Environment Protection Authority v Pasminco Cockle Creek Smelter Pty Limited

JUDGMENT:

• 11 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

ENVIRONMENT PROTECTION AUTHORITY - V - PASMINCO COCKLE CREEK SMELTER PTY LIMITED [2003] NSWLEC 439

EX TEMPORE JUDGMENT 1 HIS HONOUR: The defendant is charged with an offence against s 64(1) of the Protection of the Environment Operations Act 1997 ("the POEO Act") in that on or about 31 December 2001 at Main Road, Boolaroo in the State of New South Wales it was the holder of an Environment Protection Licence, a condition of which was contravened. The contravened condition effectively required the defendant to rehabilitate a slag dump at the northern end of its Cockle Creek smelter site at Main Road, Boolaroo, by 31 December 2001. 2 The parties have co-operated in producing an agreed statement of facts and for the purposes of this judgment I incorporate the whole of the agreed statement of facts, as follows. 1. […] 2. Background 2.1 At all relevant times Pasminco held Environment Protection Licence number 5042 ("the licence") in respect of its lead and zinc smelting operations at the site. […] 2.2. A lead and zinc smelter has operated at the site since the late 1890's. Pasminco has operated the smelter since the 1960's. 2.3 Close to the site (being less than 1km from the site) are the residential areas of Argenton to the north and Boolaroo and Speers Point to the south/southwest. Cockle Creek lies about 500 metres to the west of the site and that creek discharges into Cockle Bay to the south/southwest of the site. 2.4 Stockpiles containing approximately 1,300,000 tonnes of slag are situated at the northern end of the site ("the stockpiles"). Slag is a non-metallic waste product of the smelting operations that contains amounts of metals including lead, zinc and arsenic. The stockpiles consists [sic] of slag produced on the site prior to 1999 (since 1999 the slag from ongoing operations has been transported to a mine in western New South Wales which until recently was owned by a related company to Pasminco to be used as fill). The stockpiles cover an area of approximately 47,088 metres 2 and are up to 10 metres in height. 2.5 […] 2.6 The stockpiles comprise: 2.6.1 approximately 700,000 tonnes of "old blast furnace" slag which contains slag produced pre 1961 with an average of 2% lead and a high sulphur/sulphide content; 2.6.2 approximately 308,800 tonnes of "out of specification ISF slag" which contains slag from the imperial smelting furnace. This slag is a black granular slag similar to beach sand in texture and contains on average greater than 2% lead content; 2.6.3 approximately 234,500 tonnes of "in specification ISF slag" which contains slag produced by the current imperial smelting furnace. This slag is a black granular slag similar to beach sand in texture and contains on average less than 2% lead content; and 2.6.4 approximately 50,000 tonnes of grit blasting slag, which is used as a black sand substitute in concrete making and contains on average less than 0.8% lead content. 2.7 Pasminco does not operate any dust control measures to prevent emissions from the stockpiles. 2.8 Pasminco has been in voluntary administration since September 2001 and smelter operations ceased at the site in September 2003. 2.9 Pasminco continues to hold the licence. 3. Condition contravened 3.1 The licence that was contravened ("the subject condition") was placed on the licence in January 2001 as part of a pollution reduction program aimed at reducing lead in air levels. The subject condition states: Northern Area Slag Storage/Disposal Area/Hawks Dam Catchment 1. On or before 31 December 2001 the Licensee must complete the rehabilitation of the slag dump located on the northern end of the premises. The rehabilitation must include shaping the slag to a final contour, capping with an impervious layer and revegetation. Drainage lines must be graded to ensure the runoff does not cause scouring. Note: The rehabilitation may incorporate activity to recover slag for off-site disposal or reuse provided that activity is limited to a defined disturbed area provided with dust control measures acceptable to the EPA. 4. Particulars of the contravention 4.1 In October 1999 an amendment to the licence required Pasminco to submit plans to the Environment Protection Authority ("EPA") for the rehabilitation of the northern area of the site (including final contouring, capping and revegetation of the stockpiles) and for the reduction of ambient lead in air levels. The plans, including a timetable for the works, were to be submitted by 31 March 2000. 4.2 Pasminco failed to provide an adequate plan for the rehabilitation of the stockpiles or a timetable for the completion of the rehabilitation. 4.3 On 22 August 200 a draft pollution reduction program that included the subject condition was provided to Pasminco to comment. 4.4 On 8 November 2000 Pasminco provided comments on the draft pollution reduction program. Pasminco did not object to the subject condition. In relation to the subject condition, Pasminco provided the response: "Time frame for completion is satisfactory subject to Capital Approval. (Estimated cost is undefined)" . 4.5 In January 2001 the licence was varied to attach a pollution reduction program that included the subject condition. The subject condition was in the same terms as the draft condition provided to Pasminco for comment on 22 August 2000. 4.6 Pasminco did not appeal the licence variation. 4.7 On 21 December 2001 Pasminco informed the EPA that it was unable to commit to any capital works expenditure (to enable compliance with the pollution reduction program including the subject condition) apart from two programmes approves by its Board and Administrator. The two programmes identified did not include works in relation to the subject condition. The two programmes identified were the partial enclosure of the raw materials shed and the upgrade of air pollution control at the briquette plant at the site. The two programmes were completed prior to the cessation of smelting operations at the site. 4.8 Pasminco did not undertake the works required by the subject condition by 31 December 2001 and has not undertaken these works to date. The stockpiles have not been graded to a final contour; drainage lines have not been graded to prevent scouring and the slag has not been capped with an impervious layer. 5. Contamination 5.1 On 26 November 2001 the EPA received a letter of notification from Pasminco's then Group Manager Environment that the site was contaminated from lead and zinc smelting activities with heavy metals mainly lead and zinc and that those metals may migrate off the site and impact on the surrounding environment. 5.2 In March 2002 the EPA made a significant risk of harm determination in accordance with section 9 of the Contaminated Land Management Act 1997 ("CLM Act") that contamination on and emitting from the site posed a significant risk of harm at the site, nearby residential areas of Boolaroo, Speers Point and Argenton, Cockle Creek and Cockle Bay. 5.3 On 2 April 2002 Pasminco made a formal site contamination notification under s60 of the CLM Act. In that notification it was stated the aspects of the environment that were affected included[:] air, groundwater, surface water, sediments, soil and stormwater. The notification further stated that potentially at risk were[:] workers at the site, aquatic life, plants, residents and children. 5.4 The site was declared a remediation site under s21 of the CLM Act on 13 September 2002. On 2 July 2003 Pasminco was issued with a remediation order under the CLM Act in respect of contamination at the site. 6. Environmental harm 6.1 Southerly winds at certain windspeeds will take stockpile dust to nearby residential premises to the north of the site. 6.2 Uncontrolled fugitive emissions from the stockpiles have the potential to impact on nearby residential areas. 6.3 The stockpiles are a potential source of groundwater contamination. The site is approximately 500 metes from Cockle Creek, which discharges into Cockle Bay. The groundwater contamination from the site discharges to Cockle Creek and Cockle Bay. 6.4 The stockpiles are also a potential source of the elevated levels of lead and zinc in the sediments of Cockle Creek and Cockle Bay. The contaminated sediments contain concentrations of heavy metals significantly above the relevant sediment quality guidelines. 6.5 The slag stockpiles, if left exposed, will continue to be a potential source of lead contamination in the form of fugitive dust emissions containing lead to surrounding residential areas, and a potential source of groundwater contamination and sediment contamination in Cockle Creek and Cockle Bay. 7. History of regulatory action in respect of operations at the site. 7.1 The following is a summary of regulatory action taken in relation to the site since 1997, the majority of which relate to emissions from the site: 7.1.1 On 18 September 1997 Pasminco was issued five penalty infringement notices for the following licence breaches: · exceeding the permitted concentration limit for particulates from the refining stack by emitting solid particulates to the atmosphere of 302 mg/m3 on Wednesday 25 June 1997, thereby contravening licence condition A14; · exceeding the permitted concentration limit for air toxics from the refinery stack by emitting toxics to the atmosphere of 16 mg/m3 on Wednesday 25 June 1997, thereby contravening licence condition A14; · exceeding the permitted concentration limit for particulates from the refining stack by emitting solid particulates to the atmosphere of 202 mg/m3 on Monday 30 June 1997, thereby contravening licence condition A14; · exceeding the permitted concentration limit for air toxics from the refinery stack by emitting toxics to the atmosphere of 18 mg/m3 on Monday 27 June 1997, thereby contravening licence condition A14; · failing to apply oil to an access road in a competent manner on Monday 21 July 1997, thereby contravening licence condition S2. 7.2 On 18 December 1997 the EPA issued a penalty infringement notice in relation to Pasminco exceeding the permitted concentration limit for air toxics from a stack by emitting toxics to the atmosphere in excess of 15 mg/m 3 in July 1997, thereby contravening licence condition A12. 7.3 On 11 November 1998 Pasminco was issued two penalty infringement notices in relation to the following licence breaches: · exceeding the permitted concentration limit for particulates from a stack by emitting 57 mg/m3 from the sinter plant stack on Friday 31 July 1998, thereby contravening licence condition A11; and · exceeding the permitted concentration limit for air toxics from a stack by emitting air toxics from the imperial smelter furnace stack of 16 mg/m3 on Monday 31 August 1998, thereby contravening licence condition A12; 7.4 On 11 May 2000 Pasminco was issued a penalty infringement notice for failing to adequately control the emission of dust from grit blasting on the northern area of the site on Wednesday 26 January 2000, thereby contravening licence condition S2. 7.5 On 26 May 2000 Pasminco was issued a penalty infringement notice for failing to take appropriate measures to control the emission of dust associated with the loading and transportation of coke fines from the northern area stockpiles on Monday 7 February 2000, thereby contravening licence condition S2. 7.6 On 2 November 2001 Pasminco was found guilty by the Land and Environment Court of a breach of licence condition contrary to section 64(1) of the POEO Act and was convicted and fined $33,000. The conviction related to an incident on 3 and 4 April 2000 involving a discharge of approximately 570,000 litres of effluent containing over 500 grams of mercury through two salt water dams on its premises to Cockle Creek. 7.7 On 15 August 2000 Pasminco was issued with a penalty infringement notice for failing to take appropriate measures to control the emission of dust associated with the crushing, screening and loading of material from a waste slurry (cadmium) stockpile at the northern end of the site on 9 June 2000, thereby contravening licence condition S2. 7.8 Between September 1997 and March 2003 there have been 14 pubic complaints about dust from the site in the Boolaroo area. At the time of the complaints the stockpiles were a potential source of the dust. 8. Recent History of works at the Premises undertaken by Pasminco 8.1 Pasminco has indicated over the period July 1997 to June 2003 that a total of $23 million was invested in environmental improvements at the site by Pasminco. 9. Remediation orders 9.1 Pasminco has agreed to the imposition by the court of orders under s245 of the POEO Act […]. 9.2 The forecast costs of compliance with the orders is estimated by Pasminco to be $1 million. 10. Costs 10.1 Pasminco has agreed to pay the prosecutor's costs of $50,000 within 14 days of the orders […] being entered by the Court. 3 The prosecutor is seeking an order under s 245 of the POEO Act under which the Court may order the defendant to carry out the remediation works specified therein. The fact is that the defendant is in voluntary administration with debts of over $2 billion. The directors are of the view that the defendant is insolvent. The prosecutor in these circumstances prefers to see the remediation work done, and done pursuant to a Court order, rather than the imposition of a penalty. That is to say, the prosecutor is not seeking a monetary penalty if the work is done pursuant to orders made under s 245 of the Act. Since the insertion of subs (3) in s 244 of the POEO Act, orders may now be made for remediation under s 245 regardless of any penalty imposed or other action taken in relation to the offence. 4 It is clear that a priority should be the carrying out of remediation work. Nevertheless I am required by the Act to consider the matters set out in s 241 of the POEO Act. Having regard to the agreed facts it is clear that the harm caused, or likely to be caused, as described in s 241(1)(a) is only potential harm; that is to say, at certain wind speeds dust from the stockpiles may be taken to the vicinity of residential premises nearby and would have the potential to impact upon those residential areas. There is no evidence, however, of any actual harm. 5 As to the practical measures which may be taken to prevent, control, abate or mitigate the harm, that is now what is proposed in the proposed orders under s 245. The measures proposed are by no means cheap. They are complex and expensive measures, the cost of which is estimated to be approximately $1 million. 6 As to s 241(1)(c), no actual harm is alleged. Nevertheless, the potential for harm could and would have been reasonably foreseen if the requirements of the condition of the licence were not been implemented. 7 As to s 241(1)(d) it is clear that the defendant had control over the causes that gave rise to the offence. 8 There are other matters that must be taken into account, namely, the early plea of guilty, the defendant's co-operation with the prosecutor, the agreement on the part of the defendant to pay the prosecutor's costs (in an agreed sum of $50,000), and in particular the defendant's agreement to the proposed order under s 245, the cost of which, as I have said, is in the vicinity of $1 million. 9 As noted in the agreed statement of facts, the defendant is also required to remediate the site under the Contaminated Land Management Act 1997. I am informed that its obligations to remediate under that Act will incur the expenditure of approximately $2 million. 10 I accept that the priority here is to get the work done. I therefore accept the prosecutor's submission, joined in by the defendant, that the Court should make the orders proposed under s 245 of the POEO Act. As I have noted, those orders may be made regardless of whether any penalty is imposed or other action taken. I think it is appropriate that I should formally convict the defendant of the offence as charged, make the orders under s 245, but defer sentence for a period of seven months in order to see whether in fact those orders are implemented. If they are, then in the light of the other matters to which I have referred, I would not propose to impose any further penalty. 11 The formal orders of the Court are therefore as follows:

1. The defendant, Pasminco Cockle Creek Smelter Pty Limited (ACN 000 083 670), is convicted of the offence as charged.
2. The defendant having been convicted of the offence of contravening a condition of an environment protection licence contrary to section 64(1) of the Protection of the Environment Operations Act 1997 (NSW) (the "Act"), the Court makes the orders pursuant to section 245 of the Act as set out in Attachment D to Exhibit A in these proceedings and which are as follows: 1. The Defendant must cause all slag stockpiles ("the stockpiles") located on the Premises known as the Pasminco Cockle Creek Smelter at Main Road Boolaroo [Lot 201 DP 805914 in the Local Government Area of Lake Macquarie] (the "Premises") to be covered by a high density polyethylene (HDPE) membrane or geomembrane ("the membrane") within six months of the date of these Orders. 2. Prior to covering the stockpiles with the membrane the defendant must cause the stockpiles to be reshaped and graded so that the final profile of the stockpiles is engineered to a standard suitable for the installation of the membrane. 3. For the purposes of these Orders, the membrane installed on the stockpiles as referred to in paragraphs 1 and 2 above must, for a period of not less than ten years: (a) contain the slag within the stockpiles; and (b) provide a robust barrier to the emission of dust from the stockpiles; and (c) prevent the infiltration of stormwater into the stockpiles; and (d) withstand ultra violet light; and (e) retain its structural integrity. 4. The defendant must install a surface water drainage system at the toe of the stockpiles within six months of the date of these Orders. This drainage system must convey all surface water runoff from the stockpiles up to and including all surface water runoff from a 10 year Average Recurrence Interval (ARI) 1 hour duration storm event, to the water body known as "Hawkes Dam" situated on the Premises or to such other point as may be approved in writing by the Prosecutor from time to time. 5. Notwithstanding Orders 1-4, and provided it has all necessary approvals and consents, the defendant may remove slag from the stockpiles for the purposes of processing that slag to recover lead provided that within two (2) months of such removal the processed slag is: (a) returned to the stockpiles (and is covered by the membrane in accordance with these Orders); or (b) removed from the Premises and taken to a place that can lawfully accept it. 6. Notwithstanding Orders 1-5, and provided it has all necessary approvals and consents, the Defendant may remove slag from the stockpiles from the stockpiles and without processing that slag take it to a place off the Premises that can lawfully accept it, provided that within two (2) weeks of removing any slag from the stockpiles the stockpiles from which the slag is removed are recovered by the membrane in accordance with these Orders. 7. The removal of any slag from, or the return of any slag to, the stockpiles pursuant to Orders 5 and 6 above must be carried out in a way that prevents the emission of dust from the Premises. The Court notes that any proposed remediation or redevelopment of the Premises may involve a proposal to deal with the stockpiles other than in accordance with the above orders and accordingly further orders that. 8. These Orders apply until such further Order(s) of the Court are made. 9. The parties have liberty to apply in relation to these Orders with fourteen (14) days notice. FOR THE PURPOSES OF THESE ORDERS: The stockpiles are those stockpiles existing as at the date of these Orders and located within the area marked with the red grid on the map annexed to these Orders and marked "Annexure "A".

3. I defer sentence for a period of seven months. The hearing on penalty is stood over to 9.30 am on Monday, 7 June 2004. 4. The exhibits shall remain with the Court. 12 I note the fact that the Chief Executive Officer of the defendant's holding company, Pasminco Limited, has furnished a statement expressing his grave concern and deep regret that the defendant failed to meet its legal obligation, a breach which is viewed extremely seriously, an expression of which is given effect to by the plea of guilty in this case. HOWARD: Would your Honour formally make the costs order, if your Honour pleases. 13 HIS HONOUR: Yes, I should do that as well. I include an order that the defendant pay the prosecutor's costs in the sum of $50,000. I thank the parties for the co-operation they have shown to each other and to the Court, and in the expeditious way in which this plea has been conducted.

I hereby certify that the preceding 13 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

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