Environment Protection Authority v Biosolids Management Pty Limited

6 February 2004 ENVIRONMENT PROTECTION AUTHORITY Prosecutor v BIOSOLIDS MANAGEMENT PTY LIMITED ACN 076 115 850 Defendant EX TEMPORE JUDGMENT HIS HONOUR: 1 The defendant, Biosolids Management Pty Limited, has pleaded guilty to a charge that on or about 25 September 2002 at South Grafton in the State of New South Wales it committed an offence against s 64(1) of the Protection of the Environment Operations Act 1997 ("the PEO Act") in that it was the holder of an environmental protection licence, a condition of which was contravened by a person. 2 The relevant contravention was of condition O1.1 of Environment Protection Licence No. 11059, which provides: Licensed activities must be carried out in a competent manner. This includes: (a) the processing handling, movement and storage of materials and substances used to carry out the activity; and (b) the treatment, storage, processing, reprocessing, transport and disposal of waste generated by the activity. 3 In the present case the defendant was issued with a licence which entitled it to carry out an activity described as "composting and related processing". In addition to condition O1.1, I should refer to condition A4.1 of the licence which is as follows: Works and activities must be carried out in accordance with the proposal contained in the licence application except as expressly provided by a condition of this licence. 4 The relevant facts may be briefly described and have been conveniently collected in a statement of agreed facts which is an exhibit in these proceedings. 5 The defendant operates a waste treatment plant at Armidale Road near Grafton on land leased from Grafton City Council and adjoining the city waste tip. Mr David Crummy was the plant manager at the time of the offence and had the day-to-day responsibility of its operation. He was also at some time a director of the defendant but the evidence is not clear as to when he ceased to be a director. Nevertheless the statement of agreed facts states that he was a director at the time of the offence. 6 As I have noted, the defendant applied for and was granted an environmental protection licence. That licence was first issued in July 2000, although the plant only became operational on or about 27 February 2001. The defendant also holds a waste transporter's licence for two tanker trucks. 7 The defendant's plant treats mainly septic and grease trap waste collected from the surrounding area. The application for the licence stated that the defendant would establish the plant and treat organic waste using new proprietary technology called "Fungi-Gulp" under licence to Fungi-Gulp Pty Limited of King Street, Clifton, Australia. 8 On 25 September 2002 one of the tanker trucks for which the defendant holds a waste transporter's licence was seen with a hose running from the base of that tanker into a pond filled with liquid waste at the premises. Officers of the prosecutor attending at that time described the smell as extremely odorous. The pond covered an area of approximately eighty square metres and the walls of the pond were of sawdust. There was another pond adjacent to the first, also with liquid waste with a similar overpowering smell. This pond was approximately one hundred square metres in area. Large amounts of liquid were leaching through the sawdust walls and pooling over the ground up to twenty five metres from the edge of the ponds. 9 The formation of sawdust ponds to hold liquid waste is not a proper way to deal with septic and grease trap waste. Sample analysis indicates that the waste had extremely high faecal coliform concentrations. These results are indicative of grease trap waste and septic waste and the levels of contaminants are indicative of either untreated or at best inadequately treated waste. 10 The end-use of material was claimed to be as saleable compost. The process had been in operation for about six months prior to the commission of the offence. It seems that the Fungi-Gulp process was a failure and was not fully implemented. The defendant was unable to make it work consistently or properly. Accordingly it seems that the bacteria provided under the Fungi-Gulp licence were added straight to the waste instead of being sprayed over the waste. 11 The pollution control licence was suspended in April 2003 following the defendant's failure to pay fees, its failure to comply with statutory notices including three clean-up notices and its failure to provide a workable and effective management plan. As I understand it, the plant is not currently operating although there is a stockpile of waste still remaining there. 12 Mr C B Rawson, a director of the defendant, has given evidence. He was a director of the defendant at the time of the offence. He says in his evidence that Mr Crummy was the site manager and was responsible for the defendant's operations in Grafton. Mr Rawson was and is based in Melbourne, which is apparently the location of another company with which he is involved known as Biocare Australia Pty Limited. 13 According to Mr Rawson, Mr Crummy was not a good manager. The paperwork of the business was, to use his words, "in a mess". There were other failings on the part of Mr Crummy which demonstrate that he was either an inappropriate person to be in charge of the company's affairs at Grafton, or was otherwise distracted by a series of personal problems. 14 The stockpile of waste has now been moved into the plant buildings on the site, such waste comprising mainly soil and sawdust. The defendant also took steps to remedy odours by capping a wetland area adjacent to the site, at its cost. 15 The defendant went into liquidation in November 2003 with debts, I understand, of something in the vicinity of $80,000 to $90,000. The present directors could have walked away and let the company be wound up. However, Biocare Australia Pty Limited was a debenture holder over the assets of the defendant. It paid out the creditors and either Biocare Australia or Mr Rawson had the winding up order set aside, which I understand occurred on 14 January 2004. That is to say, the present management chose to keep the defendant afloat rather than simply walk away and let it fold. It is acknowledged by Mr Rawson that the failure of the management was to have the right staff in place and it was unaware of Mr Crummy's shortcomings. 16 The matters to be considered in an offence such as this are set out in s 241 of the PEO Act. The first matter to be considered is the extent of the harm caused or likely to be caused by the commission of the offence. The amount of actual harm caused was minimal: the area upon which the activity was being conducted was degraded and there was odour. It seems, however, that there was a real likelihood of potential harm. 17 According to Mr Paul Darvodelsky, an expert in the management of biosolids, that which occurred was contrary to standard safe practices and had the potential to harm the environment by polluting surface and ground waters and providing a breeding ground for disease carrying pests. According to Mr Darvodelsky, the method of discharge of biosolids to sawdust lined ponds was not a treatment process which meets any of the treatment requirements set out in either the New South Wales or United States EPAs' Biosolids Guidelines. Moreover the ponds to which the biosolids were discharged were not on the irrigation area licensed for discharges from the Fungi-Gulp treatment process. Neither does the method of discharge appear to comply with the prosecutor's general requirements for containment of solid and liquid wastes, which require a permeability of less than 10-9 metres per second. This had the consequence that nutrients, contaminants and pathogens would potentially be free to move into surrounding soil, ground and surface water. 18 Mr Darvodelsky states that in the event that the discharge to sawdust lined, earth ponds was a biosolids application practice the nitrogen loading rate far exceeds agronomic rates. Nitrogen not taken up by plants may contaminate ground or surface water. I understand him to be saying that the material was thus not suitable for use as fertiliser in its then condition. He also says that it is likely that the phosphorus loading rate exceeded agronomic requirements by a large margin. 19 Septage contains moderate to high levels of human pathogens. When discharged without further treatment into the open there is potential to cause pathogen contamination of ground and surface waters and attract vectors, that is, flies, rodents or other animals which can further transmit pathogens. Attraction of vectors to untreated waste may create human and/or animal health impacts off the site. 20 It follows that the offence must therefore be regarded as a serious one. 21 The next matter for consideration is the practical measures that may be taken to prevent, control, abate or mitigate the harm. In the present case there was a simple measure that could have been taken following the failure of the Fungi-Gulp process. That simple measure was that the defendant could simply have stopped receiving the waste at the site until other and proper procedures were in place for accepting it and dealing with it. 22 The next matter for consideration is the extent to which the person who committed the offence could have reasonably foreseen the harm caused or likely to be caused to the environment by the commission of the offence. I accept the prosecutor's submission that it is plain that there was a risk of harm. This was clearly self-evident and would have been foreseeable to any reasonable person. 23 The next consideration is the extent to which the person who committed the offence had control over the causes that gave rise to the offence. In the present case Mr Crummy was in control of the defendant's operations; and there is no suggestion in this case that the offence was influenced in any way by some external or outside force or incident. 24 Next is the consideration of whether in committing the offence the person was complying with orders from an employer or supervising employee. It is clear that Mr Crummy, although in charge of the defendant's operations in Grafton, was not acting in accordance with what he was expected to do by the management based in Melbourne. It seems that Mr Crummy himself had decided to dispose of the waste in the manner which occurred; and it is also clear from the evidence of Mr Rawson that was not what he, Mr Rawson, would have approved. 25 There are other considerations which must be taken into account. These are set out in s 21A of the Crimes Sentencing and Procedure Act 1999, which lists a number of aggravating factors and mitigating factors. 26 Amongst the aggravating factors are the injury, loss or damage caused by the offence. As I have noted, although there was very little actual environmental harm there was certainly the potential for environmental harm. Amongst the mitigating factors is the fact that the harm was not substantial, that the defendant does not have any record of previous convictions, that the offender is unlikely to reoffend, that the offender has shown remorse, that the offender has pleaded guilty, and the assistance and co-operation by the defendant shown to the law enforcement authorities. In the present case there has been full co-operation by the defendant with the prosecutor including entering into the statement of agreed facts and the plea of guilty. 27 The difficulty in this case is that the defendant is one which is a corporation which has only just been saved from liquidation. According to Mr Rawson, the operations at Grafton have not made any money. It has been, to use a colloquialism, a bottomless pit. The operation has never worked as intended, but rather than simply walk away and leave the mess for others to clean-up the defendant has been saved from being wound up and is apparently taking steps to rectify the position and effect a clean-up and proper disposal of the waste that remains. Under these circumstances a monetary penalty in any significant amount would only be likely to inhibit that process. That is to say, there is a very little need in the present case for a specific deterrent. 28 As Mr Barley, who appears for the prosecutor, points out, however, there is a need for a general deterrent. The fact is that the defendant was a holder of a licence under the pollution control legislation. Such a person has a heightened responsibility to ensure that its operations are conducted in accordance with the conditions of the licence: see in particular the judgment of Pearlman J in Environment Protection Authority v Port Kembla Copper Pty Ltd (2001) 115 LGERA 391. In that case it was said by her Honour that a contravention of a pollution licence involves a breach of public trust. 29 The facts in the present case seem to me to closely correspond to those in Cabonne Shire Council v Environment Protection Authority (2001) 115 LGERA 304. It is a principle of sentencing that weight must be given to the general pattern of sentences currently being passed in like cases. That is also known as the principle of even-handedness. Cabonne Shire Council v Environment Protection Authority is a judgment of the Court of Criminal Appeal which is binding on this Court and I gain a great deal of guidance from it. 30 In that case raw sewage was disposed into a gully. The trial judge determined that a fine of $75,000 was appropriate. The Court of Criminal Appeal, however, regarded that as excessive and decided that an appropriate penalty was a fine of $15,000, which should be discounted for the plea of guilty to $11,250. 31 In the present case I am of the opinion that a full discount of thirty per cent should be allowed for not only the early plea of guilty but also the other matters to which I have referred. After taking into account such a discount the penalty in the present case in my opinion should be $10,000. 32 The prosecutor also seeks a publication order under s 250(1) of the PEO Act. I have referred to the need for a general deterrent. The principal reason for imposing a fine in the present case is not its specific deterrent value but its general deterrent value. I think, therefore, that a message should go to the community that holders of pollution control licences are under a heightened responsibility to ensure that their operations are conducted in accordance with the conditions of such licences. I am prepared to make a publication order as requested. 33 I also note, in fixing the penalty, that the defendant has agreed to pay the prosecutor's costs of $18,000. 34 The formal orders are as follows:

1. The defendant is convicted of the offence as charged.
2. The defendant must pay a penalty in the sum of $10,000.
3. I direct that the defendant place a notice, within thirty (30) days, in the "Daily Examiner" Grafton, the "Advocate" Coffs Harbour and the "Northern Star" Lismore, such notice depending on column width to be as near as possible to 10 x 15 centimetres, and in the following form: - On 6 February 2004 Biosolids Management Pty Ltd was found guilty in the Land and Environment Court of a pollution offence. The Company placed inadequately treated septic tank waste and grease trap wastes in sawdust ponds at its premises in Armidale Road, South Grafton. This was contrary to standard safe practice and had the potential to harm the environment by polluting waters and providing a breeding ground for disease-carrying pests. The Company was convicted of contravening a condition of its environment protection licence by failing to carry out its activities in a competent manner. It was fined $10,000 and ordered to pay legal costs of $18,000. The Company's licence is currently suspended. This notice is placed by order of the Land and Environment Court.
4. The defendant must pay the prosecutor's costs in accordance with section 253 of the Criminal Procedure Act 1986, or as agreed. 5. The exhibits may be returned.

I hereby certify that the preceding 35 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice Lloyd. Associate Dated: 6 February 2004

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