Environment Protection Authority v Great Southern Energy

[1999] NSWLEC 192

Reported Decision: (1999) 110 LGERA 254

Land and Environment Court

of New South Wales

CITATION:

Environment Protection Authority v Great Southern Energy [1999] NSWLEC 192

PARTIES

PROSECUTOR
Environment Protection Authority

DEFENDANT
Great Southern Energy

NUMBER:

50011 of 1999

CORAM:

Cowdroy J

KEY ISSUES:

Environmental Offences :- Oil spill - absence of bunding - court's power to consider likelihood of environmental harm in circumstances where factual evidence establishes no actual harm - measures taken by defendant to avoid repetition

LEGISLATION CITED:

Environmental Offences and Penalties Act 1989 s 9, s 16
Clean Waters Act 1970 s 16
Protection of Environment Operations Act s 241

DATES OF HEARING:

08/06/1999

DATE OF JUDGMENT DELIVERY:

08/31/1999

LEGAL REPRESENTATIVES:

PROSECUTOR
Mr C Leggat (Barrister)

SOLICITORS
Environment Protection Authority

DEFENDANT
Mr S Rushton (Solicitor)

SOLICITORS
Clayton Utz

JUDGMENT:

Facts

1. By summons class five issued on 10 March 1999 Great Southern Energy (“the defendant”) was charged with an offence against the Environmental Offences and Penalty Act 1989 (“the EOP Act”). In summary the particulars allege the defendant polluted waters contrary to s 16(1) of the Clean Waters Act 1970 (“the CW Act”) when pollutant namely oil, entered into the unconfined surface waters and/or a watercourse between the defendant’s Young Depot and Burrangong Creek. The defendant has pleaded guilty to such charge and accordingly the Court is to consider penalty.

2. The defendant is a statutory state owned corporation. It was formed on 13 July 1995 pursuant to the Energy Services Act 1995 as a consequence of the amalgamation of nine separate electricity authorities. Upon its formation the defendant took charge of a large number of facilities in New South Wales including forty depots, one of which was located at 345 Boorowa St Young (the “Young depot”). An Oil Treatment Service (“OTS”) was a subsidiary activity performed by the defendant’s predecessor, namely South West Slopes Electricity at Young. Such service involved the rejuvenation or recycling of transformer oil. The OTS business was continued by the defendant.

3. In 1997 the defendant purchased a 132 kV transformer situated at Guthega Power Station and operated by the Snowy Mountains Hydro-Electric Authority. The transformer was known to contain oil containing polychlorinated biphenyls (PCBs) which is a class of manufactured chemical. The Electricity Supply Association of Australia Limited has identified PCBs as an environmentally harmful chemical. They are difficult to break down naturally and may concentrate up the food chain if ingested by living organisms. Substances containing PCBs at concentrations between 2 mg/kg and 50 mg/kg are referred to as “ non-scheduled PCB material ”. Oil in the transformer purchased by the defendant from the Snowy Mountains Hydro-Electric Authority was contaminated with non-scheduled PCBs up to a level of 5.2 ppm (“the oil”).

4. It was the defendant’s intention to relocate the transformer to a bunded area at Cooma. For this purpose 45,000 L of the oil was removed from the transformer prior to its removal from Guthega and decanted into two tankers. Whilst on route to Cooma the transformer was involved in an accident and was irreparably damaged. The defendant then transported the oil in the tankers to the Young depot for storage.

Subsequent Events

5. The defendant had transformers containing scheduled PCB transformer oil located at Griffith and Wagga Wagga. It was decided to replace such oil with 19,000 L of non-scheduled oil from the Young depot. It was first necessary for that oil to be recycled or refurbished using the OTS. Accordingly two employees were engaged in the filtering process to remove PCBs, particulate matter and other contaminants. A mobile facility was utilised and two temporary storage oil tanks for the filtering process. The process involved transferring the oil via the OTS to a storage tank.

6. The filtering operations took place between 11 and 14 May 1998 during which time 24,000 L of non-scheduled transformer oil was filtered. The process was completed at approximately 6.30 pm on 14 May 1998 and it was intended that the filtered oil would be transported to Griffith on 18 May 1998.

7. Between 6.30 pm on 14 May 1998 and the morning of the 15 May 1998 the supports or legs of the 9,000 L temporary storage tank which contained the oil sank to a depth of 75 mm into the bitumen on the surface of Young depot. In consequence a nipple on the underside of the tank came into contact with the ground and broke resulting in the release of 7,000 L of oil. Such oil flowed across the paved area of the Young depot through a wash bay and sump area and ultimately into a pipe approximately 450 mm in diameter which was connected to the second sump through which the oil flowed into an adjoining property. The oil continued to flow beneath a roadway and into an open drain which extended for about 10 m. The open drain or table-drain acted as a natural gutter through which the oil flowed before it ponded in a low lying area beside Burrangong Creek. The oil did not reach Burrangong Creek.

8. The leak of oil was not detected until approximately 10 to 10.30 am on 15 May 1998. Mr Leahy an employee of the defendant made investigations immediately and attempted to contain the escape of oil by using several “spill stations”. The spill stations contained spill kits, a type of emergency response kit consisting of 240 L bins which contain absorbent pads, absorbent sausages and mini land booms of dimensions 2 m by 3 m. Mr Leahy promptly pumped out the remaining 2000 L of oil from the damaged tank and attempted to clean up the oil spill. At 11 am Mr O’Brien, another employee inspected the extent of the leak and simultaneously Mr Leahy contacted his supervisor Vince Cosgrove. Mr Cosgrove was the Area Support Officer with the Technical Response Group based at Goulburn. Mr Cosgrove tried to contact the Environmental Co-ordinator Mr Andrew Donaldson at Wagga but he was uncontactable.

9. Mr Leahy thereafter informed the Young Shire Council and in consequence at about 11.20 am the oil spill was inspected by the council. Continual rain fell on the site throughout the day. Accordingly council workers were instructed to divert stormwater away from the road reserve to prevent the run-off containing oil from reaching Burrangong Creek. The road known as Rockdale Road was sand bagged at about midday and pumping commenced using council’s street sweeping equipment. The Environmental Protection Authority was contacted as was the Fire Brigade at Young. The Fire Brigade attended the scene at 2 pm and took control of the operations. It is accepted that had pumping not been undertaken by the Fire Brigade the pond filled with stormwater and oil would have overflowed into Burrangong Creek.

10. The oil pumped from the pond was contained in a tank at the depot. Subsequently earth works were constructed and cleaning operations ceased at 9.45 pm on 15 May 1998. The defendant retained Pacific Power International (“PPI”) to assist in the formulation of a plan for the rehabilitation of the site and to dispose of the oil recovered from the spill. The plan was approved by the prosecutor on the 20 May 1998. PPI was also engaged to certify the removal of contaminants from the affected site. Finally, the defendant installed temporary bunding around the oil handling/filtering site and all storage tanks. The local council was engaged to remediate and revegetate the affected areas.

The Offence

11. The defendant has objected to the tender in evidence of statements by the prosecutor concerning the possible environmental effects of the oil spill. Such evidence details the type of damage which might have been occasioned to the environment had the oil reached Burrangong Creek. The defendant submits that as the evidence establishes the oil spill did not reach such creek, the evidence of the potential effects are irrelevant.

12. In considering penalty s 9 of the EOP Act, the Court is required to take into consideration inter alia the extent of the harm caused or likely to be caused by the commission of the offence. Words “ commission of the offence ” as contained in s 9 of the EOP Act require an investigation of the charge and the plea of the defendant. The defendant has pleaded guilty. Such plea requires the Court to give consideration to all matters referred to in s 9(a) of the EOP Act as summarised above. It is the commission of the offence which authorises and requires the court to consider the extent of harm caused or likely to be caused to the environment.

13. In reaching this conclusion, the Court notes the decision of Stein J in Dyer v Borg & Anor (NSWLEC no 50015 of 1998) in which His Honour by inference, determined that the court was entitled to speculate on a possible consequence of an offence under s 16 of the CW Act even though no actual overflow of water had occurred and no actual damage caused. I concur with His Honour’s approach to the interpretation of s 9 of the EOP Act and have admitted the prosecutor’s reports into evidence. It is consistent also with the approach adopted by Her Honour the Chief Judge in Environment Protection Authority v Pioneer Road Services Pty Ltd (1995) 86 LGERA 52 where Her Honour considered it was appropriate to take into account evidence which suggested that diesel oil which escaped was likely to cause environmental harm even though there was no evidence that such damage in fact occurred.

The Defendant’s Submissions

14. In mitigation of penalty the defendant has submitted that it assumed control of the environmentally hazardous plant equipment from its predecessors. However the offence with which the defendant is charged has no bearing upon such history, since the defendant purchased the relevant transformer two years after its incorporation.

15. The defendant has gone to extraordinary lengths to establish itself as a responsible operator. Shortly after incorporation, it commissioned the firm of Arthur Anderson to carry out a strategic plan for its operations entitled “Star 2000”. Part of such study involved an environmental management review. The report which has been admitted into evidence was completed in August 1996 and revealed the predecessors of the applicant did not maintain a high priority for environmental issues. The study identified one of the major risks as transformer oil management and spill containment measures. Accordingly a program was commissioned by the defendant to address the issues raised in the report. The defendant adopted an environmental policy using a structured environmental management system certified to international standards and complying with all relevant environment legislation. Such policy has been displayed publicly through the defendant’s internet home page and communicated internally in the form of a poster.

16. In February 1997 the defendant determined that its Asset Strategy and Field Services division should work towards becoming certified under a standard known as ISO 14001. Arthur Anderson was engaged to achieve such certification. The defendant’s electricity operations in the area of Albury, Cooma and Wagga were certified as ISO 14001 compliant by the National Association of Testing Authorities Australia on 14 January 1999. Such standard suggests a recognised measure of environmental competence which is to be encouraged.

17. The cost of obtaining such certification has amounted to more than one million dollars. Further, the defendant has undertaken other measures directed to environmental issues for which it has an expended or budgeted expenditure in the order of ten million dollars. Against such evidence, the aspirations of the defendant to be regarded as a responsible operator is established in relation to the environment.

The defects

18. Despite the defendant’s enormous expenditure on accreditation, there were numerous failings in the system or practices adopted by the defendant at the time of the incident. Whilst obviously directing attention to its general concern for the environment the defendant appears to have overlooked the most basic and elementary requirements, namely of ensuring that its employees were adequately trained in all handling, safety and emergency procedures, and familiar with the defendant’s voluminous Codes of Practice. The employees involved had received a copy of a publication entitled Technical Response Group Operating Manual prior to the incident but neither had been instructed concerning its contents nor application. At least one of the operators has said that he did not receive any written instruction concerning oil spill procedures nor been given any training in oil spill response prior to receiving the manual. There is no evidence that the contents of the manual was ever brought to the attention of the employees by specific instruction.

19. The complexity of the Codes of Practice suggest that unless explicit instruction was provided they would be bewildering to most employees. The defendant’s Oil Treatment Services Brochure entitled Insulating Oil Reclamation contains a section entitled Safety Measure to Protect Oil Spills. It states “ temporary bunding can also be installed around the plant ”. No direction is provided that such a precaution ought to be mandatory. Bearing in mind the sensitivity of the non-scheduled PCB contaminated oil, it ought to have been fundamental that a bund be placed around the re-cycling operations.

20. Upon the leak having been discovered a strict code ought to have been implemented which was fail-safe. This occurrence has revealed a difficulty in communication at all levels. Within the company’s own operations there was no access to a central authority which was available to provide expert advice and assistance. Instead contact was attempted with Mr Donaldson who did not receive the message for some four hours after it was given that an oil spill had occurred. The message did not suggest urgency and his attention was already diverted with another problem. The fact that he was uncontactable and there was nobody else in senior management to take charge of the emergency operations is alarming.

21. According to the prosecutor’s evidence, in cases of an oil spill it is the Fire Brigade who must first be contacted. The Fire Brigade did not attend until several hours after the spill was discovered. The defendant’s brochure “Safety Measures to Prevent Oil Spills” states that in an emergency of a major spill, “ Police, SES, Councils etc .” are to be contacted. Code of Practice 14.26.00 entitled “Emergency Response Procedures” and even those codes currently in force tend to obfuscate rather than provide clear and explicit directions. The Codes provided little assistance. Whilst negligible environmental harm appears to have been caused by this delay, it is symptomatic that there existed a lack of known procedures within the defendant’s operations.

Matters for Consideration

22. The CW Act was repealed by the Protection of the Environment Operations Act 1997 (“the PEO Act”) which came into force on 1 July 1999. By virtue of s 30(1) of the Interpretation Act 1987 the current proceedings remain unaffected. However the provisions of s 30(2) and the application of cl 17 of the Protection of the Environment Operations (Savings and Transitional) Regulation 1998 operate to give effect to s 241 of the PEO Act.

23. For the purpose of assessment of harm as required by s 241(1)(a) of the PEO Act, the Court has been provided with evidence from officers of the prosecutor. It is apparent the harm caused was negligible. A dead yabby was discovered and there may be some minor residual contamination. Had the oil reached Burrangong Creek, there would have been the likelihood of much greater damage.

24. The Court is required to consider the practical measures which may have been taken to prevent, control, abate or mitigate the harm. A bund was not provided around the oil treatment operation and there is no explanation before the Court for such deficiency. The spill kits available on the site were completely inadequate to deal with the oil spillage problem and no pumps exist for any emergency. There is no evidence before the court which suggests any proper audit had been made of emergency equipment nor an awareness by employees of the emergency procedures.

25. The provisions of s 241(c) of the PEO Act provide that the court is required to consider the foreseeability of harm caused or which was likely to be caused by the commission of the offence. It was foreseeable that an escape of oil could cause harm to the environment and that such escape could result from the treatment process conducted by the OTS at Young.

26. The Court is satisfied the defendant had control over the offence and an oil spill took place in the course of procedures which were being carried out at the company’s direction.

Penalty

27. The defendant has pleaded guilty to the offence which attracts a maximum penalty of $125,000 and has provided extensive co-operation to the prosecutor. The court is mindful that the defendant’s conduct is a matter to be taken into consideration in assessing the penalty with other matters as referred to in Camilleri’s Stockfeeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683. The plea of guilty at an early stage does warrant a reduction in penalty as was recognised in R v Winchester (1992) 58 A Crim Reports 345 at 350. The fact that such an occurrence again is unlikely in view of the re-arrangement of the defendant’s activities is also to be considered. It has disposed of the OTS and ceased all activities of oil re-cycling. It has incorporated in its Code of Practice specific requirements for bunding around oil filled equipment and work sites. Since the occurrence, the defendant has ceased all bulk oil storage of transformer oil at its depots and has disposed of the mobile filtering plant. The defendant has revised its Emergency Response Procedures and achieved ISO 14001 certification. The defendant has no prior convictions for environmental offences.

Orders

28. The court orders:-

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

2. The defendant is fined an amount of $15,000.

3. The defendant is ordered to pay the costs of the prosecutor as provided by s 52(2) of the Land and Environment Court Act 1979 as amended.

4. The exhibits be returned.