Environment Protection Authority v Port Kembla Copper Pty Ltd

ENVIRONMENT PROTECTION AUTHORITY Prosecutor v PORT KEMBLA COPPER PTY LTD Defendant

The defendant, Port Kembla Copper Pty Ltd, has pleaded guilty to a charge that, between 4.00 am on 16 January 2000 and 9.40 on 17 January 2000, it committed an offence against s 120(1) of the Protection of the Environment Operations Act 1997 in that it polluted waters.

The allegation is that the defendant polluted a watercourse known as the Main Drain leading to the Outer Harbour at Port Kembla by discharging seawater mixed with sulphuric acid having an approximate pH value of 3.

The defendant's plea of guilty amounts to an admission of the essential elements of the offence with which it is charged (R v O'Neill (1979) 2 NSWLR 582) and the Court is therefore concerned only with the imposition of a penalty and the awarding of costs.

The parties furnished an agreed statement of facts from which much of the factual material in this judgment is derived. However, the parties also furnished affidavit material and some witnesses gave oral evidence, and factual material is also derived from this evidence.

The defendant operates a copper smelter at Military Road, Port Kembla ("the site").

A by-product of the copper smelting process is the production of hot 98 per cent sulphuric acid. The hot sulphuric acid is cooled by passing sea water though metal heat exchangers. The sea water is drawn through a closed loop system from the Outer Harbour and it passes back to the Outer Harbour.

The metal heat exchangers consist of metal plates through which both the acid and the seawater independently pass, that is, they do not intermix. However, the metal plates in one of the heat exchangers, numbered HE3310-06, were made of a combination of metal alloys, known as Hastelloy C-276 and Alloy D-205. The former alloy is resistant to corrosion from both sulphuric acid and sea water, whilst the latter alloy undergoes corrosion when exposed to seawater. From tests conducted after the incident, it was discovered that acid had leaked into the seawater side of the heat exchanger, as a consequence of small holes in the metal plates caused by corrosion. The result was that seawater containing sulphuric acid passed through the closed loop system into the Main Drain and thence into a stormwater drain which flows directly to the Outer Harbour.

The defendant operates a continuous pH monitoring system, using a pH probe, as well as a 24 hour composite sampling system at the point of discharge into the stormwater drain. The pH monitoring system was linked to the defendant's computerised distributed control system ("DCS") with instantaneous readings available on line and ten minute averages recorded.

From 4.00 am on 16 January 2000 until about 9.40 am on 17 January 2000, the pH value at the Main Drain pH probe fluctuated between 3.83 and 7.15. The defendant's technicians believed that the Main Drain pH probe was faulty. It was investigated between 8.00 am and 9.00 am on 17 January 2000, and a grab sample was taken from the Main Drain. A hand held pH meter showed a pH of 8, whereas the Main Drain continuous pH monitoring system, by pH probe, registered 4. Between 9.30 am and 10.00 am on the same day, a blockage in the pH probe was removed, and the pH reading stabilised within the limit prescribed by the defendant's pollution control licence. At approximately 10.00 am on 17 January 2000, the acid circulation and seawater supply to the acid plant were shut down and isolated respectively.

The Main Drain pH probe was connected to an alarm activated via the DCS, the alarm being set for pH values outside the range of 6.5 to 8.5. According to the evidence of Mr A S Blair, who is the refinery manager of the defendant, the alarm system has a range of priority from 1 through to 16, and a priority 1 alarm is audible as well as visual. It had been intended, prior to the time of the incident, to set the alarm at priority 1 but this had not been done. Accordingly, although the alarm was activated three times in the period of the charge (at 1.50 am, 3.50 am and 4.30 am on 17 January 2000), it was not acted upon by the relevant technicians.

The estimate is that up to 40 megalitres of liquid containing a pH value of less than 6 was discharged, and an area of up to a 50 metre radius in the Outer Harbour was subject to that discharge. The amended summons indicates that the duration of the discharge was 29 hours and 40 minutes.

Section 241(1) of the Protection of the Environment Operations Act requires the Court, when imposing a penalty for an offence against that Act, to take into consideration a number of stipulated matters so far as they are relevant. I deal with each in turn.

(a) The extent of the harm caused or likely to be caused to the environment by the commission of the offence:

Opinion as to the harm caused by the commission of the offence was furnished by Mr M Julli on behalf of the prosecutor and by Professor J B Hinwood on behalf of the defendant, and some commentary about this aspect is to be found in the defendant's environmental assessment report dated February 2000. 14. Mr Julli was of the opinion that the discharge was not "benign" and was highly toxic and rapidly lethal to plankton, that is, small marine life that drifts in the water. His opinion was that more mobile marine life, such as fish, would not suffer harm as they would sense the change in the seawater and swim away. He stated in his affidavit sworn on 6 March 2001 that the harm to plankton would have been localised, "primarily due to dilution, tidal flows and the neutralising actions of the harbour waters".

Attached to the defendant's environmental assessment report was a document entitled "Environmental Effects of Spill Incident" prepared by Marine Science & Ecology Pty Ltd in association with Australian Marine & Offshore Group. The opinion that was expressed in that report did not substantially differ from that of Mr Julli, namely, that fish would escape the harm, but that small organisms exposed to the discharge would be lost. It was stated in section 5 of the report that any loss of these small organisms would be offset by an immediate replenishment from other areas.

Professor Hinwood also shared the same opinion as Mr Julli. He confirmed in cross-examination that plankton would not survive in the immediate vicinity of the discharge.

No evidence was furnished as to the actual harm caused by the discharge, but the evidence I have summarised above supports a conclusion that it is highly likely that the discharge resulted in the death of plankton, although long-lasting harm to the marine biota was not likely.

I add that, in coming to this conclusion, I have placed little weight on the differing calculations furnished by the prosecutor and the defendant designed to show what volume of sulphuric acid would be required to produce a pH value of 3. A lesser volume than that postulated by Mr Julli may have been sufficient. But I accept Mr Julli's oral evidence that the actual amount of acid discharged is irrelevant. The fact is that about 40 megalitres of acidic seawater was discharged.

(b) the practical measures that may be taken to prevent, control, abate or mitigate that harm:

The incident took place during a period of "cold commissioning" of the defendant's plant on the site, but there is no doubt that practical measures could have been taken to abate any environmental harm. In an internal memorandum dated 19 January 2000, the defendant's technicians frankly acknowledged measures that could have been taken, which were, in general terms, the implementation of priority alarms, the implementation of an adequate pH monitoring system, and more efficient and updated troubleshooting and training procedures.

The alarm relating to the Main Drain pH value had been identified as a priority 1 alarm but had not been set at that level. Furthermore, the alarm that was in fact activated was ignored on three occasions. According to the oral evidence of Mr Blair, this was because, at the relevant time, systems were being tested and many alarms were being set off and, secondly, the technicians at the time believed that the pH probe was faulty so they "would not necessarily have taken any action" on the alarm.

The pH probe at the Main Drain was faulty, but the defendant's technicians did not immediately investigate it, or attempt to check its readings against a hand held meter. There is no doubt that more efficient procedures and systems would have alerted the technicians at an earlier time and have reduced the duration of the discharge.

(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:

Because the seawater used to cool the acid in the heat exchangers was supplied to the plant through a closed loop, that is, it came from the Outer Harbour and returned to the Outer Harbour, I find that it was reasonably foreseeable that any contamination of the seawater in the system would find its way to the Outer Harbour and be likely to cause environmental harm.

There was a risk of failure of the metal plates, hence, as I have pointed out in par 25, the defendant specified in its order material resistant to corrosion by seawater. In his affidavit, Mr J W Griffiths, the defendant's smelter production manager at the time of the incident, labelled the risk of failure of the heat exchanger metal plates as low, because it was "unknown to those involved" and because the defendant had relied upon manufacture by an expert. Nonetheless, I find that there was a risk of failure, which might lead to contamination of seawater, and that risk was reasonably foreseeable.

There was also a requirement in the defendant's pollution control licence for the monitoring of discharging seawater at the Main Drain and a further requirement that the discharge must not be of a pH value of less than 6.0 or greater than 9.5, matters which also indicated the risk of environmental harm and the need for its early detection.

(d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence:

The defendant had control over the operation of the plant but the main cause of the discharge was the perforations in the metal plates in the heat exchanger. I take into account in the defendant's favour that this fault was beyond its control and was due to material being used in the actual manufacture of the metal plates which was different to that specified in the defendant's order. Documents were tendered to show that the defendant contracted with JGC Corporation and ABB Engineering Construction Pty Ltd for the supply of the acid plant, including quality control and compliance. The project manager was Hitachi Zosen Corporation. The specification for heat exchanger HE 3310-06 was provided by Alfa Laval KK (Japan) to Hitachi Zosen and it specified the metal plate material as Alloy C-276. However, the metal plates were supplied through Alfa Laval Thermal AB of Sweden and the plate heat exchanger certificate for HE 3310-06 furnished by that company showed plates of Alloy D205 and Alloy C 276. In a letter to the defendant dated 28 January 2000, Alfa Laval Thermal AB acknowledged its mistake. It stated that Alloy C-276 should have been supplied by reason of its seawater resistance, and it acknowledged that Alloy D-205 undergoes corrosion by seawater attack.

I take into account the fact that the defendant does not have an unblemished environmental record (see Veen v The Queen [No 2] (1988) 164 CLR 465 at 477). On 2 August 2001, the defendant was convicted in this Court of five separate breaches of its environment protection licence (Environment Protection Authority v Port Kembla Copper Pty Ltd [2001] NSWLEC 174) and it was fined in the amounts of $60,000, $20,000, $16,000, $12,000 and $8,000 respectively.

Annexed to the affidavit sworn on 20 June 2001 of Mr W Dove, an officer in the employ of the prosecutor, were copies of three penalty infringement notices issued to the defendant. They were respectively dated 14 April 2000, 13 October 2000 and 15 March 2001, and each alleged a contravention of the defendant's pollution control licence. I place no weight upon these documents. They amount to no more than an allegation by the Environment Protection Authority that the licence was breached on the dates specified, but I have no evidence as to the circumstances surrounding the alleged breaches nor of the defendant's response to those allegations (see R v Hansen (1961) 79 WN (NSW) 148 at 149).

Ms Irish, appearing for the defendant, told the Court that, on her instructions, the defendant expressed contrition and remorse for the incident. I take that into account, but its weight would have been more significant if it had been directly expressed by the defendant in the evidentiary material filed on its behalf.

I take into account the fact that the defendant has instituted procedures to endeavour to ensure that no similar incident will occur in the future. In the defendant's incident report, a table identifying corrective actions was attached, and the status of each of these actions was specified in two status reports, one dated May 2000 and the other dated June 2001. I note in particular that the pH monitoring and sampling system of the Main Drain has been re-designed to incorporate dual probes and that it now registers a change in pH virtually instantaneously. I note also that a priority 1 alarm that is audible as well as visual has been installed, as well as an audible siren which is activated by all water treatment plant alarms. Troubleshooting, investigation and technician training systems and procedures have now been reviewed and amended.

The maximum penalty for the offence with which the defendant is charged is $250,000. Taking into account all the matters I have outlined, I consider that an appropriate penalty in this case is $40,000. However, the defendant entered a plea of guilty to the offence which entitles it to a discount for the utilitarian value of the plea, that is, the utilitarian advantage derived by the criminal justice system from an early plea of guilty (R v Thomson (2000) 49 NSWLR 383). The plea of guilty was entered about two months after the first callover (following discussions with the prosecutor about a related charge which was subsequently withdrawn) and about one month before the proceedings were set down for hearing. I consider that a discount of 15 per cent should be applied, and that, accordingly, the penalty to be imposed should be $34,000.

(1) The defendant is convicted of the offence with which it is charged. (2) The defendant is fined the amount of $34,000 to be paid to the Registrar of the Court within one month of today's date.

(3) The defendant must pay the costs of the prosecutor determined in accordance with s 52(2) of the Land and Environment Court Act 1979.

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