Revamp proposed for NSW underground petroleum storage regulation

By Claire Smith, Lauren Smith
30 May 2019
The proposed regulation remake will continue the current regulatory scheme and create additional opportunities for regulatory oversight.

The Protection of the Environment Operations (Underground Petroleum Storage Systems) Regulation 2014 (2014 Regulation) is one of the key instruments used to regulate contamination risk in NSW and specifically, UPSS infrastructure. The regulation is due to be repealed on 1 September 2019 and ultimately remade with some changes. The EPA has released a Regulatory Impact Statement (RIS) for the proposed Protection of the Environment Operations (Underground Petroleum Storage Systems) Regulation 2019 (2019 Regulation) and is inviting public submissions until 14 June 2019.

According to the recent State of the Environment 2018 Report (SOE Report) service stations are the single largest source of contamination land in NSW. Of the sites declared to be significantly contaminated between 2015-2017, 63% were service station sites and those associated with other petroleum industries. Historically petroleum products such as petrol, diesel, kerosene and other fuels and oils have been stored in underground petroleum storage systems (UPSS) with single-walled steel tanks that are vulnerable to corrosion. Leaks and spills from defective UPSS can lead to contamination of land, groundwater, surface water and air. This can affect not only the subject site, but further afield if the contamination migrates, for example, through groundwater and surface water movement.

The proposed 2019 Regulation continues the current scheme but with some minor changes to terminology, and increased accountability.

The current scheme under the 2014 Regulation

The primary aim of the 2014 Regulation is to prevent leaks from UPSS. It does so by regulating:

  • System design – requiring storage systems are designed, installed and tested by duly qualified people and in line with certain minimum standards.
  • Operational management – requiring that each system is checked and maintained, and is used in accordance with an "environmental protection plan" which includes loss monitoring and incident management procedures.
  • System back up – requiring the installation and implementation of certain leak detection systems to detect contamination from a failing UPSS if loss monitoring procedures fail to do so

Discrepancies detected by loss monitoring procedures must be investigated, and if attributable to a leak, must be fixed. In the event a UPSS is decommissioned the responsible person must prepare a report and provide it to the relevant local authority within 60 days of its decommissioning or, the completion of any remediation required. These obligations are in addition to any other relevant reporting obligations for pollution events or contamination under the Protection of the Environment Operations Act 1997 (POEO Act) and the Contaminated Land Management Act 1997 (CLM Act).

The design and installation requirements only apply to those systems approved, installed or commissioned after the commencement of the first regulation on 1 June 2008. All systems approved prior to this time are still subject to the regulation, but are not required to be meet the design standards unless the old system is significantly modified.

"Person responsible" for a UPSS

The 2019 Regulation will expand the definition of a "person responsible" for a UPSS which is the person required to comply with the obligations outlined above. Currently a person responsible is a person who has the management and control of the system, or with respect to a decommissioned system, the person who had the management and control of the system immediately prior to it being decommissioned. The new definition expands this to cover two further scenarios:

  • where a system is installed but not commissioned a person with management and control of that system is responsible;
  • where a system is no longer in use but has not been decommissioned, a person who had the management and control of the system before it ceased to be used is responsible, or, if that person cannot be found, the responsibility falls to the owner of the land.

The amendment ensures that a person can be held responsible for each UPSS and the cost of compliance is not borne by the appropriate regulatory authority (ARA).

New terminology for UPSS

Other minor changes to definitions and terminology are proposed, for example an "Environment Protection Plan" is now termed a "Fuel System Operation Plan".

Best practice equipment

Those commissioning or modifying new UPSS or making significant modifications to pre-1 June 2008 systems must ensure that the system uses equipment endorsed by AS 4897-2008 – The design, installation and operation of underground petroleum storage systems. This will bring the regulation in line with industry best practice.

Accountability and oversight

Two key changes have been introduced to encourage accountability for responsible persons and give regulators greater oversight over the management of UPSS NSW-wide. Responsible persons will be required to:

  • notify the local authority of their intention to decommission a system by no later than 30 days before the system is decommissioned; and
  • prepare an annual report for the financial year and provide it to the ARA before 31 August of the following financial year. That annual report will include details such as:
    • any modifications or decommissioning that has occurred in the reporting period;
    • a summary of the results from the equipment integrity tests carried out;
    • a description of the leak detection system, the fuel system operation plan and loss monitoring system for the UPSS; and
    • results of leak detection or loss monitoring procedures, and any action taken in the event of a discrepancy and/or leak.

The RIS states that compliance with the new requirements of the 2019 Regulation is unlikely to result in significant additional cost for responsible persons. According to the RIS, the industry is largely already complying with the requirements of AS 4897-2008. Notification with respect to decommissioning is an infrequent event and so costs are contained. The proposed annual report is an ongoing commitment; but it is in effect a summary of the details which a responsible person must otherwise record.

The EPA has been tasked with educating operators about their obligations under the UPSS regulatory framework and encouraging compliance, which has on the whole increased. The RIS states that the annual report is a low cost and regular way the ARA can monitor compliance and target potential contamination risks.

Local councils as the ARA for UPSS

Perhaps the greatest impact of the 2019 Regulation will be for local councils. Local councils are proposed to be the ARA for most UPSS, a role performed by the EPA since 2008.  The EPA will remain the ARA for UPSS managed by state and public authorities, those in areas without a local council and UPSS the subject of an existing notice, direction or requirement prior the repeal of the current regulation. Under the 2014 Regulation UPSS the subject of an environment protection licence (EPL) are excluded. The 2019 Regulation will now capture these systems with the EPA as ARA.

Local councils are no strangers to contamination issues, however the proposed changes represent a step up for local councils in the UPSS industry. A key challenge will be ensuring that the 2019 Regulation is consistently enforced across the state, given the variable resources and technical expertise available from council to council.

Public comment on the UPSS changes

The period for public submissions closes on Friday 14 June 2019. If you'd like to know more about the proposed changes and how they will affect your business, please contact us. 

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.