Environment Protection Authority v Caltex Refineries NSW Pty Limited

11 The parties agree that the cause of the odour was probably a combination of the following factors: - the diversion of HTU off-gas to the flare from June 2006; - a reduction to the gas flow to the flare causing a high steam-to-hydrocarbon ratio during the incident period leading to incomplete combustion; and - unfavourable weather conditions with relatively turbulent winds from the south and south east. 12 It is also agreed that the increase in the amount of highly odorous gases other than sulphur dioxide during the incident period was probably caused by a reduction in the flare flame temperature due to high steam-to-hydrocarbon ratios at the flare, resulting in a shift in the compositions of the gaseous emissions away from sulphur dioxide in favour of other more- odorous sulphur compounds such as carbonyl sulphide.

13 Steam was used during the process to prevent smoking by inspiriting a sufficient amount of air into the flame. Smoke is prohibited by the refinery's environmental license.

14 A high steam-to-hydrocarbon ratio is thought to be a probable cause of the odour. It has been accepted since the 1980's that high steam-to-hydrocarbon ratios may reduce the overall combustion efficiency by cooling the flare to below optimum temperatures for destruction of some waste gas constituents. There is also a general consensus that low steam-to-hydrocarbon ratios may also reduce the overall combustion efficiency which can be manifest as smoke and soot. For these reasons, good engineering practice for flaring requires that the steam-to- hydrocarbon ratios be controlled and appropriate to flare conditions.

15 Studies by the US Environmental Protection Authority (US EPA) in the 1980's indicated that the steam-to-hydrocarbon ratio should not exceed 0.5:1 to be sure of maximum efficiency of combustion. Other studies indicated that the ratio should not exceed 1:1 or 3.5:1, the latter of which would not be "typical of good engineering practice". During the incident period the average steam-to-hydrocarbon ratio varied between 2.7:1 and 4.1:1. Studies by the US Environmental Protection Authority (US EPA) in the 1980's indicated that the steam-to-hydrocarbon ratio should not exceed 0.5:1 to be sure of maximum efficiency of combustion. Other studies indicated that the ratio should not exceed 1:1 or 3.5:1, the latter of which would not be "typical of good engineering practice". During the incident period the average steam-to-hydrocarbon ratio varied between 2.7:1 and 4.1:1.

16 At all times the refinery flare system was operated based on advice from the flare vendor, John Zink Co. The John Zink Combustion Handbook (2001), states that there is "… possible error associated with using standard industry design guidelines for steam-assisted flare " in the context of determining the smokeless capacity of flares and that "… experience suggests that for large-diameter flare tips , [as installed at the Kurnell refinery] the steam-to-hydrocarbon ratios required for smokeless flaring can increase dramatically above the values in Figure 8.22… " provided by general guidelines. Mass ratios of steam-to-hydrocarbon can increase from 0.1:1 to 0.4:1 from small diameter flares to 0.6:1 to 0.8:1 for larger diameter flares.

17 During the commissioning period of the replacement flare low combustion efficiency was detected by the presence of smoke in the flare plume. Caltex increased the steam-to-hydrocarbon ratio based on John Zink advice in order to eliminate the smoke. Caltex successfully eliminated the smoke and therefore considered that the steam-to-hydrocarbon ratio was then optimised for maximum smokeless efficiency.

18 Calculations made after the incident period show that at all times during the incident period, Caltex maintained the heating values of the flare above the industry-accepted thresholds given in US EPA's 40 CFR [Code of Federal Regulations] s 60.18, where the parties agree that this threshold is a minimum.

19 In total, 35 odour complaints were made during the incident period, where 31 of these were made by different residents. The complaints were typically made by those residing in the Kurnell area, bar three complaints. Residents began making complaints on 23 December 2006 and the last of the complaints were made on 29 December 2006. The majority of complaints were made on 26 December 2006.

20 Residents typically reported a very strong and very unpleasant odour characteristic of sulphur. The presence of the odour caused many residents to go indoors and shut up their houses and the residents were generally distressed about the odour, with some residents expressing concern over the possible health effects. The residents were particularly distressed that the odour had occurred over the Christmas period when they were at home celebrating with their families and the presence of the odour impaired their ability to fully enjoy the celebrations.

21 Four complaints were made to Caltex via the Community Concerns hotline on 24 December 2006, the first of which was made at 10:30 am. Each of these complaints was investigated by the Area 1 Area Shift manager at the refinery who tried, to no avail, to identify the source of the odour. Another complaint was made via the hotline and investigated on 25 December 2006. A number of complaints were made via the hotline on 26 December 2006, each of which were investigated by the Area 1 area shift manager and Area 3 area shift manager in an attempt to define the source of the odour.

22 On 27 December 2006, a large team was formed at the refinery with an aim to identify and mitigate the source of the odour. However, it was difficult to satisfy this mandate because of factors such as swirling effects of wind direction at ground level and the large number of potential emission sources at the refinery.

23 On 29 December 2006, the source was positively identified as being the refinery flare. At approximately 4 pm, the investigation team observed that sulphurous odour emissions ceased immediately following an increase to the refinery flare gas firing rate. This indicated that the refinery flare may have been the primary source of the odour which was later confirmed.

Establishment of Minimum Flow Rate and Installation of Low Flow Alarm

24 Since the odour incident Caltex has established a minimum flow rate of gas to the flare, the implementation of which has resulted in no detectable odour at ground level being associated with combustion of the HTU off-gas in the refinery flare. Initially, a conservative flow rate of four tonnes per hour was set but trials conducted by the process engineering superintendent established that a minimum flare gas rate of two tonnes per hour was appropriate to ensure that odours were not detected at ground level. The cost of maintaining this rate is estimated between two million and four million dollars per annum. Written and verbal instructions have since been issued by Caltex to its operating personnel to: 1) ensure that the minimum flare gas rate of two tonnes per hour is maintained at all times; and 2) increase the flare firing rates above the minimum flare gas rate of two tonnes per hour if it is suspected that adverse impact on the community could occur or is occurring as a result of the flare's operation. 25 A low flow alarm has also been established on the distributed control system for the refinery flare. If the flow rate of the gas flare falls below two tonnes per hour the alarm will warn operating personnel instantaneously.

Other Measures Implemented to Improve Caltex's Environmental Performance

26 In order to improve its environmental performance Caltex has: o brought forward the implementation of the "Odour Audit Program" coordinated by environmental consultants Hodson & Associates Pty Limited; o invited local residents to participate in the "Odour Audit Program", thirteen of which accepted including four residents who made complaints during the incident period; o engaged Coffey Environments Pty Limited, environmental consultants, to review odour complaints received from residents during the incident period and advise how procedures relating to the hotline could be improved. Caltex has since committed to amending the procedures to address the recommendations made by Coffey; o began implementing several odour mitigation measures at the refinery as part of its $16 million environmental risk reduction program, an aim of which is to reduce the potential for community complaints including odour and the potential for licence infringements at the refinery; o amended its shutdown and start up processes to more thoroughly consider the potential for generation of off-site odours at significant monetary cost; o has proactively identified strategies to reduce impact from sulphurous emissions across the range of refinery operations which is in line with efforts in recent years.

27 The Act sets out a number of matters to be taken into account in sentencing: s 241. I will now deal with each of these considerations. Extent of the harm caused or likely to be caused to the environment

28 The prosecutor submits that the failure to operate the plant in a proper and efficient manner has directly caused actual environmental harm and that the offence is therefore aggravated: citing Environment Protection Authority v Ballina Shire Council (2006) 148 LGERA 278 at 294. Foul odours were emitted for six days, occasioning a direct and significant impact on the amenity of the residents which was magnified by the fact that it was over the Christmas period.

29 Caltex acknowledges the impact which the odour had on the amenity of the residents during the Christmas period. However, it submits that there is no evidence that the odour caused any actual harm beyond amenity impacts, despite the concerns over health which the residents expressed.

30 I agree with Caltex that the effects of the odour are limited to amenity. There is no evidence of actual environmental harm.

31 According to the prosecutor, Caltex could have adopted the following steps to prevent the harm: o refrain from permanently diverting odorous gases from the HTU to the main flare, at least until further risk assessment had been undertaken; and o fixing the minimum flow rate of gas to the flare at two tonnes per hour and the installation of a low flow alarm.

32 The prosecutor also advanced in the cross examination of Mr Martin Peter Sawtell, area process engineering superintendent, that a complete request for change process should have been followed upon the proposal to permanently divert the off-gases from the hydro treater unit to the main flare. Mr Sawtell explained that a request for change was initiated but was not completed because the diversion of HTU off-gas to the flare was not considered a change in the operation of the refinery. In any case, Mr Sawtell stated that a risk assessment of the same nature of that conducted in a request for change was conducted.

33 Caltex emphasises that the cause of the odour incident is one that was previously unknown to it. Prior to the incident, there were no practical measures which should have reasonably been taken to prevent the odour incident as it was not foreseeable that the over-steaming of the flare would possibly result in the emission of odour. During the incident, Caltex did all that was within its power to positively identify the source of the odour so that it could be fixed (see [21]-[23] above). Since the incident, Caltex has taken a number of steps to prevent reoccurrence (see [24]-[26] above).

34 The main point of contention between the parties is whether the incident was foreseeable. I am required to consider under s 241 of the Act: (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. 35 The prosecutor submits that the risk of harm caused by the commission of the offence was reasonably foreseeable at a fundamental level or general level because where items of the plant are used for the purpose of eliminating odours in a major industrial operation, one must be able to reasonably foresee that a failure to operate such a plant properly and efficiently is likely to cause the emission of odours: citing Environment Protection Authority v Sydney Water Corporation Ltd (1999) 102 LGERA 232 at [68]. The prosecutor submits that the emission of carbonyl sulphide in particular need not be foreseen but rather that incomplete combustion produces a reasonable risk that odorous gases will not be properly destroyed, which was the case here. 36 According to the prosecutor, the harm was also foreseeable at a specific level. In June 2006, Caltex made a conscious decision to divert the sour gases from the HTU to the main refinery flare, thus changing its system for the elimination of highly odorous gases produced as off-gases at its HTU. The reduction of odours at the main flare was dependent on the efficiency of the combustion at the flare which depended inter alia on the steam-to-hydrocarbon ratio remaining in a recognised range. It was reasonably foreseeable that the reduction of the hydrocarbon gas flow to the flare would cause the steam-to-hydrocarbon ratio to increase to a point where it would prevent proper combustion of sour gases at the flare and cause the emission of foul odours. 37 In the cross-examination of Mr Sawtell the prosecutor suggested that the use of the main flare for the purpose of the treatment of off-gases from the HTU to the main flare required the destruction by combustion of the odorous gases to which Mr Sawtell agreed. Mr Sawtell then agreed that if combustion did not work adequately at the flare, then those odours may be emitted from the flare. Mr Sawtell also agreed that if such emissions occurred, then they might cause an impact at ground level. 38 The prosecutor relies on the evidence of Mr John David Court of J D Court and Associates Pty Limited, a private consultant. In short, Mr Court opines that the incident was foreseeable. His evidence can be summarised as follows: + Over-steaming at low flaring rates is a known contributor to decreased efficiency of combustion and destruction. + The odour complaints recorded during the incident are consistent with exposure of the residents to a mixture of burned and unburned hydrogen sulphide and odorous reduced sulphur compounds although this was not the only gas present or only odorous gas present in what was emitted from the flare. 39 The defendant's evidence is quite to the contrary. Caltex submits that any matters adverse to it may only be taken into account in sentencing if they are proven beyond reasonable doubt. Matters which are favourable to Caltex, however, need only be proved on the balance of probabilities where the defendant bears the onus of proving matters submitted in mitigation: The defendant's evidence is quite to the contrary. Caltex submits that any matters adverse to it may only be taken into account in sentencing if they are proven beyond reasonable doubt. Matters which are favourable to Caltex, however, need only be proved on the balance of probabilities where the defendant bears the onus of proving matters submitted in mitigation: R v Olbrich (1999) 199 CLR 270 at [27]. 40 Caltex relies on the evidence of Dr James Garfield Seebold. This evidence should be preferred to that of Mr Court because, according to Caltex, Dr Seebold is an internationally recognised expert on flares and combustion, while Mr Court has only general environmental pollution control expertise. The main arguments of Dr Seebold are as follows: + The odour was caused by a mechanism whereby the refinery flare was " over-steamed " which resulted in the quenching of the hydrogen sulphide to sulphur dioxide chemical kinetic combustion reaction, and resulted in an odorifically-significant carbonyl sulphide concentration being generated in and emitted from the flare. + In his opinion the diversion of HTU off-gas to the flare was a reasonable course of action to take and that over-steaming would not have been a concern. + The incident that occurred at the refinery was a "unique occurrence " and has not occurred to his knowledge anywhere else in the world. + There are no reports of studies that demonstrate any odour-producing potential of over-steaming in petroleum refinery elevated flaring of mixtures of hydrocarbon relief gases containing traces of hydrogen sulphide. 41 In the alternative, Caltex submits that the prosecutor has not discharged his burden of proof in relation to the issue of foreseeability. Although the phrase " foreseen the harm " is undefined by the Act, Caltex submits that some guidance can be gleaned from case law. The defendant cites Environment Protection Authority v BHP Steel (AIS) Pty Ltd (2004) 132 LGERA 213; [2004] NSWLEC 37 at 223 [32] in which I stated: The fact that it was unforeseen and unforeseeable is reflected by the fact that such an incident was previously unknown - it had not previously occurred over decades of steel making. 42 Mr Court disagrees with Dr Seebold. He relies on the claims in Dr Seebold's report that incomplete combustion can lead to the emission of odouress materials and over-steaming can lead to incomplete combustion. Therefore, he contends, that if these three mechanisms come together, there is a risk of odorous materials. Furthermore, he contends t Mr Court disagrees with Dr Seebold. He relies on the claims in Dr Seebold's report that incomplete combustion can lead to the emission of odouress materials and over-steaming can lead to incomplete combustion. Therefore, he contends, that if these three mechanisms come together, there is a risk of odorous materials. Furthermore, he contends that a basic rule of flaring is to keep the heat of the flare right and avoid incomplete combustion. Mr Court concludes that if you over-steam the flare, the heat can be reduced and the production of odours is foreseeable. 43 I prefer, on the balance of probabilities, the evidence of Dr Seebold who is a recognised expert on flares and combustion and whose evidence of the occurrence I find persuasive. Mr Court, although an eminent pollution expert, has no specific expertise in relation to flare combustion. In my view, the incident was unprecedented and entirely unforeseeable. When I questioned Mr Sawtell he stated to me that the diverted flare was operating acceptably for six months in a variety of weather conditions, up until " all the moons aligned " and there was an adverse outcome. Both of the experts were unable to find any literature that discussed hydrogen sulphide, over-steaming and the production of odour. To the knowledge of Dr Seebold, this incident had not yet occurred in any oil refinery in the world, the industry is not concerned with over-steaming, and that this is preferable to smoke formation. 44 I find the decision of Environment Protection Authority v Sydney Water Corporation of little relevance. On the other hand, the decision in Environment Protection Authority v BHP Steel is of parallel significance. Control over the cause of the offence 45 The prosecutor submits that Caltex had control over the causes that gave rise to the offence and that it could have taken preventative measures. Caltex also acknowledges that it had control over the causes, but for the reasons above, it submits that it was not foreseeable that the causes would give rise to the offence. 46 I also agree with Caltex on this question. Indeed it did have control over the causes of the offence, but there was no way that it could have known that such causes would produce the incident. Sentencing Considerations under the Crimes (Sentencing Procedure) Act 1999 47 The Crimes (Sentencing Procedure) Act 1999 (the "Sentencing Act ") outlines the purposes of sentencing at s 3A: The purposes for which a court may impose a sentence on an offender are as follows: (a) to ensure that the offender is adequately punished for the offence, (b) to prevent crime by deterring the offender and other persons from committing similar offences, (c) to protect the community from the offender, (d) to promote the rehabilitation of the offender, (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. 48 According to the prosecutor, each of these purposes is applicable to the offence in question. In particular, it argues that a specific deterrent is required because Caltex has a less than optimal prior record. A general deterrent is also needed because a sentence in a case such as this needs to be of sufficient magnitude to change the economic calculus of persons in relation to environmental laws: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359-360; Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299 at 330. 49 Caltex submits that the entry of a conviction of itself is a powerful act of public censure and it has also agreed with the prosecutor to the making of a publication order in relation to the offence. 50 According to s 21A of the Sentencing Act , the court is to take into account the aggravating factors, mitigating factors and any other subjective or objective factor that affects the relative seriousness of the offence. I will now deal with such of these matters which are of relevance. Prior record 51 Previous convictions are an aggravating factor under s 21A(2)(d) of the Sentencing Act . The prosecutor points out that Caltex has twenty six prior convictions, four of which have been recorded since 1994 and two of which have been recorded since December 2005. 52 Caltex relies upon the following submissions in relation to its prior record: o The record is not surprising considering the size, duration and nature of Caltex's operations: Environment Protection Authority v BHP Steel (AIS) Pty Ltd [1999] NSWLEC 197 at [15]-[16]. According to the affidavit of Mr Huizenga, the Kurnell refineries' team operate a complex 52 year old refinery 24 hours a day, seven days a week, 365 days a year. o The record does not manifest a dangerous propensity or continuing attitude of disobedience of the law: Veen v The Queen (No.2) (1988) 164 CLR 465 at 476-7. o Caltex is acutely aware of its environmental responsibilities and takes these responsibilities seriously. o Caltex's prior convictions 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: Veen v The Queen (No.2) at 477. 53 Caltex argues that unforeseeable and unusual nature of the incident should incline the Court to allow it an additional discount in consideration of the mitigating factors identified above and the totality principle. Caltex relies upon my decision in Environment Protection Authority v BHP Steel (AIS) Pty Limited at 223 [32]: Although the defendant has prior convictions…the present offences arose out of an entirely unforeseen and unusual incident. The fact that it was unforeseen and unforeseeable is reflected by the fact that such an incident was previously unknown - it had not previously occurred over decades of steelmaking. The defendant is also entitled to the additional discount in view of its express statement of contr Although the defendant has prior convictions…the present offences arose out of an entirely unforeseen and unusual incident. The fact that it was unforeseen and unforeseeable is reflected by the fact that such an incident was previously unknown - it had not previously occurred over decades of steelmaking. The defendant is also entitled to the additional discount in view of its express statement of contrition and remorse, its co-operation with the prosecutor (including notifying the prosecutor of the incident before any actual pollution occurred), the steps the defendant has taken to rectify the problem, and its long and costly involvement in environmental management and pollution reduction programmes . 54 Caltex submits that there are a number of mitigating factors. These considerations which fall under the category of other relevant matters under s 241(2) of the Act and s 21A(3) of the Sentencing Act, are as follows: o Caltex has expressed contrition and remorse which can entitle it to a greater discount ( Cameron v The Queen (2002) 209 CLR 339 at [65] and [82]) and lessen the need for special deterrence ( Byres v Leichhardt Municipal Council [2006] NSWLEC 82 at [102]). o Caltex has fully co-operated with the prosecutor before and after the charge was brought and continues to enjoy good working relationship with the agency. o Caltex has incurred costs in maintaining the flare firing rate of two tonnes per hour which is estimated to be in the range of $2 million to $4 million per annum. o Caltex is committed to improved environmental performance and compliance as indicated by the affidavit of Mr Huizenga and the practical measures which Caltex has taken since the incident. This indicates that Caltex is of good character: s 21A(3)(f) of the Sentencing Act. o Caltex has agreed to pay the prosecutor's costs in these proceedings as agreed or as assessed. o Together with the prosecutor, Caltex has prepared an agreed statement of facts which has saved the Court time and substantially reduced the length of the hearing: s 23 of the Sentencing Act. o Caltex was not part of a planned criminal activity: s 21A(3)(b). 55 I take these matters into account and also acknowledge the presence at the sentencing hearing of Mr Bryan Waywell, the general manager of refining and Caltex's general counsel, and Ms Helen Conway, company secretary. 56 I have also read the affidavit of Mr Theodardus Josephus Cornelis Huizenga, refineries manager Kurnell, in which he states that he has given a general direction to assist the prioritisation of activities: namely, Caltex will comply with the law, Caltex will not hurt people or the environment, and only when those priorities are looked after, will Caltex optimise the Kurnell Refineries' financial performance. He describes the measures which Caltex has taken since the incident and are outlined in paras [24]-[26] above. He also expresses a large degree of contrition and remorse stating, 'It is a matter of grave regret that Caltex has committed an offence' and then goes on to express an apology to the Court and the community for causing the odours. 57 In her affidavit Ms Louise Renee Warner, process engineering superintendent, states that the odour was characteristic of flue gas containing combustion products of sulphurous species-flue gas being a general description for vapour effluent from refinery stacks. Caltex relies on her conclusion that the odour which she directly observed was not characteristic of hydrogen sulphide. This observation is also made by Mr Martin Peter Sawtell, area process engineering superintendent, in his affidavit. Guilty Plea 58 In sentencing, the court must take into account the fact that the defendant has pleaded guilty and when this plea was entered: s 22 of the Sentencing Act. 59 Caltex pleaded guilty to the charge at the earliest possible opportunity. The defendant submits that it is therefore entitled to a full discount reflecting the utilitarian value of the plea: R v Thompson; R v Houlton (2000) 49 NSWLR 383 at 411, which I accept. 60 In R v Thompson, Spigelman CJ set out at 419 a number of guidelines for the weighting to be given to a guilty plea in a state court. I am to quantify the effect of the plea of which can encompass contrition and the utilitarian value of the plea. A discount of ten to twenty five per cent on the sentence is the appropriate range within which the utilitarian value may be assessed and the earlier the plea is entered, the greater the utilitarian value: R v Thompson at 419 [160]. The Parity Principle 61 The maximum penalty for the offence committed by a corporation was raised from $250,000 as and from 1 May 2006 to $1,000,000. The prosecutor submits that the maximum penalty is the expression by parliament of the seriousness of the offence: Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698. It further argues that the recent fourfold increase in the maximum penalty highlights the objective gravity of the offence. 62 Caltex relies on the parity principle and the explanation which I gave in Environment Protection Authority v Nalco Australia Pty Ltd [2007] NSWLEC 831 at [28]:

Where a penalty has been increased it is not appropriate to automatically increase any fine by the same proportionate amount. In R v Slattery (1996) 90 A Crim R 519, the Chief Judge of the Criminal Division, Hunt J, said in the Court of Criminal Appeal, at 524: The action of the legislature in almost tripling the maximum sentence for a particular type of offence must be taken by the courts as reflecting community standards in relation to the seriousness of those offences, and the courts are required to give effect to the obvious intention of the Legislature that the existing sentencing patterns are to move in a sharply upward manner. 63 In Nalco, I also made reference to the decision of Environment Protection Authority v Timber Industries Ltd [2001] NSWLEC 25 that dealt with sentencing under the Act which had recently increased the penalty from $125,000 to $250,000 under s 120(1) of the Act. In relation to the doubling of the penalty, Pearlman J stated at [33]: That does not mean, however, that the court should simply impose a penalty effectively twice that which the Court would have imposed had the offence been committed before the coming into force of the POEO Act on 1 July 1999. Rather, the proper approach of the court must be to assess the relative seriousness of the particular offence in relation to a worst case for which the maximum penalty of $250,000 is now provided; that is, the penalty to be imposed is that which correlates upon the scale of penalty set by the legislature from zero to the maximum. 64 As noted in Nalco at [30], the above passage was approved by the Court of Criminal Appeal in Cabonne Shire Council v Environment Protection Authority (2001) 115 LGERA 304 at [37]. Level of Criminality 65 The prosecutor submits that a breach of an environmental license in itself is a very serious offence because the core regulatory system for the protection of the environment relies upon the observance of license conditions and such an offence offends the fundamental objects of the Act. If there is a spectrum of license conditions, ranging from the fundamental to the procedural, then a condition that requires the licensee to operate the plant in a proper and efficient manner is at the fundamental end of the spectrum. The prosecutor therefore argues that the offence is objectively a serious offence, falling somewhere in the middle for this type of offence. 66 Caltex submits that the offence ought properly be characterised as being at the low to low-medium range (about twenty per cent) of the maximum penalty available. Accordingly, Caltex should be given a twenty five per cent discount on penalty for the early entry of the plea and an additional ten per cent in consideration of the mitigating factors and the totality principle. 67 Caltex has agreed to pay the prosecutor's costs as agreed or as assessed which are expected to be in the vicinity of $48,000. The Penalty 68 The undisputed evidence is that there was a direct and significant impact on the amenity of the affected residents which continued for some six days. That, however, was the extent of the harm. There is no evidence of actual environmental harm. 69 As noted in paragraph [34] to [44] above, I have found that the cause of the offence and the resultant harm was unexpected and entirely unforeseeable. The evidence shows that this kind of incident has not been previously known to have occurred at any refinery anywhere else in the world. After a lengthy investigation the cause was established and steps have been implemented to prevent a reoccurrence, as noted in paragraphs [24] to [26] above. Although Caltex had control over the causes of the offence there is no way that it could have known that such causes would produce the incident that led to the offence. 70 These conclusions persuade me that there is no need to include any element of specific deterrence in the penalty. That is, the objective seriousness of the offence and the level of criminality is low. I also accept the submissions, noted in paragraphs [51] and [52] above, that Caltex's prior record is one which does not demonstrate a propensity or continuing attitude of disobedience to the law. I accept as genuine the expression of contrition and remorse in the evidence of Mr Huizenga, the refineries manager. And I have noted the presence at the sentencing hearing of the general manager of refining, Mr Waywell and the company secretary, Ms Conway. The comments which I made in Environment Protection Authority v BHP Steel (AIS) Pty Limited , noted in par [53] above, apply equally to the present case. 71 All of these considerations persuade me that the penalty should be in the lower range. Moreover, Caltex must be given a full discount of twenty five per cent for the early entry of the plea. After taking into account all the mitigating factors a total discount of thirty five per cent is appropriate. Having regard to the maximum penalty prescribed by the legislature - $1 million - the appropriate penalty is $120,000, reduced by thirty five per cent to $78,000. 72 The parties have agreed, however, that in lieu of imposing a fine it would be appropriate to make an order under s 250(1)(e) of the Act requiring Caltex to pay the amount to the Parks and Wildlife Group of the Department of Environment and Climate Change to be used for the implementation of the weed management strategy for Towra Point Nature Reserve. Similar orders have been made by the Court in other cases. 73 Although a publication order under s 250(1)(a) of the Act is sought, I see no utility in making such an order in the circumstances of this case. The evidence in this case does not demonstrate that Caltex is not a responsible manager of its environmental performance. Orders

1. The defendant is convicted of the offence as charged. 2. Pursuant to section 250(1)(e) of the Act, the defendant pay the Parks and Wildlife Group of the Department of Environment and Climate Change the amount of $78 000 to be used for the implementation of the Weed Management Strategy for Towra Point Nature Reserve. 3. The defendant must pay the prosecutor's costs, in accordance with Chapter 4, Part 5 of the Criminal Procedure Act 1986 . 4. The exhibits may be returned. I hereby certify that the preceding 73 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

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