Land and Environment Court New South Wales

• Medium Neutral Citation: Environment Protection Authority v Orica Australia Pty Ltd (the Ammonia Incident) [2014] NSWLEC 107
• Hearing dates: 5, 6, 10 and 12 December 2012 and 20 May 2013
• Decision date: 28 July 2014
• Jurisdiction: Class 5
• Before: Pepper J

Decision

See orders at [146].

• Catchwords: ENVIRONMENTAL OFFENCES: breach of licence condition - failure to carry out licenced activities in a competent manner - plea of guilty - sentencing principles - whether De Simoni principle applicable - whether totality principle applicable - determination of appropriate penalty.
• Legislation Cited: Crimes (Sentencing Procedure) Act 1999, ss 3A, 21A, 22, 23; Protection of the Environment Operations Act 1997, ss 3, 64, 96, 241, 250(1)
• Cases Cited: Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident) [2014] NSWLEC 103; Environment Protection Authority v Orica Australia Pty Ltd (the Jackhammer Incident) [2014] NSWLEC 105; Environment Protection Authority v Orica Australia Pty Ltd (the Hexavalent Chromium Incident) [2014] NSWLEC 106; Environment Protection Authority v Unomedical Pty Limited (No 4) [2011] NSWLEC 131; R v De Simoni [1981] HCA 31; (1981) 147 CLR 383
• Category: Sentence
• Parties: Environment Protection Authority (Prosecutor); Orica Australia Pty Ltd (Defendant)
• Representation: Mr S Rushton SC and Mr D A Hughes (Prosecutor); Mr T A Game SC, Mr D Jordan SC and Ms K Edwards (Defendant); Office of Environment and Heritage (Prosecutor); Ashurst Lawyers (Defendant)
• File Number(s): 51110 and 51111 of 2012

Judgment

Orica Pleads Guilty to a Breach of Licence Offence Resulting in the Release of Ammonia

1 The defendant, Orica Australia Pty Ltd ("Orica"), pleaded guilty to nine charges under the Protection of the Environment Operations Act 1997 ("the POEOA") which were addressed in concurrent sentence proceedings. Those charges related to seven separate pollution incidents occurring on different dates between October 2010 and December 2011. Although the proceedings were heard concurrently, it was appropriate, given the separate nature of each incident, that seven separate judgments be produced, that is, one for each discrete pollution incident.

2 The principal judgment summarises all of the charges, outlines in greater detail the conduct of the proceedings and gives a fuller articulation of the relevant sentencing principles than the six subsequent judgments (Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident) [2014] NSWLEC 103, "the principal judgment"). Those principles are applied, where relevant, in this judgment, but are expressed only in summary form. It is therefore necessary to read this judgment together with the principal judgment.

3 This judgment concerns the appropriate sentence for an offence that occurred on 9 November 2011 involving the release of ammonia into the atmosphere on six occasions over the course of the day at the Kooragang Island Licensed Premises ("KI premises") ("the Ammonia Incident").

4 The Ammonia Incident resulted in one breach of licence condition offence under Orica's Environment Protection Licence Number 828 ("Licence 828") contrary to s 64(1) of the POEOA, by failing to operate plant and equipment, namely the Ammonium Nitrate Manufacturing Facility ("ANMF"), in a proper and efficient manner (matter number 51110 of 2012). As noted in the principal judgment (at [3]), the Ammonia Incident also resulted in another offence but the prosecutor, the Environment Protection Authority ("the EPA"), agreed to dismiss that charge (matter number 51111 of 2012) upon the determination of an appropriate sentence in this proceeding.

5 The failure to comply with a licence condition in contravention of s 64(1) of the POEOA is an offence of strict liability.

6 Section 64(1) states:

(1) Offence

If any condition of a licence is contravened by any person, each holder of the licence is guilty of an offence.

Maximum penalty:

(a) in the case of a corporation-$1,000,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues...

7 By pleading guilty to the offence, Orica concedes that it failed to comply with licence condition O2.1(b) of Licence 828 in that it failed to carry out licensed activities in a competent manner.

Conduct of the Proceedings

8 The central facts relating to the commission of the offence that were not in dispute were recorded in a Statement of Agreed Facts dated 27 November 2012. These facts were supplemented by additional evidence.

9 As outlined in the principal judgment (at [22]-[23]), this evidence principally comprised two general affidavits of Mr Sean Winstone, who was the Global Executive - Manufacturing for Orica at the time, sworn 6 and 23 November 2012. In those affidavits Mr Winstone deposed to matters relevant to all seven pollution incidents. The general affidavits summarised Orica's manufacturing operations at its KI premises, Orica's Safety, Health and Environment Management System ("SHEMS"), the actions taken by Orica to minimise further environmental incidents at the KI premises, and Orica's commitment to community initiatives.

10 Mr Winstone also gave evidence specifically relevant to the Ammonia Incident in an affidavit sworn 3 December 2012. In summary, in that affidavit he deposed to the background of the Incident (including the shutdown of the Ammonia Plant and the abnormal conditions on the day in question), the Incident itself (including its causes), Orica's immediate response to the Incident, the steps taken prior to the Incident to prevent its occurrence and the steps taken after the Incident to prevent its recurrence. The affidavit will, where appropriate, be discussed in further detail below.

11 Mr Winstone was cross-examined about Orica's operations at the KI premises generally and specifically about the Incident.

12 As stated in the principal judgment, I found Mr Winstone to be a credible witness.

The Kooragang Island Premises Where the Ammonia Incident Occurred

13 A description of Orica's operations at the KI premises is contained in the principal judgment (at [8]-[13]). Suffice it to say that Orica is the operator of the site at which the Incident occurred, namely, the ANMF, located at the south eastern end of Kooragang Island near Newcastle. The KI premises are industrial and the nearest residential properties are located at Stockton, at its closest point about 650m away. Stockton is located to the east of the ANMF on the eastern side of the northern arm of the Hunter River.

14 To the west of the ANMF are a number of port related industries including those associated with Kooragang No 2 and No 3 shipping berths. Further to the west are the suburbs of Mayfield North, Tighes Hill and Carrington.

15 Licence 828 authorises Orica to carry out chemical production activities ("the KI licensed activities") at the KI premises. These include the production of ammonia and nitric acid, which are used in the manufacture of ammonium nitrate primarily for use in the mining industry.

16 Orica has operated the ANMF since 1 June 2003, although the ANMF commenced operation in 1969 with the commissioning of the Ammonia Plant, No 1 Nitric Acid Plant and No 1 Ammonium Nitrate Plant. The ANMF now comprises one Ammonia Plant, three nitric acid plants, and two ammonium nitrate plants. The plants have all undergone various upgrades since they were originally commissioned.

17 Licence 828 includes condition O2.1(b) which provides that:

All plant and equipment installed at the premises or used in connection with the licensed activity:

...

(b) must be operated in a proper and efficient manner.

18 According to the Amended Summons filed 5 December 2012, Orica breached condition O2.1(b) by failing to operate the ANMF at the KI premises in a proper and efficient manner, in particular it operated the No 1 Ammonia Feed Tank:

(a) without adequate policies and/or procedures in place to cover situations when the No 1 Ammonia Feed Tank was not servicing the No 1 Ammonium Nitrate Plant;

(b) without having carried out a risk analysis and assessment in relation to situations when the No 1 Ammonia Feed Tank was not servicing the No 1 Ammonium Nitrate Plant;

(c) with inadequate automated trip protection;

(d) where critical instrumentation was not enabled; and

(e) without adequately monitoring trends during the filling of the No 1 Ammonia Feed Tank and taking appropriate action to prevent the activation of the pressure release valves.

19 As a result of Orica's failure to operate the ANMF in a proper and efficient manner, ammonia escaped into the atmosphere.

Background to the Ammonia Plant and the No 1 Ammonia Feed Tank

20 Ammonia is used in the three Nitric Acid Plants ("NAP1", "NAP2" and "NAP3"), and the two Ammonium Nitrate Plants ("ANP1" and "ANP2"), at the ANMF to manufacture ammonium nitrate.

21 Ammonia is fed directly to the three Nitric Acid Plants and the two Ammonium Nitrate Plants by Ammonia Feed Tanks. There are three Ammonia Feed Tanks at the Ammonium Nitrate Manufacturing Facility:

(a) the No 1 Ammonia Feed Tank feeds ammonia directly to NAP1 and ANP1;

(b) the No 2 Ammonia Feed Tank feeds ammonia directly to NAP2, NAP3 and ANP2; and

(c) the No 5 Ammonia Feed Tank feeds ammonia directly to the Bottling Plant.

22 When operating normally, the No 1 Ammonia Feed Tank functions as follows:

(a) ammonia is fed into the No 1 Ammonia Feed Tank via ammonia lines from the Ammonia Plant and/or the Refrigerated Storage Tank (V101);

(b) the ammonia level in the No 1 Ammonia Feed Tank is normally controlled automatically at a setpoint of 60%. There is a High Level Alarm (LIC 227) which is triggered when the liquid ammonia level in the No 1 Ammonia Feed Tank reaches 75%;

(c) the pressure in the No 1 Ammonia Feed Tank is controlled by a side arm heater, which adds a small amount of heat to the ammonia so that the desired pressure is obtained within the No 1 Ammonia Feed Tank. There are three separate pressure alarms, which are triggered when the pressure within the No 1 Ammonia Feed Tank is increased beyond the normal range:

(i) Pressure Alarm (PIC271-PVH), which is triggered when the pressure reaches 1500kPa;

(ii) Pressure Alarm (PI269-PVH), which is triggered when the pressure reaches 1570kPa; and

(iii) Pressure Alarm (PIC271-PVHH), which is triggered when the pressure reaches 1700kPa;

(d) the No 1 Ammonia Feed Tank is fitted with two pressure safety valves known as PSV283A and PSV283B ("the Pressure Safety Valves"). The Pressure Safety Valves are operated in the event that the pressure in the No 1 Ammonia Feed Tank increases beyond the normal range to relieve the pressure to prevent the catastrophic failure of the vessel. The Pressure Safety Valves are set to operate at 1724kPa;

(e) the Pressure Safety Valves normally vent to the NAP1 Tail Gas Stack ("NAP1 vent stack"). However, during the time of the Ammonia Incident, the NAP1 vent stack was isolated for maintenance. As a result, the flow path from the Pressure Safety Valves was redirected to the NAP2 Tail Gas Stack ("NAP2 vent stack"); and

(f) there is a High Level Alarm on the Flow Indicator FI251 that monitors flows from the Knock-out Pot downstream of the Pressure Safety Valves, which indicate flows that are subsequently vented to the atmosphere.

The Ammonia Incident

23 Under normal operating conditions, ammonia is supplied to the three Nitric Acid Plants and the two Ammonium Nitrate Plants from the Ammonia Plant. The Ammonia Plant was shut down on June 2011 for a planned maintenance overhaul known as a "turnaround".

24 Due to an incident at that Plant on 8 August 2011 (Environment Protection Authority v Orica Australia Pty Ltd (the Hexavalent Chromium Incident) [2014] NSWLEC 106, or the Hexavalent Chromium Incident), the Ammonia Plant remained shut down on 9 November 2011.

25 In order to supply ammonia to the Nitric Acid Plants and the Ammonia Nitrate Plants at the KI premises, ammonia was being shipped to the KI premises and fed into the Refrigerated Storage Tank. The ammonia was periodically pumped from the Refrigerated Storage Tank to the Ammonia Feed Tanks, including to the No 1 Ammonia Feed Tank, through a process known as "batch filling".

26 On 8 November 2011, there was a power outage onsite due to a lightning strike at an offsite Ausgrid power pole at approximately 8:55pm. This caused a power outage and brought all of the Nitrate Plants offline.

27 ANP1 was kept offline to undertake some opportunistic maintenance following the power outage. By the morning of 9 November, therefore, only NAP1 was operating and it was using approximately 6.2t/h of ammonia. As a result, only NAP1 was drawing ammonia from the No 1 Ammonia Feed Tank. This increased the rate of the level of ammonia in the No 1 Ammonia Feed Tank, and consequently, the pressure in the Tank during batch filling. Ordinarily both NAP1 and ANP1 would draw ammonia from the No 1 Ammonia Feed Tank.

28 Thus on 9 November 2011, the No 1 Ammonia Feed Tank was operating under the following abnormal conditions:

(a) ammonia was being fed into the No 1 Ammonia Feed Tank via ammonia lines from the Refrigerated Storage Tank using an Export Pump (101B);

(b) only NAP1 was operating; and

(c) the ammonia level in the No 1 Ammonia Feed Tank was being controlled manually, rather than automatically, because the minimum output rate for the Export Pump exceeded the amount of ammonia required by NAP1. The Orica Ammonia Storage Operator controlled the ammonia level in the No 1 Ammonia Feed Tank by turning the Export Pump on and off at various periods as follows:

(i) the Export Pump was started at 6.26am with a tank level of 35.8%;

(ii) the Export Pump was turned off at 8.49am with a tank level of 66.7%;

(iii) the Export Pump was started at 12.35pm with a tank level of 36.3%;

(iv) the Export Pump was turned off at 12.49pm with a tank level of 42.4%;

(v) the Export Pump was started at 1.44pm with a tank level of 35.0%; and

(vi) the Export Pump was turned off at 2.49pm with a tank level of 59.15%.

29 As a result of the pumping of ammonia into the No 1 Ammonia Feed Tank, the pressure within the No 1 Ammonia Feed Tank increased and decreased throughout 9 November 2011. At various times on 9 November 2011, the pressure within the No 1 Ammonia Feed Tank increased above 1724kPa. This over-pressurisation resulted in ammonia passing through Pressure Safety Valves to the 48m high NAP2 vent stack and into the atmosphere.

30 This occurred on six occasions for about a minute each time. During the course of each of the six releases, Orica employees were not aware that the six ammonia releases had vented into the NAP2 vent stack. This is because:

(a) Pressure Alarm PIC271-PVH, which was triggered when the pressure in the No 1 Ammonia Feed Tank reached 1500kPa, was disabled at 6.39am on 9 November 2011, and only re-enabled at 2.45pm, immediately prior to the Export Pump being turned off at 2.49pm;

(b) Pressure Alarm PI269-PVH, which was triggered when the pressure in the No 1 Ammonia Feed Tank reached 1570kPa and was enabled throughout 9 November 2011 (it was activated at 7.57am, 8.15am and 1.59pm and operated as designed), only indicated to Orica employees that the pressure in the No 1 Ammonia Feed Tank had reached 1570kPa. This pressure was too low to warn the employees that ammonia was likely to flow through the Pressure Safety Valves and vent to the NAP2 vent stack;

(c) Pressure Alarm PIC271-PVHH, which was triggered when the pressure in the No 1 Ammonia Feed Tank reached 1700kPa, was disabled at 6.39am on 9 November 2011 and only re-enabled at 2.45pm, immediately prior to the time at which the Export Pump was turned off at 2.49pm. As a result, this pressure alarm did not alert Orica employees that pressure within the No 1 Ammonia Feed Tank had increased beyond the normal range;

(d) High Level Alarm LIC227, which was triggered when the ammonia level in the No 1 Ammonia Feed Tank reached 75%, was enabled throughout 9 November 2011 and operated as designed, however, as the level in the No 1 Ammonia Feed Tank only reached a maximum of 66.7%, the High Level Alarm did not activate; and

(e) High Level Alarm on Flow Indicator FI251, which indicated when there were flows from the Knock-out Pot downstream of the Pressure Safety Valves, had been disabled since 7 November 2011. As a result, this alarm did not alert Orica employees that ammonia had flowed from the Knock-out Pot downstream of the Pressure Safety Valves and was being vented into the NAP2 vent stack.

The Response to the Incident

31 At approximately 3.55pm on 9 November 2011, Orica was notified by the NSW Fire and Rescue Service that ammonia had been detected offsite.

32 Mr Winstone deposed in his affidavit sworn 3 December 2012, that as ammonia is lighter than air, under normal atmospheric conditions, in the event that a pressure valve lifts, as occurred during the Incident, the height of the vent stack is designed to ensure that ground level concentrations of ammonia are sufficiently low to prevent adverse human health effects. However, on 9 November 2011, rather than dissipating into the atmosphere, some of the ammonia vapour released via the stack drifted to the ground at the nearby Australian Rail Track Corporation ("the ART") site in Mayfield, and employees of ART reported symptoms consistent with exposure to elevated concentrations of ammonia. It was these employees who notified NSW Fire and Rescue of the Incident.

33 NSW Fire and Rescue attended the site at 4:03pm and Orica's Emergency Response Plan was activated. According to Mr Winstone, it was at this point that Orica notified regulatory agencies including the Office of Environment and Heritage ("OEH"), NSW Health and WorkCover.

34 Orica employees then identified the source of the likely releases of ammonia to the atmosphere and stopped the flow of ammonia to the No 1 Ammonia Feed Tank by turning off the Export Pump, which had been restarted at 3:42pm.

35 Orica notified its industrial neighbours of the Incident that afternoon and made enquiries to determine if any employees were impacted by the ammonia release. Orica also contacted the ART to follow up on the Incident and the health of the workers who had been affected.

36 On 9 November 2011, an EPA Officer attended the KI premises and conducted an inspection of the No 1 Ammonia Feed Tank and various other relevant plant and equipment.

37 On the same day, the KI Site Manager commenced a review process of the pressurised ammonia storage tanks to identify the cause of the Incident and what actions were required to prevent a recurrence of the Incident. Mr Winstone assisted the KI Site Manager with the investigation into the Incident with a team of Orica personnel.

38 Part of the initial response was to make safe all pressurised ammonia storage on the KI premises by safely transferring the contents of the vessels back to the Refrigerated Storage Tank. This was a complicated activity and took a number of days to safely complete.

39 That same day, Orica issued a media release on its website regarding the Incident.

40 Subsequently, Orica organised a community reference group meeting on 10 November 2011 to inform the community nearby about the Incident and a letter box drop took place in parts of nearby Carrington on 15 November 2011 and in Stockton on 16 November 2011, providing information to those communities of the Incident.

Investigation of the Cause of the Incident

41 On 10 November 2011, the EPA served Orica with a Notice of Preventative Action issued under s 96 of the POEOA ("the Notice"). The Notice required Orica to take certain preventative action and to engage an independent engineer to investigate and report on the operation of the No 1 Ammonia Feed Tank on 9 November 2011.

42 On 11 November 2011, EPA Officers attended the KI premises and conducted a further inspection of the No 1 Ammonia Feed Tank and other plant and equipment.

43 On 11 November 2011 the EPA received a letter from Orica nominating Mr Robert Weiss, of Honeywell Process Solutions ("Honeywell"), as the independent engineer that Orica intended to engage as required under the Notice.

44 On 11 November 2011 the EPA wrote to Orica advising of its acceptance of the nomination of Mr Weiss as the independent engineer.

45 On 14 November 2011 Orica wrote to the EPA requesting a number of changes to the Notice. On the same day, the EPA sent an email to Orica confirming a verbal request made by EPA Officers on 9 November 2011 for an Incident Report to be provided.

46 On 12 and 15 November 2011, Orica issued media releases on its website regarding the Incident.

47 On 16 November 2011, the EPA received Orica's Incident Report, which essentially summarised the chronology outlined above and identified a number of necessary remedial actions including:

(a) the installation of high pressure trips on the pressurised storage tanks;

(b) a review of the procedures associated with critical safety alarms;

(c) the development of temporary work instructions to respond to ammonia releases from vents and the preparation of a revised temporary work instruction for response to the activation of critical safety alarms;

(d) improved training in relation to temporary work instructions; and

(e) actions to prevent the use of ammonia export pumps for the supply of ammonia to the pressurised ammonia storage tanks onsite.

48 Very shortly after the Incident Report was submitted to the EPA, a project team at the KI premises began putting the recommendations into action.

49 On 24 November 2011, the EPA served Orica with a Variation of Notice of Prevention Notice.

50 On 24 November 2011, the EPA received from Orica a report titled Investigation into the ammonia release at Orica Australia's Kooragang Island Nitrates Plant on 9th November 2011 dated 23 November 2011, prepared by Mr Weiss of Honeywell ("the Investigation Report").

51 On 1 December 2011, Orica wrote to the EPA regarding changes to the operation of the ammonia feed tanks on the KI premises. Attached to this letter was a report prepared by Mr Weiss of Honeywell dated 1 December 2011, detailing the changes. In the report Mr Weiss stated that he was "satisfied that the actions taken by Orica satisfy in all respects the recommendations of [his] 'Prior to restart' recommendations".

52 On 5 December 2011, the EPA served Orica with a Revocation of Prevention Notice. On the same day, the EPA served Orica with a Notice of Variation of Licence ("the Licence Notice"). The Licence Notice attached further conditions to Licence 828 requiring Orica to carry out works and make certain modifications to the plant and equipment at the KI premises.

53 A number of risk assessments were undertaken to ensure that the changes did not introduce additional risks or hazards, including:

(a) Hazard Study 3 ("HAZOP");

(b) Control System HAZOP; and

(c) Job Safety and Environmental Risk Analysis ("JSERA").

54 These assessments took place between 10 November and 5 December 2011, to allow remedial work to be completed on the No 1 and No 2 Ammonia Feed Tanks.

55 Mr Winstone deposed in his 3 December 2012 affidavit that, following verification of works undertaken at the KI premises, approval to restart the Nitric Acid Plants and the Ammonium Nitrate Plants ("the Nitrates Plants") was given by the Ammonia Plant Startup Committee, comprising representatives from OEH, WorkCover, NSW Fire and Rescue, NSW Health, NSW Police, Newcastle City Council and Port Stephens Council.

56 The Nitrates Plants were restarted on 12 December 2011. A number of community meetings were held prior to the restart.

57 On 30 March 2012, Orica wrote to the EPA in respect of actions undertaken as a requirement of condition U12 of Licence 828. This was repeated on 2 April 2012, when Orica again wrote to the EPA in respect of actions undertaken as a requirement of condition U12. The letter detailed a program of employee training completed by Orica in response to the Incident.

58 Mr Winstone confirmed in his 3 December 2012 affidavit that the short term recommendations in the Investigation Report were implemented promptly, including the following:

(a) the installation of a high integrity trip valve on the No 1 and No 2 Ammonia Feed Tanks, operating independently of the computer-based Distributed Control System ("the DCS");

(b) the upgrade of the existing trips on the Ammonia Feed Tanks;

(c) the installation of an interlock device to ensure the trip operation does not increase the risk of release of ammonia upstream or downstream of the Ammonia Feed Tanks;

(d) the reconfiguration of alarms for improved trip monitoring;

(e) the modification of procedures and software to ensure that alarms cannot be disabled without proper review;

(f) changes to batch filling procedures to better manage and match pump outputs and production capacity; and

(g) the training of all relevant operators in the modified equipment and updated operating instructions.

59 Mr Winstone also confirmed that a number of medium term recommendations in the Investigation Report had been implemented including:

(a) improvements in DCS alarm management and site operating procedures and a review and update of the Nitrates DCS alarms panel to include additional critical information;

(b) the installation of restriction devices on the pressure gauges of No 1 and No 2 Ammonia Feed Tanks to minimise any loss of containment in the event of a pressure gauge or piping failure; and

(c) the introduction of a comprehensive standard operating procedure requiring risk assessments to be undertaken in abnormal operating conditions.

60 Mr Winstone further deposed to steps taken to implement the two long term recommendations made by Mr Weiss in the Investigation Report, namely, first, upgrading the existing Nitrates DCS to include effective alarm management tools, and second, simplifying the design of future ammonia storage vessels to minimise small bore piping. He stated that a $16 million project to upgrade the DCS alarm system was underway and was scheduled for completion for the end of 2013, and that implementation of the second recommendation had also commenced.

61 Finally, in addition to the recommendations made in the Investigation Report, Orica implemented the following improvements to ammonia management systems following the Incident:

(a) it made instrumentation changes to minimise the risk of a pressure relief valve release event;

(b) it updated procedures for emptying and refilling the pressurised ammonia storage tanks to prevent overpressure during startup and shutdown;

(c) it reviewed all ammonia systems at the KI premises to determine the risk of a similar event and modified operations to minimise this risk;

(d) it shared information on the Incident with other Orica and affiliated facilities in Australia and internationally;

(e) it installed double block and bleed valves on the Ammonia Feed Tank pressure gauges to enable positive isolations and mitigate loss of containment incidents; and

(f) it installed a high rate of change level alarm on the Ammonia Feed Tanks that provides early warning of potential overpressure on the Nitrates DCS.

62 These actions resulted from the risk assessment process used to implement the recommendations in the Investigation Report. The risk assessment process was broadened to ensure that other areas of the KI premises did not have the same potential for a similar incident. In total, there were 28 modifications to the plant at the KI premises implemented as part of these further improvement projects.

The Causes of the Ammonia Incident

63 The Investigation Report identified the following direct causes of the Incident:

1. the ammonia plant had been shut down since June, so ammonia was being imported and feed was from ammonia storage V101. The ammonia plant is the normal source of ammonia for the nitrates plants and has greater flexibility to deliver small to full flow rates. The pumps at V101 have less flexibility, and P101B in use at the time had a significantly higher minimum flow than the demand from a single nitric acid plant.

2. Following a power outage that had stopped all nitrate plants, opportunity was taken to perform maintenance on several plants. No. 1 Nitric Acid Plant had been started and was the only plant operating. The ammonia demand was therefore abnormally low.

3. This combination of operations was such that the automated level controls could not be used. This operating mode usually only occurs for a short time (an hour or two) during plant startup. In this case, NAP1 had been operating by itself for approximately 12 hours at the time of the incident.

4. The significance of this unusual operating mode appears not to have been recognised by plant supervisors or management. No standard operating procedures existed to cover this mode of operation. Hence the operators were left to determine how best to run the plant so as to achieve the operating objectives.

5. The design of the alarms, as well as the nature of the nitrates operation, means that spurious alarm operation is common. The operators were free to disable alarms when they thought fit, in order to maximise the relevance of alarms displayed and to avoid real alarms being hidden amongst spurious alarms. There was no formal procedure governing alarm disabling. Although software was implemented to automatically re-enable certain critical alarms, the two alarms (PIC271_PVHH and FI251_PVH) that should have warned of excessively high pressure were not included in this system. Consequently these alarms had been disabled, and the operators were unaware that a release was occurring.

6. There was no independent automated shutdown of ammonia feed on high pressure, so dependence was placed on correct operation of the alarms and response by operators to prevent to PSVs from lifting. The PSVs thus became the primary layer of protection against a major loss of containment. The PSVs, and all other systems, worked as designed.

64 In addition, the following underlying causes were identified by Mr Weiss: inadequate high pressure protection, for example, lack of an instrumented high pressure trip; deficiencies in the existing nitrates alarm system, for example, a lack of formal procedures to control disabling of alarms; operating procedure deficiencies, for example, the operating instructions did not cover procedures during abnormal operating conditions; and system operability issues, for example, nitrates control room operators did not routinely monitor storage tank pressures using trend displays or analogous techniques, but relied on alarms to be alerted to any deviations.

65 Mr Winstone did not cavil with the causes identified by Mr Weiss in the Investigation Report. He expressed the view that the disabling of critical alarms was "unacceptable unless there is a legitimate reason". He noted that, "unfortunately, the investigation and enquiries were not able to identify the reasons why the relevant alarms were disabled".

66 Following the Ammonia Incident, the EPA engaged Dr Derek Griffiths to prepare a report in relation to the causes of the Incident.

67 Dr Griffiths agreed with the Investigation Report and was of the further opinion that there were a number of matters that related to the failure to operate the plant and equipment in a proper and efficient manner that contributed to the Incident. It was his view that had the operation since June 2011 been properly assessed and a suitable management system implemented, all of the matters would have been covered. That is to say, the causative factors contributing to the Incident were covered by the SHEMS but had not been implemented. Thus:

(a) the issue that led to the Incident occurring was the failure to identify that changes had been made in the operation of the ANMF. With the closure of the Ammonia Plant in July 2011, the same operating procedures were used for the long term batch pumping of ammonia from the storage to the Ammonia Feed Tank that had been developed for very short term batch pumping. This was done without any reported attempt to assess the risks involved and to determine what additional controls were needed;

(b) there were at least three components of the SHEMS that should have triggered a review: the Management of Change Protocol; the Periodic Hazard Studies protocol; and the need for training in a different process; and

(c) if the operators, supervisors and engineers had accessed the information available during the day and had had the required operational knowledge, the trend analysis would have shown the problems occurring without the disabled alarms being sounded. The releases in the afternoon were generated by the same mechanism as the releases in the morning. It is arguable that the afternoon releases could have been avoided if the operation was being adequately monitored and trending carried out.

Steps Taken Prior to the Incident to Prevent its Occurrence

68 It cannot be said, however, that Orica did not have any operational safety systems in place prior to the Ammonia Incident. As Mr Winstone deposed in his 3 December 2012 affidavit, at the time the following measures were in existence:

(a) an operating procedure was in place that detailed how to supply ammonia to the Nitrates Plants from ammonia storage. The ammonia storage operators were trained in the procedure;

(b) apart from general training, the relevant operators received training specifically on the operation of the DCS and alarm training. Operators were trained not to disable critical alarms unless there was a legitimate reason not to do so. There was advanced training for the Nitrates Plants, which included checking whether the alarms were disabled at the start of each shift; and

(c) there was an ammonia venting risk reduction program. As part of this program an independent engineer was engaged to review releases of ammonia from various plants in order to identify risk reduction measures and to reduce the risk of a serious release occurring from any part of the KI premises. Between 2000 and 2004 an initial set of ammonia venting risk reduction works were undertaken. In 2004 a risk reduction program was commenced in the Ammonia Storage Plant, which was ongoing. The implementation measures on the ammonia storage area between 2004 and May 2012 cost Orica approximately $12.5 million. This expenditure was part of the approximately $61 million spent during this period on improvements at the KI premises.

Sentencing Principles

69 A discussion of the applicable sentencing principles is set out at [80]-[93] and [168] of the principal judgment, which I adopt here.

70 Section 3A of the Crimes (Sentencing Procedure) Act 1999 ("the CSPA") sets out the purposes of sentencing an offender. Relevant purposes in these proceedings are those contained in ss 3A(a), (b), (c), (e), (f) and (g).

71 In addition, s 21A of the CSPA identifies the matters that the Court must take into account when determining the appropriate sentence, including factors in aggravation under s 21A(2) and factors in mitigation under s 21A(3). Relevant potential aggravating factors for this offence are limited to those contained in ss 21A(2)(d), (g) and (i) of the CSPA. Relevant subjective circumstances or mitigating factors are those contained in ss 21A(3)(e), (f), (g), (i), (k) and (m) of the CSPA. The factors are discussed further below.

72 Finally, s 241 of the POEOA further provides legislative direction as to matters that are to be considered in imposing penalty for offences committed under that Act. Section 241(1) of the POEOA is a list of the objective circumstances of an offence that must be considered by the Court insofar as they are relevant, while s 241(2) of that Act recognises the Court's discretion to consider other matters relevant to the particular circumstances of the proceedings.

Objective Circumstances of the Offence

Nature of the Offence

73 A fundamental consideration of relevance to environmental offences is the degree to which Orica's conduct offends against the legislative objectives. Those objects are found in s 3 of the POEOA.

74 The nature of the offence of breach of licence has been discussed in the principal judgment (at [103]-[104]). With respect to this offence, given the potentially toxic and very harmful qualities of ammonia, it is a central requirement that Orica carry out its licensed activities in a proper and efficient manner in accordance with Licence 828 condition O2.1(b). To do otherwise is contrary to the statutory purpose enshrined in s 3 of the POEOA.

75 Specifically, Orica operated the No 1 Ammonia Feed Tank without adequate polices and procedures in place to cover situations where the No 1 Ammonia Feed Tank was not servicing ANP1, without carrying out adequate risk assessment for such situations, without automated trip protection, without critical instrumentation enabled, without adequately monitoring trends during the filling of the No 1 Ammonia Feed Tank and without taking appropriate action to prevent the activation of the pressure release valves.

76 As a result, a total of 285kg was released into the atmosphere by the six releases over the course of a single day. Ammonia is known to have a number of potential human health effects.

77 The failure by Orica to operate its plant in an efficient and proper manner contrary to Licence 828, thereby resulting in the release of the ammonia, plainly offended against the legislative objects of the POEOA. It undermined the object of reducing risks to human health and preventing the degradation of the environment by the use of mechanisms that promote pollution prevention; of reducing discharges of harmful substances; and of making progressive environmental improvements, including the reduction of pollution at the source (see s 3(d) of the POEOA).

78 Licence holders are licensed to carry out activities which, if not carried out properly, safely or efficiently, have the potential to cause harm to the environment and human health. In the case of Orica's operations at the KI premises, that potential was very real. The impact of the Ammonia Incident adversely affected the health of Orica's neighbours. On any view the objects of the POEOA were eroded by Orica's breach of its licence.

79 Although the EPA complained of the delay by Orica in notifying the Ammonia Incident to the relevant authorities (and Mr Winstone was cross-examined on this topic), I note that no such offence is charged in relation to this Incident and I have therefore placed no weight on this evidence.

Statutory Licences - a Breach of Public Trust?

80 As discussed in the principal judgment (at [106]-[107]), the EPA submitted that the potential to cause harm to the environment and human health was, in Orica's case, "very significant, particularly given the nature of the substances it handles and its proximity to Newcastle city". The EPA submitted that Orica was thereby in a position of public trust, or alternatively a position of privilege, which was contravened by the breach of licence condition.

81 However, for the reasons given in the principal judgment, I do not accept that breach of public trust is a matter than can be taken into account under s 241(2) of the POEOA as a factor increasing the objective gravity of the offence (see [108]-[111]).

Maximum Penalty

82 The maximum penalty for the commission of the offence pursuant to s 64(1) of the POEOA is $1 million for a corporation. There is a spectrum of offending behaviour covered by a given offence and the imposition of the maximum penalty is necessarily reserved for the worst case for which the penalty is prescribed.

Environmental Harm Caused by the Ammonia Incident

83 The environmental harm caused by the commission of an offence is, as was stated in the principal judgment (at [116]-[118]), a central consideration in determining the objective gravity of the offence. The concept of harm in the context of environmental offences is broad and includes the potential or risk of harm, not merely actual harm (see the authorities referred to in the principal judgment at [117]). Harm can be direct, indirect or cumulative and activities that contribute incrementally to the gradual deterioration of the environment, even when they cause no discernible direct harm to human interest, must nonetheless be treated seriously.

84 Section 241(1)(a) of the POEOA makes it clear that, in sentencing, the Court must consider the "extent of the harm caused or likely to be caused to the environment by the commission of the offence". The POEOA defines "harm to the environment" to include "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".

85 The actual environmental harm, including adverse human health impacts, caused by the commission of the offence was not a matter of controversy.

86 Ammonia is known to have a number of potential human health effects. It is classified as a hazardous substance according to National Occupational Health and Safety Council criteria and is a Dangerous Good under the Australian Dangerous Goods Code. Ammonia is classified as "toxic by inhalation" and "very toxic to aquatic organisms". Identified human health risks are "serious damage to eyes" and "causes burns". The effects of ammonia exposure are, however, concentration dependent.

87 Ammonia has mild, transient adverse effects (absent a clearly defined odour) at 25ppm. It has irreversible and serious effects that can impair an individual's ability to take protective action at 150ppm. It has life threatening health effects at 750ppm.

88 The first three releases of ammonia occurred as follows:

(a) 8.15am, releasing 54.4kg;

(b) 8.26am, releasing 41.5kg; and

(c) 8.37am, releasing 39.7kg.

89 A resident of Stockton reported an ammonia odour which made her uncomfortable at 9.20am but no ill effects were reported. The resident lodged a complaint with the EPA.

90 The second three releases of ammonia occurred as follows:

(a) 2.15pm, releasing 53.1kg;

(b) 2.26pm, releasing 52.9kg; and

(c) 2.38pm, releasing 43.3kg.

91 The second three releases resulted in the symptoms set out below that were reported by workers offsite on nearby industrial premises, in the early afternoon of 9 November 2011. There were no health impacts reported by Orica employees at the KI premises.

92 However, the following offsite employees reported the following:

(a) a worker at Mayfield East Rail Line initially noticed a loss of breath. He reported feeling lightheaded and "tingly". He took another breath and had the same reaction. He then started dry retching and started to feel nauseous. His face felt hot. He was wearing safety glasses at the time and his eyes were protected. He then started to get a headache. He was then taken to hospital where he was examined by a doctor. Following the examination, he was discharged. At 3pm the day after the Incident he still had a slight headache, his ribs hurt from dry retching and he felt lethargic;

(b) a second worker at Mayfield East Rail Line noticed a smell and took two normal breaths but the smell was so overpowering that he put his hand over his mouth. He started staggering, coughing up white phlegm, dry retching and trying to vomit. His throat was very sore and irritated. He was struggling to take breaths and became incoherent. He does not recall things that were taking place at the time. His eyes watered, his face stung and his arms felt heavy. He felt generally unwell and clammy. He washed his face and neck thoroughly which appeared to relieve the irritation to his face. He was transported to the hospital in an ambulance, and in the ambulance started to develop a headache. A doctor examined the second worker and he was subsequently medically cleared and discharged. By the end of that day he felt lethargic. He woke at 4am the next day still lethargic with aches and pains all over his body, however, the symptoms were milder than they had been the previous evening and afternoon. He commenced work at 6am;

(c) a third worker at Mayfield East Rail Line saw what was happening and smelt a strong chemical odour. The smell stung his throat and nose. He assisted the two workers referred to above to a building to shelter from the odour;

(d) at 2.40pm at the Mayfield No 4 Wharf, a worker was overcome by a severe taste in his throat and started to cough. He got a smell of what he thought might be acid. He ran to his car about 30m away in Selwyn Street and shut its windows. He suffered from a headache which lasted until 9.00pm. He also suffered from a dry sore throat, of which he still complained on the morning of 11 November 2011. He did not seek any medical treatment;

(e) a second employee at the Mayfield No 4 Wharf could feel a strange sensation like he was breathing salt water through his nose. He reported an acid smell. He did not suffer any ill effects from the smell;

(f) a third worker at the Mayfield No 4 Wharf was sitting in an air conditioned cab on a backhoe. He saw a colleague screw his face up and opened the window to see why. He smelt a strange smell and felt short of breath. He told his colleague to get out of the area;

(g) at the Kooragang No 2 Wharf a worker detected a smell of ammonia. The odour was enough to notice but not enough to cause irritation or any adverse effect. It only lasted for a few seconds; and

(h) another worker at the Kooragang No 2 Wharf smelt what he recognised to be ammonia. The smell was only slight and lasted no more than about five seconds. No adverse effects were reported.

93 Orica accepted that the symptoms suffered by the workers were "significant and distressing".

94 The health risks caused by the commission of the offence, although transitory, were nonetheless serious and impacted upon a number of people in the vicinity of the Incident. I therefore find the commission of the offence caused moderate to serious environmental harm.

95 I also find that the harm caused by the commission of the offence was sufficiently substantial that it constitutes an aggravating factor under s 21A(2)(g) of the CSPA.

Orica's State of Mind

96 The offence is one of strict liability, which means that mens rea is not an element of the offence. However, the state of mind of an offender at the time of committing an offence is a relevant consideration when imposing a sentence because a strict liability offence that is committed, for example, negligently, will be objectively more serious than one committed accidentally (see the authorities in the principal judgment at [127]).

97 The parties disagreed about whether Orica's state of mind could, conformably with the principle in R v De Simoni [1981] HCA 31; (1981) 147 CLR 383 (at 389), be taken into account with respect to the breach of licence offence under s 64(1) of the POEOA. In the principal judgment I concluded that it could (at [140]-[145]).

98 As described above, Orica failed to operate its plant and equipment in a proper and efficient manner. I accept the EPA's submission that the Incident occurred due to a number of failures in operating the relevant plant and equipment.

99 The EPA further submitted that the failures that led to the Ammonia Incident established beyond reasonable doubt that Orica was negligent. Having regard to the agreed facts and, in particular, to the conclusions expressed in the Investigation Report and the opinions of Dr Griffith, I readily find that the commission of the offence was the result of Orica's negligence.

100 In particular, Orica did not know of the six discharges because the relevant alarms had been disabled. Mr Winstone conceded that Orica still did not know why that had occurred and that "in respect to alarm management, the procedures were inadequate" (T38.01-38.39). There was also inadequate trip protection. Moreover, there were inadequate operational procedures in place. For example, an Orica worker used a transfer pump that had to be turned off and on manually because its capacity was far too great for the amount of ammonia that was being consumed within the plant. And the significance of the abnormal operating conditions appeared not to have been recognised by Orica as no operating procedures existed to deal with the scenario. In addition, inadequate risk assessment had been carried out in relation to the batch filling of the Ammonia Feed Tanks. Although Mr Weiss expressed the opinion in the Investigation Report that batch filling was "a normal part of startup, and is covered by the startup procedures" (a matter upon which Orica drew comfort), he went on to state that "however, in this case, due to maintenance work on ANP1, this mode of operation was prolonged, and it was the extended operation in this mode that presented the hazard." Finally, Orica failed to properly monitor the filling of the No 1 Ammonia Feed Tank in order to take action to prevent the activation of the pressure release valves.

Reasons for Offending

101 In the present case, the offence was not committed for any ulterior reason that would increase its objective seriousness.

Foreseeability of the Risk of Harm

102 The extent to which Orica could have reasonably foreseen the harm caused by the commission of the offence is a relevant objective circumstance (s 241(1)(c) of the POEOA and the authorities referred to at [152] of the principal judgment). It is not necessary that the precise cause of an incident be foreseeable.

103 In my opinion, the risk of harm was foreseeable. It was self evident that a lack of adequate automated trip protection, the disabling of critical instrumentation such as alarms, the failure to monitor trends while filling the Ammonia Feed Tank, and the failure to take action to prevent the activation of the pressure release valves, would result in ammonia being vented to the atmosphere thereby, given its potential toxicity, causing harm to the environment and to human safety.

104 In other words, the release of ammonia through the pressure safety valve was a reasonably foreseeable consequence of disabling and failing to re-enable alarms and failing to establish adequate monitoring and other operating procedures to monitor the pressure in the Ammonia Feed Tank. In this context I conclude that the risk of harm was reasonably foreseeable.

Practical Measures Available to Orica to Avoid or Mitigate Harm

105 Section 241(1)(b) of the POEOA makes it clear that the Court is to consider the "practical measures that may be taken to prevent, control, abate or mitigate" the harm identified in s 241(1)(a).

106 Many practical measures were taken after the Incident in order to prevent a recurrence in future, as outlined above. All of these could have been taken prior to the Incident in order for Orica to avoid or mitigate the harm.

107 This is not to say that Orica did not implement measures prior to the Incident to avoid or mitigate the risk of a release of ammonia, it did (see the affidavit evidence of Mr Winstone referred to above). Rather, it is to recognise that there were additional acts that Orica could have attended to in order to prevent the Incident from occurring.

Control Over the Causes of the Harm

108 Section 241(1)(c) of the POEOA makes it clear that the Court is to consider the extent to which Orica had control over the causes of the harm. I find that Orica had control over the causes that led to the discharge of the ammonia, notwithstanding that it does not know the reason why the relevant alarms were disabled.

Conclusion on Objective Gravity

109 Orica emphasised the need for proportionality in sentencing and submitted that the offence should, overall, be classified towards the "lower to middle range" of seriousness given, in particular, the following considerations:

(a) the consequential environmental harm was transitory;

(b) Orica's operations at the KI premises are large, complex and, as chemical processing activities, carry inherent environmental risks;

(c) the offences did not result from any decision to put the environment at risk in order to save money; and

(d) Orica responded promptly and appropriately to the Incident to minimise environmental impacts.

110 However, having regard to the seriousness of the harm caused by the commission of the offence (even though no enduring harm to human safety was caused by the Incident) and the fact that the breach of licence condition was committed negligently by Orica, I do not agree. Rather, I find that the offence in the present case is of moderate to serious objective gravity.

Subjective Considerations

111 As stated above, determining an appropriate and proportionate sentence for the offence, the Court must take into account all factors that are personal to Orica, including factors in aggravation and factors in mitigation.

Aggravating Factors

Prior Criminality

112 As stated in the principal judgment (at [170]-[173]), Orica has a criminal history of environmental offences, including for breach of a condition of an environmental licence in 2005. I take this fact into account as an aggravating factor under s 21A(2)(d) of the CSPA.

Was the Offence Committed Without Regard for Public Safety?

113 The EPA also submitted that a relevant circumstance of aggravation was that the offence was committed without regard for public safety (s 21A(2)(i) of the CSPA). The principles applicable to a finding that an offence was committed without regard for public safety under s 21A(2)(i) of the CSPA were discussed by the Court in the Jackhammer Incident decision (Environment Protection Authority v Orica Australia Pty Ltd (the Jackhammer Incident) [2014] NSWLEC 105 at [108]).

114 The EPA argued that "at the time of the Ammonia Incident Orica had lost control of its own processes"; it had no idea that a substantial amount of ammonia had been vented into the atmosphere; that it failed to carry out proper risk assessments; and that it conducted "inherently dangerous activities whilst critical alarms were disabled", all of which involved a disregard for public safety.

115 In my opinion, the EPA has not proved beyond reasonable doubt that the offence was committed without any regard to public safety. First, it did not know that the alarms were disabled at the time. Second, the No 1 Ammonia Feed Tank was operating under abnormal conditions not recognised by plant supervisors and operators. Third, an operating procedure, albeit inadequate, was in place during the batch filling. The operators had been trained to check if the alarms had been disabled. Fourth, a risk assessment had been undertaken in relation to the ammonia venting.

116 I therefore reject the application of this aggravating factor.

Mitigating Factors

Prior Criminality

117 In light of Orica's environmental antecedents, it cannot be said that Orica does not have any prior criminal record so as to operate as a mitigating factor in determining the imposition of an appropriate sentence (s 21A(3)(e) of the CSPA).

Good Character

118 Orica submitted that the evidence demonstrates it is a good corporate citizen and, more specifically, that its recent investments in environmental improvements and its community consultation and support programs practically demonstrate its good corporate character. For the reasons given in the principal judgment (at [185]-[190]), I agree. I therefore accept that Orica was a corporate person of good character at the date of this offence (s 21A(3)(f) of the CSPA).

Likelihood of Re-offending

119 Orica has undertaken a number of actions to minimise the chance of a similar incident occurring. Orica's examination of the causes of the Incident and its acceptance that these practical measures would have prevented the harm, suggests that the likelihood of future re-offending is greatly reduced and that there are good prospects of rehabilitation. Accordingly, and notwithstanding the further six pollution incidents the subject of this suite of criminal proceedings, I find the likelihood that Orica will re-offend in future to be low, which should be taken into account as a factor in mitigation (s 21A(3)(g) of the CSPA).

Demonstrated Remorse

120 Orica has, in my opinion, demonstrated remorse with respect to the commission of this Incident. The affidavits and oral testimony of Mr Winstone expressed regret for the incidents generally. Mr Winstone stated that he was "personally very disappointed that the incidents occurred". In addition, Orica tendered a formal letter from the Chairman of the Board of Orica Ltd, the parent company of Orica, wherein the Chairman, Mr Peter Duncan apologised formally to the Court and to the public for each of the seven incidents.

121 Further, in his affidavit sworn 3 December 2012, Mr Winstone specifically expressed remorse for the Ammonia Incident. He noted that on 29 November 2011, the then Managing Director and CEO of Orica, Mr Graham Liebelt, apologised in writing to residents of Stockton and Fern Bay. On 21 December 2011, Mr Winstone wrote a letter to local residents providing them with an update on improvement works at the KI premises following this Incident and the 9 November 2011 Incident. He also deposed to community forums organised by Orica on 10, 17 and 30 November 2011, to present information on the Incident.

122 There is clear evidence of Orica's remorse and acceptance of responsibility for its actions, thereby justifying the Court taking this factor into account as a mitigating factor with respect to this offence (s 21A(3)(i) of the CSPA).

Early Guilty Plea

123 Orica pleaded guilty on 28 November 2012, immediately after the amended summons was filed. Accordingly, Orica's early guilty plea should attract a maximum discount of 25% for each of the two offences (ss 21A(3)(k) and 22 of the CSPA).

Assistance to Authorities

124 The parties agreed that Orica had fully cooperated with the EPA's investigation. This assistance must be taken into account as a mitigating factor in Orica's favour (ss 21A(3)(m) and 23 of the CSPA).

Orica Agreed to Pay the Prosecutor's Costs

125 Orica has agreed to pay the EPA's reasonable legal costs, which I infer will be substantial. In addition, Orica has agreed to pay the EPA's investigation costs in the agreed sum of $1,717.51. I take this into account in the determination of the appropriate penalty to be imposed in these proceedings in accordance with the principles set out in the principal judgment (at [209]).

Conclusion on Subjective Considerations

126 The subjective circumstances of Orica operate to mitigate to a reasonable degree the penalty that would otherwise be imposed by the Court and I consider a total discount of 30% appropriate.

Sentencing Purposes: Denunciation, Retribution and Deterrence

127 The imposition of a sentence serves a number of purposes. As identified above, the relevant purposes listed in s 3A of the CSPA also inform the determination of an appropriate sentence. These include: punishment (s 3A(a)); both general and specific deterrence (s 3A(b)); community protection (s 3A(c)); making Orica accountable for its actions (s 3A(e)); denunciation (s 3A(f)); and recognition of the harm done to victims

128 (s 3A(g)).

129 The EPA submitted that both specific and general deterrence should be important sentencing considerations in the present case. At a general level, the EPA submitted that any fine imposed should be sufficient to cause others to take the positive precautions necessary to avoid offending.

130 The EPA submitted that specific deterrence was a significant factor in the circumstances of the present case because of the number of incidents being prosecuted in these consecutive proceedings and because of Orica's prior conviction for an environmental offence in 2005. The EPA contended that these circumstances demonstrated systemic problems in Orica's management and reporting systems requiring a substantial element of deterrence in the penalty to motivate lasting change within the organisation.

131 There is no doubt that the sentence imposed by the Court must be sufficient to specifically deter Orica from repeating the conduct that has resulted in the commission of the offence. It must also contain an element of general deterrence to promote the objects of the POEOA and to ensure that other environmental licensees with similar operations and responsibilities do not apprehend that such offences will be treated with relative impunity.

132 In the present case, I consider that there is a need for both specific and general deterrence for the reasons given in the principal judgment (at [210]-[214]).

133 The imposition of an appropriate sentence additionally serves the purpose of ensuring that retribution and denunciation are properly addressed. The sentence of this Court is a public denunciation of the conduct of Orica and must ensure that Orica is held accountable for its actions and is adequately punished. Accordingly, I also take these elements of sentencing into account.

Consistency in Sentencing

134 As stated in the principal judgment, a relevant consideration in sentencing is the existence of a general pattern of sentencing by the Court for offences such as the offence in question.

135 The pattern of sentencing against which the present case falls to be determined can be established by examining the relevant sentencing cases dealing with breach of licence offences pursuant to s 64(1) of the POEOA. These were examined in the principal judgment (at [223]) and are relied upon but not repeated here, other than to note that Orica placed specific reliance on Environment Protection Authority v Unomedical Pty Limited (No 4) [2011] NSWLEC 131 (discussed in the principal judgment at [223(b)]).

136 Orica submitted that although factually analogous, additional mitigating features in the present proceedings should operate in its favour to cause the Court to impose a lower monetary penalty than that imposed in Unomedical, including its early guilty plea and its expression of remorse.

137 I disagree. Orica's submission overlooks the fact that in the present case, the environmental harm caused by the commission of the offence was far more serious than that in Unomedical.

The Totality Principle

138 The totality principle is a relevant consideration when determining an aggregate penalty in sentencing for multiple offences. Although Orica argued that the totality principle should be applied across all seven pollution incidents to cause a downward adjustment to the penalty to be applied in these proceedings, for the reasons given in the principal judgment, I do not agree (at [230]-[249]). I have concluded that each of the seven incidents must be considered separately for sentencing purposes and that the totality principle has no application to this case.

Conclusion on the Appropriate Penalty for the Ammonia Incident

139 Synthesising the objective and subjective circumstances of Orica, and having regard to the existing patterns of sentencing for an offence of this nature, I consider that the appropriate penalty is a monetary penalty.

140 For this breach of licence condition offence contrary to s 64(1) of the POEOA the appropriate penalty is $250,000 discounted by 30% to $175,000.

Environmental Project

141 As the parties requested, I will order Orica to direct the monetary penalty towards a specified environmental restoration and enhancement project pursuant to s 250(1)(e) of the POEOA, and to pay the EPA's costs associated with monitoring and enforcing the carrying out of this project.

142 In the circumstances of the present case, I consider such an order to be appropriate. A fulsome description of the specified environmental project is annexed to this judgment at "A".

143 All future references to Orica's contribution towards this project will be accompanied by a reference, in the prescribed form referred to below, to the payment being part of the penalty imposed on Orica for the commission of this offence.

Publication Order

144 The parties submitted, and I agree, that it was also appropriate that the orders include a publication order pursuant to s 250(1)(a) of the POEOA.

145 In making this order, however, it is not the intention of the Court to cause Orica to publish a separate notice to that already required to be published persuant to the principal judgment (at [261(7) and (8)]).

Costs

146 Additionally, and as agreed, Orica will be ordered to pay the prosecutor's investigation costs in the agreed amounts and legal costs as agreed or assessed.

Orders

147 For the reasons provided above, the Court orders that:

51111 of 2012

(1) the charge against the defendant is dismissed.

51110 of 2012

(2) the defendant is convicted of the offence as charged;

(3) pursuant to s 250(1)(e) of the Protection of the Environment Operations Act 1997 the defendant is to pay to the NSW Office of Environment and Heritage - National Parks and Wildlife Service, within 28 days of this order, the amount of $175,000 to contribute to the Tomago Wetland Rehabilitation Project to restore the ecological character of this part of the Ramsar Wetland. A description of the project is annexed at "A";

(4) all future references by the defendant to its funding of the Tomago Wetland Rehabilitation Project shall be accompanied by the following passage (pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997):

"Orica Australia Pty Limited's contribution to the funding of the Tomago Wetland Rehabilitation Project is part of a penalty imposed on it by the Land and Environment Court of NSW after it was convicted of an offence against s 64(1) (breach of licence condition) of the Protection of the Environment Operations Act 1997 (NSW)."

(5) pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997 the defendant is to publicise a summary of the offence, of the circumstances of the offence and of the orders made against it, in the notice directed to be published at [261(7) and (8)] of the principal judgment, in the form and in the manner prescribed therein;

(6) the defendant is to pay the prosecutor's legal costs as agreed or assessed;

(7) pursuant to s 248(1) of the Protection of the Environment Operations Act 1997, the defendant is to pay the prosecutor's investigation costs in the sum of $1,717.51;

(8) the exhibits are to be returned; and

(9) liberty to restore on seven days' notice for the purpose of amending the form of any of the orders made above.

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Annexure A

Decision last updated: 28 July 2014