Environment Protection Authority v Nowra Chemical Manufacturers Pty Ltd

Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 Environment Protection Authority v Bega Valley Shire Council [1998] NSWLEC 187 CASES CITED: EPA v Cargill Australia Limited [2007] NSWLEC 337 EPA v Colenden Pty Ltd [2007] NSWLEC 289 Environment Protection Authority v Nalco Australia Pty Ltd [2007] NSWLEC 831 Environment Protection Authority v Waste Recycling and Processing Corp (2006) 148 LGERA 299 Hunter Water Board v State Rail Authority of New South Wales (No.2) (1992) 75 LGRA 22

PROSECUTOR Mr E Bateman, solicitor of Department of Environment and Climate Change LEGAL REPRESENTATIVES: DEFENDANT Mrs K Leotta SOLICITORS Minter Ellison

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

50076 of 2007 Environment Protection Authority v Nowra Chemical Manufacturers Pty Ltd

JUDGMENT 1 His Honour: The Defendant is a reputable family company of long and respected standing in both its industry of chemical manufacture, and its local district of Nowra. It is heavily engaged in making "alum". 2 The company has pleaded guilty to a Tier 2 offence in that, in breach of s.120 of the Protection of the Environment Operations Act 1997 ("POEO Act"), it polluted waters with 1700 litres of diluted sulphuric acid, which caused admitted actual environmental harm. 3 Although Mrs Leotta, counsel for the company, suggests that in view of its exceptional record, and the impressive testimonials tendered by her as Exhibit N1, s.10 of the Crimes (Sentencing Procedure) Act 1999 ("CSP Act") might be appropriate, she conceded that the Court is likely to impose a monetary penalty, and the parties have agreed that orders should be made under s.250 of the POEO Act instead of the imposition of a fine. 4 The Court has been greatly assisted by an extensive agreed statement of facts ("ASF") with comprehensive annexures, and by fulsome written submissions. 5 The most relevant important facts from those documents can be briefly summarised. 6 On 18 January 2007, after a process failure at the factory, a warm mixture of sulphuric acid and water was stored in an unbunded and uncommissioned tank fitted with a non-compliant flange. The flange was not suitable for that purpose - it was corroded by the hot acidic contents and failed overnight. The acid mixture leaked from the tank and, with the assistance of some well-intentioned hosing by employees, flowed eventually into a stormwater easement which fortunately was very dry at the time, as was the path the mixture followed to it. 7 The company's EPA licence does not allow discharge of pollutants from its factory. Most of its storage facilities are properly bunded and drain into designated pits and tanks below the premises. 8 Emergency procedures and incident response training focus on spills within the catchment of the "first flush system" on site. 9 The stormwater channel was heavily vegetated at the time, and all the vegetation was considered mostly healthy, albeit not of high ecological significance. When the channel flows as and into an ephemeral watercourse, the waters in it could end up in Flat Rock Dam, travelling via the Triplarina Nature Reserve. The actual environmental harm admitted by the Defendant was quite severe on common plant species within 22m of the non-concreted section of the stormwater channel, for a maximum period of 15 months. Some vegetation had to be removed for clean up purposes in any event. 10 There was certainly a potential for greater and more far-reaching harm, but the dry conditions and thorough clean up alleviated the risks. The chemical evidence included in the ASF shows that, despite the welcome dilution of the acid waters, the pollutant remained highly toxic and lethal to many species. The clean up was thorough, as I have said, and the follow-up precautions extensive, until overtaken by heavy rains one month later. Some 5000 litres of diluted acidic water had been recovered. 11 The decision to retain the failed "alum" process ingredients on site was commercially understandable, but the decision, based on storage limitations, to put such a dangerous liquid into an unbunded tank proved highly unsound. I accept that the inadequacy of the flange which failed was not readily obvious to the company's personnel, but the facts indicate that much more observation of the storage arrangement should have been carried out between 12.30am and 5.55am on 19 January 2007. 12 All the relevant management decisions were made at a high level in the company, and there were some relevant failures by company personnel. Chemical operations with harmful potential should be carried out in safe places by skilled persons, and a close watch maintained. 13 A substantial penalty is called for in cases such as this. It is not a case for the use of s.10 of the CSP Act. 14 In arriving at that decision, and the appropriate amount of penalty, I have had regard to all the important considerations mandated by s.241 of the POEO Act, and ss.3A, 10, 21A, 22 and 23 of the CSP Act, and to the many judgments of this Court and the Court of Criminal Appeal on their application. 15 I have had particular regard to Hunter Water Board v State Rail Authority of New South Wales (No.2) (1992) 75 LGERA 22, Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357, Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683, EPA v Colenden Pty Ltd [2007] NSWLEC 289, EPA v Cargill Australia Limited [2007] NSWLEC 337, Environment Protection Authority v Waste Recycling and Processing Corp (2006) 148 LGERA 299, and my own judgment in Environment Protection Authority v Bega Valley Shire Council [1998] NSWLEC 187. 16 Both counsel are agreed on the legal principles. 17 This was a pollutant of a very dangerous and corrosive character. There are no extenuating circumstances. The storage process was in breach of the licence conditions. The spill was objectively serious in every way. Actual harm is admitted, and very serious harm could easily have been caused. The possibility of a harmful liquid escaping from an unbunded area into a nearby drain and then downhill to the easement were clearly foreseeable events. A safe level of dilution as identified by the experts, and agreed by the Defendant in the ASF, is clearly well beyond the capacity of the Defendant to achieve when a spill occurs. Actual and likely harm were clearly foreseeable. The response of the company was less than optimum. 18 The Prosecutor has put the case very fairly to the Defendant, acknowledging subjective factors to be considered in the Defendant's favour. It has acknowledged the many practical measures that have been implemented by the Defendant, but only after the event, and it puts the level of seriousness of the offence well towards the bottom of the scale. 19 A penalty must be arrived at which deters both this offender and all those industries which handle dangerous and environmentally hazardous liquids. 20 Objectively, I can assess the seriousness of this offence at no lower than 15% of the worst case. However, I accept the Prosecutor's and Mrs Leotta's submissions that:

(i) there are no aggravating factors from s.21A(2) of the CSP Act . (ii) the Defendant has an exemplary record, and a widely acknowledged high reputation. (iii) the Defendant entered its plea of guilty at a very early stage. (iv) the Defendant was fully cooperative and helpful to the law enforcement authorities. (v) the Defendant has paid clean up and other related costs of $64,000. (vi) the Defendant has agreed to pay the Prosecutor's costs of $28,000, and (viii) the Defendant is prepared to consent to and comply with orders under s.250(1) of the POEO Act, including a publication order. 21 I accept the contrition expressed in the affidavit of the company's founder and senior executive, Mr John Raymond Lamont, sworn 22 May 2008. 22 Allowing for all these mitigating factors, I would reduce the appropriate fine to be imposed by one-third, as Lloyd J did in Environment Protection Authority v Nalco Australia Pty Ltd [2007] NSWLEC 831, from $150,000 in this case to $100,000.

[Discussion with and between the parties about the form of an order under s.250 of the POEO Act ]. 23 The orders of the Court are:

1. The Defendant is convicted of the offence as charged in summons.

2. The Defendant having been found guilty of the offence of contravening section 120(1) of the Protection of the Environment Operations Act 1997 (NSW) ('Act'), the Court makes the following orders: (a) Pursuant to section 250(1)(a) of the Act, the Defendant cause a notice in the form of Annexure A to be placed within first 12 pages of the following newspapers at a minimum size of 10cm by 20cm in the earliest edition possible after the making of this order and within 14 days of the date of this order: (i) the South Coast Register; and (ii) The Sydney Morning Herald in the Early General News Section. (b) Pursuant to section 250(1)(e) of the Act, the Defendant pay the Southern Rivers Catchment Management Authority the amount of $100,000 to be administered to the Shoalhaven Riverwatch Landcare Group and/or other similar group for the purposes of restoration and erosion control works on the Shoalhaven River. (c) The payment to be made by instalments of $50,000 per annum for a period ending 2 years from the date these orders were made. 3. The Defendant is ordered to pay the Prosecutor's costs assessed and agreed at $28,000. ANNEXURE A PROSECUTION FOR POLLUTION OF WATERS On 4 June 2008 the Land and Environment Court of New South Wales found Nowra Chemical Manufacturers Pty Ltd ("Nowra Chemicals") guilty of an offence against the Protection of the Environment Operations Act 1997, in that it caused the pollution of a stormwater easement and potentially an ephemeral creek in Triplarina Nature Reserve near Nowra. Nowra Chemicals pleaded guilty to the charge and the Court found that, among other things: 1. on 19 January 2007 approximately 1700 litres of 26.6% sulphuric acid solution escaped from Nowra Chemicals' premises at Albatross Road, Nowra; 2. the escape was caused by the company's decision to store the sulphuric acid solution in an unbunded tank with a fixture not suitable for that purpose; and 3. the sulphuric acid solution caused actual severe harm to a number of common plant species within the stormwater easement and had the potential to adversely affect aquatic and plant life in Triplarina Nature Reserve.

Nowra Chemicals was ordered to pay $100,000 by 2 annual instalments towards the restoration of Shoalhaven River. The money is to be paid to the Southern Rivers Catchment Management Authority ('the CMA') for the CMA to administer to the Shoalhaven Riverwatch Landcare Group or other similar group for the purposes of restoration and erosion control works on the Shoalhaven River.

Nowra Chemicals was prosecuted by the EPA, a part of the Department of Environment and Climate Change. This notice is placed by order of the Land and Environment Court and is paid for by Nowra Chemicals.

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.