Environment Protection Authority v Morgan Cement International Pty Ltd

nstructions Pty Limited v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189 Gore v The Queen; Hunter v The Queen [2010] NSWCCA 330 Hili v The Queen; Jones v The Queen [2010] HCA 45; (2010) 242 CLR 520 Kyluk v Chief Executive, Office of Environment and Heritage [2013] NSWCCA 114; (2013) 298 ALR 532 Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 Muldrock v R [2011] HCA 39; (2011) 244 CLR 120 Plath v Rawson [2009] NSWLEC 178; (2009) 170 LGERA 253 R v Morgan (1993) 70 A Crim R 368 R v Olbrich [1999] HCA 54; (1999) 199 CLR 270 R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383 R v Wickham [2004] NSWCCA 193 Veen v The Queen [1979] HCA 7; (1979) 143 CLR 458 Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 Texts Cited: Category: Sentence Parties: Environment Protection Authority (Prosecutor) Morgan Cement International Pty Ltd (Defendant) Representation: Counsel: Ms S Callan (Prosecutor) Mr T Howard SC (Defendant)

Solicitors: Office of Environment and Heritage (Prosecutor) Corrs Chambers Westgarth (Defendant) File Number(s): 2016/148116 Publication restriction: Nil

Morgan Cement International Emits Slag Dust into the Air

1. The defendant, Morgan Cement International Pty Ltd ("Morgan Cement"), has pleaded guilty to an offence of breaching condition O2.1 of its environment protection licence ("the EPL"), contrary to s 64(1) of the Protection of the Environment Operations Act 1997 ("the POEOA"), insofar as it failed to maintain plant and equipment installed at its premises in a proper and efficient manner.
2. Morgan Cement holds the EPL for its premises at Gate 7 Foreshore Road, Port Kembla ("the premises").
3. The EPL includes condition O2.1 which provides that: O2.1 All plant and equipment installed at the premises or used in connection with the licensed activity: a) must be maintained in a proper and efficient condition; and b) must be operated in a proper and efficient manner
4. Morgan Cement is an Australian Proprietary Company which was registered on 2 August 1996. Morgan Cement is the producer of cement and ground blast furnace slag in Port Kembla. The slag is manufactured by grinding or milling granulated blast furnace slag into small particles. The slag is then stored in silos on the premises.
5. As particularised in the amended summons dated 15 April 2016, a diverter valve ("the Flap Valve") within a supplementary silo vent pipe attached to a silo had sealed shut and the Flap Valve therefore did not allow product from the silo to flow to a pipe to the ground. Instead, the silo became overfilled and the supplementary silo vent pipe failed to divert the slag product to the ground as it should have done. As a consequence, on 14 and 15 March 2015, a quantity of ground blast furnace slag was emitted into the atmosphere out of the silo and deposited over a distance of almost 1.5kms to the south and southwest of the premises, affecting some of the residents of Port Kembla. The slag dust settled on cars, roofs and vegetation.
6. Although no actual harm to humans resulted from the breach, the risk for such harm was very real, with exposure to the particulate in sufficient quantities potentially giving rise to severe respiratory and cardiovascular adverse health consequences, including morbidity.
7. For the reasons that follow, Morgan Cement is fined the sum of $50,250 and is ordered to publish details of the offence and penalty. It must also pay the prosecutor's legal costs of $55,000.

How the Breach of the EPL and the Emission of the Slag Dust Occurred

1. The relevant facts were agreed between the parties and were located in a compendious agreed statement of facts with attached relevant documentation.
2. In addition, Morgan Cement relied upon an affidavit of Mr Michael Miller affirmed 13 October 2016. Mr Miller is the director of Morgan Cement. He was present throughout the sentencing hearing.

Ground granulated blast furnace slag

1. At the time of the incident, one of the products produced at the premises was ground granulated blast furnace slag ("the slag product").
2. The slag product is a supplementary cementitious material used to manufacture cementitious binders and as a partial replacement for Portland Cement in concrete and other similar products. It was sold to Morgan Cement's customers.
3. The slag product was produced by milling granulated blast furnace slag and gypsum. The milling process involved grinding the raw materials into fine particles. The material is very fine grained with approximately 45% of the particles being less than 10 |jm or 0.01 mm in size.
4. On Saturday 14 March 2015, an incident occurred at the premises involving an escape of the slag product from a storage silo.

Storing the slag product

1. Following milling, the slag product was transferred to storage silos using pressurised air via a Pneumatic Conveying Vessel ("PCV") transfer system. The PCV operates under pressure to facilitate the transfer of product to the silo.
2. From the storage silos, the slag product was directly loaded into trucks for transportation. This occurred in the loading bay.
3. At the time of the incident, the premises had three storage silos on the southern side of the mill building. The silos are known as Silo A, Silo B and Silo C. The offence relates to Silo A.
4. During routine operations, vented air leaves Silo A through a Dalamatic device ("the Dalamatic"). The Dalamatic consists of a number of bag filters on one side and a bag cleaning device on the other side. The bag filters remove the dust prior to discharge.
5. In the event that Silo A was over-filled, a supplementary vent pipe acted as an emergency vent to prevent the silo rupturing by releasing air pressure and directing slag product to the ground.
6. The supplementary vent system comprised a simple pipe exit attached to the top of the silo ("the supplementary vent pipe"). The air pressure and/or vented slag product would travel via the supplementary vent pipe to an outlet at ground level in the loading bay. Any slag product would be deposited onto the ground in the loading bay, which is a covered area. A security camera is located in the loading bay and the footage from the loading bay is displayed on a monitor in the site operator's control room.
7. Should a Morgan Cement staff member (namely a site operator, the operations manager or the production and maintenance engineer), a maintenance contractor or a truck driver observe slag product discharging from the supplementary vent pipe, the staff member or maintenance contractor can manually switch off the transfer of the slag product into the silo. Truck drivers will notify a Morgan Cement staff member if any such discharge is observed.
8. On the night of the incident, only two site operators were present at the premises. One of the site operators, Mr Nigel Shallcross, was present in the control room and in the vicinity of Silo A. The other site operator, Mr Peter Hooper, was working in the raw material storage building approximately 100 meters away from the mill area.

Controlling the storage levels in Silo A

1. At the time of the offence, the amount of slag product in Silo A was: 1. controlled by a mechanical device called a Roto-Bin-Dicator installed within Silo A which detected a preset "Hi level" in the silo. The Roto-Bin-Dicator has a paddle on the bottom of the device which rotates. When the slag product reaches the paddle level, the paddle motor is stalled, sending a signal to the plant programmable logic controller which terminates the flow of the product from the PCV. If the level of slag product in the silo falls below the "Hi level" the paddle can rotate again and the PCV recommences transfer of the product to the silo. If needed, an operator can manually switch off the PCV and stop the transfer of product into the silo; and 2. monitored by an ultrasonic level sensor which measured the fill level in the silo and provided a visual display of the silo's fill level on a screen in the site operator's control room. The visual display showed the fill level in the silo in both metres down from the top of the silo and percentage full.
2. At the preset "Hi level", Silo A has a nominal capacity of approximately 306 metric tonnes and is approximately 15 metres high.

The fallout incident

1. At around 6:00am on Saturday 14 March 2015, the ultrasonic level sensor showed the fill level of Silo A to be 0.9 metres from the top of the silo. This level was recorded in the shift log book by the site operator.
2. At around 9:00am on 14 March 2015, 27.4 tonnes of the slag product was loaded into a truck from Silo A. This was the only truck filled from Silo A on 14 March 2015.
3. At 9:19am on 14 March 2015, the PCV commenced transferring further slag product to Silo A for storage. The PCV can transfer approximately 18-20 tonnes of the slag product in one hour.
4. The display in the site's control room showed that product transfer was occurring.
5. The PCV continued to transfer the slag product until 1:06pm on 14 March 2015 when the PCV automatically switched off due to a lack of slag product available for transfer to Silo A.
6. At around 6:00pm on 14 March 2015, the ultrasonic level sensor showed the fill level of Silo A to be 0.7 metres from the top of the silo. This level was recorded in the shift log book by a site operator.
7. At 6.45pm on 14 March 2015, the site operator manually turned on the PCV to transfer the slag product to Silo A. This is because a site operator must manually switch on the PCV after it has automatically switched off due to a lack of slag product being available for transfer to Silo A. The site operator considered that Silo A was not full and had capacity to accept additional slag product.
8. At some time between 6.45pm and 8.11pm, the Roto-Bin-Dicator control device developed an intermittent fault and did not automatically signal to the PCV to stop the transfer of the slag product. The Roto-Bin-Dicator did not signal to the PCV to stop the transfer until 8:11 pm.
9. By about 9:30pm, two members of the public had observed white material in the air, in the vicinity of 14 Reservoir Street, Port Kembla, approximately 760m away from the premises and in the vicinity of Tobruk Avenue and Matthews Crescent, Port Kembla, approximately 1.1km away from the premises. The first complaint to the Environment Protection Authority ("EPA") Environment Line was received at 9:36pm.
10. Despite receiving the slag product throughout 14 March 2015, the fill level of Silo A, as depicted in the trend data recorded by the ultrasonic level sensor which was reviewed after the incident, did not indicate an increase in the fill level of Silo A and remained at around 93 - 95% for a period of 7am to 11pm.

Equipment failure at time of incident

1. The most likely cause of the Roto-Bin-Dicator control device in Silo A failing to function correctly was an electrical failure within the device. This failure was not caused by a failure by Morgan Cement to properly and efficiently maintain that piece of equipment.
2. It is not known whether the ultrasonic level sensor in Silo A failed to function correctly. A technician who attended the premises on 19 March 2015 indicated that the transducer in the sensor was suspected to be faulty and recommended the sensor be replaced. As outlined above, the trend data recorded by the ultrasonic level sensor throughout 14 March 2015 did not indicate an increase in the fill level of Silo A and remained at around 93 - 95% for the period 7am to 11pm, despite receiving the slag product throughout the day. This suspected failure of the ultrasonic level sensor was not caused by a failure by Morgan Cement to properly and efficiently maintain that piece of equipment.
3. At the time of the incident, Silo A and Silo B shared a supplementary vent pipe. The supplementary silo vent pipe failed to function as the Flap Valve from Silo A had sealed shut due to a build-up of fine cement dust particles over time. This meant that only Silo B was able to vent to ground. The sealing of the Flap Valve was caused by a failure of Morgan Cement to properly and efficiently maintain this piece of equipment.

Scheduled maintenance

1. The ultrasonic level sensor and Roto-Bin-Dicator are not subject to any scheduled maintenance by Morgan Cement. There were no written procedures or inspection checklists in place to inspect the ultrasonic level sensor and Roto-Bin-Dicator. The manufacturing and operating instructions for the Roto-Bin-Dicator states that scheduled preventative maintenance is not required when the equipment is properly installed. The operating instructions for the ultrasonic level sensor states that "no special maintenance is required during normal operation... A maximum of reliability is ensured. Nevertheless, faults can occur during operation".
2. Morgan Cement was aware that the Roto-Bin-Dicator and ultrasonic level sensor do fail from time to time. For example, the Silo A maintenance record shows that on 27 July 2014 and 11 December 2014 the ultrasonic level sensor displayed inaccurate measurements.
3. If such anomalies in functioning are observed by Morgan Cement's staff or maintenance contractors, the equipment will be serviced. As part of this, replacement units and parts for the units are kept on the premises in the event of a failure.
4. The supplementary vent pipe was subject to scheduled servicing every four months. Part of the inspection involved an employee or maintenance contractor placing their hand at the outlet. If air was coming out of the outlet, it was assumed the vent pipe was in working order. This method of testing could not, and did not, show that the Flap Valve from Silo A was sealed shut. Any air flow detected by an employee or contractor could have been coming from Silo B.
5. The Flap Valve had not been inspected or tested since approximately 2006 when it was sealed in the galvanised steel box on the top of Silo A. This sealing was undertaken to prevent moisture entering the Silo and mixing with the cement product(s) being stored in the silo.
6. There were no written procedures or inspection checklists in place to inspect the Flap Valve in the supplementary vent pipe. However, it is a job requirement of site operators to constantly monitor the functioning of all plant and equipment during their shift. Monitoring of the supplementary vent pipe (and other plant on the premises) is also undertaken by Morgan Cement's maintenance staff and maintenance contractor by the method outlined above.

The commission of the offence

1. On 14 March 2015, the Flap Valve in the supplementary vent pipe was not maintained in a proper and efficient condition. At the time of the incident, the Flap Valve had been sealed shut by fine cement dust particles which had built up over time. It is not known when the Flap Valve was sealed shut.
2. Nobody knew the Flap Valve was sealed shut.
3. The supplementary vent pipe was subject to scheduled inspections every four months. The Flap Valve was not checked during these inspections as the valve was contained in a sealed galvanized steel box on the top of Silo A.
4. The non-functioning of the Flap Valve was not noticed by anyone until after the fallout incident when the galvanised steel box on the top of Silo A was unsealed and inspected.
5. The preventative inspection and maintenance regime for the supplementary vent pipe was insufficient to detect and rectify any problem with the Flap Valve.
6. The failure of Morgan Cement to maintain the supplementary vent pipe so that the Flap Valve did not seal shut was therefore a contravention of condition O2.1(a) of the EPL.

Sentencing Principles

1. A basic principle of sentencing law is that the sentence imposed for an offence must reflect, and be proportionate to, the objective circumstances of the offence and the personal or subjective circumstances of the offender (Veen v The Queen [1979] HCA 7; (1979) 143 CLR 458 at 490 and Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 at 472).
2. The instinctive synthesis method is the correct method of sentencing. The Court identifies all the factors relevant to the sentence and weighs their significance to arrive at an appropriate sentence (Muldrock v R [2011] HCA 39; (2011) 244 CLR 120 at [26] and [29] and Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 at [35]-[39], [50]-[84] and [136]-[139]).
3. Although Morgan Cement's plea of guilty to the charge entails acceptance of the proof beyond reasonable doubt of the elements of the offence, the Court must not take facts into account in a manner that is adverse to Morgan Cement unless those facts have been established beyond reasonable doubt by the EPA (Gore v The Queen; Hunter v The Queen [2010] NSWCCA 330 at [27] and [105] and R v Wickham [2004] NSWCCA 193 at [27]). But if there are circumstances that the Court proposes to take into account in favour of Morgan Cement, it is enough that these circumstances are proved on the balance of probabilities (R v Olbrich [1999] HCA 54; (1999) 199 CLR 270 at [27]).
4. Section 3A of the Crimes (Sentencing Procedure) Act 1999 ("the CSPA") sets out the purposes of sentencing an offender. Relevant purposes in these proceedings are those contained in ss 3A(a), (b), (c), (e), (f) and (g).
5. In addition, s 21A of the CSPA identifies the matters that the Court must take into account when determining the appropriate sentence, including factors in aggravation under s 21A(2) and factors in mitigation under s 21A(3).
6. The matters referred to in ss 3A and 21A of the CSPA are in addition to any other matters that are required or permitted to be taken into account by the Court under any Act or rule of law, such as s 241(1) of the POEOA.
7. Section 241(1) of the POEOA provides: 241 Matters to be considered in imposing penalty (1) In imposing a penalty for an offence against this Act or the regulations, the court is to take into consideration the following (so far as they are relevant): (a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence, (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm, (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, (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence, (e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee.

Objective Circumstances of the Offence

1. The primary factor the Court must consider in determining an appropriate sentence is the objective gravity or seriousness of the offence. In determining the objective seriousness of the offence, the circumstances to which the Court may have regard include (Bentley at [163]; Gittany Constructions Pty Limited v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189 at [110] and Plath v Rawson [2009] NSWLEC 178; (2009) 170 LGERA 253 at [48]): the nature of the offence; the maximum penalty for the offence; the harm caused to the environment by the commission of the offence; Morgan Cement's state of mind in committing the offence; Morgan Cement's reasons for committing the offence; the foreseeability of the risk of harm to the environment by the commission of the offence; the practical measures available to Morgan Cement to avoid harm to the environment; and Morgan Cement's control over the causes of harm to the environment.

Nature of the offence

1. A fundamental consideration of relevance to environmental offences is the degree to which the offender's conduct would offend against the legislative objectives expressed in the statutory offence (Director-General of the Department of Environment and Climate Change v Rae [2009] NSWLEC 137; (2009) 168 LGERA 121 at [15] and Plath at [49]). A proper understanding of the purpose of creating an offence is usually assisted by a consideration of the objects of the statute (Connell v Santos New South Wales Pty Limited [2014] NSWLEC 1; (2014) 199 LGERA 84 at [59]). Therefore, regard ought to be had to the objects set out in s 3 of the POEOA.
2. The objects of the POEOA set out in s 3 relevantly include: (a) to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development, … (d) to reduce risks to human health and 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, … (iv) the making of progressive environmental improvements, including the reduction of pollution at source, (v) the monitoring and reporting of environmental quality on a regular basis, (e) to rationalise, simplify and strengthen the regulatory framework for environment protection,
3. The objects of the POEOA disclose that the central mischief to which the Act is directed is to avoid, or at least mitigate, pollution in order to prevent harm to human safety and the natural environment for both present and future generations (Environment Protection Authority v Unomedical Pty Limited (No 3) [2010] NSWLEC 198 at [188]).
4. The legislative scheme requires that "proper, and strict, precautions be taken by those whose activities may cause proscribed pollution". The adoption of that legislative scheme reflects on the part of the community "a stern policy against pollution" (Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359 and Moolarben at [43]).
5. As was stated in Environment Protection Authority v Orica Australia Pty Ltd (Nitric Acid Air Lift Incident) [2014] NSWLEC 103; (2014) 206 LGERA 239 (at [104]), it is difficult to envisage industrial production that would not, having regard to the broad definitions ascribed to the various forms of pollution regulated by the POEOA, give rise to conduct that would otherwise, but for a proscribed licensing regime under that Act, be unlawful. Compliance with licence conditions is the price that entities must pay for permission to engage in potentially polluting manufacturing processes. The conditions imposed in any licence are aimed at maximising beneficial environmental outcomes and minimising environmental harm. They represent a balancing exercise between fostering economic growth and development, on the one hand, and protecting and preserving the environment now and for the future, on the other. Strict compliance with the conditions of any environmental protection licence is therefore necessary to ensure that this balance is achieved and that the objectives of the POEOA are met.

Maximum penalty

1. The maximum penalty for an offence reflects the seriousness with which Parliament views the offence (Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698 and Plath at [67]). There is a spectrum of offending behaviour covered by a given offence and imposition of the maximum penalty is necessarily reserved for the worst case for which the penalty is prescribed (Markarian at [31]).
2. The maximum penalty for the commission of the offence pursuant to s 64(1) of the POEOA by a corporation is $1 million.

Environmental harm caused by the commission of the offence

1. The environmental harm caused by the commission of an offence is a central consideration in determining the objective gravity of the offence. The concept of harm in the context of environmental offences is broad (Waste Recycling and Processing Corp at [145]-[147]).
2. Harm includes the potential or risk of harm, not merely actual harm (Waste Recycling and Processing Corp at [145]; Axer at 366 and Bentley at [175]). Harm can be direct, indirect or cumulative (Waste Recycling and Processing Corp at [147]).
3. Furthermore, s 241(1)(a) of the POEOA makes it clear that in sentencing the Court is to consider the "extent of the harm caused or likely to be caused to the environment by the commission of the offence". The POEOA defines "harm to the environment" broadly 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.
4. The term "environment" is relevantly defined in that Act to include land and air and "any layer of the atmosphere".
5. Morgan Cement collected approximately five tonnes of the slag product from within the premises following the incident.
6. The slag product was also picked up by the wind was deposited over a distance of almost 1.5 km to the south to south west of the premises in about a 300m wide band (at its widest point).
7. By reason of the emission of the slag particulate into the atmosphere, there was actual harm to the environment, as defined in the POEOA.
8. A total of eight residents made complaints to the EPA Environment Line about the fallout. The EPA spoke to two other affected residents during the course of its investigations. The residents complained of fine white dust collecting on and adhering to cars, houses, windows, hand railings and outdoor areas. The white dust found at these premises was slag product although the chemical and/or physical composition may have changed from that at the point of emission due to interactions in the atmosphere.
9. Photographs of the premises, locations near the premises, and two residences on Matthews Crescent, Port Kembla, taken by a resident on 15 March 2015, were before the Court.

Morgan Cement's state of mind at the time of the commission of the offence

1. A breach of s 64 of the POEOA is an offence of strict liability, which means that mens rea is not an element of it. However, the state of mind of Morgan Cement at the time of committing the offence is a relevant consideration when imposing a sentence. This is because a strict liability offence that is committed intentionally, negligently or recklessly, will be objectively more serious than one committed accidentally (Rae at [42]-[43] and Gittany at [123]).
2. In the present case there is no question of Morgan Cement having intentionally, negligently or recklessly committed the offence with which it has been charged, and the EPA did not assert as such.
3. Rather, as the evidence presented disclosed, the commission of the offense was purely inadvertent insofar as the Flap Valve became stuck. However, the supplementary system designed to prevent or minimise the emission of any overflow material into the atmosphere in the event of Silo A overfilling also did not work. The Roto-Bin-Dicator developed an intermittent fault and did not automatically signal to the PCV to stop the transfer of slag into Silo A. Had this fault not developed it may be readily inferred that Silo A would not have overfilled. This failure was not caused by a failure of Morgan Cement to, for example, properly or efficiently maintain its plant or equipment. Likewise, it appears that the ultrasonic level sensor, which controls the amount of material transferred into Silo A, also failed to function properly on 14 March 2016. Again, this was not due to Morgan Cement failing to properly or efficiently maintain its plant or equipment.

Reasons for offending

1. A factor by which the objective seriousness of the offence may be augmented is the reason for its commission (Axer at 366, Bentley at [237] and Rae at [47]). If the offence is found to be committed for financial gain this will increase its objective seriousness (Bentley at [246]-[247] and s 21A(2)(o) of the CSPA).
2. Here the offence was not committed for any such reason that would have the effect of increasing the objective seriousness of the crime.

Practical measures available to Morgan Cement to avoid or mitigate harm

1. Section 241(1)(b) of the POEOA mandates that the Court consider the "practical measures that may be taken to prevent, control, abate or mitigate" the harm identified in s 241(1)(a). In Axer, Mahoney JA commented as follows (at 359): The legislation does not seek merely to prevent deliberate or negligent pollution. It envisages that… proper precautions must be taken to ensure that pollution does not occur. Experience has shown that it is not enough merely to take care: accidents will happen. The legislation envisages that… care must be supplemented by positive precautions; business must be arranged and precautions taken so as to ensure that pollution will not occur.
2. It was not in dispute that there were a number of practical measures available to Morgan Cement to prevent the resultant environmental harm arising from the commission of the offence and to ensure that the plant and equipment was maintained in a proper and efficient manner during the carrying out of the licensed activity in order to prevent the release of the slag particulate.
3. First, it could have developed and implemented an effective supplementary vent pipe inspections program which included the Flap Valve. The existing program of servicing the supplementary vent pipe every four months relevantly involved placing a hand at the outlet - if air was coming out, it was assumed the vent pipe was in working order. But air could have been coming from either Silo A or Silo B or both; the technique did not involve any actual inspection of the Flap Valve. This was insufficient to detect and rectify any problem with the Flap Valve.
4. The Flap Valve had not been inspected or tested since 2006 when it was contained in a sealed galvanised steel box on the top of Silo A. At some point between 2006 and the date of the incident, the Flap Valve had been sealed shut by fine cement dust particles which had built up over time and this remained undetected until after the incident.
5. Given the Flap Valve was a critical part of the fail-safe device, it should have been tested or serviced as part of an effective inspection program.
6. Second, it appears that Morgan Cement's training and/or systems and processes were deficient in that when employees discovered the incident they erroneously understood that the material had been wholly contained on site. In circumstances where the slag product had blown almost 1.5 kilometres from the premises this strongly suggests that checks/investigation of the incident by employees either did not occur or were not sufficiently rigorous.

Foreseeability of the risk of harm

1. The extent to which Morgan Cement could have reasonably foreseen the harm caused by the commission of the offence is a relevant objective circumstance in determining an appropriate sentence (s 241(1)(c) of the POEOA; Camilleri's at 700, Plath at [48] and [135] and Kyluk v Chief Executive, Office of Environment and Heritage [2013] NSWCCA 114; (2013) 298 ALR 532 at [131]).
2. The parties agreed that given the small particulate size and chemical composition of the cementitious product, the harm caused or likely to be caused to the environment if the product was released into the atmosphere was reasonably foreseeable. This is presumably, as the EPA observed, the reason for the existence of the Roto-Bin-Dicator, the ultrasonic level sensor and the supplementary vent pipe.

Control over the causes of the harm

1. At all times Morgan Cement had complete control over the causes of the harm (s 241(1)(c) of the POEOA). Although Morgan Cement submitted that there were other factors causally connected with the emission over which it did not have control, in particular, the failure of the Roto-Bin-Dicator and the failure of the ultrasonic level sensor, the fact remains that its failure to maintain the Flap Valve meant that when Silo A overfilled, the supplementary vent pipe ruptured, which ultimately resulted in the release of the particulate into the ambient environment.

Response to the incident

1. The EPA accepts that upon the site operators becoming aware of the incident, Morgan Cement took prompt action to shut down the transfer of slag to Silo A.
2. Further, and as corroborated by Mr Miller's written evidence, although rectification of the incident was initially limited to the premises, because the extent of the dispersion was not known by Morgan Cement, once Morgan Cement became aware of the impact on local residents, it took immediate steps to assist various residents in cleaning up the material from their premises and property.
3. Morgan Cement has spent a total of $2,155.53 on assisting the residents clean the slag product off their property.

Conclusion on objective gravity

1. In my opinion, the offence should be classified towards the lower to mid-range of seriousness having regard to the fact that: 1. the environmental harm, given the potential for serious harm, was moderate; 2. the offence was caused by inadvertence; 3. Morgan Cement has demonstrated its commitment to environmental protection by investing in practical measures to improve performance at the premises; 4. the offence did not result from any decision to put the environment at risk in order to save money; and 5. in all the circumstances, Morgan Cement responded promptly and appropriately to the incident to minimise the environmental impacts of the pollution incident. Subjective Considerations
2. As stated above, within the limits set by the objective seriousness of the offence, the Court must take into account subjective factors both favourable and unfavourable to Morgan Cement contained in s 21A of the CSPA. A proportionate sentence requires the Court to take into account any mitigating factors that are personal to Morgan Cement (Rae at [55]; Gittany at [144] and s 21A(3) of the CSPA). Relevant subjective circumstances include: 1. whether Morgan Cement has a prior criminal record (s 21A(3)(e) of the CSPA); 2. whether Morgan Cement is of good character (s 21A(3)(f) of the CSPA); 3. whether Morgan Cement is unlikely to re-offend (s 21A(3)(g) of the CSPA); 4. whether Morgan Cement has demonstrated remorse for the commission of the offence (s 21A(3)(i) of the CSPA); 5. whether, and when, Morgan Cement entered a guilty plea (ss 21A(3)(k) and 22 of the CSPA and R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383 at [151]-[155]); 6. whether Morgan Cement provided assistance to the regulatory authorities in the investigation and prosecution of the offence (ss 21A(3)(m) and 23 of the CSPA); and 7. whether Morgan Cement will pay the prosecutor's legal and investigation costs of the proceedings.

Prior convictions

1. Morgan Cement does not have any prior convictions for any environmental offences.

Good character

1. The evidence of Mr Miller demonstrates that Morgan Cement is a good corporate citizen and, more specifically, that its recent investments in environmental improvements and its support for various community programs, show that it is of excellent corporate character. As Mr Miller deposed: Morgan Cement has a long-running commitment to preservation of a local colony of the endangered green and golden bell frog on the Port Kembla premises. In 2011, Morgan Cement reinstated frog ponds located on an adjacent site after becoming the owner of that site. In 2012, in conjunction with the NSW Office of Environment and Heritage a land holder management agreement was reinstated for the frog's habitat. This habitat is subject to ongoing management by Morgan Cement in accordance with the management agreement and its development consent for the site, including maintenance of the area, regular vegetation control and population studies by a scientific offer. The total cost to Morgan Cement for managing this project is approximately $20,000 per annum, and it has been successful in preserving this colony of this endangered species.

Early guilty plea

1. Morgan Cement entered a plea of guilty at the earliest opportunity. Accordingly, its plea should attract a maximum discount of 25% (ss 21A(3)(k) and 22 of the CSPA and Thomson at [160]).

Likelihood of re-offending

1. Morgan Cement has undertaken a number of actions to minimise the chance of similar incidents occurring in the future. I find the likelihood of Morgan Cement re-offending to be so low as to be negligible, a matter which should be taken into account as a factor in mitigation (s 21A(3)(g) of the CSPA).

Contrition and remorse

1. The contrition or remorse of an offender must be taken into account as a mitigating factor in determining the appropriate sentence for an offence (s 21A(3)(i) of the CSPA and Waste Recycling and Processing Corp at [203]).
2. As the affidavit of Mr Miller demonstrates, Morgan Cement has accepted its responsibility for the offence at the highest levels of the company.
3. Morgan Cement, through Mr Miller, has expressed its unreserved remorse and contrition for the incident. Mr Miller, through his counsel, again apologised to the Court at the sentence hearing. He was present throughout the hearing.
4. Morgan Cement has further demonstrated that contrition and remorse in its actions following the incident, as outlined above.

Assistance to authorities

1. It was agreed (and verified by Mr Miller's unchallenged evidence) that Morgan Cement has cooperated fully with the EPA both during the incident investigation and during the preparation of the proceedings for hearing. This culminated in the comprehensive agreed statement of facts. This assistance must be taken into account as a mitigating factor in Morgan Cement's favour (ss 21A(3)(m) and 23 of the CSPA).

Agreement to pay the EPA's costs

1. The Court is empowered to order an offender to pay the prosecutor's legal costs of the proceedings pursuant to ss 257B of the Criminal Procedure Act 1986.
2. The payment of a prosecutor's costs is an aspect of punishment and should be considered in the determination of the appropriate penalty as a factor that acts to reduce the penalty (Environment Protection Authority v Barnes [2006] NSWCCA 246 at [78] and [88]; Environment Protection Authority v Queanbeyan City Council (No 3) [2012] NSWLEC 220 at [248] and Rae at [68]), and therefore, should be factored into the determination of the appropriate penalty.
3. Morgan Cement has agreed to pay the EPA's reasonable legal costs in the amount of $55,000 and its investigation costs (see s 248(1) of the POEOA) in the sum of $492.50.

Conclusion on subjective considerations

1. The subjective circumstances of Morgan Cement operate to mitigate to a considerable degree the penalty that would otherwise be imposed by the Court and I consider a total discount of 33% appropriate.

The Appropriate Sentence to be Imposed on Morgan Cement

1. The imposition of a sentence serves a number of purposes. As identified above, the relevant purposes listed in s 3A of the CSPA also inform the determination of an appropriate sentence. These include punishment (s 3A(a)); both general and specific deterrence (s 3A(b)); community protection (s 3A(c)); making Morgan Cement accountable for its actions (s 3A(e)); denunciation (s 3A(f)); and recognition of the harm done (s 3A(g)).

Deterrence, Retribution and Denunciation

1. The sentence must be sufficient to specifically deter Morgan Cement from repeating the conduct that resulted in the commission of the offence in the future in the hope that only nominal penalties will be applied.
2. There is also a need for the sentence to serve as a general deterrent to prevent others committing similar offences against the POEOA (Environment Protection Authority v Snowy Hydro Ltd [2008] NSWLEC 264; (2008) 162 LGERA 273 at [206]-[207] and Axer at 367). The penalty imposed should be sufficient to cause others to take the positive precautions necessary to avoid offending rather than simply treating the risk of a fine as a cost of doing business.
3. Given the measures undertaken by Morgan Cement since the commission of the offence to ensure that licensed activities are carried out in a competent manner in the future, and the genuine contrition and remorse demonstrated by the company for the harm caused, specific deterrence has the barest of roles to play in the determination of an appropriate sentence to be imposed on Morgan Cement.
4. There is, however, in my view, a need for the sentence to have embedded in it an element of general deterrence to promote the objects of the POEOA and to ensure that other holders of environmental protection licences comply with the conditions attached to their respective licences.
5. The imposition of an appropriate sentence also serves the purpose of ensuring that retribution and denunciation are properly addressed. The sentence of this Court is a public denunciation of the conduct of Morgan Cement and ensures that it is held accountable for its actions and is adequately punished (Rae at [8]-[9], and ss 3A(a) and (e) of the CSPA). Accordingly, I also take these elements of sentencing into account.

Consistency in Sentencing

1. A relevant consideration in sentencing is the ascertainment of the existence of a general pattern of sentencing by the Court for offences such as the offence in question (Gittany at [179]-[182] and Rae at [69]). The proper approach is for the Court to examine at whether the sentence is within the range appropriate to the gravity of the particular offence and to the subjective circumstances of the particular offender, and not whether it is more severe or more lenient than some other sentence that merely forms part of that range (Gittany at [182] quoting R v Morgan (1993) 70 A Crim R 368 at 371).
2. Of course care must be taken because each case is different and a sentence in one case does not demonstrate the limits of a sentencing judge's discretion, given the wide divergence of facts and circumstances leading to the imposition of specific penalties (Axer at 365; Cabonne Shire Council v Environment Protection Authority [2001] NSWCCA 280; (2001) 115 LGERA 304 at 312 and Hili v The Queen; Jones v The Queen [2010] HCA 45; (2010) 242 CLR 520 at [54]).
3. The pattern of sentencing against which the present case falls to be determined is established through an examination of the relevant sentencing cases dealing with breach of licence offences under s 64(1) of the POEOA (or analogous offences) which have resulted in the release of gas or other emissions into the atmosphere.
4. Most of the relevant cases were recently summarised by the Court in Environment Protection Authority v Environmental Treatment Solutions Pty Ltd [2015] NSWLEC 160 (at [121]-[126]), a case which is, of itself, comparable.
5. The EPA also furnished the Court with a useful list of cases, which included: 1. Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident) [2014] NSWLEC 103; (2014) 206 LGERA 239; 2. Environment Protection Authority v Unomedical Pty Limited (No 4) [2011] NSWLEC 131; 3. Environment Protection Authority v State of New South Wales (Department of Environment, Climate Change and Water) [2010] NSWLEC 67; (2010) LGERA 19; 4. Environment Protection Authority v Causmag Ore Company Proprietary Limited [2009] NSWLEC 164; 5. Environment Protection Authority v Delta Electricity [2009] NSWLEC 11 6. Environment Protection Authority v Forgacs Engineering Pty Limited [2009] NSWLEC 64; 7. Environment Protection Authority v Caltex Refineries NSW Pty Limited [2008] NSWLEC 194; 8. Environmental Protection Authority v Caltex Refineries (NSW) Pty Limited [2006] NSWLEC 335; and 9. Environment Protection Authority v BlueScope Steel (AIS) Pty Limited [2004] NSWLEC 400.

Publication Order is Appropriate

1. In addition to a fine, the EPA seeks an order under s 250(1)(a) of the POEOA that Morgan Cement publicise the offence. Morgan Cement agreed to such and order being imposed and on the form and wording of the publication notice.
2. Publicising sentences for environmental crime improves the effectiveness of sentences as a deterrent, especially in respect of corporate offenders (Waste Recycling and Processing Corporation at [242]).
3. It is appropriate in the circumstances of the commission of this offence that such an order be made.

Conclusions on the Appropriate Penalty for the Incident

1. Synthesising the objective circumstances of the offence as mitigated by the subjective circumstances of Morgan Cement, and having regard to the existing patterns of sentencing, I consider that the appropriate penalty for the commission of the offence is a monetary penalty.
2. The appropriate penalty for the breach of the licence condition, contrary to s 64(1) of the POEOA, is $75,000, discounted by 33%, to $50,250.

Orders

1. For the reasons provided above, the Court orders that: 1. the defendant is convicted as charged; 2. the defendant is fined the sum of $50,250; 3. pursuant to s 257B of the Criminal Procedure Act 1986 the defendant is ordered to pay the prosecutor's legal costs agreed in the sum of $55,000; 4. pursuant to s 248(1) of the Protection of the Environment Operations Act 1997 the defendant is to pay the prosecutor's investigation costs and expenses agreed in the amount of $492.50; 5. the defendant is, within 28 days of the date of this order, to cause a notice in the form of Annexure 'A' to be placed within the first 12 pages of publication (a), and within the first 5 pages of publications (b) and (c) below, at a minimum size of 8cm x 12cm, pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997: 1. The Sydney Morning Herald; 2. The Illawarra Mercury; and the 3. Building Connections Magazine; 1. 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 referred to above in order 5; and 2. the exhibits are to be returned.

Annexure 'A' Morgan Cement International Pty Ltd convicted of breaching an Environment Protection Licence condition and ordered to pay $105,742.50 Morgan Cement International Pty Ltd Port Kembla ("Morgan Cement") has pleaded guilty to a breach of an Environment Protection Licence condition under s 64 of the Protection of the Environment Operations Act 1997 by failing to maintain an item of plant in a proper and efficient condition on 14th March 2015. Proceedings were taken by the NSW Environment Protection Authority ("EPA") against Morgan Cement in the Land and Environment Court NSW. The failure to maintain the item of plant in a proper and efficient condition resulted in the emission of ground granulated blast furnace slag from a storage silo into the atmosphere and depositing it over a distance of up to 1.5km to the south to south west of the premises affecting local residents of Port Kembla. On 2 November 2016 Morgan Cement was ordered to pay the EPA'S legal costs of $55,000 and investigation costs of $492.50, and was fined a total amount of $50,250. This notice was paid for by Morgan Cement as a result of an order of the Land and Environment Court of NSW. 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: 02 November 2016