The state-owned corporation knew from late 2012 that upgrades at the Dungog plant and changes to its monitoring and maintenance program were needed, but it failed to act, Justice Tim Moore found.

“It is clear that not only was the risk foreseeable but that the Corporation had not taken appropriate steps of a preventative nature,” he said.

Justice Moore fined Hunter Water $187,500, ordered it to pay the NSW Environment Protection Authority’s $75,000 legal bill, and directed it to place advertisements in three Hunter region publications, including the Newcastle Herald, advising it had been convicted of four environmental offences after the water authority pleaded guilty.

The Land and Environment Court heard Hunter Water failed to respond to rising fluoride levels in the area near the plant for a number of months from April 2014, and after a spray of water on August 12, 2014 alerted staff to leakage problems, the water authority’s immediate responses added to environmental damage.

A decision to allow partly chlorine-treated water to run into Slaughteryard Creek to flush out toxic fluoride, rather than raw water from Chichester Dam, meant the extent of damage to aquatic life in the creek was “significantly” increased, Justice Moore found.

“Whilst the flushing was undoubtedly well-intentioned, it was implemented without proper thought as to the consequences of the choice of water source, and later review by a more senior staff member did not lead, at that time, to alteration of the source used,” he said.

Chlorinated water was flushed into the creek for three days until the EPA questioned the flushing after detecting the smell of chlorine at the site.

The court heard Hunter Water was guilty of a series of failures that exacerbated the failure of a system where fluoride is added to raw dam water for dental health.

A valve that was left in the “open” position for an unknown period of time even before elevated fluoride levels were first noticed near the plant in April 2014 meant the leaking fluoride was not contained in the plant area, but extended to Slaughteryard Creek.

Hunter Water was guilty of “ignoring” sample data showing fluoride levels were higher than normal for a number of months, which “could and should have provided an earlier alert that a comprehensive and thorough investigation was required to ascertain the cause”.

The court heard sample background fluoride levels generally showed levels of less than 0.3 milligrams per litre. By August 12 the level was 24 milligrams per litre.

Justice Moore rejected Hunter Water’s submission that the four offences related to allowing fluoride into the creek, causing further damage by flushing chlorine-treated water, and breaching its operation licence on two counts, should be regarded as of low seriousness.

While testing of the creek and surrounding areas showed the actual environmental harm was not likely to be significant, although the levels would have resulted in aquatic life kills, the offences were of moderate to medium seriousness, Justice Moore found.

Hunter Water “is both a large commercial enterprise and one that is publicly owned as a state-owned corporation and thus an entity of which high standards of corporate behaviour ought be expected”, he said. “That such a body has offended, as has here occurred, provides an appropriately visible opportunity to demonstrate, for reasons of general deterrence, why such lapses as are demonstrated by the offending conduct are not to be tolerated.”

Justice Moore ordered that $150,000 of the financial penalty was to be paid to Hunter Local Land Services to fund a project to manage sediment and grazing on the Dungog Common Recreation Reserve.

Another $37,500 was to be paid to the Environmental Trust for general environmental purposes.

EPA chief environmental regulator, Mark Gifford, welcomed the court’s decision, saying it should serve as a strong reminder to all operators of the importance of thorough inspections and regular maintenance in helping to make sure water pollution incidents do not occur.

“Under the Protection of the Environment Operations Act there are strict laws in place prohibiting water pollution because of the impact it can have on the environment. All operators, including Hunter Water have a responsibility to ensure their actions do not breach these laws and they comply with the conditions of their licences,” Mr Gifford said

“The toxicity of these chemicals impacted on aquatic life in the local tributaries over a number of weeks. This environmental harm could have been easily avoided if Hunter Water had taken a number of practical steps including carrying out regular inspections, proper equipment servicing and ensuring staff received appropriate environmental training.” 

NSW Health confirmed that drinking water quality was not affected as a result of the incident.

Hunter Water spent nearly $5 million upgrading fluoride installations at its plants at Anna Bay, Grahamstown, Lemon Tree Passage and Nelson Bay following the Dungog incident, and upgraded its Dungog plant.

Acting chief executive Jeremy Bath said Hunter Water had pleaded guilty and apologised to the court and accepted the court’s decision.

“Hunter Water is committed to ensuring that all its operations are carried out in an environmentally responsible manner,” he said.