Environment Protection Authority v Bulga Coal Management Pty Limited  NSWLEC 5
Our client Bulga Coal Management Pty Limited (Bulga) has successfully defended a charge brought by the Environmental Protection Authority (EPA) that Bulga failed to notify the EPA of a pollution incident that occurred at the Bulga Coal Mine as soon as practicable after it became aware of the pollution incident.
This was the first prosecution under the Protection of the Environment Operations Act 1997(NSW) (the Act) since its inception in 1997, where a plea of not guilty has been entered to the charge of failing to notify under section 148 of the Act. The EPA has advised the Court that it will not appeal this decision of her Honour Justice Pain in the Land and Environment Court.
The EPA prosecuted Bulga for failing to notify the EPA of a leak from a tailings pipeline as soon as practicable after it occurred. Bulga pleaded not guilty to this charge and argued that the notification occurred as soon as practicable after the relevant personnel formed the opinion that the incident had caused or threatened material harm. Bulga did not dispute that the pollution incident had occurred, however it disputed that it had failed to report the incident ‘as soon as practicable’ after becoming aware of the incident, as required under section 148 of the Act.
This case clarifies that the obligation to notify the relevant authorities is triggered when the person forms a subjective awareness that material harm has been caused or threatened (as opposed to the objective position when the person first becomes aware that a pollution incident has occurred). The Act was amended in November 2012 to require immediate reporting (promptly and without delay) of pollution incidents which cause material harm, however the subjective awareness requirement of whether material harm has been caused is still applicable.
Under the Act, material harm to the environment requires:
- actual or potential harm to the health or safety of human beings or to ecosystems that is not trivial, or
- harm that results in actual or potential loss (including measures to prevent or make good harm to the environment) exceeding $10,000.
This means that the person must be actually aware that:
- the pollution incident has occurred, and
- the pollution incident has caused or threatened harm to ecosystems that is not trivial, or that it will cost more than $10,000 to clean up the damage,
before that person has an obligation to report the incident.
This decision potentially has far-ranging implications for environmental law in other Australian jurisdictions.
At approximately 11.30am on Sunday, 9 October 2011, a Bulga employee became aware that coal tailings had escaped into Nine Mile Creek (an intermittent waterway which at the time was a dry creek bed). The tailings had escaped as the result of the failure of a steel T piece in the tailings pipeline, and were described as a ‘trickle’. The Bulga employee formed the opinion that the potential harm to the ecosystem was trivial as there were no signs of harm to animals or plant life in the area of spill, and the tailings were non-toxic.
The employee followed Bulga’s internal processes, by taking immediate steps to stop the leak and prevent the further spread of tailings, and by contacting both the Environment Manager and CHPP Manager to inform them of the incident. The Operations Manager, who was responsible for external reporting of environmental incidents under the Company’s internal incident management procedure, formed the positive view after being informed of the details of the incident that the incident was not causing or threatening material harm to the environment and therefore was not required to be reported on the Sunday.
The following morning, the relevant personnel assembled on site to inspect the pollution incident, and at this time the view was formed by the relevant employees that the cost of the cleanup of the incident would be more than $10,000. The Operations Manager therefore made the decision that the incident should be notified to the EPA as soon as practicable, and this occurred within one hour of that opinion being reached.
Ultimately, the final clean-up cost to Bulga was $94,550 in internal costs and the external costs amounted to $193,440.
Forming an awareness
The EPA argued that the offence in this case was made out as the EPA was only required to prove, as a matter of objective fact, the incident was of that type and when the relevant Bulga personnel became aware of such an incident was irrelevant. The Court adopted Bulga’s submissions concerning the context of sections 147 and 148 of the Act, that section 147(1)(b) naturally allows the person on whom the duty is cast to make reasonable inquiries as to the anticipated clean up costs that would be incurred to make good any (trivial) harm to the environment caused by the incident.
Overall, the Judge agreed with Bulga that not all pollution incidents are required to be notified to relevant authorities under the Act, as this would lead to a substantial drain on the finite resources of those authorities.
With respect to the EPA’s argument, Her Honour held that if this position was adopted it would lead to unfair results as a person could be held criminally liable for an offence even if they were not aware that the incident was a type that should be reported. Her Honour also suggested that the EPA’s position would be contrary to the principles identified by the Court of Criminal Appeal which reaffirmed the common law presumption that knowledge is an essential element of every offence unless expressly displaced by the drafting of the relevant statute.
The Judge found that a prosecutor must prove beyond reasonable doubt that the defendant failed to report an incident; and in addition, that the defendant was aware that the pollution incident has caused or threatened harm to ecosystems that was not trivial; or that it would cost more than $10,000 to clean up the damage from the incident.
This does not mean that a person can turn a blind eye to the question of whether material harm has been caused and then later argue that they never considered the question. The Judge noted in this case that an actual knowledge of the materiality of the harm caused could be inferred if the person could be found to be aware of suspicious circumstances or deliberately failed to inquire (wilful blindness).
What to do to ensure you are not prosecuted for failure to notify
It is imperative that your organisation has a clear process to ensure that pollution incidents are managed and reported in accordance with its obligations under the Act.
In addition, holders of Environmental Protection Licences are required to have implemented Pollution Incident Response Management Plans (PIRMP) and to regularly test these under the Act. The EPA recently completed its annual compliance audit program of PIRMPs and only one licensee was found to be fully compliant.
As soon as a pollution incident is identified the processes outlined in your organisation’s internal policy or, if applicable, under the PIRMP should be followed. The PIRMP must identify the person who is responsible for reporting a pollution incident and outline the process that person must following to determine if the incident is reportable, including the process for determining whether the ‘material harm to the environment’ thresholds have been reached.
Importantly, this case has confirmed that it is acceptable for a company to undertake an internal decision-making process to assess whether material harm to the environment has been caused or threatened and therefore whether the incident needs to be reported. In the case of Bulga this process took 24 hours, which the Court ultimately found acceptable given the internal processes undertaken by Bulga during that period and the evidence as to the beliefs that were formed by the Operations Manager during that time as to whether or not material harm to the environment had been caused or threatened.
In forming a view as to whether the incident has caused or threatened to cause material harm – in addition to considering the actual or potential harm to ecosystems that may result from the incident, the responsible person should consider whether it will cost more than $10,000 to clean up the incident. The following questions will assist that person in forming a view as to the materiality of harm:
- how much labour will be involved in the clean up?
- will any equipment need to be brought in to remove material?
- will extensive water sampling be required?
If the responsible person forms the view that the pollution incident has caused or threatens to cause material harm then that person must report to all appropriate regulatory authoritiesIMMEDIATELY (which means promptly and without delay).
The key message from this case is that it is acceptable to have a hierarchical internal process for determining whether a pollution incident has caused or threatened to cause material harm but that process must be followed to avoid prosecution for ‘failure to notify’.