Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident)
[2014] NSWLEC 103
•28 July 2014
This decision has been amended. Please see the end of the decision for a list of the amendments.
Land and Environment Court
New South Wales
Case Title: Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident) Medium Neutral Citation: [2014] NSWLEC 103 Hearing Date(s): 5, 6, 10 and 12 December 2012 and 20 May 2013 Decision Date: 28 July 2014 Jurisdiction: Class 5 Before: Pepper J Decision: See orders at [261].
Catchwords: ENVIRONMENTAL OFFENCES: offences under Protection of the Environment Operations Act 1997 - breach of licence condition - failure to maintain plant and equipment in a proper and efficient condition - pollution of waters - sentencing principles - application of De Simoni principle - application of totality principle - determination of appropriate sentence. Legislation Cited: Crimes (Sentencing Procedure) Act 1999, ss 3A, 21A, 22, 23
Criminal Procedure Act 1986, ss 257B, 257G
Environmental Planning and Assessment Act 1979, s 125
Protection of the Environment Operations Act 1997, ss 3, 64, 115, 116, 120, 241, 248, 250(1)Cases Cited: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357
Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34; (2006) 145 LGERA 234
Cabonne Shire Council v Environment Protection Authority [2001] NSWCCA 280; (2001) 115 LGERA 304
Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683
Cassidy v R [2012] NSWCCA 68; (2012) 220 A Crim 420
Chief Executive of the Office of Environment and Heritage v Rinaldo (Nino) Lani [2012] NSWLEC 115
Chief Executive, Office of Environment and Heritage, Department of Premier and Cabinet v Powell [2012] NSWLEC 129
Connell v Santos New South Wales Pty Ltd [2014] NSWLEC 1; (2014) 199 LGERA 84
Director-General, Department of Environment, Climate Change and Water v Forestry Commission of New South Wales [2011] NSWLEC 102
Director-General of the Department of Environment and Climate Change v Rae [2009] NSWLEC 137; (2009) 168 LGERA 121
Director-General, Department of Environment and Climate Change v Rae [2009] NSWLEC 137; (2009) 168 LGERA 121
Environment Protection Authority v Aargus Pty Ltd; Kariotoglou; Kelly [2013] NSWLEC 19
Environment Protection Authority v Albury City Council [2009] NSWLEC 169
Environment Protection Authority v Austar Coal Mine Pty Ltd [2011] NSWLEC 252
Environment Protection Authority v Baiada Poultry Pty Limited [2008] NSWLEC 280; (2008) 163 LGERA 71
Environment Protection Authority v Ballina Shire Council [2006] NSWLEC 289; (2006) 148 LGERA 278
Environment Protection Authority v Barnes [2006] NSWCCA 246
Environment Protection Authority v Big River Group Pty Ltd [2011] NSWLEC 80
Environment Protection Authority v BlueScope Steel (AIS) Pty Limited [2004] NSWLEC 400
Environment Protection Authority v Bowport All Roads Transport Pty Limited (No 2) [2009] NSWLEC 180
Environment Protection Authority v Bulga Coal Management Pty Limited [2014] NSWLEC 55
Environment Protection Authority v Burrangong Meat Processors Pty Ltd [2003] NSWLEC 102
Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2006] NSWLEC 335
Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2008] NSWLEC 194
Environment Protection Authority v Causmag Ore Company Pty Limited [2009] NSWLEC 164
Environment Protection Authority v Centennial Newstan Pty Ltd [2010] NSWLEC 211
Environment Protection Authority v Chillana Pty Ltd [2010] NSWLEC 255
Environment Protection Authority v Coal and Allied Operations Pty Ltd [2013] NSWLEC 134
Environment Protection Authority v Coastal Recycled Cooking Oils Pty Limited [2008] NSWLEC 242
Environment Protection Authority v CSR Building Products Limited [2008] NSWLEC 224
Environment Protection Authority v Delta Electricity [2009] NSWLEC 11
Environment Protection Authority v Forbes Shire Council [2014] NSWLEC 26
Environment Protection Authority v Forestry Commission of New South Wales [2013] NSWLEC 101
Environment Protection Authority v Forgacs Engineering Pty Limited [2009] NSWLEC 64
Environment Protection Authority v Fulton Hogan Pty Ltd [2008] NSWLEC 268; (2008) 163 LGERA 345
Environment Protection Authority v Hanson Precast Pty Limited [2008] NSWLEC 285
Environment Protection Authority v Hochtief AG [2006] NSWLEC 200
Environment Protection Authority v Hochtief AG and Thiess Pty Ltd [2007] NSWLEC 177
Environment Protection Authority v Huntsman Corporation Pty Ltd (No 4) [2011] NSWLEC 39
Environment Protection Authority v Incitec Limited [2003] NSWLEC 381; (2003) 131 LGERA 176
Environment Protection Authority v Lithgow City Council [2007] NSWLEC 695
Environment Protection Authority v M A Roche Group Pty Ltd; Environment Protection Authority v Roche [2013] NSWLEC 191
Environment Protection Authority v Moolarben Coal Operations Pty Ltd [2012] NSWLEC 65
Environment Protection Authority v Moolarben Coal Operations Pty Ltd (No 2) [2012] NSWLEC 80
Environment Protection Authority v Orica Australia Pty Ltd [2005] NSWLEC 621
Environment Protection Authority v Peak Gold Mines Pty Limited [2013] NSWLEC 158
Environment Protection Authority v Pipeline Drillers Group Pty Ltd [2012] NSWLEC 18
Environment Protection Authority v Port Kembla Copper Pty Ltd [2001] NSWLEC 174; (2001) 115 LGERA 391
Environment Protection Authority v Port Kembla Copper Pty Ltd [2003] NSWLEC 256
Environment Protection Authority v Queanbeyan City Council (No 3) [2012] NSWLEC 220; (2012) 192 LGERA 415
Environment Protection Authority v Ramsey Food Processing Pty Ltd [2010] NSWLEC 23
Environment Protection Authority v Ravensworth Operations Pty Ltd [2012] NSWLEC 222
Environment Protection Authority v Rethmann Australia Environmental Services Pty Ltd [2003] NSWLEC 351; (2003) 131 LGERA 422
Environment Protection Authority v Sibelco Australia Ltd [2011] NSWLEC 160
Environment Protection Authority v Snowy Hydro Limited [2008] NSWLEC 264; (2008) 162 LGERA 273
Environment Protection Authority v State of New South Wales (Department of Environment, Climate Change and Water) [2010] NSWLEC 67; (2010) 174 LGERA 19
Environment Protection Authority v Straits (Hillgrove) Gold Pty Ltd [2010] NSWLEC 114; (2010) 174 LGERA 314
Environment Protection Authority v Tea Garden Farms Pty Ltd [2012] NSWLEC 89
Environment Protection Authority v Transpacific Industries Pty Limited; Environment Protection Authority v Transpacific Refiners Pty Limited [2010] NSWLEC 85
Environment Protection Authority v Unomedical Pty Limited (No 3) [2010] NSWLEC 198
Environment Protection Authority v Unomedical Pty Limited (No 4) [2011] NSWLEC 131
Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; (2006) 148 LGERA 299
Environment Protection Authority v Werris Creek Coal Pty Ltd; Environment Protection Authority v Holley [2009] NSWLEC 124
Genkem Pty Ltd v Environment Protection Authority (1994) 35 NSWLR 33
Gittany Constructions Pty Limited v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189
Gordon Plath of the Department of Environment and Climate Change v Fish [2010] NSWLEC 144; (2010) 179 LGERA 386
Gore v The Queen; Hunter v The Queen [2010] NSWCCA 330
Harrison v Baring (No 2) [2012] NSWLEC 145
Hili v The Queen; Jones v The Queen [2010] HCA 45; (2010) 242 CLR 520
Johnson v The Queen [2004] HCA 15; (2004) 78 ALJR 616
Lee v Office of Environment and Heritage [2012] NSWLEC 9
Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357
Mill v The Queen [1988] HCA 70; (1988) 166 CLR 59
Muldrock v R [2011] HCA 39; (2011) 244 CLR 120
Pearce v The Queen [1998] HCA 57; (1998) 194 CLR 610
Plath v Rawson [2009] NSWLEC 178; (2009) 170 LGERA 253
R v Booth (NSW Court of Criminal Appeal, 30 September 1997, unreported)
R v De Simoni [1981] HCA 31; (1981) 147 CLR 383
R v Harris [2007] NSWCCA 130; (2007) 171 A Crim R 267
R v Holder; R v Johnston [1983] 3 NSWLR 245
R v Johnson [2004] NSWCCA 76
R v MAK; R v MSK [2006] NSWCCA 381; (2006) 167 A Crim R 159
R v MMK [2006] NSWCCA 272; (2006) 164 A Crim R 481
R v Morgan (1993) 70 A Crim R 368
R v Olbrich [1999] HCA 54; (1999) 199 CLR 270
R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383
R v Wheeler [2000] NSWCCA 34
R v Wickham [2004] NSWCCA 193
State Pollution Control Commission v CSR Ltd (1989) 75 LGRA 1
Veen v The Queen [1979] HCA 7; (1979) 143 CLR 458
Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465Category: Sentence Parties: Environment Protection Authority (Prosecutor)
Orica Australia Pty Ltd (Defendant)Representation - Counsel: Mr S Rushton SC and Mr D A Hughes (Prosecutor)
Mr T A Game SC, Mr D Jordan SC and Ms K Edwards (Defendant)- Solicitors: Office of Environment and Heritage (Prosecutor)
Ashurst Lawyers (Defendant)File Number(s): 50919 and 50920 of 2011
INDEX
Topic Paragraph Orica is Charged with Nine Environmental Offences [1] Conduct of the Proceedings [4] Orica Pleads Guilty to Two Environmental Offences [7] The Sites at Which the Incidents Occurred [8] The Nitric Acid Air Lift Incident [14] The Nitric Acid Plant [15] Evidence Led With Respect to the Nitric Acid Air Lift Incident [20] The Nitric Acid Air Lift Incident and its Aftermath [26] Impact on Groundwater [40] Impact on the Hunter River [45] Pre-Incident Air Lift Maintenance and Inspection Procedures [55] Joint Experts' Report [63] Orica's Response to the Incident and Additional Mitigation Activities [65] Sentencing Principles [80] Objective Circumstances of the Offences [93] Nature of the Offences [94] Pollution of Waters [96] Breach of Licence [103] Was There a Breach of Public Trust by Orica? [106] Maximum Penalty [112] Environmental Harm Caused by the Commission of the Offences [116] Orica's State of Mind and the De Simoni Principle [127] Reasons for Offending [150] Foreseeability of the Risk of Harm [152] Practical Measures Available to Orica to Avoid or Mitigate Harm [159] Control Over the Causes of the Harm [165] Conclusion on Objective Gravity [167] Subjective Considerations [168] Aggravating Factors [169] Orica Has a Record of Previous Convictions for Environmental Offences [169] Mitigating Factors [183] Prior Criminality [184] Good Character [185] Likelihood of Re-offending [191] Contrition and Remorse [198] Early Guilty Plea [205] Assistance to Authorities [207] Agreement to Pay the EPA's Costs [208] Conclusion on Subjective Considerations [211] The Appropriate Sentence to be Imposed on Orica [212] Deterrence [213] Denunciation and Retribution [218] Consistency in Sentencing [219] Sentencing Trends for Water Pollution Offences [222] Sentencing Trends for Breach of Licence Condition Offences [223] The Totality Principle [224] The Application of the Totality Principle [230] Conclusion on the Appropriate Penalty for the Nitric Acid Air Lift Incident [250] Publication Order [254] Environmental Order [258] Costs [260] Orders [261]
JUDGMENT
Orica is Charged with Nine Environmental Offences
The nine offences under the Protection of the Environment Operations Act 1997 ("the POEOA") with which the defendant, Orica Australia Pty Ltd ("Orica"), is charged and which are the subject of seven separate proceedings, occurred over an extended period between October 2010 and December 2011. The prosecutor, the Environment Protection Authority ("EPA"), prosecuted the seven matters together in the interests of efficient use of the parties' and the Court's time, in concurrent sentencing proceedings on 5, 6, 10, 12 December 2012 and 20 May 2013.
Listed chronologically, the incidents giving rise to the charges are as follows:
(a)first, the escape of nitric acid following the failure of a pipe in the Air Lift at one of the nitric acid plants on the Kooragang Island Licensed Premises ("KI premises"), which occurred on 19 October 2010 ("the Nitric Acid Air Lift Incident"). This resulted in two charges:
(i)pollution of waters contrary to s 120(1) of the POEOA (matter no 50919 of 2011); and
(ii)breach of a licence condition under Orica's Environment Protection Licence Number 828 ("Licence 828") contrary to s 64(1) of that Act (matter no 50920 of 2011);
(b)second, the release of a visible white plume of ammonium nitrate into the atmosphere, resulting from the failure of a pneumatic control valve at the ammonium nitrate plant at the KI premises, which occurred on 22 March 2011 ("the Evaporator Incident"). This incident resulted in one charge of breach of a condition under Licence 828 contrary to s 64(1) of the POEOA (matter no 50282 of 2012);
(c)third, the emission of ammonia into the atmosphere due to the rupture by a worker with a jackhammer of a pipe containing ammonia at the ammonia plant at the KI premises, which occurred on 17 June 2011 ("the Jackhammer Incident"). This incident resulted in one charge of breach of a condition under Licence 828 contrary to s 64(1) of the POEOA (matter no 50312 of 2012);
(d)fourth, the release of condensate containing the chemical hexavalent chromium during start up procedures at the ammonia plant at the KI premises, which occurred on 8 August 2011 ("the Hexavalent Chromium Incident"). This incident resulted in two charges:
(i)breach of a licence condition under Licence 828 contrary to s 64(1) of the POEOA (matter no 51019 of 2011); and
(ii)contravention of s 148(2) of the POEOA due to a failure to report a pollution incident 'as soon as practicable' (matter no 51020 of 2011);
(e)fifth, the release into the environment of mercury vapours when louvres were left open at the Former ChlorAlkali Plant Mercury Remediation Project ("FCAP Remediation Project") at Botany Industrial Park, which occurred on 27 September 2011 ("the Botany Mercury Incident"). This resulted in one charge of breach of a licence condition under Environment Protection Licence Number 2148 ("Licence 2148") contrary to s 64(1) of the POEOA (matter no 50974 of 2012);
(f)sixth, the release of ammonia into the atmosphere on six occasions over the course of one day on 9 November 2011 at the KI premises ("the Ammonia Incident"). This resulted in one charge of breach of a licence condition under Licence 828 contrary to s 64(1) of the POEOA (matter no 51110 of 2012); and
(g)seventh, the overflow beyond containment systems of weak ammonium nitrate solution at the KI premises, which occurred on 7 December 2011 ("the Ammonium Nitrate Solution Spill Incident"). This resulted in one charge of breach of a licence condition under Licence 828 contrary to s 64(1) of the POEOA (matter no 51164 of 2012).
As a consequence of pleading guilty to these charges, the EPA agreed to the dismissal of four further charges (matter no 50918 of 2011 arising out of the Nitric Acid Air Lift Incident; matter nos 50283 and 50284 of 2012 arising out of the Evaporator Incident and matter no 51111 of 2012 arising out of the Ammonia Incident).
Conduct of the Proceedings
Many of the central facts giving rise to the commission of the nine offences were agreed by the parties and were recorded in statements of agreed facts for each of the seven incidents. These agreed facts were supplemented by additional written and oral evidence called by Orica. The evidence came from three witnesses: Ms Sherree Woodroffe, who was at the time Orica's Safety, Health, Environment and Community Manager for the KI premises; Mr Sean Winstone, who was at the time Global Executive - Manufacturing for Orica; and Mr James Robert Stening, Orica's Senior Environmental Technologist at Orica's Botany site, who gave written evidence about the Mercury Incident.
No witnesses were called for the prosecution.
Because of the discrete nature of each of the seven incidents, and although the proceedings were heard consecutively, it is appropriate that each of the seven matters be dealt with separately in seven separate judgments. However, to the extent that common disputed factual matters or common questions of legal principle arise, these matters have been considered in full in this judgment ("the principal judgment"), and then applied in each of the subsequent six judgments.
Orica Pleads Guilty to Two Environmental Offences
In these proceedings, Orica has pleaded guilty to two charges arising out of the Nitric Acid Air Lift Incident under the POEOA. It is the determination of an appropriate sentence for Orica for the commission of these two offences that is the subject of this, the principal judgment.
The Sites at Which the Incidents Occurred
Orica is the operator of the two sites at which the incidents occurred: the Ammonium Nitrate Manufacturing Facility ("ANMF") at Kooragang Island near Newcastle and the FCAP Remediation Project at Botany Industrial Park ("the Botany premises").
Orica holds Environment Protection Licences under the POEOA for activities conducted at these two sites, namely Licence 828 for the KI premises and Licence 2148 for the Botany premises.
Licence 828 authorises Orica to carry out chemical production activities ("the KI licensed activities") at 15 Greenleaf Road, Kooragang Island. The site has been used for chemical manufacturing by Orica's predecessors since 1969. Orica has used the KI premises since 1 June 2003.
The ANMF comprises three nitric acid plants, an ammonia plant and two ammonium nitrate plants. In carrying out the KI licensed activities, Orica produces ammonia and nitric acid, which it uses in the manufacture of ammonium nitrate primarily for use in the mining industry. The main output from the KI premises is approximately 430,000 tonnes of ammonium nitrate per annum.
Licence 828 includes, relevantly, condition O2.1(a) which provides:
All plant and equipment installed at the premises or used in connection with the licensed activity:
(a) must be maintained in a proper and efficient condition; ...Licence 828 for the purpose of condition O2.1 defines "plant" as including "all plant within the meaning of the [POEOA] as well as motor vehicles".
The Nitric Acid Air Lift Incident
The uncontroversial circumstances surrounding the Nitric Acid Air Lift Incident were contained in a Statement of Agreed Facts dated 28 November 2012, with a revised version dated 5 December 2012, with photos attached.
The Nitric Acid Plant
The Incident occurred at one of the three nitric acid plants ("NAP1") within the ANMF at the KI premises. NAP1 is operated by Orica using a computer-based Distributed Control System ("DCS"). The DCS enables NAP1 to operate using readings from instruments within the plant.
The Incident resulted from the failure of a pipe in the Air Lift installed at NAP1. The Air Lift was housed in an underground lined plastic well or pit approximately six metres deep and had a metal lid across the top of the pit at ground level. The lid was not watertight.
The Air Lift's purpose is to transport and elevate weak acid flowing by gravity from upstream equipment to another process vessel, namely, the "absorber". The functioning of the Air Lift involves:
(a)a stream of single-phase weak nitric acid with a minimum "head" (or static pressure);
(b)a supply of compressed air at sufficient pressure to deliver the required flow rate of air to a "sparger" that mixes the air and acid to produce a two-phase mix with a density lower than the incoming weak acid; and
(c)the transportation of this acid/air mixture out of the delivery pipe to the absorber.
For present purposes, the components of the Air Lift are as follows: an acid delivery pipe through which single phase nitric acid enters the sparger, including a U-tube to prevent reverse flow; an air delivery pipe that conveys compressed air to the sparger; a short stub of pipe connecting the acid delivery pipe to the sparger at a 90 degree bend, with an elbow fitting; and a pipe that conveys the two phase mixture out of the sparger and towards the absorber. There are two further 90 degree elbow fittings that produce a 180 degree bend in the air delivery pipe.
The sparger is a specialised pipe structure comprising a short length of pipe drilled with many small holes designed to introduce air as a stream of fine bubbles into the acid. The sparger assembly comprises the sparger pipe, housing for the sparger and an end cap to seal it. It is linked via a conical reducer to the delivery pipe transporting the two-phase mixture to the absorber.
Evidence Led With Respect to the Nitric Acid Air Lift Incident
The affidavit of Mr Winstone sworn 1 November 2012 exclusively concerned the Nitric Acid Air Lift Incident. In his affidavit, Mr Winstone testified as to the basic facts and the cause of the Incident, and the operational procedures in place prior to the Incident.
Mr Winstone also provided evidence regarding the maintenance and inspection procedures in place prior to the Incident and the actions taken by Orica since the Incident.
An additional affidavit of Mr Winstone, sworn 6 November 2012, gave detailed evidence of:
(a)Mr Winstone's role at Orica;
(b)an overview of Orica's operations in Australia and globally;
(c)an overview of Orica's operations at the KI premises;
(d)the environmental management of the KI premises, including, for example, the environmental improvements on the premises, safety and health, the emergency response plan for the premises, environmental governance and Orica's Safety, Health and Environment Management System ("SHEMS");
(e)his disappointment and remorse for the pollution incidents that occurred at the KI premises;
(f)the steps taken by Orica since the pollution incidents to address the causes of each incident and to reduce the risk of each of the incidents occurring again. This included evidence of various projects to improve the management of safety and health, improvements to the management of major projects, structural management changes at the KI premises, improvements in the implementation of model procedures at the KI premises, the delivery of legal compliance registers and the undertaking of a mandatory environmental audit; and
(g)details of other environmental improvement projects at the KI premises including the ammonia management improvement project, the funding of additional air quality monitoring at Stockton, the funding and implementation of a nitrogen oxide ("NOx") greenhouse gas emissions reduction project and a carbon dioxide reduction project, bunding improvement works, the reduction of noise emissions at the KI premises, a Prill Tower emissions reduction project and nitrates drainage upgrade works.
A supplementary affidavit to the 6 November 2012 affidavit was sworn by Mr Winstone on 23 November 2012. This affidavit provided extensive evidence of Orica's community support programs since its ownership of the KI premises in June 2003. These include the turnaround safety incentive scheme whereby Orica makes a donation for each hour that is worked safely, support for various local schools, sporting, community and educational groups in and around the KI premises and a corporate sponsorship program, which includes donations and sponsorship.
Despite cross-examination and submissions by the EPA to the contrary, I found Mr Winstone to be a credible witness. His evidence was considered and he made concessions where appropriate to do so. I accept and give full weight to his evidence of Orica's pre-incident inspection processes and Orica's post-incident remedial activities and its subsequent operational improvement initiatives.
Where relevant, Mr Winstone's evidence is elaborated upon below in detail.
The Nitric Acid Air Lift Incident and its Aftermath
At 1.35am on 19 October 2010, an estimated 6 to 12 tonnes of nitric acid escaped from NAP1 following the failure of a pipe in the Air Lift.
The escape occurred because of a break in the acid delivery pipe occurring at the location of a weld at the junction between that pipe and the stub of pipe leading into the sparger of the Air Lift. The break resulted in nitric acid and compressed air being redirected into the pit in which the Air Lift was located, which at the time was partly filled with recent rainwater. The addition of the nitric acid filled the pit and the ongoing pressure caused the acid, now at a concentration of 47%, to be sprayed out of the pit. The nitric acid discharge reached upwards to a height of approximately three to four metres and had a diameter of approximately two to three inches fanning out to approximately one metre at the top of the spray.
The acid that escaped the pit then fell onto the ground around the Air Lift and reacted with materials on the surface. This resulted in the formation of a brownish-orange NOx gas.
At 1.45am on 19 October 2010, an absorption column level deviation alarm was activated on the NAP1 DCS control panel. This was the first indication to any of Orica's operators of a possible problem in NAP1.
Then, at 1.48am, one of the operators manually adjusted the level control valve to reduce the rate at which nitric acid was able to be discharged from the absorption column and the absorption column level stabilised. The level control valve was then returned to automatic control.
At 2.00am, two operators were in the field near NAP1 undertaking preparatory work to recommence the operation of the No 1 ammonium nitrate plant at the KI premises. As they approached NAP1 they saw a discharge of what appeared to them to be NOx, as well as liquid on the ground surface around the Air Lift. They immediately contacted Orica's team leader who commenced a physical inspection of the plant to determine the source of the emission, including checking the valves and pipework near the absorption column and Air Lift.
Orica's operators commenced "water fogging" at 2.10am, which consisted of using two portable fire water spray systems to spray and suppress the NOx. Water fogging continued until 4.00am, with one spray stem used continuously and the second used intermittently to allow periodic inspections of the incident area.
At 2.16am, NAP1 was brought offline. This occurred because the team leader was initially unable to identify the cause of the emission and because the escape of nitric acid from the Air Lift and discharge of NOx appeared to be increasing. The discharge of nitric acid ceased as soon as NAP1 was brought offline and was depressurised.
An estimated 160 to 250m3 of water was discharged to the ground around the Air Lift. The escaped nitric acid and water pooled on the ground surface around the Air Lift before also spreading across the ground to the north and northwest of the Air Lift.
On the day of the Incident, a meeting was held between the Acting Nitrates Operations Manager, Global Integrity Manager, Sustainability Manager and other personnel to identify measures to address the Incident.
Initially, Orica applied hydrated lime to the Air Lift pit to neutralise any remaining acid present. On the morning of 20 October 2010, this resultant solution was recovered from the pit and removed to the effluent system.
Additionally, limestone, and later hydrated lime, was spread on some pools remaining on the surface to minimise the impact on the local area.
Orica also excavated and removed between 60 and 70 tonnes of soil from around the Air Lift to a depth of approximately 600 to 700 mm. This soil was stored in skips and removed for disposal via a licensed waste firm.
According to Mr Winstone, the removal of contaminated soil was completed by November 2010.
Impact on Groundwater
Kooragang Island lies on reclaimed land, comprising mainly dredged sand, in the Hunter River delta. Therefore, at the time of the Incident the soil around the Air Lift comprised primarily estuarine sediments (predominantly sand, with some silt, clay and shell fragments) making it generally quite permeable. A shallow groundwater aquifer lies below the KI premises, including below the Air Lift, a fact known to Orica.
As a result, the groundwater was polluted by the Incident to the extent that the chemical composition of the groundwater in the vicinity of the Air Lift changed. Groundwater sampling at the soil/water table interface was conducted by Orica following the Incident. The pH of water measures its acidity or alkalinity on a scale from 0 (extremely acidic) through 7 (neutral) to 14 (extremely alkaline) and is an important parameter of the chemical and biological characteristics of natural waters. The Incident resulted in a low pH groundwater plume with a pH in the range of 1-2, which altered and degraded the groundwater quality at the location of the Air Lift.
Orica's sampling of groundwater following the Incident led it to estimate that the equivalent of approximately 70m2 of groundwater had been polluted as a result of the Incident.
This plume migrated through the groundwater. Sampling between April and June 2012 indicated that the plume had migrated 75m from the vicinity of the Air Lift in a southeast direction at a depth of three to four metres below ground level. However the buffering capacity of the aquifer and dispersion were expected to cause the pH to become less acidic by the time it reached the Hunter River.
It was an agreed fact that there was no evidence of actual environmental harm caused by the groundwater pollution and any potential harm was "expected to be insignificant in the context of the nature of the substance and the industrialised nature of the locality."
Impact on the Hunter River
In addition to groundwater impacts, an unknown quantity of water containing nitric acid flowed to the northwest of the Air Lift into a gutter and then a drain, through a series of underground pipes comprising Orica's on-site "No. 4 Stormwater System". Thus an unknown quantity of the water containing nitric acid was ultimately discharged into the Hunter River from a pipe protruding from the riverbank ("the Discharge Point").
The water containing acid would ordinarily have flowed into a First Flush Tank ("FFT"), which was designed to prevent contaminants entering the Hunter River during rainfall events. The FFT's contents were periodically pumped into an effluent system to ensure the FFT had sufficient capacity to receive rainwater. However, at the time of the Incident the FFT was at maximum capacity due to a recent rain event. As a consequence, only a small amount of the water containing nitric acid was retained in the FFT.
At 9.30am on 19 October 2010, Orica took a sample of water from a pit located down gradient from the FFT and the sample measured a pH of 2.9. The normal variation in the pH of seawater of typical salinity is 7.8 to 8.2 and normal variation of pH in the Hunter River at the Discharge Point is approximately the same (or slightly less) by reason of its proximity near the River mouth.
The Australian Guidelines for Water Quality Monitoring and Reporting published by the former Australian and New Zealand Environment and Conservation Council and the Agriculture and Resources Management Council of Australia and New Zealand in 2000 ("the ANZECC Guidelines") specify scientifically recognised limits or trigger values for toxicants for the protection of organisms in the environment. These include upper and lower pH trigger values for the maintenance of biological communities in different ecosystems, recording that organisms are affected where those trigger values are exceeded.
The ANZECC Guidelines provide that the lower trigger value for pH is 6.5 and the upper trigger value is 8.0 in fresh waters; the lower value is 7.0 and the upper value is 8.5 in estuarine waters; and the lower value is 8.0 and the upper value is 8.4 in marine waters.
As noted above, the pH of the liquid in the pit down gradient of the No 4 Stormwater System's FFT was recorded as 2.9. A pH of 2.9 is significantly below the low trigger limit in the ANZECC Guidelines, irrespective of whether the Hunter River at the Discharge Point is classified as estuarine or marine water.
The scientific literature recognises that a pH of 2.9 is toxic to certain types of aquatic organisms.
No discharge was observed into the Hunter River as a result of the Incident and no samples were taken from the Discharge Point. No biological or chemical data was collected at the time of the Incident in the vicinity of the Discharge Point but it can reasonably be inferred that aquatic organisms inhabited the River at or about the Discharge Point at the time of the discharge of the low pH liquid.
However, in the absence of any concrete data, it is impossible to conclude to the requisite degree whether the low pH liquid in fact harmed aquatic organisms in the Hunter River. Nevertheless, it was uncontroversial that the entry of liquid with a pH of 2.9 into the River posed a potential and direct risk of harm to aquatic organisms. Having said this, it was agreed that the risk was likely localised and was only of limited duration due to the buffering capacity of seawater to dilute the discharged liquid. Moreover, the stormwater drain discharged into a river that was large and under strong tidal influence, factors which were likely to have resulted in the significant and quick dilution of the discharge.
Accordingly, it is likely the acidic discharge would have been neutralised by the river water within a short period of time so that the potential environmental harm caused by the pollution incident would have likely been short term, localised and insignificant.
Pre-Incident Air Lift Maintenance and Inspection Procedures
Orica's maintenance and inspection procedures for the Air Lift in NAP1 prior to the Incident on 19 October 2010 included the following steps:
(a)the removal and internal inspection of the Air Lift approximately every four years during each NAP1 "turnaround" (the shutdown for major planned maintenance activities, noting that the Air Lift could not be internally inspected while NAP1 was operational);
(b)an inspection of the Air Lift every eight years as part of the piping inspection program;
(c)walk-through checks of NAP1 by operators every three hours to ascertain any abnormal conditions or operation;
(d)weekly inspections by maintenance technicians to identify any plant or equipment requiring maintenance; and
(e)the drafting of a written procedure for the FFT involving regular pumping to ensure available capacity during a rain event. The procedure required manual pumping within 48 hours after completion of a rain event.
Although the FFT had a capacity of 110m3, Mr Winstone deposed that it was close to capacity at the time of the Incident.
The NAP1 turnaround inspections prior to the Incident involved:
(a)the removal of the Air Lift with a mobile crane, followed by inspection and non-destructive testing;
(b)external inspection of the Air Lift for signs of fatigue, stress or damage requiring further investigation for any risks to integrity;
(c)hydrostatic testing by pressurising the Air Lift with water to identify leaks and verify the integrity of pipes and welds; and
(d)depending on the circumstances, internal video probe inspections.
In December 2006, additional performance investigations had been undertaken on NAP1 because it was producing nitric acid below the required concentration. This process had involved both hydrostatic testing and video probe investigations, neither of which revealed any problems with the Air Lift. However, it should be noted that the particular part of the Air Lift that failed on 19 October 2010 had not been specifically investigated by video probe at that time.
The most recent NAP1 turnaround prior to the Incident was associated with an upgrade to NAP1 in 2008. It involved removing the Air Lift and externally inspecting all the welds, including inspecting the welds joining the delivery pipe to the sparger in the section that failed. During the inspection the Nitrates Mechanical Engineer noted that welds elsewhere on the delivery pipe appeared to be of poor quality and were different to the remaining welds. The section was then inspected internally using video probe, confirming the substandard workmanship. The identified weak welds were replaced.
The pipe inspection program in place prior to the Incident was introduced in 2005. An assessment of all pipes had been undertaken to assess their corrosion risk according to the risk assessment standard used by Orica, which is the American Petroleum Industry Code 581. All relevant pipes were subsequently inspected according to their assessed class of corrosion risk.
Because this risk assessment had not identified that the Air Lift could be affected by a different corrosion risk in the presence of mechanical stress, an external eight yearly inspection cycle had been considered to be adequate.
As a result, on 29 June 2010 the scheduled external visual pipe inspection was undertaken while NAP1 was operational and only the above ground parts of the Air Lift were inspected.
Joint Experts' Report
The EPA's expert, Dr Derek Griffiths, and Orica's expert, Dr Robert Hutchison, both chemical engineers, together prepared a joint experts' report in relation to the Incident.
The experts' joint opinions were that:
(a)as at 19 October 2010, the plant and equipment installed at the KI premises and used in connection with the KI licensed activities were not maintained in a proper and efficient condition by Orica. The Air Lift failed, releasing 47% nitric acid to the environment, a proportion of which flowed into the Hunter River and a proportion of which soaked into the ground;
(b)Orica had failed to maintain that plant and equipment in a proper and efficient condition in the following ways:
(i)the program of four yearly and eight yearly internal and external inspections had failed to detect the degradation of the weld (the identified cause of the Air Lift failure);
(ii)Orica had identified several welds of poor quality and had replaced four welds in 2008 but "did not take the opportunity to adequately inspect the other welds";
(iii)according to Dr Griffiths, the "support structure for the airlift was not questioned despite the knowledge that stress applied to the joints in this process situation would be a contributing factor to failure". Dr Hutchinson stated that his training and experience did not qualify him to comment on this;
(iv)the inspection program was not sufficiently robust because the Air Lift had been classified as piping rather than 'equipment' and therefore was subject to less vigorous inspection requirements, and moreover, the piping inspection program did not identify the specific failure mechanism; and
(v)Orica had failed to inspect the Air Lift with sufficient frequency to detect the weld degradation;
(c)although the failure of the weld was difficult to foresee, Orica should nevertheless have:
(i)identified that the 2008 weld replacement could result in mechanical stress that could increase the rate of weld degradation and that the increased production rate would cause increased cavitation, placing additional fluctuating stress on the weld. It then should have made changes to the Air Lift or process conditions to prevent such a failure occurring;
(ii)identified, through the Hazard Identification, Risk Assessment and Control ("HIRAC") system, that the cumulative changes greatly increased the degradation rate. There was, for example, no evidence that a HIRAC assessment had been undertaken for the increased production rate, despite the fact that Orica's SHEMS required process changes to be assessed in accordance with Orica's Management of Change procedure; and
(iii)identified through the SHEMS Periodic Hazard Studies that there was no secondary containment around the Air Lift;
(d)Orica had "complete control over the site operations and maintenance activities and thus had control over all the causes of the weld failure";
(e)the practical measures Orica should have taken to prevent, control, abate or mitigate harm to the environment included:
(i)managing the contaminated runoff so that it did not go off-site. Although Orica's emergency response was appropriate because it protected the safety of site personnel and attempted to reduce NOx emissions, the use of water fogging had the unintended effect of causing nitric acid runoff into the Hunter River; and
(ii)adequate implementation of the Management of Change procedure to repair the Air Lift;
(f)Orica had made appropriate changes to the Air Lift after the Incident to prevent or mitigate the future risk of environmental harm including:
(i)designating the Air Lift as 'equipment';
(ii)completely replacing the Air Lift assembly;
(iii)the realignment and bracing of the pipe to prevent stress;
(iv)using a thicker grade of piping;
(v)the installation of secondary containment;
(vi)the installation of level and pressure sensors inside the secondary containment vessel to detect any leakage and to alert the operators; and
(vii)revising the pump-out scheme for the FFT to reduce the time it is unable to capture spills.
Orica's Response to the Incident and Additional Mitigation Activities
Orica prepared two reports on the Nitric Acid Air Lift Incident. The first incident report identified a series of corrective measures, which are summarised below. The second incident report was by the Nitrates Mechanical Engineer on 23 December 2010.
In response to the first incident report, Orica removed the Air Lift on 20 October 2010 and carried out the following repairs:
(a)the installation of a new 304L (low carbon content) stainless steel socket fitting to strengthen the connection to the sparger, and the alteration of the socket design;
(b)the replacement of the entire nitric acid pipe with a thicker pipe (also 304L stainless steel);
(c)the realignment of the nitric acid pipe and the installation of a brace across the two vertical arms of the U-bend in the delivery pipe to improve support and minimise mechanical stress on the pipe joint;
(d)dye penetration testing of all Air Lift welds in accordance with relevant Australian Standards; and
(e)hydro-testing of the Air Lift for 30 minutes.
The Air Lift was returned to service on 21 October 2010 following these repairs.
Additionally, Orica reviewed:
(a)the first flush stormwater procedures and system to implement an auto-start function on the first flush pumps; and
(b)the alarm options to alert operators of leaks.
In response to this review, the DCS was programmed to implement automatic pumping to the FFTs.
Licence 828 was also varied to include the installation of stormwater isolation valves to be closed remotely from the DCS that are capable of discharging material into the stormwater drains in the event of a similar incident. Implementation of this project had commenced by November 2012 at an estimated cost of $1.8 million.
The review identified that additional cameras would assist operators to view the plant when they were not in the field. Orica will incorporate this action into its KI premises expansion project activities ("Project Trident"), in which the Nitrates Control Room was to be replaced. The need for in-plant cameras and additional Control Room screens will be considered at that time.
Orica developed a "maintenance plan cycle" intended to occur every four years.
In February 2011, Orica was granted a licence by the NSW Office of Water to install wells for the purpose of extracting low pH groundwater. Between 17 and 22 February 2011, four groundwater monitoring wells were installed in the vicinity of the Air Lift. These were sampled on 9 March 2011.
On 29 July 2011, Orica applied to vary Licence 828 to authorise replacement of the Air Lift and associated works to improve drainage and effluent management at the KI premises. The EPA approved that application and introduced a new Condition U2.1 (Pollution Reduction Program 22), requiring upgrades such as double containment measures.
On 30 November 2011, the EPA varied Licence 828 to require Orica to prepare a remedial action plan ("RAP") to remediate the contaminated groundwater. On 19 March 2012, the EPA provided comments on the RAP, and on 29 March 2012 Orica provided a revised RAP prepared by Golder Associates.
Design of a new Air Lift was ongoing through 2011 and 2012. A new Air Lift was installed in May 2012 during the next scheduled NAP1 turnaround. The design of the new Air Lift was subject to Orica's internal risk and hazard management processes under the SHEMS, and was subject to non-destructive testing prior to installation. The cost of the new Air Lift installation was approximately $470,000.
Management of the NAP1 Air Lift in the future is to occur within the registered pressure vessel system. This will ensure that the Air Lift will be subject to the formal pressure vessel inspection regime under the Work Health and Safety Regulation 2011. WorkCover NSW issued a relevant registration certificate on 29 May 2012.
Orica undertook a risk assessment and prepared a specific inspection and test plan for the new Air Lift. The Air Lift is now subject to routine two yearly external inspection according to Australian Standard AS3788.
During the 2012 NAP1 turnaround, other environmental improvements to NAP1 were also made, costing $3.6 million.
Sentencing Principles
A basic principle of sentencing law is that the sentence imposed for an offence must reflect, and be proportionate to, the objective circumstances of the offence and the personal or subjective circumstances of the offender (Veen v The Queen [1979] HCA 7; (1979) 143 CLR 458 at 490 and Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 at 472).
The instinctive synthesis method is the correct method of sentencing. The Court identifies all the factors relevant to the sentence and weighs their significance to arrive at an appropriate sentence (Muldrock v R [2011] HCA 39; (2011) 244 CLR 120 at [26] and Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 at [35]-[39], [50]-[84] and [136]-[139]).
Although Orica's plea of guilty to both charges entails acceptance of the proof beyond reasonable doubt of the elements of each offence, the Court must not take facts into account in a manner that is adverse to Orica unless those facts have been established beyond reasonable doubt by the EPA. But if there are circumstances that the Court proposes to take into account in favour of Orica, it is enough that these circumstances are proved on the balance of probabilities (R v Olbrich [1999] HCA 54; (1999) 199 CLR 270 at [27]; Gore v The Queen; Hunter v The Queen [2010] NSWCCA 330 at [27] and [105] and R v Wickham [2004] NSWCCA 193 at [26]).
Section 3A of the Crimes (Sentencing Procedure) Act1999 ("the CSPA") sets out the purposes of sentencing an offender. Relevant purposes in these proceedings are those contained in ss 3A(a), (b), (c), (e), (f) and (g).
In addition, s 21A of the CSPA identifies the matters that the Court must take into account when determining the appropriate sentence, including factors in aggravation under s 21A(2) and factors in mitigation under s 21A(3). Section 21A of the CSPA provides:
21A Aggravating, mitigating and other factors in sentencing
(1) General
In determining the appropriate sentence for an offence, the court is to take into account the following matters:
(a) the aggravating factors referred to in subsection (2) that are relevant and known to the court,
(b) the mitigating factors referred to in subsection (3) that are relevant and known to the court,
(c) any other objective or subjective factor that affects the relative seriousness of the offence.The matters referred to in this section are in addition to any other matters that are required or permitted to be taken into account by the Court under any Act or rule of law, such as s 241(1) of the POEOA (see below).
Potential aggravating factors for the commission of the two offences with which Orica has been charged in these proceedings are limited to those contained in ss 21A(2)(d), (g) and (o) of the CSPA. Potential subjective circumstances or mitigating factors are those contained in ss 21A(3)(e), (f), (g), (i), (k) and (m) of the CSPA. These factors are discussed in further detail below.
It is also important to note that when assessing the objective gravity of an offence, the Court not only establishes the upper limit of the appropriate penalty but also the lower limit beneath which the penalty should not go. Subjective mitigating features should never produce a sentence that fails to reflect the gravity of the incident or the objectives of punishment which include both retribution and deterrence (Environment Protection Authority v Moolarben Coal Operations Pty Ltd [2012] NSWLEC 65 at [44] and Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; (2006) 148 LGERA 299 at [140]).
Furthermore, in determining an appropriate sentence, the Court must consider the objective and subjective circumstances of the offence in the context of the relevant legislative framework (Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34; (2006) 145 LGERA 234; Environment Protection Authority v Aargus Pty Ltd; Kariotoglou; Kelly [2013] NSWLEC 19 at [53] and Moolarben at [42]).
A proper understanding of the purpose of creating an offence is usually assisted by a consideration of the objects of the statute (Connell v Santos New South Wales Pty Ltd [2014] NSWLEC 1; (2014) 199 LGERA 84 at [59]). Therefore, regard ought to be had to the objects set out in s 3 of the POEOA and the matters to be considered in imposing a penalty listed in s 241 of the POEOA.
The objects of the POEOA set out in s 3 relevantly include:
(a) to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development,
...
(d) to reduce risks to human health and prevent the degradation of the environment by the use of mechanisms that promote the following:
(i) pollution prevention and cleaner production,
(ii) the reduction to harmless levels of the discharge of substances likely to cause harm to the environment,
...
(iv) the making of progressive environmental improvements, including the reduction of pollution at source,
(v) the monitoring and reporting of environmental quality on a regular basis,
(e) to rationalise, simplify and strengthen the regulatory framework for environment protection,
(f) to improve the efficiency of administration of the environment protection legislation, ...Section 241(1) of the POEOA provides:
241 Matters to be considered in imposing penalty
(1) In imposing a penalty for an offence against this Act or the regulations, the court is to take into consideration the following (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,
(b) the practical measures that may be taken to prevent, control, abate or mitigate that 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,
(d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence,
(e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee.The legislative scheme reflected in the objects and operative provisions of the POEOA requires that "proper, and strict, precautions be taken by those whose activities may cause proscribed pollution". Indeed, the adoption of that legislative scheme reflects on the part of the community "a stern policy against pollution" (Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359 and Moolarben at [43]).
Objective Circumstances of the Offences
The primary factor the Court must consider in determining an appropriate sentence is the objective gravity or seriousness of the offences. In determining the objective seriousness of each offence, the circumstances to which the Court may have regard include (Bentley at [163]; Gittany Constructions Pty Limited v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189 at [110] and Plath v Rawson [2009] NSWLEC 178; (2009) 170 LGERA 253 at [48]):
(a)the nature of the offences;
(b)the maximum penalty for the offences;
(c)the harm, if any, caused to the environment by the commission of the offences;
(d)Orica's state of mind in committing the offences;
(e)Orica's reasons for committing the offences;
(f)the foreseeability of the risk of harm to the environment by the commission of the offences;
(g)the practical measures available to Orica to avoid harm to the environment; and
(h)Orica's control over the causes of harm to the environment.
Nature of the Offences
A fundamental consideration of relevance to environmental offences is the degree to which the offender's conduct would offend against the legislative objectives expressed in the statutory offence (Director-General of the Department of Environment and Climate Change v Rae [2009] NSWLEC 137; (2009) 168 LGERA 121 at [15] and Plath at [49]).
The objects of the POEOA disclose that the central mischief to which the Act is directed is to avoid, or at least, reduce pollution in order to prevent harm to human safety and the natural environment for both present and future generations (Environment Protection Authority v Unomedical Pty Limited (No 3) [2010] NSWLEC 198 at [188]).
Pollution of Waters
As Preston J has observed in the context of an offence against s 120 of the POEOA (Environment Protection Authority v Baiada Poultry Pty Limited [2008] NSWLEC 280; (2008) 163 LGERA 71 at [23] and see Environment Protection Authority v Pipeline Drillers Group Pty Ltd [2012] NSWLEC 18 at [44]):
Pollution of waters is a result offence where the proscribed result directly undermines the object of the Protection of the Environment Operations Act 1997.
Section 120 of the POEOA states:
120 Prohibition of pollution of waters
(1) A person who pollutes any waters is guilty of an offence.
(2) In this section:
pollute waters includes cause or permit any waters to be polluted.The POEOA Dictionary defines pollution to include "water pollution" and defines "water pollution" or "pollution of waters" to mean:
(a) placing in or on, or otherwise introducing into or onto, waters (whether through an act or omission) any matter, whether solid, liquid or gaseous, so that the physical, chemical or biological condition of the waters is changed, ...
and, without affecting the generality of the foregoing, includes:
(d) placing any matter (whether solid, liquid or gaseous) in a position where:
(i) it falls, descends, is washed, is blown or percolates, or
(ii) it is likely to fall, descend, be washed, be blown or percolate, into any waters, onto the dry bed of any waters, or into any drain, channel or gutter used or designed to receive or pass rainwater, floodwater or any water that is not polluted, or
(e) placing any such matter on the dry bed of any waters, or in any drain, channel or gutter used or designed to receive or pass rainwater, floodwater or any water that is not polluted,
if the matter would, had it been placed in any waters, have polluted or have been likely to pollute those waters.The POEOA relevantly defines "waters" to mean "the whole or any part of":
(a) any river, stream, lake, lagoon, swamp, wetlands, ... dam or tidal waters (including the sea), or
(b) ...any underground or artesian water.The offence created by s 120 of the POEOA is one of strict liability.
The Nitric Acid Air Lift Incident involved the release of 47% nitric acid into the environment, part of which flowed into the Hunter River and part of which soaked into the ground, contaminating groundwater. Nitric acid has the potential to harm any organisms present at the discharge site. Consequently, the breach of s 120 of the POEOA undermined the objects of that Act by degrading the environment, because it polluted both the local groundwater and the Hunter River. Both types of water pollution plainly offended against the legislative objects in s 3 of the POEOA, particularly ss 3(a) and (d).
Orica sought to argue that actual or potential environmental degradation is inherent in the s 120 water pollution offence, thereby diminishing the force of any suggestion that the commission of the offence offended against the objects of the Act. Leaving to one side the inherent circularity of this argument, it is an objective fact that by polluting the groundwater and the Hunter River, degradation of the environment ensued, thereby undermining the objects of the POEOA that are expressly directed to preventing pollution and environmental harm.
Breach of Licence
The failure to comply with a licence condition in contravention of s 64(1) of the POEOA is also an offence of strict liability. Section 64(1) provides as follows:
64 Failure to comply with condition
(1) Offence
If any condition of a licence is contravened by any person, each holder of the licence is guilty of an offence.
Maximum penalty:
(a) in the case of a corporation-$1,000,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues, ...It is difficult to envisage industrial production that would not, having regard to the broad definitions ascribed to the various forms of pollution regulated by the POEOA, give rise to conduct that would otherwise, but for a proscribed licensing regime under that Act, be unlawful. Compliance with licence conditions is the price that entities must pay for permission to engage in potentially polluting manufacturing processes. The conditions imposed in any licence are aimed at maximising beneficial environmental outcomes and minimising environmental harm. They represent a balancing exercise between fostering economic growth and development, on the one hand, and protecting and preserving the environment now and for the future, on the other. Strict compliance with the conditions of any environmental licence is therefore necessary to ensure that this balance is achieved and that the objectives of the POEOA are met.
The Nitric Acid Air Lift Incident as described above breached condition O2.1(a) of Licence 828 by Orica's failure to maintain its equipment in a "proper and efficient condition", thereby contravening s 64(1) of the POEOA. The transgression was clearly incompatible with the statutory scheme and offended against the objects established by the Act for the protection of the environment, especially s 3(d) (reducing risks to human health and preventing the degradation of the environment by the use of mechanisms that promote pollution prevention and the reduction of discharges of harmful substances).
Was There a Breach of Public Trust by Orica?
In addition, the EPA submitted that because licence holders, such as Orica, are (under the POEOA) licensed to carry out activities that, if not carried out in accordance with their licence, have the potential to cause harm to the environment and to human safety, the licence holders are in a position of public trust or privilege. This trust is necessarily broken and the privilege is abused if the holder of the environmental licence breaches a condition of its licence, as Orica did in the present case.
The EPA relied on the following evidence in support of its submission, namely, that in cross-examination Ms Woodroffe was asked if she shared the view that a breach of licence was a breach of public trust and she answered "certainly" (T93.15-T93.33).
There is authority holding that such a breach of public trust is a matter that can be taken into account under s 241(2) of the POEOA as a factor increasing the objective gravity of the offence (State Pollution Control Commission v CSRLtd (1989) 75 LGRA 1 at 4-5; Environment Protection Authority v Port Kembla Copper Pty Ltd [2001] NSWLEC 174; (2001) 115 LGERA 391 at [21]-[24] and [27]; Environment Protection Authority v Port Kembla Copper Pty Ltd [2003] NSWLEC 256 at [23] and [57]; Environment Protection Authority v Hochtief AG [2006] NSWLEC 200 at [95]; and Harrison v Baring (No 2) [2012] NSWLEC 145 at [52]-[54] and [68]).
But contrary views have been expressed regarding the application of any breach of public trust doctrine (Environment Protection Authority v BlueScope Steel (AIS) Pty Limited [2004] NSWLEC 400 at [35] and [58] per Talbot J and Environment Protection Authority v Ballina Shire Council [2006] NSWLEC 289; (2006) 148 LGERA 278 at [77]-[82]). In Ballina Shire Council Preston J opined as follows (at [79]-[83]):
79 This was said in relation to a charge pursuant to s 64(1) of the Act that a condition of a licence has been contravened. Talbot J said further at [58]:
"Mr Jordan made a submission on behalf of the EPA, as prosecutor, that as the holder of a licence under the PEO Act, the defendant has a duty in the nature of a public trust not to cause pollution, otherwise than to the extent authorised by the licence. I have previously expressed reservations about attempting to equate the duty of a licence holder to an obligation arising out of a public trust. I accept that the operator of an industrial undertaking in the nature of that conducted by the defendant has a high responsibility to protect the environment from harm as a consequence of its operations. The legislation recognises the level of this duty by providing that a breach of the Act attracts strict liability. Condition O2.1 of the licence sets an absolute standard that places a strict obligation on the licence holder. The conditions of the licence reflect the nature and extent of the duty imposed upon the licence holder. I would prefer to find the strict obligations of the defendant within the terms of the licence, rather than seeking to extract some abstract principle out of an implied public trust."
80 In my opinion, there is force in what Talbot J has said. It is true that a person, who although initially prevented by a statutory provision from being able to carry out activities that are of a certain nature (scheduled activities) is then permitted to carry them out by the grant of the licence, is afforded a privilege. However, the statute recognises the fact that a licence holder has been given a privilege by requiring that the licence holder comply with the conditions of the licence so issued. Failure to do so constitutes an offence. That Parliament considers a breach of a condition of a licence to be serious is evidenced by this fact and by the magnitude of the penalty that is imposed. As of 1 May 2006, the maximum penalty imposed for such a breach by a corporation is $1 million. However, as indicated earlier, at the time of the commission of the offence, it was $250,000.
81 It is not necessary in order to emphasise the seriousness of the offence of contravening conditions of a licence, to graft onto this statutory scheme the concept of an implied public trust. The seriousness of the offence is evident in the statutory scheme and s 64 of the Act in particular, and in the magnitude of the penalty for breach of the statutory provision.
82 Moreover, it adds nothing to say that there has been a breach of an implied public trust when one comes to sentence an offender who has committed an offence against s 64 of the Act. This is because the very section itself involves the conduct of breaching a condition of licence. Every single offender against that statutory provision would be guilty of the same breach of implied public trust.
83 For these reasons, I prefer the approach taken by Talbot J in Environment Protection Authority v BlueScope Steel (AIS) Pty Limited of finding the strict obligations of the defendant within the terms of the licence and the statutory provision in question, rather than seeking to extract some abstract principle out of an implied public trust.
In Harrison v Baring (No 2) Pain J, however, said (at [52]-[53]):
52 As submitted by the Prosecutor, significant trust and reliance is placed upon licence holders by the State to ensure that they abide by the licences and approvals granted under the WM Act. Environment protection licences which allow pollution subject to specified conditions have long been recognised as involving an important public trust: Environment Protection Authority v Port Kembla Copper Pty Ltd [2001] NSWLEC 174; (2001) 115 LGERA 391 at [23] - [25]; and Environment Protection Authority v Incitec Limited [2003] NSWLEC 381; (2003) 131 LGERA 176.
53 Holders of licences and approvals under the WM Act should also be regarded as being placed in a special category over and above other persons because they are allowed to take and use a limited (and at times very scarce) resource, water, in accordance with the conditions of the licences and approvals. That is, they are trusted to construct water supply works that can take significant volumes of water, and they are trusted to use those water supply works to take water, but only as permitted under their licences and approvals. Breaches of licence conditions and approvals should therefore be regarded as involving breaches of public trust.
I prefer the position articulated by Preston J in Ballina Shire Council. Having regard to the text and context of the POEOA, there is no warrant for such a gloss being put on the legislative scheme created by that Act. I note in fairness to her Honour, that in Harrision v Baring (No 2) it does not appear that the Court was taken to Preston J's decision in Ballina Shire Council.
Maximum Penalty
The maximum penalty for an offence reflects the seriousness with which Parliament views the offence (Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698 and Plath at [67]).
The maximum penalty for the commission of the pollution of water offence under s 120(1) of the POEOA for a corporation, as stipulated in s 123(1) of the POEOA, is $1 million.
The maximum penalty for the commission of the offence pursuant to s 64(1) of the POEOA by a corporation is also $1 million.
There is a spectrum of offending behaviour covered by a given offence and imposition of the maximum penalty is necessarily reserved for the worst case for which the penalty is prescribed. The High Court in Markarian (at [31]) explained that:
...careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick.
Environmental Harm Caused by the Commission of the Offences
The environmental harm caused by the commission of an offence is a central consideration in determining the objective gravity of the offence. The concept of harm in the context of environmental offences is broad (Waste Recycling and Processing Corp at [145]-[147]).
Harm includes the potential or risk of harm, not merely actual harm (Waste Recycling and Processing Corp at [145]; Axer at 366 and Bentley at [175]). Harm can be direct, indirect or cumulative and "[a]ctivities that contribute incrementally to the gradual deterioration of the environment, even when they cause no discernable direct harm to human interest, should also be treated seriously" (Waste Recycling and Processing Corp at [147]).
Furthermore, s 241(1)(a) of the POEOA makes it clear that, in sentencing, the Court is to consider the "extent of the harm caused or likely to be caused to the environment by the commission of the offence". The POEOA defines "harm to the environment" to include:
...any direct or indirect alteration of the environment that has the effect of degrading the environment and, without limiting the generality of the above, includes any act or omission that results in pollution.
It is also important to observe that harm is not mitigated by the fact that the waters into which a pollutant is discharged are, at the time, already disturbed or modified (Moolarben at [48]; Waste Recycling and Processing Corp at [149] and Environment Protection Authority v Queanbeyan City Council (No 3) [2012] NSWLEC 220; (2012) 192 LGERA 415 at [159]). Although the disturbed condition of receiving waters is not a mitigating factor, it is relevant to the assessment of the extent of harm or likely harm caused by the commission of the offence (Waste Recycling and Processing Corp at [149]; Environment Protection Authority v Hanson Precast Pty Limited [2008] NSWLEC 285 at [66] and Environment Protection Authority v Hochtief AG and Thiess Pty Ltd [2007] NSWLEC 177 at [19]).
The parties agreed that an estimated 70m2 of groundwater had been polluted by water contaminated with nitric acid causing a low pH plume, with a pH in the range of 1-2. In addition, low pH water measuring a pH of 2.9 onsite was discharged via Orica's stormwater system into the Hunter River, although the quantity of that discharge is not known. It was not a matter of dispute that the acidic discharge to the Hunter River "would have been neutralised ... within a short period" and hence the effect was likely to have been localised and short term.
The parties agreed that water with a pH of 2.9 is toxic to certain aquatic organisms, but that there was no evidence available of actual environmental harm to aquatic life caused by the groundwater and river pollution and any potential environmental harm was expected not to be significant.
In the immediate aftermath of the Incident, Orica undertook several measures that in all likelihood reduced the environmental harm caused by the Incident including: removing contaminated soil from the vicinity of the Air Lift; obtaining approval for, and sinking, groundwater wells to monitor the groundwater; and preparing a detailed RAP.
The EPA submitted that the potential or risk of harm was a relevant consideration in this case (Axer at 366; Bentley at [175] and Waste Recycling and Processing Corp at [145]) and that the discharge of nitric acid into the groundwater and the River incrementally contributed to the degradation of the environment and must be treated seriously (Waste Recycling and Processing Corp at [146]-[149]).
Orica, however, emphasised that the environmental harm to the Hunter River was expected to be short term, localised and not significant, and that generally the environmental harm resulting from the Incident was not substantial with respect to the underlying groundwater aquifer. Given the long history of industrial activities at the KI premises since 1969, Orica submitted that this water "was disturbed by that long history of chemical production activity" and that although not a mitigating factor, this fact was relevant as a "baseline reference" in the assessment of environmental harm pursuant to s 241(1)(a) of the POEOA. In light of the evidence before the Court, I agree with Orica's submission, and I find that the potential or risk of harm caused by the commission of the offence was minimal.
Taking all of the evidence into account, I find that the commission of the offences caused environmental harm at the lower end of the spectrum.
Significantly, the commission of the two offences did not result in "substantial" harm as required to enliven s 21A(2)(g) of the CSPA. It is therefore not to be taken into account as an aggravating factor under that Act.
Orica's State of Mind and the De Simoni Principle
Both offences are offences of strict liability, which means that mens rea is not an element of the offence. However, the state of mind of Orica at the time of committing the offence is a relevant consideration when imposing a sentence. This is because a strict liability offence that is committed intentionally, negligently or recklessly will be objectively more serious than one committed accidentally (Rae at [42]-[43] and Gittany at [123]).
In the present case there was no question of Orica having intentionally or recklessly committed the offences with which it had been charged. Rather the issue was whether Orica had committed the offences negligently.
However, Orica submitted that it would be an error of law to consider its state of mind in the commission of the offences because this would amount to sentencing it for a more serious offence than that with which it has been charged (R v De Simoni [1981] HCA 31; (1981) 147 CLR 383 at 389).
The submission arose in the following way. Orica has pleaded guilty to a "Tier 2" offence against s 120 of the POEOA. The more serious "Tier 1" offence, with which Orica has not been charged, is an offence against s 116 of the Act, which states:
116 Leaks, spillages and other escapes
(1) If a person wilfully or negligently causes any substance to leak, spill or otherwise escape (whether or not from a container) in a manner that harms or is likely to harm the environment:
(a) the person, and
(b) if the person is not the owner of the substance, the owner,are each guilty of an offence.
The rule against punishment for a higher offence than that which the defendant has been charged was set out in R v De Simoni ("the De Simoni principle") per Gibbs CJ (at 389 and 392):
However, the general principle that the sentence imposed on an offender should take account of all the circumstances of the offence is subject to a more fundamental and important principle, that no one should be punished for an offence of which he has not been convicted. Section 582 reflects this principle. The combined effect of the two principles, so far as it is relevant for present purposes, is that a judge, in imposing sentence, is entitled to consider all the conduct of the accused, including that which would aggravate the offence, but cannot take into account circumstances of aggravation which would have warranted a conviction for a more serious offence.
At common law the principle that circumstances of aggravation not alleged in the indictment could not be relied upon for purposes of sentence if those circumstances could have been made the subject of a distinct charge appears to have been recognized as early as the eighteenth century
...
It is not only in cases in which the offence has been accompanied by circumstances of aggravation that a trial judge may be required, in sentencing, to take an artificially restricted view of the facts. This will be so also in cases where the jury's verdict is inconsistent with the view of the facts that the judge himself has formed, for the judge cannot act on a view of the facts which conflicts with the jury's verdict. However, where the Crown has charged the offender with, or has accepted a plea of guilty to, an offence less serious than the facts warrant, it cannot rely or ask the judge to rely, on the facts that would have rendered the offender liable to a more serious penalty.
Accordingly, a sentencing judge cannot take into account a factor which would constitute an element of a more serious offence than the one with which an offender has been charged and of which the offender has been convicted, or to which the offender has pleaded guilty (Cassidy v R [2012] NSWCCA 68; (2012) 220 A Crim 420 at [1]).
An offence is more serious than another offence for the purposes of the De Simoni principle if it renders the offender liable to a heavier penalty than the offence for which the offender is being sentenced (Environment Protection Authority v Snowy Hydro Limited [2008] NSWLEC 264; (2008) 162 LGERA 273 at [147] citing R v Booth (NSW Court of Criminal Appeal, 30 September 1997, unreported), Environment Protection Authority v Tea Garden Farms Pty Ltd [2012] NSWLEC 89 at [101] and Chief Executive of the Office of Environment and Heritage v Rinaldo (Nino) Lani [2012] NSWLEC 115 at [35]-[39]).
The maximum penalty for an offence against s 116 of the Act in the case of a corporation is $5 million for an offence that is committed wilfully, or $2 million for an offence that is committed negligently (according to s 119), whilst the maximum penalty for an offence against s 120 is $1 million. The offence in s 116 is, therefore, a more serious offence than the offence to which Orica has pleaded guilty and the De Simoni principle therefore potentially applies.
The De Simoni principle has been applied in statutory contexts, including in the sentencing for environmental offences. In Snowy Hydro, Biscoe J considered the application of the De Simoni principle in the context of s 120 of the Act. His Honour stated that (at [148]-[149]):
148 The principle has been applied in statutory contexts. For example, it was applied to the Criminal Code (WA) in De Simoni and to the Criminal Code (Tas) in Lovegrove v R [1961] Tas SR 206, which was approved in De Simoni at 390-391. In determining whether the De Simoni principle applies in a particular statutory context, the task is to interpret the language used and not to construe the statutory provisions on the assumption that they were intended to reproduce the common law. But if the meaning of the statutory provisions is doubtful, resort may be had to the common law for the purpose of aiding their construction: De Simoni at 391-392.
149 The question then is whether the De Simoni principle applies in the context of the POEO Act. There is appellate authority that it does. In Hardt v Environment Protection Authority (2007) 156 LGERA 337 at 348-349 [53] (NSWCCA) Giles JA (Grove and Harrison JJ agreeing) held in the context of a strict liability offence under the POEO Act, that:
Subject to R v De Simoni (1981) 147 CLR 383 considerations, it is relevant to sentence for a strict liability offence or an offence with a mental element less than intention to commit the offence to consider with what intention and appreciation of the offence it was committed. Depending on the intention, the offence may be regarded as more serious.
His Honour concluded in Snowy Hydro that the De Simoni principle precluded the Court from considering whether the conduct of the defendant was negligent because of the more serious offence under s 116 of the Act. His Honour reasoned that ([150]-[151]):
150 Section 241(1) of the POEO Act (set out at [135] above) does not list negligence among the matters that it mandates must be taken into consideration. However, findings adverse to an offender charged under s 120 in relation to matters listed in s 241(1) could lead the court in some circumstances to conclude that the conduct of an offender charged under s 120 was negligent. There is artificiality in the court then stopping short of describing the conduct as negligent, having regard to s 116 and the De Simoni principle. Nevertheless, it has come to be accepted that the application of the De Simoni principle means that an offender may be sentenced on the fictitious basis that a circumstance of aggravation does not exist when a trial judge would otherwise find that it did exist. In such a case, the price of the principle is an artificially restricted view of the facts. This was recognised in De Simoni at 389, 392. However, at a practical level, if matters listed in s 241(1) were to be decided adversely to an offender, in some circumstances the degree of aggravation may not be much greater if the offender's conduct was also described as negligent.
151 On the basis of the De Simoni principle, I do not propose to entertain the question whether the conduct of Snowy Hydro was negligent.
Likewise, Craig J in Tea Garden Farms reasoned (at [101]-[102]):
101 The defendant submits that to punish the defendant on the basis that its actions were reckless would contravene the principles enunciated by the High Court in R v De Simoni [1991] HCA 31; (1991) 147 CLR 383. A finding of recklessness would be tantamount to finding an element of aggravation that would warrant conviction for a more serious offence, namely an offence against s 116 of the POEO Act. That approach would offend the dictum of Gibbs CJ (Mason and Murphy JJ agreeing) in De Simoni at 389.
102 I accept the submission of the defendant. While the provisions of s 116 of the POEO Act proscribe, in terms, conduct that "wilfully or negligently causes any substance to leak, spill or otherwise escape", it seems to me that "recklessly" causing a substance to escape is also conduct that is proscribed by the section. I would regard reckless conduct to involve a lower order of fault than "wilful" but to involve an equivalent, if not higher order of fault than "negligent" conduct. As conduct involving fault of the latter kind engages the provisions of s 116, it would make no sense to interpret the section as being inapplicable to conduct that was "reckless"...
A similar finding was made by Sheahan J in Chief Executive, Office of Environment and Heritage, Department of Premier and Cabinet v Powell [2012] NSWLEC 129 at [118] (citing Rae at [42]-[43]) and Queanbeyan City Council (No 3) at [169]-[178]).
In this case, I accept that the operation of the De Simoni principle prevents me from considering whether Orica acted negligently in committing the offence in contravention of s 120 of the Act by reason of the more serious offence of wilfully or negligently causing any substance to leak, spill or otherwise escape contained in s 116 of the Act.
However, the parties disagreed as to whether Orica's state of mind could be taken into account in relation to the breach of licence offence under s 64(1) of the POEOA. Orica submitted that its breach of licence condition under s 64(1) caused a polluting substance to 'escape' to the environment and because s 116(1) of the POEOA also prohibits the escape of pollutants into the environment and is a more serious offence (maximum penalty $5 million) involving the aggravating circumstance of 'wilfully or negligently' causing that escape 'in a manner that harms or is likely to harm the environment', the De Simoni principle applied.
The authorities are equivocal on this question. In Environment Protection Authority v Rethmann Australia Environmental Services Pty Ltd [2003] NSWLEC 351; (2003) 131 LGERA 422, the Court appeared to apply the De Simoni principle to a breach of licence (at [53] per Talbot J).
The EPA submitted that Rethmann was wrongly decided on this point and relied upon several decisions of this Court that have considered, contrary to the approach in Rethmann, the state of mind of the offender in relation to a licence condition breach under s 64(1) of the POEOA (Environment Protection Authority v Transpacific Industries Pty Limited; Environment Protection Authority v Transpacific Refiners Pty Limited [2010] NSWLEC 85 at [98] and Environment Protection Authority v Lithgow City Council [2007] NSWLEC 695 at [35]-[39]).
In none of the decisions above was the issue squarely raised by the parties and thus properly considered by the Court. I agree with the submission by Orica that there is nothing in the text or context of either the POEOA or the CSPA that discloses a legislative intention to abrogate the De Simoni principle from theoretical application to s 64(1) of the POEOA (indeed s 21A(4) appears to embrace it).
However, the principle has no practical application with respect to a breach of s 64(1) of the POEOA because there is no 'more serious offence' of breaching a licence condition than that with which Orica has been charged and has pleaded guilty to. Accordingly, to take into account whether or not Orica breached a condition of its licence negligently is not to infringe the principle. While the De Simoni principle is not narrowly confined to situations where there is another specific offence in aggravated form that is otherwise identical to the offence in question, the offences must nevertheless be of the same general character. Were it otherwise, it would, given the potential breadth of the acts and omissions giving rise to the commission of an offence contrary to ss 115 and 116 of the POEOA, preclude an examination of the state of mind of an offender in most of the strict liability offences created by the POEOA.
Sentencing Trends for Breach of Licence Condition Offences
Again both parties referred the Court to numerous sentencing cases concerning breach of an environmental licence condition. It is both unnecessary and unhelpful to discuss them all, however, relevant decisions of this Court for such an offence by a corporate defendant under the POEOA and other similar regulatory regimes, are summarised below:
(a)in Environment Protection Authority v Forestry Commission of New South Wales [2013] NSWLEC 101, the Court ordered the defendant to pay $7,000 towards an environmental project and ordered the defendant to pay the prosecutor's legal and investigation costs, for, amongst other things, contravening a condition of a threatened species licence contrary to s 133(4) of the NPWA. The condition was breached when a bush fire hazard reduction burn did not proceed as planned. Although the defendant had a criminal history, the environmental harm caused by the breach was low, there was a reasonably low likelihood of the defendant re-offending, the defendant pleaded guilty early, demonstrated remorse and cooperated fully with the EPA;
(b)Environment Protection Authority v Unomedical Pty Limited (No 4) [2011] NSWLEC 131 concerned an offence of contravening s 128(2) of the POEOA, which required an occupier of licensed premises to carry on any activity, or operate any plant, in or on the premises so as to minimise air pollution where no emissions standard or rate was prescribed for the relevant air impurity. The maximum penalty was $1 million. The Court concluded that the offence was of low objective gravity and the harm was not substantial. The mitigating factors, including the defendant's lack of prior convictions, its good character, its assistance to authorities, and its unlikelihood of re-offending, all operated to mitigate the ultimate penalty. However, the defendant had neither pleaded guilty nor expressed remorse and as such a discount of only 15% was applied. The Court imposed a fine of $90,000, made a publication order and imposed a costs order for $140,000 (at [97]-[112] and [157[-[158]);
(c)in Director-General, Department of Environment, Climate Change and Water v Forestry Commission of New South Wales [2011] NSWLEC 102, the Court directed the defendant to pay $5,600 towards an environmental project and ordered costs of $19,000, for a breach of s 175(1)(a) of the NPWA for breaching a condition of a threatened species licence by burning an exclusion zone during bush fire hazard reduction activities. The defendant had environmental antecedents but pleaded guilty early, assisted the prosecutor and expressed contrition. The environmental harm occasioned by the breach was deemed to be "low to moderate";
(d)Environment Protection Authority v Huntsman Corporation Pty Ltd (No 4) [2011] NSWLEC 39 concerned a breach of licence condition contrary to s 64(1) of the Act. The condition required licensed activities to be carried out in a competent manner, which included the handling and storage of substances and waste. The Court concluded that there was no actual environmental harm and the potential for harm was low. The offence was overall of low to moderate objective seriousness. There was an early guilty plea, genuine remorse was expressed and assistance was provided to the prosecutor. With a sentence discount of more than 25%, the defendant was ordered to pay $28,000, directed towards an environmental project, and to pay the prosecutor's costs of $40,000 (at [89], [142] and [149]);
(e)Environment Protection Authority v State of New South Wales (Department of Environment, Climate Change and Water) [2010] NSWLEC 67; (2010) 174 LGERA 19 concerned a breach of licence condition contrary to s 64(1) of the Act for failing to operate equipment in a proper and efficient manner, with respect to the defendant's operation of a sewage treatment plant. A penalty of $80,000 was imposed. The Court ordered that this be directed towards an environmental project in the area of the incident. The defendant was also ordered to pay the prosecutor's costs in the sum of $65,000 (at [98]). There was no actual environmental harm and the likelihood of harm was low. The mitigating factors included that the defendant had pleaded guilty early, expressed remorse and fully cooperated with the prosecution;
(f)in Transpacific Industries, the defendant pleaded guilty to two offences against s 64(1) and one offence against s 66(2) of the POEOA. The maximum penalty was $1 million for each offence. For the two offences against s 64(1), the defendant was fined $6,500 and $9,750. This was in addition to being fined $14,000 for the offence against s 66(2) of the Act. The defendant was also ordered to pay the prosecutor's costs of the proceedings in the sum of $40,000 and a publication order was made. The offences against s 64(1) concerned breaches of a licence condition relating to the emission of certain gaseous substances into the atmosphere on two occasions. Those penalties were imposed in circumstances where the potential environmental harm was deemed to be low. Moreover the defendant pleaded guilty early, had no prior convictions, was of good character, expressed remorse and cooperated with the authorities, leading to a 35% sentencing discount for the two s 64(1) offences and 30% for the s 66(2) offence (at [110]-[122] and [146]-[147]);
(g)Sheahan J fined the defendant a total of $80,000 for five offences concerning the emission of excessive air impurities in the M5 East Tunnel in Environment Protection Authority v Bowport All Roads Transport Pty Limited (No 2) [2009] NSWLEC 180. The environmental harm was significant. Deterrence was a significant element of the penalty imposed. The defendant had prior infringement notices for emission offences. Factors in mitigation included the defendant's expression of remorse and involvement in "relevant programmes" run by the RTA and the industry. The defendant was also ordered to pay the EPA's costs of $48,000 and a publication order was made;
(h)in Environment Protection Authority v Causmag Ore Company Pty Limited [2009] NSWLEC 164, the breach of licence condition concerned a failure to maintain a plant in a proper and efficient condition, contrary to s 64(1) of the Act, by the defendant failing to repair or replace filter bags and fabric filters that had become damaged and deteriorated, thus causing dust emissions. In addition to a publication order, the Court fined the defendant $20,000 in circumstances where the defendant entered an early plea of guilty, expressed contrition and remorse, cooperated fully with the prosecutor, was of good corporate character, was found unlikely to re-offend, had prior convictions similar to the offence charged and was suffering considerable financial difficulties. The defendant was also ordered to pay the prosecutor's legal costs of $26,500 and pay a total of $45,000 to a rehabilitation project (at [60]-[65] and [83]);
(i)Environment Protection Authority v Werris Creek Coal Pty Ltd; Environment Protection Authority v Holley [2009] NSWLEC 124 concerned a breach of an environment protection licence held by Werris Creek Coal Pty Ltd ("Werris Creek") contrary to s 64(1) of the POEOA. Mr Holley was the director of Werris Creek. The breach occurred because the concentration of total suspended solids at a monitoring point (being a dam) on the mine site was higher than required by the licence. Werris Creek was fined $49,000 with the penalty directed to an environmental rehabilitation project. Costs were ordered as was the publication of the offence. The environmental harm was "minor", the defendant had no prior criminal record, there was no likelihood of re-offending, the defendant pleaded guilty early and assisted the prosecutor and expressed remorse for its actions;
(j)in Environment Protection Authority v Delta Electricity [2009] NSWLEC 11, the defendant was convicted of an offence against s 64(1) for failing to maintain the premises in a condition so as to minimise or prevent the emission of dust from the premises. The potential environmental harm was found to be not substantial. The defendant's early guilty plea, remorse, lack of prior convictions, cooperation with authorities and unlikelihood of re-offending operated to mitigate the penalty imposed. The defendant was fined the sum of $45,000 and ordered to pay the prosecutor's costs of $35,000 (at [49]-[53] and [60]-[62]);
(k)Environment Protection Authority v Forgacs Engineering Pty Limited [2009] NSWLEC 64 concerned a failure by the defendant to prevent the emission of particles from a ship repair business in breach of its licence conditions. There was short term actual harm due to amenity impacts and potential ecological harm. The defendant pleaded guilty at the earliest opportunity and a number of other mitigating factors were present. The defendant was ordered to pay $45,000 to Newcastle City Council for an environmental improvement project. A publication order and costs order for the sum of $20,883 were also imposed (at [72]);
(l)Environment Protection Authority v Coastal Recycled Cooking Oils Pty Limited [2008] NSWLEC 242 concerned a breach of a licence condition (failure to maintain) contrary to s 64(1) occasioned by the failure to close a lid on a storage tank releasing offensive odours from the tank. The release was for a limited duration and the environmental harm was found to be minimal. The defendant had no prior convictions and there were other mitigating factors present. The defendant was ordered to pay $18,000 towards a weed management project and to pay the prosecutor's costs of $13,000;
(m)in Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2008] NSWLEC 194, the defendant, contrary to s 64(1) of the Act, breached a licence condition to operate a plant and equipment in a proper and efficient manner, causing odours. There was no evidence of actual harm. The defendant received a substantial discount of 35% for mitigating factors which included an early guilty plea, cooperation with the prosecutor and demonstrated remorse. The objective circumstances such as the unforeseeable and unusual nature of the failure were also taken into account. The monetary penalty imposed was $78,000 and the defendant was ordered to pay the prosecutor's costs of approximately $48,000 (at [70]-[73]);
(n)Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2006] NSWLEC 335 concerned a breach of s 124(b) of the POEOA, which creates an offence where the operator of a plant and equipment fails to operate it in a proper and efficient manner causing air pollution. The defendant company pleaded guilty and was fined $77,000 (taking into account a 30% discount for mitigating factors). The maximum penalty at the time was $250,000. The defendant was also ordered to pay the prosecutor's costs of $81,311. The offence involved the spillage of a waste by-product that had a rotten egg odour and in turn caused black smoke to be emitted, inducing nausea, headaches and diarrhoea. The matter was overall of serious objective gravity albeit of short duration. The defendant had several prior convictions for environmental offences. However, the Court took into account mitigating factors including an early guilty plea, the defendant's quick response to minimise the harm caused, remorse, and cooperation with authorities (at [87] and [89]);
(o)in Environment Protection Authority v Orica Australia Pty Ltd [2005] NSWLEC 621, Orica was convicted for a breach of licence condition contrary to s 64(1) of the POEOA. The maximum penalty at the time was $250,000. The condition imposed a discharge limit and the breach involved exceeding this limit by discharging wastewater containing 683kg of nitric acid into the Hunter River. There was no evidence of actual harm and the Court accepted that any potential harm would have been short term and localised. Mitigating factors included the defendant's guilty plea at the first opportunity, expression of remorse, cooperation with the prosecutor and good corporate character. This resulted in a total discount on the penalty of 30%. The defendant was fined $10,500, ordered to pay the prosecutor's costs and a publication order was made; and
(p)finally, in Environment Protection Authority v Bluescope Steel (AIS), the defendant, contrary to s 64(1) of the Act, breached a licence condition to maintain a plant and equipment in a proper and efficient condition when it failed to maintain a circuit breaker and back up batteries in a proper condition, causing the emission of waste gas. The maximum penalty at that time for each offence was $250,000. There was no actual harm but the potential to cause harm. After applying a discount for mitigating factors that included an early guilty plea, expressions of remorse and cooperation with the prosecutor, the defendant was fined $70,000 and ordered to pay the prosecutor's costs (at [68]-[70]).
The Totality Principle
The totality principle is a relevant consideration when determining an aggregate penalty in sentencing for multiple offences. In R v Holder; R v Johnston [1983] 3 NSWLR 245, Street CJ explained the application and policy underpinnings of the totality principle as follows (at 260B-E):
The principle of totality is a convenient phrase, descriptive of the significant practical consideration confronting a sentencing judge when sentencing for two or more offences. Not infrequently a straightforward arithmetical addition of sentences appropriate for each individual offence considered separately will arrive at an ultimate aggregate that exceeds what is called for in the whole of the circumstances. In such a situation the sentencing judge will evaluate, in a broad sense, the overall criminality involved in all of the offences and, having done so, will determine what, if any, downward adjustment is necessary, whether by telescoping or otherwise, in the aggregate sentences in order to achieve an appropriate relativity between the totality of the criminality and the totality of the sentences.
The High Court in Mill v The Queen [1988] HCA 70; (1988) 166 CLR 59 relied on the following passage from DA Thomas, Principles of Sentencing (2nd ed) (1979) at pp 56-57 (at 62 to 63 of Mill):
"The effect of the totality principle is to require a sentencer who has passed a series of sentences, each properly calculated in relation to the offence for which it is imposed and each properly made consecutive in accordance with the principles governing consecutive sentences, to review the aggregate sentence and consider whether the aggregate is 'just and appropriate'. The principle has been stated many times in various forms: 'when a number of offences are being dealt with and specific punishments in respect of them are being totted up to make a total, it is always necessary for the court to take a last look at the total just to see whether it looks wrong('); 'when ... cases of multiplicity of offences come before the court, the court must not content itself by doing the arithmetic and passing the sentence which the arithmetic produces. It must look at the totality of the criminal behaviour and ask itself what is the appropriate sentence for all the offences'."
This was echoed by the High Court in Johnson v The Queen [2004] HCA 15; (2004) 78 ALJR 616 (at [18]) and the Court of Criminal Appeal in R v MMK [2006] NSWCCA 272; (2006) 164 A Crim R 481 (at [11] and [13]). The task of the Court is to ensure that the overall sentence is neither too harsh nor too lenient.
The principle will most often be invoked when an offender is being sentenced at the one time for multiple offences arising out of common or related criminal acts. However, the principle may still be applied when sentences are imposed at different times and even by different judges (R v MAK; R v MSK [2006] NSWCCA 381; (2006) 167 A Crim R 159 at [99] and Mill at 64).
Care must nevertheless be taken "to ensure that any adjustment of individual sentences does not cause the aggregate sentence not to reflect the total criminality of the offender's conduct or the sentence for any individual offence to become disproportionate to the objective gravity of that offence" (Plath at [222]). The identified risk is that, if "sentences are reduced substantially, offenders may view that they can escape punishment for successive deliberate discrete offences" (Gittany at [199] and [201]; R v Harris [2007] NSWCCA 130; (2007) 171 A Crim R 267 at [46] and R v Wheeler [2000] NSWCCA 34 at [36]-[37]). That is to say, the application of the principle must not cause public confidence in the administration of justice to be undermined by any perception that "what is in effect being offered is some kind of discount for multiple offending" (R v MAK; R v MSK at [18]).
As Sully J opined in Wheeler (at [36]-[37]):
36 The countervailing factor, no less legitimate, is the need to ensure public confidence in the administration of criminal justice; and, in particular, to ensure that there does not emerge in the community at large a perception that there is not all that much to choose between the person who commits one or two offences, and the person who commits six or seven offences, for the reason that somehow or other they all manage to finish up with effective sentences between or among which there is hardly anything in practical terms to choose.
37 It needs to be clearly understood by all concerned that a person who commits a deliberate series of discrete offences, - and the present applicant's case, is a good example of the kind, - he must not be left with the idea that by intoning references to the principle of totality as though it were some magic mantra, he can escape effective punishment for the offences which follow successively one upon another throughout the whole course of a studied and deliberate course of criminal behaviour.
The Application of the Totality Principle
Orica submitted that the totality principle was applicable and that it operated at two levels in the circumstances of these proceedings. First, the principle applied in order to ensure that any sentence should reflect the totality of Orica's criminality given that the Court was sentencing for "multiplicities of offending", in order to avoid a "crushing effect". Second, the principle applied at a narrower level, with the result that the overlap or commonality of underlying facts and circumstances, or conduct, must be considered and accommodated in the overall sentence.
Therefore, Orica submitted that the totality principle applied not only within each pollution incident where multiple charges were laid, but also across all seven incidents (comprising nine offences), because all offences arose out of Orica's operation of the same site, namely, the KI premises, and under the same licence.
The EPA submitted that because the seven separate incidents occurred on different dates (including one incident at the Botany premises) and involved different conduct giving rise to different charges, the totality principle did not apply to reduce the aggregate total sentence of all nine charges across the seven separate matters. The EPA noted that it had been a matter of procedural efficiency and cost minimisation that the seven matters were heard together.
With respect to the Nitric Acid Air Lift Incident the EPA submitted that the two charges did not share common elements to enliven an application of the totality principle.
The EPA relied on the decision of the Court in Moolarben (No 2) (the facts of which are discussed above) in support of its position. In that case, the defendant had argued that the penalty imposed in the earlier decision in Moolarben (also see above) should be taken into account for the purpose of applying the totality principle. The Court refused to do so, Craig J reasoning that (at [131]):
131 While I do not suggest that the defendant in the present case has indulged in a deliberate course of criminal behaviour, the observations contained in the cases that I have cited in relation to the totality principle seem to me, in the present circumstances, to be apposite. The offence in the present case was committed six months after the first offence. While each involved an offence against s 120 of the POEO Act, each was a discrete offence arising from different causes. While the cause of the first offence is one of the three causes attributed to the present offence, that circumstance, for reasons earlier explained, does not seem to me to involve a continuity of conduct of the kind ordinarily considered when applying the principle of totality to multiple offences. Each involved different and separate episodes of conduct breaching s 120 (cf R v Finnie [2002] NSWCCA 533 at [57]-[58]).
In Connell v Santos, the defendant pleaded guilty to four charges of failing to comply with the conditions of a petroleum title under s 136A(1) of the Petroleum (Onshore) Act 1991. The first charge was for failing to report an incident causing or threatening material harm to the environment. The second charge was for failing to lodge an accurate environmental management report with respect to the salinity levels of water discharged into a creek. The third and fourth charges were similar to the second charge. The defendant submitted that the three charges involved an essentially identical course of conduct repeated on three, albeit separate, occasions in very similar factual circumstances that therefore attracted the operation of the totality principle. The Chief Judge, Preston J, disagreed. He held that the three offences could not be regarded as involving a continuous "(as opposed to identical)" period of conduct. This was because there were three separate obligations to report and the facts in each reporting period were different. Thus each of the three offences were temporally separate and discrete offences (at [153]). His Honour also rejected the application of the principle with respect to the first charge on the basis that it involved a different factual substratum to the second, third and fourth charges and was distinct from those charges in terms of criminality. The defendant had submitted that the totality principle should apply because it arose under the same petroleum title and in relation to the operation of the same water treatment plant (at [154]).
Similarly, Lani concerned the imposition of an appropriate sentence for offences committed contrary to the NPWA. Four summonses were before the Court, two of which were heard concurrently, followed by the remaining two, also heard concurrently (at [2]). In separate proceedings to determine the penalty to be imposed with respect to the first two charges, the first defendant, Lampo Pty Ltd ("Lampo"), pleaded guilty to an offence against s 118D(1) of the NPWA in that it caused damage to habitat, not being critical habitat, of a threatened species (the squirrel glider), knowing that the land concerned was habitat of that kind. The second defendant, Mr Rinaldo Lani, likewise pleaded guilty to an offence against s 118D(1) by reason of s 175B(1) in his capacity as a director of Lampo. Each of those two offences therefore arose from the same facts (at [3]-[4]). With respect to the proceedings on the remaining two matters, the first defendant, Bombala Investments Pty Ltd ("Bombala") pleaded guilty to an offence against s 118D(1) of the NPWA and the second defendant, Mr Lani, as a director of Bombala, likewise pleaded guilty under that provision by reason of s 175B(1) (at [71]). The defendants submitted that the totality principle should apply across both sets of proceedings with respect to all four charges. The Court did not agree. Although the latter two charges also arose pursuant to ss 118D(1) and 175B(1) of the NPWA and also related to damage caused to the habitat of the squirrel glider, the Court emphasised that the latter two offences occurred on a different property and at a different time and were therefore "not so related as to involve the totality principle" (at [62]-[63]).
Likewise, Gittany concerned three separate offences against s 125(1) of the Environmental Planning and Assessment Act 1979 for unlawful development. The three offences occurred on 9 August 2004, and involved the removal of trees and indigenous bushland. One of the offences involved the breach of a condition of a development consent by failing to retain, protect and enhance the patches of indigenous bushland. The other two offences involved the breach of a condition of development consent by removing two Eucalyptus gummifera trees. The Court determined that a fine of $10,000 was appropriate for each offence involving the removal of trees and a fine of $45,000 for the offence of failing to retain and protect indigenous bushland. Cumulatively, however, the aggregate sentence of $65,000 would exceed marginally what was appropriate in the circumstances, having regard to the fact that the two trees removed were in close proximity, and the contemporaneous nature of the conduct. A downward adjustment of the penalties for these two offences to $7,500 each was considered appropriate. However, the offence involving the removal of the indigenous bushland was held to involve different criminal conduct to that which resulted in the removal of trees offences. Therefore, the Court held the criminality involved in the two sets of offences should not be conflated and no further downward adjustment should be made to the amount of the fine for the third offence (at [2]-[3] and [196]-[206]).
So too in Genkem Pty Ltd v Environment Protection Authority (1994) 35 NSWLR 33 (which was prosecuted under the predecessor statutory scheme to the POEOA), the appellant operated a chemical plant at Tomago and was charged with twelve environmental offences committed between 18 and 29 May 1990 at that site. The appellant pleaded guilty to six of the charges, and the respondent did not press three. Of the three charges that remained, the appellant was convicted of two and acquitted of one. The appeal was against those two convictions and against the severity of the penalties that were imposed in respect of all eight offences (at 34F-35A). There were a number of grounds of appeal, one of which involved the trial judge's application of the totality principle. The trial judge had concluded that substantial penalties were called for in respect of three offences, namely those relating to a blocked drain in the lead plant, the pollution of waters by wastewater discharge from the lead plant, and the improper storage of drums from which sodium dichromate had been leaking. Significantly, his Honour rejected a submission that the offences were all "related" for the purpose of the application of the totality principle. The Court of Criminal appeal agreed with Bignold J (at 44F-45D and 50A per Gleeson CJ, Dunford J agreeing).
The totality principle has, however, been applied in a number of cases involving environmental offences that have been committed on different dates in order to adjust downwards the ultimate penalty imposed. But what is notable about these decisions is that on each occasion the offence had the same factual basis so that the contravening conduct or failure was the same.
In Pipeline Drillers, as noted above, the defendant was fined $18,000 for a first pollution of waters offence involving the discharge of bentonite slurry into a wetland. Applying the totality principle, a reduced fine of $12,000 was imposed for a second offence involving the same conduct that had occurred four days later (at [113]-[116]).
Transpacific Industries concerned convictions for two offences against s 64(1) of the POEOA. The licence had transferred from the one defendant to another in the intervening period between the commission of the offences. Applying the totality principle, the defendants were fined $9,750 and $6,500 respectively (this was in addition to being fined $14,000 for a contravention of s 66(2) of the Act). The offences against s 64(1) concerned breaches of a licence emission limit. On each occasion the breach was the same, namely, volatile organic compounds containing the toxic air pollutant benzene were emitted from the defendant's reprocessing facility at levels in excess of the licence limit (at [14]-[19] and [146]-[147]).
And in Environment Protection Authority v Burrangong Meat Processors Pty Ltd [2003] NSWLEC 102, the defendant, who operated an abattoir, was charged with four offences. The first offence involved a breach of s 64(1) of the POEOA (an excess of effluent being pumped through the system that produced offensive odours) because one of the conditions of the company's environmental protection licence was contravened insofar as the defendant failed to operate its effluent treatment system in a proper and efficient manner. The other three offences involved contraventions of s 129(1) of the Act insofar as the defendant was the occupier of premises at which a licensed scheduled activity was carried out and which caused an offensive odour. All four incidents occurred between 11 October and 22 November 2001 and were premised on the emission of odours due to the defendant's effluent treatment system being overloaded. The maximum penalty at that time for each offence was $250,000. The Court considered that a fine of $50,000 was warranted for each offence. However, applying the totality principle, Pain J considered that a further 'substantial' downwards adjustment to the total amount imposed was warranted by virtue of the totality principle, resulting in a penalty of $32,500 for the first offence and penalties of $16,250, $2,000 and $8,125 for the remaining three offences, resulting in a total penalty of $58,875 (at [53] and [58]-[59]). Although two different provisions of the POEOA were engaged, the conduct and resultant emissions arose from the same offending conduct and all four incidents occurred within a relatively short timeframe between 11 October and 22 November 2001.
Finally, Camilleri's Stock Feeds involved an appeal against sentence for three offences against the former Clean Air Act 1961. The offences involved the emission of similar offensive odours on three separate occasions between January and March 1991. Having regard to the "close time frame of the three offences" and because remedying the defect that was causing the odours would have taken longer than the time that had elapsed between the first and third offence, Kirby P applied the totality principle and reduced the penalties imposed by the trial judge (at 703-704).
I do not accept the EPA's submission that the totality principle has no application to the two offences the subject of these proceedings. The two offences arose out of the same factual substratum and contain common elements. The two offences arose from essentially the same failing with respect to the proper maintenance of the Air Lift pipe and weld, thereby resulting in nitric acid escaping to the environment. In other words, the two offences shared the same conduct. A form of double punishment would result if the overall sentence did not reflect these shared circumstances.
The High Court described this aspect of the totality principle in Pearce v The Queen [1998] HCA 57; (1998) 194 CLR 610 as follows (at [40]):
To the extent to which two offences of which an offender stands convicted contain common elements, it would be wrong to punish that offender twice for the commission of the elements that are common. No doubt that general principle must yield to any contrary legislative intention, but the punishment to be exacted should reflect what an offender has done; it should not be affected by the way in which the boundaries of particular offences are drawn. Often those boundaries will be drawn in a way that means that offences overlap. To punish an offender twice if conduct falls in that area of overlap would be to punish offenders according to the accidents of legislative history, rather than according to their just deserts.
Accordingly, the Court must justly and appropriately impose a sentence that reflects the overall total criminality of the conduct that resulted in the Nitric Acid Air Lift Incident (Lee v Office of Environment and Heritage [2012] NSWLEC 9 at [67] and Gittany at [196] and [199]-[200]).
However, having regard to the principles and authorities referred to above, I do not accept the submission that the totality principle applies across the seven pollution incidents so as to require a further downwards adjustment of the penalty for the Nitric Acid Air Lift Incident by reference to the penalties imposed by the Court with respect to the other six incidents which were prosecuted consecutively with the proceedings for the Nitric Acid Air Lift Incident.
The seven incidents are discrete incidents that occurred on separate occasions over a period of more than one year (19 October 2010, 22 March 2011, 17 June 2011, 8 August 2011, 27 September 2011, 9 November 2011, 7 December 2011). They do not, in my opinion, reflect a continuing course of conduct on the part of Orica. Moreover, the incidents bear no commonality of fact. Each incident involved different species of plant or equipment failures and the release of different chemical pollutants resulting from those failures. The fact that six of the seven incidents occurred at the same site (the KI premises) is insufficient to impart the requisite commonality so as to engage the application of the totality principle.
Therefore, each of the seven incidents must be considered separately for sentencing purposes and no additional global downward adjustment by reason of the application of the totality principle is appropriate.
Conclusion on the Appropriate Penalty for the Nitric Acid Air Lift Incident
Synthesising the objective circumstances of the two offences as mitigated by the subjective circumstances of Orica, and having regard to the existing patterns of sentencing, I consider that the appropriate penalty for each offence is a monetary penalty.
The appropriate penalty for the water pollution offence committed contrary to s 120(1) of the POEOA is $100,000, which should be discounted by 30% taking into account the mitigating factors discussed above, to $70,000.
The appropriate penalty for the breach of licence condition offence contrary to s 64(1) of the POEOA is $60,000 discounted by 30% to $42,000, taking into account the mitigating factors discussed above.
Applying the totality principle so that the total monetary penalty reflects Orica's overall criminality with respect to the Nitric Acid Air Lift Incident, I consider it appropriate to reduce the penalty imposed for the breach of licence offence by 25% to $31,500. This produces a total monetary penalty for both offences of $101,500.
Publication Order
The parties agreed that it was also appropriate that the orders include a publication order pursuant to s 250(1)(a) of the POEOA. The form and manner of publication of the proposed notice was provided to the Court by consent.
In Waste Recycling and Processing Corp, Preston J noted that the Court had made publication orders in a number of cases and described their utility as follows (at [242], citations omitted):
Publicising sentences for environmental crime improves the effectiveness of sentences as a deterrent. This is particularly applicable to corporate offenders, who are susceptible to criminal stigma.
Because a publication order is made in addition to, rather than instead of, any penalty (Environment Protection Authority v Incitec Limited [2003] NSWLEC 381; (2003) 131 LGERA 176 at [58]-[59]) it ought not be considered in determining what financial penalty should be imposed.
In the circumstances of this case, I find that the making of a publication order in the terms of the notice agreed to by the parties is appropriate. It will be apparent that the terms of the publication order refer to all seven pollution incidents described above (at [2]).
Environmental Order
The parties agreed to direct the monetary penalty imposed with respect to the commission of the two offences towards a specified environmental restoration and enhancement project pursuant to s 250(1)(e) of the POEOA, and to pay to the prosecutor the costs associated with monitoring and enforcing the carrying out of this project.
In the circumstances of the present case, I consider such an order to be appropriate. A fulsome description of the specified environmental project is annexed to this judgment at "A".
Costs
Additionally, and as agreed, Orica will be ordered to pay the prosecutor's investigation costs in the sum of $960.91 and its legal costs as agreed or assessed.
Orders
For the reasons provided above, the Court orders that:
50918 of 2011
(1)the charge against the defendant is dismissed.
50919 of 2011
(2)the defendant is convicted of the offence as charged;
(3)pursuant to s 250(1)(e) of the Protection of the Environment Operations Act 1997 the defendant is directed to pay to the NSW Office of Environment and Heritage, within 28 days of this order, the amount of $70,000, as a contribution to the Hunter River Health Monitoring Program to determine the cumulative impacts of heavy industry on the health of the Hunter River. A description of the project is annexed at "A";
50920 of 2011
(4)the defendant is convicted of the offence as charged;
(5)pursuant to s 250(1)(e) of the Protection of the Environment Operations Act 1997 the defendant is directed to pay to the NSW Office of Environment and Heritage, within 28 days of this order, the amount of $31,500, as a contribution to the Hunter River Health Monitoring Program to determine the cumulative impacts of heavy industry on the health of the Hunter River. A description of the project is annexed at "A";
50919 and 50920 of 2011
(6)all future references by the defendant to its funding of the Hunter River Health Monitoring Program shall be accompanied by the following passage (pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997):
"Orica Australia Pty Limited's contribution to the funding of the Hunter River Health Monitoring Program is part of a penalty imposed on it by the Land and Environment Court of NSW after it was convicted of offences against ss 64(1) (breach of licence condition) and 120(1) (water pollution) of the Protection of the Environment Operations Act 1997 (NSW)."
(7)pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997, the defendant, at its own expense, is to place a notice in the form of annexure "B" in the following publications:
(a)the Australian Financial Review within the first 21 pages at a minimum size of 20cm x 11cm, within 30 days of this order;
(b)the Sydney Morning Herald within the first 21 pages of the General News Section at a minimum size of 18.6cm x 12.9cm, within 30 days of this order;
(c)the Newcastle Herald within the first four pages at a minimum size of 18.6cm x 12.9cm, within 30 days of this order;
(d)the Southern Courier within the first five pages at a minimum size of 18.6cm x 12.9cm, within 30 days of this order; and
(e)the Journal of Chemical Engineering and Process Technology at a minimum size of 18cm x 12cm, within 60 days of this order;
(8)the defendant is to provide to the prosecutor a complete copy of the page of the publications in which the notice appears within 14 days of the date of publication of the notices set out in order 7;
(9)the defendant is to pay the prosecutor's legal costs as agreed or assessed;
(10)pursuant to s 248(1) of the Protection of the Environment Operations Act 1997, the defendant is to pay the prosecutor's investigation costs in the sum of $960.91;
(11)the exhibits are to be returned; and
(12)liberty to restore on seven days' notice for the purpose of amending the form of any of the orders made above.
*****
Annexure A
Annexure B
Amendments
29 Jul 2014 correct version of Annexure B attached Paragraphs: annexure
Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident) [2014] NSWLEC 103
Environment Protection Authority v Orica Australia Pty Ltd (the Botany Mercury Incident) [2014] NSWLEC 110
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