Land and Environment Court of New South Wales CITATION : Environment Protection Authority v Simplot Australia Pty Ltd [2001] NSWLEC 40 PROSECUTOR: Environment Protection Authority PARTIES : DEFENDANT: Simplot Australia Pty Ltd FILE NUMBER(S) : 50049; 50050; 50051 of 2000 CORAM: Bignold J KEY ISSUES: Environmental Offences :- polluting waters - plea of guilty—mitigating factors - Appropriate sentence LEGISLATION CITED: Protection of the Environment Operations Act 1997, s 120(1) CASES CITED: EPA v Devro-Teepak Pty Ltd (2000) NSWLEC 275; R v Olbrich (1999) 199 CLR 270 DATES OF HEARING: 7 March 2001 DATE OF JUDGMENT: 03/07/2001 PROSECUTOR: Mr D Galpin, Barrister SOLICITORS Environment Protection Authority LEGAL REPRESENTATIVES: DEFENDANT: Mr B J Preston, SC SOLICITORS Andersen Legal JUDGMENT: IN THE LAND AND Matter No. 50049, 50050, 50051 of 2000 ENVIRONMENT COURT OF Coram: Bignold J. NEW SOUTH WALES 7 March 2001 ENVIRONMENT PROTECTION AUTHORITY Prosecutor v SIMPLOT AUSTRALIA PTY LIMITED Defendant JUDGMENT Bignold J: A. INTRODUCTION 1. The Defendant has pleaded guilty to two separate charges of an offence against the Protection of the Environment Operations Act 1997, s 120(1), (PEO Act) in that between 1 and 19 August 1999 (the first charge) and on 4 September 1999 (the second charge) at Bathurst, it polluted waters. By consent, the charges were heard together. 2. At the commencement of the hearing, the Prosecutor informed the Court that a third charge of the same offence against the Defendant as alleged in the Summons filed in proceedings 50049 of 2000 was to be withdrawn and that concurrently, with its reserved judgments on sentence, the Court would be asked to make orders by consent, dismissing that summons with no order as to costs. 3. The two charges that have been proceeded with, are respectively particularised in each of the summonses as follows— (i) The first charge Pollution/Pollutant: Matter containing: matter that causes biochemical oxygen demand; and/or oil and/or fat; and/or vegetable matter and/or batter. Waters an open storm water drain leading to Raglan Creek, and downstream thereof". (ii) The Second Charge Pollution/Pollutant: Matter containing: (i) caustic soda; and/or (ii) matter that causes biochemical oxygen demand; and/or (iii) oil and/or fat. Waters an open storm water drain leading to Raglan Creek, and downstream thereof". 4. The PEO Act s 120(1) provides: A person must not pollute any waters." 5. The dictionary to the Act defines "waters" and "water pollution" in very broad terms and the latter definition includes "placing any matter (whether solid, liquid or gaseous) in a position where it descends…into any drain channel or gutter used or designed to receive or pass rainwater…." 6. As particularised, the Prosecutor relies on paragraph (d) of the statutory definition of "water pollution" in that in both charges the relevant "waters" are specified as the open storm water drain leading to Raglan Creek and downstream thereof. B. FACTS CONCERNING THE POLLUTION INCIDENTS 7. The Court has been assisted by the parties providing an Agreed Statement of Facts (Exhibit 1) from which I extract the following summary of relevant facts. (Additionally, the Defendant relies upon the evidence of (i) Ms Susan Pilkington, its National Risk Manager and (ii) Mr Paul Anink, an environmental scientist specialising in marine and freshwater pollution. The effect of this evidence will be summarised in the context of my consideration of mitigating factors relied upon by the Defendant.) (i) Background facts 8. The Defendant owns and operates nine food processing facilities in various locations in Australia, employing over 2,500 people, one of those plants (the subject of the present proceedings) being a processing facility located at Kelso near Bathurst in New South Wales which has 140 permanent employees and up to 70 casual employees. The latter premises have been operated as a frozen food processing plant since 1980, with the Defendant so operating them since 1995. At the premises, frozen seafood and snack products such as fish fingers, corn fritters and fish cakes are produced. This process generates organic waste by-products such as batter (flour and water), vegetable oil (canola oil), corn, carrots, other vegetables, meats and fish. These wastes are treated at the Defendant's own premises by a trade waste system. 9. At the time of the commission of the offences, the Defendant's trade waste system was operated in the following manner. All waste water generated by the manufacturing process was directed to a pit located on the southern side of the building (referred to as the 'Telecom Pit') and then pumped through a pipe which traverses the roof of the plant building, to a tank and thence to a DAF treatment tank. After the last-mentioned treatment is undertaken to remove sludges, oils, fats and solids (which are extracted and held in the 'sludge tank') the treated effluent is discharged to the sewer under a trade waste agreement with the Bathurst City Council. 10. The Defendant also operates under specific and detailed working procedures for its trade waste operation, and detailed protocols (which are continually updated) are in place designed to deal with, inter alia the handling of waste materials. (ii) The First Pollution Incident 11. Sometime between 10 and 12 August 1999 pollutants escaped from the tradewaste system into an underground storm water pipe which leads to an open storm water drain into which drain stormwater pipes from the Defendant's premises, as well as other industrial premises situate in the locality, drain. The open drain traverses a distance of 320 m where it terminates at a flood levee where it discharges through an open pipe located under the levee. On the other side of the levee there is an area of wetlands comprising some isolated ponds without any defined channel leading to Raglan Creek situate some 20 metre distant and which Creek is a tributary of the Macquarie River. 12. The pollutant material was discovered by an EPA officer (during a routine inspection of premises in the area) in the open storm water drain. It consisted of vegetable oil and fat, having an appearance that matched the type of waste produced by the Defendant, and the sludge material covered the drain from bank to bank over a distance of 40-50 metres measured from the commencement of the open drain (ie located at its most distant point from the wetlands and Raglan Creek).. 13. Three samples were taken of the pollutant, and upon analysis each one revealed very high BOD levels (28,000; 38,000; and 99,000 mg/L respectively). One sample contained high nitrogen levels (1100 mg/L) and phosphorus levels (97 mg/L). Both these measured levels greatly exceed the recommended concentrations as set by the ANZECC (1992) National Guidelines for the Protection of Aquatic Ecosystems. The other two samples showed much lower concentrations of nitrogen and phosphorus (being 0.9 mg/L and 0.12 mg/L respectively) almost complying with the Guidelines. 14. Upon being notified of the discovery of the pollution incident, representatives of the Defendant inspected the site of the contamination, and initially concluded that although the material looked like their type of waste by-product, the identification of the substance could not be known for certain, and no spills had been reported at the plant. Dye tests carried out on 19 August confirmed that one of three stormwater pipes that led to the open storm water drain originated from the Defendant's property and upon inspection, all the pits connected to the storm water pipeline, except for those down stream of the Defendant, were dry and had no indication of oil or fatty material or deposits in the drains. 15. On 20 August 1999 the clean-up operation was undertaken by the Defendant with approximately 80 tonnes of 'sludge' material and clay being removed by truck (49 tonnes of the material being pollutant). A coffer dam was placed downstream of the pipe inlet to the open drain and a total of 37,000 litres of liquid were pumped out - about 2,600 litres of this being pollutant (600 litres of oil scum and 2,000 litres of sludge). Prior to the removal of the pollutant, turtles were observed in the material, and appeared to be distressed and immobilised and four dead carp fish were observed floating in the water. 16. On 21 August 1999 remediation of the site was undertaken by the Defendant, such works comprising the deposition of sand and gravel into the base of the drain. It should be noted that the totality of the clean-up and remediation works were done at the expense of the Defendant notwithstanding that at that point in time it was not known or determined exactly from whence the pollution had originated. It should also be noted that the Defendant complied fully with Prosecutor's investigation of the pollution incident eg by providing records of plant production for the weeks commencing 2, 9, 16 August 1999 and waste tank disposal records etc. 17. It was not until 16 September 1999, that the cause of the pollution incident was ascertained when Mr Warren Smith, the Defendant's day-shift trade waste operator, informed the EPA's investigating officer that on 12 August 1999, whilst undertaking a routine inspection of the trade waste pipe (having an 80 mm internal diameter) which carries waste from the trade waste pit to the trade waste tank, he had noticed the pipe broken directly above the roof guttering. (As stated earlier, the pipe traverses the roof of the plant building.) The breakage was repaired with glue and the supervisor of the day was notified and the incident was recorded on the worker's job sheet. 18. According to rainfall figures obtained from the Bureau of Meteorology, in the period of 24 hours until 9am on 13 August 1999, 30.4 millimetres fell in the Bathurst area, with the consequence that the pollutant emanating from the broken pipe was likely to have been washed down from the roof, into the downpipe and thence travelled through a series of pipelines into the open storm water drain. The pipe traversing the roof had remained in a broken state for a maximum period of 57 hours, being the intervening period between the inspection undertaken on 12 August 1999 when the pipe was observed to be broken and the previous inspection that had occurred on 10 August 1999. (iii) The Second Pollution Incident 19. On 4 September 1999 at about 10.30am, EPA investigating officers attended the open storm water drain and observed vegetable oil was floating down the drain. Earlier that morning, employees of the Defendant had carried out cleaning duties at the factory, including cleaning out a bunded area around the canola oil tanks. The bunded area contained a pit fitted with an automatic pump system. In order to routinely empty the pit, the automatic pump system would normally pump material to the trade waste treatment plant. However, there was the possibility of an alternative route, operated by a valve, which was controlled by a lever which allowed the material to be directed to an old interceptor pit which was connected to the stormwater system. Due to the pollution risk associated with pumping to the old interceptor pit the Defendant had not operated the alternative system by chaining and padlocking to the closed position the valve lever, so that discharges from the bunded area could only be directed to the trade waste system. 20. At some point in time before the bunded area was cleaned, the chain fastening the lever had been broken and the lever moved so that the caustic solution and oils from the washing down process were unintentionally directed to the storm water drain via the old interceptor pit, the operator of the pump not being aware that the lever had been so moved from its locked position. Following this incident, the Defendant eliminated the alternative route by cutting and plugging the pipe leading from the bunded area to ensure that polluted material could never escape that way again, and the triple interceptor pit, once the liquid was pumped out, was completely cemented up, ensuring no material could enter the storm water system via that point. On 8 September 1999 the Defendant carried out a clean-up operation of all its drains leading to the storm water system. 21. Although it is not known how much canola oil was present in the drain, some 30,000 litres of liquid were pumped out by a tanker truck as part of the clean up operation. (iv) Environmental Effects of the First Pollution Incident 22. As noted earlier, the pollutants consisted of organic waste being vegetable oil (canola oil) butter, fat, corn and carrots, being matter that upon analysis, revealed very high levels of biochemical oxygen demand, and high levels of phosphorous and total kjeldahl nitrogen. 23. Additionally, all samples showed low ph levels (4 and 5), being below the lower limit of 6.5 mg/L for the protection of aquatic ecosystems set by the ANZECC Guidelines. 24. Ecotoxicological test results achieved by applying various dilutions of the samples to cladocerans less than 24 hours old (small freshwater invertebrates which are important in food webs as they eat algae and are eaten by fish) demonstrated toxicity to cladocerans. 25. Two of the three samples produced extremely low levels of Dissolved Oxygen (0-10 per cent) being levels that "could most likely cause fish and invertebrate death in the open storm water channel" and is the "most likely cause of the death of the number of small carp fish" that were observed by the investigating EPA officers to be floating in the oil in the open drain. (v) Environmental Effects of the Second Pollution Incident 26. Two samples were taken of the pollutant in the open stormwater drain soon after its discovery, with both samples recording levels of 9 to 10 pH, being levels that were at or above the upper guideline limit recommended in the aforesaid ANZECC (1992) Guidelines. The levels of pH for three other samples taken later in the day showed levels of approximately 6 and 7 being within the Guidelines. The cleaning process carried out on the morning of 4 September employed the use of a caustic solution which was strongly alkaline. It appears that the waste oil and caustic solution were discharged to the stormwater drain from the Defendant's premises. C. MITIGATING FACTORS 27. The following is a summary of the mitigating factors that operate in favour of the Defendant and justify a significant reduction in penalty— (i.) the earliest plea of guilty was entered to the charges; (ii.) the Defendant's excellent character and reputation including its previous unblemished record in respect of its obligations under environmental laws; (iii.) the Defendant's entire co-operation with the EPA investigations conducted into the pollution incidents; (iv.) the Defendant's ready and early assumption of responsibility for the environmental clean-up and remediation involving an overall cost of $108,000 (which included the obtaining by the Defendant of a Permit under Part 3A of the Rivers and Foreshores Improvement Act 1948 for rehabilitation of the open drain) at a time before its legal responsibility for the pollution incident had been established; (v.) the Defendant's ready responsiveness to the two pollution incidents resulting in immediate changes to the relevant operational protocols to provide for daily, rather than weekly checking of the relevant pipework employed in the trade waste system and for the daily physical inspection of the open drain and ultimately in a commitment by the Defendant to the commissioning of a new trade waste system costing some $850,000 soon to be operational. In short, action taken by the Defendant subsequent to the dates of the offences means that there is no possibility of either of the pollution incidents being repeated; (vi.) the Defendant's commitment to ongoing environmental responsibility inasmuch as the majority of its waste materials are now being recycled by being employed in the production of soil conditioner; (vii.) the Defendant has expressed publicly to the Court is genuine regret and contrition for the commission of these two environmental offences; (viii.) although the cause of each of the pollution incidents had ex post facto demonstrated to the contrary, the Defendant had in place at the dates of the offences management and operational procedures and measures which it believed had adequately addressed the identified risk of pipe failure etc; (ix.) the Defendant had agreed to pay the Prosecutor's costs in the sum of $16,500; (x.) the following expert opinion of Mr Anink (which I accept) expressing the "conclusion" of his report "on the aquatic ecological implications arising from two discharges of food processing wastes on or about 13 August 1999 and 4 September 1999 to an open stormwater drain leading to Raglan Creek, attributory of the Macquarie River at Bathurst". The aquatic ecological impact of the combined incidents was judged to be a short term pulse perturbation on the depauperate aquatic fauna at the head of the stormwater drain, following the first incident only. The first incident resulted in the death of four juvenile introduced carp (a pest species). It would appear from the locations at which the fish were found that the deaths were caused by direct contact with the waste materials discharged. That is, the fish died of oxygen starvation when they became trapped in the high BOD food waste material. There is no indication of aquatic communities downstream of the immediate area of spillage (either in the remainder of the drain, in Raglan Creek or the Macquarie River) being impacted by either of the incidents and it is concluded that there would have been no significant impact on the aquatic biota in these locations. 28. It is to be noted that Mr Anink's Report contains the following discussion relevant to his use of the term "short term pulse perturbation": To predict and measure the effects of an incident in an aquatic habitat, it is important to identify the nature of the disturbance and how the components of the aquatic ecosystem may respond. It is important to recognise, however, that a particular disturbance may not cause a detectable response (ie have a significant effect ). Scientists often distinguish between a disturbance which is some change in the physico/chemical environment, and a perturbation which is the disturbance plus some measurable ecological response (impact). These issues have been given considerable attention by ecologists, in relation to natural and human induced perturbations (see DUAP 1998). Disturbances can vary in the manner of effect with respect to time and magnitude. There are three types of disturbance commonly identified; press, pulse and catastrophic disturbances: · A pulse disturbance is an acute, short-term episode of disturbance, which may cause a temporary response in a population. · A press disturbance is a sustained or chronic disturbance to the environment, which may cause a long-term response. · A catastrophic disturbance is a major destruction of habitat from which populations are unlikely to recover in that area because the habitat has been removed or changed in some way which would require, for recovery, active remedial work. 29. I should say a few things about my acceptance of Mr Anink's opinions. Firstly, his evidence was the only evidence concerning the condition of the aquatic environment of the open drain leading to Raglan Creek. Secondly, in accepting his opinion, which included the opinion of the "depauperate aquatic fauna at the head of the stormwater drain", the relevant standard of proof is, satisfaction or the balance of probabilities: see R v Olbrich (1999) 199 CLR 270. Thirdly, his opinion evidence is not contrary to any of the agreed facts. Fourthly, under cross-examination, he admitted that there was a potential in the event of heavy rain with greater water flow in the drain, for the sludge sediment that was confined to the first 50 m of the open drain to scour the drain by movement and to enter the waters of Raglan Creek. However, this potentiality was not realised and the only pollutant material to find its way through the discharge pipe in the levee bank was a small quantity of oily water which was observed in some of the isolated ponds in the wetlands. D. APPROPRIATE SENTENCE 30. The maximum penalty prescribed for the admitted offences is $250,000 when, as is the present case, the Defendant is a corporation: vide the PEO Act, s 123. 31. The maximum penalty prescribed for this offence is double the maximum penalty that was imposed under s 16 of the Clean Waters Act 1970 for the same offence (that Act having been repealed by the PEO Act on 1 July 1999). 32. The offence created by s 120 of the PEO Act is a tier 2 offence under the Act and is thereby not the most serious environmental offence created by the Act. The offence is also one of strict liability: See EPA v Devro-Teepak Pty Ltd (2000) NSWLEC 275. 33. The parties' respective submissions on sentence, in the result, do not greatly diverge. For example, both submissions accept (i) each charge justifies the recording of a conviction and the imposition of a penalty; (ii) that the combined effect of the several mitigating factors justifies a significant reduction in the respective penalties to be imposed; (iii) that the totality principle of sentencing should be applied; and (iv) that the second offence should be regarded within the low to mid range scale of gravity. 34. The only potentially significant difference between the parties' submissions is that the Defendant submits that the first offence should also be graded as a low to mid range offence, whereas the Prosecutor submits that it should be graded as a mid range offence. More particularly, the Prosecutor submits that the first offence should receive a penalty similar to that recently imposed in the Devro-Teepak case ie $60,000 reflecting the result of a notional 40 per cent of the maximum penalty ie $100,000 less 40 per cent discount for mitigating factors, whereas the Defendant submits that the penalty called for in the present case should be less than that imposed in Devro-Teepak because of important factual differences in the cases, particularly those concerned with the degree of criminal culpability involved in the two cases. 35. As I have noted, in the ultimate result, even the competing submissions concerning the graduation within the overall spectrum of gravity, of the seriousness of the first offence are not really divergent to any significant extent. 36. Ultimately, I have concluded that the Defendant should be convicted of each charge and that a penalty of $45,000 should be imposed for the first offence and a penalty of $15,000 should be imposed on the second offence. 37. In so concluding, I am of the opinion that the objective seriousness of each of the offences, together with the Defendant's criminal culpability in committing them, calls for a mid range sentence in respect of the first charge and a low range sentence in respect of the second charge. However, in each case, the combined effect of the several mitigating factors justifies a maximum sentence reduction of 50 per cent. The sentences also reflect the need for general deterrence. 38. Accordingly, but for the sentence reduction factor, I would regard the first offence as justifying a mid range penalty of $90,000 (ie 36 per cent of the maximum penalty of $250,000) and the second offence as justifying a low range penalty, of $30,000 (ie 12 per cent of the maximum penalty of $250,000). 39. By applying the 50 per cent sentence reduction factor in each case, the resultant penalties of $45,000 and $15,000 respectively do not, in my judgment, require any further reduction by virtue of the totality principle of sentencing because the totality of the combined penalties (ie $60,000) is commensurate with my finding of the overall gravity or criminality of the Defendant in the commission of both offences. 40. In so concluding, I have had regard, in respect of both sentences, to the factors expressly enumerated in the POE Act, s 241. 41. My findings on those matters, which are reflected either in the Statement of Agreed Facts (Exhibit 1) or in my findings on the additional evidence reflected in my summary of "mitigating factors", can be summarised as follows: (a) Extent of Environmental harm 42. The first offence involved actual environmental harm by virtue of the death of four carp fish. 43. The second offence involved no actual environmental harm, save for the fact that "water pollution" occurred and hence by definition that water pollution relevantly constitutes "harm" as that term is defined in the POE Act to "include any act or omission that results in pollution". 44. However, both offences involved potential environmental harm inasmuch as had the pollutants not been confined to the open drain and not been removed therefrom, in addition to the temporary harm caused by their temporary presence within the drain, they could have caused actual environmental harm had they been transmitted to Raglan Creek eg by a storm event or greater water flow in the drain. (b) Practical measures that may have been taken to prevent, control abate or mitigate that harm 45. Practical measures were taken by the Defendant to abate or mitigate the harm by removing the pollutants from the open drain soon after their discovery. 46. Practical measures could, with reasonable foresight on the part of the Defendant (see my findings on "foreseeability") have prevented both pollution incidents, eg by daily monitoring of the open drain and trade waste system pipework especially as it traversed the roof of the plant, and by permanently eliminating the alternative route of directing to the stormwater system, the washdown contents of the bunded area. (c) Foreseeability of harm 47. Both causes of the pollution incidents were, in my judgment, reasonably forseeable by the Defendant. Even though it had in place operational protocols and systems which it believed adequately addressed the relevant risks, those systems did not prevent the occurrences of the pollution incidents when both systems could, with reasonable foresight, have reasonably done so eg by adopting the measures implemented by the Defendant subsequent to the offences to prevent a recurrence of the pollution incidents. (d) Extent to which the Defendant had control over the causes 48. The Defendant had complete control of its plant and equipment. As such, it had control over the separate causes of the two pollution incidents. Although it appears that the second incident involved some action by persons unknown tampering with the fixed lever, it was the apparent ignorance of this fact by the employee undertaking the cleansing operation of the bunded area, that caused that employee to pump the contents into the stormwater system, though he thought they were being pumped to the trade waste tank. 49. In other words, the pollution incident was not directly caused by the tampering activity. Rather, it was directly caused by the Defendant's employee discharging the contents of the bunded area in the manner employed, in apparent ignorance that the fixed lever had been tampered with. E. CONCLUSIONS AND ORDERS 50. For all the foregoing reasons, I make the following orders: 1. In Matter 50051 of 2000, the Defendant is convicted of the offence charged. 2. A penalty of $45,000 is imposed in respect of that conviction. 3. In Matter 50050 of 2000, the Defendant is convicted of the offence charged. 4. A penalty of $15,000 is imposed in respect of that conviction. 5. In Matter number 50049 of 2000, by consent, the Summons is dismissed with no order as to costs. 6. The Defendant shall pay the Prosecutor's costs in the agreed sum of $16,500. 7. Exhibits shall be returned other than Exhibit 1 (the Statement of Agreed Facts) which shall remain on the Court file. 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.