Taranaki Regional Council v GrainCorp Liquid Terminals NZ Limited [2021] NZDC 3320 (23 February 2021)

Last Updated: 12 March 2021

IN THE DISTRICT COURT AT NEW PLYMOUTH I TE KŌTI-Ā-ROHE KI NGĀMOTU

CRI-2020-043-000450 JUDGE VIA AVL [2021] NZDC 3320

TARANAKI REGIONAL COUNCIL Prosecutor

v

GRAINCORP LIQUID TERMINALS NZ LIMITED Defendant

Hearing:	23 February 2021
Appearances:	K de Silva for the Prosecutor S de Groot for the Defendant
Judgment:	23 February 2021

ORAL JUDGMENT OF JUDGE B P DWYER

[1] GrainCorp Liquid Terminals NZ Limited (GrainCorp) appears for sentence on two charges brought by Taranaki Regional Council (the Council) for breach of s 15(1)(b) of the Resource Management Act by discharging contaminants (tallow and untreated wastewater in one instance and untreated wastewater in the other) in circumstances where those contaminants may enter water, as we know they did in fact do. The charges are contained in charging documents ending 0123 and 0124.

[2] GrainCorp has pleaded guilty to both charges. Counsel advised that s 24A Sentencing Act 2002 is not applicable. No suggestion has been made that there should

TARANAKI REGIONAL COUNCIL v GRAINCORP LIQUID TERMINALS NZ LIMITED [2021] NZDC

3320 [23 February 2021]

be a discharge without conviction so GrainCorp is hereby convicted on both charges accordingly.

[3] Both offences occurred overnight on 5/6 September 2019 at GrainCorp’s terminal site at Port Taranaki. GrainCorp carries out the business (inter alia) of bulk molasses and tallow storage at the site.

[4] On the night of 5/6 September 2019 heated tallow in two of the plant’s storage tanks escaped from tank eight due to a sight glass valve which enabled checking of the level of the tallow in the tanks having become disconnected and a valve having been left open. The heated tallow spilled into a bunded area designed to hold any overflow where it filled on site interceptors and flowed into the District Council wastewater network. The summary of facts records that about 60 tonnes of tallow had entered the bund but does not state how much got into the wastewater system. The spilled tallow entered a pump station in the wastewater system causing a blockage at the pump station as it cooled. Ultimately this rendered the pump station and part of the wastewater network inoperative. Tallow and wastewater began discharging into the Hongihongi Stream via a wastewater overflow pipe which had also become blocked. The stream flows into the Tasman Sea and some tallow from the discharge washed up onto Ngamotu Beach.

[5] The summary of facts records that it is not known what volume of tallow discharged into the stream and the sea. It is estimated that between 3,000 and 9,000 litres per hour of wastewater would have discharged into the stream but there was a nearly 12 hour window during which the discharge could have commenced, so no definite calculation of volume of escaped wastewater can be made. The environmental impact report appended to the summary of facts estimates that over a four hour period, wastewater would have made up somewhere between 7 and 19 per cent of stream flow volume.

[6] The effects of tallow on the coastal environment which it entered are summarised in these terms in the environmental report:

Summary

Overall, the discharge of tallow into the Port Taranaki Harbour had the potential for significant adverse ecological effects, however, none were discovered. The event had a significant impact on the amenity of Ngamotu Beach, as it detracted from the beach’s aesthetic values and prompted its closure.

[7] The effects of the wastewater discharge were somewhat more complex and serious than the tallow discharge. A series of flow samples was taken at a location in the harbour. Two were taken on 6 September. One was while the discharge was ongoing and one after it had ceased with further samples taken on 7 and 9 September.

[8] The first sample showed faecal indicator bacteria (FIB) levels at the sample site being the highest ever recorded at that sampling location. The second sample, taken after the discharge had ceased, showed a decrease in FIB levels but still above any previously recorded levels.

[9] The report concludes that the untreated wastewater would have been the principal source of FIB detected at the coast on 6 September and notes that E. coli samples downstream of the discharge were approximately 300 times higher than upstream levels. These levels decreased over the following samples but clearly demonstrate the contribution to contamination in the stream being made by this particular discharge. The report noted various amenity and potential health effects from the discharge. These included closure of the beach and shellfish collection, objectionable odours, visual scums, films and sanitary tissue and other similar debris.

[10] The summary of the environmental report on page 9 described these outcomes in the following terms (I formally record that the media can access the summary of facts and any attachments to it if it wants to see specific terms of those things):

Summary

Overall, the discharge of untreated wastewater into the Port Taranaki Harbour is considered the primary cause for a temporary decline in water quality at the shoreline. Because FIB are widespread in aquatic environments, the untreated wastewater was unlikely to have been the only source detected in the coastal water samples. However, the substantial loading of FIB in the untreated wastewater discharge, and the duration of the event meant that this was likely the principal source of contamination at this time. Furthermore, it is important to note that the risk that untreated wastewater poses to human health is generally much higher than that of other FIB sources, due to the human specific pathogen

content. As such, the discharge adversely affected the recreational values of Ngamotu Beach by rendering it unsafe to swim and collect shellfish; with public warnings implemented by NPDC. Localized impacts on visual appeal and odour were also observed at the western end of the beach in the vicinity of the discharge.

[11] I note that the maximum penalty for each of the two charges is the sum of

$600,000. Counsel have approached their sentencing submissions on the basis that there should be one global penalty starting point identified for the two charges and I concur with that. The charges represent two consequential outcomes of what was in reality one offending incident.

[12] For the Council, Ms de Silva contends that the appropriate penalty starting point is the sum of $140,000 and Ms de Groot, for GrainCorp, submits that the appropriate figure is $100,000.

[13] In resolving the differences between counsel I am going to address four issues:

• An assessment of environmental effects;
  
• An assessment of culpability;
  
• Consideration of attitude, co-operation and remorse;
  
• Some comparison with sentencing levels in other cases.
  

[14] Dealing firstly with environmental effects, I concur with the proposition advanced by Ms de Groot for GrainCorp that the direct environmental effects of the tallow discharge were limited. Spread of the tallow would have been restricted as it solidified in the wastewater network. Only about 10 kilograms of tallow was subsequently scraped up off the beach. However I think that the submission in that regard fails to adequately weight the flow on effects of the discharge into the wastewater system, namely the gumming up of pumps and pipes and consequential discharge of untreated wastewater. These effects are direct consequences of the tallow discharge and cannot be severed from it. Ms de Groot assesses the effects of

wastewater discharge as falling in the minor to moderate category. I disagree with any suggestion that the effects were minor.

[15] It is correct that the effects were temporary but that is a common feature of offending such as this where effects of wastewater, sewage, et cetera discharges diminish, are remedied and disappear once the contamination tap is turned off. That is a common feature of this sort of offending and certainly does not diminish their seriousness, but it is obvious that such discharges are time limited because people stop them when they are discovered.

[16] Of particular significance in my consideration are the highly elevated levels of FIB, being the highest ever detected at the measuring location in the harbour and the massive increase in E. coli levels upstream and downstream of the point where the discharge entered the stream. Even acknowledging that the stream was already far from pristine, the action zone for a response in the harbour extended some 300–400 metres from the outlet point of the stream into the harbour. The potential for adverse health effects was real but avoided by prompt action on the part of the Council and port authority. Had there been actual health effects we would have been looking at a considerably elevated starting point.

[17] Amenity effects of odour and visual indicators of contamination were apparent and also need to be taken into account.

[18] In short, I recognise that the effects of the discharges were temporary and limited in spatial extent but strongly disagree with any suggestion that they were minor.

[19] I also part company from GrainCorp in my assessment of culpability. Its submission contained an explanation as to various procedures which it had in place to guide the safe and efficient operation of the facility but failed to give any adequate explanation as to how it was that two valves or cut off mechanisms were left open on 5/6 September. Not only was the sight glass valve open, but a directional or shutoff valve in the system was also left open directing liquid in the bunded tank area to the wastewater network. The obvious explanations for these failures are carelessness by

staff or some form of systems failure. Nothing in the material before the Court remotely begins to establish the likelihood of intervention by an unnamed, unknown outside person as hinted by GrainCorp.

[20] However, from my point of view, the most staggering fact is the absence of a warning system to warn of any discharge into the bund which was connected by pipe to the District Council wastewater system and where any discharge must go. I note that the bund is also connected to the District Council’s stormwater system, although the connection into the stormwater system was fortunately turned off. I am told that an alarm has now been fitted. In my experience (and I see many of these situations), alarms are commonly incorporated into bund systems to warn when there are discharges occurring. I find the absence of such a device in this case to be very strange indeed.

[21] A matter of contention between the Council and GrainCorp is the fact that GrainCorp did not hold a trade waste consent allowing discharges from its plant into the trade waste system in the first place. Ms de Silva submitted that this established that discharge to the system was deliberate, fraudulent and deceitful, something which GrainCorp strongly disputes, although I note that it does not offer any satisfactory explanation for the failure to hold the necessary consent.

[22] I do not have to resolve that dispute and it must be recognised that the discharge would probably have occurred under these circumstances even if GrainCorp held a permit. However, it must also be recognised that GrainCorp is a business which specialises in storing and handling material such as tallow. It can reasonably be expected to be aware of the rules under which it must operate. It must certainly have been aware of the risks involved and the appropriate processes for handling tallow. In my experience, the requirement to obtain permits or licences to discharge trade waste is common in many industrial and commercial facilities. GrainCorp’s failures to provide a warning system in the bund and to have obtained a trade waste discharge permit belie its claim as to having good systems in place.

[23] This combination considerably aggravates GrainCorp’s culpability for the offending, in my view. The most generous interpretation of events to GrainCorp is that

a failure of its staff or systems or a combination of the two, demonstrate a high degree of carelessness and hence culpability for the offending.

[24] It is apparent from the submissions made on GrainCorp’s behalf that it responded appropriately to the discharge and did all it could to put things right once the discharge was known to have occurred. That, of course, is how things should be. GrainCorp has apparently revamped its systems and training processes. Again, that is how things should be.

[25] I return to the fact that GrainCorp is a business which specialises in handling material such as tallow and can be expected to act in accordance with appropriate procedures and rules. In that situation, deterrence from poor practice is a significant factor in sentencing considerations.

[26] I have considered all of the various cases to which I was referred by counsel for comparative purpose. Section 8(e) of the Sentencing Act 2002 recognises the desirability of consistency of sentencing levels when imposing sentence on similar offenders committing similar offences in similar circumstances. Counsel acknowledge that that is a difficult exercise in this case. Many of the cases referred to relate to local authority offending. Starting points in cases referred to by counsel for GrainCorp range from $35,000–$90,000.

[27] I think that an unusual feature of this case is the dual nature of the discharge which involved discharges of both tallow and wastewater. I have determined that the appropriate starting point for penalty considerations is the sum of $120,000. I do not do so because it is mid way between the Council’s $140,000 and GrainCorp’s

$100,000. I do so because I note that it constitutes 20 per cent of the maximum penalty. I consider that it gives the Defendant the benefit of uncertainty as to the duration and volume of the wastewater discharge while recognising the elevated contaminant levels attributable to the offending. If there was hard evidence before the Court establishing significantly higher volumes, duration and/or spatial extent of the contaminant spread I would have adopted a higher starting point.

[28] The $120,000 recognises the clear failings and high culpability on the Defendant’s part even having regard to uncertainties as to effects. The figure is of such an amount as to have a deterrent effect appropriate to drive home to businesses such as GrainCorp the need to carry out their activities legally and in accordance with best practice. The figure appropriately reflects the dual discharge nature of the offending, combined with the failure to have a proper warning system and trade waste consents in place.

[29] I will allow reduction of the starting point of 5 per cent on account of past good character and co-operation, with an additional 25 per cent for prompt guilty plea, giving an end penalty of $84,000 which I will divide $42,000 on each charge. GrainCorp is fined that amount accordingly.

[30] It will pay solicitor costs as per the Costs in Criminal Cases Regulations (to be fixed by the Registrar if need be) and Court costs $130.

[31]

Finally, pursuant to s 342 Resource Management Act, I direct that the fines less 10 per cent Crown deduction are to be paid to Taranaki Regional Council.

B P Dwyer

Environment/District Court Judge