Environment Protection Authority v Boral Australian Gypsum Limited

Environment Protection Authority v Boral Australian Gypsum Limited - [2009] NSWLEC 26 - NSWLEC 2009 case summary — Zoe

[18]

13 The clean up took place on Sunday 26 August 2007 and included pumping Gardisperse from the batching tank to the storage tank. On Monday 27 August 2007 a Veolia truck was used to pump out material from the off-site stormwater drain and the unnamed waterway at the suggestion of EPA officers. Additional evidence 14 The Defendant read the affidavits of Mr Batstone, executive general manager of the Defendant, dated 4 February 2009, Mr Campbell, Manufacturing Manager at the premises since November 2004 and Distribution Manager since December 2008, dated 6 February 2009, and Mr Strauch, Boral's General Manager Environmental Services, dated 4 February 2009. 15 Mr Batstone's affidavit referred to the his actions when he became aware of the spill and its general circumstances. He sent a report on the spill the day after he was informed of the incident to the CEO of Boral, Mr Pearse. Mr Pearse is also a board member of Boral. Mr Batstone was aware of the decision of the general manager operations, Mr Evans, to undertake a strategic review across all the business units to ensure that no similar incident could occur elsewhere. He expresses the regret of the board of Boral and of the Defendant for the incident. He discusses Boral and the Defendant's commitment to responsible environmental management, including investment in training programs for staff and technology to reduce the risk of a spill. He also considered there had been a prompt and effective response to the incident. 16 Mr Batstone also gave oral evidence concerning his reporting the incident to Mr Pearse. He described Mr Pearse's expression of concern and regret that the offence had happened. He also expressed remorse on his own behalf and that he was embarrassed by the fact that the offence had occurred. 17 Mr Campbell's affidavit refers to the detailed environmental management procedures in place for the premises, including regular weekly inspections by trained staff to detect any potential environmental problems, the identification of these to management with follow up action identified and six monthly inspections by EPA staff with suggestions for improvement in relation to dust from trucks. Environmental training of employees is extensive and ongoing as detailed in the affidavit. The response to the incident as soon as it was known and the follow up action which was implemented immediately is set out including the replacement of the faulty sensor and increasing bunding size for the batching tank. These measures cost about $10,500. Other measures have been implemented at other plants at additional cost. The Defendant has implemented a number of measures at the site as detailed in the SOAF at par 76 and at other plants it owns since the offence as identified in the affidavit of Mr Batstone at annexure C. 18 Mr Strauch identified the approach of Boral generally to environmental management as overseen by him as General Manager Environmental Services. His affidavit attaches Boral's environmental policy and annual report showing the environmental reporting undertaken by Boral.

[30]

Finding 25 A substantial amount of liquid (6,000 litres) which was not readily biodegradable and has low to moderate toxicity in the aquatic environment if not substantially diluted escaped from the Defendant's premises. Gardisperse requires active mixing to disperse in water, according to the experts' report. The samples taken more than a day after the incident suggest that the chemical was diluted as it moved towards and into the Parramatta River given the increasingly weaker concentrations found in the samples. As submitted by the Prosecutor the lack of evidence of actual harm does not mean there was none. Rather there is likely to have been harm to sediment dwelling organisms and plankton, evidence of which is difficult to obtain. This is in part related to the length of time between the escape of the chemical into the river and the discovery of that by the Defendant's employees many hours later as night was falling on Sunday 26 August 2007. 26 As identified in the joint report extracted above, there is clear potential for harm as defined in the dictionary to the POEO Act. That large dilution factor is required to reduce/remove the toxicity of the chemical suggests that there is a likelihood of significant harm to sediment dwelling organisms. The joint report identifies worst case scenarios in par 10 and 11 and sets out in par 12 various factors which could have potentially influenced the extent of mixing which may have occurred. Their conclusions are set out in par 13-15. 27 Gardisperse does not bioaccumulate in organisms and the two experts concluded in par 15 of the joint report that assuming adequate dilution rates of river water they considered it was unlikely there would be significant long term impact due to the short timeframe of the incident. The harm caused in this matter is reasonably serious although of short rather than longer duration. (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm Prosecutor's submissions 28 There were several practical measures which the Defendant could have taken to prevent, control or mitigate the harm caused by the offence. Businesses must arrange their affairs to ensure that pollution will not occur per Mahoney JA in Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357. A number of precautionary steps could have been taken to avoid the offence occurring including ensuring there was an adequate bund around the batching tank, installing an overflow alert mechanism, programming the computer program controlling the supply process between the storing tank and batching tank so that the process did not work when the concrete plant was not operating, The Defendant runs a profit-making business where managing the risk of accident is an intrinsic part of managing their operations. Defendant's submissions 29 The Defendant has installed a number of additional mechanisms to prevent the incident from occurring in the future: (a) A new level sensing probe; (b) A secondary mechanical level switch that will shut off the pump from the storage tank if the electronic level sensing probe fails in the batching tank; (c) A tertiary electronic level sensing switch of the batching tank; (d) A comprehensive review of not only this site but all sites within the Defendant's business to ensure similar mechanisms are in place; (e) Changing the computer program so that filling can only occur when the cornice plant is being operated and thus when staff are present; (f) Increasing the batching tank bund capacity to cater for the tanks within the bund plus the volume of the storage tank; and (g) Sealing of stormwater entry points. 30 With hindsight there is always something that could have been better. In terms of mitigation of harm the foreseeability of harm was limited however, so that the measures which could have been taken must be considered in that light.

[31]

Finding 31 There were practical measures that could have been taken to mitigate the harm caused by preventing the incident giving rise to the harm as identified by the Prosecutor. The extent of foreseeability of harm I consider in the next section. In terms of mitigating the harm caused by the incident, there were clean up measures implemented to try to reduce the harm after the event and these were undertaken promptly. As identified by the Defendant a number of measures have been implemented to ensure there is no possibility of the offence occurring again. (c) the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence 32 The Prosecutor submitted that as the holder of an environmental protection licence the Defendant was on notice concerning possible harm to the environment. The failure of the sensors was foreseeable given the acknowledgment of the Defendant's engineer that industrial sensors have a limited lifetime. The harm caused was foreseeable as the Gardisperse is known to be moderately toxic, it is not assigned for release into the environment and no backup sensor existed in the event of the failure of the electronic level sensor in the batching tank. The Defendant should have been aware that the batching tank was in an inadequately bunded area. 33 The Defendant submitted that while the spill was foreseeable it was not a readily foreseeable risk. The electronic level sensing probe had operated without any problem since 2003 and had failed partially without warning. The Defendant had to foresee the sensor probe would detect a low level of Gardisperse and trigger the refilling process but not detect a high level so that pumping would continue and not be detected and that the entire storage tank would be pumped out. The storage tanks could have held more than batching tanks (1,000 litres) and the bund (6,000 litres). The risk was not identified in regular internal audits and despite a rigorous environmental system.

[32]

Finding 34 I accept the Defendant's submission to some extent that while the incident was foreseeable the probability of this incident arising was reasonably remote and depended on several circumstances combining to result in the incident giving rise to the offence. In reaching that conclusion I take into account the evidence of Mr Batstone and Mr Campbell concerning the environmental management measures in place at the premises. It appears that consistent efforts have been made to actively manage the environmental impact of the activities at the premises for a considerable period. The fact that despite these measures no problem with the system had been identified suggests that the likelihood of this combination of events arising was not immediately apparent. The caveat on that finding is that I agree with the Prosecutor's submission that the inadequate bunding around the batching tank should have been obvious given the far greater capacity of the storage tank which fed it. I consider the level of foreseeability was at the lower end of what could reasonably be expected of a responsible operator except that the inadequate bund capacity was reasonably foreseeable. (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence 35 The Prosecutor submitted and the Defendant accepted that as the owner/operator and licensee of the premises it had complete control of the operation of the premises. The Defendant further submitted however that its liability on this basis was tempered by the circumstances in this case where it was not particularly foreseeable that this offence could occur. 36 Given that the premises are under the complete control of the Defendant and it operates and has done for some time a large and complicated business at the plant it clearly had control over the causes giving rise to the offence, as the Prosecutor submitted. There is no basis to ameliorate that finding based on the Defendant's submissions concerning foreseeability. (e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee. 37 Not applicable.

[38]

Guilty plea s 21A(3)(k), 22 CSP Act 45 The Defendant pleaded guilty at the earliest opportunity. A plea of guilty entitles the Defendant to a discount in penalty under s 22 of the CSP Act in the range of 10-25 per cent: R v Thomson; R v Houlton (2000) 49 NSWLR 383; R v Sharma (2002) 54 NSWLR 300. The Prosecutor accepts that there has been a guilty plea at the earliest opportunity. There should be a large discount on this basis. Remorse (s 21A(3)(i) CSP Act) 46 The Defendant has expressed remorse through the affidavit and oral evidence of Mr Batstone. I recently determined in Hawkesbury City Council v Johnson; Hawkesbury City Council v Johnson Property Group Pty Limited (No 2) [2009] NSWLEC 6 that evidence of contrition was best adduced from the sole director of the corporate defendant. In this case the corporate structure of the Defendant and its large parent company, Boral, has been set out in the affidavits of Mr Strauch and Mr Batstone. Given the size of the parent company, its management structures and the senior position occupied by Mr Batstone as head of the plasterboard division of Boral (the Defendant subsidiary company), I accept his expression of remorse on behalf of the Defendant and also his personal expression of remorse in the course of giving oral evidence. Assistance to law enforcement authorities - s 21A(3)(m) 47 There has been full cooperation with the Prosecutor in relation to the offence and in relation to the preparation for this hearing as evidenced by the SOAF. The incident was reported promptly when the total volume of the Gardisperse was worked out, employees having initially and incorrectly thought the spill was a much smaller volume. 48 The Defendant has no previous convictions (s 21A(3)(e) CSP Act) and is unlikely to reoffend (s 21(3)(g)). Evenhandedness 49 The principle of evenhandedness requires that the Court consider if there is any sentencing pattern for like offences in order to determine a consistent approach to penalty. This principle must always be applied subject to the particular circumstances of the case before the Court. The Prosecutor referred to two cases with some factual similarity to this matter which have been decided since the penalty was increased in 2006.

[39]

50 The defendant in Environment Protection Authority v Nalco Pty Ltd [2007] NSWLEC 831 operated a chemical manufacturing factory. A tanker truck made a delivery of low toxicity ethylene glycol which was pumped from the truck to a storage tank. The valve on the storage tank and four further valves in the stormwater system had been left open causing 9000 litres of the substance to escape into a drain leading to Botany Bay. The failure to close the valves was due to the inexperience and lack of training of the plant operator to check the valves were closed. There was no actual environmental harm and there was potential only for minor transient harm. The likelihood of this harm was entirely foreseeable and not the result of any failure of plant or equipment. The mitigating factors considered included an early plea of guilty, the defendant's lack of prior convictions, its expression of contrition through two senior executives, its good corporate character and the cooperation with the investigation. Lloyd J considered the offence was of low criminality. His Honour imposed a penalty of $50,000 reduced from $75,000 in light of the many mitigating factors. 51 In Environment Protection Authority v Hanson Precast Pty Limited [2008] NSWLEC 285 a leak in a heating pipe caused 200-300 litres of heat transfer oil to escape into a stormwater drain. An alarm alerted the defendant that a leak had occurred but the defendant incorrectly identified the location of the leak and restarted the system. There was a further failure in the system designed to prevent leaked oil from entering an offsite stormwater drainage system. Actual environmental harm resulted from the oil covering a watercourse over 200 metres for three days. The harm included the killing of a small number of small fish, damage to reeds within the watercourse and a change to the chemical composition of the water. An odour was detectable in the area. There was potential for environmental harm to other aquatic organisms. There were no long-term harmful effects. Biscoe J stated there were obvious practical measures that could have been taken to prevent the harm occurring particularly as the defendant knew the system did not operate sufficiently. The incident was foreseeable to the defendant who had control over its causes. Biscoe J considered the defendant's early plea of guilty, its lack of prior convictions, its expression of contrition, its good corporate character, its cooperation in the investigation and its efficient but costly clean-up. Biscoe J did not consider that there was a strong case for specific deterrence as the defendant demonstrated that it was conscientious about environmental safety and had responded well to the incident in both the cleanup and steps taken to prevent a recurrence of the incident. A penalty of $50,000 reduced from $75,000 was imposed.

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