Land and Environment Court of New South Wales CITATION : Environment Protection Authority v Pasminco Cockle Creek Smelter Pty Limited [2001] NSWLEC 270 PROSECUTOR Environment Protection Authority PARTIES : DEFENDANT Pasminco Cockle Creek Smelter Pty Limited FILE NUMBER(S) : 50055 of 2001 CORAM: Talbot J KEY ISSUES: Prosecution :- factors to be taken into account on plea of guilty - penalty - breach of licence condition LEGISLATION CITED: Crimes (Sentencing Procedure) Act 1999 s 22, s 23 Protection of the Environment Operations Act 1997 s 64(1), s 241(1)(a), (b), (c), (d) Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357; CASES CITED: Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683; Environment Protection Authority v Norco Co-operative Limited (2000) 108 LGERA 137; R vThomson; R v Houlton (2000) 49 NSWLR 383 DATES OF HEARING: 01/11/2001, 02/11/2001 EX TEMPORE JUDGMENT DATE : 11/02/2001 PROSECUTOR Mr D Jordan (Barrister) SOLICITORS Environment Protection Authority LEGAL REPRESENTATIVES: DEFENDANT Mr JB Maston (Barrister) with Mr C Dimitriadis (Barrister) SOLICITORS Rankin & Nathan JUDGMENT: IN THE LAND AND Matter No. 50055 of 2001 ENVIRONMENT COURT Coram: Talbot J OF NEW SOUTH WALES Decision Date: 2 November 2001 Environment Protection Authority Applicant v Pasminco Cockle Creek Smelter Pty Limited Respondent REASONS FOR JUDGMENT 1. HIS HONOUR: The defendant operates a zinc smelter at Main Road, Boolaroo near Newcastle. It is charged with an offence against s 64(1) of the Protection of the Environment Operations Act 1997 ("the PEO Act") in that between 4 and 6 April 2000 it was the holder of a licence, a condition of which was contravened. 2. At the relevant dates pollution control licence No 005042 ("the licence") contained condition W5.12 which provides that waste discharged from the waste liquor effluent treatment plant must not contain more then 0.006 milligrams per litre of mercury and any of its compounds expressed as mercury when calculated as the arithmetic mean of samples collected, as in condition W10.2, on any three consecutive days when a discharge occurred. 3. Condition W10.2 prescribes the monitoring of waste discharge from the export pump tank of the effluent treatment plant and specifically deals with mercury. It must be carried out daily on the basis of a composite sample consisting of samples collected over a 24 hour period. Sampling is to be conducted at equal discharge volume increments of 100 kilolitres over a collecting period for total milligrams per litre mercury. 4. In summary, the licence conditions relating to maximum allowable mercury discharge from the effluent treatment plant are:- (1) as per W5.12 a three day mean of 0.006 milligrams per litre or parts per million; (2) as per W5.13 an annual concentration of 0.001 milligrams per litre or parts per million; and/or (3) as per W5.14 an annual maximum allowable discharge of 0.0006 tonnes or 600 grams. 5. In a report to the Environment Protection Authority ("EPA"), the defendant described the known details of the cause, time and duration of the event as follows: A task was performed during the planned Tail Gas Scrubber shutdown with the aim of removing calomel from the Mercury Removal Plant tower by leaching with a sodium hypochlorite solution. During the hypochlorite leach, both the inlet and outlet gas ducts were blanked off to prevent chlorine gas from escaping into the atmosphere. It is assumed that the chlorine gas diffused into the weak acid section where it reacted with mercury sludges to form water soluble mercury compounds. The weak acid system was filled with water and circulation commenced on Monday 3 rd April, 2000. The weak acid contaminated by the soluble mercury compounds was then exported to the Effluent Treatment Plant (ETP) for normal tr5eatment [sic] . Normal analysis of the ETP Bleed showed elevated levels of mercury. 6. A number of matters upon which the Court relies are contained in a statement of agreed facts prepared by the parties including the statement that a total of 570,000 litres of effluent flowed from the ETP during the 24 hour period ending 8.15am on 4 April. This liquid contained 0.884 milligrams per litre of mercury. For the 24 hour period ending 8.15am on 5 April 2000, 364,000 litres passed through the monitoring point containing 0.079 milligrams per litre of mercury. For the 24 hour period ending 8.15am on 6 April, the figure was 698,000 litres containing 0.01 milligrams per litre of mercury. However, the three day average ending 6 April 2000 for the purpose of the licence was 0.3243 parts per million compared with the licence level of 0.006 parts per million. These discharges are the subject of the charge and represent the relevant breach of licence. 7. However, it should be noted that the discharge does not flow directly from the monitoring point to Cockle Creek. It first passes through on-site salt water dams and then into flow channels before it reaches the creek. Ultimately, as the Court understands it, the creek discharges to Lake Macquarie. 8. The defendant has pleaded guilty. 9. Relying on the statement of facts, the Court describes the process as follows:- 9. Pilot tests in the laboratory were carried out. These indicated that the method proposed could safely remove calomel without the generation of chlorine gas. Pasminco decided to use a diluted sodium hypochlorite solution to effect removal of the sticky calomel build up in the MRP [mercury removal plant] . This compound was used to minimise the production of chlorine in the course of the clean out process. 10. Four other measures were intended to prevent chlorine escaping to other parts of the plant where it might mobilise mercury deposits. These were: a) the use of oxidisation reduction potential probes (ORP probes) to electronically measure the oxidisation potential of the sodium hypochlorite to a dilution level at which the chemical generation of chlorine gas does not occur; b) the isolation of the MRP during the cleanout process by the use of plastic blanks in the ducting to and from the MRP; c) additional bunding of the MRP and installation of additional storage for liquors used or generated during the flushing of the MRP with sodium hypochlorite; and d) the flushing at the end of the process, after the sodium hypochlorite solution was pumped out of the MRP, of the MRP with a weak solution of chlorine dissolved in water prior to removing the plastic blanks referred to in (b) above with the intent that any traces of chlorine would be dissolved. 11. In March and early April 2000, Pasminco shut down the acid plant for the purposes of commissioning a tail gas scrubber and during this time planned the removal of calomel from the MRP tower by leaching with the sodium hypochlorite solution. The Cause 10. It is agreed between the prosecutor and the defendant that the probable cause of the mercury discharge was as follows:- a. after the blanks were removed, either some chlorine or more likely hypochlorite vapour did move out of the MRP upstream to the weak acid section (the weak acid section is another part of the plant which removes impurities from the sulphur dioxide gas b. In the upstream section the gas or vapour reacted with mercuric sulphide to form a water soluble mercury compound. c. When the weak acid section was later flushed with water before acid plant operations were recommenced, the soluble mercury compounds were then carried into ETP . 11. As I have already observed the discharge did not pass directly into Cockle Creek at the licence discharge point. It passed through the usual saltwater dilution process required by the licence. This is specified to be not less than 1 to 16 parts effluent to saltwater cooling water in normal operation. 12. On this occasion, however, the dilution ratio was in all likelihood in excess of 1 to 50 because the plant was not operating, with the result that there was much less effluent passing out of the plant than normal while the same amount of saltwater was being pumped through. 13. The effluent stream then passed through two large on-site saltwater temperature, pH and sediment control dams. These are situated upstream from the licenced discharge point to Cockle Creek. 14. There are a number of matters of course which the Court must take into account. 15. Firstly, there is the fact that the defendant entered an early plea of guilty ( R v Thomson, R v Houlton (2000) 49 NSWLR 383). The defendant is entitled to the full value of the utilitarian benefit of entering a plea of guilty at the first callover following confirmation by the prosecutor that the whole of the evidence upon which it relied had been filed and served. 16. Secondly, the seriousness of the offence. The prosecutor submits that contravention of a pollution control licence involves a breach of public trust and a failure to fulfill a heightened responsibility to keep the level of discharge within the parameters set by the licence. 17. It is not my understanding that the so called concept of a public trust is appropriate simply because the defendant held a licence under the pollution control legislation whereby it was entitled it to make discharges of pollutants within prescribed limits. The observations made by Bignold J at p 144 of his judgment in Environment Protection Authority v Norco Co-operative Limited (2000) 108 LGERA 137 that the contravention of a condition of a licence involves a sense of breach of public trust and the references cited by his Honour do not, in my view, support the prosecutor's submission. 18. The seriousness of an offence involving a breach of the condition of a licence is to be assessed, like any other offence, by having regard to the general principles to which Kirby P had regard in Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698 and 699. 19. The Court is bound to take into account the circumstances surrounding the offence. Where the charge relates to a breach of the conditions of a licence, the circumstances include the heightened responsibility on the licence holder to maintain a level of discharge consistent with the terms of the licence. 20. The maximum penalty of $250,000 reflects the legislature's expression of the seriousness of the offence. This must be balanced against the facts which tend to mitigate that seriousness. 21. The Court is also required to consider the matters referred to in s 241 of the PEO Act in imposing a penalty. Those matters highlight essential aspects of the elements of an environmental offence and the circumstances surrounding it. 22. Seriousness lies not only in the actual harm caused but in the potential for harm. 23. As Badgery-Parker J explained in Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 366:- The criminality involved is to be measured, however, not only by the seriousness of what occurred, but by reference to the reasons for its occurrence. 24. In a balanced submission, Mr Jordan, who appears for the prosecutor, accepts that the following matters can be taken into account in the defendant's favour:- (1) The plea of guilty; (2) The novel procedure being undertaken for the removal of the sticky calomel; (3) The recognition of the potential for chlorine to mobilise mercury deposits by the use of oxidisation reduction potential probes, the isolation of the mercury removal plant and the flushing of the plant with a weak solution of chlorine at the conclusion of the procedure; (4) The flow of effluent to Cockle Creek was promptly stopped; (5) The prompt report of the breach on 6 April 2000; (6) The defendants cooperation with the prosecutor's investigation; (7) Implementation of subsequent corrective measures; and (8) The absence of evidence of any significant environmental harm. 25. Foreseeability, together with the ability of the defendant to abate, mitigate and minimise are issues to be addressed. The prosecution says the defendant well understood that chlorine could mobilise mercury. 26. Having regard to the novelty of the procedure the defendant should have been more alert to the potential for chlorine to escape. According to the prosecutor it ought to have been particularly vigilant and have undertaken additional monitoring. 27. On the other hand, the defendant through Mr Maston, submits that its culpability is as low as it could be. It took extraordinary steps to prevent or control the discharge of mercury. A team of scientists was engaged to analyse and advise on the process. All conceivable controls were implemented to the extent that, according to Mr Maston, how the discharge occurred is still fundamentally a mystery. 28. The early plea of guilty entitles the defendant to a significant credit for the utilitarian value of the plea. It is appropriate to observe particularly what the Chief Justice had to say in this respect in R v Thomson at p 411 – 412:- Rather, they are a collateral benefits for the efficiency and effectiveness of the criminal justice system as a whole, which require acknowledgement of some character by way of an incentive, so that the benefits will in fact be derived by the system. 29. And then further on at p 412 at par 119 he says: As noted above, a factor identified as a benefit from a plea of guilty is the avoidance of the need for witnesses to give evidence, particularly victims and their families and, especially sexual assault victims. 30. And then finally at the bottom of p 412, he says: The public interest served by encouraging pleas of guilty for the utilitarian value is a distinct interest. 31. Furthermore, s 22 of the Crimes (Sentencing Procedure) Act 1999 directs the Court to take into account the plea of guilty. Section 23 requires the Court to take account of the obvious degree of assistance offered to the prosecutor by the defendant and to recognise the benefits of settling an agreed statement of facts. 32. The Court agrees with Mr Maston that in terms of general deterrence, the Court needs to be careful that the penalty reflects and recognises the extent to which the defendant addressed the issues of potential discharge, otherwise than in accordance with the conditions of the licence. 33. In addition to the utilitarian value of the plea of guilty, it is also evidence of the contrition expressed by the defendant. 34. Section 241(1)(a) of the PEO Act requires the Court to take into consideration the extent of harm caused or likely to be caused to the environment by the commission of the offence. 35. It is agreed that although there is evidence that a considerable quantity of mercury was released, there is no evidence of actual harm. The discharge was extensively diluted before it reached Lake Macquarie. The incident is described as a short-term pulse disturbance resulting in contamination of Cockle Creek and on-site waters with elevated mercury levels above ANZECC guidelines. 36. Although there is an alteration to the environment by the mercury deposits, research indicates that it does not have any long term affect on aquatic organisms. The parties have adopted the conclusion of an independent aquatic biologist as follows. It is concluded that there was no actual, or at the most there was insignificant harm to the aquatic ecology of Cockle Creek and beyond in the short, medium or long term. 37. The practical measures taken by the defendant indicate what steps were available to abate or mitigate the harm. 38. Pasminco Cockle Creek Smelter Pty Limited ("Pasminco") has altered its manuals for standard operating procedures for the process. In future the MRP will be ventilated separately to prevent a recurrence of gas moving from the MRP into other sections of the plant. This would prevent mobilization of mercury sludges from this type of operation and the resultant mercury discharge. 39. There will also be an increase in the duration of the monitoring to enable the detection of chlorine gas and hypochlorite vapour in the MRP and if found, these gases would be vented prior to the removal of the blanks which isolate the MRP. 40. Additionally, the resultant liquors in the weak acid sections will be monitored and treated prior to discharge to the ETP. The upgrade of the ETP has been implemented in stages over a number of years in accordance with the development consent for the overall environmental upgrade of the plant and is scheduled for completion in the second half of 2001. 41. This will result in a marked improvement of the capability of the ETP to treat variations in levels of contaminants including the removal of soluble mercury compounds. 42. The degree of foreseeability has already been discussed. The prospect of the offence was not overlooked or ignored. Without a final conclusion to the cause, it is difficult to be definitive about the foreseeability of what actually occurred. 43. There is no question that the defendant had control of the causes in the sense that it operated the plant and implemented the process involved. 44. For the purpose of s 241, the Court takes into account the matters prescribed by subss 1 (a), (b), (c) and (d) in the above mentioned way. 45. Other considerations which the Court takes into account in assessing penalty are set out in the agreed statement of facts as follows:- _ Pasminco has cooperated with the prosecutor in the investigation of the offence; _ Pasminco is currently in administration but as at July 2001 contributed $60,000 to community projects. _ Pasminco has spent $40m in environmental upgrades to the plant over a period from 1995 to date, the latest major project being a $7m Tail Gas Scrubber to reduce SO 2 emissions to comply with the WHO goal of SO 2 in ambient air; _ Pasminco is certified under ISO 14001 Environmental Management Standard; _ The whole company sincerely regrets that a breach of licence occurred; _ Pasminco has not been prosecuted by the NSW EPA before but has had 15 penalty infringement notices issued over the past 9 years for breach of licence conditions. None of the breaches has been in relation to emissions of mercury to water. 46. The fact that Pasminco is in administration has no bearing on the circumstances surrounding the commission of the offence, nor on the way in which Pasminco should be dealt with as a defendant in terms of penalty. There may be other consequences, none of which concern the Court at this point. 47. Having regard to the maximum penalty of $250,000, the actual circumstances of the offence, the early plea of guilty, the extent of environmental harm, the antecedents, cooperation and contrition of the defendant and the statutory as well as general principles of sentencing, the Court concludes that a fine of $33,000 is appropriate. 48. Although the defendant cannot agree to the payment of the prosecutor's costs in its present financial state, nothing is said by the defendant against an order to pay the prosecutor's costs. 49. The formal orders of the Court are: 1. The offence is proved. 2. The defendant is convicted of the offence charged. 3. The defendant is ordered to pay a penalty by way of fine in the sum $33,000. 4. The defendant is ordered to pay the prosecutor's costs. 5. The exhibits, except exhibit A, which is the statement of agreed facts, may be returned. 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.