Environment Protection Authority v Orica Australia Pty Ltd - [2014] NSWLEC 107 - NSWLEC 2012 case summary — Zoe

NSWNSWLEC

Environment Protection Authority v Orica Australia Pty Ltd

[2014] NSWLEC 107

Land and Environment Court (NSW)|2012-12-12|Before: Pepper J

View original source

At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2012-12-12

Before

Pepper J

Source

Original judgment source is linked above.

Judgment (38 paragraphs)

[1]

Background to the Ammonia Plant and the No 1 Ammonia Feed Tank 20Ammonia is used in the three Nitric Acid Plants ("NAP1", "NAP2" and "NAP3"), and the two Ammonium Nitrate Plants ("ANP1" and "ANP2"), at the ANMF to manufacture ammonium nitrate. 21Ammonia is fed directly to the three Nitric Acid Plants and the two Ammonium Nitrate Plants by Ammonia Feed Tanks. There are three Ammonia Feed Tanks at the Ammonium Nitrate Manufacturing Facility: (a)the No 1 Ammonia Feed Tank feeds ammonia directly to NAP1 and ANP1; (b)the No 2 Ammonia Feed Tank feeds ammonia directly to NAP2, NAP3 and ANP2; and (c)the No 5 Ammonia Feed Tank feeds ammonia directly to the Bottling Plant. 22When operating normally, the No 1 Ammonia Feed Tank functions as follows: (a)ammonia is fed into the No 1 Ammonia Feed Tank via ammonia lines from the Ammonia Plant and/or the Refrigerated Storage Tank (V101); (b)the ammonia level in the No 1 Ammonia Feed Tank is normally controlled automatically at a setpoint of 60%. There is a High Level Alarm (LIC 227) which is triggered when the liquid ammonia level in the No 1 Ammonia Feed Tank reaches 75%; (c)the pressure in the No 1 Ammonia Feed Tank is controlled by a side arm heater, which adds a small amount of heat to the ammonia so that the desired pressure is obtained within the No 1 Ammonia Feed Tank. There are three separate pressure alarms, which are triggered when the pressure within the No 1 Ammonia Feed Tank is increased beyond the normal range: (i)Pressure Alarm (PIC271-PVH), which is triggered when the pressure reaches 1500kPa; (ii)Pressure Alarm (PI269-PVH), which is triggered when the pressure reaches 1570kPa; and (iii)Pressure Alarm (PIC271-PVHH), which is triggered when the pressure reaches 1700kPa; (d)the No 1 Ammonia Feed Tank is fitted with two pressure safety valves known as PSV283A and PSV283B ("the Pressure Safety Valves"). The Pressure Safety Valves are operated in the event that the pressure in the No 1 Ammonia Feed Tank increases beyond the normal range to relieve the pressure to prevent the catastrophic failure of the vessel. The Pressure Safety Valves are set to operate at 1724kPa; (e)the Pressure Safety Valves normally vent to the NAP1 Tail Gas Stack ("NAP1 vent stack"). However, during the time of the Ammonia Incident, the NAP1 vent stack was isolated for maintenance. As a result, the flow path from the Pressure Safety Valves was redirected to the NAP2 Tail Gas Stack ("NAP2 vent stack"); and (f)there is a High Level Alarm on the Flow Indicator FI251 that monitors flows from the Knock-out Pot downstream of the Pressure Safety Valves, which indicate flows that are subsequently vented to the atmosphere.

[2]

The Ammonia Incident 23Under normal operating conditions, ammonia is supplied to the three Nitric Acid Plants and the two Ammonium Nitrate Plants from the Ammonia Plant. The Ammonia Plant was shut down on June 2011 for a planned maintenance overhaul known as a "turnaround". 24Due to an incident at that Plant on 8 August 2011 (Environment Protection Authority v Orica Australia Pty Ltd (the Hexavalent Chromium Incident) [2014] NSWLEC 106, or the Hexavalent Chromium Incident), the Ammonia Plant remained shut down on 9 November 2011. 25In order to supply ammonia to the Nitric Acid Plants and the Ammonia Nitrate Plants at the KI premises, ammonia was being shipped to the KI premises and fed into the Refrigerated Storage Tank. The ammonia was periodically pumped from the Refrigerated Storage Tank to the Ammonia Feed Tanks, including to the No 1 Ammonia Feed Tank, through a process known as "batch filling". 26On 8 November 2011, there was a power outage onsite due to a lightning strike at an offsite Ausgrid power pole at approximately 8:55pm. This caused a power outage and brought all of the Nitrate Plants offline. 27ANP1 was kept offline to undertake some opportunistic maintenance following the power outage. By the morning of 9 November, therefore, only NAP1 was operating and it was using approximately 6.2t/h of ammonia. As a result, only NAP1 was drawing ammonia from the No 1 Ammonia Feed Tank. This increased the rate of the level of ammonia in the No 1 Ammonia Feed Tank, and consequently, the pressure in the Tank during batch filling. Ordinarily both NAP1 and ANP1 would draw ammonia from the No 1 Ammonia Feed Tank. 28Thus on 9 November 2011, the No 1 Ammonia Feed Tank was operating under the following abnormal conditions: (a)ammonia was being fed into the No 1 Ammonia Feed Tank via ammonia lines from the Refrigerated Storage Tank using an Export Pump (101B); (b)only NAP1 was operating; and (c)the ammonia level in the No 1 Ammonia Feed Tank was being controlled manually, rather than automatically, because the minimum output rate for the Export Pump exceeded the amount of ammonia required by NAP1. The Orica Ammonia Storage Operator controlled the ammonia level in the No 1 Ammonia Feed Tank by turning the Export Pump on and off at various periods as follows: (i)the Export Pump was started at 6.26am with a tank level of 35.8%; (ii)the Export Pump was turned off at 8.49am with a tank level of 66.7%; (iii)the Export Pump was started at 12.35pm with a tank level of 36.3%; (iv)the Export Pump was turned off at 12.49pm with a tank level of 42.4%; (v)the Export Pump was started at 1.44pm with a tank level of 35.0%; and (vi)the Export Pump was turned off at 2.49pm with a tank level of 59.15%. 29As a result of the pumping of ammonia into the No 1 Ammonia Feed Tank, the pressure within the No 1 Ammonia Feed Tank increased and decreased throughout 9 November 2011. At various times on 9 November 2011, the pressure within the No 1 Ammonia Feed Tank increased above 1724kPa. This over-pressurisation resulted in ammonia passing through Pressure Safety Valves to the 48m high NAP2 vent stack and into the atmosphere. 30This occurred on six occasions for about a minute each time. During the course of each of the six releases, Orica employees were not aware that the six ammonia releases had vented into the NAP2 vent stack. This is because: (a)Pressure Alarm PIC271-PVH, which was triggered when the pressure in the No 1 Ammonia Feed Tank reached 1500kPa, was disabled at 6.39am on 9 November 2011, and only re-enabled at 2.45pm, immediately prior to the Export Pump being turned off at 2.49pm; (b)Pressure Alarm PI269-PVH, which was triggered when the pressure in the No 1 Ammonia Feed Tank reached 1570kPa and was enabled throughout 9 November 2011 (it was activated at 7.57am, 8.15am and 1.59pm and operated as designed), only indicated to Orica employees that the pressure in the No 1 Ammonia Feed Tank had reached 1570kPa. This pressure was too low to warn the employees that ammonia was likely to flow through the Pressure Safety Valves and vent to the NAP2 vent stack; (c)Pressure Alarm PIC271-PVHH, which was triggered when the pressure in the No 1 Ammonia Feed Tank reached 1700kPa, was disabled at 6.39am on 9 November 2011 and only re-enabled at 2.45pm, immediately prior to the time at which the Export Pump was turned off at 2.49pm. As a result, this pressure alarm did not alert Orica employees that pressure within the No 1 Ammonia Feed Tank had increased beyond the normal range; (d)High Level Alarm LIC227, which was triggered when the ammonia level in the No 1 Ammonia Feed Tank reached 75%, was enabled throughout 9 November 2011 and operated as designed, however, as the level in the No 1 Ammonia Feed Tank only reached a maximum of 66.7%, the High Level Alarm did not activate; and (e)High Level Alarm on Flow Indicator FI251, which indicated when there were flows from the Knock-out Pot downstream of the Pressure Safety Valves, had been disabled since 7 November 2011. As a result, this alarm did not alert Orica employees that ammonia had flowed from the Knock-out Pot downstream of the Pressure Safety Valves and was being vented into the NAP2 vent stack.

[3]

The Response to the Incident 31At approximately 3.55pm on 9 November 2011, Orica was notified by the NSW Fire and Rescue Service that ammonia had been detected offsite. 32Mr Winstone deposed in his affidavit sworn 3 December 2012, that as ammonia is lighter than air, under normal atmospheric conditions, in the event that a pressure valve lifts, as occurred during the Incident, the height of the vent stack is designed to ensure that ground level concentrations of ammonia are sufficiently low to prevent adverse human health effects. However, on 9 November 2011, rather than dissipating into the atmosphere, some of the ammonia vapour released via the stack drifted to the ground at the nearby Australian Rail Track Corporation ("the ART") site in Mayfield, and employees of ART reported symptoms consistent with exposure to elevated concentrations of ammonia. It was these employees who notified NSW Fire and Rescue of the Incident. 33NSW Fire and Rescue attended the site at 4:03pm and Orica's Emergency Response Plan was activated. According to Mr Winstone, it was at this point that Orica notified regulatory agencies including the Office of Environment and Heritage ("OEH"), NSW Health and WorkCover. 34Orica employees then identified the source of the likely releases of ammonia to the atmosphere and stopped the flow of ammonia to the No 1 Ammonia Feed Tank by turning off the Export Pump, which had been restarted at 3:42pm. 35Orica notified its industrial neighbours of the Incident that afternoon and made enquiries to determine if any employees were impacted by the ammonia release. Orica also contacted the ART to follow up on the Incident and the health of the workers who had been affected. 36On 9 November 2011, an EPA Officer attended the KI premises and conducted an inspection of the No 1 Ammonia Feed Tank and various other relevant plant and equipment. 37On the same day, the KI Site Manager commenced a review process of the pressurised ammonia storage tanks to identify the cause of the Incident and what actions were required to prevent a recurrence of the Incident. Mr Winstone assisted the KI Site Manager with the investigation into the Incident with a team of Orica personnel. 38Part of the initial response was to make safe all pressurised ammonia storage on the KI premises by safely transferring the contents of the vessels back to the Refrigerated Storage Tank. This was a complicated activity and took a number of days to safely complete. 39That same day, Orica issued a media release on its website regarding the Incident. 40Subsequently, Orica organised a community reference group meeting on 10 November 2011 to inform the community nearby about the Incident and a letter box drop took place in parts of nearby Carrington on 15 November 2011 and in Stockton on 16 November 2011, providing information to those communities of the Incident.

[4]

Investigation of the Cause of the Incident 41On 10 November 2011, the EPA served Orica with a Notice of Preventative Action issued under s 96 of the POEOA ("the Notice"). The Notice required Orica to take certain preventative action and to engage an independent engineer to investigate and report on the operation of the No 1 Ammonia Feed Tank on 9 November 2011. 42On 11 November 2011, EPA Officers attended the KI premises and conducted a further inspection of the No 1 Ammonia Feed Tank and other plant and equipment. 43On 11 November 2011 the EPA received a letter from Orica nominating Mr Robert Weiss, of Honeywell Process Solutions ("Honeywell"), as the independent engineer that Orica intended to engage as required under the Notice. 44On 11 November 2011 the EPA wrote to Orica advising of its acceptance of the nomination of Mr Weiss as the independent engineer. 45On 14 November 2011 Orica wrote to the EPA requesting a number of changes to the Notice. On the same day, the EPA sent an email to Orica confirming a verbal request made by EPA Officers on 9 November 2011 for an Incident Report to be provided. 46On 12 and 15 November 2011, Orica issued media releases on its website regarding the Incident. 47On 16 November 2011, the EPA received Orica's Incident Report, which essentially summarised the chronology outlined above and identified a number of necessary remedial actions including: (a)the installation of high pressure trips on the pressurised storage tanks; (b)a review of the procedures associated with critical safety alarms; (c)the development of temporary work instructions to respond to ammonia releases from vents and the preparation of a revised temporary work instruction for response to the activation of critical safety alarms; (d)improved training in relation to temporary work instructions; and (e)actions to prevent the use of ammonia export pumps for the supply of ammonia to the pressurised ammonia storage tanks onsite. 48Very shortly after the Incident Report was submitted to the EPA, a project team at the KI premises began putting the recommendations into action. 49On 24 November 2011, the EPA served Orica with a Variation of Notice of Prevention Notice. 50On 24 November 2011, the EPA received from Orica a report titled Investigation into the ammonia release at Orica Australia's Kooragang Island Nitrates Plant on 9th November 2011 dated 23 November 2011, prepared by Mr Weiss of Honeywell ("the Investigation Report"). 51On 1 December 2011, Orica wrote to the EPA regarding changes to the operation of the ammonia feed tanks on the KI premises. Attached to this letter was a report prepared by Mr Weiss of Honeywell dated 1 December 2011, detailing the changes. In the report Mr Weiss stated that he was "satisfied that the actions taken by Orica satisfy in all respects the recommendations of [his] 'Prior to restart' recommendations". 52On 5 December 2011, the EPA served Orica with a Revocation of Prevention Notice. On the same day, the EPA served Orica with a Notice of Variation of Licence ("the Licence Notice"). The Licence Notice attached further conditions to Licence 828 requiring Orica to carry out works and make certain modifications to the plant and equipment at the KI premises. 53A number of risk assessments were undertaken to ensure that the changes did not introduce additional risks or hazards, including: (a)Hazard Study 3 ("HAZOP"); (b)Control System HAZOP; and (c)Job Safety and Environmental Risk Analysis ("JSERA"). 54These assessments took place between 10 November and 5 December 2011, to allow remedial work to be completed on the No 1 and No 2 Ammonia Feed Tanks. 55Mr Winstone deposed in his 3 December 2012 affidavit that, following verification of works undertaken at the KI premises, approval to restart the Nitric Acid Plants and the Ammonium Nitrate Plants ("the Nitrates Plants") was given by the Ammonia Plant Startup Committee, comprising representatives from OEH, WorkCover, NSW Fire and Rescue, NSW Health, NSW Police, Newcastle City Council and Port Stephens Council. 56The Nitrates Plants were restarted on 12 December 2011. A number of community meetings were held prior to the restart. 57On 30 March 2012, Orica wrote to the EPA in respect of actions undertaken as a requirement of condition U12 of Licence 828. This was repeated on 2 April 2012, when Orica again wrote to the EPA in respect of actions undertaken as a requirement of condition U12. The letter detailed a program of employee training completed by Orica in response to the Incident. 58Mr Winstone confirmed in his 3 December 2012 affidavit that the short term recommendations in the Investigation Report were implemented promptly, including the following: (a)the installation of a high integrity trip valve on the No 1 and No 2 Ammonia Feed Tanks, operating independently of the computer-based Distributed Control System ("the DCS"); (b)the upgrade of the existing trips on the Ammonia Feed Tanks; (c)the installation of an interlock device to ensure the trip operation does not increase the risk of release of ammonia upstream or downstream of the Ammonia Feed Tanks; (d)the reconfiguration of alarms for improved trip monitoring; (e)the modification of procedures and software to ensure that alarms cannot be disabled without proper review; (f)changes to batch filling procedures to better manage and match pump outputs and production capacity; and (g)the training of all relevant operators in the modified equipment and updated operating instructions. 59Mr Winstone also confirmed that a number of medium term recommendations in the Investigation Report had been implemented including: (a)improvements in DCS alarm management and site operating procedures and a review and update of the Nitrates DCS alarms panel to include additional critical information; (b)the installation of restriction devices on the pressure gauges of No 1 and No 2 Ammonia Feed Tanks to minimise any loss of containment in the event of a pressure gauge or piping failure; and (c)the introduction of a comprehensive standard operating procedure requiring risk assessments to be undertaken in abnormal operating conditions. 60Mr Winstone further deposed to steps taken to implement the two long term recommendations made by Mr Weiss in the Investigation Report, namely, first, upgrading the existing Nitrates DCS to include effective alarm management tools, and second, simplifying the design of future ammonia storage vessels to minimise small bore piping. He stated that a $16 million project to upgrade the DCS alarm system was underway and was scheduled for completion for the end of 2013, and that implementation of the second recommendation had also commenced. 61Finally, in addition to the recommendations made in the Investigation Report, Orica implemented the following improvements to ammonia management systems following the Incident: (a)it made instrumentation changes to minimise the risk of a pressure relief valve release event; (b)it updated procedures for emptying and refilling the pressurised ammonia storage tanks to prevent overpressure during startup and shutdown; (c)it reviewed all ammonia systems at the KI premises to determine the risk of a similar event and modified operations to minimise this risk; (d)it shared information on the Incident with other Orica and affiliated facilities in Australia and internationally; (e)it installed double block and bleed valves on the Ammonia Feed Tank pressure gauges to enable positive isolations and mitigate loss of containment incidents; and (f)it installed a high rate of change level alarm on the Ammonia Feed Tanks that provides early warning of potential overpressure on the Nitrates DCS. 62These actions resulted from the risk assessment process used to implement the recommendations in the Investigation Report. The risk assessment process was broadened to ensure that other areas of the KI premises did not have the same potential for a similar incident. In total, there were 28 modifications to the plant at the KI premises implemented as part of these further improvement projects.

[5]

The Causes of the Ammonia Incident 63The Investigation Report identified the following direct causes of the Incident: 1. the ammonia plant had been shut down since June, so ammonia was being imported and feed was from ammonia storage V101. The ammonia plant is the normal source of ammonia for the nitrates plants and has greater flexibility to deliver small to full flow rates. The pumps at V101 have less flexibility, and P101B in use at the time had a significantly higher minimum flow than the demand from a single nitric acid plant. 2. Following a power outage that had stopped all nitrate plants, opportunity was taken to perform maintenance on several plants. No. 1 Nitric Acid Plant had been started and was the only plant operating. The ammonia demand was therefore abnormally low. 3. This combination of operations was such that the automated level controls could not be used. This operating mode usually only occurs for a short time (an hour or two) during plant startup. In this case, NAP1 had been operating by itself for approximately 12 hours at the time of the incident. 4. The significance of this unusual operating mode appears not to have been recognised by plant supervisors or management. No standard operating procedures existed to cover this mode of operation. Hence the operators were left to determine how best to run the plant so as to achieve the operating objectives. 5. The design of the alarms, as well as the nature of the nitrates operation, means that spurious alarm operation is common. The operators were free to disable alarms when they thought fit, in order to maximise the relevance of alarms displayed and to avoid real alarms being hidden amongst spurious alarms. There was no formal procedure governing alarm disabling. Although software was implemented to automatically re-enable certain critical alarms, the two alarms (PIC271_PVHH and FI251_PVH) that should have warned of excessively high pressure were not included in this system. Consequently these alarms had been disabled, and the operators were unaware that a release was occurring. 6. There was no independent automated shutdown of ammonia feed on high pressure, so dependence was placed on correct operation of the alarms and response by operators to prevent to PSVs from lifting. The PSVs thus became the primary layer of protection against a major loss of containment. The PSVs, and all other systems, worked as designed. 64In addition, the following underlying causes were identified by Mr Weiss: inadequate high pressure protection, for example, lack of an instrumented high pressure trip; deficiencies in the existing nitrates alarm system, for example, a lack of formal procedures to control disabling of alarms; operating procedure deficiencies, for example, the operating instructions did not cover procedures during abnormal operating conditions; and system operability issues, for example, nitrates control room operators did not routinely monitor storage tank pressures using trend displays or analogous techniques, but relied on alarms to be alerted to any deviations. 65Mr Winstone did not cavil with the causes identified by Mr Weiss in the Investigation Report. He expressed the view that the disabling of critical alarms was "unacceptable unless there is a legitimate reason". He noted that, "unfortunately, the investigation and enquiries were not able to identify the reasons why the relevant alarms were disabled". 66Following the Ammonia Incident, the EPA engaged Dr Derek Griffiths to prepare a report in relation to the causes of the Incident. 67Dr Griffiths agreed with the Investigation Report and was of the further opinion that there were a number of matters that related to the failure to operate the plant and equipment in a proper and efficient manner that contributed to the Incident. It was his view that had the operation since June 2011 been properly assessed and a suitable management system implemented, all of the matters would have been covered. That is to say, the causative factors contributing to the Incident were covered by the SHEMS but had not been implemented. Thus: (a)the issue that led to the Incident occurring was the failure to identify that changes had been made in the operation of the ANMF. With the closure of the Ammonia Plant in July 2011, the same operating procedures were used for the long term batch pumping of ammonia from the storage to the Ammonia Feed Tank that had been developed for very short term batch pumping. This was done without any reported attempt to assess the risks involved and to determine what additional controls were needed; (b)there were at least three components of the SHEMS that should have triggered a review: the Management of Change Protocol; the Periodic Hazard Studies protocol; and the need for training in a different process; and (c)if the operators, supervisors and engineers had accessed the information available during the day and had had the required operational knowledge, the trend analysis would have shown the problems occurring without the disabled alarms being sounded. The releases in the afternoon were generated by the same mechanism as the releases in the morning. It is arguable that the afternoon releases could have been avoided if the operation was being adequately monitored and trending carried out.

[8]

Nature of the Offence 73A fundamental consideration of relevance to environmental offences is the degree to which Orica's conduct offends against the legislative objectives. Those objects are found in s 3 of the POEOA. 74The nature of the offence of breach of licence has been discussed in the principal judgment (at [103]-[104]). With respect to this offence, given the potentially toxic and very harmful qualities of ammonia, it is a central requirement that Orica carry out its licensed activities in a proper and efficient manner in accordance with Licence 828 condition O2.1(b). To do otherwise is contrary to the statutory purpose enshrined in s 3 of the POEOA. 75Specifically, Orica operated the No 1 Ammonia Feed Tank without adequate polices and procedures in place to cover situations where the No 1 Ammonia Feed Tank was not servicing ANP1, without carrying out adequate risk assessment for such situations, without automated trip protection, without critical instrumentation enabled, without adequately monitoring trends during the filling of the No 1 Ammonia Feed Tank and without taking appropriate action to prevent the activation of the pressure release valves. 76As a result, a total of 285kg was released into the atmosphere by the six releases over the course of a single day. Ammonia is known to have a number of potential human health effects. 77The failure by Orica to operate its plant in an efficient and proper manner contrary to Licence 828, thereby resulting in the release of the ammonia, plainly offended against the legislative objects of the POEOA. It undermined the object of reducing risks to human health and preventing the degradation of the environment by the use of mechanisms that promote pollution prevention; of reducing discharges of harmful substances; and of making progressive environmental improvements, including the reduction of pollution at the source (see s 3(d) of the POEOA). 78Licence holders are licensed to carry out activities which, if not carried out properly, safely or efficiently, have the potential to cause harm to the environment and human health. In the case of Orica's operations at the KI premises, that potential was very real. The impact of the Ammonia Incident adversely affected the health of Orica's neighbours. On any view the objects of the POEOA were eroded by Orica's breach of its licence. 79Although the EPA complained of the delay by Orica in notifying the Ammonia Incident to the relevant authorities (and Mr Winstone was cross-examined on this topic), I note that no such offence is charged in relation to this Incident and I have therefore placed no weight on this evidence.

[11]

Environmental Harm Caused by the Ammonia Incident 83The environmental harm caused by the commission of an offence is, as was stated in the principal judgment (at [116]-[118]), a central consideration in determining the objective gravity of the offence. The concept of harm in the context of environmental offences is broad and includes the potential or risk of harm, not merely actual harm (see the authorities referred to in the principal judgment at [117]). Harm can be direct, indirect or cumulative and activities that contribute incrementally to the gradual deterioration of the environment, even when they cause no discernible direct harm to human interest, must nonetheless be treated seriously. 84Section 241(1)(a) of the POEOA makes it clear that, in sentencing, the Court must 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" 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". 85The actual environmental harm, including adverse human health impacts, caused by the commission of the offence was not a matter of controversy. 86Ammonia is known to have a number of potential human health effects. It is classified as a hazardous substance according to National Occupational Health and Safety Council criteria and is a Dangerous Good under the Australian Dangerous Goods Code. Ammonia is classified as "toxic by inhalation" and "very toxic to aquatic organisms". Identified human health risks are "serious damage to eyes" and "causes burns". The effects of ammonia exposure are, however, concentration dependent. 87Ammonia has mild, transient adverse effects (absent a clearly defined odour) at 25ppm. It has irreversible and serious effects that can impair an individual's ability to take protective action at 150ppm. It has life threatening health effects at 750ppm. 88The first three releases of ammonia occurred as follows: (a)8.15am, releasing 54.4kg; (b)8.26am, releasing 41.5kg; and (c)8.37am, releasing 39.7kg. 89A resident of Stockton reported an ammonia odour which made her uncomfortable at 9.20am but no ill effects were reported. The resident lodged a complaint with the EPA. 90The second three releases of ammonia occurred as follows: (a)2.15pm, releasing 53.1kg; (b)2.26pm, releasing 52.9kg; and (c)2.38pm, releasing 43.3kg. 91The second three releases resulted in the symptoms set out below that were reported by workers offsite on nearby industrial premises, in the early afternoon of 9 November 2011. There were no health impacts reported by Orica employees at the KI premises. 92However, the following offsite employees reported the following: (a)a worker at Mayfield East Rail Line initially noticed a loss of breath. He reported feeling lightheaded and "tingly". He took another breath and had the same reaction. He then started dry retching and started to feel nauseous. His face felt hot. He was wearing safety glasses at the time and his eyes were protected. He then started to get a headache. He was then taken to hospital where he was examined by a doctor. Following the examination, he was discharged. At 3pm the day after the Incident he still had a slight headache, his ribs hurt from dry retching and he felt lethargic; (b)a second worker at Mayfield East Rail Line noticed a smell and took two normal breaths but the smell was so overpowering that he put his hand over his mouth. He started staggering, coughing up white phlegm, dry retching and trying to vomit. His throat was very sore and irritated. He was struggling to take breaths and became incoherent. He does not recall things that were taking place at the time. His eyes watered, his face stung and his arms felt heavy. He felt generally unwell and clammy. He washed his face and neck thoroughly which appeared to relieve the irritation to his face. He was transported to the hospital in an ambulance, and in the ambulance started to develop a headache. A doctor examined the second worker and he was subsequently medically cleared and discharged. By the end of that day he felt lethargic. He woke at 4am the next day still lethargic with aches and pains all over his body, however, the symptoms were milder than they had been the previous evening and afternoon. He commenced work at 6am; (c)a third worker at Mayfield East Rail Line saw what was happening and smelt a strong chemical odour. The smell stung his throat and nose. He assisted the two workers referred to above to a building to shelter from the odour; (d)at 2.40pm at the Mayfield No 4 Wharf, a worker was overcome by a severe taste in his throat and started to cough. He got a smell of what he thought might be acid. He ran to his car about 30m away in Selwyn Street and shut its windows. He suffered from a headache which lasted until 9.00pm. He also suffered from a dry sore throat, of which he still complained on the morning of 11 November 2011. He did not seek any medical treatment; (e)a second employee at the Mayfield No 4 Wharf could feel a strange sensation like he was breathing salt water through his nose. He reported an acid smell. He did not suffer any ill effects from the smell; (f)a third worker at the Mayfield No 4 Wharf was sitting in an air conditioned cab on a backhoe. He saw a colleague screw his face up and opened the window to see why. He smelt a strange smell and felt short of breath. He told his colleague to get out of the area; (g)at the Kooragang No 2 Wharf a worker detected a smell of ammonia. The odour was enough to notice but not enough to cause irritation or any adverse effect. It only lasted for a few seconds; and (h)another worker at the Kooragang No 2 Wharf smelt what he recognised to be ammonia. The smell was only slight and lasted no more than about five seconds. No adverse effects were reported. 93Orica accepted that the symptoms suffered by the workers were "significant and distressing". 94The health risks caused by the commission of the offence, although transitory, were nonetheless serious and impacted upon a number of people in the vicinity of the Incident. I therefore find the commission of the offence caused moderate to serious environmental harm. 95I also find that the harm caused by the commission of the offence was sufficiently substantial that it constitutes an aggravating factor under s 21A(2)(g) of the CSPA.

[12]

Orica's State of Mind 96The offence is one of strict liability, which means that mens rea is not an element of the offence. However, the state of mind of an offender at the time of committing an offence is a relevant consideration when imposing a sentence because a strict liability offence that is committed, for example, negligently, will be objectively more serious than one committed accidentally (see the authorities in the principal judgment at [127]). 97The parties disagreed about whether Orica's state of mind could, conformably with the principle in R v De Simoni [1981] HCA 31; (1981) 147 CLR 383 (at 389), be taken into account with respect to the breach of licence offence under s 64(1) of the POEOA. In the principal judgment I concluded that it could (at [140]-[145]). 98As described above, Orica failed to operate its plant and equipment in a proper and efficient manner. I accept the EPA's submission that the Incident occurred due to a number of failures in operating the relevant plant and equipment. 99The EPA further submitted that the failures that led to the Ammonia Incident established beyond reasonable doubt that Orica was negligent. Having regard to the agreed facts and, in particular, to the conclusions expressed in the Investigation Report and the opinions of Dr Griffith, I readily find that the commission of the offence was the result of Orica's negligence. 100In particular, Orica did not know of the six discharges because the relevant alarms had been disabled. Mr Winstone conceded that Orica still did not know why that had occurred and that "in respect to alarm management, the procedures were inadequate" (T38.01-38.39). There was also inadequate trip protection. Moreover, there were inadequate operational procedures in place. For example, an Orica worker used a transfer pump that had to be turned off and on manually because its capacity was far too great for the amount of ammonia that was being consumed within the plant. And the significance of the abnormal operating conditions appeared not to have been recognised by Orica as no operating procedures existed to deal with the scenario. In addition, inadequate risk assessment had been carried out in relation to the batch filling of the Ammonia Feed Tanks. Although Mr Weiss expressed the opinion in the Investigation Report that batch filling was "a normal part of startup, and is covered by the startup procedures" (a matter upon which Orica drew comfort), he went on to state that "however, in this case, due to maintenance work on ANP1, this mode of operation was prolonged, and it was the extended operation in this mode that presented the hazard." Finally, Orica failed to properly monitor the filling of the No 1 Ammonia Feed Tank in order to take action to prevent the activation of the pressure release valves.

[29]

Sentencing Purposes: Denunciation, Retribution and Deterrence 127The 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 Orica accountable for its actions (s 3A(e)); denunciation (s 3A(f)); and recognition of the harm done to victims 128(s 3A(g)). 129The EPA submitted that both specific and general deterrence should be important sentencing considerations in the present case. At a general level, the EPA submitted that any fine imposed should be sufficient to cause others to take the positive precautions necessary to avoid offending. 130The EPA submitted that specific deterrence was a significant factor in the circumstances of the present case because of the number of incidents being prosecuted in these consecutive proceedings and because of Orica's prior conviction for an environmental offence in 2005. The EPA contended that these circumstances demonstrated systemic problems in Orica's management and reporting systems requiring a substantial element of deterrence in the penalty to motivate lasting change within the organisation. 131There is no doubt that the sentence imposed by the Court must be sufficient to specifically deter Orica from repeating the conduct that has resulted in the commission of the offence. It must also contain an element of general deterrence to promote the objects of the POEOA and to ensure that other environmental licensees with similar operations and responsibilities do not apprehend that such offences will be treated with relative impunity. 132In the present case, I consider that there is a need for both specific and general deterrence for the reasons given in the principal judgment (at [210]-[214]). 133The imposition of an appropriate sentence additionally 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 Orica and must ensure that Orica is held accountable for its actions and is adequately punished. Accordingly, I also take these elements of sentencing into account.

[38]

51110 of 2012 (2)the defendant is convicted of the offence as charged; (3)pursuant to s 250(1)(e) of the Protection of the Environment Operations Act 1997 the defendant is to pay to the NSW Office of Environment and Heritage - National Parks and Wildlife Service, within 28 days of this order, the amount of $175,000 to contribute to the Tomago Wetland Rehabilitation Project to restore the ecological character of this part of the Ramsar Wetland. A description of the project is annexed at "A"; (4)all future references by the defendant to its funding of the Tomago Wetland Rehabilitation Project shall be accompanied by the following passage (pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997): "Orica Australia Pty Limited's contribution to the funding of the Tomago Wetland Rehabilitation Project is part of a penalty imposed on it by the Land and Environment Court of NSW after it was convicted of an offence against s 64(1) (breach of licence condition) of the Protection of the Environment Operations Act 1997 (NSW)." (5)pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997 the defendant is to publicise a summary of the offence, of the circumstances of the offence and of the orders made against it, in the notice directed to be published at [261(7) and (8)] of the principal judgment, in the form and in the manner prescribed therein; (6)the defendant is to pay the prosecutor's legal costs as agreed or assessed; (7)pursuant to s 248(1) of the Protection of the Environment Operations Act 1997, the defendant is to pay the prosecutor's investigation costs in the sum of $1,717.51; (8)the exhibits are to be returned; and (9)liberty to restore on seven days' notice for the purpose of amending the form of any of the orders made above.

Annexure A 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: 28 July 2014

Parties

Applicant/Plaintiff:

Environment Protection Authority

Respondent/Defendant:

Orica Australia Pty Ltd

Legislation Cited (1)

Environment Operations Act 1997(NSW)

Cases Cited (6)

Orica Pleads Guilty to a Breach of Licence Offence Resulting in the Release of Ammonia 1The defendant, Orica Australia Pty Ltd ("Orica"), pleaded guilty to nine charges under the Protection of the Environment Operations Act 1997 ("the POEOA") which were addressed in concurrent sentence proceedings. Those charges related to seven separate pollution incidents occurring on different dates between October 2010 and December 2011. Although the proceedings were heard concurrently, it was appropriate, given the separate nature of each incident, that seven separate judgments be produced, that is, one for each discrete pollution incident. 2The principal judgment summarises all of the charges, outlines in greater detail the conduct of the proceedings and gives a fuller articulation of the relevant sentencing principles than the six subsequent judgments (Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident) [2014] NSWLEC 103, "the principal judgment"). Those principles are applied, where relevant, in this judgment, but are expressed only in summary form. It is therefore necessary to read this judgment together with the principal judgment. 3This judgment concerns the appropriate sentence for an offence that occurred on 9 November 2011 involving the release of ammonia into the atmosphere on six occasions over the course of the day at the Kooragang Island Licensed Premises ("KI premises") ("the Ammonia Incident"). 4The Ammonia Incident resulted in one breach of licence condition offence under Orica's Environment Protection Licence Number 828 ("Licence 828") contrary to s 64(1) of the POEOA, by failing to operate plant and equipment, namely the Ammonium Nitrate Manufacturing Facility ("ANMF"), in a proper and efficient manner (matter number 51110 of 2012). As noted in the principal judgment (at [3]), the Ammonia Incident also resulted in another offence but the prosecutor, the Environment Protection Authority ("the EPA"), agreed to dismiss that charge (matter number 51111 of 2012) upon the determination of an appropriate sentence in this proceeding. 5The failure to comply with a licence condition in contravention of s 64(1) of the POEOA is an offence of strict liability. 6Section 64(1) states: (1) Offence If any condition of a licence is contravened by any person, each holder of the licence is guilty of an offence. Maximum penalty: (a) in the case of a corporation-$1,000,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues... 7By pleading guilty to the offence, Orica concedes that it failed to comply with licence condition O2.1(b) of Licence 828 in that it failed to carry out licensed activities in a competent manner.

(1981) 147 CLR 383

Cited By (3)

Environment Protection Authority v Hunter Water Corporation

Environment Protection Authority v Orica Australia Pty Ltd

Environment Protection Authority v Steggles Foods Mt Kuring-gai Pty Ltd