Land and Environment Court New South Wales Medium Neutral Citation: Environment Protection Authority v GrainCorp Operations Limited [2019] NSWLEC 143 Hearing dates: 10 September 2019 Date of orders: 01 October 2019 Decision date: 01 October 2019 Jurisdiction: Class 5 Before: Pepper J Decision: See orders at [233]. Catchwords: ENVIRONMENTAL OFFENCES: breach of environmental protection license condition – plea of guilty – incorrect calculation of emission rate of methyl bromide and phosphine during fumigation – sentencing principles – determination of the objective seriousness of the offence – no actual environmental harm – low potential for harm to the environment and human health – subjective circumstances of the defendant – no prior convictions – discount for early guilty plea – assistance to authorities – comparable cases – monetary penalty imposed – publication orders made, including on social media – costs ordered. Legislation Cited: Crimes (Sentencing Procedure) Act 1999, ss 3A, 21A, Div 1, Sch 1 Criminal Procedure Act 1986, ss 257B, 257G Protection of the Environment Operations Act 1997, ss 3, 64, 66, 120, 241, 250, Pt 5.4 Cases Cited: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34; (2006) 145 LGERA 234 Cabonne Shire Council v Environment Protection Authority [2001] NSWCCA 280; (2001) 115 LGERA 304 Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 Chief Executive, Office of Environment and Heritage v Orica Pty Ltd; Environment Protection Authority v Orica Pty Ltd [2015] NSWLEC 109 Director-General of the Department of Environment and Climate Change v Rae [2009] NSWLEC 137; (2009) 168 LGERA 121 Elias v The Queen; Issa v The Queen [2013] HCA 31; (2013) 248 CLR 483 Environment Protection Authority v Barnes [2006] NSWCCA 246 Environment Protection Authority v BHP Steel (AIS) Pty Ltd [2001] NSWLEC 214 Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2008] NSWLEC 194 Environment Protection Authority v Causmag Ore Company Pty Ltd [2015] NSWLEC 58 Environment Protection Authority v Coastal Recycled Cooking Oils Pty Ltd [2008] NSWLEC 242 Environment Protection Authority v Crown in the Right of New South Wales (Office of Environment and Heritage) [2019] NSWLEC 66 Environment Protection Authority v New South Wales (Department of Environment, Climate Change and Water) [2010] NSWLEC 67; (2010) 174 LGERA 19 Environment Protection Authority v Orica Australia Pty Ltd (the Jackhammer Incident) [2014] NSWLEC 105 Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident) [2014] NSWLEC 103; (2014) 206 LGERA 239 Environment Protection Authority v Ravensworth Operations Pty Ltd [2012] NSWLEC 222 Environment Protection Authority v Ridley AgriProducts Pty Limited [2019] NSWLEC 119 Environment Protection Authority v Sydney Water Corporation [2019] NSWLEC 100 Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; (2006) 148 LGERA 299 Environment Protection Authority v Whitehaven Coal Mining Ltd [2019] NSWLEC 27 Gittany Constructions Pty Ltd v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189 Gore v The Queen; Hunter v The Queen [2010] NSWCCA 330; (2010) 208 A Crim R 353 Harris v Harrison [2014] NSWCCA 84; (2014) 86 NSWLR 422 Hoare v The Queen [1989] HCA 33; (1989) 167 CLR 348 Liverpool City Council v Leppington Pastoral Co Pty Ltd [2010] NSWLEC 170 Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120 Newcastle City Council v Pace Farm Egg Products Pty Ltd [2002] NSWLEC 66 Plath v Rawson [2009] NSWLEC 178; (2009) 170 LGERA 253 R v De Simoni [1981] HCA 31; (1981) 147 CLR 383 R v Dodd (1991) 57 A Crim R 349 R v Nichols (1991) 57 A Crim R 391 R v Olbrich [1999] HCA 54; (1999) 199 CLR 270 R v Oliver (1980) 7 A Crim R 174 R v Visconti [1982] 2 NSWLR 104 Veen v The Queen [1979] HCA 7; (1979) 143 CLR 458 Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 Walden v Hensler [1987] HCA 54; (1987) 163 CLR 561 Category: Sentence Parties: Environment Protection Authority (Prosecutor) GrainCorp Operations Limited (Defendant) Representation: Counsel: Ms J Single (Prosecutor) Mr T Howard SC (Defendant) Solicitors: Environment Protection Authority (Prosecutor) Johnson Winter & Slattery (Defendant) File Number(s): 2019/17072 Judgment GrainCorp Operations Limited Pleads Guilty to Breaching a Condition of its Environment Protection License 1. The defendant, GrainCorp Operations Limited ("GrainCorp"), has pleaded guilty to a criminal charge under s 64(1) of the Protection of the Environment Operations Act 1997 ("the POEOA") for contravening a license condition. The charge relates to GrainCorp's breach of a condition of its Environment Protection License 3693 ("EPL") for the scheduled activities of "chemical storage" and "shipping in bulk". 2. The EPL applies to GrainCorp's operations at the Port Kembla Grain Terminal at Morton Way, Port Kembla, New South Wales, on Lot 2001 DP1030233, Lot 20 DP1046295, Lot 21 DP1046295 and part of Lot 70 DP 1182824 ("the premises"). 3. Condition O1.1 of the EPL relevantly states that: O1 Activities must be carried out in a competent manner. O1.1 Licensed activities must be carried out in a competent manner. This includes: (a) The processing, handling, movement and storage of materials and substances used to carry out the activity; and (b) The treatment, storage, processing, reprocessing, transport and disposal of waste generated by the activity. 1. The breach was particularised as a failure by GrainCorp to carry out its licensed activities in a competent manner by incorrectly calculating and recording the emission rate of the fumigants methyl bromide and phosphine from vent stacks located on the premises during ventilation. As a result, the maximum emission rates prescribed by the EPL for methyl bromide and phosphine were exceeded. 2. The offence took place between 23 February 2016 and 23 January 2018. 3. The factual background giving rise to the commission of the offence was contained in an agreed statement of facts, the salient features of which are summarised below, and two affidavits of Mr Nigel Lotz affirmed 26 August and 2 September 2019. Mr Lotz is the General Manager, Domestic Operations at GrainCorp. 4. The EPA also sought to tender a statement of facts not agreed to by GrainCorp. It was rejected by the Court on the basis that the facts contained in it were not relevant to the offence as charged and could not be proved beyond reasonable doubt. GrainCorp 1. GrainCorp is an Australian registered company and a wholly owned subsidiary of GrainCorp Limited. GrainCorp Limited is listed on the Australian Stock Exchange with a market capitalisation of approximately $1.81 billion. 2. GrainCorp is part of a group of companies that form an international agribusiness operating in the field of storage, marketing, and transport of bulk grain, malt, and oils by road, rail, and sea throughout Australia and internationally. 3. GrainCorp operates eight bulk grain ports in Australia, including five in NSW. 4. During the charge period, the following individuals were employed by GrainCorp: 1. Mr Martin Sierzycki, Group Environment and Sustainability Manager; 2. Mr Mark Jelbart, Terminal Manager of the Port Kembla Grain Terminal (later, GrainCorp's NSW Ports Manager); 3. Mr Phillip Clamp, Quality Assurance Manager; and 4. Mr Paul Rickard, Electrical Supervisor. The EPL and the Premises 1. The Port Kembla Grain Terminal typically receives bulk grain deliveries by road and rail and dispatches grain by ship. It can store up to 260,000 tonnes of grain in vertical storage in 30 grain silos (also referred to as "bins"). The grain silos are located next to Berth 104, a 260 m long shipping berth on the northern edge of Port Kembla Inner Harbour, which has two ship loading gantries and an annual shipping capacity of approximately 4.3 million tonnes. The actual average annual shipping over the past 30 years is 1.2 million tonnes per annum and the current annual average is 600,000 tonnes per annum. 2. The premises are located approximately 2.5 km south of the Wollongong Central Business District and approximately 1.3 km southeast of the nearest residential areas in Coniston and Mount St Thomas. 3. The premises are immediately adjacent to Berths 105, 106 and 107, which are operated by Australian Amalgamated Terminals ("AAT") as a multi-purpose stevedoring facility catering for motor vehicles, general cargo, containers, and visiting cruise ships. AAT occasionally fumigates cargo using methyl bromide by covering the cargo with tarpaulins, injecting methyl bromide and then removing the tarpaulins. 4. GrainCorp leases the premises from NSW Ports, who owns the land on which the premises are situated. 5. At all relevant times, GrainCorp was the occupier of the premises and was responsible for the control and management of the Port Kembla Grain Terminal facility at the premises. The Licensed Activities 1. The EPL authorised GrainCorp to conduct the activities of cement or lime works, chemical storage, and shipping in bulk at the premises, all of which are scheduled activities under Sch 1 of the POEOA. 2. As part of the bulk grain shipping operations, GrainCorp may fumigate grain at the premises if required to meet Australian quarantine regulations, its customers' export requirements, or if insects are detected in the grain. 3. For this purpose, GrainCorp operates associated fumigation facilities at the premises, including plant and equipment comprising a fumigation system. 4. Since 1990, GrainCorp has used one of two commercial products to fumigate grain, depending on the type of grain and the requirements of its customers (together, "the fumigants"): 1. AgriGas M, which contains approximately 100% methyl bromide (CH3Br) in 100 kg cylinders; or 2. Eco2fume, which contains approximately 2% phosphine (PH3) mixed with CO2 (98%) in compressed gas form in 31 kg cylinders. 1. The fumigants are brought onto, and stored at, the premises by GrainCorp in storage cylinders, which are then connected to the fumigation system and the fumigants are injected into sealed silos to fumigate the grain. 2. After the grain is fumigated for the required period of time, GrainCorp vents the residual fumigants in the silos into the atmosphere from vent stacks located above the silos. GrainCorp's Fumigation Infrastructure 1. GrainCorp's fumigation system at the premises is split into six separate systems that service groups of four, five or six silos. 2. At all relevant times during the charge period, the fumigation systems were comprised of the following: 1. fumigation houses where cylinders of the fumigants were connected to a supply line, on which a fan was installed, and a fan discharge control valve; 2. a supply line that ran from each fumigation house to the base of each silo in the group, where the fumigants entered the silos through diffusers located at the base of the silo; 3. a return line that ran from the top of each silo back to the fumigation house and then through the fan into the base of the silo, which allowed the fumigants to circulate through the grain; 4. flow meters installed on the supply lines which recorded the volumetric flow of air and/or gas in litres per second ("L/s"); 5. valves on the supply and return lines which allowed the silos to be isolated for the required exposure period to sufficiently fumigate the grain; 6. vent stacks equipped with valves which, when opened, allowed the fumigants to be vented into the atmosphere from a point approximately 57 m above ground level; 7. a sampling port at the base of the vent stack where the concentration of fumigants could be monitored during their release through the vent stack; and 8. the Supervisory Control and Data Acquisition Software ("SCADA"), an automatic control system which was operated through a computer interface which, amongst other things, allowed the operators of the fumigation system to monitor data from the flow meters and to control the valves and fans during fumigation and ventilation. 1. The volumetric flow rate during ventilation (which was identified on the SCADA system as the "Fan Speed") was displayed in L/s on the SCADA system. The volumetric flow rate of air and gas through the fumigation system was controlled by the fan discharge control valve set point on the SCADA, which opened the valves by degrees. The Fumigation and Ventilation Process 1. The standard fumigation process in place during the charge period was that prior to fumigation, safety and equipment checks were conducted by GrainCorp's fumigators, who were employed by GrainCorp to operate the fumigation system, including the pressure testing of silos to ensure that they were properly sealed. 2. Fumigators then turned on the fans in the fumigation house to create air flow and the fumigants were released from cylinders and pumped through the supply lines into the silos. 3. To ensure the fumigants were mixed through the grain, the air and fumigant was circulated through the return lines and the supply lines running from the top to the bottom of the silos through the fumigation house. The concentration of fumigants in each silo was monitored by the fumigators by way of hand-held portable concentration monitors at monitoring points at the top and the bottom of the silo. 4. Once the requisite concentration and circulation of the fumigants had been achieved for phytosanitary purposes, the silos were isolated for the required period to ensure adequate fumigation of the grain. During this stage, the concentration of fumigants in the silos would decrease due to the adsorption of the fumigants into the grain. 5. Immediately prior to ventilation, fumigators took further measurements of the concentration of fumigants at the top and the bottom of the silo (the top was referred to as the "silo headspace") in g/m3, which were then manually recorded by fumigators in a document known as a "fumigation record". 6. The readings of fumigant concentrations in the silo (recorded in g/m3) and the "volumetric flow rate" (recorded in m/s) were inserted into an excel spreadsheet which contained a formula to calculate fumigant emission rates ("the fumigation spreadsheet"). The fumigants were then ventilated into the atmosphere through the valves ("ventilation event"). 7. The fumigators relied on the formula to determine the appropriate volumetric flow rate at which the maximum emission limits for the fumigants prescribed by the EPL would not be exceeded. The fumigators adjusted the fan discharge control valve set point in the SCADA to open the valves and control the volumetric flow rate accordingly. 8. During ventilation events, GrainCorp's fumigators monitored the volumetric flow rate on the SCADA and the concentration of gas from the gas monitors in the vent stacks and recorded these readings in the fumigation record every 15 minutes. 9. As the concentration of the fumigants began to fall during ventilation, the volumetric flow rate was increased by further opening the valves until the remaining fumigants had been emitted to the threshold limit value. 10. The grain was then loaded onto ships for export using the ship loading gantries. The EPL 1. The EPL was issued under the POEOA on 4 December 2000. 2. From the time the EPL was granted until 23 February 2016, there were no specific conditions under the EPL regulating the emissions of the fumigants. 3. On 24 October 2014, the EPA varied the EPL to require GrainCorp to prepare a report in accordance with the EPA's Approved Methods for the Modelling and Assessment of Air Pollutants in NSW (2005) ("the Approved Methods") which included: 1. identification and description of all processes as well as sources and potential sources of methyl bromide and phosphine emissions; 2. sufficient detail to accurately characterise and quantify all potential methyl bromide and phosphine emissions (including both point and fugitive emissions); 3. assessment of GrainCorp's standard operating criteria under a variety of purging scenarios against ground level impact assessment criteria for methyl bromide and phosphine; and 4. a description of the proposed mitigation, monitoring and management measures in the event that impact assessment criteria for methyl bromide and phosphine are exceeded. 1. GrainCorp engaged AECOM to prepare the report. An interim report was provided to the EPA on 27 February 2015 and a final report was provided on 13 March 2015 ("the AECOM March 2015 Report"). 2. The AECOM March 2015 Report included air quality modelling and recommended the following operational emissions structure: The maximum number of vents emitting [methyl bromide and phosphine] shall not exceed 4 vents at any one time. The maximum emission concentration from any one vent stack shall not exceed 15 g/s of [methyl bromide] and 0.45 g/s of [p]hosphine. When purging is underway, the emission concentration from the first bin must fall to 7.5 g/s of [methyl bromide] and 0.15 g/s of [p]hosphine before the initial purge of a second bin can commence. Only one bin can be in the initial purge phase at any time. 1. Under meteorological conditions where exceedances are predicted, AECOM recommended that the operational emissions would need to be scaled back to a reduced emissions profile in order to meet the impact assessment criteria set by the Approved Methods. The recommended reduced operational emissions profile was: The maximum number of vents emitting [methyl bromide and phosphine] shall not exceed 2 vents at any one time. The maximum emission concentration from any one vent stack shall not exceed 8 g/s of [methyl bromide] and 0.15 g/s of [p]hosphine. When purging is underway, the emission concentration from the first bin must fall to 1 g/s of [methyl bromide] and 0.01 g/s of [p]hosphine before the initial purge of a second bin can commence. Only one bin can be in the initial purge phase at any time. 1. On 1 December 2015, the EPA provided a draft notice of variation of the EPL to GrainCorp proposing new conditions to regulate the emissions of fumigants and invited GrainCorp's comments. Mr Sierszykci, Mr Jelbart, and Mr Clamp provided comments on the proposed conditions by email and GrainCorp engaged AECOM to conduct further modelling on the emissions of the fumigants under different EPL conditions and scenarios. 2. On 23 February 2016, the EPL was varied to include the new conditions regulating emissions of the fumigants. The varied EPL was forwarded under cover of a letter dated 23 February 2016, along with a Notice of Variation. The variations to the EPL were as follows: 1. air emissions monitoring points 3, 4, 5, 6, 7 and 8 were identified in condition P1.1; 2. addition of conditions L3.3 to L3.8 (within section L3 of the EPL entitled "Concentration limits") relating to the ventilation of the fumigants from the vent stacks, including: L3.3 Point 3, 4, 5, 6, 7, 8 Pollutant Units of measure 100 percentile mass limit Averaging period Methyl Bromide grams per second 8 Instantaneous Phosphine grams per second 0.15 Instantaneous L3.4 The maximum emission rate from any one vent stack during ventilation must not exceed: a) 8 grams per second of Methyl Bromide; or b) 0.15 grams per second of Phosphine. L3.5 The minimum velocity from any one vent stack during ventilation must not be less than: a) 1.4 metres per second of Methyl Bromide; or b) 3.1 metres per second of Phosphine. L3.6 The maximum number of grain silos ventilating at any one time must not exceed two. L3.7 Only one grain silo can be in the initial purge phase at any one time. Ventilation of the second grain silo may only commence if the emission rate from the first grain silo has reduced to: a) 1 gram per second of Methyl Bromide; or b) 0.01 grams per second of Phosphine. L3.8 If the maximum emission rate of Methyl Bromide or Phosphine from any one vent stack during ventilation exceeds the limit specified in Condition L3.3 or Condition L3.4, the licensee must notify the EPA in writing within 7 days of the exceedance. The licensee must provide written details of the nature of the emission scenario and an assessment of probable off site ground level concentrations caused by the exceedance. 1. addition of a monitoring condition, condition M2.3, which provided that: Points 3, 4, 5, 6, 7, 8 Pollutant Units of measure Frequency Sampling Method Volumetric flow rate m3 per second continuous CEM-6 Methyl Bromide grams per second continuous Special Method 1 Phosphine grams per second continuous Special Method 2 Note: For the purposes of the table in Condition M2.3, Special Method 1 means the Methyl Bromide monitoring equipment specified in 'Fumigation - Port Kembla Ports Training Program Facilitator Guide Version 1.0' Note: For the purposes of the table in Condition M2.3, Special Method 2 means the Phosphine monitoring equipment specified in 'Fumigation - Port Kembla Ports Training Program Facilitator Guide Version 1.0' 1. On 29 February 2016, Mr Clamp sought advice from AECOM on how to comply with the new conditions. 2. On 7 March 2016, Mr David Rollings, Associate Director of Air Quality of AECOM, advised Mr Clamp by email that: 1. the maximum emission rate of 8 g/s for methyl bromide can be achieved with "an initial concentration rate of 20 g/m3 x 0.283 (area of the stack) x 1.4 m/s = 7.91 g/s"; 2. "the concentration needs to be multiplied with the area of the stack and then the velocity to get the mass flux in g/s"; and 3. in response to Mr Clamp's email stating his confusion with the "m/s versus m3/s versus stack diameter", Mr Rollings confirmed the correct formula to be "volumetric flow m3/s calculated from velocity [m/s] x stack cross sectional area [m²]". 1. In response to Mr Clamp's email stating that "I am sure there must be a blindingly simple explanation but I just don't understand it", Mr Rollings advised that the "crux is the calculation of the VFRs [volumetric flow rates]". 2. The advice from Mr Rollings, while correct, did not take into account the fact that GrainCorp staff at that time were misinterpreting the volumetric flow rate readings on the SCADA as a measure of velocity in m/s, and not of volumetric flow in m3/s ("the interpretation error", described in detail below). As a result, the fan speed on the SCADA was set to 1400 L/s, rather than 400 L/s which was what was required to achieve the maximum emissions rate as prescribed in conditions L3.3 and L3.4 of the EPL (assuming a concentration of 20 g/m3). 3. In an email to the EPA on 8 March 2016, Mr Clamp advised that he, Mr Jelbart, and Mr Sierszycki had discussed Mr Rollings's email on 7 March 2016 and had confirmed that "GrainCorp could meet the 8 g/s limit at the minimum exit velocity". 4. On 8 March 2016, Mr Clamp advised the EPA that during ventilation events on 3 and 4 March 2016, methyl bromide had been emitted at less than the minimum velocity limits in condition L3.5 in order to comply with the limits in L3.3 and L3.4. However, due to the interpretation error, this was incorrect. In fact, the actual velocity during ventilation events on 3 and 4 March 2016 exceeded the minimum velocity of 1.4 m/s. 5. On 10 March 2016, Ms Jennifer Byrne from the EPA discussed the non-compliances on 3 and 4 March 2016 with Mr Jelbart and requested that GrainCorp provide a written report with details of the ventilation events in a follow-up email. 6. On 25 March 2016, Mr Jelbart submitted a written report to the EPA which confirmed the non-compliance with condition L3.5 during ventilation events on 3 and 4 March 2016. 7. In a letter dated 12 April 2016, Mr Jelbart reported GrainCorp's emissions of the fumigants in March 2016 in compliance with reporting condition E1.1 in the EPL. 8. On 18 May 2016, the EPA responded to the report received from Mr Jelbart on 12 April 2016 and sought an explanation from GrainCorp for non-compliances with condition L3.4 during the March 2016 ventilation events. 9. On 31 May 2016, Mr Jelbart explained that GrainCorp had misunderstood the limits in conditions L3.3 and L3.4 to be averaged over one hour. Variation of the Phosphine Limits 1. On 6 May 2016, Mr Clamp emailed the EPA and provided a further report from AECOM dated 5 May 2016 ("the AECOM May 2016 Report"). 2. The AECOM May 2016 Report included two modelling scenarios to assess air quality impacts during the ventilation of phosphine at lower emission velocities that would comply with the one hour average criteria of 0.0031 mg/m3 for phosphine set out in the Approved Methods. The AECOM May 2016 Report recommended: …that the facility be licenced to operate at 0.424 g/s [sic] for the initial purge mass emission rate as shown in Table 4. Table 4 Final Operating Parameters Emission Concentration Emission Velocity Stack Diameter Flow Rate Mass Emission Rate g/m3 m/s m m3/s g/s 0.3 0.5 0.6 0.14 0.0424 1. On 16 May 2016, Ms Byrne emailed Mr Jelbart proposing a variation of conditions L3.3, L3.4, and L3.5 to lower the maximum emission rate of phosphine to 0.0424 g/s and to reduce the minimum velocity of phosphine during ventilation to 0.5 m/s. 2. On 19 May 2016, Mr Jelbart accepted the variation of the EPL conditions. 3. On 23 May 2016, conditions L3.3 and L3.4 of the EPL were further varied by the EPA to lower the maximum prescribed emission rate for phosphine from 0.15 to 0.0424 g/s. The minimum prescribed velocity of phosphine during ventilation in condition L3.5 was also reduced from 3.1 m/s to 0.5 m/s. The EPL, as varied on 23 May 2016, remained current until the end of the charge period. The Interpretation Error 1. During the charge period, GrainCorp's fumigators, who operated the fumigation system during ventilation events, incorrectly interpreted the display of the volumetric flow rate on the SCADA as a measure of flow velocity and, consistent with their work instructions, divided that reading by 1000 to obtain a measure of velocity in m/s. For example, 1400 L/s divided by 1000 was incorrectly interpreted as representing a velocity of 1.4 m/s, when it in fact represented a volumetric flow rate of 1.4 m3/s. 2. Due to the interpretation error, GrainCorp used an incorrect formula to calculate the emission rates of the fumigants, which was as follows: emission rate (g/s) = silo headspace fumigant concentration (g/m³) x flow velocity (m/s) [calculated by dividing the L/s reading by 1000] x stack cross sectional area (0.283m²) ("the incorrect formula"). 1. In March 2016, the incorrect formula was embedded in the fumigation spreadsheet used by GrainCorp fumigators to calculate and control the rate of emissions of fumigants for the whole charge period. 2. On 12 February 2018, GrainCorp advised that the correct formula to incorporate proper readings of the SCADA data as volumetric flow which should have been applied to calculate the maximum emission rate during the charge period was: emission rate (g/s) = silo headspace fumigant concentration (g/m³) x fan speed (volumetric flow rate) (m³/s) [calculated by dividing the l/sec reading by 1000] ("the correct formula"). 1. In a letter to the EPA on 24 August 2018, GrainCorp stated that: …the calculation of the emission rate was a systemic error which was created at the time that GrainCorp was putting in place systems and processes to comply with the new Licence requirements relating to fumigation (which commenced on 23 February 2016). The calculation used during the Relevant Period was based on modelling provided in a report prepared by AECOM in 2015, which was provided to the EPA at that time and which formed the basis for variations to GrainCorp's Licence on 23 February 2016. However, in implementing the calculation in the AECOM report in or around March 2016 (for the purpose of ensuring compliance with the varied Licence conditions) the calculation was misinterpreted by GrainCorp's Quality Assurance Manager, Mr Phillip Clamp. The incorrect calculation was subsequently communicated to the fumigation team and programmed into the fumigation monitoring system. Detection of the Interpretation Error 1. On 1 February 2018, Mr Rickard was in the planning stages of an upgrade of GrainCorp's automation control system at the premises which included a review of inputs into the SCADA system. Mr Rickard identified that the conversion by the fumigators of the flow meter readings on the SCADA system (shown as fan speed) from "L/s" to "m/s" was incorrect and that the fumigators were misinterpreting the volumetric flow reading as velocity. 2. Mr Rickard requested a copy of the AECOM March 2015 Report. He formed the view that there may have been an error in the calculation of emission rates from the fumigation system. He raised the issue with the fumigators and GrainCorp management on 1 February 2018. 3. GrainCorp sought advice from AECOM who confirmed the interpretation error and the application of the incorrect formula on 5 February 2018. 4. On 5 February 2018, GrainCorp voluntarily ceased fumigation and ventilation activities on the premises. Notification to the EPA 1. In accordance with its EPL conditions and the relevant provisions of the POEOA, on 8 February 2018 Mr Jelbart called the EPA's "Environment Line" to report that GrainCorp had identified that it had not complied with EPL conditions L3.3 and L3.4 when venting fumigants between January 2016 and 23 January 2018. Mr Jelbart also called Wollongong City Council, the Ministry of Health, SafeWork NSW, and Fire and Rescue NSW and made similar reports. 2. On 12 February 2018, Mr Jelbart sent a letter to the EPA, copying Wollongong City Council, the Ministry of Health, SafeWork NSW, and Fire and Rescue NSW, reporting non-compliance with EPL conditions L3.3 and L3.4 during each ventilation event from 23 February 2016 to 23 January 2018, and providing an explanation of the nature and cause of the interpretation error and the use of the incorrect formula. Mr Jelbart also provided the EPA with a report prepared by AECOM on 12 February 2018, which modelled probable off-site ground level concentrations of the fumigants during each ventilation event ("AECOM February 2018 Report"). 3. The AECOM February 2018 Report concluded that the predicted ground level concentrations at, or beyond, the boundary of the premises during the charge period did not exceed the EPA's impact assessment criteria for both methyl bromide and phosphine as specified in the Approved Methods. 4. On 16 February 2018, the EPA provided a draft notice of variation of the EPL proposing to prohibit fumigation at the premises and to require a fumigation audit to be conducted. The EPA also requested that GrainCorp investigate the potential impacts of ventilation on 18 January 2018 on a cruise ship that was berthed on that date next to the premises. GrainCorp was also asked to provide corrected Annual Returns and emissions reporting data. 5. On 21 February 2018, the EPA varied the EPL by adding condition E.1 prohibiting all fumigation activities at the premises and by adding condition U.1 requiring a fumigation audit to be undertaken by a suitably qualified and independent auditor approved in writing by the EPA. The fumigation audit was required to audit the fumigation systems and procedures and to assess whether they were adequate to recommence fumigation operations at the premises in compliance with the EPL. The Reasons Why the Interpretation Error Was Not Detected Earlier 1. GrainCorp wrote to the EPA on 24 August 2018 setting out, amongst other things, the following reasons why the incorrect formula was not detected earlier: ● When the calculation was programmed into GrainCorp's systems, there was no cross reference or evidence verifying the calculation with a subject matter expert; and ● There were no deeper evaluations by management to check the calculations used in the spreadsheets to generate the data and there was no auditing in place to audit the calculations embedded in procedural checklists; ● Procedures and administrative controls were confusing when referencing any conversions rates and did not align with required EPL limits. This made it difficult to check when conversion rates were applied. 1. In that letter, GrainCorp also identified the measures, checks, and systems it had in place during the charge period, namely, that it operated a certified quality management system. However, this system was focussed on overall management system compliance and it did not provide a detailed audit process of the aspect of fumigation and ventilation in question. 2. In his record of interview dated 13 September 2018, Mr Clamp stated that he was the person who made the interpretation error. Mr Clamp also stated that he had implemented the incorrect formula in the fumigation spreadsheets by his own initiative and that he did not subsequently review or proof those spreadsheets. Mr Clamp also said that he was the person who instructed and trained the fumigators in person and by email on the interpretation of the SCADA readings of flow rate and the incorporation of the incorrect formula into the fumigation spreadsheet. 3. GrainCorp did not provide any instructions or training to Mr Clamp or the fumigators in relation to the interpretation of the SCADA readings or the development of the formula for calculating emission rates. Mr Clamp stated that GrainCorp would have provided him with support for this work if he had asked for it, but that he did not seek it because he "would not normally seek a peer review of everything" that he did and that this work formed part of the normal scope of his work as Quality Assurance Manager. 4. The subsequent application of the incorrect formula by fumigators was similarly not peer reviewed or checked by anyone else at GrainCorp. GrainCorp Carried Out the Licensed Activity in a Less Than Competent Manner 1. During the charge period GrainCorp fumigated grain at the premises with methyl bromide on 115 occasions and with phosphine on 30 occasions, venting the residual fumigants into the atmosphere on each occasion. 2. For each ventilation event that occurred during the charge period GrainCorp failed to carry out ventilation in a competent manner because it incorrectly calculated and recorded the rate of emissions of the fumigants from the vent stacks located on the premises. This resulted in GrainCorp exceeding the maximum emission rates prescribed in conditions L3.3 and L3.4 of the EPL for the emission of no more than 8 g/s of methyl bromide and 0.15 g/s of phosphine (and later when the EPL was varied on 23 May 2016, 0.0424 g/s for phosphine) when measured instantaneously. 3. The interpretation error and the resultant incorrect formula for calculating emission rates caused the actual rate of emissions of the fumigants to be up to approximately 3.5 times higher than GrainCorp had calculated and recorded during the ventilation events. 4. As a result of the GrainCorp's failure to calculate the emission rate of the fumigants during ventilation in a competent manner, the fumigants were inadvertently released at a rate greater than was otherwise permitted under the EPL on 145 occasions. Further Investigations 1. On 28 February 2018, the EPA and NSW Health requested that GrainCorp provide an air quality impact assessment report that fully set out the data and assumptions on which any modelling of emissions of the fumigants was based, described the risk factors to human health, justified the acute and chronic exposure criteria, and identified any uncertainty involved in the modelling. 2. On 12 March 2018, GrainCorp provided the EPA with a final air quality impact assessment report prepared by AECOM ("the AECOM March 2018 Report"). In that report, AECOM modelled predicted concentrations of methyl bromide and phosphine for all fumigation events and concluded that: The predicted ground level concentrations between March 2016 and December 2017 when the fumigation activities were potentially occurring in breach of the licence limits were shown to be in compliance with both ambient air quality and short and long term human health risk assessment criteria. 1. On 24 April 2018, the EPA wrote to GrainCorp raising questions about the air quality impact assessment in the AECOM March 2018 Report and requesting that GrainCorp better characterise the potential impacts associated with the ventilation events by: 1. providing a full data set about each ventilation event, including the total quantities of fumigant used and emitted during each ventilation event; 2. comparing the parameters used in the AECOM modelling with GrainCorp data and operational procedures; and 3. revising the AECOM March 2018 Report in light of the above information and the findings of the fumigation audit. 1. On 25 May 2018, AECOM prepared a report clarifying the methodologies used in the AECOM March 2018 Report ("the AECOM May 2018 Report"). 2. The AECOM May 2018 Report concluded that the actual emissions monitoring data for the charge period generally exceeded the modelled emissions in the AECOM March 2018 Report for the first hour of ventilation due to a 15 to 30 minute time lag in the displacement of fumigants from the grain into the silo headspace and then into the vent stacks. 3. On 20 June 2018, GrainCorp provided the EPA with the AECOM report Stage Two Response to EPA Questions: Air Quality Impact Assessment: Port Kembla Grain Fumigation Modelling 2016 – 2017 ("AECOM June 2018 Report"). The significance of the findings of the AECOM June 2018 Report are discussed in detail later in this judgment. The GHD Audit Report and Implementation of Audit Recommendations 1. On 13 April 2018, GrainCorp provided the EPA with a draft fumigation audit report ("the Draft GHD Audit Report") prepared by GHD Pty Ltd ("GHD") required by condition U1 of the EPL. 2. On 10 May 2018, the EPA provided comments to GrainCorp that the Draft GHD Audit Report did not meet the requirements of condition U1.3 because it did not provide sufficient, robust, or detailed information on: 1. the specifics of GrainCorp's fumigation systems and procedures, including its monitoring and sampling procedures; or 2. any corrective actions, including control or mitigation measures, that have been or can be implemented to prevent recurrence of human error or uncontrolled discharges of the fumigants. 1. In relation to condition O1.1, the EPA commented in its letter of 10 May 2018 in relation to the GHD draft audit that: The EPA considers the non-compliance with fumigant concentrations also represent non-compliances with EPL Conditions O1.1 and O1.2. The EPA requests these conditions be added to table 3 Summary of non-compliances and associated tables. 1. On 19 June 2018, GrainCorp provided the EPA with the final fumigation audit report prepared by GHD ("the GHD Audit Report") in response to condition U1.5. 2. The GHD Audit Report found that the exceedances reported by GrainCorp to the EPA were the result of a number of shortcomings in GrainCorp's systems and processes. 3. The GHD Audit Report also concluded that GrainCorp had not complied with condition O1.1 of the EPL because of: …inadequate quality procedures which contribute to the non-detect of systemic calculation errors and the non-detect of breaches of volumetric flow and gas concentration limits. 1. The GHD Audit Report made recommendations for the corrective actions ("CA") required to comply with the EPL, including that GrainCorp: 1. CA1 – resubmit the Annual Returns for this period with the corrected emissions and flow data (within one month of re-commencing fumigation); 2. CA2 – provide detailed records for each grain silo fumigated with the Annual Return as required by condition R4.1 (within one month of re-commencing fumigation); 3. CA3 – develop supporting documents to enable the implementation of the reporting and recording flow charts (within one month of re-commencing fumigation); 4. CA4 – develop and maintain a register of controlled documents including procedures and records that must be maintained to protect the integrity of the system (within one month of re-commencing fumigation); 5. CA5 – develop a documented procedure for a robust audit program, including how the scope of each audit (process, compliance and system audits) would be selected and prioritised to address risks associated with fumigation and venting (within one month of recommencing fumigation); and 6. CA6 – seek approval from the EPA for the monitoring equipment proposed in Port Kembla Fumigation Training Facilitation Guide Version 1.4 and amend EPL condition M2.3 accordingly (prior to re-commencing fumigation). 1. The GHD Audit Report also identified a number of improvement opportunities ("IO") for GrainCorp: 1. IO1 – consolidate roles and responsibilities for the fumigation and ventilation process (including support roles from other divisions of GrainCorp) into one document; 2. IO2 – develop an environmental compliance register which includes all environmental obligations (legislation, regulations, and statutory instruments) applicable to fumigation and venting; 3. IO3 – in line with s 66 of the POEOA, GrainCorp is to liaise with the EPA to identify the extent to which the data on GrainCorp's website should be amended to correct errors associated with the EPL exceedances; 4. IO4 – review internal incident response procedures to allocate responsibility and document the requirements for reporting breaches of licence conditions to the EPA; 5. IO5 – update fumigation training material and the SCADA interface with the units of measure specified in the EPL to reduce risk of human error during conversion of units; 6. IO6 – consider developing an environmental management system in conformity with Australian Standard ISO14001:2015, initially for the environmental management of the fumigation and ventilation process, and in the longer term the whole site; 7. IO7 – revise the Safe Work Method Statement ("SWMS") Fumigate with Methyl Bromide and SWMS Fumigate with Phosphine to specify that the EPA ID Points 3-8 are used to monitor compliance with the EPL concentration limits during venting; 8. IO8 – complete the assessment of the feasibility of a system upgrade to automate and reduce manual process steps; 9. IO9 – implement quality control procedures to monitor for transcription errors. GrainCorp is to consider the use of data loggers to reduce the likelihood of transcription errors from manually recorded vent stack fumigant concentrations; and 10. IO10 – conduct maintenance inspections of expansion bellows on fumigation pipework to assess for corrosion or wear and to ensure the integrity of pressurised pipework. 1. On 1 August 2018, the EPA commented upon the GHD Audit Report: 1. indicating its support for the recommended CAs and IOs; 2. requiring additional measures be incorporated in GrainCorp's audit implementation report, including regular review of procedures, roles, responsibilities, and documents; and 3. recommending the adoption of timeframes for the completion of each measure. 1. On 20 September 2018, GrainCorp provided the EPA with an Audit Implementation Report in compliance with condition U1.9 ("the Audit Implementation Report"). In the Audit Implementation Report, GrainCorp agreed to implement all of the CAs and nine out of the ten IOs recommended by GHD. 2. On 13 November 2018, the EPA issued an EPL variation to GrainCorp requiring it to implement the recommendations of the GHD Audit Report, as agreed in the Audit Implementation Report. 3. As at 28 June 2019, GrainCorp have complied with a number of the conditions of its EPL relating to implementation of the GHD Audit Report, including: 1. E3.3(1) – GrainCorp must submit corrected Annual Return data, including detailed records for each grain silo fumigated in accordance with condition R4.1; 2. E3.3(2) – GrainCorp must update the GrainCorp website with the corrected data and include an explanation for the corrected data, including a "correction log"; and 3. E3.7 – GrainCorp must seek approval from EPA for the monitoring equipment proposed to be used in the Fumigation Training Facilitator Guide Version 1.4 and to ensure that the current guide is referenced in the EPL. Resubmission of GrainCorp's Annual Returns 1. Due to the interpretation error, GrainCorp incorrectly reported the concentration of fumigant emissions in its 2016 and 2017 Annual Returns provided to the EPA and its emissions monitoring data published on its website. 2. On 22 August 2018, following a direction from the EPA, GrainCorp resubmitted its Annual Return for the period 24 June 2017 to 23 June 2018, in which it included statements regarding its non-compliance with condition O1.1 during the charge period based on the findings of the GHD Audit. 3. On 28 September 2018, GrainCorp resubmitted its Annual Returns for the periods 24 June 2015 to 23 June 2016 and 24 June 2016 to 23 June 2017. Additional Remedial Action Undertaken by GrainCorp 1. In addition to complying with the conditions of its EPL, once the interpretation error was detected, GrainCorp undertook the following actions: 1. published details of the exceedances on its website; 2. implemented the correct formula in the fumigation spreadsheet; 3. commissioned air quality modelling of ventilation events and responded to EPA's queries regarding that modelling; 4. conducted a review of personnel with process engineering competence and, as a result, engaged a new Electrical Control Technician; 5. updated training documents and SWMS; 6. updated the Pollution Incident Response Management Program to include breach of emission limits as a hazard; 7. provided training to employees regarding updated work instructions; 8. updated reporting and recording flow charts for fumigation and venting procedures, monitoring data, and the Annual Returns; 9. adopted an audit schedule which details the number and frequency of plant inspections, process audits, compliance and system audits, and verification audits; and 10. installed new flow meters and concentration monitors. 1. GrainCorp is currently upgrading the SCADA system. 2. In addition, in his affidavits Mr Lotz deposed that GrainCorp undertook a fumigation upgrade project including an investigation of potential uses of technology to assist in removing any scope for future error. His evidence was that GrainCorp intends to automate the process of calculations within the SCADA system once all upgrades are complete. Mr Lotz also deposed that GrainCorp hired a dedicated Environmental Advisor in January 2019. 3. Based on these measures, the EPA varied the EPL on 15 February 2019 to amend the prohibition against ventilation of the fumigants to be limited to periods when cruise ships are berthed at AAT. 4. Ventilation of fumigants re-commenced at the premises on 28 May 2019. The Purposes of Sentencing 1. The purposes of sentencing are set out in s 3A of the Crimes (Sentencing Procedure) Act 1999 ("CSPA"): 3A Purposes of sentencing The purposes for which a court may impose a sentence on an offender are as follows: (a) to ensure that the offender is adequately punished for the offence, (b) to prevent crime by deterring the offender and other persons from committing similar offences, (c) to protect the community from the offender, (d) to promote the rehabilitation of the offender, (e) to make the offender accountable for his or her actions, (f) to denounce the conduct of the offender, (g) to recognise the harm done to the victim of the crime and the community. Statutory Matters Required to be Taken into Account in Sentencing 1. In addition to the matters set out in Div 1 of the CSPA, s 241(1) and (2) of the POEOA sets out the factors which are required to be taken into account in determining a sentence for an offence committed under that Act: 241 Matters to be considered in imposing penalty (1) In imposing a penalty for an offence against this Act or the regulations, the court is to take into consideration the following (so far as they are relevant): (a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence, (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm, (c) the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence, (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence, (e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee. (2) The court may take into consideration other matters that it considers relevant. 1. Subsection 21A(2) of the CSPA also sets out aggravating factors that the Court must consider. Those relevant to the facts of this case are: 21A Aggravating, mitigating and other factors in sentencing (2) Aggravating factors The aggravating factors to be taken into account in determining the appropriate sentence for an offence are as follows: … (d) the offender has a record of previous convictions (particularly if the offender is being sentenced for a serious personal violence offence and has a record of previous convictions for serious personal violence offences), … (g) the injury, emotional harm, loss or damage caused by the offence was substantial, … (o) the offence was committed for financial gain, … The court is not to have additional regard to any such aggravating factor in sentencing if it is an element of the offence. 1. Section 21A(4) of the CSPA further states that, "the court is not to have regard to any such aggravating or mitigating factor in sentencing if it would be contrary to any Act or rule of law to do so". 2. The appropriate sentence to be imposed on GrainCorp is to be determined by an instinctive synthesis of all of the relevant objective and subjective circumstances of the commission of the offence (Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357). 3. Importantly, the sentence to be imposed on Graincorp for the offence must be proportionate to both the objective seriousness or gravity of the offence and GrainCorp's subjective circumstances (Veen v The Queen [1979] HCA 7; (1979) 143 CLR 458 at 490 and Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 at 472). 4. The Court must not take facts into account in a manner that is adverse to GrainCorp unless those facts have been established beyond reasonable doubt by the EPA. If there are mitigating circumstances that the Court proposes to take into account, it is sufficient that those circumstances are proved on the balance of probabilities (Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident) [2014] NSWLEC 103; (2014) 206 LGERA 239 at [82]; R v Olbrich [1999] HCA 54; (1999) 199 CLR 270 at [27]; and Gore v The Queen; Hunter v The Queen [2010] NSWCCA 330; (2010) 208 A Crim R 353 at [26]). Objective Circumstances of the Offence 1. The objective gravity of the offence fixes both the upper and lower limits of proportionate punishment. It fixes the upper limit insofar as the sentence must not exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in light of its objective circumstances (Veen v The Queen (No 2) at 486 and Hoare v The Queen [1989] HCA 33; (1989) 167 CLR 348 at 354). It fixes the lower limit because allowance for the subjective factors of the case ought not produce a sentence which fails to reflect the objective gravity or seriousness of the offence (R v Dodd (1991) 57 A Crim R 349 at 354 and R v Nichols (1991) 57 A Crim R 391 at 395). 2. Objective seriousness is to be determined by reference to the nature of the offence and not by reference to matters that are personal to a particular offender (Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120 at [27]). 3. The relevant factors that the Court ought to have regard to in determining objective seriousness are discussed below. Nature of the Offence 1. The nature and purpose of the statutory provision that has been contravened, and its place in the statutory scheme, give an indication of the objective seriousness of the environmental offence committed (Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34; (2006) 145 LGERA 234 at [168]-[169], Plath v Rawson [2009] NSWLEC 178; (2009) 170 LGERA 253 at [49]; and Chief Executive, Office of Environment and Heritage v Orica Pty Ltd; Environment Protection Authority v Orica Pty Ltd [2015] NSWLEC 109 at [59]). 2. The relevant objects of the POEOA contained in s 3 of that Act identify the legislative rationale for creating the offence. In Orica Australia (the Nitric Acid Air Lift Incident) the Court opined that (at [104]): 104. …Compliance with licence conditions is the price that entities must pay for permission to engage in potentially polluting manufacturing processes. The conditions imposed in any licence are aimed at maximising beneficial environmental outcomes and minimising environmental harm. They represent a balancing exercise between fostering economic growth and development, on the one hand, and protecting and preserving the environment now and for the future, on the other. Strict compliance with the conditions of any environmental licence is therefore necessary to ensure that this balance is achieved and that the objectives of the POEOA are met. 1. In Environment Protection Authority v Ridley AgriProducts Pty Limited [2019] NSWLEC 119, Robson J remarked that (at [45]): 45. Conditions imposed upon an environmental protection licence traverse a spectrum of obligations. Some are procedural, the consequences of non-observance of which are not necessarily adverse to the environment, while others are regarded as more fundamental in the control of the regulated activity: Environment Protection Authority v Huntsman Corporation Australia Pty Ltd [2011] NSWLEC 39 ('Huntsman') at [65]. I consider that the condition the subject of the current offences, being one requiring that plant and equipment used in connection with the licenced activity be operated in a proper and efficient manner, is a condition of the latter kind such that failure to observe the requirements involved a system-based failure. 1. The EPA submitted, and I accept, that the breach of the EPL in the present case is analogous to the breach that Robson J considered in Ridley AgriProducts. 2. The EPA further submitted that carrying out licensed activities in a competent manner is vital to the functioning of the licensing regime. 3. I agree. GrainCorp breached condition O1.1 of the EPL because, for the reasons discussed earlier in the judgment, it failed to undertake ventilation during the charge period in a "competent manner", thereby contravening s 64(1) of the POEOA. The transgression was incompatible with the regulatory regime and the objects of the POEOA, especially with respect to the protection of the environment (see, in particular, s 3(d) of the POEOA) (Orica Australia (the Nitric Acid Air Lift Incident) at [105] and Environment Protection Authority v Sydney Water Corporation [2019] NSWLEC 100 at [138]-[139]). Maximum Penalty 1. The maximum penalty provided for an offence indicates the seriousness with which the legislature views the commission of the offence (Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698 and Rawson at [57]). It also provides a sentencing yardstick for the case before the Court (Markarian at [31] and Elias v The Queen; Issa v The Queen [2013] HCA 31; (2013) 248 CLR 483 at [27]). The maximum penalty for an offence against s 64(1) of the POEOA by a corporation is $1 million. GrainCorp's State of Mind in the Commission of the Offence 1. Although the offence created by s 64(1) is a strict liability offence, if committed intentionally, recklessly, or negligently, this will increase the objective seriousness of the offence compared to those committed inadvertently (Ridley AgriProducts at [67]; Gittany Constructions Pty Ltd v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189 at [123]; and Director-General of the Department of Environment and Climate Change v Rae [2009] NSWLEC 137; (2009) 168 LGERA 121 at [42]). There was no evidence that GrainCorp committed the offence other than inadvertently. GrainCorp's Reasons for the Commission of the Offence 1. The criminality involved in the commission of the offence by an offender is measured not only by the seriousness of what actually occurred but also by reference to the reasons for its occurrence (Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at [366] and Bentley at [237]). An offence committed for financial gain is objectively more serious than one which is not. There was no evidence that the offence was committed to gain a monetary benefit. The Environmental Harm Occasioned or Likely to be Occasioned by the Commission of the Offence 1. Section 241(1)(a) of the POEOA requires the Court to take into account the extent of the harm caused, or likely to be caused, to the environment by the commission of the offence. 2. "Harm" is defined in the dictionary to the POEOA as: harm to the environment includes any direct or indirect alteration of the environment that has the effect of degrading the environment and, without limiting the generality of the above, includes any act or omission that results in pollution. 1. Methyl bromide is an odourless, colourless gas which can pose a risk to human health above certain threshold concentrations through acute or chronic exposure. 2. It is also an ozone depleting substance. 3. Methyl bromide is classified as a dangerous good under the Australian Dangerous Goods Code. 4. The Material Safety Data Sheet for AgriGas M (Methyl Bromide) (BOC, 2018) indicates that: 1. acute exposure to methyl bromide by inhalation or dermal exposure can cause death and or severe injuries, including: 1. damage to the lungs, liver, and kidneys; 2. neurological effects including seizures, tremors, fainting, hallucinations, headaches, dizziness, lethargy, weakness, mental confusion, speech impairment, visual effects, and numbness; and 3. irritation to the eyes, skin, and upper respiratory system; 1. methyl bromide is a dangerous cumulative poison. The effects of exposure can be delayed from 48 hours to several months after exposure. Chronic exposure to methyl bromide may result in damage to the lungs, liver and kidneys, and mild neurological impairment. It is also suspected of causing genetic defects; and 2. methyl bromide is also very toxic to terrestrial and aquatic organisms. 1. Phosphine is an odorous air pollutant which can pose a risk to human health above certain threshold concentrations through acute or chronic exposure. 2. The Material Safety Data Sheet for Eco2Fume (BOC, 2015) indicates that: 1. acute exposure to phosphine by inhalation or dermal exposure can cause death and severe injuries, including: 1. respiratory effects including pulmonary edema, pulmonary irritation, coughing with green sputum, laboured breathing, and chest tightness; 2. neurological effects including tremors, convulsions, dizziness, lethargy, and fatigue; 3. gastrointestinal effects, including nausea and vomiting; and 4. serious irritation to the eyes and skin and cyanosis; 1. chronic exposure to phosphine may cause inflammation of the nose and throat, weakness, dizziness, nausea, gastrointestinal and cardiorespiratory distress, jaundice, liver effects, and increased bone density; 2. phosphine is also very toxic to terrestrial and aquatic organisms; and 3. in high concentrations, phosphine can also form explosive mixtures with air and self-ignite. 1. In Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; (2006) 148 LGERA 299, Preston J stated, in the context of an offence against s 120 of the POEOA, that harm includes both actual harm and potential harm (at [145]-[148]): 145. Harmfulness needs to not only be considered in terms of actual harm, the potential or risk of harm should also be taken into account: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 366 and Bentley v BGP Properties Pty Ltd (2006) 145 LGERA 234 (6 February 2006) at [175]. Harm should not be limited to measurable harm such as actual harm to human health. It can also include a broader notion of the quality of life. 146. Harm can include harm to the environment and its ecology. Harm to an animal or plant not only adversely affects that animal or plant, it also affects other biota that have ecological relationships to that animal or plant: Bentley v BGP Properties Pty Ltd at [174]. 147. Harm can be direct or indirect, individual or cumulative. Activities that contribute incrementally to the gradual deterioration of the environment, even when they cause no discernible direct harm to human interest, should also be treated seriously. 148. The culpability of the defendant depends in part on the seriousness of the environmental harm. Sentencing courts have exercised their discretion in relation to penalty on the principle that the more serious the lasting environmental harm involved, the more serious the offence and, ordinarily, the higher the penalty: Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority at 701. If the harm is substantial, this objective circumstance is an aggravating factor: s 21A(2)(g) of the Crimes (Sentencing Procedure) Act 1999 NSW. 1. The following evidence is relevant. The AECOM June 2018 Report modelled the concentrations of the fumigants during six model scenarios of ventilation events against four sets of criteria. First, the NSW EPA's Ambient Air Assessment Air Quality Criteria as set out in the Approved Methods ("EPA criteria"): Pollutant Assessment criterion Averaging period Methyl Bromide 350 µg/m3 1 hour Phosphine 3.1 µg/m3 1 hour 1. The EPA criteria represent the levels at which the EPA finds the presence of pollutants acceptable, above which further assessments of health and environmental risks would need to be conducted. 2. Second, the Protective Action Criteria ("PAC") for acute episodes of exposure (averaged over one hour), as developed by the Department of Energy of the Government of the United States of America: 1. PAC-1 – mild, transient health effects; 2. PAC-2 – irreversible or other serious health effects that could impair the ability to take protective action; and 3. PAC-3 – life-threatening health effects. Pollutant Assessment criterion Averaging period Methyl Bromide PAC-1: 79,400 µg/m3 1 hour PAC-2: 878,000 µg/m3 1 hour PAC-3: 3,090,000 µg/m3 1 hour Phosphine PAC-1: 1,500 µg/m3 1 hour PAC-2: 2,990 µg/m3 1 hour PAC-3: 3,090,000 µg/m3 1 hour 1. Third, chronic exposure criteria for prolonged exposure averaged over one year developed by the United States of America Environment Protection Authority: Pollutant Residential exposure Commercial exposure Methyl Bromide 5.2 µg/m3 22 µg/m3 Phosphine 0.31 µg /m3 1.3 µg/m3 1. Fourth, SafeWork Australia's eight hour time-weighted average work exposure standards for airborne contaminants in the workplace: Pollutant Assessment criterion Methyl Bromide 19,000 µg/m3 Phosphine 420 µg /m3 1. Relevantly, the AECOM June 2018 Report's findings are summarised in the following table extracted from the Report: 1. A summary of the modelling in the AECOM June 2018 Report stated that: The results of the six modelled scenarios indicate the following: Ground level pollutant concentrations at or beyond the boundary complied with the NSW EPA assessment criteria for the operations between 2016 and 2017 for PH3 and for MeBr in 2016. The maximum predicted 99.9th percentile PH3 concentration for 2016 and 2017 was 0.876µg/m3 (compared with a criteria of 3.1µg/m3). MeBr concentrations were below the criteria in 2016 with a 99.9th percentile concentration of 288µg/m3 for MeBr (compared with a criterion of 350µg/m3). The maximum 99.9th percentile ground level concentration for MeBr at or beyond the boundary in 2017 was above the NSW EPA criteria with a concentration of 402µg/m3. This concentration prompted further analysis and comparison against the acute health risk assessment screening criteria which has been used as the primary measure of whether an adverse impact is likely as a result of the 2017 MeBr ventilation events. All maximum ground level MeBr and PH3 concentrations for 2016 and 2017 were below the Acute exposure screening criteria, with the maximum predicted concentrations for those two years being 2,024µg/m3 for MeBr (compared with the acute health risk criteria of 79,400µg/m3) and 14.1µg/m3 for PH3 (compared with a criteria of 1500µg/m3). All annual average ground level MeBr and PH3 concentrations for 2016 and 2017 were below both the Residential and Industrial Chronic exposure screening criteria, with the maximum predicted concentrations for those two years being 0.864µg/m3 for MeBr (compared with a criteria of 5.2µg/m3 for Residential exposure and 22.0µg/m3 for Industrial worker exposure) and 0.0033µg/m3 for PH3 (compared with a criteria of 0.31 µg/m3 for Residential exposure and 1.3 for Industrial worker exposure). The maximum MeBr concentration predicted for the period of time around which the Cruise Ship was in Port on 27 December 2016 was 1220µg/m3 (compared with the acute health risk criteria of 79,400µg/m3). The maximum concentration was found to be at Level 15 at the approximate location of the top viewing deck of the Cruise ship. The maximum MeBr concentration predicted for the period of time around which the Cruise Ship was in Port on 18 January 2017 was 541µg/m3 (compared with the acute health risk criteria of 79,400µg/m3). The maximum concentration was found to be at ground level approximately 80m to the north of the edge of wharf at which the Cruise ship was berthed. The maximum concentration at the Cruise Ship itself was 471µg/m3 at the approximate western edge of the Cruise Ship at ground level. The maximum concentration at the viewing deck level was 450µg/m3. Worker health has been assessed through the analysis of the receptor concentrations at the Gantry level above the silos, adjacent to the stack emission points and at ground level. MeBr and PH3 results for workers were as follows: Predicted gantry MeBr concentrations were below short term acute screening criteria and Time Weighted Average (TWA) criteria for all scenarios with the exception of MeBr 2017 (Scenario 2), which exceeded the 1 hour average MeBr acute screening criteria. The predicted 1 hour MeBr concentration for 2017 was 108,020µg/m3 (compared with a criterion of 79,400µg/m3). The maximum 8 hour MeBr concentration for 2016 and 2017 was 13,503µg/m3 (compared with a criteria of 19,000µg/m3). Further analysis of the exceedance and its implications are provided in Section 5.1.3. All predicted gantry PH3 concentrations were below short term acute screening criteria and Time Weighted Average (TWA) criteria. The maximum predicted 1 hour PH3 concentration for 2016 and 2017 was 312µg/m3 (compared with a criteria of 1500µg/m3) and the maximum 8 hour PH3 concentration for 2016 and 2017 was 39.1µg/m3 (compared with a criteria of 1,500µg/m3). All ground level MeBr and PH3 concentrations at ground level were below their relevant acute exposure criteria and were lower than the off-site maximum ground level concentrations. 1. On 30 November 2018, AECOM provided a further sensitivity analysis, which concluded that even with substantial error margins applied, the air quality impacts modelled for all ventilation events in the AECOM June 2018 Report did not exceed any air quality impact assessment acute or chronic criteria for human health. 2. Finally, in his affidavit dated 26 August 2019, Mr Lotz deposed that all GrainCorp fumigators are required to undertake annual blood tests to ensure that there are no residual chemical levels present in their bodies. Such tests are undertaken at peak exposure time. Mr Lotz inquired into the blood test results of the two fumigators present on 14 May 2017 and confirmed that neither of them returned results indicating residual chemical levels after that date. 3. Accordingly, as the parties agreed, there was no evidence of any actual harm to human health as a result of the failure of GrainCorp to calculate the emission rate of the fumigants during ventilation during the charge period in a competent manner. 4. The EPA submitted, however, that the emission of fumigants at rates in excess of those prescribed in the EPL caused harm to the environment as defined in the Dictionary to the POEOA in that it: 1. introduced into the environment quantities of chemicals toxic to human and terrestrial life, which had the effect of altering and degrading the environment, albeit only temporarily; and 2. emitted into the air quantities of "air impurities" at rates in excess of the EPL conditions without lawful authority which constituted air pollution. 1. "Air pollution" and "air impurity" are defined as: air pollution means the emission into the air of any air impurity. air impurity includes smoke, dust (including fly ash), cinders, solid particles of any kind, gases, fumes, mists, odours and radioactive substances. 1. I do not accept the EPA's submission in this regard. First, the definition of "harm" in the Dictionary to the POEOA requires that the alteration to the environment "has the effect of degrading the environment", which is not established on the evidence before the Court. 2. Second, as submitted by GrainCorp, the fumigants were permitted to be released into the atmosphere under the EPL. The overall quantity of fumigant released into the atmosphere was not varied by the commission of the offence. This was due to the fact that a standard quantity of fumigant (which will vary depending on the specific requirements of the country to which the grain is exported) is pumped into the silo during fumigation and all of that fumigant is released into the atmosphere during ventilation events, save that which is adsorbed into the grain. Rather, the offence related to the rate of emission of the fumigants. 3. Third, and in any event, the rule in R v De Simoni [1981] HCA 31; (1981) 147 CLR 383 (at 389) precludes the Court from considering whether or not the offence caused harm insofar as it caused air pollution as defined in the Dictionary to the POEOA. GrainCorp was not charged with an offence of air pollution (see Pt 5.4 of the POEOA). 4. There was, therefore, no actual harm caused by the commission of the offence. Potential for Environmental Harm 1. The EPA submitted that the commission of the offence gave rise to the potential for, or risk of, harm, relying on the reasoning in Waste Recycling and Processing Corporation. 2. The failure of GrainCorp to calculate the emission rate of the fumigants during ventilation during the charge period in a competent manner resulted in the PAC-1 assessment criterion to be exceeded in the hour from 9 am to 10 am on 14 May 2017, in the immediate vicinity of the top of Tower 2 on the premises between the northern and southern silos. If any person had been present in that location at that time they may have been exposed to PAC-1 trigger levels of methyl bromide, and therefore, may have experienced mild transient health effects. 3. However, the top of Tower 2 is an enclosed (although not airtight) space at a height of 55 m above ground level. Plant records indicate that on 14 May 2017 (a Sunday), the only site activities occurring on the premises were rail receivals (located at ground level 500 m to the north of the central vent stacks) and the fumigant ventilation activities (which do not involve staff being present at the elevated tower locations). 4. In his affidavit affirmed 26 August 2019, Mr Lotz confirmed that based on his knowledge and inquiries there was no person actually present, and no reason for any person to be present, in the vicinity of the top of Tower 2 between 9 am and 10 am on 14 May 2017. Mr Lotz deposed that GrainCorp staff are only required to enter this space for the purpose of maintenance or hygiene activities, which were not being undertaken on that day. 5. On this basis, the AECOM June 2018 Report concluded that there was a very low likelihood that any staff member would have been at this receptor location for a significant period of time when the exceedance occurred, and therefore, the likelihood that there would have been an adverse health impact from the ventilation event was low. 6. The meaning of the words "likely to be caused to the environment" in s 241(1)(a) of the POEOA was considered by Lloyd J in Newcastle City Council v Pace Farm Egg Products Pty Ltd [2002] NSWLEC 66, where his Honour stated (at [44], citations omitted): …in considering the harm likely to be caused to the environment, it is to be noted that the word "likely" in this context has been held to mean "a real or not remote chance or possibility regardless of whether it is less or more than a fifty per cent chance"… 1. GrainCorp submitted that in this case there was only a remote and not a real prospect of harm to the environment and that this was insufficient to constitute "harm" for the purposes of s 241(1)(a) of the POEOA. 2. GrainCorp further sought to distinguish between "potential" harm and "likely" harm, submitting that the two were often conflated but in fact "potential harm" was "effectively something outside [s] 241(1)(a)" (T34:37 – T35:11) and that the decision in Waste Recycling and Processing Corporation had put an unwarranted gloss on the statutory definition of "harm" in the POEOA. 3. While there is some force in GrainCorp's submission, I do not need to resolve the issue based on the evidence before the Court and GrainCorp's reluctance to contend that the reasoning of Preston J in Waste Recycling and Processing Corporation was plainly wrong. Although there was only one hour during the charge period where concentrations of fumigant reached levels in excess of the PAC‑1 criteria which could have caused mild transient health effects if a person had been in the immediate vicinity of the top of Tower 2, 55 m above ground level, this is sufficient. Had a person been present at the relevant location, the risk of harm to their health was very real, and not remote. That no one was present was a matter of mere scheduling. While the risk of harm was fleeting and minimal, it was nevertheless extant. 4. GrainCorp further submitted that the De Simoni principle precluded the Court from taking harm into account as a factor in assessing the objective seriousness of the offence. It argued that (T35:42-48): Because if you're taking [environmental harm] into account in terms of objective seriousness, there are only three possibilities. One is that it makes an offence less objectively serious. That's not a real possibility at all. The second is that it makes no difference in which case why take it into account? The third is that it makes an offence more objectively serious in which case one is moving into a circumstance of aggravation. 1. The submission may be rejected. First, s 241(1)(a) of the POEOA mandates the Court to consider the extent of harm caused or likely to be caused to the environment by the commission of the offence. Second, to constitute an aggravating factor under s 21A(2)(g) of the CSPA the harm must be "substantial". The evidence does not support a finding that the environmental harm caused by the commission of the offence was substantial. 2. Finally, the EPA submitted that because the interpretation error related to the use of chemicals that are highly toxic to human, terrestrial, and aquatic life, the offence was objectively more serious because it involved the emission of such chemicals during ventilation events in circumstances where GrainCorp did not accurately know their concentrations. 3. Although the EPL did not prescribe a maximum concentration or quantity of fumigants emitted during a ventilation event, it prescribed a maximum emission rate and minimum velocity, and as GrainCorp accepted, the emission rate will affect the concentration of fumigant in the vicinity of the emission point because the higher the emission rate, the higher the concentration of fumigant that is released into the atmosphere from the silo. Because the total amount of fumigant does not change, the emission rate will drop over the course of the ventilation event as fumigant is released and clean air is introduced into the silo. In short, the fumigants ought to have been emitted at lower concentrations over a longer span of time. 4. However, as GrainCorp stated, while the Court can take into account the fact that the commission of the offence resulted in emission rates inadvertently exceeding the emission rate limit set by the EPL as a relevant circumstance informing the objective seriousness of the offence, the Court has to take care to ensure that GrainCorp is not punished for any exceedance of condition L3.4 of the EPL, an offence with which it was not charged. In other words, the Court cannot have regard to the emission of the fumigants in excess of the limit imposed by the EPL as a circumstance of aggravation (De Simoni at 389). 5. Nevertheless, it remains the fact that the interpretation error meant that GrainCorp did not know the emission rate of the fumigants used during the ventilation events, a matter the Court can, and should, take into account. Reasonable Foreseeability of the Harm Caused or Likely to be Caused to the Environment by the Commission of the Offence 1. The Court must have regard to the extent to which the offender could reasonably have foreseen the harm caused or likely to be caused to the environment as a result of the commission of the offence (s 241(1)(c) of the POEOA). 2. The EPA submitted that the risk of harm to the environment was generally foreseeable and preventable and that GrainCorp could and should have reasonably foreseen that environmental harm could be caused to the environment by the commission of the offence at a general level. This is because where licenced activities involve the release of chemical emissions through a controlled ventilation process, it is reasonably foreseeable that a failure to conduct that activity in a competent manner is likely to cause the harm to the environment. 3. In this case, the EPA submitted that the likelihood of harm was also foreseeable at a specific level. GrainCorp understood that the input calculations underpinning the settings used for ventilation of the fumigants were critical to demonstrate compliance with the EPL and sought advice on the issue. It was reasonably foreseeable that, once the interpretation error was made, the fumigants could be ventilated in a manner that contravened the requirements of the EPL causing harm to the environment. 4. In reply, GrainCorp submitted that while it was reasonably foreseeable that the interpretation error could cause the fumigants to be emitted at an unintended rate and that this might cause some degree of environmental harm, it was not reasonably foreseeable that the commission of the offence would cause "significant" environmental harm. However, s 241(1)(c) requires the Court to consider the reasonable foreseeability of the harm caused or likely to be caused, not whether that harm was "significant". 5. In my view, it was reasonably foreseeable that an exceedance of the maximum emission rate could increase concentrations of the fumigant in the vicinity of the discharge point, and that therefore, the potential for environmental harm in the manner described above could occur as a result of the commission of the offence. Control Over Causes 1. Section 241(1)(d) of the POEOA requires the Court to take into account the extent to which the offender had control over the causes that gave rise to the offence. It was not in dispute that GrainCorp had control over the causes of the commission of the offence. Practical Measures Taken to Prevent, Control, Abate, or Mitigate Harm 1. The Court must take into account the practical measures available to the defendant to prevent, control, abate, or mitigate the environmental harm caused by the commission of an offence (s 241(1)(b) of the POEOA). 2. The EPA argued that GrainCorp's quality assurance system was defective because it allocated the entire responsibility for devising a system of calculating and recording the emissions of the fumigants to one employee, Mr Clamp, and moreover, that there were no checks or controls on his work. 3. The EPA also submitted that GrainCorp had failed to ensure that Mr Clamp was sufficiently qualified or trained to understand AECOM's advice and to undertake the correct calculation. The lack of sufficient expertise of GrainCorp's fumigation and quality assurance staff was evidenced by the fact that following the incident, GrainCorp conducted a review of personnel with process engineering competence and identified that it needed to engage a new Electrical Control Technician, which it subsequently did. 4. The EPA argued that while the fumigators employed by GrainCorp had been trained and were qualified to perform fumigation, the training was not adequate. They had not, for example, been instructed or trained to check, detect and correct the interpretation error. In particular, while the GrainCorp fumigation training material instructed fumigators that the fumigants "must be ventilated in accordance with EPA licence conditions" and that the "airflow rate needs to [be] carefully controlled to ensure emission limits are not exceeded at all times to meet [EPL] requirements", it did not provide instruction that: 1. the flow rate reading on the SCADA system was a reading of volumetric flow in L/s, and not a reading of velocity in m/s. Rather, the material incorrectly trained fumigators that the "volumetric flow rate" was measured in "metres per second", which is a measure of velocity, not volume; and 2. the correct formula had to be used in the fumigation spreadsheet to accurately calculate and record the emission rates. Rather, the material displayed manual purge graphs for methyl bromide and phosphine that were generated using the incorrect formula. 1. In reply, GrainCorp submitted that it had implemented a number of practical measures to avoid or prevent the environmental harm. For example, GrainCorp sought specialist advice from AECOM to assist it in implementing the maximum emission rates for the fumigants as prescribed in the varied EPL. Further, GrainCorp had comprehensive fumigation training material to train fumigators. 2. GrainCorp also maintained that it did not allocate total responsibility for the determination of a formula to calculate fumigant emissions to one employee because it had sought specialist advice from its external consultant, AECOM. In addition, a number of GrainCorp employees, including two in management positions, consulted with the EPA about the proposed maximum emission rates prior to the EPL variation. 3. As was stated by GrainCorp, when a licence holder is required to comply with a new licence condition prescribing, for the first time, maximum emission rates of specified substances from a stack, thereby requiring the licence holder to develop the requisite mathematical formulae to measure the emission rates, one practical measure the licence holder could be expected to take to ensure compliance with the licence would be to procure advice from a specialist consultant. 4. This is a practical measure that GrainCorp did in fact take when the maximum emission rates were prescribed for the fumigants under the EPL variation made on 23 February 2016. Nevertheless, despite taking this measure, the interpretation error was made. 5. It should be recognised that GrainCorp had a reasonable training system in place at the time of the commission of the offence in relation to its fumigation operations. Notably, at the time of the commission of the offence, GrainCorp had in place a Fumigation Training Package which it had developed in order to ensure that those persons carrying out fumigation activities were competent to do so. 6. However, Mr Clamp did not appear to be sufficiently qualified to understand the advice given by AECOM in March 2016 and to prepare the formula to measure the emission rates (see Q/A 376 – 388 of his record of interview on 13 September 2018). Furthermore, although peer review and support was available had he sought it, there was no oversight mechanism in place to check the correctness of his work (Q/A 394-399 of his record of interview). It remains the fact that the interpretation error was only picked up during a general investigation by Mr Rickard into the SCADA control system to facilitate testing of a new system, and not as part of any routine monitoring and oversight function designed to identify such errors (see Mr Rickard's record of interview on the same day at, for example, Q/A 119 – 123, 130 – 132 and 203). 7. According to GrainCorp, the EPA was imposing upon it a "counsel of impossibility" (T37:9). GrainCorp claimed that it could not have been expected to have in place a new fumigation training package immediately after the EPL variation, nor could it have been expected to supervise and review every action undertaken by its employees. GrainCorp relied on the findings of the GHD Audit Report, which stated that GrainCorp had: …stringent requirements for the training, certification and experience of personnel to perform the role of fumigator… It was also evident that GrainCorp have [sic] a very stable workforce, particularly in the fumigation team, where there have only been two new fumigators added to the team in the last ten years. This has resulted in a team of fumigators who are very experienced in their roles and have a well-developed understanding of the risks, compliance obligations and procedures. The auditors found the fumigators to be very knowledgeable in fumigation operations, the risks and controls and able to answer the auditors' questions consistently with their SWMS and training guides. … The fumigator training material provides participants with a thorough understanding of the SWMS Fumigate with Methyl Bromide and SWMS Fumigate with Phosphine including… compliance with the EPL. 1. Having regard to the evidence, I find that Mr Clamp was suitably qualified and that GrainCorp's training procedures were adequate. I also find that GrainCorp did implement practical measures to prevent the potential for environmental harm by seeking specialist advice from AECOM prior to and after the EPL variation. 2. However, given the importance of complying with the new EPL conditions and the toxicity of the fumigants, GrainCorp ought to have had in place more stringent quality assurance mechanisms to avoid or detect the interpretation error. GrainCorp candidly conceded, in its letter to the EPA dated 28 August 2018, that there was an absence such mechanisms. 3. I also find that there ought to have been mandatory oversight of Mr Clamp's work. Such oversight would have reduced the risk of Mr Clamp's work being affected by human error. 4. Accordingly, there were practical measures that GrainCorp could, and should, have taken to prevent, abate, control, or mitigate the harm. Conclusion on Objective Seriousness 1. Having regard to all of the objective circumstances of its commission, I find that the offence was at the lower end of objective seriousness. The offence was committed inadvertently, there was no actual environmental harm, the potential for environmental harm was minimal, and GrainCorp took some practical measures to avoid the harm. Subjective Circumstances of GrainCorp 1. Imposing a proportionate sentence requires the Court to take into account any mitigating factors that are personal to GrainCorp (s 21A(3) of the CSPA). Relevant subjective circumstances include: 1. whether the environmental harm caused by the commission of the offence was not substantial (s 21A(3)(a) of the CSPA); 2. whether GrainCorp has a prior criminal record (s 21A(3)(e) of the CSPA); 3. whether GrainCorp is of good character (s 21A(3)(f) of the CSPA); 4. whether GrainCorp is unlikely to reoffend (s 21A(3)(g) of the CSPA); 5. whether GrainCorp has demonstrated remorse for its commission of the offence (s 21A(3)(i) of the CSPA); 6. whether, and when, GrainCorp entered a guilty plea (ss 21A(3)(k) and 22 of the CSPA and R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383 at [152]-[155]); and 7. whether GrainCorp provided assistance to the regulatory authorities in the investigation and prosecution of the offence (ss 21A(3)(m) and 23 of the CSPA). The Environmental Harm Was Not Substantial 1. Given the findings above with respect to environmental harm, I do not need to consider whether the environmental harm caused by the commission of the offence was substantial or not. No such aggravating factor exists. Prior Convictions of GrainCorp 1. GrainCorp has no prior convictions for environmental offences. GrainCorp is of Good Character 1. In his affidavits, Mr Lotz gave evidence of GrainCorp's record of good corporate citizenship, including that: 1. GrainCorp allocates up to $400,000 annually to a Community Fund Program to support the communities in which it operates in Australia, New Zealand, Canada and the United Kingdom. Through this fund, GrainCorp supports community organisations in areas such as safety, infrastructure capability, tourism and disaster relief. In particular, GrainCorp supports the rural fire and rescue services, growers experiencing drought, the Westpac Rural Helicopter Service, and communities affected by flooding; 2. GrainCorp has a long-standing partnership with the Clontarf Foundation, which supports young Aboriginal and Torres Strait Islander people in completing schooling and transitioning to employment; 3. GrainCorp is developing a new partnership with a major national provider of mental health support services; 4. GrainCorp staff participate in volunteering activities such as blood donation, tree-planting, and sand-bagging; and 5. GrainCorp has contributed to regional Australian towns through its silo art projects, where GrainCorp donates its silos for use as canvasses for artworks and community messages. 1. There is no doubt that GrainCorp is of good corporate character. Contrition and Remorse 1. GrainCorp has demonstrated contrition and remorse (Waste Recycling and Processing Corporation at [203]-[215]) through: 1. the efficiency of the remedial action it took to rectify any harm caused or likely to be caused by the commission of the offence (Waste Recycling and Processing Corporation at [204]). GrainCorp immediately sought advice on the interpretation error from AECOM; voluntarily ceased fumigation activities four days after becoming aware of the error and did not recommence such activities until 28 May 2019; and promptly undertook an internal review of its processes; 2. voluntarily reporting the commission of the offence to the EPA as well as other authorities (Waste Recycling and Processing Corporation at [210]); and 3. the acknowledgement by a member of GrainCorp's senior management (Mr Lotz) of GrainCorp's contrition and remorse and the seriousness of the offence (Waste Recycling and Processing Corporation at [214]). 1. The subsequent taking of measures to address the causes of the offence also indicates genuine contrition and remorse (Waste Recycling and Processing Corporation at [212] and Camilleri's Stock Feeds Pty Ltd at 700-701). 2. GrainCorp has undertaken substantial remedial steps since the commission of the offence to remedy the failures in its system and operations (as described earlier in this judgment). In his supplementary affidavit, Mr Lotz gave evidence that in implementing remedial actions GrainCorp had incurred expenses of over $2 million, including: 1. $130,291 on consultant fees paid to AECOM for air quality modelling and reporting services; 2. $70,715 on consultant fees paid to GHD for the audit; 3. approximately $350,000 conducting the internal review by GrainCorp employees, with an additional $128,988 in ongoing costs; 4. $128,250 to hire a new Environmental Advisor; 5. $20,000 for ongoing audit requirements under the EPL; 6. $20,000 for updates to the training procedures in accordance with the GHD Audit Report. As part of the Audit Implementation Plan, a training procedure has been developed which identifies training type, frequency, content requirements, and the need to ensure that staff are aware of, and understand, any legislative or EPL changes that might arise; and 7. $1,235,096 on capital expenditure and systems reviews to upgrade the fumigation system, including the replacement of plant and equipment. 1. The EPA contended, however, that not all of these remedial actions were entirely voluntary or the result of GrainCorp's own initiative. It noted that the independent audit and the implementation of the audit's recommendations were requirements imposed on GrainCorp by variations to the EPL. 2. Moreover, it submitted that some of the expenses incurred by GrainCorp related to ongoing obligations under the EPL. For example, Mr Lotz had included the cost of the independent audit in his $2 million expenditure estimate. 3. Also, the capital expenditure costs relating to the fumigation upgrades, which totalled $1.24 million, would have been incurred in any event to comply with the EPL and to rectify other errors in the fumigation process that were not the subject of the present offence but were discovered during the independent audit (T28:21-25). 4. The EPA conceded, however, that the expenses incurred by GrainCorp as a consequence of the commission of the offence were nevertheless likely to be "substantial" (T29:1). 5. I agree. GrainCorp incurred substantial expenses to address the causes of the offence and this is a further demonstration of its contrition and remorse. GrainCorp is Unlikely to Reoffend 1. In light of GrainCorp's demonstrated contrition and remorse, and the measures it has implemented to improve its fumigation process and the cost of these, I find that its likelihood of reoffending is low. Early Plea of Guilty 1. GrainCorp entered a plea of guilty at the earliest reasonably available opportunity. It is therefore entitled to the full 25% discount for the utilitarian value of its plea. Assistance to the EPA 1. The parties agreed that at all times GrainCorp has cooperated with the EPA's investigation by: 1. providing timely responses to the EPA's queries for further information, documents, and reports, including providing a number of reports prepared by AECOM; 2. attending meetings with EPA officers; and 3. making Mr Clamp and Mr Rickard available to attend voluntary interviews. 1. GrainCorp submitted that it has also worked constructively with the EPA by: 1. fully cooperating in the independent audit process and the adoption of the audit implementation plan (which was subsequently incorporated into the EPL conditions); and 2. subsequent compliance with a number of actions required by the audit implementation plan, including ongoing certification of GrainCorp's air monitoring system and the correction of erroneous fumigation data on GrainCorp's website. 1. I therefore find that GrainCorp has fully cooperated with and assisted the EPA during the investigation process. The Offence Could Have Been Prosecuted in the Local Court 1. In Harris v Harrison [2014] NSWCCA 84; (2014) 86 NSWLR 422 (at [92]) the Court of Criminal Appeal held that this Court must take into account whether the offence could have been prosecuted in the Local Court, which I have done. Retribution, Denunciation, and Deterrence 1. The sentencing purposes of retribution and denunciation are also relevant. The Court must impose a sentence that achieves the purposes of denouncing the conduct the subject of the offence and making GrainCorp accountable for its actions. 2. The Court is also required to take into account both specific and general deterrence (s 3A(b) of the CSPA and Walden v Hensler [1987] HCA 54; (1987) 163 CLR 561 at 569-570). 3. The penalty imposed by the Court must serve as a general deterrent to holders of EPLs to carry out their licensed activities in a competent manner and in compliance with their license conditions (Environment Protection Authority v Crown in the Right of New South Wales (Office of Environment and Heritage) [2019] NSWLEC 66 at [175]-[177] and see s 3A(b) of the CSPA). 4. The Court accepts that the appropriate sentence to be imposed on GrainCorp must carry an element of general deterrence. The EPA submitted that something more than a nominal fine was required in order to achieve general deterrence. This submission should be accepted. 5. The EPA also submitted that specific deterrence is required in this case because GrainCorp continues to undertake fumigation activities at the premises and at its other grain storage facilities (Environment Protection Authority v Ravensworth Operations Pty Ltd [2012] NSWLEC 222 at [48]). I also accept this submission. Consistency in Sentencing 1. The task of the sentencing court is to seek even-handedness in the imposition of sentences (R v Oliver (1980) 7 A Crim R 174 at 177 and R v Visconti [1982] 2 NSWLR 104 at 107). However, care must be taken in aiming for consistency. There is always difficulty in comparing the penalty in one case with that in another because of the wide divergence of facts and circumstances in each case (Axer Pty Ltd at 365). The sentence imposed in a single case does not demonstrate the limits of a sentencing court's discretion (Cabonne Shire Council v Environment Protection Authority [2001] NSWCCA 280; (2001) 115 LGERA 304 at [35] and Environment Protection Authority v Barnes [2006] NSWCCA 246 at [79]). 2. The EPA took the Court to a number of cases regarding breaches of s 64(1) of the POEOA resulting from similar failures of pollution control systems, resulting in little or no actual harm: 1. Environment Protection Authority v Whitehaven Coal Mining Ltd [2019] NSWLEC 27; 2. Environment Protection Authority v Causmag Ore Company Pty Ltd [2015] NSWLEC 58; 3. Environment Protection Authority v Orica Australia Pty Ltd (the Jackhammer Incident) [2014] NSWLEC 105; 4. Ridley AgriProducts; 5. Environment Protection Authority v Coastal Recycled Cooking Oils Pty Ltd [2008] NSWLEC 242; 6. Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2008] NSWLEC 194; 7. Environment Protection Authority v BHP Steel (AIS) Pty Ltd [2001] NSWLEC 214; 8. Environment Protection Authority v New South Wales (Department of Environment, Climate Change and Water) [2010] NSWLEC 67; (2010) 174 LGERA 19; and 9. Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident). 1. I have considered the facts and findings of these cases. The five decisions summarised below are, in my view, the most comparable. 2. In Whitehaven Coal Mining Limited, the offender pleaded guilty to an offence of failing to conduct blasting operations in a competent manner in breach of its EPL. No actual harm was caused but there was potential for harm arising from exposure to nitrogen oxides emitted from the blast (at [209]-[213]). The offender did not commit the offence recklessly, intentionally, or negligently (at [202]). The Court found the offence was in the upper end of the lower range of objective seriousness and determined that a fine of $38,500 was appropriate (which had been discounted by 30% in consideration of the subjective circumstances of the offender) (at [275]). 3. Causmag Ore Company Pty Ltd concerned a breach of s 64 of the POEOA resulting from a failure to carry out a licenced activity in a competent manner. The commission of the offence caused the emission of white dust from a stack at the offender's factory into the atmosphere caused by a failure of the dust filtration system. Dust was emitted for a period of up to 9.5 hours. The emission caused an adverse aesthetic impact, but there was no harm to human or animal health. The environmental harm caused was low (at [73]) but was foreseeable and preventable (at [86]). Overall, the Court found the commission of the offence to be at the lower end of the range of objective seriousness (at [89]). The offender pleaded guilty but had three prior convictions for dust related offences (at [97]). The offender was fined $82,500 (at [137]). 4. In Ridley AgriProducts the offender pleaded guilty to two breaches of s 64 of the POEOA in relation to licence conditions requiring the offender to operate plant in an efficient manner, which caused water pollution. The commission of the first offence resulted in actual harm to the environment, but not substantial harm (at [60]-[62]). No actual harm was caused by the commission of the second offence, but the Court found that there was potential for harm to have occurred (at [66]). The second offence was found to be committed negligently (at [75]). The first offence was not committed negligently, recklessly, or intentionally (at [74]). After the deduction of a 25% discount for an early guilty plea, the offender was fined $52,500 for each offence (at [114]). 5. The case of New South Wales (Department of Environment, Climate Change and Water) related to the breach of a license condition requiring the proper and efficient operation of a sewage plant which resulted in the discharge of untreated sewage into Perisher Creek in Kosciuszko National Park. There was no evidence of actual harm and only a low likelihood of environmental harm (at [38]), but the risk of harm was foreseeable and within the offender's control, despite the employee responsible for the commission of the offence operating contrary to approved procedures due to a lack of training (at [67]). The Court also had regard to the fact that the offence was committed intentionally by an employee of the offender (the employee intended to pump supernatant to the decant pit which resulted in the discharge), but that there was no intention to cause environmental harm, nor was the offence committed for financial gain (at [73]). The Court therefore found the offender's culpability to be on the "low end of the spectrum" (at [73]) and a fine of $80,000 was imposed (at [96]). 6. Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident) concerned a pollution of waters offence (s 120(1) of the POEOA), in addition to an offence of breaching a licence condition requiring the proper and efficient operation of plant, due to an escape of nitric acid. The Court found that the offences both caused an insubstantial amount of actual harm in the context of large and complex chemical processing operations (at [167]). The Court found that the offences were not undertaken negligently, intentionally, recklessly (at [148]), or for financial gain (at [151]), and that appropriate remedial action had been taken (at [24]). The Court held that the offence fell in the lower to middle range of objective seriousness (at [167]). It ordered the offender to pay $31,500 to an environmental project in respect of the breach of license condition charge after discounting for various mitigating factors and the application of the totality principle (at [235]). 7. GrainCorp sought to distinguish the present case from those relied upon by the EPA on the basis that there was no actual harm caused, and only a very low potential for environmental harm. GrainCorp therefore argued that the comparable cases reinforced its submission that the penalty to be imposed should be at the lower end of the range. Costs 1. GrainCorp consented to an order that it pay the EPA's professional costs. Because the parties have not reached agreement as to quantum, these costs are to be determined pursuant to s 257G(b) of the Criminal Procedure Act 1986. 2. While it is legitimate to take into account any costs order in determining the appropriate penalty to be imposed (Harris at [100], Barnes at [78] and Causmag Ore Company Pty Ltd at [123]), an order for costs ought not result in a reduction in the monetary penalty imposed to a sum lower than that suggested by the general pattern of sentencing for the relevant offence (Liverpool City Council v Leppington Pastoral Co Pty Ltd [2010] NSWLEC 170 at [50]). 3. In the present case, while the EPA's professional costs payable by GrainCorp were not able to be quantified, it was accepted by the parties that these were likely to be in excess of $100,000. I take this sum into account. Appropriate Sentence 1. Having regard to the objective seriousness of the offence and the mitigating subjective factors of GrainCorp, together with the penalties imposed in relevant comparable cases, I consider that the appropriate sentence to be imposed for the commission of the offence is a monetary penalty of $60,000. 2. GrainCorp submitted that in light of the subjective factors in mitigation, including the utilitarian value of GrainCorp's early guilty plea, a discount of 35% would be appropriate. GrainCorp was, however, unable to direct the Court to a case in which the discount applied was greater than 33%. While I acknowledge that GrainCorp benefits from a number of factors in mitigation, I am unwilling to increase the discount above 33%, which is reflective of the general pattern of sentencing for the relevant offence. This results in a figure of $40,200. Any Monetary Penalty to be Paid to the Environmental Trust 1. The parties have agreed that in lieu of a fine, the monetary penalty imposed should be paid to the Environmental Trust established under the Environmental Trust Act 1998 for general environmental purposes (s 250(1)(e) of the POEOA). I consider it appropriate to make such an order. Publication Order 1. Pursuant to s 250(1)(a) of the POEOA, the parties have agreed to a publication order requiring the details of the offence and penalty to be published in three publications (The Australian Financial Review, The Sydney Morning Herald, and the Illawarra Mercury), as well as on its website and on several of its social media accounts. 2. Having regard to the circumstances of this case, I find that the making of a publication order is appropriate. 3. The content of the publication order, as agreed by the parties, is set out at Annexure "A" to this judgment. 4. The publication order includes a requirement that the social media posts be published between the hours of 9 am and 5 pm Australian Eastern Standard Time. It also includes a requirement that the posts be pinned to GrainCorp's Twitter and Facebook accounts for a period of seven days after publication and retained on those accounts for a minimum of 30 days after publication. These requirements are to ensure that GrainCorp does not negate the effect of the publication order by posting or tweeting during a period of low social media activity, or by burying the posts on their accounts with a multitude of subsequent posts. Orders 1. In conformity with the reasons given above, the Court makes the following orders: 1. GrainCorp is convicted of the offence against s 64(1) of the POEOA as charged; 2. pursuant to s 250(1)(e) of the POEOA, GrainCorp is to pay $40,200 to the Environmental Trust established under the Environmental Trust Act 1998 for general environmental purposes; 3. pursuant to s 257B of the Criminal Procedure Act 1986, GrainCorp is to pay the EPA's professional costs as may be determined under s 257G of that Act; 4. pursuant to s 250(1)(a) of the POEOA, GrainCorp is, at its own expense and within 28 days of the date of this order, to cause a notice in the form of Annexure "A" to this order to be placed within the first 11 pages of the following publications, at a minimum size of 14 cm x 19 cm: 1. The Australian Financial Review; 2. The Sydney Morning Herald; and 3. the Illawarra Mercury; 1. pursuant to s 250(1)(a) of the POEOA, within 28 days of the date of this order, GrainCorp is to cause a notice in the form of Annexure "A" to this judgment to be placed on the website http://www.graincorp.com.au for a minimum of 30 days; 2. pursuant to s 250(1)(a) of the POEOA, GrainCorp is to: 1. within 14 days of the date of this order, publicise the offence and the orders made against it by posting the text of Annexure "A" to these orders on its Facebook homepage, https://www.facebook.com/GrainCorpLimited/, between the hours of 9:00 am and 5:00 pm Australian Eastern Standard Time ("AEST") together with a hyperlink to the Court's judgment as published on the New South Wales Caselaw website and tagging the EPA's Facebook profile https://www.facebook.com/pages/category/Public---Government-Service/NSW-Environment-Protection-Authority-348147535752448/, pinning the post to its Facebook homepage for seven days and retaining the post for a minimum of 30 days; and 2. within 14 days of the date of this order, publicise the offence and the orders made against it by tweeting a photo of the Port Kembla Grain Terminal and the following text from its Twitter account, https://twitter.com/GrainCorp, between the hours of 9:00 am and 5:00 pm AEST as a pinned tweet for seven days and retaining the tweet for a minimum of 30 days: @GrainCorp prosecuted by @NSW_EPA & convicted of failing to competently calculate & record emissions of methyl bromide and phosphine from Port Kembla Grain Terminal during 2016-2018. Ordered to pay $40,200 #portkembla #illawarra #environment #grain [insert hyperlink to judgment as published on NSW Caselaw website]; 1. within 35 days of the date of this order, GrainCorp must provide to the EPA a complete copy of the pages of the publications and websites in which the notices have appeared pursuant to orders 4, 5 and 6; 2. pursuant to s 250(1)(b) of the POEOA, GrainCorp is to cause a notice in the form of Annexure "A" to this order to be placed in the next Sustainability Report published by GrainCorp; and 3. the exhibits are to be returned. ********** Annexure A GrainCorp Operations Ltd Convicted of Breaching its Environment Protection Licence and Ordered to Pay $40,200 GrainCorp Operations Limited ("GrainCorp"), a wholly owned subsidiary of GrainCorp Limited, has been convicted and been ordered to pay to the Environmental Trust the sum of $40,200 by the Land and Environment Court of NSW for breaching a condition of its Environment Protection Licence ("Licence") issued by the Environment Protection Authority ("EPA") in respect of GrainCorp's activities at the Port Kembla Grain Terminal ("Terminal"). The Licence required GrainCorp to carry out its activities in a competent manner. However, in the period of 23 February 2016 to 23 January 2018, GrainCorp failed to carry out certain fumigant ventilation activities in a competent manner in that it incorrectly calculated and recorded the rate at which it emitted methyl bromide and phosphine, being fumigants used to fumigate grain at the Terminal, into the atmosphere ("the Calculation Error"). As a result of the Calculation Error, GrainCorp inadvertently exceeded the maximum emission rate of methyl bromide and phosphine imposed under the Licence on 145 occasions. Upon becoming aware of the Calculation Error, GrainCorp reported the error to the EPA and all relevant authorities. There was no evidence of actual harm to human health or the environment arising from the Calculation Error. At all times, GrainCorp cooperated with the EPA's investigation in relation to the Calculation Error including by providing timely responses to all requests for information and undertaking an independent audit. It has put in place a number of measures to ensure that the Calculation Error is rectified and that no similar exceedances occur again. On 1 October 2019 the Land and Environment Court convicted GrainCorp of an offence against s 64(1) of the Protection of the Environment Operations Act 1997 for contravening a condition of its Licence and ordered it to: 1. pay an amount of $40,200 to the Environmental Trust in lieu of a fine; 2. pay the EPA's professional costs; and 3. publish this notice in the The Australian Financial Review, The Sydney Morning Herald and the Illawarra Mercury, on GrainCorp Limited's website, in its next Sustainability Report, and on various social media websites. 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: 01 October 2019