Australia: Big fines for environmental crimes

The NSW Land and Environment Court and the EPA look for money and efforts to be spent in risk planning, avoidance and mitigation.

The NSW Land and Environment Court has handed down the largest ever penalty for a single environmental prosecution.

The NSW Environment Protection Authority (EPA) and the Office of Environment and Heritage (OEH) prosecuted Clarence Colliery Pty Ltd, a subsidiary of Centennial Coal, for an overtopping incident resulting in the escape of coal fines slurry and coarse reject material into the Blue Mountains National Park in July 2015. The incident impacted approximately 10.3km of the Wollangambe River.

Clarence Colliery pleaded guilty to offences under the Protection of the Environment Operations Act 1997 (NSW) (POEO Act) and the National Parks and Wildlife Act 1974 (NSW) (Parks Act) (Environment Protection Authority v Clarence Colliery Pty Ltd; Chief Executive, Office of Environment and Heritage v Clarence Colliery Pty Ltd [2017] NSWLEC 82).

Penalties imposed

Justice Robson ordered Clarence Colliery to pay over $1.15m, comprising:

  • $720,000 in respect of an offence under section 116(1)(a) of the POEO Act for negligently causing the escape of coal fines slurry and coarse reject material into the environment;
  • $103,000 for EPA investigation costs in respect of the POEO Act offence;
  • EPA legal costs;
  • $330,000 in respect of an offence under section 156A(1)(b) of the Parks Act for damaging vegetation and land within the Blue Mountains National Park; and
  • $3,010 for OEH investigation costs in respect of the Parks Act offence; and
  • OEH legal costs.

The amounts payable for the offences are to be put towards five separate environmental restoration and enhancement projects.

In addition, Clarence Colliery was ordered to publicise its offences in the Australian Financial Review, Sydney Morning Herald and the Lithgow Mercury.

While the penalty for the POEO Act offence falls short of the maximum penalty for a Tier 1 offence committed negligently ($2m), the fine imposed by the Court is a record fine for the EPA. In a media statement, EPA Chief Executive Barry Buffier said it is the largest penalty obtained by the EPA for a single prosecution. This reflects the serious nature of the offence.

Aggravating and mitigating factors

In determining the appropriate penalty, the Court is required to have regard to both the objective and subjective circumstances of the offence.

The objective circumstances include the maximum penalties under the relevant legislation; the environmental harm; the practical measures to prevent environmental harm; and whether the offences were committed with any state of mind or for financial gain.

The subjective circumstances relate to Clarence Colliery itself such as any prior convictions; early guilty pleas; Clarence Colliery's contrition and remorse and measures taken to prevent reoccurrence.

In this case, the coal material that escaped into the National Park and the river bed was described by the Court as "a very substantial quantity" and Clarence Colliery's conduct found to have caused "substantial actual harm and likely environmental harm" in "areas of high environmental and conservation value". The judgment records that the clean-up took approximately 51 weeks with a team of up to five employees working six to seven days per week. Approximately 700 helicopter lifts were required to remove 739 one-tonne bags from the National Park and 214,050kg of coal material from the River. The clean-up cost exceeded $2m.

Further, the Court found that there were practical measures that were available to Clarence Colliery that would have prevented the incident. In weighing up the objective and subjective circumstances of the offence, the Court focused on what could have been done to prevent the incident rather than what was done to address the environmental harm afterwards, Clarence Colliery's co-operation with the EPA, and its contrition and remorse. This is a key lesson for operators of any industrial facility.

How industrial operators can mitigate environmental liabilities

The EPA and Clarence Colliery agreed in this case that the POEO Act offence was committed negligently. They agreed the particulars of Clarence Colliery's negligence and the EPA further made submissions (with which the Court agreed) on practical measures that could and should have been taken to avoid the incident.

Having regard to the Court's findings, we have developed the following list of practical measures that operators of industrial facilities should adopt to mitigate environmental liabilities, specifically in relation to overtopping or spill incidents:

  • regularly inspect site conditions, eg. holding cell capacity;
  • issue adequate instructions to contractors and provide training, including on how to properly inspect site conditions including holding cell capacity;
  • if appropriate in the circumstances, ensure that adequate lighting is installed to be able to monitor conditions on site;
  • use technology to assist to monitor site conditions, eg. level sensors that automatically alert site personnel when a holding cell is reaching capacity;
  • ensure holding cells are properly designed and constructed; and
  • immediately desist from pumping to a holding cell where an issue is identified.

Generally, operators of all industrial facilities can take steps to minimise environmental risks, such as:

  • identify environmental law compliance requirements and key risk areas;
  • develop a best-practice environmental compliance framework that includes operational checks and balances, requirements to clearly document procedures and record any changes to operations or to plant and equipment;
  • train employees to know, understand and implement the environmental compliance framework and undertake regular refresher training;
  • continuously update and improve the environmental compliance framework; and
  • seek legal advice regarding reporting obligations, incident investigation and management; and engaging with the regulator.

The final word

This case demonstrates that it is not sufficient to clean up environmental harm after it has occurred, irrespective of how fast, diligent or effective that clean-up is. The Court and the EPA look for money and efforts to be spent in risk planning, avoidance and mitigation.

RELATED KNOWLEDGE

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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