arise from the fact that the defendant possessed inadequate knowledge of the relevant statutory requirements. Taking into consideration the fact that the very nature of the defendant’s business related to matters which were clearly environmentally sensitive, the conduct of the defendant can only be described as grossly irresponsible. It was engaging in an enterprise for profit yet the defendant knew that it was generating waste with no ready means of disposal.
34. In respect of proceedings 50038/00 the Court finds that the defendant carried out its activities, in the knowledge that such activities were being conducted without approval. The Court is also mindful of the fact that the EPA allowed the recycling process to operate even though it was aware that the defendant did not possess the requisite approvals, and has offered little assistance concerning methods for the disposal of the waste.
35. The defendant has little excuse for breaches of the relevant statutory provisions. The only redeeming aspect in relation to each charge is the fact that there has been no demonstrable environmental harm arising from the commission of the offences. In imposing sentence, the Court is mindful of the observations in Veen v The Queen [No 2] (1988) 164 CLR 465 concerning the need to impose appropriate sentences for deterrence.
Penalty
36. The maximum penalty for offences 50036 of 2000 and 50037 of 2000 is $137,500 each. The Court considers that the appropriate penalty in respect of charge 50036 of 2000 is one-half of the maximum, less the 20% discount for the early plea and a further discount of $10,000 to reflect the application of the totality principle (see R v Holder [1983] 3 NSWLR 245 at 260). As such the penalty will be $45,000.
37. In respect of charge 50037 of 2000, similar consideration will apply. The penalty will be $45,000.
38. In respect of charge 50038 of 2000, the maximum penalty is $125,000. The Court considers that the appropriate penalty is two-thirds of the maximum, namely $83,334, but reduced by 20% for the early pleas to $66,668 and a further $10,000 to reflect the totality principle. Accordingly the penalty will be $56,668.
Orders
39. The Court orders:-
1. In respect of charge no 50036 of 2000 the defendant is convicted and fined the sum of $45,000.
2. In respect of charge no 50037 of 2000 the defendant is convicted and fined the sum of $45,000.
3. In respect of the charge no 50038 of 2000 the defendant is convicted and fined the sum of $56,668.
4. The defendant is ordered to pay the prosecutor’s costs in relation to each of the charges.
5. The exhibits be returned.
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