Environment Protection Authority v KBL Mining Ltd

The Mine 5KBL acquired the Mine in 2008. It recommenced mining and processing of minerals in 2011. The Mine is described as a polymetallic mine producing copper, lead, gold and silver. 6Modern mining operations at the Mine commenced in about 1988. Prior to that, the site had been the focus of intermittent mining and mineral exploration activities from about 1908. Those early mining activities are said to have focussed upon oxide mineralisation. Since 1988 there have been two periods in which the mine has been placed "in care and maintenance", no doubt reflecting the viability of mining operations during those periods. 7The Mine is located in a semi-arid environment with average annual rainfall of 443.5mm. Evaporation exceeds rainfall in all months of the year and rainfall typically occurs as irregular, high intensity events. In addition to mineral exploration and mining activities being carried out on the Mine site and its environs over many years, the area has been the subject of feral goat grazing. 8At the time of commission of the offence, ore was mined and transported to an area of the site known as the Run of Mine Pad. Ore was then taken from the Pad to the processing plant where it was ground and minerals extracted from the ground ore. Part of that grinding and extraction process involved the addition of a chemical collector (DSP009) and a chemical frother (DSF510) to ground ore and water. Processing of ore in that manner was carried out at the Mine over 24 hours each day of the week, assuming the availability of mined ore for processing. 9The process just described resulted in the production of waste material known as "tailings". These tailings comprise water, process chemicals and ground ore/rock. They take the form of a slurry of varying particle size. 10The tailings were pumped from the processing plant to two tailings storage facilities or dams through two tailings pipelines known as Tailings Line A and Tailings Line B (the Tailings Lines). Only one Tailings Line was in use at any given time. These Tailing Lines comprised high-density polyethylene pipes, having an outer diameter of 142mm. The distance from the processing plant to the Northern Tailings Storage Facility (the Northern Dam) is approximately 400m. 11For the length of the Tailings Lines between the processing plant and the Northern Dam, the Lines were located within a soil bund. The Defendant believes that the bund was designed by the former Mine owner in order to contain any non-catastrophic leak or spill. 12Immediately south of the processing plant, the Tailings Lines traverse a relatively flat, cleared area between that plant and the Mineral Hill access road. In that cleared area, two sections of the bund, each of approximately 2m to 3m in length, had been modified. In those two locations, the bund was not as deep as it was elsewhere because soil had been placed in the bund and over the Tailings Lines. Although it is accepted that those modifications to the bund occurred in late 2012, the precise reason for them is not known. The modifications seem to have been made as a consequence of other works either being carried out or intended to be carried out on the Mine site at that time. 13The Tailings Lines were inspected by the Defendant's employees approximately three to four times per shift. At the time of the incident, two shifts per day were being worked. In carrying out inspections at these intervals, the Defendant was complying with the condition of its Environment Protection Licence requiring that inspection of the lines be carried out daily. The condition also required that the Tailings Lines have a bund on either side "to contain any leakages or spillage of tailings or process water." 14The Mine site is traversed by three unnamed ephemeral creeks. These creeks are identified in a Water Management Plan prepared for the site as Creeks A, B and C. Creek C is of no present relevance. There are no points for the discharge of polluted water authorised under the POEO Act in either Creek A or Creek B. 15Creek A runs through the centre of the Mine site, north of the processing plant. It is described as having slightly to highly eroded defined banks with a natural channel approximately 3m in width. The maximum Creek width is about 7m. Water in that Creek flows from west to east and passes under a culvert beneath a road known as Pybar Workshop Road (the Pybar Culvert). Downstream of the Pybar Culvert, Creek A has been formed into a diversion drain where the channel is deeper and narrower than its upstream natural profile. In this location it flows approximately south-east, roughly parallel to Pybar Lane until it reaches a further culvert beneath a haul road leading to the Eastern Pit (the Haul Road Culvert). Small areas of aquatic vegetation, including macrophytes and algae, were observed in the diversion drain in August 2014. Downstream of the Haul Road Culvert, Creek A, in the form of the diversion drain, turns to the north-east where it ultimately joins with Creek B. 16In the period between 1 January 2013 and 31 December 2013, Creek A flowed on only three occasions. Those occasions were on 1 March 2013, 10 June 2013 and 18/19 July 2013. 17Creek B flows north-east off the Mine site. Generally it has highly eroded defined banks. It does not flow into any main watercourse but, when flowing, the water that it carries has the potential to reach farm dams downstream of the mine. However, given that this would involve a travel distance of approximately 5 kms, the potential for waters in Creek B to reach these dams is considered to be low. 18Creek A requires about 50mm of rainfall in a 24 hour period in order to flow through the Mine site. In the period from 10 to 13 June 2013, there had been approximately 60mm of rainfall. On 20 June 2013, Creek A was not flowing but there were small pools of water that remained from the rain that had fallen during the previous week. At that time, those small pools of water were expected to remain for a short time. The pool at the Pybar Culvert is likely to have taken longer to dry out than those smaller pools. This was the case because the pool at Pybar Culvert was larger, having been formed artificially by the presence of the roadway and culvert. The pool is approximately 15m x 10m with a shallow ledge. 19The small pools upstream of the Pybar Culvert, together with the leaf litter, gravel, branches and other debris in the beds of those pools could have provided habitat for micro and macro invertebrate organisms and frogs. However, there is no distinctive or very limited riparian habitat and the habitat in the small pools is considered marginal. It is not possible to quantify the prospect of these small pools containing micro or macro invertebrate organisms and frogs immediately prior to the incident. However, it is agreed that the prospect of aquatic fauna being present was likely in the Pybar pool but remote in the smaller pools upstream. Ultimately, it is accepted by the Prosecutor that the presence of aquatic fauna in the creeks at the time of the incident could not be determined. I am not persuaded beyond reasonable doubt that there was aquatic fauna in the creeks at the time of the incident. 20No incident involving the discharge of pollutants to Creek A is known to have occurred between 2010 and 20 June 2013. However, the Mine site has been used for Mineral exploration and mining activity for over a century, including the use of cyanide as part of the processing operation by the previous Mine owner, with the result that it is not known whether there have been earlier pollution incidents.

The discharge of tailings 21On the evening of 19 June 2013, the processing plant at the Mine was operating. Tailings were being pumped to the Northern Tailings Dam through Tailings Line A. At about 12.30am on 20 June an employee of the Defendant completed a mid-shift inspection of Tailings Line A. No breach of that Line was then observed to have occurred. 22At about 1.00am on 20 June, computer software installed in the Mine processing plant recorded a reduction in the power draw on the tailings pump used to pump tailings through Tailings Line A. That reduction in power draw was not observed by any employee of the Defendant at that time. 23Between 1.30am and 4.30am that morning, normal processing operations, including the pumping of tailings, continued until the plant was shut down due to the lack of mined ore. However, the tailings line pump continued to operate, with water being flushed through the processing system and Tailings Line A in order to clear residual ore. The liquid pumped through the Tailings Line in this period was mostly water, unlike the slurry that was being pumped between 1.00am and 4.30am. 24At about 5.30am on 20 June, Stevan Nikolic, an employee of the Defendant, arrived at the Mine to commence work. He noticed that tailings had spilled across the Mine access road and carpark. Shortly thereafter, the tailings pump was switched off. 25Subsequent inspections revealed that a Victaulic coupling joint which joined two sections of Tailings Line A had split, probably due to severely cold weather causing the Line to contract. The split coupling was located approximately 200m south of the processing plant. This was the first occasion on which a coupling had split in that manner since the Defendant had acquired the Mine in 2008. 26It is likely that the coupling joint split occurred at about 1.00am on 20 June, being the time at which the computer software at the plant recorded the reduced power draw of the tailings pump. As a consequence, between that time and 5.47am when the pump was turned off, tailings were flowing out through the split coupling. 27The volume of tailings that flowed out of the Tailings Line in the period from 1.00am to 5.47pm is calculated as being approximately 378.5 cubic metres. These tailings covered an area of about 6,500m² which included a section of the Mine road, a power line easement and carpark. Of the total volume that escaped, it is calculated that approximately 94 cubic metres of tailings entered Creek A. 28A small proportion of the tailings sprayed at high pressure from the split coupling. This was evident from the observation of tailings on the wall of the Run of Mine Pad. Tailings were also pooled next to the bund in the immediate vicinity of the broken coupling. 29Most of the tailings that flowed out of the split coupling initially flowed north inside the bund towards the processing plant. However, at the locations at which the bund had been modified in the manner earlier described, the tailings flowed out of the bunded area and onto the surrounding ground. Once the coupling split had occurred, all of the tailings being pumped from the processing plant flowed out of the bund in this manner. 30Having flowed across both cleared and lightly vegetated areas of the Mine site, the tailings reached Creek A and flowed through that Creek for approximately 275m to the Pybar Culvert. This culvert was substantially blocked with debris and vegetation at the time of the incident, with the consequence that most of the tailings slurry was blocked from flowing through the culvert. Some days later it was observed that tailings had settled in a layer approximately 8cm thick under the water in the pool at the Pybar Culvert. 31Downstream of the Pybar Culvert, thick tailing sediment was not visible. The thick sediment or slurry in and upstream of the Pybar Culvert had the appearance of a grey sludge. However, in the diversion drain downstream of the Pybar Culvert, a "grey skim" was apparent in some areas of the surface water on 21 June and grey tailings were visible especially at the edges of the pools of water. However, there was no evidence that tailings had flowed beyond the Haul Road Culvert or beyond the boundaries of the Mine site.

Clean-up and remediation 32Upon discovering the escape of tailings and the extent to which those tailings had spread across the Mine site and into Creek A, the response of the Defendant was immediate. It notified the Prosecutor of the incident. It also embarked upon remedial action. That action broadly involved: (i)installation of bunds and blockage of culverts in Creek A to prevent flushed tailings water from flowing beyond the Haul Road Culvert and hence into any farmland downstream of the Mine site; (ii)pumping flushed tailings water out of Creek A and the formation of bunds to channel water into appropriate locations; (iii)use of an excavator and hand tools to scrape off, stockpile and remove the top layer of grassy vegetation and soil from areas that had been covered in tailings; (iv)use of that same equipment to scrape off, stockpile and remove the top layer of soil and (v)vegetation from the bed and banks of Creek A that had been covered in tailings between the point at which water had entered the Creek and the Pybar Culvert; and (vi)commissioning of remediation works and retainer of an external consultant to validate the effectiveness of the remediation measures. 33Clean-up and remediation works were completed by 28 August 2013. The cost of those works is said to have been approximately $80,000.

Sentencing considerations 34The sentence to be imposed for the present offence must reflect both the objective gravity of the offence as well as the subjective circumstances of the Defendant. In that regard, I am required to consider, and have considered, the factors of relevance in s 21A of the Crimes (Sentencing Procedure) Act 1999 (NSW) (the Sentencing Act) as well as s 241(1) of the POEO Act. The purposes for which a sentence may be imposed are those identified in s 3A of the Sentencing Act. 35The objects of the POEO Act cannot be removed from consideration when determining an appropriate sentence. Those objects, as stated in s 3, include not only protection, restoration and enhancement of the quality of the environment of this State, but also include the object expressed in paragraph (d) of that section in the following terms: "(d) to reduce risks to human health and to prevent the degradation of the environment by the use of mechanisms that promote the following: (i) pollution prevention and cleaner production, (ii) the reduction to harmless levels of the discharge of substances likely to cause harm to the environment, ... ". 36Effect is sought to be given to those objects, at least in part, by the provisions found in Chapter 5, creating a range of environment protection offences, including the offence created by s 120(1) of the Act. The legislative scheme reflected in the objects and operative provisions of the Act require that "proper, and strict precautions be taken by those whose activities may cause proscribed pollution" (Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 per Mahoney JA at 359). As was also observed by Mahoney JA in Axer, the adoption of the legislative scheme reflects "a stern policy against pollution". 37The POEO Act also aims to ensure that the environment is protected, having regard to the principles of ecologically sustainable development, being the principles identified in s 6(2) of the Protection of the Environment Administration Act 1991 (NSW). In the context of environmental prosecutions, the application of those principles may properly be seen as including an obligation on members of the present generation, including the courts, to play a part in ensuring that rivers, creeks and water courses are preserved from pollution (Environment Protection Authority v Straits (Hillgrove) Gold Pty Ltd [2010] NSWLEC 114; 174 LGERA 314 at [60]. 38The pollution of waters contrary to s 120 of the POEO Act is an offence of strict liability. It has been described as being "a result offence". 39As I have earlier indicated, the maximum penalty imposed by s 123(a) for the commission of the offence is $1,000,000. That maximum penalty is a reflection of the seriousness with which the commission of the offence is regarded by the legislature. 40The objective gravity of an offence against s 120 has two principal components. Those components are the "precise acts or omissions of the offender and the consequences of those acts or omissions" (Environment Protection Authority v Baiada Poultry Pty Ltd [2008] NSWLEC 280; 163 LGERA 71 at [22]). Assessment of these components of objective gravity is served by considering those matters to which s 241(1) of the POEO Act directs attention.

Environmental harm: s 241(1)(a) of the POEO Act 41Section 241(1)(a) requires that in imposing a penalty for the present offence, the Court is required to take into account the extent of the harm caused or likely to be caused to the environment by the commission of that offence. The expression "harm to the environment" is defined in the Dictionary to the POEO Act to include: "any direct or indirect alteration of the environment that has the effect of degrading the environment and, without limiting the generality of the above, includes any act or omission that results in pollution". The word "likely" has been determined to mean a real or not remote chance or possibility. 42The Defendant accepts that the commission of the present offence did cause harm to the environment and also accepts that it was likely to have caused harm to the environment. However, it is the nature and extent of that harm that needs to be addressed. 43It is accepted by both parties that there are two events that found the source of harm or likely harm to the environment in the present case. Obviously enough, the first event is the discharge of tailings across the Mine site and into Creek A in the manner earlier described. The second event is the clean-up and remediation action, appropriately but necessarily taken by the Defendant to address the tailings discharge on 20 June. The latter action involved not only the use of hand tools but the use of heavy equipment to remove the tailings that had spread across the site as well as the use of equipment in the bed of Creek A to remove the tailings that had flowed into the Creek. In undertaking the clean-up or remediation action, not only was there surface disturbance but also some trees were removed. 44I have earlier described the Mine site as being located in a semi-arid environment with low average rainfall. Creeks A and B only carried water for short periods throughout the year. It is agreed that immediately prior to 20 June 2013, Creek A had a natural looking bed-form with banks and trees in the riparian zone. However, the Creek had been subject to disturbance for more than a century from exploration and mining activities as well as grazing. At numerous locations the Creek banks were highly eroded and largely devoid of aquatic vegetation. Erosion is accepted as being a natural phenomenon in this environment. 45At the time of the incident, it is also agreed that aquatic flora in the form of macrophytes were present in that part of Creek A that is downstream of the Pybar Culvert, being the section of the Creek otherwise referred to as the diversion drain. However, the evidence does not enable me to conclude beyond reasonable doubt that at the time of the incident there was aquatic vegetation upstream of the pool at the Pybar Culvert. 46The impact upon or harm to the environment occasioned both by the tailings discharge and remediation action taken by the Defendant has been the subject of expert assessment by an eco-toxicologist, two ecologists and an environmental auditor. These four experts have prepared a joint report that forms part of Exhibit A. There is minimal disagreement among them. 47They agree that although additional sediment entered Creek A as a result of the clean-up and remediation, there was no evidence that it caused harm to aquatic fauna and that high sediment levels and erosion are a typical feature of this semi-arid environment. Historical water sampling shows high sediment levels above ANZECC Guidelines trigger values after rainfall. 48While it is accepted as a fact that some trees were removed as a result of the clean-up actions by the Defendant, the extent of harm by reason of that tree removal is, according to the experts, unquantifiable. In so saying, they identified the fact that some trees had been removed prior to the incident to accommodate a power line easement. Further, they agree that such tree removal as did occur in the course of clean-up had "negligible" impact upon aquatic biota. 49The tailings that spilled from the Tailings Line and entered Creek A contained metals at concentrations far exceeding ANZECC Guidelines trigger values. The weighted average metal concentrations in the tailings pumped through the Tailings Line at the time of the incident were 4.2 ppm cadmium, 1580 ppm copper, 230 ppm manganese and 1800 ppm zinc. 50Investigators from the Prosecutor attended the Mine site on 21 June when a number of water samples were taken. Analysis of these samples showed that the surface water in the section of Creek A into which the tailings had flowed was potentially toxic to some aquatic organisms for the following reasons: (i)concentrations of dissolved metals, particularly zinc and cadmium, far exceeded ANZECC water quality guidelines trigger values for the protection of fresh water aquatic eco-systems at the 95% level of protection; and (ii)pH and conductivity values were outside the ANZECC default trigger values for the protection of aquatic eco-systems in south-eastern Australia. 51The experts agree that high mineralisation could be expected in both water and soil on the Mine site before 20 June 2013, given the duration of mining activities at the site. They acknowledge, from such pre-incident data as was available, that water upstream of the area affected by the discharge of tailings into Creek A historically had concentrations of cadmium, copper and zinc above "unadjusted" ANZECC 95% protection level trigger values. While the view was expressed that high concentrations of metals in sediments in the impacted area of Creek A would be expected, no opinion could be expressed as to the extent to which those concentrations were higher than background. 52As part of the measures undertaken by the Defendant to validate the clean-up and remediation of the site, its consultants gathered a number of water samples on 19 July 2013. Having regard to test results for those samples, the experts agree that water in Creek A had returned to its pre-spill condition by 19 July. 53I have earlier described the clean-up action taken by the Defendant involving the use of an excavator and hand tools to remove the top layer of soil and vegetation from the bed of the Creek and from the areas over which the tailings had flowed before reaching that Creek. While the site disturbance caused by this action had an environmental impact, the experts accept that the removal of tailings solids effectively prevented any significant contamination of the underlying soils. 54The flow of tailings across sections of the Mine site, resulting in about 94 cubic metres of tailings entering Creek A, clearly occasioned environmental harm. Settlement of tailings and their chemical composition which exceeded water quality guidelines potentially had an immediate impact. It is the location and extent of that impact that must be addressed. 55There are two components of the Mine site environment upon which the evidence focuses. First is the environment of Creek A itself and second is the environment referred to in the evidence as the "flood plain habitat", being the physical environment, including trees, that were located in the area beside the Creek and over which the Creek water surcharged on the relatively rare occasions on which there was a flow of water in the Creek. As the Defendant submitted, to assess the actual and likely harm from the discharge of tailings, it is necessary to understand each of these receiving environments as they were at the time of the discharge of tailings. 56The semi-arid nature of the Mine site environment and the infrequency with which water flowed in Creek A is relevant when considering the impact upon that Creek. So also is the circumstance that the Mine site has been the subject of disturbance from mining for over 100 years. 57Having made the latter observation, the Defendant accepts that the disturbed or degraded state of the Mine site does not identify a circumstance that, of itself, mitigates the consequence of the tailings discharge that occurred on 20 June 2013. However, the condition and state of the receiving environment is relevant to the assessment of the extent of harm or likely harm caused by the commission of the offence (Environment Protection Authority v Orica Australia Pty Ltd (The Nitric Acid Air Lift Incident) [2014] NSWLEC 103 at [119]). 58As I have earlier recorded, apart from the pool at the Pybar Culvert, there were only small pools of water in the Creek on 20 June, being remnants of the creek flow that had occurred the previous week, and those small pools were expected to remain for only "a short time". Prior to the rainfall that occurred in the proceeding week, there had only been one other rainfall event in 2013 sufficient to cause the Creek to flow. 59It is accepted by the Prosecutor that at numerous places the banks of the Creek were highly eroded and largely devoid of aquatic vegetation (Exhibit A at [29]). Having regard to the condition of the Mine site at the time of the tailings discharge, I am not satisfied beyond reasonable doubt that there was aquatic flora in Creek A that was harmed by that discharge. So to conclude does not address the likelihood of harm, an impact to which I will turn shortly. 60I accept that the removal of some trees in the course of carrying out the clean-up of the flood plain area as a consequence of the tailings discharge is a loss that itself identifies environmental harm. The experts accept that the habitat has not recovered to its pre-offence condition, with natural re-establishment expected to take further time, possibly several years. The slow recovery of the flood plain habitat is not only a consequence of the semi-arid state of the site but also a consequence of top soil and vegetation removal that occurred when the spilled tailings were scraped and removed. 61Also relevant to a consideration of the harm to the flood plain environment is the fact that in the flood plain area in which the clean-up occurred, some trees had recently been removed in conjunction with the creation and use of an electricity easement. The reference to the long recovery time for the flood plain area is partly due to the loss of vegetation in the area affected by the easement clearing. 62As I have earlier recorded, the Prosecutor accepts that the clean-up of tailings was completed by 28 August 2013. By reason of this action, the experts accept that no contaminants from the tailings discharge remain on the flood plain or in the Creek so as to have any residual environmental impact. In short, the impact upon the flood plain area was the immediate effect upon existing ground cover and the loss of that ground cover and some trees as a consequence of the clean-up. The long term effect is in the slow recovery of vegetation in this area consequent upon the remedial action taken by the Defendant. 63It is next necessary to return to the likely and potential impacts upon Creek A. Not only are those likely impacts required to be considered by s 241(1)(a) but the potential or risk of harm must be considered when considering the objective seriousness of an offence of the present kind (Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; 148 LGERA 299 at [145] - [149]). 64The critical component of Creek A for the purpose of considering likely environmental harm is the pool at Pybar Culvert. The Defendant accepts that unlike other pools that held water for only a short time following rainfall, water in the Pybar pool remained for a longer period of time. The experts agree and I accept that organisms such as micro and macro invertebrates and frogs were likely to have been present in that pool immediately prior to the tailings discharge on 20 June. As a consequence of that discharge, the experts agreed and I accept that "mortality of any aquatic fauna present in Pybar pool would have occurred due to the spill and remediation." When the area was visited in August 2014, aquatic invertebrates including diving beetles, water scavenger beetles, biting midges, aphids, water striders and stick caddis flies were collected from the area. These observations confirmed the likelihood that such species inhabited Pybar pool at the time of the tailings discharge and therefore are likely to have been harmed in the manner described by the experts. 65I have earlier identified the circumstance that the debris and vegetation at the Pybar pool largely blocked the tailings from being flushed through that pool into that section of the Creek formed by the diversion drain. To the extent to which the very fine fragment of the tailings flowed through the pool into the diversion drain, the experts agreed, and I accept, that it was "most unlikely" that any harm was caused by smothering in the diversion channel. The experts do, however, state that the concentration of zinc and cadmium in the tailings water, being at a level that was an order of magnitude higher than previous data had indicated for those minerals in creek water, was sufficiently great to have caused harm to some aquatic fauna, assuming they were present. 66When this area of the Creek was visited in August 2014, frogs were heard in the rushes that were growing in the diversion drain. While there is no evidence to support a finding that frogs were, in fact, present in the diversion drain at the time at which tailings were discharged on 20 June 2013, the observations made in 2014 identify the potential for some aquatic fauna to have been present. By reason of the elevated levels of zinc and cadmium, I am satisfied that the potential for harm in the diversion drain is to be recognised, albeit, as the experts acknowledged, that the degree of harm could not be quantified. 67In summary, there was an environmental impact upon the aquatic environment in Creek A. Having regard to the evidence that I have accepted, this impact was limited. So far as water quality was impacted, this impact was of short duration, it being accepted that pre-discharge water quality had been restored by 19 July 2012, thereby limiting the impact to about one month. There was potential for the impact to be more significant had the discharge of tailings taken place during a period of high rainfall and high biological activity. 68I accept the submission of the Defendant that the harm caused or likely to be caused to the environment by the commission of the offence was material and not trivial. Overall, I am satisfied beyond reasonable doubt that the harm is in the range of low to moderate.

Practical measures: s 241(1)(b) of the POEO Act 69It is not in contest between the parties that there were practical measures available to the Defendant to have been taken that may have controlled, abated or mitigated the harm that occurred by reason of the discharge of tailings on 20 June. There can be no doubt that the Defendant was under an obligation to take proper precautions to ensure that pollution did not occur and to arrange its business accordingly (Axer at 359). 70The Prosecutor identified the "basic causes" of the offence as being: (i)a split joint in the Tailings Line; (ii)tailings from this split flowed out of the bund in which the Line was laid at those locations where the depth of the bund had been reduced by actions taken by or on behalf of the Defendant; and (iii)the flow of tailings over the Mine site was not detected for over four hours. While these three factors explain the escape of tailings from the Tailings Line, emphasis upon the sections of the bund that had been made shallower than the remainder of the bund should not be considered as an aggravating "cause", notwithstanding that these shallower areas identify the points of escape. 71The Agreed Facts establish that while the Tailings Line was placed in the bunded area for the obvious reason of containing spills, it was not known whether, had the bund remained unmodified, it would have contained the tailings that spilled from a split joint in the Line. It is for that reason that I cannot conclude, beyond reasonable doubt, that the sections of the bund that it modified were a "cause", as distinct from identifying those areas of the bund from which the tailings escaped. 72Apart from the clean-up and remediation action taken by the Defendant, it identified and undertook measures to prevent a recurrence of the incident. Those measures involved: (i)enlargement of the Tailings Line bund to accommodate a larger volume of spillage and redirect the flow of any spill back to the Process Plant, with the enlarged bund redesigned so that the Line was laid in a "snaked" formation, accommodating temperature-related contraction and expansion in joints and thereby lessening the risk that joints would pull apart; (ii)introducing a regime of coupling inspection along the Tailings Lines during regular shutdown maintenance; (iii)installation of an alarm on the tailings pump to sound in the event of "no load" for a period of greater than five minutes, requiring an operator to check for the cause of the alarm; (iv)installation of a camera and area floodlighting so that the control room operator at the Mine could monitor the area, day and night; and (v)updating the Defendant's internal soil disturbance approval form to ensure that environmental protection measures are taken into account for any future excavation work undertaken by employees or contractors. Further, a culvert has been constructed over the top of the Tailings Line bund to accommodate vehicle crossings. 73The Defendant accepts that had these measures been put in place prior to 20 June 2013, they would have prevented or minimised the foreseeable harm to the environment caused by an incident such as that which occurred. Those measures are additional to those that were already being undertaken by the Defendant, including inspection of the Tailings Line in the course of each shift. 74I am satisfied that those measures that were taken by the Defendant after the tailings discharge on 20 June reflect the practical measures that, had they been taken earlier, may have prevented, controlled, abated or mitigated the harm that occurred following that discharge.

Foreseeability of harm: s 241(1)(c) of the POEO Act 75The Defendant does not contest that the harm caused or likely to be caused to the environment in the event of a discharge of tailings from its Mine site was reasonably foreseeable. As would be apparent, the Defendant was aware of the content of tailings, the volume of tailings being pumped through the Tailings Line and the topography of the Mine site, making it readily apparent that any tailings that escaped from the bund would flow towards Creek A. 76Moreover, the possibility that tailings may escape from the pipeline due to some form of fracture is evident from the fact that the Tailing Lines were inspected by employees at least six times per day. The need for inspection was also reinforced by a condition of the Environment Protection Licence held by the Defendant as well as the Water Management Plan that was prepared for it.

Control of causes: s 24(1)(d) of the POEO Act 77Furthermore, the Defendant accepts that it had control over the causes that gave rise to the offence. It was the holder of the Environment Protection Licence as well as being the owner and operator of the Mine.

Combined effect of factors identified in s 241(1) of the POEO Act 78The Prosecutor submits that those considerations directed to harm, practical measures, foreseeability and control over causes of the offences weigh towards a conclusion that the overall objective seriousness of the offence is in the moderate range. I accept that submission. It is a characterisation of the offence that is not disputed by the Defendant. 79This is a case where an important component of infrastructure proved inadequate during routine operations of the Mine. It did not involve an unusually complex series of events coinciding so as to occasion the discharge of tailings that occurred. While I accept that no fracture or split in couplings had occurred during the years in which the Defendant had operated the Mine, the prospect that such an event may occur was, for reasons earlier explained, readily foreseeable. 80In expressing the conclusion that I have as to the objective seriousness of the offence, I make clear that I make no finding that the omissions on the part of the Defendant that have been identified amount to negligence on its part. 81The conclusion that the objective seriousness of the offence is in the moderate range, also reflects the seriousness of the offence as reflected in the maximum penalty that I have earlier identified. I also take account of the fact, accepted by the Prosecutor to be the case, that the offence was committed accidently and that the Defendant had no financial or other motive in committing the offence.

Subjective considerations 82It is necessary that a proportionate sentence be one that reflects not only the objective circumstances of the offence but also the particular circumstances of the Defendant. This requires the Court to take into account any mitigating factors as well as any aggravating factors personal to the Defendant (Veen v The Queen [1979] HCA 7; 143 CLR 458 at 490). 83The Prosecutor does not contend that there are any aggravating circumstances that should be considered in relation to the Defendant.

Prior offences 84The Defendant has not been convicted of any prior offence for a breach of environmental legislation in this State. It is entitled to the benefit of that clear record.

Plea of guilty 85A plea of guilty was entered by the Defendant on the first call-over of this matter. As a consequence, the Prosecutor accepts that the plea was entered at the first available opportunity and that the Defendant should have the benefit of the utilitarian value of that early plea (R v Thomson; R v Houlton [2000] NSWCCA 309; 49 NSWLR 383 at [152]).

Contrition and remorse 86Affidavit evidence of Robert Besley was read by the Defendant and Mr Besley was present in Court. He was not required for cross-examination. Mr Besley is a non-executive director of the Defendant who was authorised by the Board to speak on behalf of the Defendant. Also present during the course of the sentence hearing was Mr R Griffith, the Defendant's Chief Operating Officer and Mr A Patrikios, the Defendant's General Operations Manager. 87By his evidence, Mr Besley demonstrated a clear understanding, both on his part and on behalf of his Board, of the obligation imposed by the Environment Protection Licence applicable to the operation of the Mine as well as the more general obligations imposed by the POEO Act. He established that at a meeting of the Board of the Defendant on 24 July 2014, it had recorded: " ... its deep regret that the Company's actions resulted in a pollution incident and for any impact it has had on the environment. In addition to actions already taken, the board reiterates its commitment to take all practicable measures to prevent reoccurrence of this incident." 88In addition to that resolution, Mr Besley expressed his personal regret that the Defendant's operations had resulted in the discharge of tailings that occurred on 20 June 2012. He stated that it was a "career objective" of his to ensure that exploration and mining is conducted "according to community expectations and best practice." 89Apart from both the Board of the Defendant and Mr Besley, as a director, expressing regret that the company had committed the offence with which it is presently charged, there are objective circumstances supporting the observation that these expressions of contrition and remorse are genuine. Those objective circumstances are identified as being: (i)the prompt reporting of the incident to the Prosecutor; (ii)the prompt action of the Defendant in addressing the escape of tailings, undertaking of its own accord and without delay, actions to clean-up and remediate all areas of the Mine site including the Creek, affected by the tailings spill; (iii)implementing significant measures to address the likely causes of the commission of the offence, directed to prevent a recurrence; and (iv)the presence at the hearing of senior executives of the Company. Based on the evidence given on behalf of the Defendant and the measures that it has taken, I accept that the Defendant is genuinely contrite and remorseful (Environment Protection Authority v Waste Recycling and Processing Corporation at [204] - [214]). 90The Prosecutor accepted that the Defendant's response to discovery of the tailings discharge was both prompt and efficient. Further, it accepts that costs incurred by the Defendant of and associated with the clean-up were substantial, approximating $80,000. While the fact that a sum of that order was incurred by the Defendant is not, of itself, a mitigating factor, the fact that it was incurred in taking the actions that the Defendant did, is relevant to my acceptance of the contrition and remorse expressed on behalf of the Defendant.

Prior good character 91Good character is a relevant mitigating factor: s 21A(3)(f) of the Sentencing Act. Evidence of the Defendant's good corporate character was given in the affidavit evidence of Mr Besley and not challenged by the Prosecutor. This evidence establishes that the Defendant contributes to its local community in the following way: (i)sponsoring local schools in Condobolin; (ii)supporting an annual horseracing event in that town; (iii)supporting other sporting events and sporting clubs within Condobolin; (iv)sponsoring the local Aboriginal Land Council; (v)offering work experience for young professionals; and (vi)actively protecting and preserving mining heritage items on the Mine site by the installation of protective fencing.

Assistance to authorities 92The Prosecutor acknowledges that the Defendant has fully co-operated with it, both by way of response to the incident and in the course of the Prosecutor's investigation of that incident. Further, in preparing for this sentence hearing the Defendant has, through its solicitors, co-operated by agreeing with the evidence relevant to be considered by the Court, including the preparation of Exhibits A and B. In so doing, the efficient presentation of the proceedings to the Court was facilitated without any factual controversy. 93Finally, as further evidence of its co-operation and assistance, the Defendant has agreed to pay the Prosecutor's investigation costs of $10,390 together with its legal costs in the sum of $51,000.

Deterrence 94One of the purposes of imposing a sentence upon an offender as identified in s 3A(b) of the Sentencing Act is deterrence. When imposing a sentence both general and specific deterrence must be considered.

General deterrence 95While the commission of an offence may be unintentional, as is the position in the present case, the purpose of the POEO Act would be frustrated if only a nominal penalty was to be imposed simply because the breach committed was determined to be accidental. Adherence to the provisions of the POEO Act imposing an offence of strict liability requires recognition that accidents, although regrettable, are part of the industrial landscape. In turn this salutary fact requires that the likelihood of unintentional or accidental events occasioning breach be recognised and all measures practically available be implemented in order to prevent them. The implementation of such measures must be recognised as a cost to be borne in any form of industrial undertaking (Axer Pty Ltd v Environment Protection Authority at 359). 96These observations have the consequence that the penalty to be imposed for the present offence must be sufficient to compel those operating facilities that produce pollutants as a by-product of an enterprise to pay close attention to the need to safeguard the environment and in so doing comply with the law so that the environment is not exposed to harm. The imposition of a nominal fine will be ineffective to achieve that purpose.

Specific deterrence 97As the Defendant continues to operate the Mine, it is appropriate that an element of the penalty to be imposed reflect the need for specific deterrence. This will serve the purpose of reinforcing to the Defendant its overriding responsibility to conduct its mining operations in a way that does not cause pollution. 98Having identified the need for that deterrence, there is substance in the submission of the Defendant that this factor need not "weigh heavily" in determining the penalty in this case. That is because the Defendant has taken measures, recognised by the Prosecutor to be appropriate, to avoid recurrence of any event similar to that which occurred on 20 June 2012.

Even-handedness 99The principle of even-handedness in sentencing requires that a sentencing court have regard to the general pattern of sentencing for offences of the kind under consideration. This said, care must be taken in undertaking that task as the wide divergence of facts and circumstances leading to the imposition of a penalty in a decided case will almost always militate against direct comparison with the case at hand. Rarely, if ever, do the circumstances, both objective and subjective, in an earlier case mirror those in the case under consideration. 100The parties identified a number of decisions reflecting some comparability with the circumstances in which the present offence was committed. Those decisions are: Environment Protection Authority v Straits (Hillgrove) Gold Pty Ltd [2010] NSWLEC 114, Environment Protection Authority v Bulga Coal Management Pty Ltd [2014] NSWLEC 55, Environment Protection Authority v Peak Gold Mines Pty Ltd [2013] NSWLEC 158, Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident) [2014] NSWLEC 103, Environment Protection Authority v Greater Taree City Council [2014] NSWLEC 88, Environment Protection Authority v Sibelco Australia Ltd [2011] NSWLEC160 and Environment Protection Authority v Moolarben Coal Operations Pty Ltd (1) [2012] NSWLEC 65. 101I have considered the circumstances in each of those decisions, all of which involve the commission of an offence against s 120 of the POEO Act. Most involve the commission of such an offence in the course of carrying out mining activities. However, the nature and volume of discharged material giving rise to each offence differed from case to case. Head penalties, before discount, ranged from $120,000 to $50,000. The discount allowed varied from case to case, as did the quantum of both legal and investigative costs that were payable. 102Making due allowance for those differences, I have considered the pattern of penalties reflected by those decisions when determining an appropriate penalty to be imposed in the present case.

Appropriate penalty 103Synthesising the objective circumstances of the offence, earlier described as being in the moderate range of objective gravity, and the relevant subjective circumstances of the Defendant, I consider that the appropriate penalty to be imposed would, subject to discount, be $80,000. This sum should be reduced by 35% on account of the mitigating factors that I have identified and which includes a 25% discount for the utilitarian value of the Defendant's early plea of guilty. 104This has the consequence that the penalty to be imposed is a fine of $52,000. In fixing this penalty, I take account of the fact that the Defendant has agreed to pay the Prosecutor's legal costs and investigation costs in the sums earlier identified.

Publication notice 105The Prosecutor sought and the Defendant has agreed that there should be a publication order made under the provisions of s 250(1)(a) of the POEO Act. The proposed order requires publication in a newspaper having Statewide circulation as well as two newspapers circulating in the Condobolin area. I agree that the publication order is appropriate. It is not opposed by the Defendant and the terms of publication have been agreed between the parties.

Orders 106For all these reasons I make the following orders: (1)The Defendant is convicted of the offence as charged. (2)The Defendant is fined the sum of $52,000. (3)The Defendant is to pay the Prosecutor's investigation costs pursuant to s 248 of the Protection of the Environment Operations Act 1997 (POEO Act) in the amount of $10,390, within 28 days of this order. (4)The Defendant is to pay the prosecutor's legal costs in the amount of $51,000. (5)The Defendant is, within 28 days of the date of this order, to cause a notice in the form of Annexure A to this judgment to be placed within the first 5 pages of the following publications, at a minimum size of 9cm x 12cm, pursuant to s 250(1)(a) of the POEO Act: (i)Sydney Morning Herald; (ii)Dubbo Daily Liberal; and (iii)Condobolin Argus (6)Within 35 days of the date of this order, the Defendant must provide to the Prosecutor a complete copy of the pages of the publications in which the notice appears. (7)Exhibits may be returned. ANNEXURE A KBL Mining Limited convicted of water pollution at Mineral Hill. KBL Mining Limited has been convicted in the Land and Environment Court of one offence of water pollution under the Protection of the Environment Operations Act 1997. KBL Mining was prosecuted by the NSW Environment Protection Authority (the EPA) for this offence and pleaded guilty to the charge. KBL Mining operates the Mineral Hill mine 60km north-west of Condobolin. It holds an Environment Protection Licence but is prohibited from causing water pollution. On 20 June 2013, an estimated 378 cubic metres of mine tailings leaked from a pipeline and over 90 cubic metres flowed into a water course at the Mine. A bund around the pipeline failed to control the leaking material. The flow of tailings was entirely contained on the Mine site and did not reach any neighbouring properties. The leak required an extensive clean-up to remove the tailings and dirty water. The leak could have killed any invertebrates or frogs if present in the water course at the time. On 14 November 2014, KBL Mining was fined a total of $52,000 and was ordered to pay the EPA's investigation costs of $10,390 and legal costs of $51,000. This notice was paid for by KBL Mining Limited pursuant to an order of the Court.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 March 2015