Director-General, Department of Planning & Infrastructure v Integra Coal Operations Pty Ltd

Land and Environment Court (NSW)|2012-11-13|Before: Craig J

EX TEMPORE JUDGMENT 1The defendant, Integra Coal Operations Pty Ltd, is responsible for managing the operations of a major coal mine in the Upper Hunter Valley of New South Wales, some 10kms north-west of the town of Singleton. The mining operation involves both underground and open cut mining, collectively known as the Integra Complex. 2The mining operations overseen by the defendant are conducted not only pursuant to authorities granted under the Mining Act 1992, but also pursuant to project approvals granted under Pt 3A (now repealed) of the Environmental Planning and Assessment Act 1979 (the EPA Act). It is an approval of the latter kind which founds the present prosecution. 3The defendant has pleaded guilty to an offence against s 125(1) of the EPA Act in that between 12 August 2011 and 18 March 2012 it carried out the "Integra Open Cut Coal Project" otherwise than in accordance with the conditions attaching to the project approval for that project, contrary to s 75D of the EPA Act. The condition breached was a condition that limited the maximum height for out-of-pit waste rock emplacement to 135m AHD, said to equate to a height of 27m above existing ground level at the mine site. The condition was breached when the rock emplacement was found to reach a height of up to 145m AHD or 37m above the existing ground level.

Statutory provisions 4Section 125(1) of the EPA Act provides: "125 Offences against this Act and the regulations (1) Where any matter or thing is by or under this Act, other than by or under the regulations, directed or forbidden to be done, or where the Minister, the Director-General, a council or any other person is authorised by or under this Act, other than by or under the regulations, to direct any matter or thing to be done, or to forbid any matter or thing to be done, and that matter or thing if so directed to be done remains undone, or if so forbidden to be done is done, a person offending against that direction or prohibition shall be guilty of an offence against this Act." The relevant "matter or thing ... directed or forbidden to be done" arises from the provisions of s 75D, a provision contained in Pt 3A of the EPA Act. Although Pt 3A was repealed on 1 October 2011, its provisions, as they relate to an approval given under that Part prior to its repeal, were continued in force by cl 3(1) of Sch 6A to the Act. 5Section 75D of the EPA Act provided: "75D Minister's approval required for projects (1) A person is not to carry out development that is a project to which this Part applies unless the Minister has approved of the carrying out of the project under this Part. (2) The person is to comply with any conditions to which such an approval is subject."

Approval for open cut coalmining 6None of the facts relevant to the development of the Integra Complex as a mining site nor the conduct of the defendant leading to the commission of the offence, and its actions subsequent to the offence being brought to its attention, are controversial. A Statement of Agreed Facts has been prepared and tendered before me. In addition, affidavit evidence has been read by each party, and the evidence so given is, once again, not contested. It is upon the basis of this evidence in its totality that matters of fact referred to in this judgment have been recited. 7The defendant is a wholly owned subsidiary of an international corporation known as Vale. Its Australian holding company is Vale Australia Holdings Pty Ltd. The parent corporation, Vale, operates or has an interest in diversified mining projects throughout the world. It is recorded in a document tendered in evidence that it is a corporation of very substantial worth. 8Exploration of the Integra Complex site first began in the mid 1970s. As a result of that exploration, development consent for the conduct of open cut mining operations was first granted on 19 March 1990. That consent was followed in November 1991 by the grant of development consent for an underground mine. Operations, so the evidence revealed, commenced at the open cut and underground mines in 1991, including coal handling and coal preparation facilities, the operation of which have been governed by a range of separate planning approvals granted since that time. Historically, it was known as the Glennies Creek Mine and Colliery. 9On 30 May 2008 and again on 3 June 2008 the defendant lodged major project applications for approval of mine operations under Pt 3A of the EPA Act. Approval was sought for two interrelated projects, the first of which was known as the Integra Open Cut Project and the second referred to as the Integra Underground Project. 10On 26 November 2010 the Minister for Planning approved those major project applications. While contained in a single instrument of approval, the instrument separately identifies the two projects. The approval consolidated numerous development consents and project approvals covering both open cut and underground mining operations since their inception in the early 1990s. Those approvals included what was known as the Glennies Creek Open Cut Project. 11The relevant approval for the Integra Open Cut Project comprises a number of individual open cut operations. These include operations known as the North Open Cut and the Western Extension. The North Open Cut Project was formerly known as and is referred to in various documents tendered in evidence, including environmental assessment documents, as the Camberwell Coal Mine or the Glennies Creek Open Cut Coal Mine. 12The approval granted on 26 November 2010 is subject to conditions identified in Sch 2. Condition 1 required that the proponent "implement all reasonable and feasible measures to prevent and or minimise any material harm to the environment that may result from the construction, operation or rehabilitation of the projects". Condition 2 was in these terms: "The proponent shall carry out the open cut project generally in accordance with the: (a) previous open cut EAs; (b) open cut project EA; (c) OC statement of commitments; and (d) conditions of this approval."

A condition of approval is breached 13It is Condition 2 that was breached. In order to understand the breach to which the plea of guilty has been entered, it is necessary to notice that the expression "previous open cut EAs" used in paragraph (a) of Condition 2 is an expression defined in Appendix 2 to the Project Approval. That definition includes reference to the Environmental Assessment prepared for the 'Glennies Creek Open Cut Coal Project'. It is the Environmental Assessment for that project that is relevant for present purposes. 14The Environmental Assessment for the Glennies Creek Open Cut Coal Project was prepared for the defendant. It included reference to the North Open Cut area which is the site the subject of the present charge. Among other matters, the Environmental Assessment addressed what was described as the out-of-pit waste rock emplacement, indicating that such emplacement was to be undertaken so as to achieve a maximum elevation of 135m AHD. That height constraint on rock emplacement is referred to on a number of pages of the Environmental Assessment, either by reference to the Australian Height Datum level or the level of 27m above the existing ground level at the mine site. As I have said, it is that statement, as expressed in the Environmental Assessment, that the prosecutor charges and the defendant accepts, results in a breach of Condition 2 of the Project Approval granted on 26 November 2010. 15Some background to the operation needs to be given. During the course of operations pursuant to the approval, some difficulty was encountered in that it became apparent to the defendant that more rock was needed to be emplaced than had been contemplated when the Environmental Assessment was prepared. Those difficulties are outlined in an affidavit that was filed on behalf of the defendant and sworn by its managing director, Mr Andrew Betts. 16Mr Betts states in his affidavit that some four days after he took up the role as general manager there was what was described as "a gas event" in the underground operations. That event apparently had potentially significant consequences for the overall operation, including the safety of employees. Understandably, that event caused focus to be had on mine operations and the need to make appropriate and different arrangements in respect of them. 17Secondly, he identifies the circumstance that at the time a number of key personnel left the project. This had the consequence that the defendant was left without what might be called "corporate knowledge" of the history of works and activities associated with its operations. 18Thirdly, there was a retainer offered to a consultant in relation to the additional needs that the defendant recognised for, amongst other things, additional rock emplacement. The faith placed in the consultant was not fully realised when it was later appreciated that the focus of work undertaken by that consultant was directed to the requirements of the Mining Act, while overlooking the need to attend to the provisions of the EPA Act and approvals obtained under it. 19I mention those matters not to be critical but simply to indicate, in accordance with the unchallenged evidence of Mr Betts, that the defendant recognised a need to change its process in relation to out-of-pit rock emplacement by increasing the height of that emplacement, coupled with the need to have that change sanctioned by a statutory authority. To that end it sought and obtained an amendment to its Mine Operations Plan, being a process undertaken with the Department administering the Mining Act. That is, the defendant sought to comply with the provisions of the Mining Act by amending its Mine Operations Plan. What it did thereafter by extending the height of the out-of-pit rock emplacement conformed with the approval that had been given to it under the Mining Act.

Discovery of breach: the defendant's response 20The commission of the present offence was drawn to the attention of the prosecutor by a member of the public. Apparently, the height of the rock emplacement was observed from a nearby road known as Stoney Creek Road and perceived from that location to be higher than the Project Approval condition allowed. That observation was made on or about 11 August 2011 and thereafter reported to the prosecutor. The complaint was investigated by officers of the prosecutor who also observed the emplacement from a location on Stoney Creek Road. Having established that the condition appeared to have been breached, the breach was drawn to the attention of the defendant on 23 August 2011. 21When the height exceedence was drawn to the attention of the defendant, it readily acknowledged its breach. Thereafter, as the evidence before me reveals, senior employees of the defendant participated in a number of meetings with officers of the prosecutor and took a number of steps to address the breach that had occurred. I do not recite all of those steps. Suffice it is to notice that, subject to one minor exception with which the prosecutor agreed, the defendant immediately ceased any further rock emplacement at the height of 145m AHD, having made temporary arrangements to place rock elsewhere. The alternate arrangements for placement of rock were submitted to and approved by the prosecutor before that placement was undertaken. 22Subsequently, the defendant applied, pursuant to Pt 3A of the EPA Act, to modify the Project Approval so as to bring Condition 2, as it related to the North Open Cut, into line with the modified Mine Operations Plan by seeking to increase the maximum height of out-of-pit rock emplacement to 141m AHD. That modification was ultimately approved by the Minister's delegate on 18 March 2012. Prior to that approval being granted, the Modification Application was subjected to detailed environmental assessment, including an assessment of the likely impacts of the height being permanently increased to the level sought. Once the modification was approved, the defendant removed the emplaced rock that extended to a height of 145m AHD so as to accord with the modified condition. In the result the out-of-pit rock emplacement extended to a height of 33m above existing ground level rather than 27m that had been the subject of the unmodified 2010 Project Approval.

Sentencing considerations: objective seriousness 23What then should be the consequence for the defendant in the events that I have briefly outlined? The purpose that attends the imposition of a penalty in the present case are those purposes that are identified in s 3A of the Crimes (Sentencing Procedure) Act 1999. Relevantly the purposes of sentencing which are appropriate to be considered in the present case are set out in the paragraphs of that section as follows: "(a) to ensure the offender is adequately punished for the offence, (b) to prevent crime by deterring the offender and other persons committing similar offences, ... (e) to make the offender accountable for his or her actions, (f) to denounce the conduct of the offender, (g) to recognise the harm done to the victim of the crime and the community." 24The maximum penalty for the present offence under s 125 of the EPA Act is $1.1M: s 126(1) of the EPA Act. That maximum penalty reflects the seriousness with which the legislature regards an offence of the present kind. Apart from acknowledging the importance of that maximum penalty, an assessment of the objective seriousness of the offence includes an examination of the objective circumstances and the consequences of the breach that has been committed. The state of mind of the defendant is also relevant when assessing the objective seriousness of the offence. 25The evidence makes clear that the offence was not deliberate. The prosecutor does not submit to the contrary. Rather the offence resulted from a systemic failure on the part of the defendant to identify the ambit of statutory approvals required for the conduct of operations of the present kind. The defendant appreciated that the need for out-of-pit emplacement of rock would exceed the limit previously imposed upon it, indeed imposed upon itself by its own Environmental Assessment that was accepted by the relevant authorities. While addressing the need to increase the height of its rock emplacement by seeking and obtaining an amendment of its Mines Operations Plan under the Mining Act, it failed to appreciate the need to address the height limit imposed by the Project Approval under the EPA Act. 26In assessing the objective seriousness of the offence, it is also relevant that the height exceedence was able to be appreciated by a member of the public who brought it to the attention of the prosecutor. As I have already stated, the height was able to be observed by the informant from a public road, earlier identified as Stoney Creek Road. 27The evidence demonstrates that rock emplacement will always have been apparent from the public road, even if its height had been limited to 135m AHD as the condition of the project approval required. However, the height to which rock had been emplaced by the defendant clearly allowed it to be differentiated from the surrounding land form in a manner that differed from that contemplated by the grant of approval. The height exceedence of up to 10m, together with the impact, if any, of the activity involved in placing material to that height, had not been addressed in the environmental assessment prepared on behalf of the defendant. As I have earlier identified, it was that assessment which controlled height in accordance with Condition 2 of the 2010 Project Approval. 28There must also be weighed with these matters, the circumstance that the defendant believed, albeit incorrectly, that by seeking and obtaining approval to amend its Mine Operations Plan prior to extending the height of rock emplacement, it had fulfilled its statutory obligations. While the defendant's mistaken belief is not advanced as an excuse for its breach of the EPA Act, the circumstance that it held that belief is explainable, at least in part, from the derivative means by which the height limit was imposed by the Project Approval. 29As the opening words of Condition 2 indicate, the carrying out of the Open Cut Coal Project was to be "generally in accordance with" those matters listed in paragraphs (a) to (d) earlier identified in [12] of these reasons. Relevantly, reference is made in paragraph (a) to "previous open cut EAs", including that pertaining to the Glennies Creek Open Cut Coal Project. No qualitative or quantitative requirement of that Environmental Assessment was specifically identified in the conditions of approval. 30The Environmental Assessment has been tendered in evidence before me. I record that it is a very lengthy document, requiring detailed consideration and assessment by a reader in order to distil from it those aspects of a complex and major mining operation that imposed specific limits on activities associated with those operations. 31As I have said, these matters are not identified by way of excuse. Rather they support the submission advanced by the defendant and accepted by the prosecutor that the breach of Condition 2 of the Project Approval was not deliberate. 32When assessing the seriousness of the offence, I also take into account the fact that, by subsequent modification, the originally approved height was increased, albeit not to the height to which the defendant had completed its rock emplacement prior to seeking that modification. 33Also bearing upon the objective seriousness of the offence is the need to preserve the integrity of the system of development control by enforcing adherence to the terms upon which consents and approvals are granted under the EPA Act. That is a matter that has been the subject of observation in a number of cases decided by this Court, including cases which have involved the exploitation of mineral deposits in breach of conditions of a development consent or project approval. 34As Biscoe J observed in Minister for Planning v Coalpac Pty Ltd [2008] NSWLEC 271 (at [44]): "At stake is the integrity of the planning system which is harmed when a person carries out development before undertaking the required assessments and receiving approval." That position was reiterated by his Honour in Minister for Planning v Hunter Quarries Pty Ltd [2010] NSWLEC 246 when his Honour said (at [25]): "There is a need for general deterrence to promote the objective of the EPA Act in deterring persons from engaging in conduct that may harm the environment that has not first been the subject of environmental assessment and approval. General deterrence calls for a sentence that is sufficient to deter the commission of similar crimes by those who might otherwise be tempted by the prospect that only light punishment will be imposed." 35That same matter was taken up by me in Minister for Planning v Moolarben Coal Mines Pty Ltd [2010] NSWLEC 147; (2010) 175 LGERA 93 where I referred to the need to preserve and protect the integrity of the system of planning and development control. In that case, I also observed, as relevant to the present defendant (at [46]): "[The defendant] ... is a corporation engaged in a multimillion dollar coalmining project, an activity which in all its aspects had the potential to have a very significant impact upon the environment. Corporations engaged in activities of this kind must be reminded of the obligations imposed upon them to ascertain the laws and controls applicable to the carrying out of any activity associated with a particular project in order to ascertain the need for any consent or approval to that activity so that the appropriate environmental assessment can be undertaken before any approval is given to it." 36Having regard to all these matters I am of the opinion that the objective seriousness of the offence in question is low to medium.

Subjective considerations 37One then must come to consider the subjective circumstances of the defendant. In the present case those circumstances weigh significantly in its favour. First, as I have already indicated, the commission of the offence was not deliberate. Further, in conducting this significant operation, the defendant has no conviction for any prior offence. The only evidence led on behalf of the prosecutor, additional to the Statement of Agreed Facts, was an affidavit from one of its officers to the effect that during the past 12 months the defendant has been issued with three penalty infringement notices for breach of conditions of the Project Approval. While these matters must be recognised, they do not amount to convictions, albeit they would suggest that, in conducting its operations, the defendant may not always have been as diligent in the observance of conditions as it ought to have been. They are matters which, as the defendant submitted, should not weigh heavily, but not be ignored, when I impose an appropriate sentence. 38Also to be taken into account in favour of the defendant is its cooperation with the prosecutor once the breach of condition had been drawn to its attention. The evidence in this regard is extensive. I have not recited its detail but it is sufficient to note that from the moment that the breach was drawn to its attention the defendant ceased, within a day, from emplacing rock to the offending height. Secondly, it set about taking steps, in cooperation with the prosecutor, to address the problem that it had in storing or stockpiling that rock. That, as I have already said, resulted in an application for modification of its consent and the subsequent grant of approval to that modification application. 39The evidence also reveals that the defendant sought to engage, and has continued to engage, with the local community so as to establish itself as a worthy corporate citizen. The evidence shows that it has made financial contribution to a number of local activities and charities, amounting to something in the order of $52,000. 40Importantly, from the point of view of the protection of the environment, the defendant also gives detailed evidence of the steps it has taken to ensure, so far as it is humanly possible, that breaches of conditions of consent do not occur in the future. The detail of those steps is identified in the affidavit of Mr Betts. It is sufficient to note for present purposes that procedures have been put in place and implemented, so it would seem, to ensure that there are checks and balances to any step the defendant might take in its operations which might potentially involve some impact upon the environment. Those steps include training of appropriate personnel together with what might be called a system of internal audits or checks to ensure that the environment is managed responsibly. 41I also take into account in favour of the defendant that throughout the hearing of this matter the defendant has been represented not only by its counsel and solicitor, but also by Mr Betts, the defendant's environmental officer, and the internal legal officer for the defendant's parent company. All have been present in order to hear the evidence, submissions and to hear my remarks on sentence. 42They are all matters, as I have said, that must weigh significantly in favour of the defendant. So also does the defendant's early plea of guilty which the prosecutor acknowledges entitles it to the full discount for taking that course of action.

Evenhandedness 43Both parties have addressed the question of evenhandedness which requires consideration of penalties imposed by the Court for offences of a similar kind. As both this Court and higher courts have cautioned, seeking to apply the results in other cases can never fully determine the appropriate penalty in a given case. That is because the facts and circumstances that attend a particular defendant in the commission of a particular offence almost always vary from earlier decided cases, with the consequence that there is no direct comparison to be made. 44Each party has identified the decision of Biscoe J in Minister for Planning v Coalpac Pty Ltd in this context. Importantly,the finding in that case was that the breach of a condition of development consent which limited the production of saleable coal was intentional and was financially motivated. No one suggests that facts of that kind were present in the case before me. That, to my mind, is an important distinguishing feature which would not justify a fine of the order imposed in that case, namely a fine of $200,000. 45The second case of some relevance is my own decision in Minister for Planning v Moolarben Coal Mines Pty Ltd. In that case there had been a breach of condition which restrained the clearing of vegetation and which involved some harm to a protected species of vegetation. Again, as is the case here, a primary factor informing the penalty there imposed, was the need to retain the integrity of the planning system by insisting upon adherence to conditions of development consent or project approval. A fine of $70,000, after discount, was imposed. 46A similar penalty was imposed by Biscoe J in Minister for Planning v Hunter Quarries where, again with some similarity to the present case, the breach was not deliberate but was a consequence of the failure to have in place a system that ensured adherence to conditions of consent dealing with production and transport of quarry material. 47I take into account the penalties imposed in these cases. However, as I have earlier recorded, one cannot apply directly the result in one case to a second case because of the circumstances that will differ one from the other.

Synthesing the relevant considerations 48Applying the instinctive synthesis which the High Court says I am to apply when determining an appropriate penalty, I determine that the penalty that should be imposed in this case is a fine of $84,000. This figure takes account of the full discount for the subjective factors that I have identified, including the defendant's early plea of guilty. 49I note that the prosecutor seeks payment to it of half of the fine imposed, pursuant to s 122 of the Fines Act 1996. I do not understand the defendant to make any submission against that application.

Orders 50Accordingly the orders that I make are these:

The defendant is convicted of the offence against s 125(1) of the Environmental Planning and Assessment Act 1979, as charged.
The defendant is fined the sum of $84,000.
I direct that one half of the fine imposed by order 2 be paid to the prosecutor pursuant to s 122 of the Fines Act 1996.
The defendant must pay the prosecutor's costs in the agreed sum of $38,000.
Exhibits may be returned.

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: 23 November 2012

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