EPA v Colenden Pty Ltd

Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299; CASES CITED: R v Thomson (2000) 49 NSWLR 383; The Queen v Olbrich (1999) 199 CLR 270

APPLICANT Mr E Bateman (solicitor) SOLICITORS Department of Environment and Climate Change NSW LEGAL REPRESENTATIVES: RESPONDENT Mr McCall SOLICITORS Bourke Love McCartney Young

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

ENVIRONMENT PROTECTION AUTHORITY Prosecutor

JUDGMENT Jagot J: A. Introduction 1 Colenden Pty Ltd (the defendant) operates a timber treatment plant at Cavanagh's Road, Lowanna, inland from Coffs Harbour. The treatment process involves the use of copper chromium arsenate. During the evening of 30 November 2005, a buffer tank containing a mixture of copper chromium arsenate solution and rainwater ruptured. At least 1000 litres of contaminated wastewater leaked from the buffer tank. The wastewater entered a dam and samples disclosed elevated levels of arsenic, chromium and copper in a nearby creek, which was a tributary of the Little Nymboida River. The defendant has pleaded guilty to the offence of polluting waters (s 120(1) of the Protection of the Environment Operations Act 1997). I must now determine sentence.

2 The maximum penalty for the offence under s 120(1) is $250,000 (s 123(a) of the Protection of the Environment Operations Act).

B. Facts 3 Most of the facts were recorded in an agreed statement of facts.

4 The defendant carries out its activities under an environment protection licence. The licence does not contain any authorised discharge points.

5 The defendant receives cut saw logs, trims and cuts the logs into sleepers and palings, and pressure treats the sleepers and palings with a copper chromium arsenate product. Copper chromium arsenate is a hazardous substance used as a wood preservative. The treatment involves placing cut wooden palings or sleepers into a timber treatment vessel to which the copper chromium arsenate solution is added. The timber treatment vessel is then pressurised to infuse the wood with the solution.

6 The treatment activities are carried out in the treatment plant, which is contained within a roofed area surrounded by a bund. The copper chromium arsenate product is stored in a bulk concentrate tank. The product is usually mixed in a mixing tank with clean water from the main clean water tank located just outside the treatment plant. The solution is then usually placed in the working solution tank from which it can be sourced for the pressure treatment that takes place in the timber treatment vessel. The plant also contains a dirty water storage tank, containing wastewater from the treatment plant that is available for reuse in the treatment process (the storage tank). Another tank, known as the dirty water buffer storage tank, was located immediately outside of the treatment plant and thus outside the roofed area surrounded by the bund (the buffer tank). The buffer tank was on ground slightly lower than the storage tank. It was about the size of a shipping container. It was not covered and had an open top. Although it did not usually have any function within the treatment process, having been used in the past to store rainwater and dipping lining boards, the buffer tank was connected by a pipe to the balance of the treatment plant. The buffer tank had not been in use for about 18 months before the incident.

7 Mr Atkinson, an employee of the defendant, operated the treatment plant at the time of the incident, under the supervision of Mr Mason, who in turn reported to Mr Rovere, the general manager. Mr Mason had over 10 years' experience in operating the plant. Mr Atkinson worked alongside Mr Mason for three months, during which Mr Mason demonstrated to Mr Atkinson the operation of the plant. Mr Mason supervised Mr Atkinson's operation of the plant. Mr Atkinson attended a three day workshop run by the copper chromium arsenate product supplier on the use of the product. Mr Atkinson also received instruction in relation to the material safety data sheets and emergency procedures for the operation of the timber treatment plant and copper chromium arsenate concentrate (although not the precise product used in the plant).

8 The plant operator uses a sight tube to ascertain the volume of copper chromium arsenate product in the bulk concentrate tank. However, about two months before the incident the sight tube broke off the bulk concentrate tank. The defendant had to empty the bulk concentrate tank to replace the sight tube. To do so, it emptied the tank by pumping the contents to the storage tank, which contained some plant wastewater. This meant that the copper chromium arsenate had to be made up by pumping the copper chromium arsenate product from the storage tank to the mixing tank. At this time, it also meant that the storage tank contained a relatively concentrated solution of copper chromium arsenate of a greater volume than would otherwise be the case, being about three quarters full (around 30,000 litres). Mr Mason said that about 16,000 litres was pumped back to the bulk concentrate tank before the incident (leaving about 13,000 litres in the storage tank).

9 Mr Rovere considered that the buffer tank should be removed to provide space for new tanks to increase the treatment plant's capacity. Mr Mason believed he had informed Mr Atkinson that the buffer tank was to be decommissioned in the week of the incident as it was corroded and may be prone to leaking. Mr Atkinson believed that he had been so informed between two to four weeks before the incident. Mr Mason considered that the rainwater in the buffer tank had to be removed to enable it to be decommissioned. Mr Atkinson said that Mr Mason had instructed him to use the rainwater by pumping that water to the mixing tank to dilute the copper chromium arsenate product. As there was too much rainwater to use in one hit, Mr Atkinson was undertaking this process gradually. For this purpose, the valve in the pipe between the buffer tank and the mixing tank had to be opened and activated through a pump.

10 On 1 December 2005 at about 6.00am employees of the defendant discovered that the buffer tank had ruptured causing wastewater contaminated with copper chromium arsenate to escape. At least 1000 litres of contaminated wastewater escaped. Rain fell during the evening of 30 November and the morning of 1 December 2005. This caused the contaminated wastewater to disperse along certain drainage paths and towards a dam known as the downstream dam, the land generally sloping in that direction.

11 When Mr Mason checked the treatment plant on the morning of 1 December 2005 he saw that the valves on both the storage tank and buffer tank had been left open. The defendant believes that Mr Atkinson must have left both valves open on the evening of 30 November 2005. With both valves open, the liquid level in the two tanks was able to equalise. Because the buffer tank was on slightly lower ground, the copper chromium arsenate solution in the storage tank flowed into the buffer tank, mixing with the rainwater. The extra pressure caused the corroded buffer tank to rupture. Mr Atkinson said that he could not recall closing the valve on the storage tank on the evening of 30 November, but had not touched the valve on the buffer tank for about two to four weeks before the incident. Although he had been directed to use the rainwater in the buffer tank in order to drain that tank, Mr Atkinson said that he in fact used clean water on 30 November 2005 to create the copper chromium arsenate solution.

12 The defendant's employees constructed an earth bund and sumps to prevent the further flow of the contaminated wastewater and pumped the remaining wastewater in the buffer tank to the storage tank within the area surrounded by the bund. They focused their immediate attention on the source of the leak and its containment. They did not check the downstream dam at that time. At about 6.45am on 1 December 2005 Mr Rovere and Mr Webster traced the path of the contaminated wastewater towards the downstream dam, inspecting the containment works that had been constructed along the way. They checked the downstream dam and saw no evidence that the contaminated wastewater had reached that dam. They also saw no evidence that the dam was overflowing.

13 Officers of the Department of Environment and Conservation (as it was then known) attended the premises on 2 December 2005. They followed the drainage lines, passing the sumps filled with liquid of the same appearance as the contaminated wastewater collected in ponds around the plant. They took various photographs showing the liquid, the sumps, the downstream dam and other features of the premises. They took various samples. They returned to the premises and took further samples on 13 December 2005 and 9 January 2006. The sampling results showed the concentrations of copper, chromium and arsenic in the wastewater remaining in the buffer tank on 2 December 2005. If one litre of that liquid had escaped into the environment then 2,500,000 litres (or almost 1.3 Olympic swimming pools) of clean water would be required to dilute that liquid to levels where it presented a low risk to the environment.

14 The sampling showed that very high concentrations of copper, chromium and arsenic were present in the downstream dam on 2 December 2005. The levels were sufficiently high to cause acute toxicity to some aquatic life in the dam for up to five weeks after the incident. They also showed detectable levels of copper, chromium and arsenic in the creek downstream of the dam, being higher than the levels from the upstream dam. The levels from the creek downstream would cause harm to sensitive aquatic life in the creek especially if sustained over a long period of time. The samples from 13 December 2005 showed some amelioration of toxicity of the waters in the downstream dam, with levels still likely to cause acute toxicity to algae and invertebrates. The samples from the creek downstream on 13 December 2005 showed significant improvement and were unlikely to show any acute or chronic toxicity (with copper not being detectable and 2.4g/L of chromium and 11g/L of arsenic, compared to the 2 December 2005 samples of 6.5g/L, 32g/L and 30g/L respectively). The samples from the downstream dam on 9 January 2006 showed continuing reduction in the levels of chromium and arsenic. No one observed any aquatic life harmed by the escape of the contaminated wastewater into the downstream dam or the creek. There is no evidence of harm to any organism in the Little Nymboida River by reason of the escape.

15 After the incident the defendant decommissioned and removed the buffer tank and associated pipe work, consistent with its intention before the incident. As a result of a clean up notice issued by the Department under s 91 of the Protection of the Environment Operations Act the defendant removed around 30 cubic metres of contaminated soil from the area where the buffer tank had stood, and between 7 and 30 cubic metres of soil from the flat area in that vicinity. Around 3000 litres of liquid was collected and placed into 200 litre drums. The defendant was required to undertake testing of the downstream dam and to prevent further run off from entering the dam so the dam would not overtop. The defendant removed Mr Atkinson from the responsibility of operating the treatment plant immediately after the incident.

16 Mr Rovere prepared an affidavit on behalf of the defendant. In addition to matters in the agreed facts Mr Rovere observed that the defendant had operated its business from the premises since March 1989, having acquired the business from another operator that had established it in 1980. Mr Rovere, Mr Mason (the sales and distribution manager) and Mr Webster (the production manager) all have responsibility for the environmentally safe operation of the premises. They correct any environmentally unacceptable conduct on the spot. Employees are trained in the operational requirements of the business, which are regularly reinforced. The defendant limits the number of employees who can deal with the copper chromium arsenate product to reduce the risks of poor environmental performance and management. The bund around the treatment plant existed before the defendant acquired the business. The defendant extended the bund to allow timber to be stored and treated within the area surrounded by the bund. The Environment Protection Authority had inspected the premises on at least four occasions. The defendant has no prior record.

17 Mr Rovere lives in the area. The rainfall data showed that 2mm fell on 30 November and 58mm on the morning of 1 December 2005. This was a significant amount that contributed to the volume of water in the buffer tank and volume of stormwater across the premises. The downstream dam was below full capacity before the incident as the rainfall occurred after a period without rain. This allowed the dam to capture the contaminated stormwater, even though it was not designed for that purpose. Mr Rovere called the pollution hotline shortly after arriving at work on 1 December 2005, with a follow up call being made by employees later in the day.

18 Mr Rovere accepted that it was foreseeable that an escape into the environment of the contaminated wastewater had the potential to cause harm. Two or three weeks after the incident Mr Rovere and Mr Mason observed tadpoles in the downstream dam. Mr Rovere accepted that the defendant was responsible for the management of the premises and the employment of its staff. He noted that Mr Atkinson had been trained with respect to the operation of the treatment plant and was directed to empty the buffer tank, but had not done so in the manner directed. The defendant had subsequently reinforced with all employees the need to manage all chemicals in an environmentally responsible manner. All employees involved in handling the copper chromium arsenate have been retrained to minimise risks. The defendant had made inquires about external courses in relation to handling these chemicals and operating a timber treatment plant, but none were available, so the defendant focused on its in-house training and training by the supplier. The defendant has a good working relationship with the Environment Protection Authority. The defendant reported the incident at the earliest opportunity because it takes its environmental obligations seriously. Mr Rovere confirmed that the defendant also took the loss of its clean environmental record and reputation very seriously and regretted the incident and the risk it presented to the environment.

19 Mr Rovere identified that, after the incident and the actions taken immediately to contain the spill, the defendant took further steps, including steps as part of a pollution production program required by the Environment Protection Authority. The defendant retained an environmental consultant to propose a method for soil and water remediation associated with the incident after an initial consultant failed to respond in a timely manner. These steps involved remediation and disposal of contaminated soils and remediation of the wastewater in the downstream dam. External auditors validated this clean up. The works cost the defendant approximately $60,000. This sum does not include the significant internal resources the defendant devoted to the clean up or its legal costs. The defendant also decommissioned the buffer tank and installed a 10,000 litre tank within the area of the bund to hold excess dirty water if the storage tank becomes full. All chemical and water associated with the treatment plant is now within the area of the bund and the bund has a capacity exceeding the combined capacity of all the storage tanks. Hence, it is no longer physically possible for the incident to be repeated. The defendant also orders the copper chromium arsenate concentrate in smaller batches to decrease any risk associated with the product. This is more inconvenient and involves losing any discount for bulk orders. The defendant entered its plea of guilty at the first opportunity and had agreed to pay the prosecutor's costs in the sum of $18,000. Cross-examination of Mr Rovere was limited and did not affect the substance of his evidence as recorded above, which I accept.

20 Insofar as it may have remained oblique in the agreed facts, I record that I am satisfied beyond reasonable doubt that the spill from the buffer tank caused the pollution of both the downstream dam (which is "waters" for the purpose of the Protection of the Environment Operations Act) and the creek (The Queen v Olbrich (1999) 199 CLR 270 at [27]).

C. Sentence considerations Protection of the Environment Operations Act 21 A fundamental consideration for the purpose of sentence is the maximum penalty for this offence of polluting waters ($250,000 under s 123(a) of the Protection of the Environment Operations Act).

22 Section 241 of the POEO Act specifies matters to be considered in imposing sentence for an offence against that Act. I deal with those matters, as relevant, in turn.

Extent of the harm (s 241(1)(a)) 23 The prosecutor submitted that the potential for harm to the environment was real and not remote. The evidence established that copper chromium arsenate is a hazardous substance capable of causing acute and chronic health effects in humans, fish, invertebrates and freshwater plants including algae. At least 1000 litres of contaminated wastewater escaped from the buffer tank, with a potential for more to have done so. The levels in the downstream dam were sufficient to cause acute toxicity to some aquatic life for a period of five weeks. The levels in the creek downstream were sufficient to cause harm to sensitive aquatic life if exposure was sustained over a long period of time. The potential or risk of harm is relevant (Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299 at [145]). The defendant acknowledged that copper chromium arsenate is a hazardous substance and that the inadvertent release involved a high potential for harm. However, that potential was ameliorated by the operation of the downstream dam (albeit not intended for that purpose) and the steps the defendant had taken to rectify the harm insofar as it was able to do so. The harm was also limited in its geographical extent to the site itself and an area of the creek downstream. In terms of water pollution, the harm in the creek was effectively rectified by 13 December 2005 and thus of a relatively short duration. Overall, and over time, the actual harm from the incident has proven to be minimal. The prosecutor's speculation about more than 1000 litres of contaminated wastewater having escaped should not be entertained in the face of the agreed facts.

24 I am satisfied beyond reasonable doubt that the escape of the contaminated wastewater carried a high risk of potential harm given the hazardous nature of copper chromium arsenate and the concentrations of those chemicals detected in the various samples. I am also satisfied beyond reasonable doubt that the escape would have caused actual harm to some organisms within the downstream dam, although I do not know the nature and extent of that harm. I accept that the harm to the creek was limited in extent and duration and the defendant acted appropriately to rectify the harm insofar as it was able to do so. Although there was some evidence about the adequacy of the defendant's completion of aspects of the pollution reduction program, I do not consider those matters sufficiently material to impact on resolution of the appropriate sentence to be imposed.

Practical measures (s 241(1)(b)) 25 The prosecutor submitted that the defendant could have taken a range of practical measures to prevent the harm. These measures included relocating its timber treatment plant, increasing the stormwater drainage capacity, removing the pipe connections between the buffer tank and the treatment plant, roofing the buffer tank, not using the buffer tank at all as part of its treatment process, locating the buffer tank inside the bund and building a new bund around the buffer tank. The defendant submitted that little weight should be given to notions about relocating the treatment plant or increasing the stormwater drainage capacity (which were authorised by the licence). The defendant had taken steps immediately and in the longer term to rectify the harm, as disclosed in the agreed facts and Mr Rovere's evidence. It was also relevant that the buffer tank did not form part of the usual treatment process. The incident occurred during operations outside the defendant's usual parameters, while the bulk concentrate tank was being repaired.

26 I accept that the buffer tank that ruptured, causing the leak of the contaminated wastewater and the pollution of waters, did not form part of the defendant's usual operations. The defendant intended to remove the buffer tank before the offence. Nevertheless, the defendant was responsible for the continued presence of the buffer tank. It was responsible for the condition of the buffer tank - that is, in terms of its location on lower ground and outside the bund, its structural adequacy and exposure to rainwater. The defendant was responsible for the buffer tank being connected to the treatment plant by pipes. Practical measures as identified by the prosecutor were available before the offence with respect to each of these unsatisfactory circumstances. Had those measures been implemented, the harm could have been effectively avoided irrespective of the inappropriate conduct of any employee.

Foreseeability (s 241(1)(c)) 27 The defendant acknowledged that the harm was reasonably foreseeable. This acknowledgment was appropriate in the circumstances.

Control over causes (s 241(1)(d)) 28 The defendant submitted that the issue of control should be approached at two levels. It was clear that the defendant had control over the causes of the buffer tank rupturing. However, it had no control over the heavy rainfall which contributed to the load on the buffer tank and which led to the dispersal of the contaminated wastewater.

29 It is true that the defendant had no control over the rainfall. However, heavy rainfall is itself a foreseeable circumstance. Businesses in the position of the defendant are responsible for ensuring that plant and equipment is capable of operating adequately during heavy rainfall. The defendant had control over the circumstances that enabled the heavy rainfall to contribute to the commission of the offence.

Other considerations 30 The prosecutor acknowledged that there were no aggravating factors as set out in s 21(A)(2) of the Crimes (Sentencing Procedure) Act 1999 in relation to this matter. It submitted that, in all the circumstances, the offence was serious. The defendant was dealing with a hazardous substance. The defendant was culpable by reason of its use of unsafe equipment as part of its treatment operation absent adequate ameliorating measures. While the buffer tank was not normally part of the treatment process, the defendant had used it as such for a period of time, within which the offence occurred. Accidents can occur. But people in the defendant's position are obliged to take positive precautions to ensure that accidents do not result in environmental harm. Considerations of general deterrence were material. The defendant continues to carry out its operations. Accordingly, specific deterrence considerations are also relevant. Having regard to all the circumstances, a penalty in the upper echelons of the lower range ($30,000 to $50,000) should be considered.

31 The defendant emphasised: - (i) its previously unblemished record, which was particularly impressive given the nature of its activities, (ii) the steps it had taken to minimise the harm, (iii) the steps it had taken to ensure such an offence was not repeated, (iv) the costs associated with those steps, (v) its entry of a plea at the first opportunity warranting a discount as contemplated by R v Thomson (2000) 49 NSWLR 383, (vi) its cooperation at all times with the prosecutor, including its self-reporting of the incident (a matter, I note, required by the licence), and (vii) its agreement to pay the prosecutor's costs. The defendant submitted that it had shown its genuine contrition and remorse not only by Mr Rovere's evidence but also through its conduct at all times. It said that, in all the circumstances, a penalty in the range of $15,000 to $20,000 was appropriate.

32 Both the prosecutor and defendant referred to various decisions on penalty as potentially relevant, whilst conceding that each case turned on its own particular facts.

33 Under ss 21A(3)(k) and 22 of the Crimes (Sentencing Procedure) Act a plea of guilty, and the timing of the plea, are factors to be taken into account on sentence. The defendant entered a plea of guilty on 16 January 2007, which was the earliest opportunity. I am satisfied that the defendant's plea had material utilitarian value. Other than the affidavit of Mr Rovere, the facts were agreed and conveniently set out in a statement of agreed facts. In these circumstances, I consider the defendants should have the benefit of a discount of 25% on account of the utilitarian value of their early guilty plea (R v Thomson (2000) 49 NSWLR 383 at [151] - [161]).

34 I consider the offence to be one of moderate objective seriousness, having regard to: - (i) the hazardous nature of the chemicals involved, (ii) the immediate causes of the offence, which included the connection to the treatment system of a tank identified by one employee as corroded and prone to leaking, and the location of that tank outside the protection of the bund, and (iii) the potential for harm associated with the escape of the contaminated wastewater. I accept the prosecutor's submissions that the circumstances disclose culpability on the defendant's part despite the fact that inappropriate action by one of its employees was also a cause. As the prosecutor submitted, accidents happen, but people in the defendant's position are bound to take positive precautions to ensure that accidents do not result in environmental harm. General deterrence is important and the penalty should reflect that consideration. Specific deterrence is also a relevant matter, albeit of less importance in all the circumstances.

35 There are strong subjective considerations in the defendant's favour. The defendant has an excellent environmental record, which is particularly commendable given the nature of the operations it undertakes. The absence of any prior convictions and good character of the defendant are material matters (s 21A(3)(e) of the Crimes (Sentencing Procedure) Act). The defendant did have in place appropriate training regimes. It did take its environmental responsibilities seriously. It intended to remove the buffer tank that ruptured and caused the offence to occur. The defendant took immediate and appropriate action to minimise and rectify the harm and potential harm, which is relevant under s 21A(3)(i) of the Crimes (Sentencing Procedure) Act. It has put in place measures that should be effective to prevent any repetition of an offence of this nature. The defendant's actions, including its co-operation at all times and agreement to pay the prosecutor's costs in the sum of $18,000, show its genuine contrition and remorse and determination to ensure that the circumstances causing this offence cannot arise again. Mr Rovere was an impressive witness. His evidence demonstrated that the defendant placed a high priority on its environmental performance. These are significant considerations in determining the overall penalty.

36 Having regard to these considerations, I am satisfied that a penalty of $34,000 is warranted. The defendant should have the benefit of a 25% discount on account of the utilitarian value of its guilty plea, resulting in a fine of $25,500.

D. Orders 37 Accordingly, I make the following orders: (1) The defendant is convicted of the offence charged. (2) The defendant is fined the sum of $25,500. (3) The defendant is to pay the prosecutor's costs as agreed in the sum of $18,000. (4) The exhibits are returned.

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