Bergin v Linc Energy Limited[2016] QMC 4

MAGISTRATES COURTS OF QUEENSLAND

[1] This committal hearing proceeded on the basis of the tender of statements and exhibits pursuant to section 110A of the Justices Act 1886 and the production of certain witnesses for cross examination, as ordered by this court.

[2] The Defendant has submitted that for each of the five charges brought against it, there is no case to answer.

COMMITTAL PROCEEDINGS

[3] In Gant v Magistrate Kucks^[1],   Martin J iterated the well known maxims with regard to a magistrate’s task in committal proceedings. He stated –

[12] The task of a magistrate under this section is well settled.  A magistrate must, when considering evidence, determine its reliability, including if necessary findings as to credibility, in order to arrive at a decision as to whether or not there is a prima facie case against the defendant.

[13] In other words, a magistrate has to determine, on the basis of the written evidence and any oral evidence, whether a reasonable jury properly instructed could return a verdict of guilty.  If, after completing that task, the magistrate forms the opinion that a verdict of guilty could not be returned in those circumstances, then the magistrate is obliged to discharge the defendant.^[2]

[4] Importantly, it is not for a magistrate to decide the guilt or innocence of the Defendant, but to consider whether on the evidence before the court, a jury properly instructed could lawfully convict.^[3] 

[5] Campbell J went on to read a practice direction given by the Divisional Court in England^[4] which he stated “is a sound guide for magistrates in Queensland”.^[5] In part, that practice direction states –

A submission that there is no case to answer may properly be made and upheld:

1. (a)
   When there has been no evidence to prove an essential element in the alleged offence;
2. (b)
   When the evidence adduced by the prosecution has been so discredited as a result of cross-examination or is so manifestly unreliable that no reasonable tribunal could safely convict upon it.

Apart from these two situations a tribunal should not in general be called upon to reach a decision as to conviction or acquittal until the whole of the evidence which either side wishes to tender has been placed before it.  If however a submission is made that there is no case to answer, the decision should depend not so much on whether the adjudicating tribunal (if compelled to do so) would at that stage convict or acquit but on whether the evidence is such that a reasonable tribunal might convict.  If a reasonable tribunal might convict on the evidence so far laid before it, there is a case to answer.

THE CHARGES

[6] The Defendant company Linc faces five charges of wilfully and unlawfully causing serious environmental harm contrary to Section 437(1) of the Environmental Protection Act 1994.  It is alleged the offences occurred at its mining lease located at 357 Kummerows Road, Chinchilla between 31 July 2007 and 1 December 2007, 31 July 2007 and 31 December 2007, 1 July 2008 and 1 November 2009, 31 January 2010 and 29 February 2012 and 1 October 2011 and 1 December 2013 respectively.

[7] “Environmental harm” is defined as –

…any adverse effect, or potential adverse effect (whether temporary or permanent and of whatever magnitude, duration or frequency) on an environmental value, and includes environmental nuisance.

 (2) Environmental harm may be caused by an activity –

2. (a)
   whether the harm is a direct or indirect result of the activity;  or

2. (b)
   whether the harm results from the activity alone or from the combined effects of the activity and other activities or factors.^[6]

[8] “Serious environmental harm” is –

….environmental harm (other than environmental nuisance)—

2. (a)
   that is irreversible, of a high impact or widespread; or

2. (b)
   caused to—

1. (i)
   an area of high conservation value; or

2. (ii)
   an area of special significance, such as the Great Barrier Reef World Heritage Area; or

2. (c)
   that causes actual or potential loss or damage to property of an amount of, or amounts totalling, more than the threshold amount; or

2. (d)
   that results in costs of more than the threshold amount being incurred in taking appropriate action to—

1. (i)
   prevent or minimise the harm; and

2. (ii)
   rehabilitate or restore the environment to its condition before the harm.

1. (2)
   In this section—

threshold amount means $50,000 or, if a greater amount is prescribed by regulation, the greater amount.^[7]

[9] The elements of the charges of wilfully and unlawfully causing serious environmental harm are –

1. (a)
   “serious environmental harm” under the Act;
2. (b)
   The harm was “unlawful”;  and
3. (c)
   The unlawful harm was caused “wilfully”

[10] As previously stated, it is not this court’s task to find that each of the elements have been proven, but to ascertain whether the evidence is such that a reasonable tribunal might convict on the evidence presented at committal.

THE EVIDENCE

[11] Before addressing the evidence, it is apposite that the process of underground coal gasification (UCG) be described –

UCG is the process by which coal is gasified underground.  In order to exploit underground coal, the coal seam itself becomes a reactor.  Two wells (an injection and a production well……) are drilled into the coal seam at least 100m deep and 30m apart, where a connection is made.  The coal is ignited and compressed oxidants (air or oxygen) are introduced via the injection well which, with groundwater, aids the combustion of coal.  The gas produced, known as syngas (mainly carbon monoxide, hydrogen, carbon dioxide, methane and water), is extracted through the production well and cleaned for the downstream processes.

During operation, gas pressure within the cavity (reactor) is maintained below the hydrostatic pressure of water in the coal seam and surrounding strata, thus creating a positive groundwater flow directed towards the cavity.  Overlying impermeable rocks and pore water pressure in the surrounding coal seam and overburden create a natural sealing that limits the potential to contaminate groundwater or for gas to escape during the reactions.  This pressure is why UCG is best at depths over 100m, generally beyond the limits of conventional coal mining.^[8]

Serious Environmental Harm

Gasifier 2

[12] Charge 1 alleges that the defendant unlawfully caused serious environmental harm “by the damaging of the landform (including creating pathways and/or enhancing existing natural pathways)”^[9] in the landform during the operation of Gasifier 2. In other words, it is alleged the defendant damaged the landform by “fraccing”.

[13] The defence has submitted that there is “insufficient evidence to conclude that Linc caused permanent damage to the containing properties of the landform”.^[10]  They point to concessions made by expert witnesses, such as Mr Rooke who conceded that based on Mr Kamenar’s test results, the overburden on the Linc site has nearly twice the breakdown pressure of the coal seam on the Linc site.^[11]

[14] Mr Cowie is a former Linc employee.  His evidence is that “it is vital to understand the hydrostatic and formation pressure in any reservoir before any UCG activity commences”.^[12] In describing this principle as a “basic and fundamental principle of engineering and reservoirs”^[13] he then goes on to say –

If too much pressure is applied beyond the fracture gradient, you risk not only fracturing the coal, but also the overburden.  This will result in a loss of containment….by the creation of pathways for contaminants to travel…[and] will allow fractures to travel along the coal and then jump up on the roof….”^[14]

[15] Evidence is before the court that pressures used at Gasifier 2 included pressures between 28 and 48 bar^[15] being excessive pressures.

[16] It was accepted that any contaminants from the gasifier would escape by way of the least resistance, eg, around the shaft of the well or other natural pathways.  Taking this into account together with evidence contained in an email^[16] from Linc’s environmental manager Matthew Buchanan to the consulting company KCB that because pressure applied exceeded that of the aquifer this caused gas to escape from the gasifier, the “air frac” was not fully controlled and “fracs” went to various places as a consequence, it is my view that a jury properly instructed could find that the defendant’s actions have caused “fraccing” of the landform.

[17] Charge 2 also relates to Gasifier 2, alleging that the defendant failed to operate the gasifier “in a manner that effectively contained contaminants”^[17] thus causing environmental harm.

[18] The defence points to concessions made by Mr Zurig in cross examination with regard to the extent of the VOCs (volatile organic compounds) found on and adjacent to the Linc site.  Mr Zuric conceded, inter alia, that the investigation he had directed was a “preliminary investigation or a broader scale screening investigation”^[18]; the only on-site locations where VOCs exceeded the nominated Safe Work Criteria were above the gasifiers themselves^[19] and that VOC sampling was only conducted once for each sample location, therefore on-site conclusions were based only on single samples.^[20]

[19] Also, they submit that Dr Matthew agreed in cross examination relating to the acidification of the soil, that he was unable to “distinguish between what is natural and what is contributed from Linc activities.”^[21]

[20] However, there is evidence that gasifier 2 was consistently operated at extremely high hydrostatic pressures for prolonged periods^[22] and that as a result operating pressure within the generator was lost “which allowed some of the gasses to escape directly to the surface.”^[23]

[21] There were a number of logs tendered into evidence which provide contemporaneous accounts of observations made by Linc employees of the escape of gases at the site.  These logs are supported by evidence from Dr Gary Love and Mr Anderson.  Notably, Mr Schofield (General Manager at Linc from November 2007 to February 2009) advised Peter Bond (CEO at Linc) in an email dated 23 November 2007 that ‘…UCG produced escaping to the surface and not being confined to a sealed chamber and associated wells’, and that ‘…Gas and air is also escaping to the surface in widespread places not related to the wells’.^[24]

[22] I am satisfied that a jury properly instructed could find that there was lack of containment at Gasifier 2 causing environmental harm.

Gasifiers 3 to 5

[23] Charges 3 to 5 relate to the operation of Gasifiers 3 to 5.  It is alleged that the defendant failed to operate each of the gasifiers “in a manner that effectively contained contaminants”.

Gasifier 3

[24] Despite Linc’s knowledge that the landform had been compromised and containment had been lost^[25] arising out of the operation of Gasifier 2, there was no attempt to carry out a further environmental assessment before establishing Gasifier 3.

[25] Gasifier 3 was located approximately 100 metres from Gasifier 2. 

[26] There is evidence before the court that the defendant was advised^[26] that –

“there is a potential for local scale structural defects to exist.  These may influence groundwater movement and contaminant mobilisation…it is recommended that interpretation of geological structure be undertaken…with an option to undertake targeted verification drilling and potentially, geophysics if required…

…there is no reliable permeability data currently available for the overburden materials…

…all existing data recovered to date has been from wells screened in the Macalister Coal Measures…groundwater quality data will also be required from Kumbarilla Beds and Condamine Alluvium (where saturated)…

…A field-based data acquisition program is proposed to address the identified knowledge ‘gaps’ which will need to be overcome prior to completion of the hydrogeological conceptualisation and the commencement of the impact assessment phase of the project…”

[27] This groundwork was not undertaken.

[28] During the operation of Gasifier 3, Linc appointed seven technical experts to assist with its UCG operations. Of these seven, only Dr Gary Love, a hydrologist, was cross examined at the committal, with the statements of the remaining 6 being admitted into evidence.  This technical team was led by Dr Bryant who presented a power point presentation^[27] to Mr Donald Schofield (general manager of UCG from November 2007 to February 2009) and Mr Stephen Dumble (chief operating officer from early 2008 to early 2010).

[29] Tellingly some key aspects in that presentation are –

• G2 operators attempted to link its wells by high-pressure fracturing.  It was run at pressures that were many times greater than the hydrostatic pressure…..There were also reports of anomalous detections of carbon monoxide and ethylene in the coal seam about 14 km from the Linc site that could have some association to G2 as well.
• The landform legacy of G2’s operation included a ‘high degree of formation damage to coal seams and overburden.  Recent leak off testing around Gen 3 shows breakover pressures as low as 8.5 bar’.  The high fracture permeability created in the coal and the overburden were making groundwater influx and gas outflows excessive, ‘and therefore fundamentally unsuited for UCG’.  The estimated extent of fracture damage from G3 was 1 to 2 km.  It was noted that pockets of syngas had been intersected in the overburden during drilling for G3.  It was also noted that the groundwater levels had been lowered as compared to what they were during the operation of G1.

[30] There was a recommendation that plans be made to commence decommissioning G3 with the G4 project to be fast-tracked.  

[31]  Evidence of lack of containment has also been received from Mr Cowie (Drilling Engineer Linc), Simon Gossmann (hydrogeologist Linc) and Christopher Dickinson (KCB).  None of these witnesses were the subject of cross examination. 

Gasifier 4

[32] Gasifier 4 is the subject of charge 4.  In this instance, the evidence of Dr Gary Love is pertinent.  He provided an update memorandum to Greg Perkins, Manager of UCG Technology at Linc, with a copy to Matthew Buchanan, environmental manager at Linc.  In that memorandum, it was noted that the G4 “operating pressure was lowered to approximately 7.2 bar in an attempt to regain containment’.^[28]

[33] Key organic indicators were detected in M14 and M22, which were identified as “being strongly affected by the process”.^[29]  There are statements from David Cox (production manager Linc), Samuel Pocock (environmental engineer Linc), Craig Treasure (UCG Operator Linc) and Simon Gossmann (Hydrogeologist Linc) with regard to loss of containment from G4.  These witnesses were not cross examined at committal.

[34] Witnesses cross examined were Christopher Anderson, Dr Philip Matthew, Nathan Zurig and Dr Gary Love.  Each of those witnesses gave evidence of the escape of gases from G4, including gas escapes at monitoring bores, bubbling of gas, and the presence of Toluene on an adjacent property.

Gasifier 5

[35] Charge 5 related to Gasifier 5.  Again there were detections of gases escaping at monitoring bores over the operational period of G5.

[36] Linc’s own documents reveal that benzene concentrations were detected in samples from monitoring bores throughout the operation of Gasifier 5.  An email dated 14 May 2013 from Ty Felmingham (Linc’s (then) hydrogeologist) to Nicole Lashmar (Environmental Manager) identified the extent of syngas migration between November 2011 and September 2012.^[30]

[37] An internal memorandum from Nicole Lashmar dated 7 June 2013^[31] defined the issues with respect to the gas data and states –

“What we know:

1. Gas data collected by operations between 1 November 2011 and 30 September 2012 show CO and H detections extending for certain periods to the boundaries of the coal seam water monitoring bores. (see Ty’s report).
2. The groundwater is not showing the same detections to the extent seen in the gas monitoring.
3. Groundwater levels in the coal seam have lowered – check with hydros
4. There have been periods in the past where overpressurisation (sic) has occurred and resulted in fracturing of the coal seam.
5. There has been (sic) various times when the gasifiers have been run above hydrostatic pressure.”

[38] This evidence, together with that of Christopher Anderson and Nathan Zurig indicate loss of containment from Gasifier 5.

[39] It is my view that this case is distinguishable from that of Orwin v Landfix Pty ltd & Ors^[32].  In that case the magistrate found that the contaminant was “not going to leave in any real quantities whereby harm is going to happen in any large way.”

[40] Here there is evidence of the escape of contaminants into the surrounding landform.^[33]

Unlawful

[41] Section 493A of the Environmental Protection Act 1994^[34] provides that an activity that causes, by act or omission, serious environmental harm is unlawful unless it is authorised under a relevant instrument.  In this case, the relevant instruments are the various Environmental Authorities which are required to be supported by an environmental management plan (EMP). 

[42] The prosecution alleges that the defendant’s acts or omissions causing the harm complained of, were not authorised, that is, they were outside the scope of the authorisation.  The Environmental Authority held by the defendant when Gasifier 2 commenced authorised what was known as a level 2 mining project.  The prosecution alleges that the Gasifier 2 operations involved a number of level 1 activities including flaring waste gases, releasing waste gas to the atmosphere, releasing process water and other liquids to land and using a dam to store and evaporate process water.  Linc well knew that if it undertook these activities, it did not have an appropriate Environmental Authority.^[35]

[43] In a public statement on 3 September 2007, the defendant announced that “(a)t approximately 11 am last Friday, 31^st August 2007, Linc Energy commenced flaring gas from its UCG site located at Chinchilla”.^[36]  There is also evidence that gases were released during the operation of Gasifier 2.  This is detailed in a number of Linc’s logs which report gas escaping from a number of monitoring wells.  These include reports that “a lot of gas was visible coming out of the ground around L24”, “high CO readings (200+ppm) in gas field, “L24 blowing a lot of gas, like (steam), “bubbles noted at base L25” and “ground fracture around L23 seems to be getting worse”.^[37]

[44] This evidence is prima facie evidence that the defendant committed an unlawful act with regard to Gasifier 2 operations between July and December 2007, the period for charges 1 and 2 as it did not comply with its Environmental Authority in force at that time. 

[45] Linc sought approval for a ‘Level 1” Environmental Authority prior to the operation of Gasifier 3 and it appears that in all subsequent applications, Linc represented that containment was achieved through the containment measures by operating the gasifiers “below the hydrostatic pressure of water in the coal seam and surrounding strata”.^[38]  The Environmental Authorities have been tendered and the only environmental harm authorised was harm necessarily associated with the burning of coal within a nominated gasification area capable of containing the contaminants and extracting the contaminants created to the surface through dedicated infrastructure.   A properly instructed jury could be satisfied that the escape of contaminants from Gasifiers 3, 4 and 5 as revealed by the evidence^[39] was not authorised by the relevant Environmental Authorities.

Wilfully

[46] “Wilful” is defined in the EPA as –

(a) intentionally; or

(b) recklessly; or

(c) with gross negligence

[47] I note that for Charges 1 and 2, the Act (in force at that time) does not provide specific definitions for these terms.  However, at common law, “recklessness has been defined as conscious disregard for known or obvious risks.”^[40]

[48] With regard to “gross negligence” Keane JA stated in R v Clark^[41] that “the gravamen of the contravention lies in the failure to use ‘reasonable care and take reasonable precautions to avoid’ danger to life, safety and health.”

[49] It is trite to say that for the defendant to have ‘wilfully’ caused serious environmental harm a jury would have to be satisfied that the defendant had the requisite state of mind.  The question has been aptly put by the prosecution in their submissions where they state at paragraph 164 –

A jury would have to be satisfied that Linc, as a corporate entity, disregarded known or obvious risks such that it warranted a description as recklessness and/or gross negligence.

[50] Linc has submitted that the prosecution has not proved that a relevant person or persons within Linc had the requisite state of mind.  However, they do not take into account Section 492 of the Environmental Protection Act 1994 which addresses the responsibility of representatives for an act or omission.  Relevantly, Section 492 states –

1. (1)
   If, in a proceeding for an offence against this Act, it is relevant to prove a person’s state of mind about a particular act or omission, it is enough to show—

1. (a)
   the act or omission was done or omitted to be done by a representative of the person within the scope of the representative’s actual or apparent authority; and

2. (b)
   the representative had the state of mind.

1. (2)
   An act or omission done or omitted to be done for a person by a representative of the person within the scope of the representative’s actual or apparent authority is taken, in a proceeding for an offence against this Act, to have been done or omitted to be done also by the person, unless the person proves the person took all reasonable steps to prevent the acts or omissions.

[51] Where the person is a corporation a ‘representative’ of a person means an executive officer, employee or agent of the corporation.^[42]

[52] I am satisfied that a jury properly instructed on the interpretation of this statutory regime could find that Linc acted recklessly if an executive officer, employee or agent of Linc acted, or omitted to act, within the scope of their actual or apparent authority and the act or omission was such that it amounted to a conscious disregard for known or obvious risks.  It could also be open to a jury to find conduct amounting to gross negligence where the actions amounted to a failure to take precautions for the purposes of avoiding or neutralising obvious risks.

[53] Linc knew that the gasifier should be operated at pressures below that of the surrounding hydrostatic pressure, otherwise “if too much pressure is applied beyond the fracture gradient, you risk not only fracturing the coal, but also the overburden.  This will result in a loss of containment…by the creation of pathways for contaminants to travel…[and] will allow fractures to travel along the coal and then jump up on the roof…”^[43]

[54] Linc well knew this concept as it is described in its own Environmental Management Plans.

[55] It is useful to set out some of the risks which became known by the defendant as a result of the monitoring of groundwater impacts at the Chinchilla site during and after the completion of Gasifier 1 (which is not subject to any charges before the court).  These risks were contained in a paper co-authored by Dr Linderman and Mr Fidler of Golder Associates.^[44]

…During operations, groundwater contamination can occur if product gas is forced into the formation and condenses, leaving behind pure phase hydrocarbons which then dissolve into groundwater in the longer term, the ash residue remaining in the gasifier has the potential to leach chemicals into the groundwater.

UCG is a complex chemical process involving coal, groundwater, surrounding rock and the injected oxidant.  The interaction of the UCG products (both gaseous and condensable) with the underground environment is inevitable…… However, provided the products of gasification are maintained within the immediate vicinity of the gasifier itself, any pure phase hydrocarbons, which condense in the formation, will be consumed as the gasifier expands as part of normal operation.  ….

….

Another important feature of groundwater protection during UCG depends on the establishment of hydraulic circulation system comprising the wells and the connection between them through the coal.  Using this circulation system, the underground cavity can be flushed, pumped out, and cleaned up……  Any potential contaminants in the underground gasifier can be cleaned up by these measures as soon as they are contained within the gasifier.  If, however, contaminants are introduced into the porous media surrounding the underground gasifier, then the clean-up becomes a difficult and sometimes impossible task. ….

[56] One of Linc’s first Environmental Management Plans^[45] identified the potential impact of the UCG process on the groundwater regime.  In December 2001, it was identified that risks of contamination of groundwater could be mitigated by the selection of a site where there are “no communicable groundwater aquifers within the vicinity of the UCG development”.^[46]

[57] Linc also engaged geological consultants Garry LeBlang and Associates to carry out exploration on the site.  The drilling logs contained in the report^[47] revealed a variable landform and before operating Gasifier 2, Linc did not carry out any further testing.  I am satisfied that a jury, properly instructed, could find that the omission by Linc to carry out further tests, referred to in evidence as site characterisation tests, to ensure that UCG operations at Gasifier 2 did not fracture the landform was reckless or grossly negligent, given Linc’s level of knowledge.

[58] Further, with regard to charge 2, Linc was made aware of the losses of containment as a result of the gasifier 2 operation.  In a memorandum to Linc’s CEO from Mr Schofield, it is stated that “…UCG produced escaping to the surface and not being confined to a sealed chamber and associated wells’ …..and “…Gas and air is also escaping to the surface in widespread places not related to the wells’.^[48]

[59] I am satisfied that a jury properly instructed could find that Linc knew that a lack of containment represented a significant risk of causing environmental harm and that as a result of operating Gasifier 2 over pressure had caused contaminants to be released from the Gasifier.

[60] Given the evidence summarised above,^[49] I am satisfied that a jury properly instructed could find that Linc continued to operate Gasifiers 3, 4 and 5, even in the face of ongoing reports both by affected employees and Linc’s own technical experts that there continued to be loss of containment.

Threshold amount

[61] As mentioned at the outset, for there to be serious environmental harm, the harm must be “irreversible, of a high impact or widespread; …. or that causes actual or potential loss or damage to property of an amount of, or amounts totalling, more than the threshold amount; ….or that results in costs of more than the threshold amount being incurred in taking appropriate action to …prevent or minimise the harm; and … rehabilitate or restore the environment to its condition before the harm.”

[62] It would appear that the harm is widespread as reported by Dr Bryant in his power point presentation to Linc management in early 2009.  This spread of contaminants has also been the subject of investigations carried out by the Gilbert and Sutherland team, relying on expert evidence by Dr Golding and Professor Cliff.

[63] The threshold amount is $50,000.  Mr Sutherland gave evidence that the projected cost of further testing, groundwater monitoring, rehabilitation and restoration at a figure up to $5m.  The defence has argued that costs of maintenance and monitoring cannot be taken into account when deciding whether the cost exceeds the threshold amount as these costs cannot be required as financial assurance pursuant to Section 296 of the Act and therefore if there were any environmental harm, Linc’s acts do not constitute serious environmental harm.

[64] I disagree.  Financial assurance is a condition required under an Environmental Authority to give security for any costs and expenses which may be incurred by the administering authority in preventing or minimising environmental harm or  to “rehabilitate or restore the environment, in relation to the carrying out of an activity for which financial assurance has been given; or … secure compliance with an environmental authority or small scale mining tenure for which financial assurance has been given.”^[50]

[65] It is my view that the threshold amount mentioned in Section 17 of the Environmental Protection Act 1994 relates to the definition of “serious environmental harm” and has no relationship with financial assurance made by a holder of an Environmental Authority.

[66] Even if costs and expenses of maintenance and monitoring cannot be included in the threshold amount, Mr Sutherland’s evidence that the cost of assessments of tars and other contaminants on the site and surrounding properties would be in the region of $370,000, is far above the threshold amount.

CONCLUSION

[67] Having considered the evidence before the court on the committal, I am of the opinion that the evidence is sufficient to put the defendant upon trial on each charge.