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Media Statement - Judge Smith's sentencing decision: Bay of Plenty Regional Council v Fonterra Limited.

Tuesday, 4 August 2015 3:00 p.m.

Here is the link to Judge Smith’s sentencing decision from the recent successful prosecution by the Bay of Plenty Regional Council against Fonterra Limited.

Fonterra pled guilty to six separate offences under the Resource Management Act and was fined a total of $174,150 at a hearing in Tauranga District Court on 27 July.

Bay of Plenty Regional Council brought the prosecution against Fonterra after four failures of Fonterra’s wastewater (whey) irrigation system at Edgecumbe and two overflows of wastewater to the stormwater system at Fonterra’s Edgecumbe plant resulted in pollution entering the Rangitāiki River and other smaller waterways between September 2014 and April 2015. 

Some of the salient points from Judge Smith’s written sentencing decision are as follows:

Paragraph 52 - “I can only ask you, Mr Bird, as the management member who is in attendance, to report to the directors and senior management the Court’s disappointment at the industry leader being flat-footed in this way.  It is difficult enough for this Court to impress upon farmers their obligations to comply with the Act for the sake not only of the future of dairying in New Zealand but for the sake of the community.  But when Fonterra, who has taken it upon itself to be responsible for improving farm operations through its farm advisors and audit systems for ecological reasons, is found to have failed to invest in such a basic way, this task is made more difficult and this is a significant disappointment to this Court.  I hope you will communicate that to the directors and the management team.”

Paragraph 51 - “Although there is a disconnect between the irrigation offences and those from the plant, they represent a decision, it seems to me, to prioritise productivity over the environmental consequences of discharge.  It is regrettable that a director from the company, or one of the senior management team responsible for the decisions for capital investment, has not attended this hearing.”

Paragraph 53 – “It is most unfortunate that, when this industry was at its height, there was a failure to invest.  Now, of course, the difficulty for the company is it is having to make these investments at a time when the returns are not as high.  However, the need for the positive environmental outcomes are even more necessary because of the effects of this continuing type of activity.”

Paragraph 54 – “It seems to me that if dairying is to continue on the Rangitikei Plains, everyone – including Fonterra – needs to take the issue of making sure that these systems work properly seriously.  They need to ensure that the cultural and environmental expectations for water quality in the rivers are being met.”

Paragraph 17 – “Can I say that I am amazed – and I use the word amazed – that this (the upgrading of Fonterra’s irrigators with pressure cut-off devices, GPS trackers, monitors, etc) did not occur ten years ago when these issues were clearly highlighted by the Court in a number of decisions.  I will return to this theme in due course, but Fonterra should be an industry leader, not a laggard in regard to the adoption of appropriate technology to avoid environmental effects.”

Paragraph 29 – “I consider the whey-water irrigation discharges are four examples of a continuing systemic failure by Fonterra to address its obligations in terms of its resource consent and its environmental obligations to the wider community of New Zealand.”

Paragraph 30– “What occurred in the period from 2010 to the commencement of these prosecutions was a period of under-investment in the irrigation system.  Fonterra, through counsel, has accepted that the dropped the ball.  I think the matter is more serious than that.  I think there was a carelessness bordering on deliberateness not to spend the money on improving the systems.”

Paragraph 31 – “If Fonterra was not aware of the obligation to ensure that these irrigators did not stall/decouple/discharge to farm canals, then that borders in my view on negligence and deliberateness.”

Paragraph 32 – “I must assume, therefore, that the decision not to invest in bringing their irrigation systems up to speed was seriously careless at best.  It was a systemic failure.  It related to under-investment in irrigators, in pipe lines in hydrants and reticulation systems.”