Terminals Pty Ltd trading as Quantem v Environment Protection Authority

Representation: Counsel:
J Caldwell (Applicant)
C Butler (Solicitor)(Respondent)
Solicitors:
Herbert Smith Freehills (Applicant)
Environment Protection Authority (Respondent)

File Number(s): 2025/248626

Publication restriction: Nil

Judgment

1. COMMISSIONER: This is an appeal under s 287(1) of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act).

2. The appeal falls within Class 1 of the Court’s jurisdiction pursuant to s 17(a) of the Land and Environment Court Act 1979 (NSW) (LEC Act).

3. The Court has jurisdiction pursuant to s 17(a) of the LEC Act to hear and dispose of an appeal under Pt 9.2 of the POEO Act, including an appeal regarding a decision about a licence under s 287(1) of the POEO Act.

4. The statutory power or function to be exercised in determining the proceedings are s 292(1) and (2) of the POEO Act, and s 39(2) of the LEC Act.

5. The Applicant is the holder of Environmental Protection Licence No 1048 (the Licence) being a licence under Ch 3 of the POEO Act, which conditionally permits the Applicant to carry out the scheduled activities listed in Schedule 1 of the POEO Act of “chemical storage”, “petroleum products and fuel production”, “shipping in bulk” and “waste storage” (the scheduled activities). The scheduled activities are carried out on Lot 17 and 18 in DP1126332, Lot 6 in DP1292529 and Lot 102 and 103 in DP1182871 known as 45 and 51 Friendship Road, Port Botany NSW 2036 (the Premises), where the Applicant operates a bulk liquid storage facility.

6. The Court arranged a conciliation conference under s 34(1) of the LEC Act between the parties, which was held on 6 February 2026. I presided over the conciliation conference.

7. At the conciliation conference, the parties reached agreement as to the terms of a decision in the proceedings that would be acceptable to the parties. The parties filed a s 34(3) Agreement on 2 March 2026 prior to the proposed adjourned conciliation conference on 6 March 2026.

8. 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 the function under s 292(1) and (2) of the POEO Act and s 39(2) of the LEC Act to uphold the appeal and amend the Licence Variation in accordance with Annexure A.

9. 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 they have been satisfied as set out below.

10. Section 58 of the POEO Act authorises the Respondent to vary an environmental protection licence, including by attaching a condition to a licence, on application by the licence holder or on its own initiative, at any time during the currency of the licence. Section 58(5) provides that a licence is varied by notice in writing given to the holder of the licence.

11. The subject of this appeal is the decision of the Respondent to vary the Licence as per the Notice of Variation of Licence No 1048 (Notice No 1649397) issued by the Respondent on 11 June 2025 (Licence Variation).

12. The Licence Variation attaches new (additional) conditions to the Licence, namely Conditions E3.1 to E3.6, which require the Applicant to cause a mandatory environmental audit to be undertaken to evaluate the scheduled activities carried out at the Premises, including an evaluation of its management practices, systems and plant.

13. Being the holder of the Licence, the Applicant is a person aggrieved by the Licence Variation decision giving it the right to appeal to the Court pursuant to s 287(1) of the POEO Act.

14. Chapter 3 of the POEO Act is titled “Environment protection licences”, ss 45 and 58 sets out the matters that the Respondent is required to take into consideration in exercising its licensing functions.

15. Section 45 of the POEO Act is relevant for the Court, particularly –

45 Matters to be taken into consideration in licensing functions

…

(b) the objectives of the EPA as referred to in section 6 of the Protection of the Environment Administration Act 1991,

(c) the pollution caused 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,

(d) the practical measures that could be taken—

(i) to prevent, control, abate or mitigate that pollution, and

(ii) to protect the environment from harm as a result of that pollution,

…

16. Section 67 of the POEO Act provides that the conditions of a licence may require the holder of the licence to comply with the requirements of a mandatory environmental audit program in accordance with Ch 6 of that Act.

17. Chapter 6 of the POEO Act concerns “Environmental audits”. The following provisions in Ch 6 are of particular relevance to the Court in exercising the functions of the Respondent in imposing a mandatory environmental audit:

172 Nature of environmental audit

An environmental audit is a documented evaluation of an activity (including an evaluation of management practices, systems and plant) for either or both of the following purposes—

(a) to provide information to the persons managing the activity on compliance with legal requirements, codes of practice and relevant policies relating to the protection of the environment,

(b) to enable those persons to determine whether the way the activity is carried on can be improved in order to protect the environment and to minimise waste.

…

174 Conditions for mandatory environmental audits

(1) The conditions of a licence may require a mandatory environmental audit to be undertaken to the satisfaction of the appropriate regulatory authority.

(2) Such a condition must specify the purpose of the audit.

(3) Such a condition may require—

(a) appointment of an environmental auditor to undertake the audit, and

(b) approval by the appropriate regulatory authority of the environmental auditor before being appointed, and

(c) preparation of written documentation during the course of the audit, and

(d) preparation of an audit report, and

(e) production to the appropriate regulatory authority of the audit report.

(4) Such a condition may—

(a) specify the format and level of detail required for the audit, or

(b) require the environmental auditor to submit the proposed format and level of detail to the appropriate regulatory authority for approval.

175 Circumstances in which mandatory environmental audit can be imposed

Conditions requiring the undertaking of a mandatory environmental audit may only be imposed if—

(a) the appropriate regulatory authority reasonably suspects—

(i) that the holder of the licence has on one or more occasions contravened this Act, the regulations or the conditions of the licence, and

(ii) that the contravention or contraventions have caused, are causing or are likely to cause, harm to the environment, or

(b) the appropriate regulatory authority reasonably suspects that an activity has been or is being carried out by the holder of the licence in an environmentally unsatisfactory manner (within the meaning of section 95).

18. I have also considered the objects of the POEO Act as set out below:

3 Objects of Act

The objects of this Act are as follows—

(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,

(b) to provide increased opportunities for public involvement and participation in environment protection,

(c) to ensure that the community has access to relevant and meaningful information about pollution,

(d) to reduce risks to human health and prevent the degradation of the environment by the use of mechanisms that promote the following—

(i) pollution prevention and cleaner production,

(ii) the reduction to harmless levels of the discharge of substances likely to cause harm to the environment,

(iia) the elimination of harmful wastes,

(iii) the reduction in the use of materials and the re-use, recovery or recycling of materials,

(iv) the making of progressive environmental improvements, including the reduction of pollution at source,

(v) the monitoring and reporting of environmental quality on a regular basis,

(vi) the proper environmental management of chemicals throughout their whole lifecycle,

(e) to rationalise, simplify and strengthen the regulatory framework for environment protection,

(f) to improve the efficiency of administration of the environment protection legislation,

(g) to assist in the achievement of the objectives of the Waste Avoidance and Resource Recovery Act 2001.

19. Taking in consideration the matters set out above, 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 s 34(3) of the LEC Act.

20. As the parties’ decision is a decision that the Court could have made in the proper exercise of its functions, I am required under s 34(3) of the LEC Act to dispose of the proceedings in accordance with the parties’ decision. Pursuant to s 292(1) and (2) of the POEO Act and ss 34(3) and 39(2) of the LEC Act, I shall uphold the appeal, revoke the decision to vary Environment Protection Licence No 1048 set out in the Notice of Variation No 1649397 and vary the Licence No 1048 in accordance with Annexure A.

21. The Court notes:

22. The agreement between the parties that, in coming to an agreement under s 34(3) of the LEC Act, the Respondent has given an undertaking to the Applicant that it will not rely on any information or records provided to it in the course of a mandatory environmental audit (to be undertaken pursuant to the conditions in Annexure A) against the Respondent, its directors or managers as evidence in any criminal proceeding arising from the alleged incident involving the leak of benzene, toluene, xylene and hydrogen sulphide (Incident) that is the subject of proceedings 2025/50389 – 50397, 50399 and 2025/181140 – 181143 in the Land and Environment Court of NSW, other than information and/or records that have already been provided, or were required to be provided, to the Respondent in the course of its investigation into the Incident.

23. The agreement between the parties that each party is to bear its own costs.

24. The Court orders:

25. The appeal is upheld.

26. The decision to vary Environment Protection Licence No 1048 set out in the Notice of Variation No 1649397 is revoked.

27. Environmental Protection Licence No 1048 is varied by Annexure A.

M Peatman

Acting Commissioner of the Court

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Annexure A (175 KB, pdf)