Connell v Santos NSW Pty Limited

Land and Environment Court (NSW)|2013-12-18|Before: Preston CJ

381; (2006) 167 A Crim R 159 R v McNaughton [2006] NSWCCA 242; (2006) 66 NSWLR 566 R v Olbrich [1999] HCA 54; (1999) 199 CLR 270 R v Rushby [1977] 1 NSWLR 594 R v Shankley [2003] NSWCCA 253 R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383 R v Wickham [2004] NSWCCA 193 Raad v R [2011] NSWCCA 138; (2011) 220 A Crim R 471 Veen v R (No 2) [1988] HCA 14; (1988) 164 CLR 465 Texts Cited: A Ashworth, Sentencing and Criminal Justice (4th ed, Cambridge University Press, 2005) S J Odgers SC, Sentence (Longueville Books, 2012) Category: Principal judgment Parties: Rachel Connell (Prosecutor) Santos NSW Pty Ltd (Defendant) Representation: Mr S J Rushton SC with Ms S G Callan (Prosecutor) Mr D Jordan SC with Ms K J Edwards (Defendant) Crown Solicitor's Office (Prosecutor) Ashurst Australia (Defendant) File Number(s): 50435-50438 of 2013 Publication restriction: No

Defendant pleads guilty to offences against onshore petroleum legislation 1The defendant, Santos NSW Pty Limited ('Santos NSW'), has pleaded guilty to four charges of committing offences under s 136A(1) of the Petroleum (Onshore) Act 1991 ('the Act') in that it, without reasonable excuse, failed to comply with conditions of a petroleum title which it held over an area of land (comprising 265km²) located to the south of Narrabri in the local government area of Narrabri Shire Council in New South Wales. 2The first charge to which Santos NSW has pleaded guilty is that, on or about 25 June 2011, it committed an offence under s 136A(1) of the Act by failing, without reasonable excuse, to comply with a condition of its petroleum title which required it to report any incidents causing or threatening material harm to the environment. The nature of the incident that Santos NSW failed to report is outlined later. 3The second charge to which Santos NSW has pleaded guilty is that, in or about June 2010, it committed an offence under s 136A(1) of the Act by failing, without reasonable excuse, to comply with a condition of its petroleum title in that it lodged an environmental management report ('EMR') with the Director-General of the Department of Primary Industries ('the Department') for the period November 2009 to May 2010 that did not accurately report against compliance with a document known as the Petroleum Operations Plan ('POP'). 4The third and fourth charges were similar in nature to the second charge. In respect of the third charge, Santos NSW pleaded guilty to the charge that, in or about April 2011, it committed an offence under s 136A(1) of the Act by failing, without reasonable excuse, to comply with a condition of its petroleum title in that it lodged an EMR with the Director-General of the Department for the period October 2010 to March 2011 that did not accurately report against compliance with the POP. In respect of the fourth charge, Santos NSW pleaded guilty to the charge that, on or about 8 September 2011, it committed an offence under s 136A(1) of the Act by failing, without reasonable excuse, to comply with a condition of its petroleum title in that it lodged an EMR with the Director-General of the Department for the period April 2011 to August 2011 that did not accurately report against compliance with the POP. 5The Court's task is to sentence the defendant for these offences.

Factual background to the offences 6The following facts are derived from the Amended Agreed Statement of Facts dated and filed by the parties on 1 November 2013 (Exhibit A), and the Agreed Bundle of Documents filed by the parties on 15 October 2013 (Exhibit B). The defendant is granted a petroleum assessment lease subject to conditions 7From 2004, a company known as Eastern Star Gas Limited ('ESG') - now known as Santos NSW - undertook drilling as part of its exploration for coal seam gas in area of land located south of Narrabri, NSW. The defendant was permitted to undertake such drilling and exploration activities under Petroleum Exploration Licence 238 ('PEL238') and, from 30 October 2007, under Petroleum Assessment Lease 2 ('PAL2') granted by the Minister for Mineral Resources (by the Minister's delegate) under s 9 of the Act. 8The drilling process undertaken by the defendant produced water with elevated concentrations of salt (referred to as "formation water"). The defendant had permission under PEL238 and PAL2 to convey that formation water to a reverse osmosis plant known as the Bibblewindi Water Treatment Plant ('the water treatment plant') for treatment and then to discharge the treated water into a nearby waterway, Bohena Creek. 9The grant of PAL2 under s 9 of the Act was subject to conditions imposed pursuant to s 23(1) of the Act. The conditions formed sch 2 to PAL2. On a general level, these conditions were said to be required in order to: ensure optimal petroleum resource recovery; prevent, minimise and/or offset adverse environmental impacts; provide for ongoing environmental management of the project; and ensure that areas disturbed by petroleum operations and exploration activities are appropriately rehabilitated. 10The conditions of immediate relevance to these proceedings are conditions 3 and 4. 11Condition 3 provides: (a) The Lease Holder must lodge Environmental Management Reports (EMR) with the Director-General annually or at dates otherwise specified by the Director-General. (b) The EMR must: (i) report against compliance with the POP [condition 2 requires activities to be carried out in accordance with the POP]; (ii) report on progress in respect of rehabilitation completion criteria; (iii) report on the extent of compliance with regulatory requirements; and (iv) have regard to any relevant guidelines adopted by the Director-General. (c) Additional environmental reports may be required on specific surface disturbing operations or environmental incidents from time to time as directed in writing by the Director-General and must be lodged as instructed. 12The parties agreed that the Director-General had specified that the lodging of EMRs was to occur biannually. 13Condition 4 provides: The Lease Holder must, in accordance with Departmental guidelines (if any), report any incidents causing or threatening material harm to the environment. For the purposes of this condition, harm to the environment is material if: (i) it involves actual or potential harm to the health or safety of human beings or to ecosystems that is not trivial, or (ii) it results in actual or potential loss or property damage of an amount, or amounts in aggregate, exceeding $10,000. Loss includes the reasonable costs and expenses that would be incurred in taking all reasonable and practicable measures to prevent, mitigate or make good harm to the environment. 14Section 136A(1) of the Act provides: The holder of any petroleum title must not, without reasonable excuse, contravene or fail to comply with any conditions of the title. 15It is in relation to certain events and incidents at the water treatment plant that the defendant is charged for breaching conditions 3 and 4 of PAL2 contrary to s 136A(1) of the Act. Before considering those events and incidents, it is necessary to make some brief observations, first, about the history and nature of the water treatment plant and the POP provisions relating to it and, secondly, the change in ownership of the defendant from ESG to Santos NSW. The history and nature of the water treatment plant and the POP provisions relating to it 16On 11 April 2007, the defendant was granted, as titleholder of PEL238, approval to treat produced formation water from nine appraisal wells by reverse osmosis and discharge the treated water to Bohena Creek, that is, by operation of the water treatment plant. On 29 October 2008, the Department gave approval to the defendant, as titleholder of PAL2, for the management of coal seam gas production water at the water treatment plant by treatment and discharge, in respect of the nine appraisal wells and six production wells. 17In January 2009, the defendant prepared a POP pursuant to condition 2 of PAL2, which, in section 4 (entitled "Water Management"): (a)described the processing of water at the water treatment plant; and (b)in relation to "permeate" (clean) water which would be discharged into Bohena Creek, stated that the "indicative permeate quality" had been modelled at around 250 mg/L of TDS and that estimated permeate qualities of less than 250 mg/L were expected. 18A proposal to expand the water treatment plant, as contained in the POP dated January 2009, was approved by the Director-General of the Department on 2 July 2009. Twelve month extensions of the approval to treat formation water by reverse osmosis and to dispose of treated water into Bohena Creek were granted on two separate occasions by the Department in October 2010 and October 2011. 19The water treatment plant was in operation from September 2009 until December 2011. It was at all material times located in the Bibblewindi State Forest, within the area covered by PAL2. 20The primary function of the water treatment plant was to treat formation water to reduce salinity levels. This was achieved by reverse osmosis, which is a pressure driven desalination process that uses a membrane to separate salt from water. In essence, the treatment of formation water at the water treatment plant occurred in three main stages. 21In the first stage, formation water was pumped from gas drilling wells along "water gathering lines" into one of three ponds at the water treatment plant, known as "Pond 1", "Pond 2" and "Pond 3". 22In the second stage, the water contained in one of these three ponds was pumped into tanks, and then through units known as "Fixed Plant 1", "Fixed Plant 2" and "Pall Rental Unit", which processed the water to remove total dissolved solids by reverse osmosis. 23Finally, in the third stage, two water streams were created - one with low levels of total dissolved solids (i.e. "permeate") which was pumped into Bohena Creek, the other - being brine with much higher concentrations of total dissolved solids - was pumped back into one of the ponds - usually Pond 3. Change in ownership of defendant 24Prior to 17 November 2011, the defendant was a company listed on the Australian Stock Exchange as ESG. The water treatment plant and the petroleum activities under PEL238 and PAL2 were undertaken by the defendant. Santos Limited held, during this period, a non-controlling 19.9% shareholding in ESG and a non-operating 35% beneficial interest in the petroleum tenements relevant to the water treatment plant. Santos Limited and its related bodies corporate did not have any representation on the board or management of ESG. Santos Limited did not operate the water treatment plant or undertake petroleum activities under PEL238 or PAL2. 25On 17 November 2011, Santos Limited purchased all shares in ESG and, as a consequence, ESG became a wholly owned subsidiary of Santos Limited. The board was replaced with a new board of directors and the 50 employees of ESG became employees of Santos Limited. 26The defendant's operations after 17 November 2011 became subject to the management and control of staff employed by Santos Limited and subject to the operating procedures and environmental, health and safety systems of Santos, although practical implementation of all these procedures and systems to ESG's operations was not immediate. These systems were progressively introduced following the takeover of ESG by Santos Limited on 17 November 2011. 27ESG was delisted from the Australian Stock Exchange on 21 November 2011, and the name of ESG was changed to Santos NSW on 30 November 2012. 28Following acquisition of ESG, Santos Limited and the new management team of ESG (as appointed by Santos Limited) undertook a detailed review of ESG's former operations, including the water treatment plant. In conducting this review, Santos Limited and the new management team became aware of a number of past practices and incidents of ESG that should have been reported to the Department. This led, in January and February 2012, to reports to the Department of a number of spill events and incidents at the water treatment plant. 29I will now address those spill events and incidents that form the basis of the charges to which Santos NSW has pleaded guilty in these proceedings. The spill event at the water treatment plant 30On 25 June 2011, after multiple leaks and incidents had occurred at the water treatment plant (and after attempts had been made to repair those leaks), there was a spill of water at the water treatment plant. At about 4am on this date, an ABS 8 inch cap on a pipeline, which was transferring water from Pond 1 to the water treatment plant, burst. This caused production water to spill within the besser block walled area around the water treatment plant (i.e. the bund). 31There was a sump pump in the walled area. Attached to that pump was an electronic failsafe switch designed to shut down the plant if the sump was about to overflow. The switch failed and, as a consequence, production water eventually spilled over the wall. The production water flowed over the wall until about 8am when it was discovered by an employee of the defendant who immediately shut down the plant. 32The production water reached as far as Garlands Road, which is located 420m from the water treatment plant. A temporary earth bund was constructed on Garlands Road to contain the spilled production water. By midday, the spilled water in and around the walled area next to the water treatment plant had been pumped back into the ponds by the defendant's staff. It was estimated that approximately 3,000 litres of the spilled production water was transferred from Garlands Road to the ponds. It was also estimated that approximately 10,000 litres of the spilled production water, with total dissolved solids measuring about 16,000 ppm, escaped beyond the road beside the water treatment plant. 33Thus, when one deducts the approximated 3,000 litres of spilled production water that was "captured" and transferred back to the ponds from the approximated 10,000 litres of total spilled production water, it would appear that approximately 7,000 litres of spilled production water escaped from the water treatment plant and was not captured by the defendant. 34It is this spill event of 25 June 2011 that forms the basis of the first charge to which Santos NSW has pleaded guilty in these proceedings. 35A report on this incident was prepared on or shortly after 25 June 2011. Its long title was "HSEC - Incident - Environmental Report - Extensive spill caused by pipe burst and electronic float switch failure". It records that the incident occurred at 4.00am on 25 June 2011 and was reported by the defendant's then Water Engineer to the defendant's then Chief Operating Officer by 9.00am that same day. The report sets out the details of the spill. Under the heading "Immediate Action Taken" is a note that the incident was reported to the then Narrabri Field Adviser and the then Chief Operating Officer "immediately after discovery of the spill". The report also stated that earthworks were being conducted to "remediate the affected area". The actual outcome of the spill was described as "moderate". 36A series of internal emails were sent between employees and senior managers of ESG relating to the spill on and in the days after the spill had taken place: see [38]-[41] of the Amended Agreed Statement of Facts. On 25 June 2011, the defendant's then General Manger - Health, Safety and Environment emailed the then Chief Operating Officer saying that "there are some primary questions to be answered" relating to "the quantity, the quality, the extent of the spill and time needed to remediate the affected soils" and that they needed to discuss "the reporting aspects". On 27 June 2011, the defendant's then Manager - Environment emailed the then Manager - Health, Safety and Environment expressing concern at the lack of information that had been passed on regarding the spill incident. He noted: The obligation to report is 'as soon as practicable' and I am fairly sure this timeframe has already passed. Had it been a more serious spill (ie entered the creek) we would already be in breach of the Act. Moving forward we will need to draft a spill response/reporting procedure with some strict guideline/timelines for reporting. 37The reference in this email to the duty to notify pollution incidents "as soon as practicable'' was a reference to the requirements of s 148 of the Protection of the Environment Operations Act 1997 at the time of the incident (the duty in s 148 has since changed to impose a duty to notify pollution incidents "immediately"). 38By email in response later on 27 June 2011, the defendant's then General Manager - Health, Safety and Environment thanked the Manager - Environment for his feedback and referred to developing a spill response chart and training package about spill response/reporting. 39Board papers dated 4 August 2011, prepared by the defendant's management and submitted to the defendant's Board, stated that there were "three minor environmental incidents recorded during the month. Two incidents were related to produced water spills. Work is being completed to prevent the re-occurrence of these events including the upgrading of equipment and infrastructure": at [42] of the Amended Agreed Statement of Facts. Response to the spill incident of 25 June 2011 40There were numerous actions taken and investigations initiated in response to the spill incident of 25 June 2011: see especially [43]-[52] of the Amended Agreed Statement of Facts. The following constitutes a summary of those events that are relevant to the Court's task of sentencing the defendant for the offences it has committed. 41First, an upgrade to the water treatment plant was undertaken, in two phases, shortly after the spill incident. This involved replacing: the above ground polypropylene pipes used at the plant with underground polypropylene pipes; the manifolds on the input pipes from the ponds to the water treatment plant; the pump for Pond 1; and all other pipes in and around the water treatment plant. 42Secondly, from 8 to 10 August 2011, Mr G Summerhayes of the Office of Coal Seam Gas conducted investigations into the operation of the ESG Narrabri Coal Seam Gas Project. Also in attendance during these investigations were officers from the Environment Protection Authority and Forests NSW and Mr T Donnan (Environmental Manager) from ESG. 43During the site visit on 8 August 2011, Mr Summerhayes noticed an area of standing water and vegetation (middle and upper story native trees) in poor condition located between the water treatment plant and Pond 2. When he asked about this, Mr Donnan stated that it was due to past rainfall and impeded drainage, causing tree die back due to water logging, and that ESG had spoken with Forests NSW about removing the dying trees. At no point during this inspection from 8 to 10 August 2011 did any person from the defendant inform Mr Summerhayes of a spill at the water treatment plant on 25 June 2011, nor did ESG provide him with any documentation or other evidence of a spill on 25 June 2011. 44On 3 November 2011, prior to the Santos Limited takeover, the defendant provided a report to the Department in response to the complaints about, among other things, tree die back within close proximity to the water treatment plant. Again, no reference was made by the defendant to the spill on 25 June 2011. 45On 5 January 2012, Mr Summerhayes referred a complaint alleging dead trees and discharge of black, tarry water at the water treatment plant to Santos Limited, and requested a response. On that day, a member of the defendant's new management team (as appointed by Santos Limited after the corporate takeover of ESG had been completed) became aware of information relating to this complaint. The defendant contacted Mr Summerhayes via email on the evening of 5 January 2012 to inform him that it had found information that was relevant to the complaint received by the Department and would send a report by 6 January 2012. 46On 6 January 2012, Santos Limited sent a report to the Department attaching a copy of the defendant's environmental incident report document dated 25 June 2011. 47On 22 February 2012, Santos Limited issued a report which noted that, after the 17 November 2011 takeover of the defendant, Santos Limited had conducted a review of the defendant's practices prior to the takeover. In the report Santos Limited provided details of a number of spill events at the water treatment plant, including the spill of 25 June 2011. It acknowledged that this spill ought to have been reported. The report was provided to the Department, the EPA and was made publicly available on the website of Santos Limited. Failure to accurately report against compliance with the POP 48The report issued by Santos Limited on 22 February 2012 also made reference to the failure of ESG to accurately report the total dissolved solids level of water discharged into Bohena Creek, which on occasion had exceeded the total dissolved solids limit of 250 ppm. The discussion that follows below constitutes a condensed summary of the relevant facts outlined at [53]-[61] of the Amended Agreed Statement of Facts. 49Information contained in the Santos report dated 22 February 2012 indicated that between 2009 and 2011, the defendant measured the total dissolved solids level of permeate water discharged from the water treatment plant into Bohena Creek using three methods: first, using a handheld measuring device; ("hand held data"), secondly, providing samples of permeate water for analysis by a NATA accredited laboratory ("laboratory analysis"); and thirdly, obtaining data of the electronic conductivity readings at the output from the separate units at the water treatment plant, which was used to calculate "theoretical" total dissolved solids levels. 50A spreadsheet of the raw data collected by the defendant (and provided to the Department in February 2012) indicated several instances when the permeate water discharged into Bohena Creek exceeded a total dissolved solids level of 250 ppm (i.e. in excess of the expected permeate quality of less than 250 milligrams per litre of total dissolved solids referred to in the POP). In the period November 2009 to May 2010, there were four instances, the highest of these instances being an amount of 5,300 ppm, which was recorded, by a laboratory analysis, on 11 March 2010. In the period October 2010 to March 2011, there were three instances, ranging from 580 to 670 ppm. In the period April 2011 to August 2011, there were four instances, ranging from 284.1 to 524 ppm. 51Relevant to each of the second, third and fourth charges, the defendant had prepared and submitted three reports to the Department titled "Narrabri Coal Seam Gas Project biannual water management report" which covered the periods: (a)November 2009 to May 2010 (lodged with the Department in June 2010) (this report formed the basis of the second charge); (b)October 2010 to March 2011 (lodged with the Department in April 2011) (this report formed the basis of the third charge); and (c)April 2011 to August 2011 (lodged with the Department in September 2011) (this report formed the basis of the fourth charge). 52These reports were treated by the defendant and the Department as the EMRs required under condition 3 of PAL2. 53Each of these three reports contained a graph which purported to show the total dissolved solids level of permeate water discharged into Bohena Creek through the reporting period. In each case, the graph indicated the total dissolved solids level varied, but remained always under 250mg/L. Accompanying the graphs, each of the reports stated: Weekly quality monitoring of water discharged at Bohena Creek has been undertaken and at all times been tested as being below the stated discharge limit of 250ppm mg/L (see Figure 3-2). A combination of field based testing using a hand held EC/pH and TDS meter and also monthly laboratory testing of all water has occurred. 54These three reports did not disclose the occasions when the treated water discharged from the water treatment plant into Bohena Creek exceeded 250mg/L of total dissolved solids. Moreover, the report covering the period of April 2011 to August 2011 did not disclose the spill event at the water treatment plant on 25 June, noting that "[n]o reportable environmental incidents occurred over the reporting period". 55Keeping this factual background in mind, I now turn to the Court's task of sentencing Santos NSW for the four offences to which it has pleaded guilty.

Sentencing considerations 56In sentencing for the offences, the Court is to consider the objective and subjective circumstances of the particular offences and the offender. In this case, the Court is required to consider or take into account the following matters: the factors set out in s 136A(3) of the Act; the aggravating, mitigating and other factors in s 21A of the Crimes (Sentencing Procedure) Act 1999 ('the Sentencing Act'); and any other relevant or applicable provisions contained in the Sentencing Act. The Court may also have regard to the applicable principles of sentencing articulated in case law, as well as the purposes of sentencing contained in s 3A of the Sentencing Act.

Objective gravity of the offence 57In determining the objective gravity of each offence, the Court may have regard to the following factors: the nature of the offence; the maximum penalty for the offence; the harm caused to the environment by commission of the offence; the state of mind of the offender for committing the offence; the offender's reasons for committing the offence; the foreseeable risk of harm to the environment by commission of the offence; the practical measures to avoid harm to the environment; and the offender's control over the causes of harm to the environment. Nature of the offence 58As discussed in Director-General, Department of Environment and Climate Change v Rae [2009] NSWLEC 137; (2009) 168 LGERA 121 at [15]-[19], the objective seriousness of an environmental offence is illuminated by the nature of the statutory provision, contravention of which constitutes the offence, and its place in the statutory scheme: see Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34; (2006) 145 LGERA 234 at [51]-[71], [168]-[169]. 59A proper understanding of the purpose of creating an offence will be generally assisted by consideration of the objects of the statute: see Environment Protection Authority v Le Dome Pty Ltd [2002] NSWLEC 167; (2002) 125 LGERA 121 at [80]; Environment Protection Authority v Coe Drilling Australia Pty Ltd [2005] NSWLEC 719 at [132]. Unusually for a modern statute, there are no objects set out in the Act in these proceedings. Nevertheless, as the prosecutor submitted (at [29]), it is clear from the regime set out in the Act that the general purpose of the Act is to regulate, in an effective manner, the exploration and drilling for petroleum resources and their environmental consequences. A comprehensive regime is created for the granting of licences and leases, on conditions including conditions relating to environmental management. 60In order for a person to obtain a petroleum title a number of steps are required to be undertaken sequentially under the Act. 61First, the legislative scheme is activated in circumstances where the Minister opts to exercise the discretion under s 8 of the Act to invite applications for petroleum titles by notification in the Gazette. The phrase "petroleum title" is defined in s 3 of the Act, and includes a production lease such as the ones granted to the defendant in this case. 62Secondly, if a person decides to take up the Minister's invitation to apply for a petroleum title, that person must make an application in a form approved by the Minister: s 11 of the Act. The person pays a lodgement fee for the application as required by s 12 of the Act, and the application so lodged must be accompanied by certain documentation and evidence: see ss 13-15 of the Act. 63Thirdly, once the application has been duly lodged, the Minister will consider the application and determine whether to exercise his or her discretion to grant a petroleum title over any onshore area within the State: s 9 of the Act. In reaching his or her decision, the Minister is required to take into account certain matters. Determination of precisely which matters the Minister is required to take into account will vary depending upon the type of petroleum title for which the relevant person has applied. 64One of the main considerations to be taken into account by the Minister in determining an application is the need to protect the environment. Section 74 of the Act requires the Minister to take into account the need to conserve and protect: (a) the flora, fauna, fish, fisheries and scenic attractions, and (b) the features of Aboriginal, architectural, archaeological, historical or geological interest, in or on the land over which the petroleum title is sought. Moreover, s 74(2) of the Act states that the Minister "may cause such studies (including environmental impact studies) to be carried out as the Minister considers necessary to enable a decision whether or not to grant a petroleum title to be made". 65The Minister may decide to either grant or refuse to grant the petroleum title sought by the person in the application that has been lodged: s 9 of the Act. The Minister may refuse an application for a petroleum title on the grounds provided for by s 21 of the Act. If the Minister approves the application for a petroleum title, he or she may impose conditions on that approval by specifying such conditions in the title: s 23 of the Act. Specific conditions relating to protection of the environment may also be included in the title: see s 75 of the Act. 66Any contravention or failure to comply with the conditions of title by a petroleum title holder, without reasonable excuse, constitutes an offence under s 136A of the Act. The defendant in this case, as noted above, has been charged with such offences. 67The failure of a petroleum title holder to comply with the conditions of its title, including a condition relating to protection of the environment, thus undermines and frustrates not only the purpose of the statutory scheme provided for by the Act, but also the terms on which the petroleum activities and operations were permitted to be carried out under the title issued by the Minister. 68There is a need for the upholding of the legislative scheme contained in the Act. The efficacy of that scheme depends on a titleholder's observance of, and compliance with, the conditions on which its petroleum title has been granted. Offences which undermine the integrity of the legislative scheme are objectively serious. Use of the criminal law ensures the credibility of the legislative scheme. 69The actions of the defendant in failing to comply, without reasonable excuse, with the conditions of its petroleum title offend against the purpose of the legislative scheme. Maximum penalty 70The maximum penalty reflects the seriousness with which Parliament views the offence and provides a sentencing 'yardstick': see Elias v R; Issa v R [2013] HCA 31; (2013) 298 ALR 637 at [27] and Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698. 71At the time of the offences, the maximum penalty which applied to each of the four charges against s 136A of the Act, being contraventions of conditions of title related to environmental management, was 1,000 penalty units or $110,000 (see s 136A(1)(a)(i)). Subsequently, the maximum penalty was increased to 10,000 penalty units (or $1,100,000) with effect from 1 January 2013 (by the Petroleum (Onshore) Amendment (Royalties and Penalties) Act 2012). However, the prosecutor and the defendant agreed that, by reason of s 30 of the Interpretation Act 1987, this legislative amendment did not affect the maximum penalty applicable to the four offences here and they remain those which applied before the amendment. Harm to the environment 72The Amended Agreed Statement of Facts (from [66] to [78]) summarised the evidence as to the harm caused by the spill incident of 25 June 2011 to the environment. The discussion in this part of the judgment draws upon that summary as well as the evidence referred to in that summary (that is, references to documents contained in the Agreed Bundle of Documents). 73Messrs Irvine, Rossler and Tap of Forests NSW provided a report on 14 March 2012 containing details of their inspection and quantification of the tree and vegetation death adjacent to the water treatment plant. 74The report noted that an inspection of the coal seam gas drilling site was conducted on 6 March 2012. Using a GPS, the Forests NSW staff calculated that the net area of forest affected by the spill was 1.75 ha. The forest located on the site was a mixture of white cypress pine, narrow leaved ironbark, and bull oak. The understory was comprised of native grasses and shrubs. Plot information from two 0.1 ha circular plots within the impacted area indicated that 77% of the trees and up to 85% of the ground vegetation on the site (in the path of the spill) was dead at the time of assessment, and noted evidence of regenerating plants. 75On 17 February 2012, Santos Limited provided the Department with a report from RPS Australia East Pty Ltd (which had been commissioned by Santos Limited) into the spill incident. The report noted that two vegetation surveys had been conducted on 19 and 20 January 2012. The vegetation community was found to be "White cypress pine - Bulloak - Ironbark Forest". A habitat assessment indicated that, over the 1.5 ha of vegetation die back, there has been a reduction of shelter due to loss of foliage and loss of foraging resources (p 10 of the report). Threatened or migratory species were identified as occurring or potentially occurring in the affected area, although this was assessed as unlikely except for the Pilliga Mouse (Pseudomys pilligaensis) (p 27), which is listed as a vulnerable species under sch 2 of the Threatened Species Conservation Act 1995. 76On 11 May 2012, Coffey Environments provided a report, commissioned by the Department, which included findings made by Coffey about the area affected by the spill incident. An environmental scientist employed by Coffey attended the site on 12 and 13 March 2012, and 11 April 2012 and observed that: (a)the impacted area included visible evidence of stressed vegetation (numerous larger trees exhibiting signs of die back such as decaying trunks and dead limbs, and small shrubs were mainly non-existent) around the southern and western edges of Pond 2 and extending in a south-west direction into the forest; (b)there were some areas of ponded water in the impacted area, although the majority was dry; and (c)the areas immediately surrounding the impacted area were characterised by healthy vegetation and dense undergrowth. 77The report noted that laboratory results of tested soil samples showed that pH levels and sodium were higher in the areas impacted by the spill incident than the background samples taken before the spill incident. 78The report concluded that, based on field observations and data obtained, the approximate area of visible impact was 18,440 m² (or 1.84 ha), the depth about 0.3m bgs, giving an estimated total volume of impacted soil of about 5,550 m³, however the extent of the impacted area should be considered as indicative only. 79On 28 April 2013, Dr Munns (a specialist plant scientist) commissioned by the prosecutor provided a report explaining the likely rapid and long term effects upon the environment of the spill incident. The report noted that the likely initial or rapid effects of the spilt Pond 1 water on plants were:

plants were prevented from taking up water from the soil as a result of the high concentration of salts (16,000 ppm - equivalent to half-strength sea water);
plants wilted; and
plant growth was discontinued as a result of the high salt concentration (the extent of this depending upon the nature and resilience of the particular species). 80The report also noted that the initial or rapid effects on plants would be modified by cloudy or rainy weather, and that most plants would probably recover after some time. 81In relation to the initial or rapid effects on soil, the report noted that:
the high percentage of sodium relative to other cations (e.g. potassium, calcium and magnesium) in the discharged water would cause it to react with the soil, turning it sodic (sodic soil contains sufficient exchangeable sodium to adversely affect soil stability); and
the high alkalinity of the water would react with the organic matter in the soil, causing a black residue of organic matter on the surface. 82With respect to the likely long term effects of the spilt Pond 1 water, the report noted that:
the sodic soil would become waterlogged after rain and thus impede the regrowth of plants (affecting some species more than others, depending upon the extent to which a particular species was resistant to waterlogging); and
as a result of the soil becoming alkaline, the survival and regrowth of plants would be affected as alkalinity lowers the availability of some essential nutrients. 83Dr Munns further noted in her report that the damage to the soil was severe and, if left untreated, would be permanent. She concluded that the soil should be remediated with application of gypsum and that, through undertaking soil remediation and amendments, natural revegetation of much of the damaged area should occur. As discussed later in this judgment, the defendant has already commenced such remediation works in consultation with the Department. 84Finally, it should be noted that both the prosecutor and the defendant, in their respective oral submissions, also took the Court to photographs which illustrated the extent of the environmental harm caused by the offence. 85The extent of harm caused or likely to be caused to the environment by the commission of each of the offences is a relevant objective factor to be taken into account: s 136A(3)(a) of the Act. 86In relation to the first charge, the offence relates not to the spill incident and its concomitant environmental harm as such, but to the failure to report that incident. The environmental harm caused by commission of that offence, therefore, relates to what environmental harm occurred in the time after the incident should have been reported. If the spill incident had been promptly reported, the Department, and Forest NSW in whose land the spill occurred, could have given consideration to, and directed, the undertaking of prompt and effective action to prevent, control, abate, mitigate and remediate the spill and its environmental impacts. The defendant's failure to report the spill incident prevented such action being taken. The extent of environmental harm that has been experienced, as summarised above, is to a large extent a product of prompt and effective action not being taken. 87However, having regard to the extent of vegetation and soil affected by the spill incident, the absence of actual or potential environmental harm to threatened species (except for possibly the Pilliga Mouse) and endangered ecological communities, and the good prospects for remediation of affected vegetation and soil, I consider the environmental harm caused by the offence to be at the lower end of the scale of seriousness. 88In relation to the second, third and fourth charges, the relationship of the offences to environmental harm is more distant, but not non-existent. As noted at [91] in the Amended Agreed Statement of Facts, had the three water management reports provided by the defendant contained disclosure of the instances of discharges of permeate water into Bohena Creek, the Department would have given consideration to: increasing regulatory monitoring of the defendant's operations, including issuing directions to the defendant requiring it to cease operations at the water treatment plant and to undertake investigation and remediation actions; rescinding the approval to discharge water into Bohena Creek; or declining any further application to extend the approval. 89For example, if the defendant had disclosed in its EMR for the period November 2009 to May 2010 (which formed the basis of the second charge) or in its EMR for the period October 2010 to March 2011 (which formed the basis of the third charge) that on three and four occasions respectively the level of total dissolved solids in the permeate water discharged into Bohena Creek exceeded the limit in the POP of 250ppm (and on one occasion on 11 March 2010 was over 21 times greater (5,300ppm)), the Department may have directed the defendant to have taken action which would have prevented the spill incident later occurring on 25 June 2011 (such as by upgrading operations at the water treatment plant). The commission of the offences the subject of the second and third charges, therefore, can be seen to have, in this way, an indirect causal relationship to the environmental harm resulting from the spill incident. 90This indirect causal relationship cannot be established for the fourth charge which related to a reporting period (April 2011 to August 2011) that finished after the spill incident on 25 June 2011. However, if the defendant had reported in its EMR that there were four instances in the period April to August 2011 where the total dissolved solids levels exceeded the POP limit of 250ppm, the Department may well have undertaken an investigation at the defendant's operations that might have disclosed that the spill and the consequent environmental harm had occurred a few months earlier, allowing the Department and Forests NSW to direct the undertaking of prompt and effective action to remediate the environmental impacts. In this way, therefore, the commission of the fourth offence can be seen to have an indirect causal relationship to the unnecessary prolongation of the environmental impacts of the spill. 91However, as earlier indicated, I find that the environmental harm caused by the failure to report the spill incident, the inaccurate reporting in the EMRs and consequent breaches of the conditions of the petroleum title to be at the lower end of the scale of seriousness. State of mind of the offender 92An offence against s 136A of the Act is a strict liability offence and mens rea is not an element of the offence. Nevertheless, the state of mind of an offender at the time of the offence can have an effect of increasing the seriousness of the offence. A strict liability offence that is committed intentionally, negligently or recklessly will be objectively more serious than one not so committed. Moreover, a large measure of premeditation will make an offence more serious than if it is committed on the spur of the moment: see Rae at [42], [43]. 93In the present case, the defendant's conduct in failing to both report the spill incident (first charge) and accurately report compliance against the POP (second, third and fourth charges) cannot be regarded as being undertaken without knowledge of its obligations under conditions 3 and 4 of PAL2. 94The defendant must, as the prosecutor submitted, be regarded as cognisant, at all relevant times, of its obligation under condition 4 of PAL2 to report incidents threatening material harm to the environment. The defendant's own internal incident report completed at the time of the spill recorded the outcome of the incident as "moderate". Its senior managers were made aware of the spill incident on the day it occurred, and reference was made in internal emails to the existence of reporting obligations. Yet, the defendant remained silent and did not report the spill incident, as required by law. 95Moreover, I agree with the prosecutor that the objective circumstances in relation to the first charge are aggravated by the fact that in August and early November 2011, when officers of the Department investigated reports of tree die back in the area, the defendant had an opportunity to disclose the spill incident but did not do so. 96On this basis, the defendant's state of mind with respect to the commission of the offence forming the basis of the first charge (the non-reporting of the spill incident) should be regarded as deliberate and intentionally carried out with knowledge that its actions were illegal. The commission of the offence forming the basis of the first charge with this knowledge increases the objective seriousness of the offence. 97The defendant must also be taken to be cognisant of its obligation under condition 3 of PAL2 to report against compliance with the POP, including compliance with the limits in the POP of permeate water quality. Indeed, the defendant purported to do so by expressly reporting on the dissolved solids levels of the permeate water in each of the environmental management reports. No explanation has been provided as to how or why reference to the data showing exceedences of the required permeate water quality was not included in each of environmental management reports. There is no evidence that would establish, beyond reasonable doubt, that the defendant made a deliberate decision to not accurately report compliance against the POP on three separate occasions. The data showing exceedences of the required permeate quality on occasions in each reporting year was clearly available to the defendant, but whether the particular persons preparing the EMRs were actually aware of that data and, if so, the reasons why they did not include reference to the exceedences, are unknown. It is, therefore, not possible to make any finding as to the defendant's state of mind in committing the offences the subject of the second, third and fourth charges. Reasons for committing the offences 98The criminality involved in the commission of offences is to be measured not only by the seriousness of what occurred but also by reference to the reasons for its occurrence: see Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 366; Bentley v BGP Properties Pty Ltd at [237]; Gittany Constructions Pty Ltd v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189 at [140]; Garrett v Williams [2006] NSWLEC 785; (2006) 160 LGERA 115 at [120]; Rae at [47]. 99The carrying out of an offence to make a profit or to save incurring an expense, or to avoid the cost of obtaining and implementing a statutory permission such as a development consent or environmental protection licence, increases the seriousness of the crime. Offenders should not profit from crime: Rae at [48]; Garrett v Williams at [121]. 100In this case, the prosecutor invited the Court to infer that the defendant did not disclose the spill, and did not accurately report in relation to the total dissolved solids levels, because it did not want to give the regulator reason to suspend or impose further conditions on its coal seam gas operations. 101In response, the defendant submitted that while this hypothesis was a possible explanation, there are alternative hypotheses available on the evidence. Two alternative hypotheses were advanced by the defendant: first, that the former employees of ESG believed (wrongly) that there was no reporting obligation because the spill incident was not sufficiently serious and/or permeate water from the spill did not enter into Bohena Creek and, secondly, that middle level supervisors did not want senior management to learn of the environmental issues. The defendant also observed in its submissions that there may be other reasons, unknown to the prosecutor and the defendant (as currently constituted), that motivated the reporting failures by former ESG employees. 102The defendant further submitted that if the inference advanced by the prosecutor is to be accepted, it would increase the seriousness of the offences. As such, that inference must be established beyond reasonable doubt, citing R v Olbrich [1999] HCA 54; (1999) 199 CLR 270 at [27]. In light of the availability of alternative hypotheses, the defendant submitted that on the available evidence the inference sought by the prosecutor is not established to the requisite standard. 103I do not find the alternative hypotheses offered by the defendant to be convincing. In relation to the first alternative hypothesis offered, the email extracts contained in [38] and [39] of the Amended Agreed Statement of Facts clearly reflect that employees of the defendant knew, from the day of the spill incident, that the defendant was under a legal obligation to report the spill incident. In relation to the second alternative hypothesis offered, it is again apparent from the Amended Agreed Statement of Facts (in [38] to [42]) that middle level supervisors were in contact with senior management in relation to the spill incident and that senior management notified the Board of the existence of the environmental incident in board papers dated 4 August 2011. I do not, therefore, accept that the two alternative hypotheses advanced by the defendant were available on the evidence. 104However, I do accept the defendant's submission that there may be other reasons, unknown to the prosecutor and the defendant (and indeed, the Court), that explain the reporting failures by former ESG employees. On this basis, I accept the defendant's submission that the Court cannot, on the evidence, draw beyond reasonable doubt the inference sought by the prosecutor. Foreseeability and the risk of harm 105Having regard to the nature and extent of the spill incident, and the consequences of a failure to report the incident and accurately report on compliance with the POP as I have discussed above, I consider that a reasonable person could foresee the risk of harm caused or likely to be caused to the environment by the commission of the offences. The extent of foreseeability of harm is a relevant objective circumstance of the offence: see s 136A(3)(c) of the Act; Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority at 700; Rae at [50]. 106In this case, it is reasonable to infer, from the evidence of the incident report, emails and board papers at the time, that the defendant did in fact foresee the risk that the occurrence of the spill incident itself, and the subsequent failure to report it, were likely to cause harm to the environment. It is not possible on the evidence to draw the same inference that the defendant did in fact foresee a risk of environmental harm by reason of any failure to accurately report on compliance with the POP. Practical measures to prevent, control, abate or mitigate harm 107The defendant could and should have ensured that its coal seam gas drilling and other associated activities were carried out in compliance with the conditions of its petroleum title and its POP and that any failure to do so was reported promptly to the Department in accordance with conditions 3 and 4 of PAL2. As I have earlier explained, compliance with condition 3 and 4 may have prevented the spill incident occurring, or may have prevented the prolongation of the environmental harm caused by the spill. The defendant's failure to do so constituted an omission to take practical measures to prevent risk of harm to the environment: see s 136A(3)(b) of the Act. 108The defendant did, however, undertake practical measures to control, abate or mitigate environmental harm after the spill incident had occurred: see s 136A(3)(b) of the Act. Those practical measures are described earlier in this judgment under the heading "Response to the spill incident of 25 June 2011". 109In addition, the defendant has (in consultation with the Department) undertaken the following remediation works as required by the direction served by the Department under s 77 of the Act (at [102] in the Amended Agreed Statement of Facts):

Subjective circumstances of the offender 114Within the limits set by the objective gravity or seriousness of the offence, the Court may take into account the favourable factors personal to the offender. Prior criminal record 115The existence or lack of prior criminality is a factor in sentencing: s 21A(2)(d) (existence of prior record is an aggravating factor) and s 21A(3)(e) (lack of prior criminal record is a mitigating factor) of the Sentencing Act. 116Past criminal behaviour is relevant in sentencing to show whether the instant offence is an uncharacteristic aberration or whether the offender has manifested in his or her commission of the instant offence a continuing attitude of disobedience of the law: see Veen v R (No 2) [1988] HCA 14; (1988) 164 CLR 465 at 477 (per Mason CJ, Brennan, Dawson and Toohey JJ). 117The fact that an offender has a record of prior convictions is not itself an aggravating feature under s 21A. It is only an aggravating factor where the record gives rise to the consideration in Veen v R (No 2) that was described in R v Shankley [2003] NSWCCA 253 at [31] as being relevant, not to increase the objective seriousness of the offence (because to do so would infringe the principle of proportionality), but rather that retribution, deterrence and protection of society may indicate a more severe sentence is warranted: see R v Johnson [2004] NSWCCA 76 at [34], [35], [37], [39]; R v Wickham [2004] NSWCCA 193 at [24], R v McNaughton [2006] NSWCCA 242; (2006) 66 NSWLR 566 at [26], [32]; R v MAK; R v MSK [2006] NSWCCA 381; (2006) 167 A Crim R 159 at [51]. 118The defendant does not have any prior convictions for any environmental offences. However, the prosecutor noted that the defendant was recently convicted for an offence against s 8(2) of the former Occupational Health and Safety Act 2000 following a plea of guilty: Nash v Eastern Star Gas Ltd [2012] NSWIRComm 75. That case concerned the death, on 1 August 2009, of a contractor involved in the installation of a water and gas gathering pipeline on land within PAL2. 119The prosecutor submitted that although this was a very different type of offence to the offences that the defendant is to be sentenced for here, the existence of this prior conviction indicates that the offences committed by the defendant against s 136A of the Act are not isolated nor an anomaly but part of a broader failure by the defendant (prior to the takeover by Santos Limited) to meet various statutory obligations in relation to its coal seam gas activities. 120In response, the defendant submitted that there was no adequate support for the views expressed by the prosecutor and that the mitigating factor for no prior convictions under s 21A(3)(e) should be available to the defendant. 121In this case, the prior conviction in Nash for the particular occupational health and safety offence is of a quite different nature and arose in circumstances quite different to those giving rise to the present four offences. I do not consider that it reveals a continuing attitude of disobedience of the law or that retribution, deterrence and protection of society indicate that a more severe sentence is warranted by specifically taking into account the defendant's prior conviction in Nash. I do not consider, therefore, that the defendant's conviction in Nash should be taken into account as an aggravating factor under s 21A(2)(d). 122Nevertheless, the fact that this prior conviction is different in nature to the offences the subject of the present sentencing proceedings does not support the defendant's submission that the mitigating factor in s 21A(3)(e) of the Sentencing Act is established. The existence of a prior record (although I accept not a significant record) speaks against a conclusion in mitigation that the defendant does not have any record of convictions under s 21A(3)(e) of the Sentencing Act: see Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; (2006) 148 LGERA 299 at [196]. Prior good character of the offender 123As I have detailed above, the defendant was previously known as ESG. After ESG was taken over by Santos Limited on 17 November 2011, ESG's name was changed to Santos NSW. There is positive evidence to suggest that the defendant, as currently constituted, is of good character: s 21A(3)(f) of the Sentencing Act. 124The defendant's commitment to ensuring that it fully complies with its environmental responsibilities under the conditions of its petroleum title may be evidenced, among other things, by:

the defendant's detailed review of the operations previously conducted by ESG;
the shutdown of the water treatment plant in December 2011, pending a full review of its adequacy and integrity;
the decommissioning of the water treatment plant, and associated rehabilitation, at a cost of approximately $319,000;
the commitment of approximately $30 million to construct an entirely new, and improved, water treatment facility at Leewood;
the defendant's implementation of extensive works, improvements and rehabilitation to improve environmental performance across the entire coal seam gas operation at an approximate cost of $17 million; and
engaging with the local community through meetings, consultative committees and information centres at Narrabri and Gunnedah. 125There is also no doubt that Santos Limited, being the parent company of the defendant now known as Santos NSW, has a good corporate character, both generally and in environmental matters. Insofar as the defendant is a wholly owned subsidiary of Santos NSW, it is required to implement policy directives of the parent company. These include the implementation of Santos Limited's environmental management system and the developing of environment and community management standards in accordance with the environmental management system. These matters may be taken into account: Environment Protection Authority v Centennial Newstan Pty Ltd [2006] NSWLEC 732 at [126], [127]. 126Thus, I take the prior good character of the defendant (as currently constituted) into account as a mitigating factor under s 21A(3)(f) of the Sentencing Act. Plea of guilty 127The four charges were laid against the defendant on 11 June 2013 and pleas of guilty were entered on 20 September 2013. This was the first available opportunity, and should be regarded as an early guilty plea: see ss 21A(3)(k) and 22 of the Sentencing Act. 128The parties agreed that a discount in the vicinity of 25% was appropriate in the circumstances of this case. I agree. Therefore, the discount afforded for the utilitarian value of the plea of guilty should be the maximum discount permitted, namely 25%: see R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383 at [160]. Contrition and remorse 129The defendant has offered a formal apology to the Court, and the public, for the failures that gave rise to the offences that it is to be sentenced for in the present proceedings. Senior officers of the defendant attended the sentence hearing. The actions of the defendant (as currently constituted) in promptly disclosing the details of the offences to the Department and undertaking works to remediate the environmental harm associated with the offences reflect that the contrition and remorse it has expressed is genuine. Thus, the defendant has accepted responsibility for its actions and has acknowledged and made reparation for the environmental harm caused by its actions. For this reason, the mitigating factor in s 21A(3)(i) of the Sentencing Act should be taken into account in sentencing the defendant. Assistance to the authorities 130The cooperativeness of the offender with relevant regulatory and law enforcement authorities is a matter to be taken into account when fixing penalties: Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority at 700-701. 131Typically, in environmental offences, assistance to authorities might involve the offender reporting the offence and its consequences, assisting with abatement, prevention and clean up of environmental harm caused by the offence, and assisting in the investigation of the offence committed by the offender and any co-offenders, including voluntarily participating in interviews and providing information and documents to investigating authorities. 132The defendant notes that after ESG was taken over by Santos Limited, the offences were uncovered by the defendant (as currently constituted) and promptly disclosed to the prosecuting authority. 133The defendant submitted that it was unlikely that the prosecutor would have discovered the offences if they had not been disclosed by the defendant. In this respect, the defendant suggested that some analogy may be drawn between the defendant's conduct and the actions of the offender in R v Ellis (1986) 6 NSWLR 603 who voluntarily disclosed information about a number of armed robberies to police. 134In Ellis, Street CJ recognised the need for a significant additional element of leniency on sentence where, without the offender's voluntary disclosure, it was unlikely that the offences would be discovered (at 604): When the conviction follows upon a plea of guilty, that itself is the result of a voluntary disclosure of guilt by the person concerned, a further element of leniency enters into the sentencing decision. Where it was unlikely that guilt would be discovered and established were it not for the disclosure by the person coming forward for sentence, then a considerable element of leniency should properly be extended by the sentencing judge. It is part of the policy of the criminal law to encourage a guilty person to come forward and disclose both the fact of an offence having been committed and confession of guilt of that offence. 135The defendant conceded that, unlike the offender in Ellis, the defendant here had an obligation to report on environmental incidents. However, it submitted that the effect of the reporting failures was to conceal offences of which the prosecuting authority had no knowledge until they were disclosed by the defendant (as currently constituted). 136The defendant acknowledged that the strength of the analogy varies in relation to the different offences in two respects. First, the defendant stated that there is a clear analogy with Ellis with respect to the three offences relating to inaccurate reporting of salinity levels in water discharged into Bohena Creek because, on the evidence, it is unlikely that the prosecutor would have discovered these offences if they had not been disclosed by the defendant. Secondly, the defendant noted that the analogy with Ellis has less force in relation to the offences involving the spill in June 2011, because the prosecuting authority was already investigating the dieback of trees in the vicinity of the water treatment plant and probably would, ultimately, have discovered the spill as a result of its own investigations. 137Moreover, the defendant observed that it has fully cooperated with the prosecutor in the investigation and prosecution of the offences. The prosecutor agreed with this position: see [127] of the Amended Agreed Statement of Facts. In cooperating with the prosecutor, the defendant:

Totality 150The parties each initially submitted in their written submissions that the principle of totality should be considered by the Court in determining the sentence or penalty to be imposed on the defendant for each of the four charges. However, this position changed during the course of oral argument, an issue that I will address momentarily. 151The principle of totality was articulated by Street CJ in R v Holder [1983] 3 NSWLR 245 at 260 as follows: 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 straight-forward 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 effect of this practical consideration is always to produce an ultimate aggregate which is less than that which would be arrived at by a straight-forward adding up of the terms appropriate for the offences if each were viewed alone. 152In Camilleri's Stock Feeds v Environment Protection Authority at 704, Kirby P observed that the principle of totality has application where the penalty imposed is by way of a fine. However, his Honour also observed that the principle "may not have the same force in the case of the imposition of fines, as opposed to the imposition of imprisonment where it has a special operation". 153The parties submitted that the second, third and fourth charges - all of which concerned inaccurate reporting of the salinity levels of water discharged into Bohena Creek - involved an essentially identical course of conduct repeated on three occasions in very similar factual circumstances. While that may be so, the three offences cannot be regarded as involving a continuous (as opposed to identical) period of conduct. There were separate obligations to report at particular intervals, and the facts in each reporting period were different. Each of the three offences, while essentially identical in nature, were temporally separate and discrete offences. The non-compliances with the total dissolved solids levels in the POP were different in each reporting period (different levels and different number of occasions of non-compliance). The failure to report in one reporting period did not carry over into another reporting period - each duty to report and each breach of that duty were discrete. The totality principle, in such circumstances, should not apply: see, by way of analogy, Chief Executive of the Office of Environment and Heritage v Rinaldo (Nino) Lani [2012] NSWLEC 115 at [62], [63]. When the Court raised this issue with the prosecutor, it revised the position it had previously taken in its written submissions to submit that the totality principle should not apply in relation to the second, third and fourth charges. I consider this to be the preferable view. 154Moreover, I accept the prosecutor's submission that the totality principle should not apply to the first charge as that charge involved a different factual substratum to the second, third and fourth charges, and is distinct from those charges in terms of criminality. The defendant submitted that the totality principle should also apply in relation to the first charge on the basis that it arises under the same petroleum title, in relation to the operation of the same water treatment plant, before the defendant was taken over by Santos Limited. In my view, these factors are insufficient to attract the application of the principle of totality. The offence of failing to report the spill incident is unrelated to the offences of failing to report on the non-compliance with the total dissolved solids levels in the POP. 155Therefore, no adjustment to the penalties that would otherwise be appropriate for each of the offences needs to be made on account of the principle of totality to achieve appropriate relativity between the totality of criminality and the totality of the sentences for the four offences.

Deterrence 156Deterrence can operate at the level of the individual offender or the public. Individual or specific deterrence is concerned with preventing the particular offender being sentenced from re-offending. General deterrence is concerned with preventing others from committing the kind of offence committed by the offender being sentenced. 157It is the duty of the court to see that the sentence that is imposed will operate as a powerful factor in preventing the commission of similar crimes by those who might otherwise be tempted by the prospect that only light punishment will be imposed: see R v Rushby [1977] 1 NSWLR 594 at 597-598. Corporations engaged in activities that have the potential to have a significant impact on the environment must be reminded that such activities must be carried out in accordance with the law and conditions upon which its consent or title has been issued: see generally Minister for Planning v Moolarben Coal Mines Pty Ltd [2010] NSWLEC 147; (2010) 175 LGERA 93 at [46]. 158General deterrence has a consequential or utilitarian rationale. Punishment is justified if the benefit (in terms of general deterrence) would outweigh the cost to the offender being punished. The sentence of a court should be calculated to deter others from committing the offence, no more and no less. The assumption is that citizens are rational and will adjust their conduct according to the disincentives provided by sentences: see A Ashworth, Sentencing and Criminal Justice (4th ed, Cambridge University Press, 2005) p 75. 159There is a need for general deterrence in the case before the Court. The penalty imposed upon the defendant should serve as a sufficient deterrent to operators in the coal seam gas industry to ensure that they comply with conditions of petroleum title requiring the timely reporting of incidents causing or threatening to cause environmental harm and the accurate, complete and timely reporting of compliance with a petroleum operations plan. 160There is no real need for specific deterrence in the circumstances of this case. The defendant, since being taken over by Santos NSW, has undertaken a significant change of corporate mind and culture. Since the takeover, the defendant has demonstrated itself to be a far more responsible operator in the industry and a committed corporate citizen.

Consistency in sentencing 161A relevant consideration in sentencing is the ascertainment of a general pattern of sentencing for offences of the kind under consideration. The task of the sentencing court is to pursue the ideal of even-handedness in the manner of sentencing: broadly similar cases should be dealt with similarly and broadly different cases should be dealt with differently: Hili v The Queen [2010] HCA 45; (2010) 242 CLR 520 at [49]; Elias v R; Issa v R at [29]. 162However, as noted in Rae at [70]-[76], care needs to be taken in the task of achieving consistency. There is always difficulty in attempting to compare the penalty in one case with a penalty in another case because of the wide divergence of facts and circumstances. There is also a risk that earlier sentences may not be appropriate and therefore ought not to fix the figures or range in subsequent cases: see Rae at [75]. 163The proceedings before the Court are the first prosecutions instituted for offences against s 136A of the Act. The prosecutor identified cases that it suggested might be comparable for the purposes of the first charge and the second, third and fourth charges. The defendant, in response, submitted that all of these cases were of limited assistance as they were factually too dissimilar to the factual circumstances attending the offences committed by the defendant here. 164In relation to the first charge, the prosecutor identified one comparable case which it submitted may assist in the Court in its task of sentencing the defendant for the offence forming the subject of that charge, namely Environment Protection Authority v Caltex Australia Petroleum Pty Ltd [2007] NSWLEC 647. In that case, the defendant pleaded guilty to charges of having polluted waters contrary to s 120(1) of the POEO Act, and that it failed to notify the appropriate regulatory authority as soon as practicable after it became aware of a pollution incident that threatened material harm, contrary to s 148(2) of the POEO Act. 165The maximum penalty for each offence was $250,000. The incident had occurred in May 2002. The relevant officer from Caltex took the incident seriously and amongst other things prepared a draft notification to the EPA but for reasons of oversight (which the Court accepted as a genuine explanation) that notification was not sent. The incident first came to the attention of the EPA in December 2005. The Court found that there could not be any suggestion that Caltex deliberately withheld information from any regulatory authority. There was also evidence before the Court that since the date of the incident, Caltex had implemented a number of measures aimed at improving its environmental performance. 166The Court concluded that the offences were at the low end of objective seriousness, that the offence was an isolated incident and referred to Caltex's good character. The Court considered that penalties of $15,000 for the offence against s 148 and $12,000 for the offence against s 120 of the POEO Act were appropriate but in lieu ordered that the combined total of $27,000 for both offences be directed to an environmental restoration project. 167While this case has some degree of comparability with the offence forming the basis of the first charge in this case on a general level (e.g. failure to report an incident, evidence of implementation of measures aimed at improving environmental performance, prior good character and so on), it is also distinguishable in many respects from the first offence here to be sentenced by the Court. For example, in Caltex, there was no change in ownership of the defendant; the incident was indirectly (rather than directly) brought to the regulatory authority's attention by the defendant; there was an administrative oversight with respect to disclosure, rather than a deliberate withholding of information; and there was a longer period of time between the occurrence of the incident and the regulatory authority's receipt of information about that incident. Accordingly, I find this case to be of limited assistance. 168In relation to the second, third and fourth charges, the prosecutor identified three cases involving the provision of false and misleading information contrary to the provisions of environmental legislation, namely Environment Protection Authority v Peters [2006] NSWLEC 612; (2006) 153 LGERA 238; Environment Protection Authority v Hargreaves (No 2) [2003] NSWLEC 15; (2003) 124 LGERA 57; and Environment Protection Authority v Djura [2012] NSWLEC 122. 169I consider the facts arising in these three cases are distinguishable in important respects from the facts arising in these proceedings. For example, in Peters, there was a systematic falsification of between 300 and 400 certificates that had the potential to pose a risk to human health. In Hargreaves (No 2), one of the defendant's prime motives in committing the offence was for financial gain. In the present case, the evidence does not establish, beyond reasonable doubt, any heightened state of mind, or a motive of financial gain, in committing the offences. Finally, in Djura, it is evident that the sentence imposed on the single defendant in that case was influenced by "a cognitive impairment" that coloured his judgment. Again, this can be distinguished from the corporate defendant in the present case. 170Thus, all of the cases referred to by the prosecutor are of limited assistance in determining the appropriate sentences for the offences in this case.

Synthesising the objective and subjective circumstances of the offences and offender 171I take into account the objective circumstances of the offences, as mitigated by the subjective circumstances of the defendant. I take account of the need to impose a sentence that achieves the relevant purposes of sentencing as contained in s 3A of the Sentencing Act of denouncing the conduct of the defendant, ensuring that it is adequately punished for the offences it has committed, making it accountable for its actions, recognising the harm done to the environment by commission of the offences, and preventing crime by deterring other operators in the coal seam gas industry from committing similar offences of failing to comply, without reasonable excuse, with the conditions of a petroleum title it holds. 172Synthesising these factors, I consider that the following penalties are appropriate: (a)In relation to the first charge, a fine of $30,000 for the offence forming the basis of this charge. This figure should be discounted by 30% for the utilitarian value of the plea of guilty (25%) and the assistance provided by the defendant to the authorities (5%), which results in a fine of $21,000; and (b)in relation to the second, third and fourth charges, a fine of $15,000 for each offence forming the basis of these charges. This figure should be discounted by 30% for the utilitarian value of the plea of guilty (25%) and the assistance provided by the defendant to the authorities (5%) for each offence, which results in a fine of $10,500 for each offence. 173The prosecutor seeks a moiety in the fine payable by the defendant by an order under the s 122 of the Fines Act 1996 that half of the fine payable by the defendant be paid to the prosecutor. The defendant does not oppose this course of action and I will make orders to that effect. 174Accordingly, in matter no 50435 of 2013, the Court orders: (1)The defendant is convicted of the offence as charged. (2)The defendant is fined the sum of $21,000. (3)Pursuant to s 122(2) of the Fines Act 1996, the Court directs that half of the fine, $10,500, be paid to the prosecutor. 175In matter no 50436 of 2013, the Court orders: (1)The defendant is convicted of the offence as charged. (2)The defendant is fined the sum of $10,500. (3)Pursuant to s 122(2) of the Fines Act 1996, the Court directs that half of the fine, $5,250, be paid to the prosecutor. 176In matter no 50437 of 2013, the Court orders: (1)The defendant is convicted of the offence as charged. (2)The defendant is fined the sum of $10,500. (3)Pursuant to s 122(2) of the Fines Act 1996, the Court directs that half of the fine, $5,250, be paid to the prosecutor. 177In matter no 50438 of 2013, the Court orders: (1)The defendant is convicted of the offence as charged. (2)The defendant is fined the sum of $10,500. (3)Pursuant to s 122(2) of the Fines Act 1996, the Court directs that half of the fine, $5,250, be paid to the prosecutor. 178In all four matters, the Court orders that the defendant pay the prosecutor's costs for all four proceedings in the agreed sum of $110,000.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 January 2014

(1993) 113 LGERA 357

(2006) 145 LGERA 234

(2006) 153 LGERA 238

(2006) 148 LGERA 299

(2006) 160 LGERA 115

(2006) 145 LGERA 189

(2009) 168 LGERA 121

(2002) 125 LGERA 121

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