Environment Protection Authority v Timber Industries Ltd

ENVIRONMENT PROTECTION AUTHORITY Prosecutor v TIMBER INDUSTRIES LTD Defendant

The defendant, Timber Industries Ltd, has pleaded guilty to committing an offence under s 120(1) of the Protection of the Environment Operations Act 1997 ("the POEO Act"). The summons charges that on or about 7 September 1999, at or near Oberon, the defendant polluted waters.

The defendant has owned and operated a timber mill in Lowes Mount Road, Oberon ("the site") for many years.

The defendant has a collection system on the site to manage run-off. The collection system comprises three pits at the front of the site, numbered DP-01, DP-02 and DP-03. They are connected via pipes. Pit DP-01 is the final pit and has a pump attached to it which pumps run-off to a wastewater storage dam at the back of the site.

At the time of the incident, the defendant was the holder of an environmental protection licence which regulated liquid discharge from the site. The licence included a condition to the effect that wastes must not be discharged from pit DP-02 which:

1. exceed a volume of 1 kilolitre (1,000 litres) on any day;
2. cause more that 20 milligrams per litre of biochemical oxygen demand (BOD);
3. contain more than 30 milligrams per litre of non-filterable residue (NFR).

An agreed statement of facts was submitted from which I derive the following description of what occurred and how it occurred.

At approximately 9.10 am on 7 September 1999, two officers of the Environment Protection Authority ("the EPA") were obtaining fuel at the Caltex Depot located opposite the site. Both officers observed a blue hose discharging black coloured liquid protruding through the front fence of the site.

One officer observed that the liquid flowed from the hose across a nature strip approximately 6 metres wide in front of the site, then through a drain passing under Lowes Mount Road and into a drainage channel which ran along the eastern side of Lowes Mount Road ("the drainage channel").

The liquid was being pumped from a pit on the premises, later identified as pit DP-02. A submersible pump suspended from a backhoe had been placed in pit DP-02. It is agreed between the parties that no-one was in attendance of the pump or pit DP-02 when the EPA officers first noticed the discharge.

The officers entered the premises at approximately 9.30 am and ordered the pump to be turned off.

During the previous night there had been a discharge of mains water from the boiler house on the site. The exact time this occurred is not known, but the front yard of the site was observed by the site engineer, Mr W Boyd, as being flooded at 6.45 am. It was later discovered that the float valve in the boiler had snapped, allowing mains water to escape the boiler housing and run via an underground drainage pipe ("the inlet pipe") into pit DP-02.

Normally, run-off entering pit DP-02 would pass into pit DP-01 and be pumped to the wastewater storage dam at the back of the site. However, on 7 September 1999, sediment in the bottom of pit DP-02 blocked the pipe between it and pit DP-01, causing the liquid to overflow pit DP-02 and pit DP-03.

At approximately 7.45 am, Mr Boyd instructed the site's maintenance handyman, Mr G Ross to lower the liquid in pit DP-02 to a level approximately 1 foot below the pit wall. This was in order to allow the blockage between pits DP-02 and DP-01 to be cleared with a backhoe. Mr Boyd decided to lower the level in the pit before using the backhoe in order to prevent any removed sediment from discharging from the site. Mr Ross was instructed to do this by suspending a submersible pump from the backhoe and lowering it into the pit, and to pump the liquid from the pit out through the boundary fence via a hose.

Mr Ross was left in charge of the pump operation. As instructed, Mr Ross set the pump approximately 18 inches below the top of pit DP-02. At approximately 8.00 am, Mr Ross left the pump unattended and went to morning tea. In his absence the arm of the backhoe, which was faulty, crept lower into the pit, causing the pump to discharge the liquid and sediment residue in the pit through the fence and outside the site along the drainage channel.

In imposing a penalty for this offence, I have taken into consideration the following matters in accordance with s 241(1) of the POEO Act:

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

There was no evidence of actual harm to the environment. There was, however, an issue as to the likelihood of environmental harm, and in this connection, four matters arise for consideration. They are:

(1) the extent of the waters affected by the discharge; (2) the nature of the discharge; (3) the amount of the discharge; and (4) the expert evidence regarding the likelihood of environmental harm. (1) the extent of the waters affected by the discharge:

The liquid discharged from the site into a drainage channel which is part of an off-site stormwater drainage system. That system is located both adjacent to Lowes Mount Road and also on another site, the Carter Holt Harvey MDF plant premises ("the MDF premises"). The system collects stormwater run-off from the site and from neighbouring land and the roadways. The stormwater flows through the drainage channel to a dam ("the first dam") and then into a further channel which flows into a second dam at the northern end of the MDF premises ("the northern dam") before flowing into an unnamed tributary of Kings Stockyard Creek.

There was no evidence to show that the discharge reached the unnamed tributary or Kings Stockyard Creek itself, and I find accordingly that no natural watercourses were affected. There is no doubt, however, that the discharge flowed into the drainage channel (it was so observed by the EPA officers), but, according to the expert evidence presented by both sides, it was unlikely to have reached the first dam, the further channel or the northern dam.

Samples of the liquid were taken from the hose by the EPA officers as it discharged. Analysis revealed that the liquid had concentrations respectively of BOD of 120mg/L, chemical oxygen demand (COD) of 300mg/L, and total suspended solids (TSS) of 110mg/L. About 50 minutes later, a sample of the residue remaining in pit DP-02 was taken by employees of the defendant, and this sample showed a concentration of TSS of 1200mg/L.

Although the overflow into pit DP-02 resulted from mains water discharging from the boiler house into the pit through the inlet pipe, I do not accept that the liquid was largely clear water. It is disclosed in the agreed statement of facts that, when the EPA officers arrived at the pit, it was largely emptied of free liquid and there was a slurry of black liquid, sediment and wood fines at the bottom. According to that statement, the level of liquid and slurry, while not even, covered approximately half of the inlet pipe from the boiler house. Furthermore, photographs were tendered (as part of the bundle ex 'A') showing sediment and wood fines lying in the area surrounding the pit. I have also noted, from the sketch included as part of ex 'A', that the inlet pipe was not set high in the wall of pit DP-02 but in a box cut into the wall of the pit and so positioned that the base of the inlet pipe was 126 cm from the top of the pit. That position indicates that any clear water flowing into pit DP-02 through the inlet pipe would have been mixed with sediment and wood fines. From all this evidence, I am satisfied beyond reasonable doubt that the liquid was not simply clear water but contained sediment and wood fines.

According to the statement of agreed facts, the volume of liquid which discharged is estimated to have been between 4,850 and 5,064 litres.

(4) the expert evidence regarding the likelihood of environmental harm:

The prosecutor relied on the affidavit evidence of Mr M J Root, an environmental scientist in the employ of the EPA. He concluded that the concentrations of BOD, COD and TSS of the liquid were high, and had the potential to adversely affect the environment of any receiving waters. In his opinion, this would manifest itself primarily in a reduction of dissolved oxygen concentrations in the receiving waters possibly leading to stress or even mortality to aquatic animals. This result would be compounded by the turbid nature of the liquid, causing additional stress to the biota and contributing, via deposition of particulate matter, to the longer term degradation of the aquatic habitat. But Mr Root acknowledged three things. Firstly, the stormwater drainage system into which the liquid discharged was of a highly modified nature, and was unlikely to have the structural habitat complexity necessary to support a diverse aquatic community. Secondly, the stormwater drainage system receives run-off from a range of land areas, from which it is reasonable to expect some pollutants discharge into the system. Thirdly, if the drainage channel had no water in it at the time, most of the liquid would have been likely to soak into the bed sediments of the drainage channel, and, although rainfall would re-suspend particulates, the potential effect of the discharge would be reduced by the effects of time and the dilution of rainwater run-off.

The defendant tendered a report by Mr W S Rooney, an aquatic ecologist. He agreed generally with Mr Root's evidence, and particularly with Mr Root's conclusion that other pollutants discharge into the stormwater drainage system, that the system was a highly modified one, and that most of the liquid would have soaked into the bed sediments of the drainage channel.

The evidence I have outlined leads me to conclude that, whilst there was a likelihood of environmental harm by reason of the nature and amount of the liquid discharged, that likelihood was not of a serious or lasting nature. No natural watercourse was affected, and the artificial system into which the liquid discharged was highly modified and likely to be contaminated to some extent quite apart from the discharge.

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

The prosecutor submitted that the defendant failed to take steps to ensure the wastewater collection system operated properly, which included ensuring the pits and pipes were clear of sedimentation. While the defendant believed the pits were cleaned on a fortnightly basis, at the time of the incident there was no maintenance register or formal procedure in place to ensure adequate cleaning and maintenance of the pits. The defendant did not know the last time the pits had been cleaned.

Since the incident, the defendant has instituted a preventative maintenance and daily inspection work schedule for the pits. This simple and inexpensive preventative measure should, it was contended, have been in place prior to the incident occurring.

Further, the prosecutor contended that there were alternative steps the defendant could have taken to deal with the liquid in pit DP-02 without having to discharge it through the boundary fence. An example provided in submissions was to pump the excess liquid into a container, bin or drum and then empty it directly into pit DP-01. Instead, the defendant made a deliberate decision to pump the liquid out of the pit and out of the site.

In an interview with the EPA, Mr S Barrett, an employee of the defendant who was authorised to speak on behalf of the defendant, agreed that leaving the pump unattended and pumping out to the environment was not a competent way to handle the situation and that not pumping the liquid flooding pit DP-02 back to the wastewater storage dam on the premises was a poor decision.

Although the prosecutor urged me to do so, I do not place much weight on the duration of the period during which Mr Ross left the pump unattended. Mr Ross claimed that he left the pump at about 8.00 am and that it remained unattended for approximately 25 minutes. The prosecutor claims that this estimate is inconsistent with the evidence of the observations of the EPA officers, who saw the discharge at about 9.10 am and noticed no-one in attendance at the pump. Mr Ross' estimate of the period during which he was away may be inaccurate (it may have been 70 minutes instead of 25 minutes), but the duration is not the important matter. The important matter (upon which I do place significant weight) is that the pump was left unattended, and had that not occurred, the lowering of the faulty backhoe may have been noticed and the incident rectified before it was brought to an end by the EPA officers requesting that the pump be shut down.

Finally, it should be noted that the discharge of the liquid ceased only when one of the EPA officers ordered Mr Ross to turn off the pump.

(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

The defendant claimed that the harm caused or likely to be caused could not reasonably have been foreseeable for the following reasons. Mr Boyd believed that the liquid flooding above pit DP-02 was clear mains water which had flowed from the boiler house. In accordance with that belief, the pump was initially set at about 18 inches below the top of the pit. The reason that deeper liquid (which was likely to be contaminated by sediment and wood fines lower in the pit) was discharged was because of the faulty hydraulics on the back hoe. The faulty hydraulics were unknown to the defendant and were not foreseeable.

I do not accept this claim. The defendant pumped liquid from a wastewater pit off the site into the drainage channel. It knew, because it cleaned out the pit fortnightly with a backhoe, that the pit usually contained approximately one foot of sediment and wood fines. Mr Boyd knew at the time of the incident that liquid was flowing into the pit through the inlet pipe from the boiler house. Having regard to those circumstances, I find that it must have been reasonably foreseeable by the defendant that the liquid overflowing the pit would be contaminated and harm was likely to be caused to the environment by pumping the liquid off the site into the drainage channel.

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

The defendant was the owner and licensed operator of the timber mill and in complete control of the site and the factors which caused the offence.

The maximum penalty for a breach of s 120 of the POEO Act in the case of a corporation is $250,000 (s 123(a)). It is to be noted that, upon the enactment of the POEO Act, the maximum penalty for water pollution offences in the case of a corporation was doubled - that is, the maximum penalty was increased from $125,000 to $250,000. That does not mean, however, that the Court should simply impose a penalty effectively twice that which the Court would have imposed had the offence been committed before the coming in to force of the POEO Act on 1 July 1999. Rather, the proper approach of the Court must be to assess the relative seriousness of the particular offence in relation to a worst case for which the maximum penalty of $250,000 is now provided; that is, the penalty to be imposed is that which correlates upon the scale of penalty set by the legislature from zero to the maximum: Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698. The increase in penalty must be taken as indicative of the legislature's reflection of community standards in relation to the seriousness of the offence (R v Slattery (1996) 90 A Crim R 519), and it is the increased penalty against which the penalty for this particular offence must be measured.

In considering the appropriate penalty to be imposed, I have taken into account the matters I have earlier set out. In particular, I have taken into account the fact that the defendant made a deliberate decision to pump liquid from pit DP-02 through the boundary fence and off the site rather than collecting the liquid and disposing of it into the wastewater dam located upon the site. The action of the defendant in pumping the liquid through the boundary fence showed a lack of competence, care and responsibility and that lack was highlighted by the failure of its employee to properly supervise the pumping procedure.

I have also taken into account the defendant's prior conviction for an environmental offence. In February 2000, the defendant was convicted of an offence of polluting waters at its Bathurst premises contrary to s 16(1) of the Clean Waters Act 1970 (now s 120 of the POEO Act), and it was fined $15,000 (against a then maximum of $125,000) (Environment Protection Authority v Timber Industries Ltd [2000] NSWLEC 39).

However, in the defendant's favour I take into account the following matters:

(1) There was no actual harm to the environment. There was a likelihood of harm to the environment but not harm of a serious or lasting kind; (2) The defendant has taken remedial action so as to endeavour to ensure that a similar incident does not occur in the future. According to the agreed statement of facts, it cleaned the area at the front of the site and installed silt mesh and straw bales along the boundary fence. It instituted a cleaning schedule for the three pits. It issued a memorandum to all supervisors pointing out their environmental responsibilities, it re-issued the Boral environment policy to all staff, and a new water management plan will be implemented for the site. The cost of remediation undertaken by the defendant was approximately $1,689; (3) The defendant co-operated with the prosecutor in its investigation of the incident.

Taking into account all these matters, I consider that an appropriate penalty would be $25,000, that is, 10 per cent of the maximum. However, the defendant's plea of guilty entitles it to a discount in the range of 10 - 25 per cent (R v Thompson [2000] NSWCCA 309). It is appropriate, in setting such a discount, to take into account the utilitarian value of the plea of guilty (that is, the public value of avoiding the expense of a contested trial) and the defendant's contrition. In this case, the plea of guilty was not entered on the first return date; but it was entered on the second return date, after the prosecution's evidence was wholly available. I am prepared to regard this as an early plea of guilty and to allow a significant discount for it. I do not propose, however, to allow the maximum reduction of 25 per cent. Although the plea of guilty itself reflects some degree of contrition, the defendant's actions at the time of the incident reduce that degree to some extent. I accept the prosecutor's submission in this regard to the effect that the defendant did not report the discharge of liquid (it was discovered by the EPA officers at the petrol depot across the street) and it did not take any action to stop the discharge until told to shut the pump down by the EPA officers. In all the circumstances, I consider that a reduction of 20 per cent is justified, and that, accordingly, the appropriate penalty is $20,000.

In accordance with the above, my formal orders are as follows:

(1) The defendant is convicted of the offence with which it is charged; (2) The defendant is fined the sum of $20,000 to be paid to the Registrar of the Court within 28 days; (3) The defendant must pay the costs of the prosecutor as agreed or as determined in accordance with s 52(2) of the Land and Environment Court Act 1979 and the Regulation. (4) The exhibits may be returned.

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