Land and Environment Court of New South Wales CITATION: Environment Protection Authority v BHP Steel (AIS) Pty Ltd [1999] NSWLEC 197 PARTIES PROSECUTOR Environment Protection Authority DEFENDANT BHP Steel (AIS) Pty Ltd NUMBER: 50141 of 1998 CORAM: Cowdroy J KEY ISSUES: Environmental Offences :- Plea of guilty - discharge of toxic chemicals into harbour - overflow resulting from simultaneous failure of pump and reserve pump - defendant adopting procedures to avoid possibility of repetition Protection of the Environment Operations Act s 241 LEGISLATION CITED: Environmental Offences and Penalties Act s 9 Clean Waters Act 1970 s 16 DATES OF HEARING: 08/23/1999 DATE OF JUDGMENT DELIVERY: 09/03/1999 PROSECUTOR Mr C Leggat (Barrister) SOLICITORS Environment Protection Authority LEGAL REPRESENTATIVES: DEFENDANT Mr M Brennan (Solicitor) SOLICITORS Blake Dawson Waldron JUDGMENT: The Charge 1. By summons class five issued on 22 December 1998 BHP Steel (AIS) Pty Ltd ("the defendant") was charged that on or about 2 April 1998 at or near Port Kembla it committed an offence against the Environmental Offences and Penalties Act 1989 ("the EOP Act") by polluting waters contrary to s 16(1) of the Clean Waters Act 1970 ("the CW Act"). The defendant has pleaded guilty to such charge and accordingly the question for determination is the assessment of penalty. The Facts 2. The evidence establishes that the defendant conducts the operation of steel-making at a very substantial industrial site at Port Kembla. In one portion of the steel works known as Gas Processing two flushing liquor pumps are used to pump flushing liquor from that operation to another undertaking known as the 7A Coke Ovens Battery. One such pump is known as the Electric 7A Flushing Liquor Pump ("the electric pump") and the other which is driven by a steam turbine is known as the 7A Flushing Liquor Turbine ("the reserve pump"). The electric pump is on constant duty whereas the latter is used as a reserve in the event that the principle pump malfunctions or is removed from service. 3. On Wednesday 1 April 1998 the electric pump failed at about 2.30 pm. On 2 April 1998 the reserve pump was observed to be operating normally. At about 4 pm on that day the electricians notified Mr Mark Ivor Antrobus, the supervisor that repairs to the electric pump panel which transmitted power to the electric pump had been completed. However upon testing it failed and the reserve pump resumed operation. Approximately an hour later an alarm sounded indicating low flushing liquor volume to the 7A Coke Ovens Battery. It was discovered the reserve pump had failed and in consequence an over-flow occurred from the 7A Flushing Liquor Tar Decanter No 10 and the No 3P Flushing Liquor Tank to yard drains in the Gas Processing Area. Such drains discharge into the 7A Settling Basin. Mr Antrobus was aware that any over-flow from such settling basin would flow into the Iron Making East Drain ("the IME drain") which then discharged into Port Kembla harbour. 4. Mr Antrobus endeavoured to expedite the repair of the electric pump but it was not until 6.40 pm that the overflow to the yard drains ceased. The report made by the defendant acknowledges the discharge was regarded as significant with potentially very serious environmental impacts. 5. As a consequence 560,000 L of flushing liquor was discharged and ultimately flowed into the waters of Port Kembla Inner Harbour via the IME drain. Such drain is a licensed discharge point known as 012 pursuant to licence no 000722 held by the defendant under the Pollution Control Act 1970 in relation to its Port Kembla Steel Works. The discharge classification in respect of such drain is as follows:- Drain, with likely daily discharge of more than 10,000 kilolitres. 6. Attached to the licence are details of the discharge point 012 described as follows:- Iron Making East Drain - Over-flow of Weir adjacent to sign marked Iron Making East Drain . Pursuant to the licence discharges of 7 mg/L of ammonia and 0.2 mg/L of cyanide was authorised from such discharge point. Statutory Considerations 7. The Protection of the Environment Operations Act 1997 ("the PEO Act") came into force on 1 July 1999, repealing inter alia, the Clean Waters Act 1970. Clause 17(3) of the Protection of the Environment Operations (Further Amendment) Regulation 1999 provide:- (3) The provisions of a repealed Act relating to orders that a court may make when it finds an offence proved continue to have effect in respect of any such proceedings. By s 30(1) of the Interpretation Act 1987 the defendant's liability continues. Accordingly orders which might have been made in respect of an offence under the CW Act continue to apply in respect of proceedings which were pending at the date of the commencement of the PEO Act. 8. In its sub-sections, the provisions of s 241 of the PEO Act specifies the matters which the Court is to take into consideration when imposing a penalty for an offence against such Act. For practical purposes they are identical with the corresponding provisions of s 9 of the EOP Act with the exception that by virtue of s 241(2) of the PEO Act the Court is entitled to take into consideration " other matters that it considers relevant ". Each of the relevant matters are considered hereunder. Harm to the Environment 9. Section 9(a) of the EOP Act (s 241(1)(a) of the PEO Act) requires the Court to consider the extent of the harm caused or likely to be caused to the environment by the commission of the offence. Such evidence is provided by the affidavit of Dr Fleurdelis Pablo, an ecotoxicologist engaged by the prosecutor. Sampling from the IME discharge point established that on 2 April 1998 100 mg/L of ammonia and 4.7 mg/L of cyanide was discharged. On 3 April 1998 the level had dropped to 81 mg/L and 2.3 mg/L respectively. Such recordings show gross excess of discharge compared to the licence limits. In addition the phenols were included in the discharge. The defendant's licence did not authorise the discharge of any phenols. On 2 April 1998 16 mg/L of phenols were recorded and on 3 April 13 mg/L. 10. Dr Pablo has explained that ammonia is in two chemical forms namely free ammonia (NH3) and ammonium ion (NH4+). The former is the principal toxic form. The sample on 2 April 1998 revealed the presence of free ammonia (26.2 mg/L) and on 3 April 1998 (18.3 mg/L). In such concentration it is likely to cause death to marine fish and intervertebrates. Similarly, free cyanide which was sampled on 2 and 3 April 1998 (3.8 and 1.9 mg/L respectively) is harmful to fish. Lastly, the concentrations of phenols in the samples are at a level described as " acutely toxic " to submarine organisms. 11. Dr Pablo observed that since the discharge from the IME drain entered the inner Port Kembla Harbour, there would be a mixing or diluting effect of the waters with the ammonia, cyanide and phenols. The potential acute toxicity zone would have been confined around the discharge point and the geographic extent is difficult to determine. Approximately 87 species of fish were found in Inner Port Kembla Harbour in 1991 and it is likely that some of the species were present in the vicinity of the drain at the time of discharge. However, there is no evidence that any dead fish were located and no evidence of actual harm having been occasioned. The Court can readily conclude there was the likelihood of harm being occasioned to the environment namely the threat to the marine life by virtue of the discharge. Measures to prevent or control harm 12. Section 9(b) of the EOP Act (s 241(b) of the PEO Act) requires the Court to consider the practical measures that might have been taken to prevent, control, abate or mitigate that harm. The discharge giving rise to the offence resulted from two mechanical failures. The failure of the electric pump is not explained, other than it was due to an electrical fault. The second failure of the reserve pump is explained. Maintenance which ought to have been carried out in January 1998 had not occurred. Since the reserve pump was not in constant use, the defendant considered it was justified in departing from the manufacturers specifications concerning its maintenance. The defendant introduced its own program of maintenance to which it did not adhere. Had the maintenance check been carried out on the turbine operating the reserve pump, the lack of oil which lead to its failure would have been revealed. It was possible for the defendant to have taken measures to avoid the likelihood of harm. Foreseeability 13. Section 9(c) of the EOP Act (s 241(c) of the PEO Act) requires the Court to consider the forseeability of the harm caused or the likelihood of such harm being occasioned. The discharge resulted from a chain reaction. It was foreseeable that in the event the electric pump failed there was the risk that a discharge would occur. In theory it was foreseeable that if the reserve pump failed simultaneously there would be a discharge. The likelihood of such an event occurring could be said to be remote. The prospect that the failure to carry out scheduled maintenance would result in the discharge was very remote. Nevertheless it remained a possibility and the risk of harm if the two pumps failed simultaneously was foreseeable. Control 14. Pursuant to s 9(d) of the EOP Act (s 241(1)(d) of the PEO Act) the Court is required to consider the extent of control over the cause that gave rise to the offence. There is no doubt the defendant exercised control over its plant and operations. The evidence of Mr Daniel Ernest Walton, a maintenance planner engaged by the defendant establishes the failure to conduct the scheduled service was due to work load, and competing priorities. The scheduled service was not overlooked but rather postponed to a future unspecified date. Had the operator been instructed to check oil levels routinely while operating turbines or rotating equipment such as the reserve pump the low oil level would have been detected. No such practice existed for the turbine machinery in the Gas Processing Plant prior to the date of the offence. Other considerations 15. One matter of obvious relevance is the size and scale of the operations of the defendant which is to be considered against its prior history of convictions. Whilst the defendant was convicted on several occasions prior to 1978 of offences under s 16 of the CW Act and has six convictions under such statute in the past ten years, there have been no convictions for offences against such statute since 1992. 16. It could not be said that the defendant is environmentally irresponsible. The evidence discloses beyond doubt that the defendant is acutely aware of environmental legislation and aspires to be environmentally responsible. For this reason I reject the prosecutor's submission the defendant should be considered as an individual who has shown a " dangerous propensity " as was considered by the High Court of Australia in Veen v The Queen [No 2] [1987-1988] 164 CLR 465 at 477. The evidence discloses that the defendant is engaged in a program directed to pollution reduction, environmental enhancement and education relating to the environment and is continuing to promote measures for the benefit of the environment. The Court accepts the offence did not result from any disregard of environmental obligation. Mitigation 17. The defendant has pleaded guilty. In accordance with the judgment of the New South Wales Court of Appeal in Camilleri's Stockfeeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 such a plea at an early stage justifies consideration in determining the penalty as does subsequent co-operation with the prosecutor. 18. The offence has not caused any lasting proven harm and once the over-flow became known, prompt steps were taken to notify the appropriate authorities and all possible measures were undertaken to prevent the discharge from continuing. Further, the defendant has now established practices which will rectify the deficiency revealed in its current maintenance of equipment by this offence. For example the operating procedures at Gas Processing have been amended to ensure that the lubrication schedule is adequate and carried out by a trained lubrication. Inspections are recorded and reviewed by a maintenance team. Testing of equipment has also been introduced on all pumps with any difficulties being reported. By virtue of these measures it is hoped that unexpected oil leaks from the equipment will be prevented or at least detected at an early stage. It is intended that such a system will be fail-safe. 19. As a further safeguard the defendant's pollution containment system has been expanded to accommodate a larger volume of flushing liquor to be captured by means of sumps and storage area. The yard drains at Gas Processing have been redirected to ensure that any over-flows are now discharged into a new Coke Ovens Recovery Basin. Accordingly any future spills should be contained. All such measures reinforce the conclusion that the defendant has done its utmost to prevent future breaches occurring at the plant. Penalty 20. The defendant has agreed to pay the prosecutor's costs in the sum of $12,000. Such costs are taken into consideration in assessing penalty, the maximum of which is $125,000 for the offence. Orders 21. The court makes the following orders:- 1. The defendant is convicted of the offence as charged. 2. The defendant is fined the sum of $30,000. 3. The defendant is to pay the prosecutor's costs of $12,000. 4. The exhibits be returned. 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