Environment Protection Authority v Shoalhaven Starches 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; EPA v Barnes [2006] NSWCCA 246; Environment Protection Authority v Incitec Limited [2003] NSWLEC 381; CASES CITED: Environment Protection Authority v Shoalhaven Starches Pty Limited [2006] NSWLEC 496; Environment Protection Authority v Shoalhaven Starches Pty Ltd [2003] NSWLEC 107; Regina v Darrell Terry McNaughton [2006] NSWCCA 242; Reg. v O'Neill [1979] 2 NSWLR 582; Veen v The Queen [No 2] (1988) 164 CLR 465

PROSECUTOR Mr S Rushton SC SOLICITORS Department of Environment & Conservation LEGAL REPRESENTATIVES: DEFENDANT Mr I Lloyd QC SOLICITORS Kirkby & Associates

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

ENVIRONMENT PROTECTION AUTHORITY Applicant

SHOALHAVEN STARCHES PTY LTD Respondent

JUDGMENT Jagot J: A. Introduction 1 In my principal reasons delivered on 6 September 2006, I found that Shoalhaven Starches, on 15 April 2004, was the occupier of premises at which scheduled activities were carried on under authority conferred by a licence and caused the emission of offensive odours from the premises to which the licence applied, contravening s 129(1) of the Protection of the Environment Operations Act 1997 (see Environment Protection Authority v Shoalhaven Starches Pty Limited [2006] NSWLEC 496). The issue of sentence for that offence remains.

2 The maximum penalty for the offence is $250,000 (s 132(a) of the POEO Act). My remarks on sentence follow.

3 My findings about the offence are set out in my principal reasons.

4 In particular, I was satisfied beyond reasonable doubt about the following matters: (1) The defendant operated six ponds on premises known as the environmental farm, north of Bolong Road, Bomaderry.

(2) The ponds were used to store wastewater from the factory operations, which involved the processing of flour, the conversion of wastewater into ethanol and stockfeed insofar as practicable, and the pumping of excess wastewater to the environmental farm for irrigation. About 50% of the wastewater could be immediately irrigated in dry weather (after the pH had been raised by the addition of lime). The balance was stored in the ponds. The ponds were also used for storage of wastewater in wet weather, when the wastewater could not be irrigated.

(3) Because the wastewater contained biodegradable material it would become malodorous when subject to anaerobic biological action. Anaerobic biological action in the wastewater was likely. Shoalhaven Starches' treatment consisted of reducing pH levels by acidification to inhibit biological action.

(4) For some months prior to 15 April 2004, pond 3 contained solids or sludge. Shoalhaven Starches was removing the solids or sludge as part of the commissioning of its stillage recovery process. Acid was not added to pond 3 for that period. When it started raining in April 2004, wastewater was added to pond 3. Anticipating that the rain would cease, Shoalhaven Starches pumped wastewater from pond 3 to pond 4 on 15 April 2004.

(5) EPA officers, Mr Jamieson and Mr Newman, inspected the ponds on 15 April 2004. Mr Jamieson smelt two offensive odours coming from the ponds - a strong vomit and off-cheese type odour from pond 3 and a very strong vomit, off-cheese and dog faeces type odour from the up-welling in pond 4 caused by the pumping. Mr Newman smelt a very strong concentrated dog faeces odour from the up-welling in pond 4.

(6) Mr Jamieson and Mr Newman smelt the same odours in numerous locations around Bomaderry and Nowra throughout 15 April 2004, at intensities sufficient to make them feel ill. These odours were all offensive odours caused by the operations of Shoalhaven Starches, thereby contravening s 129 of the POEO Act.

5 Under s 241(1) of the POEO Act, I must take into consideration five matters if relevant. In summary, they are: - (a) the extent of harm caused or likely to be caused to the environment by the offence, (b) the practical measures the defendant could have taken to prevent or mitigate that harm, (c) the reasonable foreseeability of the harm or likely harm, (d) the extent of the defendant's control over the causes of the offence, and (e) whether a person who committed the offence was complying with orders from an employer or supervisor. Under s 241(2), I may also take into consideration other matters I consider relevant.

6 Section 244 of the POEO Act provides for the making of orders in addition to the imposition of a fine (whether or not any fine is imposed). Section 250 provides that those orders may include imposing requirements that the defendant publicise the offence and related matters, notify persons of the offence and related matters, and carry out an environmental audit of its activities.

7 The general purposes of sentencing are set out in s 3A of the Crimes (Sentencing Procedure) Act 1999. These include the need for adequate punishment, deterrence (both specific and general), protection of the community, rehabilitation of the offender, making the offender accountable for their actions, denouncing the offender's conduct and recognising harm done to the victims of crime and the community.

8 Under s 21A of that Act, and insofar as consistent with the common law, I must take into account any applicable aggravating factor (if any such factor has been proved beyond reasonable doubt - Reg. v O'Neill [1979] 2 NSWLR 582) and any applicable mitigating factors.

9 The EPA submits that the offence warrants a substantial monetary penalty. It also submits that orders should be made requiring Shoalhaven Starches to notify the offence and related matters in the South Coast Register, the Sydney Morning Herald, and on its website, to notify the offence and related matters to all residents and businesses within nominated parts of Bomaderry and Nowra, and to carry out an environmental audit of its activities, as well as an order for costs.

10 The EPA submits that relevant factors include: (1) Shoalhaven Starches' past offences and regulatory infringements dealt with by way of penalty infringement notices disclose an "appalling" environmental record.

(2) The demonstrated capacity of the ponds to cause offensive odours.

(3) Evidence of Shoalhaven Starches having a "mindset" contrary to that demonstrated capacity (disclosed by its position in the principal hearing that its activities were incapable of producing offensive odours as smelt by Mr Jamieson and Mr Newman).

(4) The absence of procedures to prevent the commission of offensive odours. Shoalhaven Starches' procedures were limited to the acid protocol, intended to reduce or minimise (not eliminate) the generation of offensive odours.

(5) Shoalhaven Starches' "woeful" management of the ponds and the acid protocol, when it was carrying out a commercial activity with an inherent risk of environmental impacts (as a scheduled activity) pursuant to a licence.

(6) The terrible nature of the odours emitted from the ponds, which were perceived as such by Mr Jamieson, Mr Newman, Mr Williams and Mr Gordon, and would have been perceived as such by the wider community.

(7) The significant impact of the odours on Mr Jamieson, Mr Newman, Mr Williams and Mr Gordon, and likely impacts on others.

(8) The fact that offensive odours, by their nature, are limited in duration. Hence, the maximum penalty must be available for such events.

(9) The reasonable foreseeability of the generation of offensive odours from the ponds.

(10) The absence of effective steps on 15 April 2004 to mitigate the generation of the offensive odours.

(11) A strong need for specific deterrence. A number of the factors set out above, particularly Shoalhaven Starches' prior convictions for serious environmental offences, suggest a likelihood of further offences, absent condign punishment.

(12) The requirement for general deterrence by assessing the fine bearing in mind the "economic realities" upon which environmental protection legislation is based ( Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359).

11 Shoalhaven Starches consents to an order that it publicise the offence and related matters in the South Coast Register, an order that it carry out an environmental audit and an order that it pay the EPA's costs (agreed to be $235,000). Shoalhaven Starches submits that relevant factors include: (1) The offence is a strict liability offence. Shoalhaven Starches did not intend to cause the emission of offensive odours. The emission was akin to an accident.

(2) As the offence is constituted by offensive odours being emitted beyond the boundaries of the premises, the odours within the premises are irrelevant. Off-site impacts only are relevant.

(3) As the offensiveness of the odour is itself an element of the offence, its characteristics and qualities are not aggravating factors.

(4) The extent of the harm is identified in my principal reasons at [189].

(6) The harm involved impacts on amenity, not human health.

(7) Shoalhaven Starches' employees did not smell the odour while present on the environmental farm. Its employees investigated the odour complaints, and did not identify Shoalhaven Starches as the source.

(8) The EPA officers did not request that the pumping from pond 3 to pond 4 cease.

(9) Although the offence was not technical or trivial, it does not fall within the most serious category, given the absence of lasting effects on humans and the environment.

(10) Shoalhaven Starches processes its wastewater to create useable products, including stockfeed and ethanol (to reduce the environmental impacts of petrol consumption).

(11) There are numerous subjective circumstances that weigh in favour of Shoalhaven Starches as detailed in the affidavits of Brian Hanley and Martyn Evans (see below), including the agreement to carry out the environmental audit (at an estimated cost of $415,000) and to pay the EPA's costs ($235,000).

12 Ms Roy (the EPA's pollution line manager until November 2004, and current information centre manager), Mr Jamieson and Mr Todoroski provided affidavits on matters relevant to sentence. Their affidavits disclosed the very substantial number of complaints to the EPA associated with Shoalhaven Starches' operations (peaking in 2004, but continuing thereafter), its environmental compliance record and the reasons making an environmental audit order necessary and appropriate (an order to which Shoalhaven Starches consents). I consider the affidavits relevant only for the purpose of supporting the order for the environmental audit.

13 Shoalhaven Starches' was convicted of 5 related offences in 1989 arising from the discharge of effluent (fines totalling $52,000 were imposed), a pollution of waters and related breach of licence offence in 1993 (fines totalling $30,000 were imposed), a breach of licence relating to odour emissions in 1996 (a fines of $30,000 was imposed), two breaches of licence relating to ponding of wastewater on irrigation areas in 2001 (fines of $100,000 and $60,000 were imposed) and thirteen penalty infringement notices (for various matters).

14 Mr Hanley is the General Manager of Shoalhaven Starches and has detailed knowledge of its operations. His affidavit disclosed the following matters.

15 Shoalhaven Starches processes 410 tonnes of flour per annum, exported 4259 shipping containers of product last year, produces 95M/litres of industrial and fuel grade ethanol per annum, and 250 tonnes of stockfeed per day. It is Australia's largest supplier of starch, gluten, glucose, brewers' syrup and ethanol, supplying many large corporations in Australia. Because of the nature of its operations, Shoalhaven Starches uses 50 road transport operators and two rail operators. Its operations and capacity to provide raw materials on a "just in time" basis, underpin many other industrial and manufacturing activities within Australia.

16 Shoalhaven Starches is the single largest employer in the Shoalhaven region, employing 213 full-time employees and 8 casual employees. It buys goods from 218 local suppliers and contractors, at a cost of $15.5 million over the past 12 months, and $32.6 million in New South Wales generally. It is part of the larger Manildra Group, which employs a further 442 people in other operations, and purchased 30,000 tonnes of wheat from farms in New South Wales last year.

17 Shoalhaven Starches has spent $70 million on environmental expenditure over the past 5 years. The environmental farm has had an operating expenditure of $21.3 million over the past 5 years.

18 Shoalhaven Starches undertakes many activities in its local community. Mr Hanley has been the chairman of the Area Consultation Committee since 1995 (a Federal Government advisory committee). Shoalhaven Starches provided donations totalling $23,960 to a wide range of community organisations, sports teams and community members in 2005, and participates with numerous organisations and community groups (including tours and seminars). It also participates in numerous environmental initiatives in the area (including involvement in committees, industry partnerships, support of sciences within universities).

19 Access to water is a key requirement for its operations (hence, its location next to the Shoalhaven River). Access to a large land area is also necessary for the irrigation of wastewater (hence, the environmental farm of about 1000 hectares). Shoalhaven Starches also requires access to a population centre given its employments requirements. Economies of scale and capacity to irrigate wastewater are two key components of the continued viability of Shoalhaven Starches' operations in the global market. This was a principal factor in Shoalhaven Starches increasing its wet weather storage capacity to enable it to continue operating in wet weather (when it could not irrigate), so that it could continue to supply many businesses within Australia's manufacturing sector.

20 Shoalhaven Starches constructed the ethanol plant (which reuses wastewater) in 1992 at a cost of $24.5 million. Shoalhaven Starches spent $3.4 million between 1998 and 2000 on its stillage recovery programme, $9.5 million between 2001 and 2002 on part of its wastewater treatment system, and $430,000 in the same period as a contribution to the BOC carbon dioxide recovery plant. As part of pollution reduction programme 7 (PRP 7) involving the upgrade of its wastewater management system, Shoalhaven Starches undertook an extensive environmental assessment and consultation process, and ensured its capacity to immediately implement the works (ordering part of the equipment at a significant cost prior to approval). Shoalhaven Starches spent $44 million in total on this upgrade. It completed commissioning the new plant and processes in April 2004 (the offence occurred on 15 April 2004). The purpose of the upgrade was to remove solids from the wastewater and enable re-use and irrigation of wastewater without causing odour.

21 At the time of the incident, Shoalhaven Starches employed an environmental manager specifically responsible for investigating odour complaints. The environmental manager was required to advise Mr Hanley of any unusually large grouping of complaints that the manager thought attributable to Shoalhaven Starches. The environmental manager had difficulty doing so if there was delay between the complaints and notification of Shoalhaven Starches. It was not uncommon for EPA officers to contact Mr Hanley directly about odour complaints, but they did not do so on 15 April 2004. Shoalhaven Starches was first told that an incident report for 15 April 2004 was required at a meeting with the EPA about PRP 7 on 27 April 2004. This came as a surprise to Shoalhaven Starches, as its information did not disclose an odour incident on 14 or 15 April 2004. Mr Hanley interviewed Mr Hill (the environmental manager), Mr Thompson (environmental farm manager) and Ms Lugg (environmental scientist), and was informed that they were not aware of offensive odour coming from the ponds on 14 or 15 April 2004 and/or did not believe the ponds were the source of the odour the subject of the complaints. Mr Hanley instructed Mr Stephenson to assist Shoalhaven Starches to carry out a more detailed investigation. All of the advice he received was to the effect that Shoalhaven Starches was not the source of the odour complaints in the Bomaderry/Nowra area on 14 and 15 April 2004.

22 Under PRP 7, the remaining pond solids associated with the old wastewater were removed from the ponds by 26 August 2004. New wastewater only was stored in all ponds, except pond 4, from that time. Pond 4 still contains residual old wastewater, but a floating pond cover was introduced in September 2004. A new environmental manager was appointed in February 2005. The pond pH procedures were changed in May 2005. The pH aim is 2.5. Acid is to be added at pH 2.7. The pH meter is now automated. All persons responsible for pH testing were given refresher training. Closer monitoring of pH testing and records of such testing has been implemented.

23 Mr Hanley said that Shoalhaven Starches' processes are not inherently odorous, and odours are caused by organic activity in wastewater that is not toxic to human or plant life. He also said that Shoalhaven Starches deeply regrets the incident and inconvenience caused to the community and the EPA by the entirely unintentional incident on 15 April 2004.

24 Mr Evans is a consultant to Manildra. He prepared a report in October 2006 about the environmental and health effects of ethanol as a fuel transport supplement. The report concluded that substantial evidence supported significant economic, health and environmental benefits from the use of oxygenated and renewable bio-fuels such as ethanol. Shoalhaven Starches' ethanol production is made from wastewater, and adds value to that wastewater.

25 Shoalhaven Starches submitted to the EPA a draft proposal for an environmental audit of its activities. Ten scientists designed the proposal, each with high-level expertise in different fields. The proposal records Shoalhaven Starches' objective of addressing the EPA's requirements and maintaining ongoing reduction in odour complaints with the ultimate goal of zero odour complaints. Shoalhaven Starches identified the proposal as a work in progress. It focuses on the implementation of an adequate overall environmental management system (replacing the existing system) for Shoalhaven Starches' operations to achieve an ISO 14000 compliant system (the International Standard for compliance) and to represent "a visible and ongoing commitment to maintain an agreed set level of operational procedures and attain an agreed environmental performance standard, which is a key to gaining and maintaining the support of stakeholders". The various steps in the audit are estimated to cost $415,000, with a possible additional cost of about $100,000 for a new 60 metre meteorological station instrumented at three levels.

26 The EPA made some comments about the content of the draft (that I do not consider it necessary to record). Its primary submissions were that the environmental audit involved the exercise of a separate discretion and ought not to lead to a discount of the monetary penalty as a matter of principle (relying on the observation in Environment Protection Authority v Incitec Limited [2003] NSWLEC 381 at [57] to [59]) or discretion (as the audit was a method of ensuring that Shoalhaven Starches did what it was required to do - comply with the law). Shoalhaven Starches submitted that the penalty overall had to be proportionate to the offence, and that there was no reason to treat the costs of the audit differently from the costs of the proceedings, which ought to be taken into account in assessing penalty (relying on EPA v Barnes [2006] NSWCCA 246). It emphasised that the costs of the proceedings ($235,000) and likely costs of the audit (currently estimated at over $400,000) far exceeded the maximum penalty ($250,000).

27 The assessment of the objective seriousness of the offence is informed by the maximum penalty ($250,000) considered as part of the overall statutory scheme (including its environmental protection objects), the nature of the offence, the harm and likely harm associated with it, the foreseeability of the risk of harm, the practical measures available to avoid the foreseeable risk of harm, the reasons for the offence, and the defendant's state of mind.

28 Section 129 plays an important role in the scheme of the POEO Act. It recognises that scheduled activities, subject to a licence requirement, have significant potential to create environmental impacts and regulates one such potential impact (emission of offensive odours). The maximum penalty reflects Parliament's view about the seriousness of the offence (Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698). That expression includes the potential for additional penalties for each day an offence continues (of $60,000). The offence I found Shoalhaven Starches to have committed occurred on 15 April 2004.

29 The fact that the maximum penalty is available for an offence of limited duration (as the EPA submitted) does not mean that duration is irrelevant to the objective gravity of the offence. The offence proved was of limited duration, and that fact must be taken into account.

30 The offence involves the emission of offensive odour outside the boundary of the premises. Accordingly, the fact of offensiveness of the odour per se cannot aggravate the objective seriousness of the offence - if the offence is proved, offensiveness of the odour is a given. But I do not accept that the particular qualities and impacts of an offensive odour are irrelevant to the objective gravity of the offence. The relevant part of the definition of offensive odour may apply to a range of odours of different intensity and effect.

31 Here, the odour was sufficiently strong to cause adverse physical reactions in Mr Jamieson and Mr Newman (including gagging, upset stomachs, feeling ill, bringing water to the mouth) in numerous locations across a not insignificant area, including many residential streets. Mr Gordon described the odour as having "bit" into his face, having "hit" his sinuses and as "quite a painful smell". Mr Williamson described the odour as a terrible smell. The odour caused both Mr Gordon and Mr Williamson to close up their houses to try to keep the smell out. Mr Williamson had to take his washing in, to avoid the smell infiltrating the clothes. These are significant interferences with amenity, against which s 129 is intended to protect. Those facts are relevant to the objective gravity of the offence.

32 I am also satisfied beyond reasonable doubt that, given the various locations at which Mr Jamieson and Mr Newman smelt the odour at sufficient strength to cause these adverse physical reactions, other people would have been likely to smell the odour and to react similarly.

33 The odour created no long-lasting impact, and the chemicals in the air causing the odour were not toxic. Those facts also inform the objective seriousness of the offence, given that the definition of offensive odour extends to odours that are harmful or likely to be harmful to humans.

34 I do not think it appropriate to place weight on the fact that employees on the environmental farm did not smell anything out of the ordinary on 14 or 15 April 2004, or that Mr Hill's investigations disclosed no odour source at Shoalhaven Starches when assessing the objective seriousness of the offence. Although I accept Mr Hanley's evidence that the source of the odours was unclear to Shoalhaven Starches at the time, I also accepted Mr Todoroski's evidence that Shoalhaven Starches' overall approach to identifying the source of these complaints was inappropriate and unrealistic.

35 I also do not think it appropriate to place weight on the notion emphasised by the EPA that Shoalhaven Starches abused a public trust represented by the licence. The offence for which it is being sentenced is not breach of its licence. The fact that it was not entitled to emit offensive odours under its licence does not aggravate the offence. The emission of offensive odours was the offence, the seriousness of which Parliament recognised by imposing the maximum penalty of $250,000.

36 I am satisfied that the emission of offensive odours from the environmental farm was reasonably foreseeable. The absence of identification of an immediate cause does not render the emissions unforeseeable. Shoalhaven Starches' knowledge of the biodegradable compounds in the wastewater at high levels (prior to PRP 7 being introduced), its knowledge that old wastewater and/or solids from old wastewater were present in all ponds but pond 5 at the time of the offence, the acid protocol, the experience of Mr Thompson, and the circumstances leading up to the approval of PRP 7, all disclose the reasonable foreseeability of the emission of offensive odours.

37 I accept that the issue of practical measures that could have been taken to prevent or mitigate the harm is difficult to assess as I could not make any finding beyond reasonable doubt about the immediate reason the ponds caused the odour (other than that I accepted that the ponds containing the pre-PRP 7 wastewater and solids were likely to cause odours if biological action occurred, and that the acid protocol was designed to minimise and reduce, not eliminate, odour potential). Nevertheless, it cannot be irrelevant that pond 4 (which still contains old wastewater and is used to store wash down water containing biodegradable solids) is now covered (I infer to prevent the effusion of odours to the air) and the acid protocol has been refined.

38 I do not accept the EPA's submission that Shoalhaven Starches had no measures in place at the time to prevent the emission of offensive odours. The environmental farm is a very large area, and the ponds are set back from the property boundary. The acid protocol was not mandated by the licence, but was developed by Shoalhaven Starches to manage the potential to generate the odour. The fact that neither measure prevented the offence on 15 April 2004 is a given - but it is not reasonable to conclude that Shoalhaven Starches proceeded with its operations absent any consideration of preventing emission of offensive odours.

39 I also do not accept the EPA's submission that ceasing operations altogether until Shoalhaven Starches had developed procedures guaranteeing no risk of emissions of offensive odours was a practical measure for Shoalhaven Starches to take, given the historical development of the plant, the nature of its operations and the measures that were in place to manage potential odour generation, prior to all steps associated with PRP 7 being completed. The practicality of any particular measure under s 241(1)(b) should not be assessed absent a realistic appreciation of the particular circumstances. This conclusion in no way affects the fundamental obligation of Shoalhaven Starches to comply with environmental laws.

40 I accept that Shoalhaven Starches management of its acid protocol was sub-standard, as testing pH routinely, and recording the results, was necessary to achieve the object of minimising and monitoring biological activity, given the absence of any reliable method to calculate required acid additions and the low mixing power of the ponds. I cannot be satisfied that any failure to comply with the acid protocol was the immediate cause of the odour incident, however. Nor is Shoalhaven Starches being sentenced for failure to comply with its acid protocol (a protocol not mandated by any licence condition). I also accept Mr Hanley's evidence that the procedures in place since May 2005 are more rigorous than those leading up to the incident.

41 I do not accept the EPA's submission that Shoalhaven Starches' conduct discloses a reprehensible "mindset". The fact that I rejected Mr Stephenson's evidence and the related submission that the ponds were incapable of producing the odours at 15 April 2004 does not disclose a reprehensible "mindset" on the part of Shoalhaven Starches. Nor does the fact that I accepted Mr Todoroski's opinions that Shoalhaven Starches' assessment of odour sources was inappropriate and unrealistic. Both facts support the carrying out of the environmental audit, however. Shoalhaven Starches consents to an order to carry out an environmental audit, and has already taken steps to commence the carrying out of that audit.

42 I do not accept Shoalhaven Starches' submission that the offence was akin to an accident. The fact that Shoalhaven Starches did not intend to cause an offensive odour on 15 April 2004 does not make the emission an accident. The emission was a foreseeable risk of the storage system controlled by Shoalhaven Starches - a risk that PRP 7 was intended to address, but the full works pursuant to PRP 7 were not complete as at 15 April 2004.

43 General deterrence plays a particularly important role in sentencing for environmental offences. Accordingly, the "fine should be such as will make it worthwhile that the costs of precautions be undertaken" (Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359).

44 While I accept that toxicity is relevant to assessing the objective gravity of the offence, I do not accept that the most serious category of case under s 129 is limited to offensive odours that are also toxic. Shoalhaven Starches was correct to accept that the offence cannot be characterised as trivial or technical. The extent of the impact and the consequences of the impacts for those who came into contact with the air laden with odours from the ponds exclude any such characterisation. In all of the circumstances, the offence was serious, but not within the most serious category of case.

45 Contrary to the EPA's submission, I do not find it helpful to label Shoalhaven Starches' environmental record "appalling". I am satisfied that the prior offences committed by Shoalhaven Starches (particularly in 1996 and 2001) disclose that wastewater management and potential odour generation has been and remains an issue warranting systematic review, which will occur as part of the audit process consented to by Shoalhaven Starches.

46 The offence committed on 15 April 2004 was not the consequence of an "uncharacteristic aberration", but a reasonably foreseeable consequence of the operations conducted by Shoalhaven Starches. This is important in assessing the submissions for leniency having regard to the substantial expenditure already made by Shoalhaven Starches and which it has committed to make to ensure compliance with its environmental obligations.

47 That having been said, Shoalhaven Starches prior offences and penalty infringement notices do not lead me to conclude that the offence discloses "a continuing attitude of disobedience to the law" on its part (Veen v The Queen [No 2] (1988) 164 CLR 465 at 477-478. See also Regina v Darrell Terry McNaughton [2006] NSWCCA 242). That conclusion would be inconsistent with the measures that were in place to minimise the potential for odour reduction (albeit inadequate), the very substantial investment Shoalhaven Starches made by committing to PRP 7 prior to this offence, and the fact that PRP 7 was developed in close consultation with relevant regulatory authorities. Consistent with the observations of Pearlman J in Environment Protection Authority v Shoalhaven Starches Pty Ltd [2003] NSWLEC 107 at [62], I consider that these matters should not be given too much weight in all of the circumstances, even though I consider it important to recognise that Shoalhaven Starches has made real efforts towards continuous improvement and will continue to do so through the audit.

48 I am satisfied that specific deterrence is an important consideration in all of the circumstances, irrespective of the EPA's submission that Shoalhaven Starches' conduct suggests that it treats the possible consequences of environmental offences as a mere cost of business. That submission does not reasonably reflect all of the circumstances of Shoalhaven Starches' conduct (to which I have referred above), and I do not accept it.

49 Mr Hanley's evidence discloses that Shoalhaven Starches has taken many significant steps to improve its environmental performance, and I am satisfied that it recognises that it must do so to in order to be a responsible member of the local and wider community. The steps Shoalhaven Starches has already taken to implement the environmental audit (with its associated costs) and Mr Hanley's evidence, lend weight to this conclusion, and support my acceptance of Mr Hanley's expression of regret for the offence and the inconvenience caused to the community and the EPA as genuine. I also recognise the substantial costs ($235,000) that Shoalhaven Starches has agreed to pay.

50 I am satisfied that I ought to require Shoalhaven Starches to notify the offence and related matters as submitted by the EPA in the South Coast Register, the Sydney Morning Herald and its website. I accept the EPA's submission that, in all of the circumstances, limiting the publication orders to the South Coast Register is inappropriate. As Mr Hanley's evidence disclosed, Shoalhaven Starches is a large enterprise with an Australia wide customer base. Publication limited to a local newspaper, in the context of its overall operations, is insufficient. I consider a 6 month notice on the website excessive in all of the circumstances. I propose to reduce that period to three months. I have determined the appropriate form of notice, having regard to the versions submitted by the EPA and Shoalhaven Starches.

51 I am not satisfied that I should exercise my discretion to require a letter to be sent to all businesses and people within a fairly large part of the Nowra and Bomaderry areas, given the other notification procedures that I will impose. I consider that notice in the newspapers and on Shoalhaven Starches' website will achieve the specific deterrence and other objectives of notification.

52 I have determined the form of the order for the environmental audit, having regard to the limited issues between the EPA and Shoalhaven Starches in that regard.

53 I do not consider that the costs that Shoalhaven Starches has agreed to pay or the costs it will incur in complying with the order with respect to the environmental audit should lead to a material reduction in the fine in the circumstances of this matter. In particular, I place weight on the fact that the offence impacted across a relatively wide area, involved significant interference with reasonable amenity expectations, and was not the result of an uncharacteristic aberration. I do not consider the facts analogous to those in Barnes, where the issue of costs arose in a different context and where Mr Barnes entered a plea of guilty at once. I consider Shoalhaven Starches' consent to carry out an environmental audit appropriate and responsible, but recognise also that the circumstances of the offence call for that response to ensure that Shoalhaven Starches can take precautions to avoid environmental harm, as it is obliged to do. Moreover, the carrying out of the environmental audit is intended to enable a thorough review of potential odour generating activities as part of ensuring that precautions to avoid environmental harm are taken. Other important sentencing considerations remain, including general deterrence, denunciation and recognising the harm to the community. These considerations lend weight to the observations in Incitec.

54 I am satisfied that a penalty of $125,000 should be imposed, having regard to all of the circumstances, and that I should order notification of the offence and related matters in the South Coast Register, Sydney Morning Herald and Shoalhaven Starches' website, the carrying out of the environmental audit and that Shoalhaven Starches pay the EPA's costs agreed in the amount of $235,000.

55 I make the following orders: (1) The defendant is convicted of the offence charged.

(3) The defendant is ordered, within 28 days, to place a notice in the first 5 pages of the South Coast Register at a minimum size of half a page in the form in annexure "A".

(4) The defendant is ordered, within 28 days, to place a notice in the first 12 pages of the early general news section of the Sydney Morning Herald at a minimum size of 137 mm in width in the form in annexure "A".

(5) The defendant is ordered, within 28 days, to place a readily accessible notice on its website (www.manildra.com.au) in the form in annexure "A", such notice to remain on the website for a period of not less than three months.

(6) The defendant is ordered to carry out an environmental audit and take the related steps as are specified in annexure "B".

(7) The defendant is ordered to pay the prosecutor's costs, agreed in the sum of $235,000, within 28 days.

(8) The exhibits may be returned. ANNEXURE "A" SHOALHAVEN STARCHES PTY LTD

On 6 September 2006 the NSW Land and Environment Court found SHOALHAVEN STARCHES PTY LTD guilty of causing offensive odours on 15 April 2004 from its premises on Bolong Road, Bomaderry, NSW. The offensive odours were emitted from wastewater stored in the ponds within the Bomaderry premises, and resulted in a large number of complaints. On 2 November 2006 SHOALHAVEN STARCHES PTY LTD was fined $125,000 and ordered to:

1. carry out an environmental audit of its odour producing activities at the licensed premises;
2. pay the prosecutor's costs of $235,000; and
3. place this publication notice (paid for by Shoalhaven Starches Pty Ltd). Complaints from members of the public about odours from the premises can be made to the SHOALHAVEN STARCHES PTY LTD telephone complaints line ph 1300 300 104. SHOALHAVEN STARCHES PTY LTD was prosecuted by the EPA, part of the Department of Environment and Conservation.

ANNEXURE "B"

1. Premises means the defendant's premises at Bomaderry to which environment protection licence no. 883 (or any amendment or replacement of that license) applies.

2. For the purposes of ensuring no offensive odours as defined by the Protection of the Environment Operations Act 1997 are emitted from the premises, the defendant must engage a suitably qualified expert or experts to conduct an environmental audit that must: (a) Identify and list every process, activity and substance stored or used at the premises that generates or has the potential to generate odours. (b) Benchmark each process and activity identified at (a) against comparable international best available technology and industry best management practice relating to the control of odour from that process and activity. (c) Identify and list every actual and every potential source of offensive odour at the premises. This must include all point, diffuse and fugitive sources. (d) Identify for each odour source identified at (c) the cause or causes of the odour. (e) Quantify for each odour source identified at (c) the actual and potential nature, strength and duration of occurrence of the odour in accordance with the publication "NSW DEC 2005 Approved Methods for the Sampling and Analysis of Air Pollutants in NSW". (f) Model for each odour source identified at (c) the impacts and potential impacts of the odour at all sensitive receptors in accordance with the publication "NSW DEC 2005 Approved Methods of the Modelling and Assessment of Air Pollutants in NSW". (g) Identify all available options to prevent the generation of offensive odour for each actual and potential odour source identified at (c). (h) Where at (g) prevention is not possible, identify all available options to minimise the generation of offensive odour for each actual and potential odour source identified at (c). (i) Describe, quantify and model the likely environmental impacts of implementing each option identified at (g) and (h). (j) State for each actual and potential odour source identified at (c), the preferred option for the prevention or minimisation of the generation of offensive odour from that source. (k) Review the adequacy of policies, procedures, standards, practices and training at the premises in relation to environmental performance and in particular odour management. Where any inadequacy is found to exist recommend options to address each inadequacy. (l) Produce an audit report that details all of the above.

3. Within 12 months of the date of this order the defendant must: (a) Submit to the Land and Environment Court; (b) Submit to the Regional Manager South East Region, Department of Environment and Conservation; (c) Make available for public viewing, free of charge, at the Shoalhaven Starches Pty Ltd administration offices in Bolong Road, Bomaderry; and (d) Publish in an easily accessible format on its website www.manildra.com.au,

the environmental audit report and a statement from the defendant identifying what options identified in that report the defendant intends to implement and by when each such option will be implemented. Note: The above orders do not allow the defendant to cause or permit the emission of any offensive odour from the premises.

Note: The suitably qualified expert or experts may seek information from the Department of Environment and Conservation in undertaking the environmental audit.

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.