Environment Protection Authority v Causmag Ore Company Pty Ltd

(e) On the evening of Monday 17 May 1999, materials (within the meaning of the particulars to the summons) were emitted from the defendant's premises from the stack attached to the Rotary Kiln. The materials were caused to be deposited on cars at the car yard.

It is the incident which occurred during the evening on Monday 17 May 1999 which forms the basis for the charge.

The fact of the discharge was brought to the attention of the prosecutor on 18 May 1999 following a complaint from Harden Geelan Motors.

The EPA's Regional Operations Manager, Mr Baxter, visited the premises of Harden Geelan Motors and observed that a number of motor cars on display were covered in a layer of white dust.

Photographs and a video were taken and samples collected.

Dust was also observed on bushes in the vicinity and at various points in and around the defendant's premises.

Employees of the defendant were interviewed and initially appeared to be unaware of any emission from the defendant's premises or complaints of dust deposits outside the factory.

Ultimately it was determined that three bags in the Richardson bag filter system attached to the rotary kiln were leaking during the operation of the plant and dust was emitted from the stack.

In a letter dated 19 May 1999 (the day after the report of the incident) the company wrote to the EPA as follows:- After your inspection of the Causmag factory on Tuesday 18.5.99, we made further investigations into where the offending dust could be coming from. Much to our surprise we found our filter system on the rotary kiln was malfunctioning and dust was emitting from the stack, mainly when the air pulses operated in the filter system.

This was not visible during the day and was only noticed at night with the lights on behind it. We first thought it was steam due to the cooler conditions.

The kiln was subsequently shut down at 6.45pm Tuesday 18.5.99.

The maintenance employees are inspecting the filter systems today; they have found 3 suspect filter bags, which seem to be letting the dust through the seal on the top cone.

We are repairing the seals and hope to be back on line this afternoon …

In response to a formal notice requiring the defendant to provide information and records, the defendant provided the following information:- The bag houses were opened up and inspected for dust leakage around the venturies that seat the bags in the main frame.

The Richardson bag house appeared to have dust on the wrong side of the bags which indicated it was leaking around the venturies in a couple of places.

After the inspection of the Luhr bag house, which seemed to be in good order, the maintenance employees isolated the Richardson bag house from the Luhr filter bag house by installing slides between the ductwork.

Adrian Horne, who was the General Manager of the defendant from about November 1990 until 1996 gave evidence that the addition of the second filter had resolved most problems with dust emissions before he left the employ of the company. He explained that the main problems experienced which involved dust from the stack for the rotary kiln were:- (a) filter bags blowing out; and

(b) failure of the sealing material at the base of the filter bags where the bag attaches to the steel base of the filter.

There is also evidence from Mr Horne and a record of interview with two current employees that the company had been experiencing problems with adjustment of the pulse pressure duration and interval of the filters resulting in filter bags blowing out and failure of the sealing material at the base of the filter bags. Although the manual for the Richardson filter prescribed a higher pressure, the company reduced the air supply pressure to allow the filter to "cake-up" to a greater degree, thereby improving the longevity of bag life.

John David Court is an independent expert consulted by the EPA. His opinion is that the cause of the emission was as a result of a failure to achieve proper and efficient operation of the process of filtering exhaust gases as follows:- (a) it did not maintain the Richardson fabric filter in a way which prevented excessive emissions due to leaks. The filter was operated between 17 and 20 May 1999 when there were leaks from the vicinity of at least three of the bags;

(b) it did not monitor differential pressure across the fabric filters in a way which would indicate possible dust emissions, in particular, by keeping records, which could have indicated trends in the performance of the filter;

(c) it did not make adequate visual observations, of the type that would have indicated a dust emission problem from the filters, or, if it did, the observations were not acted upon;

(d) it had not established an environmental management plan for the premises; and

(e) it did not keep adequate records of monitoring of the relevant pollution control equipment and process variables or of maintenance carried out on the equipment to enable it to properly track environmental performance.

The Court is able to find that the underlying factual basis supporting the charge to which the defendant has pleaded guilty is that at least three bags used in the Richardson filter connected to the rotary kiln were defective so that dust leaked through the seal of the bags, thereby allowing dust to be emitted from the stack, mainly when the air pulse operated in the system.

The Court finds that the failure to carry out the processing of materials in a proper and efficient manner so as to cause or increase air pollution contrary to s 14(3) of the Clean Air Act is as a consequence of operating the plant when bags on the Richardson filter were not properly sealed, thereby enabling the filter to leak unfiltered dust particles to the stack.

This finding is accepted by the defendant although it adds that a qualifying contributing factor may have been that there was insufficient time for the materials to cake-up on the surface of the filter bags. This would have allowed dust to pass through the fabric and contributed to the failure to carry out the processing in a proper and efficient manner.

The company also failed to maintain a proper system of monitoring to enable it to adjust the air pressure, pulse duration and interval between pulses delivered to the filter in such a manner as to prevent or minimise dust emissions from the filter to the stack. If it had maintained a measuring device to show the differential pressure, this may have alerted the operator to the problem with the defective bags.

The premises of the defendant are scheduled premises licensed under s 17D(3) of the Pollution Control Act 1970.

The terms of the Pollution Control Approval for the installation of the rotary kiln issued by the EPA in 1995 required the following as condition 4 under category 1 of the approval:- A differential pressure device, which is capable of indicating bag filter failure, must be installed on the bag filter serving the Rotary kiln prior to the discharge to atmosphere. The device must trigger an audible and visual alarm located at the Rotary kiln control panel in the event of a bag filter failure.

It is agreed that the device referred to in condition 4 was in place but it was not operating at the date of the offence. In any event, Mr Court doubts whether differential pressure in itself is likely to indicate a problem with the filter, except catastrophic failure of the bags. Consequently, in his opinion, some means of assessing dangers was needed for the device to fulfil the requirements of the condition in any event.

The prosecutor asserts that the defendant did not take adequate precautions to prevent the offence occurring and did not carry out proper monitoring that could have signalled the prospect of a problem (see Axer Pty Ltd v Environment Protection Authority (NSWCCA, 22 November 1993, unreported)).

The evidence shows that the defendant was well aware of the prospect that dust emissions could occur if the bag filter system did not operate efficiently. However, the Court is not satisfied that the defendant acted without any regard to the consequences of its industrial operation. It had undertaken a range of works designed to control or mitigate potential emissions from the rotary kiln in recent times. The Richardson filter was part of a tandem filter system. The Luhr filter was added to deal with the added pressure to the filter system following installation of the rotary kiln. Filter bags are replaced on a regular basis. Other specific pollution reduction works such as additional seals, suction lines and enclosure of exposed machinery were all designed to reduce dust emissions. It appears that the bag filters had been recently replaced just prior to the incident. It could have been that three of the bag filters were not sealed properly and hence defective, allowing them to leak.

As measures taken since the incident show, although Causmag may well have taken measures before the incident that could have reduced the prospect of the incident occurring, the failure to do so was not such that it showed a reckless indifference to its obligation to minimise discharges from the stack. Nevertheless, the remedy was always in the defendant's hands.

The defendant entered a plea of guilty at the earliest opportunity on the first return date of the summons.

Mr Hill requested the Court to note that the obligations imposed by s 14(3) of the Clean Air Act are concerned with processing, handling, moving or storing materials and not with control equipment, which the bag filter system appears to be. It is s 14(1) which imposes the obligation to maintain any control equipment installed in premises in an efficient condition and to operate it in a proper and efficient manner. Without deciding whether the prosecutor would have been in a position to amend the summons if the defendant had raised the issue and entered a plea of not guilty, it is nevertheless in the defendant's favour that it elected to proceed with a plea of guilty to the charge under s 14(3), thereby facilitating an efficient conclusion to the proceedings. Mr Hill emphasised that his submission was to be taken as in no way detracting from the plea of guilty.

In R v Thomson; R v Houlton [2000] NSWCCA 309 the Chief Justice, in a guideline judgment, identified two circumstances which will generally affect the appropriate level of discount representing the utilitarian value of a plea of guilty, generally to be assessed in the range of 10 to 25 per cent discount on sentence as follows:- (i) The time at which a plea is entered. A plea entered at committal has a more significant utilitarian benefit than a plea entered at first listing, which in turn has the greater benefit than a plea entered at the beginning of trial.

(ii) The complexity of the issues about which evidence will have to be gathered and adduced affects the value of the plea. The greater the difficulty of assembling the relevant evidence and the greater the length and complexity of the trial, the greater the utilitarian value of a plea.

The Chief Justice concluded that in so far as existing sentencing practice has been to allow discounts for pleas up to 35 per cent, encompassing all relevant matters, such a practice remains appropriate.

The utilitarian value of the plea of guilty in this case is at the highest end of the scale. In so far as the plea of guilty is an indication of contrition on the part of the defendant, I propose to make a further allowance so that the ultimate total discount referable to the plea of guilty is 30 per cent.

Furthermore, the defendant has acted promptly to install a dust monitor to attempt to prevent a recurrence of a similar emission of dust from the exhaust stack.

Although the offence resulted in the deposition of dust onto plants and property, in particular, cars at Harden Geelan Motors, there is no evidence that the emissions caused any harm to humans or animals.

The Court accepts the submission made on behalf of the defendant that it has responded to the incident by taking a number of actions which will in the future minimise the prospect of a similar incident occurring. There is now a better system in place to measure and record not only dust emissions as mentioned a moment ago, but also pressure differentials which could lead to an early warning, notwithstanding the doubts expressed by Mr Court.

Finally, it needs to be said that the co-operation by the defendant and its employees enabled the incident to be fully investigated by the prosecutor, thereby bolstering the case against the defendant and reducing the necessity to obtain detailed evidence in order to prove the prosecutor's case. Section 23 of the Crimes (Sentencing Procedure) Act 1999 gives a Court a discretion to impose a lesser penalty than it would otherwise impose on an offender having regard to the degree to which the offender has assisted or undertaken to assist the law enforcement authority in its investigation of an offence.

Causmag has operated in Young for nearly 50 years. It is a major employer in the district and highly regarded as a corporate citizen in this regional area of New South Wales. It has one prior offence recorded under s 14(3) of the Clean Air Act on 17 December 1992 in relation to an incident which occurred before the rotary kiln had been installed.

Having regard to the whole of the circumstances, in particular the foreseeability of an emission from the stack in the absence of proper monitoring procedures, the contrition of the defendant reflected in the plea of guilty, the antecedents of the defendant, its response to approaches by the EPA and the plea of guilty itself, the Court considers that an appropriate penalty is $20,000.

The Court finds the offence proved and makes the following orders:- 1. The defendant is convicted of the charge particularised in the summons.

3. The defendant is ordered to pay the prosecutor's costs as agreed or in the absence of agreement, in such sum as may be assessed in accordance with the regulation.

4. The defendant is allowed three (3) months to pay the penalty of $20,000.

5. The defendant is allowed three (3) months from the date of agreement or date of assessment to pay the costs.

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3. The defendant is ordered to pay the prosecutor's costs as agreed or in the absence of agreement, in such sum as may be assessed in accordance with the regulation.

4. The defendant is allowed three (3) months to pay the penalty of $20,000.

5. The defendant is allowed three (3) months from the date of agreement or date of assessment to pay the costs.