Environment Protection Authority v Austar Coal Mine Pty Ltd

Events after the offence 9The incident was first noticed by Austar employees arriving at work at 6.00am on 29 July 2010. They observed foam in parts of Bellbird Creek located on the mine site. They reported it to the plant maintenance planner, Mr Taylor, who inspected the creek and reported to the plant manager, Mr Cross, who in turn reported it to Austar's environmental coordinator, Mr Mulhearn. From about 7.30am onwards, Mr Mulhearn conducted an inspection at the point of discharge adjacent to the transpiration area and upstream and downstream of the point of discharge. At 12.00pm, Mr Mulhearn collected water samples from upstream, the point of discharge and at the Doyle Street Dam. 10Meanwhile, the Office of Environment and Heritage ("OEH") had received a complaint on its Environment Line, about 10.25am. At 1.15pm, an OEH officer, Mr Clair, spoke to Mr Mulhearn and was advised that an incident had occurred and investigations were underway to determine the cause of the incident. At 2.35pm, Mr Mulhearn formally reported the incident to OEH's Environment Line. 11On 30 July 2010, OEH officers conducted an inspection of the premises and Bellbird Creek and took samples and photographs. 12Austar's investigations, on 29 July and subsequent days, identified the cause of the incident as being seepage of effluent from the transpiration area into the piped section of Bellbird Creek. Austar took a number of actions in response to the incident: (a)Following the incident, Austar used Doyle Street Dam to intercept water in Bellbird Creek and ensure that contamination did not leave the mine site. Water that was intercepted by the Doyle Street Dam was pumped to another dam on the mine site. (b)Following the incident, Austar used water from its reverse osmosis plant to flush the impacted section of Bellbird Creek down to Doyle Street Dam. The cost of these controls was $9,000. (c)From 5 August 2010, all shower and wastewater from the bathhouse is now pumped into an above ground tank. (d)On 11 October 2010, Austar decommissioned the plant's on-site septic system and transpiration area, and installed a new aerated sewage management system. Austar have entered a maintenance contract for quarterly servicing of the new system. As a result, Austar no longer applies effluent to the transpiration area located above the piped section of Bellbird Creek. The total cost of replacing the septic tank was $25,000. (e)Austar have changed the bathhouse body wash product used by employees in the bathhouse from Castrol Hair and Body Wash to a new product called "Gent-L", which is licenced by Good Environmental Choice Australia Ltd to use the Environmental Choice Australia Ecolabel.

Sentencing considerations 13The sentence I impose should reflect both the objective gravity of the offence and the personal or subjective circumstances of the particular defendant. I am required to consider, and have considered, the factors of relevance in s 21A of the Crimes (Sentencing Procedure) Act 1999 and s 241(1) of the Protection of the Environment Operations Act . The purposes for which the court may impose a sentence are those set out in s 3A of the Crimes (Sentencing Procedure) Act . Paragraphs (a), (b), (e), (f) and (g) are relevant and are purposes of sentencing for which I impose the sentence in this case.

Nature of offence and maximum penalty 14Pollution of waters is a result offence where the proscribed result directly undermines the objects of the Protection of the Environment Operations Act . It is a strict liability offence. 15The maximum penalty for a corporation for the offence is $1 million.

Objective harmfulness of offence - environmental harm 16The extent of the harm caused or likely to be caused to the environment by commission of the offence is relevant to the objective gravity of the offence: s 241(1)(a) of the Protection of the Environment Operations Act and s 21A(2)(g) of the Crimes (Sentencing Procedure) Act . 17In this case, the pollution caused actual environmental harm. An unknown quantity of effluent entered Bellbird Creek on 29 July 2010. However, Austar estimates that up to 3,300 litres of water are treated by the on-site septic system per day. A lesser quantity than this would have ended up as effluent seeping from the transpiration area into the piped section of Bellbird Creek. 18The effluent that did escape caused elevated levels of methylene blue active substances, nutrients and faecal coliforms in the two kilometre length of the creek downstream of the plant to the Doyle Street Dam. The concentration of methylene blue active substances was at a level toxic to aquatic biota, and the concentration of nutrients (phosphorus and nitrogen) were at a level above the default figure value set out in the Australian and New Zealand Environment and Conservation Council, Australian Water Quality Guidelines for Fresh and Marine Water (2000) . The presence of detergents in the effluent caused white foam in sections along a length of two kilometres of Bellbird Creek. There was localised odour at the point of discharge and further downstream on 29 and 30 July 2010. 19By reason of the concentrations of methylene blue active substances and nutrients, the parties agree that the incident is likely to have adversely impacted any aquatic biota in Bellbird Creek at the time from the point of discharge to Doyle Street Dam (a distance of about two kilometres). However, there were no reports of dead or dying biota observed in or around Bellbird Creek on 29 and 30 July 2010. 20The parties also agree that the incident had the potential to cause harm to the environment in that the discharge of the pollutants into Bellbird Creek had the potential to transmit methylene blue active substances, nutrients and faecal coliforms further downstream in Bellbird Creek and off the Austar Coal Mine site if water levels in the creek had been higher. 21The actions taken by Austar to contain the pollution and to flush the creek had the effect of mitigating environmental harm. 22I find the actual likely harm to the environment to be low.

Foreseeability of risk of harm 23The extent to which the defendant could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence is a relevant objective circumstance: s 241(1)(c) of the Protection of the Environment Operations Act . 24The risk that effluent applied to the transpiration area might enter Bellbird Creek was reasonably foreseeable. The piped section of Bellbird Creek was directly underneath the transpiration area. 25The age of the on-site septic system is unknown. However, Austar estimated it was first commissioned in about the 1920s. The age of the piped section of Bellbird Creek is also unknown but it may be reasonable to infer that it was undertaken at a similar time to the commission of the on-site septic system which included the transpiration area above the piped section of Bellbird Creek. The older age of the on-site septic system and the piped section at Bellbird Creek underneath the transpiration area increases the risk of defects in those systems and structures. 26Austar did not have a formal process for inspection, maintenance or monitoring of the bathhouse, on-site septic system or transpiration area. Austar had not carried out any environmental audit or study in relation to the bathhouse, on-site septic system or transpiration area. An environmental risk assessment of the plant's surface water management system in 2005 did not include an assessment of the bathhouse, on-site septic system or transpiration area. There is no evidence that the integrity of the piped section of Bellbird Creek underneath the transpiration area was ever inspected, maintained or monitored or subject to a risk assessment. As a consequence, there had been no formal process whereby any defects in the on-site septic system and transpiration area, and the piped section of Bellbird Creek, could have been detected and remedied. 27In these circumstances, there was a foreseeable risk that a hydraulic connection could have formed between the transpiration area and the piped section of Bellbird Creek and hence that any effluent applied to the transpiration area could seep into the piped section and thereby pollute waters in the creek.

Practical measures to prevent risk of harm 28Another factor relevant to the objective gravity of the offence is the practical measures that may be taken to prevent, control, abate or mitigate harm to the environment by the commission of the offence: s 241(1)(b) of the Protection of the Environment Operations Act . 29A reasonable person's response to the foreseeable risks to which I have referred, of hydraulic connection between the transpiration area and the piped section of Bellbird Creek, of effluent seeping into the piped section, and of polluting waters in the creek, would have been to take precautions to ensure that the systems and structures did not lose integrity so as to cause pollution of the creek. The incident, and the harm caused by the commission of the offence, may have been avoided if Austar had: (a)conducted an environmental study or audit of the bathhouse, on-site septic system and transpiration area to determine where the pollution could occur from those parts of the plant; (b)implemented a formal inspection program in relation to the bathhouse, on-site septic system and transpiration area to monitor the performance of these parts of the plant; (c)implemented a formal maintenance program to ensure that no pollution occurred at the bathhouse, on-site septic system and transpiration area. (d)located the transpiration area to another area of the mine site and away from the piped section of Bellbird Creek; (e)replaced the on-site septic system and transpiration area with a more up-to-date system, such as the aerated sewerage management system Austar installed after the incident. 30These were practical measures that Austar could have taken and, if taken, would have prevented the harm caused by commission of the offence.

Control over causes 31The extent to which a defendant had control over the causes which gave rise to the offence is another factor relevant to the objective gravity of the offence: s 241(1)(d) of the Protection of the Environment Operations Act . In this case, Austar had control over the plant, including the bathhouse, on-site septic system and transpiration area, and the application of the effluent on the transpiration area.

Complying with orders 32The fact of complying with an order of a superior, referred to in s 241(1)(e) of the Protection of the Environment Operations Act , is not relevant in this case.

State of mind of the offender 33The offence of polluting waters is a strict liability offence and hence the state of mind of an offender is not an element of the offence. Nevertheless, the offender's state of mind in committing the offence can increase 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. 34In this case, the prosecutor originally submitted that either Austar's conduct in relation to the operation of the on-site septic system was negligent or the on-site septic system was operated in circumstances where there was a risk of harm. However, at the hearing, the prosecutor withdrew its submission that Austar was negligent. Nevertheless, the prosecutor continued to press the second way it put as to the state of mind of Austar in committing the offence. The prosecutor submitted that Austar's knowledge of the circumstances surrounding the offence (as described above) meant that the on-site septic system was operated in circumstances where Austar should have known that there was a risk of harm. The prosecutor submitted that this made Austar's conduct more serious than where an offender could not have known that there was any risk of harm. Austar submitted that negligence or recklessness has not been established by the prosecutor. 35I am not satisfied that the prosecutor's second way of putting an aggravated state of mind is relevantly different to the factors of foreseeability of the risk of harm and practical measures to prevent risk of harm under s 241(1)(b) and (c) of the Protection of the Environment Operations Act . I have already made findings in relation to these factors.

Prior criminality 36Austar has not been prosecuted previously for any environmental offences. However, since Austar began operating the Austar Coal Mine in 2005, it has been issued with two penalty notices. The first, on 1 June 2011, relates to the incident the subject of this charge. Austar was issued with a penalty notice for its delay in notifying the EPA of the incident on 29 July 2010. The fine in the penalty notice has been paid. 37The second, on 6 November 2009, was for a breach of s 120 of the Protection of the Environment Operations Act after a discharge of coalmine tailings into Bellbird Creek. In addition to issuing the penalty notice, OEH varied Austar's environment protection licence to include a series of pollution reduction programs requiring Austar to carry out clean up activities at Bellbird Creek. The fine in the penalty notice has been paid and Austar has undertaken the pollution reduction program. 38Austar's prior criminality is not part of the objective circumstances of this offence and cannot be used to impose a sentence which is greater than the upper boundary of a proportionate sentence set by the objective gravity of the offence. Nevertheless prior criminality can still legitimately be taken into account in fixing where, within the boundary set by the objective circumstances, a sentence should lie. Prior criminality is relevant to show whether the offence is an uncharacteristic aberration or whether the offender has manifested a continuing attitude of disobedience to the law. If so, the purposes of retribution, deterrence and protection of society may all indicate that a more severe penalty is warranted. 39In this case, however, the two prior penalty notices do not show that Austar has a continuing attitude of disobedience to the law.

Plea of guilty 40Austar entered a plea of guilty at the second mention of the matter in the court, being the first reasonable time for the entering of a plea following the service of all of the prosecutor's evidence. The prosecutor accepts that this timing warrants the maximum discount of 25 per cent for the utilitarian value of Austar's plea of guilty. I agree.

Contrition and remorse 41Austar has expressed genuine contrition and remorse for the commission of the offence. Mr McLean, the General Manager of Austar, gave evidence that both Austar, and its parent company, Yancoal Australia Limited, regretted the incident that occurred on 29 July 2010. Mr McLean was in court during the sentencing hearing as were Mr Crawford, director of Yancoal Australia Limited, and Mr Mulhearn, the environmental coordinator of the Austar Coal Mine. 42The early plea of guilty is consistent with Austar's contrition and remorse. Austar promptly investigated then took action to prevent further harm and to remedy the harm caused to the creek by the pollution incident. Austar has taken action subsequently to implement measures to prevent reoccurrence of the incident. 43Mr McLean has also expressed Austar's wish for Austar, as part of the penalty, to pay an amount to Conservation Volunteers Australia to undertake a regeneration project in Bellbird Creek along the section of the creek affected by Austar's conduct in this case. All of these actions speak of Austar's contrition and remorse. 44Austar's expressed regret is also consistent with its prior commitment to environmental management at the Austar Coal Mine and its contribution to local community and environmental groups.

Assistance to authorities 45Austar cooperated with and provided assistance to OEH about the incident and its causes, and cleaned up its consequences. Austar participated in site inspections and recorded interviews with OEH. Austar has agreed to a statement of agreed facts. Austar has also agreed to pay the prosecutor's professional legal costs in the amount of $25,000 and the prosecutor's investigation costs under s 248 of the Protection of the Environment Operations Act in the amount of $17,269.13.

Synthesising the objective and subjective circumstances 46Taking both the objective circumstances of the offence and the subjective circumstances of the offender into account, as well as the other orders which will be made for payment of the prosecutor's investigation and legal costs, I consider the appropriate penalty to be in the sum of $100,000. This sum should be reduced by 25 per cent for the utilitarian value of Austar's plea of guilty. The resultant amount is $75,000. 47I have considered the penalties imposed in other cases for water pollution offences. The penalty in this case, having regard to the circumstances, meets the criteria of even-handedness with those other penalties.

Type of penalty that should be imposed 48Both the prosecutor and Austar submit that this is a case where it is appropriate for the Court to make an order under s 250(1)(e) of the Protection of the Environment Operations Act , coupled with a publication order under s 250(1)(a), in lieu of a fine. The orders that are set out in Pt 8.3 of the Protection of the Environment Operations Act , which include the orders under s 250, may be made by the Court regardless of whether any penalty is imposed or other action taken in relation to the offence: see s 244(2) and (3) Protection of the Environment Operations Act . 49The parties have not agreed, however, on the particular project. The prosecutor has proposed the Mount View Corridor Threatened Species Habitat Rehabilitation Project ("the Mount View Project") to be undertaken by the Hunter-Central Rivers Catchment Management Authority ("HCRCMA"). Mr Callaghan Cotter, the Catchment Coordinator Lower Hunter, at the HCRCMA has provided information on the Mount View Project. 50The Mount View locality has been identified as a strategic conservation corridor in the NSW OEH Cessnock Biodiversity Management Plan. At a local scale, the area contains remnants of the Lower Hunter Valley Dry Rainforest, a vulnerable ecological community listed under the Threatened Species Conservation Act 1995, and potentially a climber, Cynanchum elegans , an endangered species listed under the Threatened Species Conservation Act and the Environment Protection and Biodiversity Conservation Act 1999 (Cth). 51The Mount View Project proposes to work with landholders to restore linkages in the Mount View Conservation Corridor and to rehabilitate Lower Hunter Valley Dry Rainforest remnants on their properties. HCRCMA believes that engaging landholders to undertake conservation works that improve the health and condition of native vegetation in their property will:

• provide opportunity to restore landscape connectivity by linking large patches of remnant bushland adjacent to Cessnock and Kurri Kurri to Cedar Creek;
• facilitate wildlife movement;
• restore key habitat for threatened plant species and vegetation communities; and
• improve biodiversity values of local terrestrial systems. 52HCRCMA has proposed onground works including planting of local provenance native tube-stock, installation of stockproof fencing to protect remnant vegetation and revegetated areas, and weed control. Ongoing control of environmental weeds and fire hazard will be required as a result of stock exclusion. 53HCRCMA states that, as a statutory authority, it has rigorous accounting systems in place and is able to ensure that all funds received from all sources are able to be readily tracked and accounted for. Financial reporting can be provided together with project activity reporting. As a statutory authority, HCRCMA must comply with all facets of public sector accounting and reporting, including annual audits by the NSW Audit Office covering compliance and accountability of expenditure of public funds. 54HCRCMA has confirmed that it is in a position to receive any funds Austar is ordered to pay and that it has the capacity to invest them in the project to improve biodiversity and connectivity in the Mount View locality. 55Austar has proposed the Bellbird Creek Bush Regeneration Project to be undertaken by Conservation Volunteers Australia ("CVA"). CVA has provided information on the Bellbird Creek Bush Regeneration Project in a project quotation. 56The Bellbird Creek Bush Regeneration Project would use a newly trained, indigenous bush regeneration team to identify and remove environmental weeds, primarily lantana, from either side of the two kilometre length of Bellbird Creek affected by the commission of the offence. Weed removal would be undertaken using both manual and chemical methods. CVA would undertake followup of weeded areas at threemonthly intervals. 57Other than the benefit of removal of environmental weeds, no other information is available as to the environmental benefits likely to be derived by the project. There is no assessment of the conservation value of the targeted two kilometre length of Bellbird Creek. This section of the creek is wholly within the Austar Coal Mine site and under the control of Austar. 58Mr McLean states that Austar is prepared to pay $66,200 to CVA for the first phase of the Bellbird Creek Bush Regeneration Project. CVA has indicated to Austar that it is prepared to undertake that work if it is paid by Austar. CVA said that, in consultation with Austar, media announcements would be formatted and agreed and released prior to each rotation of activities to raise awareness of the project within the community. 59No information was provided on CVA's systems of accountability, auditing or reporting on the receipt or expenditure of funds or on the project activity. 60I find HCRCMA's Mount View Project to be superior to CVA's Bellbird Creek Bush Regeneration Project, including in terms of the greater and more certain environmental outcomes; the greater and more certain accountability of HCRCMA; and the independence from Austar (the project not being on the Austar Coal Mine site or involving media releases agreed with Austar). The disadvantage that the environmental outcomes from HCRCMA's Mount View Project will be delivered slightly further removed from Bellbird Creek, the environment affected by the offence, than would be the case under CVA's Bellbird Creek Bush Regeneration Project, is not sufficient in the circumstances to outweigh the benefits of HCRCMA's Mount View Project. 61The order under s 250(1)(e) should be to pay the amount of $75,000 which I have determined to be the appropriate penalty to the HCRCMA for the Mount View Corridor Threatened Species Habitat Rehabilitation Project. 62Both the prosecutor and Austar also submit that a publication order should be made under s 250(1)(a) but disagree as to the terms of the public notice. The disagreement relates to the inclusion of statements as to the cause and consequences of the incident: the prosecutor seeking inclusion but Austar seeking exclusion of statements to that effect. 63I consider it is appropriate to include brief statements concerning the cause and consequences of the incident. In light of my findings of fact as to the cause and consequences of the incident, I would adjust the language proposed by the prosecutor. I find that the terms of the public notice that should be given should be as follows: " Austar Coal Mine Pty Ltd convicted for polluting waters near Pelton Austar Coal Mine Pty Ltd has been convicted by the Land and Environment Court of NSW of having committed an offence against s 120(1) of the Protection of the Environment Operations Act 1997 of having polluted waters. The offence involved an amount of water containing detergent and effluent from a bathhouse facility at the Austar Coal Mine, which Austar had applied to a grassed, transpiration area, seeping into a piped section of Bellbird Creek near Pelton. The incident caused white foam and elevated levels of detergent, nutrients and faecal matter along approximately 2km of Bellbird Creek. Austar was prosecuted by the Environment Protection Authority (the EPA). Austar cooperated with the EPA during the course of its investigation and pleaded guilty to the charge. The Land and Environment Court convicted Austar for the offence and ordered Austar to pay $75,000 to the Hunter-Central Rivers Catchment Management Authority for a rehabilitation project in the Mount View Conservation Corridor instead of a fine; to pay the EPA's costs and expenses of investigation and legal costs in a total amount of approximately $42,000; and to publish this notice. This notice was placed by order of the Land and Environment Court of NSW and was paid for by Austar." 64The public notice should be placed in two publications, the Newcastle Herald newspaper and the Australian Mining Monthly magazine, within the first ten pages of each publication at a quarter of a page in size. 65In addition to these orders under s 250(1)(a) and (e), I will make an order under s 248(1) of the Protection of the Environment Operations Act that Austar pay the EPA's costs and expenses of investigation of the offence in the sum of $17,269.13 and an order that Austar pay the EPA's legal costs of $25,000.

Orders 66The Court makes the following orders: 1.The defendant is convicted of the offence against s 120(1) of the Protection of the Environment Operations Act 1997 as charged. 2.The defendant, pursuant to s 250(1)(e) of the Protection of the Environment Operations Act, is to pay to the Hunter-Central Rivers Catchment Management Authority, within 28 days of this order, the amount of $75,000 to be used for the Mount View Corridor Threatened Species Habitat Rehabilitation Project, as set out in Annexure A. 3.All future public references by the defendant to the payment above shall be accompanied by the following passage: "Austar Coal Mine Pty Limited's contribution to the funding of the HunterCentral Rivers Catchment Management Authority is part of a penalty imposed on it by the Land and Environment Court of NSW after it was convicted of polluting waters, an offence against s 120 of the Protection of the Environment Operations Act 1997." 4.Pursuant to s 250(1)(a) of the Protection of the Environment Operations Act, the defendant, within 21 days of this order, is to place a notice in the following publications: (a) Newcastle Herald newspaper within the first ten pages; and (b) Australian Mining Monthly magazine within the first ten pages, at a quarter of a page in size in the form of Annexure B. 5.Within 14 days of the date of publication of the notices set out in Order 4, the defendant is to provide to the prosecutor a complete copy of the page of the publications in which the notice appears. 6.The defendant, pursuant to s 248(1) of the Protection of the Environment Operations Act, is to pay the prosecutor's costs and expenses of investigating the offence in the sum of $17,269.13, within 28 days of this order. 7.The defendant is to pay the prosecutor's legal costs in the sum of $25,000, within 28 days of this order.

Annexures (PDF) 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: 20 December 2011