Environment Protection Authority v Illawarra Coke Company Pty Limited

IN THE LAND AND Matter No. 50074 - 6 of 2001 ENVIRONMENT COURT Coram: Talbot J OF NEW SOUTH WALES Decision Date: 22 February 2002

Environment Protection Authority Applicant v Illawarra Coke Company Pty Limited Respondent

The defendant, Illawarra Coke Company Pty Limited ("ICC"), appears to answer the three charges that on or about 21 July 2000, 10 August 2000 and 11 August 2000 at Corrimal, in the State of New South Wales, it committed an offence against s 129(1) of the Protection of the Environment Operations Act 1997 ("the PEO Act") in that, being the occupier of premises at which a scheduled activity was carried on under the authority conferred by a licence, it did cause the emission of an offensive odour from the premises to which the licence applies.

Following the first return date on 29 August 2001 and two subsequent call overs, the defendant entered a plea of guilty on 25 October 2001.

The following facts have been deduced from a comprehensive Statement of Agreed Facts relied upon by the parties.

ICC is the occupier of premises at which a scheduled activity is carried on under the authority conferred by an environment protection licence.

ICC operates Corrimal Coke Works at 27 Railway Street, Corrimal in Wollongong where the coke plant was once operated in open paddocks. It is now surrounded by residential development and roadways.

Since a change in ownership in March 1996 ICC has spent approximately $3 million on improvements to environmental management systems at the Corrimal Coke Works.

At all relevant times ICC held Environment Protection Licence No 125 ("Licence No 125") which was originally issued under the Pollution Control Act 1970 ("the Pollution Control Act"). This licence continued to have effect pursuant to cl 6 of the Protection of the Environment (Savings and Transitional) Regulation 1998. A replacement licence dated 8 August 2000 was served on 9 August 2000.

Licence No 125 contains condition U1(2)(D) which is expressed in the following terms:- (2) ICC must achieve the following environmental outcomes by 30 June 2000: … (D) ODOUR (i) The plant, works and processes must be designed such that when they are in operation not more that 20,000 odour units (OU 50D) will be emitted when measured at the outlets of the Quench Stacks.

(Note: This represents a 90 per cent reduction in Quench Stack odours at the outlet compared to baseline odour generation measured on 18/1/96)

(ii) Not more than 35,000 odour units (OU 50D) can be emitted when measured at the outlets of the Quench Stacks.

(Note: This represents an 82 per cent reduction in Quench Stack odours at the outlet compared to baseline odour generation measured on 18/1/96)

(iii) The environmental outcome referred to (ii) above does not apply to odour emissions during the first full push of any recommissioned coke oven. Under these circumstances not more than 50,000 odour units (OU 50D) can be emitted when measured at the outlets of the Quench Stacks.

(Note: This represents a 74 per cent reduction in Quench Stack odours at the outlet compared to "normal operations" baseline odour generation measured on 18/1/96) …

There are two coke oven batteries, namely C1 battery and C2 battery, which are used to manufacture coke from coal. All ovens are of the non-recovery type where the volatile gases are completely burnt during the coking process to provide the heat necessary to coke the coal. Non-recovery technology has less environmental impacts when compared to recovery technology.

The coking process liberates and burns the coal into coke. The coke is then carried down to the quench bay for cooling. Cooling occurs with the controlled release of a specific quantity of water onto the hot coke. The quenching of coke generates a large volume of water vapour. Coke is manufactured in either a three or four-day cycle.

All coke-making produces emissions during quenching of the coke, which typically include solid particulates, sulfur dioxide, hydrogen sulfide, oxides of nitrogen and volatile organic compounds. Two distinct odours result from coke production. One is hydrogen sulphide odour, which is typically in the quench plume. The second is a tarry-like odour, which can be described as a 'coke ovens odour'. 12. One cause of the odour emissions from the Corrimal Coke Works is the quenching process, whereby a newly made batch of coke is cooled or quenched. The quenching process occurs approximately every ten minutes on operational days and lasts from three to five minutes. Particular weather conditions can impede dispersion of any coke works emissions, which can result in varied impacts on surrounding residents.

It would not be operationally feasible for the coke works to vary methods of operations to avoid days of continuous strong wind without ceasing operations, as coke-making is a continuous process.

Over the years, up to and including the year 2000, the company and the Environment Protection Authority ("EPA") negotiated the terms of 18 Pollution Reduction Programs ("PRP's"), which are attached to ICC's licence. The PRP's have been completed with significant improvement in odour generation.

From 5 February 1996 to 14 February 2000, the Corrimal Coke Works was exempt from the provisions of s 15A of the Clean Air Act 1961 ("the Clean Air Act").

These exemptions were granted by the Minister for the Environment following an application by ICC. However, the exemption expired on 14 February 2000 and required ICC firstly, to complete a PRP, which involved participation in community meetings and, secondly, to take all practicable measures to prevent or minimise the emission of odours from the premises.

The EPA issued Notice No 005372 under the Pollution Control Act on 28 July 1998. It revoked PRP 17 and attached PRP 20, which imposed agreed conditions to the licence whereby ICC is required to design, install and operate plant, works and processes to, inter alia, achieve the following outcomes:- _ install works that would collect and treat fugitive pushing emissions to remove air pollutants including any particulates or odours, minimise odour production from quenching operations and modify quench water conditions, by 30 June 1999.

_ reduce odour emissions to stated odour unit levels to achieve a 90 per cent reduction in quench stack odours compared to 1996 levels, by 30 June 2000.

A specific odour defence licence condition ("A27") pursuant to s 129(2) of the PEO Act was attached by an EPA Notice, No 009020, on 1 March 2000, after agreement with ICC. This condition allowed time for ICC to complete PRP 20. Condition A27 states as follows:- (1) Until 30 June 2000, the emission of quench odours from the outlet of the quench stacks and from the base of the quench stacks on the premises (a "quench odour") is identified in this licence as a potentially offensive odour within the meaning of section 129 of the Protection of the Environment Operations Act.

(2) To minimise quench odours up to and after the 30 June 2000, the concentration of hydrogen peroxide in the quench water used to quench the coke must not be less than 20 parts per million as determined by an agreed test method. Note: Until 30 June 2000, it is a defence in proceedings for an offence against section 129 relating to the emission of a quench odour if the licensee can establish that this licence condition has been complied with. This condition does not provide a defence for odours that arise from other operations on the premises.

The EPA wrote to ICC on 4 August 2000 and advised them that a large number of complaints had been received from members of the public who live in an area to the south-east of the Corrimal Coke Works and members of Corrimal East Public School on 21 July 2000. The EPA detailed the odour requirements of s 129 of the PEO Act. The letter also pointed out that the exemption granted to ICC had expired and the EPA would thoroughly investigate complaints and incidents at both sites owned by ICC where offensive odours appear to have been emitted in contravention of s 129.

On 21 July 2000 the EPA Pollution Line service received complaints from members of the public about odours allegedly coming from the Corrimal Coke Works. These were forwarded to EPA officers at the South Coast Regional Office at Wollongong and investigations were commenced immediately. The investigations involved travelling to the location of the complaint and other locations surrounding the coke works, interviewing complainants, undertaking odour surveys and taking photographs of emissions from the plant.

On this particular day there was a strong west north-westerly wind.

The odour, variously described as hydrogen sulfide and tarry, was noticed from 7.00am over approximately four hours at various locations including at least one dwelling house, a residential street, Corrimal East Public School and Corrimal High School.

An 11 year-old student, a school teacher and the headmaster of Corrimal East Public School respectively suffered physical effects of headache, itchy nose, eyes and throat and nausea. It became necessary to close doors and windows.

No operating problems were experienced at the plant on that day. In response to complaints the defendant, in a letter dated 30 April 2000, states as follows:- With respect to the nature of emissions emitted, given that all plant parameters at the time of the complaints were normal, it can only be assumed that emissions were normal. If this is the case, then low levels of H 2 S may have been present in the quench plume. Recent monitoring has shown that the typical levels of H 2 S in the quench plume are approximately 3.5 to 4.0ppm.

On 10 August 2000 the EPA Pollution Line service received three complaints about odours allegedly coming from the Corrimal Coke Works. These were forwarded to EPA officers at the South Coast Regional Office at Wollongong and investigations were commenced immediately. The investigations involved travelling to the location of the complaint and other locations surrounding the coke works, interviewing complainants, undertaking odour surveys and taking photograph footage of emissions from the plant.

On this particular day there was a gusty south-westerly wind.

The odour, variously described as "rotten egg" and "sulphurous" , was noticed from 7.30am over approximately six hours at various locations including at least four dwelling houses, residential streets, Corrimal High School and Corrimal Railway Station.

The reported effects and interference with day-to-day activities included nausea, sensation in the nose and throat, coughing, full or blocked sinuses, mild headache, breathing difficulty, uncomfortable eyes, and "rotten taste" in the mouth. It became necessary to close doors and windows.

On 11 August 2000 the EPA Pollution Line service received two complaints about odours allegedly coming from the Corrimal Coke Works. These were forwarded to EPA officers at the South Coast Regional Office at Wollongong and investigations were commenced immediately. The investigations involved travelling to the location of the complaint and other locations surrounding the coke works, interviewing complainants, undertaking odour surveys and taking photographs of emissions from the plant. 30. On this particular day there was a strong westerly, south-westerly wind.

The odour, variously described as strong tarry, hydrogen sulfide and sulphurous, was noticed from 7.45am over approximately four hours at several locations including Corrimal High School and a residential street.

The reported effects and interference with day-to-day activities included nausea, effect on sinuses, chemical induced asthma, headache, sore throat and feeling "off colour" . It became necessary to close outside doors and windows around the administration area of Corrimal High School.

Agreed facts - Physical and psychological effects of coke works odours

The prosecutor's case is pitched at disamenity and goes no further than that.

Dr Robert Kenyon, an Occupational Physician of NSW WorkCover Authority, has sworn an affidavit filed in the proceedings. His following conclusions are not challenged:- A. The odorous contaminants escaping from the plant contain hydrogen sulphide, nitrogen oxides, sulphur dioxide and volatile organic compounds. The most potent of these gases is hydrogen sulphide, commonly known as rotten egg gas. Other contaminants are frequently described as having a "tarry" odour and are probably volatile organic compounds.

B. …The odours are described as offensive and when they are particularly strong the amenity of the environment is seriously degraded.

D. …The fact that relatively few health effects were reported suggests that these may have occurred in a particularly sensitive minority of the people exposed. These effects are generally minor and settled with removal from the odour. Adverse health effects reported included headache, nausea irritated eyes and throats.

In conclusion, it is my opinion that there is a definite cause-effect relationship between the presence of strong coke work odours and reporting of adverse health effects and lifestyle restriction.

ICC has one previous conviction for an environmental offence, namely a breach of s 15A of the Clean Air Act, which occurred on 21 September 1993 (when the previous management was in control). On that occasion, ICC was fined $20,000 and ordered to pay the prosecutor's costs of $8,715.

ICC has also been issued with four Penalty Infringement Notices (PINs) for failure to comply with licence conditions since 1993. These are as follows:- (1) 9 August 1993 - Fined $500 (this arose out of a noise incident when the previous management was in control);

(2) 7 August 1997- Fined $500 (lid puller failure, manual pulling, odour complaints);

(3) 30 September 1999 - Fined $1,500 (failure of lid returns); and

(4) 30 September 1999 - Fined $1,500 (one complaint of odour on the day).

The payment of a penalty in response to a PIN can be construed as an admission of guilt ( Ex parte Newman: Re Fischer and McInerny [1969] 1 NSWR 538) but the Court has no evidence as to the circumstances surrounding the alleged breaches in (1) to (4) set out above.

In the case of a corporation the maximum penalty for each offence is $250,000. Such a large penalty reflects the public expression by Parliament of the seriousness of the offence (see R v H (1980) 3 A Crim R 53 at 65 cited by Kirby P in Camilleri's Stock Feeds v Environment Protection Authority (1993) 32 NSWLR 683 at 698). Mrs Kelly, who appears for the prosecutor, quite properly acknowledges that in the context of the definition of "offensive odour" the present offences are not of the most serious kind, as harmful long-term health effects are not alleged. The prosecutor relies on the second defined category of "offensive odour" set out in the dictionary to the PEO Act as follows:- offensive odour means an odour:

(a) that, by reason of its strength, nature, duration, character or quality, or the time at which it is emitted, or any other circumstances: (i) …

(ii) interferes unreasonably with (or is likely to interfere unreasonably with) the comfort or repose of a person who is outside the premises from which it is emitted, or (b) …

Mrs Kelly, again, quite properly, recognises on behalf of the prosecutor that it is appropriate to apply the totality principle given that the three offences occurred within the close time frame of 21 days ( Camilleri at 703 - 4). This requires the Court to assess the overall criminality involved and then to determine whether a downward adjustment is necessary in order to achieve appropriate relativity between the totality of the criminality and the totality of the sentence ( R v Holder [1983] 3 NSWLR 245 at 260).

Section 241 of the PEO Act dictates matters to be considered when imposing penalty beyond the guidelines established as general principles. 41. The extent of actual harm is outlined above. The prospect of long-term harm to the environment is not suggested.

Since, at least, 1996 the company has implemented a number of practical measures at considerable expense in order to comply with EPA and ministerial directives, and generally, in an attempt to prevent, control, abate or mitigate harm from the discharge of offensive odours. ICC confesses that future improvement is possible.

It is incontrovertible that the defendant could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence.

Excluding the weather conditions, the company did otherwise have some measure of control over the causes that gave rise to the offence. The Court recognises that the level of odour emissions varies according to inconsistent factors in the industrial process and weather conditions. Nevertheless s 129 of the PEO Act brooks no concessions for these matters and imposes a strict liability on the occupier of the premises at which scheduled activities are carried on not to cause or permit the emission of any offensive odours.

The Court agrees with Mrs Kelly that the matters relied upon by the defendant must be evaluated in the context that ICC was granted exemptions from the offensive odour provisions of the relevant legislation for over four years for the purpose of allowing it to carry out works to reduce odours. The fact remains that notwithstanding current land use conflicts, which are not of its own making, the offence is in respect of licensed premises from which offensive odours must not be emitted and in respect of which ICC has been exempt for four years for the express purpose of addressing the odour problem. It does not follow that compliance with condition U1(2)(D) of the current licence is a defence in proceedings for an offence against s 129(1) of the PEO Act. Firstly, the emission is not specifically identified in the licence as a potentially offensive odour and secondly, no relevant actual measurements are in evidence.

The defendant is entitled to a discount for the utilitarian value of the pleas of guilty entered at an early stage of the proceedings ( R v Thompson (2000) 49 NSWLR 383 at 411). Moreover, the defendant has co-operated with the preparation of an agreed statement of facts and by not requiring the witnesses for cross-examination.

Although the land use conflict may have arisen as a consequence of decisions by others involved in the planning process, the PEO Act imposes the responsibility on ICC to comply with s 129 irrespective of where the premises are situated. Nevertheless the Court recognises the history of the co-operation with the EPA shown by the defendant over recent years in an attempt to achieve an odour environment consistent with the incompatible surrounding development.

There is a history of complaints about the operations of the plant and the emission of odours is clearly a contentious issue for those living, working and attending school nearby. However, in taking these matters into account the Court will be careful not to punish the defendant for anything other than the subject offences.

The defendant has pleaded guilty, which clearly acts as an admission to the essential elements of the offences ( R v O'Neill [1979] 2 NSWLR 582).

Having regard to the maximum penalty prescribed by the legislation, and the facts which establish the seriousness of the offence and also to those which tend to mitigate that seriousness or exculpate the defendant, together with an evaluation of ICC's antecedent history, which is before the Court, it is my view that an appropriate penalty for each offence, in the circumstances, is $55,000. After allowing an appropriate discount for an early plea of guilty and the co-operation of the defendant in the preparation for the trial, including an agreement to pay the prosecutor's costs in the sum of $25,000, the penalty for the offence, which occurred on 21 July 2000, should be $40,000. It follows, applying the totality principle, that the offence, which occurred on 10 August 2000, attracts a penalty of $20,000 and the offence, which occurred on 11 August 2000, attracts a penalty of $10,000. The total penalty of $70,000 is, having regard to the whole of the circumstances, proportionate to the total criminality involved and represents a fair punishment.

The Court makes the following formal orders: (1) The defendant is convicted of the offence the subject of the charge in each matter.

(2) In matter No 50074 of 2001 the defendant is fined the sum of $40,000.

(3) In matter No 50075 of 2001 the defendant is fined the sum of $20,000.

(4) In matter No 50076 of 2001 the defendant is fined the sum of $10,000.

(5) By consent the defendant is ordered to pay the prosecutor's costs in the sum of $25,000.

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