Underground petroleum storage systems: New regulations bring some clarity to management

Do you ever drive past old service station sites and ask questions like:

  • Why did the petrol station close down?
  • With property values so high, why is the site lying dormant?
  • Who is responsible for any petrol spills that contaminate the land?

I regularly asked these questions after a summer job during my university years working as a drillers offsider. As part of that job, I would often attend disused service station sites to take core samples of the soil. Seeing the slurry of soil mixed with petrol and inhaling the dense smell of petrol while core samples were taken, was an unforgettable experience. Since this time, I’ve always been curious about these sites from a legal perspective.

fuel pump

Over the last decade, I have been able to answer this earlier curiosity, by advising numerous client on the regulation of petrol station sites – from approvals to operate, to the contractual allocations of risk between vendors and purchasers, as well as the statutory allocation of responsibility for pollution and contamination at these sites.

The new Protection of the Environmental Operations (Underground Petroleum Storage Systems) Regulation 2014 (2014 Regulation) replaces the Protection of the Environment Operations (Underground Petroleum Storage Systems) Regulation 2008 (2008 Regulation) and provides some clarity to some of the above questions.

This Regulation is important as contamination by underground petroleum storage systems (Storage Systems) can be difficult to detect and time consuming to clean up, [1] causing significant environmental and financial impacts.

Protection of the Environmental Operations (Underground Petroleum Storage Systems) Regulation 2014

Click here for the 2014 Regulation, and here for the EPA’s Regulatory Impact Statement (RIS) which examines the economic and social costs and benefits of the 2014 Regulation.

Aim

The 2014 Regulation remakes the 2008 Regulation, with certain changes (set out in the table below). The RIS states that the 2014 Regulation is designed ‘to reduce the occurrence of contamination which may impact on human health and the environment from underground petroleum storage systems (UPSS)’. It aims to:

  • align regulatory requirements with other legislation and industry best practice
  • improve documentation of site management procedures
  • improve enforceability
  • reduce administrative costs
  • encourage the adoption of new technologies.[2]

The Regulation applies to:

    • Persons who manage or control an Storage System (referred to in the 2014 Regulation as the ‘person responsible’ for the Storage System). Depending on the site’s legal arrangements, this may be more than one person. In respect of ‘decommissioned’ systems (defined as permanently abandoned use or rendered system permanently unusable), the person who was responsible before decommissioning remains responsible. This is relevant to vendors of former industrial sites who may wish to address cost allocation for that potential ongoing liability in sale contracts.
    • A Storage System – The definition in the 2014 Regulation defines the term to mean a ‘system of tanks, pipes, valves and other equipment that is designed:
      (a) to contain petroleum
      (b) to control the passage of petroleum into, out of, through or within the systemand includes any structure through which petroleum routinely passes from one part’.The RIS states that these are tanks that are completely or partially buried in the ground and which contain, or are intended to contain, petroleum, including any piping which connects the tanks to the dispensers, but also states that it does not include vent or vapour recovery piping. [3]Petroleum is defined in the 2014 Regulation to mean ‘any fuel that consists predominantly of a mixture of hydrocarbons derived from crude oil, whether or not the fuel includes additives (such as ethanol), and includes:
      (a) used oil
      (b) synthetic fuels such as 100 percent ethanol or biodiesel.

      The RIS states that petroleum products include petrol, diesel, kerosene, heating oil, aviation fuel and waste engine lubricating oil. [4] The above definition is important, as in our experience, purchasers of former sites sometimes overlook the Regulation’s coverage of the of pipes and, valves where the tank itself has been removed.

    • All sites with active Storage Sites. This includes active retail service station sites, commercial, industrial and government-operations premises, and sites with small tanks used by enterprises such as workshops, hire premises, golf courses and marinas.[5]
    • It also applies to sites where a Storage System is to be decommissioned.

The Regulation does not apply to –

  • Premises that have been licensed under the POEO Act to store petroleum products (for example, oil terminals).[6]
  • Sites with Storage Systems used for the storage of fuel for generators, heating and waste oil.
  • Persons exempted by the EPA. [7]

Summary of key changes

Planning Blog Summary Table (96dpi)

Do the changes better implement the aims of the Regulation?

The modelling of the 2014 Regulation on Australian Standards better reflects industry best practice. An environmental protection plan now includes drainage services, which is an important addition, and can now comprise a compilation of documents, which improves documentation of site management procedures given that it is difficult to always have a consolidated plan.

The Regulation also provides more precision as to specific offences, given that the offence provisions are now woven through the 2014 Regulation under relevant clauses. For example, there are now specific offence provisions dealing with equipment integrity testing, reporting after decommissioning, the need for secondary leak detention systems. The offence is against the person responsible for a storage system if the person contravenes (or authorises or permits the contravention of) the relevant clause in connection with the Storage System. Unlike other reforms to environmental enforcement laws which we covered in our last blog, the penalty units have not been increased and remain between 200 and 400 penalty units depending on whether the offence is carried out by an individual or a corporation.

The inclusion of ‘secondary leak detection system’ in clauses 16, 17 and 18 should encourage the adoption of new technologies. Whether there is a reduction in administrative costs remains to be seen.

Authors:

Todd Neal, Senior Associate, Maddocks

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Elizabeth Sivell, Lawyer, Maddocks

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Footnotes

[1] EPA’s Regulatory Impact Statement for the 2014 Regulation p 3.
[2] Ibid p 7.
[3] Ibid p 2.
[4] Ibid p 3.
[5] Ibid p 2.
[6] Ibid.
[7] Ibid.

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