Environment Protection Authority v BHP Steel (AIS) Pty Limited [2001] NSWLEC 214

Land and Environment Court of New South Wales

CITATION : Environment Protection Authority v BHP Steel (AIS) Pty Limited [2001] NSWLEC 214 APPLICANT Environment Protection Authority PARTIES : RESPONDENT BHP Steel (AIS) Pty Limited FILE NUMBER(S) : 50029 of 2001 CORAM: Talbot J KEY ISSUES: Prosecution :- proof of aggravated circumstances LEGISLATION CITED: Protection of the Environment Operations Act 1997 s 120(1), s 122, s 123, s 241 Anderson v The Queen (1993) 177 CLR 520; Camilleri's Stock Feeds Pty Ltd v EPA (1993) 32 NSWLR 683; Environment Protection Authority v Anning (1998) 100 LGERA 354; EPA v BHP Steel (AIS) Pty Ltd [2000] NSWLEC 19, unreported; EPA v Port Kembla Pty Ltd [2001] NSWLEC 174, unreported; Matthews v Goulburn Wool Processors Pty Ltd (unreported, Supreme Court, NSW, 6 November 1986); CASES CITED: Minister Administering the Crown Lands Act v Deerubbin Local Aboriginal Land Council (No 2) [2001] NSWCA 28; R v Thomson; R v Houlton (2000) 49 NSWLR 383; Reg v O'Neill (1979) 2 NSWLR 582; State Pollution Control Commission v Blayney Abbatoirs Pty Ltd (1991) 72 LGRA 221; State Pollution Control Commission v New South Wales Sugar Milling Co-operative Ltd (1991) 73 LGRA 86; The Queen v Olbrich (1999) 199 CLR 270; Thorneloe v Filipowski [2001] NSWCAA 213, unreported DATES OF HEARING: 10/08/2001, 16/08/2001 DATE OF JUDGMENT: 09/11/2001

APPLICANT Mr C J Leggat (Barrister) SOLICITORS Environment Protection Authority LEGAL REPRESENTATIVES: RESPONDENT Mr B J Preston SC SOLICITORS Mallesons Stephen Jaques

JUDGMENT:

IN THE LAND AND Matter No. 50029 of 2001 ENVIRONMENT COURT Coram: Talbot J OF NEW SOUTH WALES Decision Date: 11 September 2001

Environment Protection Authority Prosecutor v BHP Steel (AIS) Pty Limited Defendant

REASONS FOR JUDGMENT

1. These are class 5 proceedings commenced by a summons requiring the defendant ("BHP") to answer the charge that on or about 13 March 2000 at Port Kembla it committed an offence against s 120(1) of the Protection of the Environment Operations Act 1997 ("the PEO Act") in that it polluted waters.

2. Section 120(1) of the PEO Act provides that "A person must not pollute any waters" .

3. The act of polluting is particularised as follows:- In the course of its operations, the Defendant flushed condensate from a gas pipe which ultimately was discharged into Allen's Creek.

4. It is alleged that the liquid contained ammonia, total cyanide, chromium, mercury, phenols, cadmium and iron.

5. Section 122 of the PEO Act provides a defence if the person establishes that the pollution was regulated by an environment protection licence and the conditions to which that licence were subject, relating to the pollution of waters, were not contravened.

6. The defendant holds Environment Protection Licence No. 000722. The licence does not regulate the discharge of phenols. It is agreed between the parties that the concentrations of ammonia, cyanide, iron, chromium and mercury discharged exceeded the limits set for dry weather conditions under the licence.

7. The defendant has entered a plea of guilty.

8. The incident occurred while the defendant was carrying out an overhaul of Boiler No. 24 as part of a prescribed maintenance program at its Port Kembla steelworks.

9. Boiler No. 24 is approximately the same size as a small block of four flats.

10. The maintenance procedure generally takes about five weeks in total. The boiler is taken off line for the whole of that period.

11. All of the pipe works leading into the boiler (coke ovens gas, blast furnace gas and natural gas) must be purged. The first step of the purge process involves the use of a water seal as an isolating device. The water seal operates to prevent gas from travelling beyond the water seal into the boiler gas pipe work during the carrying out of the boiler maintenance.

12. The boiler is isolated from the mains by the insertion of a steel slip plate blocking off the mains. Once slip plates are in place and all other isolations and verifications have been completed the boiler is then released for maintenance.

13. A dump tank, located on the upstream side of the slip plate, also needs maintenance as part of the boiler overhaul. The water seal remains in place to isolate the maintenance operator working on the dump tank from any gas leak.

14. At the commencement of the maintenance operation the water seal is maintained by the dump tank trickle flow by leaving the auto-fill valve open. An auto-drain valve maintains the water seal at the overflow height of 2.4 metres. Both the auto-drain valve and the auto-fill valve need to be removed for maintenance. To allow this to occur a valve to an alternate water supply system is opened.

15. The maintenance of the auto-drain valve and auto-fill valve takes place off-site over about two weeks. On return of the valves the procedure is reversed. In both procedures the dump tank system is off-line for about two and a half hours during which the alternate water supply is used.

16. The following diagram forms part of an agreed statement of facts and seeks to demonstrate the system described above:-

Diagram 1

17. Coke ovens gas (which is highly toxic and inflammable) creates small amounts of condensate in the bottom of the gas mains as it cools. This condensate gradually trickles to the nearest seal pot and then into a series of condensate collection tanks located around the steelworks site.

18. One of the condensate collection tanks is known as 47K Seal Pot tank. It has a capacity of 4,500 litres. Condensate tanks are emptied of any condensate about six times per month by tanker collection. A rod measures the level of condensate in the tank with a float on the bottom. The higher the level of the condensate in the tank, the higher the rod protrudes.

19. The overhaul of Boiler No. 24 commenced on 21 February 2000. Maintenance to the dump tank auto-fill and auto-drain valves commenced at approximately 8:45am on 13 March 2000. Replacement of the auto-fill valve commenced at approximately 9:15am.

20. No abnormalities in the maintenance work were observed by, or reported to, any person involved in the maintenance until approximately two hours later when the Energy Services Division of the company was notified of an overflow to Blast Furnace Drain No. 5.

Cause of the overflow into Allans Creek

21. The sequence of events is best described by adopting par 22 and par 23 of the agreed statement of facts, exhibited to the Court, which, omitting formal parts, states:- During the maintenance works on 13 March 2000, the water to fill the water seal was being sourced from the permanently connected alternate water supply…. This alternative water supply is in fact the original water supply that was used prior to installation of the dump tank.

The alternate water supply is fitted with a siphon breaker (which is a branch pipe attached at a perpendicular angle to the main pipe and has a smaller diameter tha [n] the main pipe)…. The purpose of the siphon breaker is to prevent contaminated water being sucked back down the water supply pipe.

On 13 March 2000 air was drawn into the alternate water supply pipe…due to the phenomena of the science of fluid mechanics known as the "Venturi Effect", the practical consequence of which was to create a pressure phenomenon which cyclically forced the water from the water seal back through the coke ovens gas main where it discharged into and rapidly filled the No. 47K condensate tank, whence the overflow entered the No. 5 Blast Furnace Drain and discharged to Allans Creek. There is no bund or warning devise fitted to No. 47K condensate tank….

22. The overflow continued for two hours.

23. Reference back to diagram 1 will assist with an understanding of the above description.

24. The statement of agreed facts explains the conditions under which the Venturi Effect can occur as follows:- For the Venturi Effect to occur at the siphon breaker, certain pre-conditions must all exist at exactly the right time. These conditions include the following: (a) the ratio of the size of the main pipe and the size of the opening of the siphon breaker must be correct;

(b) the fluid must be travelling past the siphon breaker at a certain velocity; (c) the fluid flow rate, temperature, pressure, density and viscosity must be [sic] all be at the correct values; (d) the pipework must be of a certain geometry and shape; and (e) the pipework must be of a certain configuration.

Varying any of these factors may eliminate the occurrence of the Venturi Effect. The siphon breaker is not designed to create a Venturi Effect.

25. It is agreed between the parties that the pressure effect described above and the subsequent discharge of condensate to, and overflow from, No. 47K condensate tank would not have occurred if valve No. 23 ("valve 23") had been open during the carrying out of the maintenance procedure to the dump tank. The valve was shut at the time. Pressure formed in the seal. This caused the water seal level to become unbalanced and temporary water supply flowed back into the gas main. Valve 23 is shown as "Vent on gas side of slip plate" in the abovementioned diagram 1.

26. The diagram below demonstrates the effect of the vent being shut while the alternate water supply is being used during the carrying out of the maintenance procedure to the dump tank:-

Diagram 2

27. There is a dispute between Mr Richard Lincoln Ainsworth, a Senior Process Engineer – Technical Safety, employed by the Engineering Technical Services Division of BHP Steel at the Port Kembla steelworks, and Mr John David Court, an Environmental Engineering Consultant retained by the prosecutor.

28. Mr Court is of the opinion that the space between the isolating water seal and the slip plate should be vented or the appropriate amount of pressure should be relieved whenever the water seal is in place. On the other hand, Mr Ainsworth says that the fundamental objective of preventing gas escapes dictates that the valve ought to have been required to be closed by the operating procedure in order to provide a second line of defence in addition to the water seal. Further, "a fundamental principle in all gas work procedures is to eliminate, as far as possible, the risk of persons being exposed to gases" . According to Mr Ainsworth, the closing of the valve was consistent with general practice when dealing with gas. He told the Court that the operating procedure has now been amended to require that the valve be closed at all times during the maintenance procedure, except during works to the water seal itself.

The isolating procedure

29. In 1998 the company issued a document the purpose of which was to give guidance in the Isolation and Recharge of No. 24 Boiler Coke Ovens Gas System – SP-GEN-BB24-626 ("BB24-626").

30. One of the actions specified is to open fully Bleeder valve 23 to enable steam/gas mixture to exit to the atmosphere.

31. Clause 5.02 of BB24-626 warned that the "Bleeding of unburnt gas to the atmosphere contaminates the air with undesirable gasses [sic] , therefore the period that the system is bled for is to be kept to the minimum possible" .

32. Revision No. 2 of No. 2 Blower Station Standard Procedure, Document No. SP-GEN-BB24-065 ("BB24-065") was issued in July 1998. The purpose of this document is stated to be to provide instruction for the removal and replacement of automatic fill and drain valves on No. 24 Boiler Coke Ovens Gas System and to maintain plant integrity and provide a safe environment for both maintenance and operational personnel. There is a reference to BB24-626. There is no specific mention of the equivalent of valve 23, thereby leaving the previous instruction in document BB24-626 in place.

33. Document BB24-065 was further revised during 2001. In the first revision, printed on 11 January 2001, the operator was instructed in Action 17 to ensure that the bleeder before the slip plate and valve 23 is open to prevent "main seal pumping phenomenon when changing from dump tank float make-up to emergency fresh water supply". The second revision, printed in July 2001, maintained the same instruction regarding valve 23 in Action 17 but inserted a new subsequent instruction in Action 26 to close valve 23 to "Avoid accidental gas leakage". This final amended procedure provides for valve 23 to be closed during all aspects of the maintenance procedure, except during the works to the water seal itself.

34. In the first report made to the Environment Protection Authority ("the EPA") after the incident on 13 March 2000, the defendant provided an Energy Services One Point Lesson which stated that it is important to release the air pressure to ensure that whenever a slip plate is in place the bleeder valve 23, between the slip plate and the water seal, is left open to ensure that any air trapped in area A is able to escape to the atmosphere and the normal balance of the water seal will be maintained.

35. In a further and later report the defendant provided an update of the One Point Lesson. The following notes were added:- Corrective Action:- To ensure that "AREA A" does not become pressurised, it is important to ensure that when ever a slip plate is in place, the bleeder B2 , between the slip plate and the water seal is left open. This will ensure that any air trapped in AREA "A" , is able to escape to atmosphere and the normal balance of the water seal will be maintained. Key Learning Recognise the possibility of air being sucked into the siphon breaker on the make up water and take any steps necessary to ensure that a build up of pressure cannot occur inside the water seal pipe work.

36. The reference to bleeder B2 is a reference to valve 23.

37. Mr Ainsworth confirmed that the prosecutor is correct when it alleges that the procedure, current as at 13 March 2000, did not identify a requirement for valve 23 to be opened or closed. He considers the action taken by an operator to close valve 23 to be consistent with gas safety procedure. If valve 23 had been open, according to Mr Ainsworth, this would have been an unsafe condition due to the potential release of uncontrolled gas. In his view, because of the fundamental safety principle identified, good practice dictates that the valve should have been closed (as it was on 13 March 2000) to provide an additional level of protection from gas escape through the valve in the event of any draining of the water seal. While the water seal is in place, closing of the valve provides a second line of defence from gas escape.

38. On the other hand, Mr Court does not consider it reasonable to leave normal operating procedures to the judgment and discretion of operators in situations where the operation involves considerable risk to the environment. He cannot agree that experienced gas operators should be entitled to use their judgment and discretion in operating the plant if there are detailed written instructions which are not drafted in a way which implies that operators will take actions, other than those listed, in normal circumstances.

39. It is agreed that, notwithstanding the dispute in respect of how valve 23 should have been operated on 13 March 2000, the standard operating procedure for the maintenance of the dump tank has now been amended to require that the valve be closed at all times during the maintenance procedure except during the works to the auto-fill and auto-drain valve of the dump tank.

40. Mr Ainsworth and Mr Court agree that it is important in the design, operation and maintenance of the liquid seal that the pressure operating on either side of the seal is carefully controlled by venting or some form of relief or pressure equalisation to ensure that the liquid seal operates as designed.

The proof of the offence

41. The parties have submitted an agreed statement of facts.

42. Furthermore, the plea of guilty entered by the defendant carries with it an admission of the essential legal ingredients of the offence.

43. Any further facts relied upon by the prosecutor and, in particular, any facts that aggravate the offence, must be established by the prosector. Any dispute as to matters beyond the essential ingredients of the offence admitted by the plea of guilty and the agreed statement of facts must be resolved by ordinary legal principles (see Reg v O'Neill (1979) 2 NSWLR 582 at p 588).

44. Where the prosector relies on facts or circumstances as aggravating the offence the onus lies upon the prosecutor to prove beyond reasonable doubt the facts that demand that conclusion (See Anderson v The Queen (1993) 177 CLR 520 at p 536 and The Queen v Olbrich (1999) 199 CLR 270 at p 293 - 294). The prosecutor relies on three matters to establish that there were aggravated circumstances in this case.

45. These are the matters identified in the PEO Act as matters that the Court is to take into consideration in imposing a penalty for an offence pursuant to s 241 as follows:- (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.

The extent of harm

46. The primary fact upon which the prosecutor relies, in this respect, is the extent to which the discharges of ammonia, phenols, cyanide and mercury exceed the level permitted under the licence.

47. The prosecutor refers to the increasing quality of marine life in Allans Creek since 1997 and the likely harm that the discharge caused, or was likely to cause, to that environment.

48. There is no observation of dead fish or other adverse effect to sea life.

49. The statement of agreed facts incorporates opinions expressed by an ecotoxicologist employed by the EPA and an Environmental Scientist – Water and Ecology employee of the defendant.

50. Following laboratory tests, the EPA witness, Fleurdelis Pablo, stated that the chemicals involved in the discharge may cause moderate to highly acute toxicity in aquatic organisms which, other than mercury, would have limited potential for harm due to the effects of dilution and would dissipate about an hour after the discharge ceased. She further says that the potential for harm from mercury may be longer in duration than the other chemicals because it does not degrade in the environment.

51. On the other hand, Bruce Green, the environmental scientist employed by BHP, states that the " dilution would have been effective in this case because approximately 190,000 kilolitres of seawater is pushed into Allans Creek due to tidal changes". Mr Green observed on 13 March 2000 that the seawater and the discharge were mixing during the period of the discharge with the result that the concentration of contaminants contained within the discharge would, in his opinion, have been diluted quite quickly. Mr Green does not dispute the results of the toxicity tests undertaken by Ms Pablo but says that the dilution effect would have been greater than the levels of dilution used by her in the toxicity test. During Mr Green's inspection of Allans Creek on 13 March 2000 he observed " that the discolouration was contained in one area of the Creek (about 4 metres around the discharge point for No. 5 Blast Furnace Drain). The discolouration was limited to the southern bank of Allans Creek and the discharge did not create a barrier across the Creek, which would allow fish to move out of the affected area".

52. Ms Pablo notes that the levels of pollutants in the samples collected were significantly higher than the ANZECC guidelines for ambient waters. The highest sample is the level of cyanide. The ANZECC guidelines are stricter than the terms of the licence.

53. The difference of opinion between the two experts is not resolved by the statement of agreed facts and in respect of this issue neither party has relied upon any evidence beyond the statement of agreed facts. The experts did not give oral evidence. The fact that the opinion's expressed are held by Ms Pablo and Mr Green is not in dispute. Where there is a difference in opinion and the Court is not able to resolve the difference for itself, then the accused is entitled to be given the benefit of the doubt. There is no obligation placed upon the defendant to prove a fact ( Olbrich at p 291). If a conflict of a primary fact emerges, as it has in this case, then it is inappropriate to determine the issue unfavourably to the accused without hearing the witnesses ( O'Neill at p 589; Camilleri's Stock Feeds Pty Ltd v EPA (1993) 32 NSWLR 683 at p 689 - 699).

54. For the purpose of determining an appropriate penalty it is therefore open to the Court to accept that, although the discharge exceeded the limits prescribed by the licence, the actual harm caused was minimal and the harm likely to be caused was significantly decreased by the dilution effect and the short duration of the event (See Camilleri at p 701 and Thorneloe v Filipowski [2001] NSWCAA 213, unreported, at par 135 - 140).

55. The beneficial purpose of the PEO Act is to protect the environment. This suggests that the matters to be taken into consideration in imposing a penalty should be construed broadly within the context of a penal statute. It is appropriate to have regard to a real and not remote chance or possibility of harm to be caused. ( Matthews v Goulburn Wool Processors Pty Ltd (Smart J, NSWLEC, 6 November 1986, unreported); State Pollution Control Commission v Blayney Abattoirs Pty Ltd (1991) 72 LGRA 221 at p 224; State Pollution Control Commission v New South Wales Sugar Milling Co-operative Ltd (1991) 73 LGRA 86 at p 100, per Cripps J; Minister Administering the Crown Lands Act v Deerubbin Local Aboriginal Land Council (No 2) [2001] NSWCA 28, unreported, at par 50, par 51 and par 52 and Environment Protection Authority v Anning (1998) 100 LGERA 354). The short period of time during which the process causing the discharge operated, the limited magnitude of the general risk of overflow into the gas main and the infrequency of the maintenance program significantly reduces the potential chance of harm.

The Practical Measures to Control, Abate or Mitigate Harm

56. The incident occurred as a consequence of the failure of the formal procedures and work programs to take account of the prospect that the venturi effect may occur if valve 23 is closed while the alternate water supply system is connected. Measures available to the company are demonstrated by the subsequent amendment to its standard procedure to require that valve 23 be open during the works to the auto-fill valve and auto-drain valve of the dump tank.

57. The prosecutor suggests at least six particular practical measures are available to the defendant as follows:- (1) An alarm could have been fitted to the condensate tank to provide adequate warning that the overflow was imminent. 58. The evidence of Mr Ainsworth is that an alarm may have cost in the order of $5,000. In his opinion, however, fitting alarms to the condensate tank is an inappropriate response given the design parameters of the tank and its purpose to collect condensate trickle flow. Mr Ainsworth's analysis is that there is minimal risk of large flows to condensate tanks from gas mains, absent the venturi effect in the alternate water supply, because condensate from the gas is small and creates, at most, a trickle flow. Mr Court, on the other hand, surmises that a practical and workable response would be to have an automated level alarm on the condensate tanks. Ultimately, Mr Ainsworth, in cross-examination, told the Court that even if a remote alarm had been fitted the incident would not have been prevented although it could have facilitated an earlier response that would have reduced the extent of the discharge.

(2) If BB24-626 had been more specific and stipulated specifically when valve 23 should be open or closed the problem would not have occurred.

59. Mr Ainsworth agrees, with the benefit of hindsight, that the occurrence of the venturi effect in the system could have been avoided by altering any one of the pre-conditions. He did not foresee the occurrence of the venturi effect and without further detailed inquiry could not have predicted the exact circumstances necessary to give rise to that effect in the system.

60. Mr Ainsworth also told the Court that BHP Steel Gas Safety Experts are unanimous that the valve should be closed after isolation of the boiler as the risk of gas escape is foreseeable. As previously explained the current procedure, following the incident on 13 March 2000, provides that the valve be closed after isolation, except during the maintenance of the auto-fill and auto-drain valve. 61. The object of closing the valve at all times during the maintenance period is to meet the concern that the water seal might drain due to water leakage, thereby removing the protection afforded by that seal and allowing the toxic and flammable gas to escape into atmosphere. An immediate concern would be for the safety of workmen in close proximity to the vent. During such time as the water is supplied through the dump tank there is no prospect of the siphon effect occurring because of a lack of pressure in a gravity feed system. In the circumstances that prevailed at the date of the offence the discretion to open or close valve 23 was left to the individual workmen or supervisors. There was no guidance from the standard operating procedures other than the direction to close the valve.

62. In the absence of an appreciation of the potential for the venturi effect to occur it was entirely reasonable for the defendant to require that the valve be kept closed in the interest of health and safety. The degree of foreseeability that the water pressure would cause the venturi effect is a critical element in determining whether there was at the time of the incident a practical measure that could have been taken to prevent, control, abate or mitigate the harm.

63. Despite the efforts of Mr Court to establish the contrary conclusion it has not been established beyond reasonable doubt that the defendant could reasonably have foreseen the harm caused or likely to be caused to the environment during the process of maintaining Boiler No. 24 as a consequence of leaving valve 23 closed. The prospect of the simultaneous existence of the conditions under which the venturi effect can occur is so remote that in the Court's opinion it was not reasonably foreseeable. (3) The installation of a larger condensate tank could have prevented the overflow.

64. It is not suggested that the condensate tank was not large enough to deal with the condensate generated during routine operation of the plant. Here again the question of foreseeability arises and accordingly it is not, in the Court's opinion, reasonable to expect that the company should have installed larger tanks to meet the contingency of the events which occurred on 13 March 2000. (4) Steps subsequently taken by the defendant to seal the open drain adjacent to No. 47K Condensate Tank demonstrates a practical measure available to the defendant that could have mitigated the harm. 65. Clearly that is a self-evident fact that must also be measured against the foreseeability of the particular event the subject of these proceedings. (5) BHP is conducting a detailed audit of all seal pots at the Port Kembla Steelworks site to identify and assess risks associated with the operation of the seal pots and to determine any necessary corrective actions. 66. Mr Leggat makes the submission, on behalf of the prosecutor, that this demonstrates another practical measure that was available to the defendant whereby the problem of potential overflow could have been identified. The Court accepts that the company is obliged to carry out adequate risk assessment in respect of the whole of its operation. The evaluation currently being conducted will have the benefit of the actual experience which occurred on 13 March 2000. The prosecutor has not demonstrated beyond reasonable doubt that an audit or risk assessment of the seal pots would have been likely to alert the company to the prospect of environmental harm as a consequence of an overflow during such time as the water seal was being augmented from the alternate water supply system. (6) The preparation and implementation of modified procedures, during the carrying out of the bi-annual maintenance of the dump tank and modifications to the alternate water supply to eliminate the siphon breaker design in the coke ovens gas main, demonstrate a further practical measure available to the company.

67. Subject to the limitation already expressed in respect of the foreseeability of this particular incident, the Court accepts that such steps now being undertaken by the company are obvious ongoing practical measures that should be adopted in a general sense. With the benefit of hindsight it is trite to say that the elimination of the siphon breaker design would have prevented the occurrence.

Foreseeability of harm

68. To a large extent this issue has already been dealt with. Section 241(1)(c) of the PEO Act is directed more specifically to whether the company could reasonably have foreseen the harm caused or likely to be caused "by the commission of the offence" . There is no element of mens rea in the commission of this offence. The prosecutor has not shown any overt act or decision by the company to cause the discharge. The act complained of is an act of omission. The Court agrees with Mr Preston SC who has submitted, on behalf of the defendant, that the test of whether the defendant could reasonably have foreseen the harm caused requires something more than an appreciation of the mere possibility that the harm could occur.

69. Mr Court expresses the view that it is important in the design operation and maintenance of the liquid seal that the pressure operating on either side of the seal is carefully controlled by venting or some form of release or pressure equalisation to ensure the liquid seal operates as designed. If an unexpected pressure or vacuum develops above the liquid, in either leg of the seal, he points out that the liquid levels will be disturbed by the change in pressure and the seal may not operate. In his experience this is a well recognised practice in the design, operation and maintenance of liquid seals. Mr Ainsworth accepts the applicability of the principles referred to by Mr Court. However, he says "the foreseeable risk was not one of fluctuation in coke ovens gas pressure affecting the operation of the seal but rather, the draining (through corrosion or a leaking drain valve) of the water in the water seal (thereby exposing workers on the downstream side of the seal to gas leaks unless all valves on the upstream side of the slip plate protection were closed)" . He takes no account of the foreseeability of an escape of water upstream into the gas main.

70. The Court accepts that the evidence of both experts is feasible.

71. Mr Preston makes the submission that the Court should place greater reliance on the evidence of Mr Ainsworth, having regard to the more limited experience of Mr Court not only in the steel industry, itself, but also in relation to the operation of low pressure gas systems. Although Mr Court claims some ancient experience in regard to low pressure gas systems there can be no doubt that Mr Ainsworth has been more directly involved over a longer and more recent period of time.

72. It is clear from a perusal of the standard procedures in place at the time of the incident that the prospect of a discharge of water from the water seal into the gas main had not been contemplated. The Court is not able to reach a firm conclusion that the prospect of water entering the gas main and finding its way into the condensate collection tank in sufficient volume to cause an overflow and ultimately a discharge into Allans Creek was reasonably foreseeable. The Court is satisfied that the event itself was unique and that the company had no warning from prior experience that it was likely to occur. If the prosecutor had been able to show beyond reasonable doubt that the incident had occurred previously or was otherwise common knowledge or at least was so plain that it should have been understood then it may have been appropriate for the Court to accept the submission that there were aggravated circumstances.

Whether the defendant had control over the causes

73. The Court is required to take into account the extent to which the person who committed the offence had control over the causes which gave rise to the offence, pursuant to s 241(1)(d) of the PEO Act. There can be no doubt that in this case that the defendant company was responsible for the plant and its operation and that it had control over the matter in which the procedures are implemented. Once again the extent of the control must be assessed by having regard to the perceived likelihood of the event occurring.

Other matters

74. Section 241(2) of the PEO Act allows the Court to take into consideration other matters that it considers relevant.

75. The defendant entered a guilty plea 28 days after the first return date of the summons. On that day a date was set for hearing on penalty and costs. It is appropriate to regard the plea in this case as an early plea and for the defendant to be entitled to the full extent of the discount in that respect ( R v. Thomson; R v Houlton (2000) 49 NSWLR 383).

76. The consequence of connecting to the alternate water supply did not have the element of inevitability attributed to it by the prosecutor. The system had worked before without a manifestation of the problem.

77. The prosecutor appears to rely upon the difficulty experienced by the defendant in adopting an appropriate and acceptable procedure to prevent reoccurrence following the event. It is true that the company made several attempts to deal with the problem by amending the instructions in the standard operating procedures. The fact that the company had difficulty in resolving the problem is not evidence of aggravated circumstances unless it demonstrates an unwillingness to address the issues involved. The evidence is to the contrary.

78. Mr Leggat submits that the holder of a licence under the pollution control legislation has a heightened responsibility to ensure that its plant is operated in accordance with the conditions of the licence (See authorities summarised by the Chief Judge in EPA v Port Kembla Pty Ltd [2001] NSWLEC 174, unreported, particularly at par 23 - 25).

79. It is undisputed by the prosecutor that:- (a) Due to the risks associated with gas works, the Steelworks has developed its own comprehensive set of "Gas Regulations", which includes 4 levels of gas accreditation for employees and contractors.

(b) Once the source of the overflow was identified, it was promptly rectified and the overflow ceased due to the immediate pumping out of the condensate tank. (c) The duration of the overflow was relatively short, occurring between approximately 9.30am and 13.49pm. Further, by 2.45pm there was no evidence of any discolouration of Allans Creek.

(d) BHP Steel Engineering Technical Services Department carried out detailed inquiries to identify the cause of the phenomenon and to develop effective procedures (in conjunction with the Energy Services Department) to prevent any reoccurrence of the phenomenon. (e) BHP otherwise co-operated with the EPA, including making all relevant personnel available for voluntary interviews with the EPA and the EPA's experts on 14 February 2001. (f) BHP has co-operated with the EPA in respect of the preparation of the agreed statement of facts. (g) BHP has arranged for the open drain adjacent to No. 47K condensate tank to be sealed. (h) BHP is conducting a detailed audit of all seal pots at the Port Kembla Steelworks site to identify and assess risks associated with the operation with the seal pots and determine any necessary corrective actions. (i) BHP is in the process of purchasing a number of new collection tanks for the site. (j) BHP has prepared and implemented modified procedures during the carrying out of the two yearly works to the dump tank which will be effective to prevent the development of any pressure build up when using the alternate water supply system (which, as noted, is only accessed for the maintenance works to the dump tank every two years). In addition, BHP is implementing modifications to the alternate water supply to eliminate the siphon breaker design in the coke ovens gas main.

80. The defendant has agreed to pay the prosecutor's costs in such sum as may be agreed or assessed.

81. BHP Port Kembla Steelworks occupies an area of eight square kilometres. It is Australia's largest integrated steel making centre and has a workforce of around 6,900 people. 82. The company has in place a number of environmental policies, environmental management and compliance manuals and clearly recognises in its literature education and awareness programs in respect of environmental issues. The company has recently negotiated its fifth Five Year Pollution Program with the EPA, the first being in 1976. The company has undertaken a number of initiatives involving significant capital expenditure in an effort to limit the impact of its operations upon the environment.

83. The Court has taken into account the matters specified in s 241 of the PEO Act in the manner outlined above.

84. The last occasion the company was before this Court, charged with offences under environment protection legislation, was in February 2000 ( EPA v BHP Steel (AIS) Pty Ltd [2000] NSWLEC 19, unreported). At par 59 of my judgment in that matter I summarised the manner in which the Court should have regard to prior convictions recorded against this defendant. The three offences, the subject of those proceedings, occurred in November 1997 when the maximum fine was $125,000.

85. Notwithstanding the further offence on 13 March 2000, the Court is not prepared to find that the record of the company shows a continuing attitude of irresponsibility and a failure to recognise the importance of protecting the environment and in particular the requirement to operate the Port Kembla Steelworks in accordance with the relevant licences attached to the premises. Nevertheless, the record of the company and its conviction on 29 occasions, since 1961, is a matter that is properly to be taken into account when assessing the appropriate penalty in respect of the present offence.

86. The Court is not satisfied beyond reasonable doubt that the prosecutor has discharged the onus of proof that there were aggravated circumstances in this case.

87. The Court finds that the company breached the conditions of its licence and thereby polluted the waters of Allans Creek, in contravention of s 120(1) of the PEO Act, when polluted water flowed back through the gas main into condensate collection tank 47K Seal Pot causing that tank to overflow into No. 5 Blast Furnace Drain resulting in a discharge of polluted liquid to Allans Creek.

88. After taking into account the mitigating factors outlined above, the antecedents of the defendant, the seriousness of the offence and the utilitarian value of the early plea of guilty the Court determines that the appropriate penalty, having regard to the maximum penalty of $250,000 is $60,000.

Orders

89. The Court finds that the offence is proved and that a conviction should be recorded and a penalty of $60,000 imposed. The defendant will be ordered to pay the prosecutor's cost.

90. The formal orders of the Court are:- 1. The Court finds the offence charged in the summons proved.

2. The defendant is convicted of the offence against s 120(1) of the Protection of the Environment Operations Act 1997 that on or about the 13 March 2000 at Port Kembla it polluted waters.

3. The defendant is ordered to pay a fine in the sum of $60,000. 4. The defendant is ordered to pay the costs of the prosecutor in such sum as may be agreed or if there is no agreement as assessed in accordance with the Regulation made under the Land and Environment Act 1970. 5. The exhibits may be returned.

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