Orica Australia Pty Ltd v Environment Protection Authority

Protection of the Environment Administration Act 1991 (POEA Act) Section 6 Objectives of the Authority (1) The objectives of the Authority are: (a) to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development, and (b) to reduce the risks to human health and prevent the degradation of the environment, by means such as the following: • promoting pollution prevention, • adopting the principle of reducing to harmless levels the discharge into the air, water or land of substances likely to cause harm to the environment, • minimising the creation of waste by the use of appropriate technology, • regulating the transportation, collection, treatment, storage and disposal of waste, • encouraging the reduction of the use of materials, encouraging the re-use and recycling of materials and encouraging material recovery, • adopting minimum environmental standards prescribed by complementary Commonwealth and State legislation and advising the Government to prescribe more stringent standards where appropriate, • setting mandatory targets for environmental improvement, • promoting community involvement in decisions about environmental matters, • ensuring the community has access to relevant information about hazardous substances arising from, or stored, used or sold by, any industry or public authority, • conducting public education and awareness programs about environmental matters. (2) For the purposes of subsection (1) (a), ecologically sustainable development requires the effective integration of social, economic and environmental considerations in decision-making processes. Ecologically sustainable development can be achieved through the implementation of the following principles and programs: (a) the precautionary principle - namely, that if there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation. In the application of the precautionary principle, public and private decisions should be guided by: (i) careful evaluation to avoid, wherever practicable, serious or irreversible damage to the environment, and (ii) an assessment of the risk-weighted consequences of various options, (b) inter-generational equity - namely, that the present generation should ensure that the health, diversity and productivity of the environment are maintained or enhanced for the benefit of future generations, (c) conservation of biological diversity and ecological integrity - namely, that conservation of biological diversity and ecological integrity should be a fundamental consideration, (d) improved valuation, pricing and incentive mechanisms - namely, that environmental factors should be included in the valuation of assets and services, such as: (i) polluter pays - that is, those who generate pollution and waste should bear the cost of containment, avoidance or abatement, (ii) the users of goods and services should pay prices based on the full life cycle of costs of providing goods and services, including the use of natural resources and assets and the ultimate disposal of any waste, (iii) environmental goals, having been established, should be pursued in the most cost effective way, by establishing incentive structures, including market mechanisms, that enable those best placed to maximise benefits or minimise costs to develop their own solutions and responses to environmental problems. Section 7 General functions of Authority (1) The Authority has such environment protection and other functions as are conferred or imposed on it by or under the environment protection legislation or any other legislation. (2) The Authority has general responsibility for the following: (a) ensuring that the best practicable measures are taken for environment protection in accordance with the environment protection legislation and other legislation, (b) co-ordinating the activities of all public authorities in respect of those measures, (c) inquiring into and reporting on the efficacy of those measures, (d) reviewing the regulatory framework for environment protection and advising on its rationalisation and simplification, (e) investigating and reporting on alleged non-compliance with environment protection legislation for the purposes of prosecutions or other regulatory action, (f) establishing a database on the state of the environment, (g) advising persons engaged in industry and commerce and other members of the community on environment protection, (h) advising the Government on methods to ensure the integration of the Authority's pollution approvals and licensing processes with the development consent process so that the importance of environment protection is recognised. (3) Persons may be employed in the Public Service under the Government Sector Employment Act 2013 to enable the Authority to exercise its functions. Note - Section 59 of the Government Sector Employment Act 2013 provides that the persons so employed (or whose services the Authority makes use of) may be referred to as officers or employees, or members of staff, of the Authority. Section 47A of the Constitution Act 1902 precludes the Authority from employing staff.

Land and Environment Court Act 1979 (LEC Act) Section 17 Class 1 - environmental planning and protection appeals The Court has jurisdiction (referred to in this Act as "Class 1" of its jurisdiction) to hear and dispose of the following - (a) appeals under Part 9.2 of the Protection of the Environment Operations Act 1997, …. Section 34 Conciliation conferences (1) If proceedings are pending in Class 1, 2 or 3 of the Court's jurisdiction, the Court - (a) may arrange a conciliation conference between the parties or their representatives, with or without their consent, and (b) if it does so, must notify the parties or their representatives of the time and place fixed for the conference. (1A) It is the duty of each party to proceedings where a conciliation conference has been arranged under subsection (1) to participate, in good faith, in the conciliation conference. (2) A conciliation conference is to be presided over by a single Commissioner. (3) If, either at or after a conciliation conference, agreement is reached between the parties or their representatives as to the terms of a decision in the proceedings that would be acceptable to the parties (being a decision that the Court could have made in the proper exercise of its functions), the Commissioner - (a) must dispose of the proceedings in accordance with the decision, and (b) must set out in writing the terms of the decision. (4) … … (7) Subject to this Act and the rules, the Commissioner disposing of, or hearing and disposing of, proceedings pursuant to subsection (3) or (4)(b) has and may exercise the functions of the Court. (8) The decision of the Commissioner under subsection (3) or (4)(b) is taken to be the decision of the Court. …. Section 39 Powers of Court on appeals (1) In this section, appeal means an appeal, objection, reference or other matter which may be disposed of by the Court in proceedings in Class 1, 2 or 3 of its jurisdiction. (2) In addition to any other functions and discretions that the Court has apart from this subsection, the Court shall, for the purposes of hearing and disposing of an appeal, have all the functions and discretions which the person or body whose decision is the subject of the appeal had in respect of the matter the subject of the appeal. (3) An appeal in respect of such a decision shall be by way of rehearing, and fresh evidence or evidence in addition to, or in substitution for, the evidence given on the making of the decision may be given on the appeal. (4) In making its decision in respect of an appeal, the Court shall have regard to this or any other relevant Act, any instrument made under any such Act, the circumstances of the case and the public interest. (5) The decision of the Court upon an appeal shall, for the purposes of this or any other Act or instrument, be deemed, where appropriate, to be the final decision of the person or body whose decision is the subject of the appeal and shall be given effect to accordingly. (6) Notwithstanding any other provision of this section, if an appeal relates to an application made to a council within the meaning of the Local Government Act 1993 or a consent authority within the meaning of the Environmental Planning and Assessment Act 1979 and that council or consent authority may not approve of, consent to, or deal with, or grant a permission in respect of, the application except after consultation with, or with the concurrence or approval of, any person or body - (a) the Court may determine the appeal whether or not the consultation has taken place and whether or not the concurrence or approval has been granted, and (b) in a case where the concurrence or approval has been granted - the Court may vary or revoke any conditions imposed by that person or body or may impose any conditions that could have been imposed by that person or body. (6A) (Repealed) (7) The functions of the Court under this section are in addition to and not in derogation from any other functions of the Court. (8) ….

Background

1. The MP Approval was issued on 18 May 2012 under the former s 75J of the Environmental Planning and Assessment Act 1979 (EPA Act). The MP Approval involved remediation of the soil at the Site and risk assessment of the groundwater. The main contaminants for which site-specific remediation goals or groundwater trigger values were developed are monochlorobenzene (MCB), ethylene dichloride (EDC), trichloloroethene (TCE), tetrachloroethene (PCE), 1,2-dichloroethane (1m2-DCA), vinyl chloride, dichlorodiphenyltrichloroethane (DDT), an organochlorine pesticide, and its degradation products dichlorodiphenyldichloroethane (DDD), and dichlorodiphenyldichloroethylene (DDE), hexachlorobenzene (HCB), total petroleum hydrocarbons (TPHs) including benzene, toluene, ethyl benzene, and xylene and polycyclic aromatic hydrocarbons (PAHs) including benzo(a)pyrene. Excavation and treatment of contaminated soil was completed at the end of 2015. The soil remediation work has effectively removed a substantial source of groundwater contamination from the soil, though some contribution from separate-phase contaminants in groundwater would be expected to continue. The MP Approval has been modified under the former s 75W of the EPA Act as follows:

• Modification 1 - was issued on 3 April 2013, which allowed for the construction of water treatment ponds.
• Modification 2 - was issued on 27 October 2015, which modified the MP Approval to include additional conditions around asbestos management and a long-term environmental management plan.
• On 28 June 2019, the Project was declared to be State significant development (SSD) for the purposes of the EPA Act. Accordingly, the MP Approval is now subject to the SSD modification pathway under s 4.55 of the EPA Act.
• Modification 3 (09_2147-Mod-3) - was issued on 24 March 2021 (Modification 3), which modified the development consent, including -
• A revised condition for the Long-Term Environmental Management Plan (LTEMP) for the Property; and
• Subdividing the Site into two lots and requiring easements, including a Public Positive Covenant to be registered on the new Lot 1.

1. On or around 12 May 2000 the Respondent granted the EPL No. 2149 to the Applicant. Between 29 April 2001 and 23 April 2015, the Respondent issued 10 EPL Variations to EPL No. 2149.
2. On or around 4 July 2016 the Applicant provided a Remediation Validation Report dated 22 March 2016 and LTEMP dated 16 June 2016 to the Respondent.
3. By late 2018 the Applicant had confirmed that its business operations had no foreseeable use for the Property as it had relocated its proximate operations and closed its Sydney office in Chatswood. Discussions with potential development partners for the Property commenced in mid-2019.
4. On or around 16 September 2019 the Applicant applied to surrender the EPL No. 2149 pursuant to s 80 of the POEO Act.
5. On 30 June 2020 the Respondent issued the 2020 EPL Variation in relation to EPL No. 2149. The Applicant appealed against the 2020 EPL Variation under s 58 of the POEO Act, and in particular in relation to Condition E1. The draft notice of variation of the EPL provided the following new condition E1 as follows: "E1 Establishment of Public Positive Covenant E1. E1.1 The Licensee must prepare and register a public positive covenant in accordance with section 88B of the Conveyancing Act 1919 with the following terms ('Covenant'): a) The prescribed authority that is imposing the public positive covenant is the EPA; b) The land on which the public positive covenant is to be registered is the Premises; c) The obligations imposed by the public positive covenant binds the Owner, as land owner, and all subsequent land owner(s) of the Premises; d) The obligations under the Covenant must extend to, and benefit, any other land required to be accessed in order to meet the requirements of the offsite groundwater monitoring under the GMP ('Off-site Land') and LTEMP, as determined by the EPA from time to time; e) The Owner must use its best endeavours to secure access to the Off-site Land at its own cost for the purposes of meeting the any requirements specified in the LTEMP and GMP; and f) The public positive covenant is to require the Owner to comply with all of its obligations under the LTEMP and the GMP, which should include a formal process to request access to monitoring wells where access has not been granted through informal requests; E1.2 The Covenant must be prepared, negotiated (if required) and registered on the Premises at the expense of the Licensee to the satisfaction of the EPA, prior to any subdivision of the Premises. The Licensee bears all costs associated with obtaining required consent from any persons against whom the Covenant is enforceable. E1.3 The Covenant must be registered by the date notified to the Licensee in writing by the EPA. E1.4 The Licensee must ensure that the Covenant incorporates the most recent version of the LTEMP and GMP (as approved and determined by the EPA) at all times, including arranging the variation of the Covenant at its own cost. E1.5 In these special conditions: a) 'EPA' means the New South Wales Environment Protection Authority. b) 'Licensee' means Orica Australia Pty Ltd ACN 004 117 828. 15 c) 'GMP' means the most recent version of the Groundwater Monitoring Plan as determined by the EPA, which may be amended or replaced by the EPA at any time. d) 'LTEMP' means the most recent version of the Long-Term Environmental Management Plan for the Premises as determined by the EPA, which may be amended or replaced by the EPA at any time. e) 'Off-site Land' means the land required to be accessed in order to meet the off-site groundwater monitoring requirements of the GMP. f) 'Owner' means Orica Limited ACN 004 145 868, and any current or future owner(s) of the Premises. g) 'Premises' means: i. Lot 1 DP 634604, being known as 2 Christina Road Villawood NSW 2163; ii. any subsequent lot(s) or parcel(s) of land which result from the subdivision of Lot 1 DP 634604; and iii. the amalgamation of titles which include Lot 1 DP 634604."
6. On or around 6 May 2020, the Respondent emailed the Applicant a copy of the Environmental Risk Assessment (No. 4012147) for the Property and confirmed that the overall regulatory priority for the Property had changed from 'moderate' to 'low'.
7. The parties prepared a table setting out each party's position in relation to the proposed Condition E.1 itemising each requested amendment. The table formed a practical basis for negotiating an agreement on the terms of Condition E1 to the 2020 EPL Variation.
8. The Court arranged a conciliation conference on 16 December 2020 and 18 March 2021 between the parties at which the parties reached an in-principle agreement regarding the variation of Condition E1 of the 220 EPL Variation. The s 34 in-principle agreement was subject to the Department of Planning and Infrastructure granting consent to Modification 3 to the MP Approval. I presided over the s 34 conciliation conference.
9. The s 34 Agreement dated 13 April 2021 involved the parties agreeing to: 1. Modification 3 to the MP Approval being granted by the Department of Planning and Infrastructure; 2. Condition E1 to the 2020 EPL being replaced with the condition E1 annexed and marked "A". Condition E1 provides for the establishment of a Public Positive Covenant together with 88B and 88E instruments (annexed and marked "B") to ensure, inter alia, the implementation of the Long-Term Environmental Management Plan dated 23 April 2020 prepared by JBS&G Australia Pty Ltd and the Groundwater Management Plan (or any subsequent version or replacement of either plan as approved the appointed Site Auditor and the Respondent).

Jurisdictional prerequisites

1. Under s 34(3) of the LEC Act, I must dispose of the proceedings in accordance with the parties' decision if the parties' decision is a decision that the Court could have made in the proper exercise of its functions. The parties' decision involves the Court exercising its functions under s 39(2) and s 34(3) of the LEC Act which gives it all the functions and discretions of the EPA with respect to the appeal against Condition E1 of the 2020 EPL Variation. There are jurisdictional prerequisites that must be satisfied before this function can be exercised. The parties identified the jurisdictional prerequisites of relevance in these proceedings and explained how the jurisdictional prerequisites have been satisfied. 1. The EPA has the power to vary conditions of an EPL pursuant to s 58 of the POEO Act. 2. Under s 17(a) of the LEC Act, the Court has jurisdiction to hear and dispose of appeals under Part 9.2 of the POEO Act, including appeals regarding EPL applications and EPLs under s 287(1)(a) and (b) of the POEO Act. 3. The parties have identified the jurisdictional prerequisites of particular relevance for the Court to consider when exercising the power of the EPA to vary 2020 EPL Variation to EPL No. 2149 pursuant to s 58 of the POEO Act as follows: 1. the objects set out in s 3 of the POEO Act, including the object of "ecologically sustainable development" (s 3(a)). 2. the objectives of the EPA set out in s 6 of the Protection of the Environment Administration Act 1991 (POEA Act), including - 1. the "need to maintain ecologically sustainable development" (s 6(1)(a)); and 2. the objective that: environmental goals, having been established, should be pursued in the most cost effective way, by establishing incentive structures, including market mechanisms, that enable those best placed to maximise benefits or minimise costs to develop their own solutions and responses to environmental problems (s 6(2)(d)(iii)) 1. the objectives set out in s 6(1)(b) of the POEA Act and s 3(d) of the POEO Act, including the need to reduce risks to human health and prevent degradation of the environment by the use of mechanisms that promote the following: 1. pollution prevention and clean production; 2. the reduction to harmless levels of the discharge of substances likely to cause harm to the environment; 3. the making of progressive environmental improvements, including the reduction of pollution at source; and 4. the monitoring and reporting of environmental quality on a regular basis; 1. the pollution being or likely to be caused by the carrying out of the activity or work concerned and the likely impact of that pollution on the environment (POEO Act, s 45(c)); 2. the practical measure that could be taken to: 1. prevent, control, abate or mitigate that pollution; and 2. protect the environment from harm as a result of that pollution (POEO Act, s 45(d)); 1. the principle of subsidiarity which indicates that the licence holder should have the choice of actions that might best achieve the mandated outcomes and the Applicant is best placed to develop cost effective solutions to the environmental problem Jeffman Pty Ltd and Lawrence Dry Cleaners Pty Ltd v Environment Protection Authority of NSW, Sydney Water Corporation and Douglas and Hilary Hutchinson [2011] NSWLEC 89 per Preston CJ at [85] and [99]; 2. the economic impacts of the Court's decision on the licence-holder and other adverse economic impacts of the decision; 3. the responsibility of the Respondent to ensure that the best practicable measures are taken for environment protection in accordance with environmental protection legislation and other legislation (POEA Act, s 7(2)(a)); 4. the Court should, and must only, exercise the power in a manner which is proportionate to the purpose/s for which the power is exercised; 5. the Court should not, and must not, vary a licence in order to achieve an environmental objective if the adverse impacts of that decision are such that the variation is disproportionate to the environmental objective; and 6. the Court is permitted to consider the EPA's policies.
2. The parties consider that the jurisdictional prerequisite to the proper exercise of the power to vary EPL 2149 pursuant to the 2020 EPL Variation have been met. I accept the jurisdictional prerequisites identified by the parties, and note that the appeal to the Court was lodged within the time limit of 21 days after being given notice of the decision of the EPA, in accordance with Part 9.2, s 287(a) of the POEO Act. The EPA issued the 2020 EPL Variation on 30 June 2020 and the Applicant appealed to this Court on 20 July 2020.
3. I accept that the EPA has taken into consideration the following matters under Part 3.1 s 45 (d) of the POEO Act: (i) to prevent, control, abate or mitigate that pollution, and (ii) to protect the environment from harm as a result of that pollution.
4. I further accept that the EPA has taken into consideration its objectives as set out in s 6, and has properly carried out its functions as set out in s 7 of the POEA Act.
5. I am satisfied that the parties' decision is one that the Court could have made in the proper exercise of its functions, as required by ss 34(3) and 39 of the LEC Act. The amended Condition E1 as set out in Annexure A (noting the ss 88B and 88E instruments set out in Annexure B) ensure that in the long term the Property and the environment will be protected from harm as a result of the potential pollution existing on the Property. Steps have been taken to prevent, control, abate and mitigate that pollution. As the parties' decision is a decision that the Court could have made in the proper exercise of its functions, I am required to dispose of the proceedings in accordance with the parties' decision.
6. The Court Orders that: 1. The appeal is upheld. 2. Condition E1 of the Environment Protection Licence No. 2149 as varied by Notice of Variation of Licence No. 2149 (being notice number 1591821), is varied by replacing that condition with the condition annexed and marked "A".
7. The Court notes that: 1. The parties have agreed that each party will pay its own costs. 2. The agreement of the Applicant, Orica Australia Pty Ltd, and the Respondent, Environment Protection Authority, that: 1. In relation to Order (2), any easement and public positive covenant to be imposed under sections 88B and 88E of the Conveyancing Act 1919 (NSW) are to be in the terms set out in the instrument annexed hereto and marked "B"; 2. The Environment Protection Authority will expeditiously (and using its best endeavours within 2 business days) do all things necessary to execute and return to Orica Australia Pty Ltd the ss 88B and 88E Instruments in registrable form.

Acting Commissioner of the Court Annexure A (133124, pdf) Annexure B (303608, pdf)

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. Decision last updated: 22 April 2021