08 May 2008

New Regulation for underground petroleum storage systems in NSW

By Jenny Liu

The UPSS Regulation requires owners and operators to regularly check for leaks in the fuel tanks and pipes used to store and handle petroleum products. Owners and operators also now need to meet minimum standards in their day-to-day environmental management of these storage systems.

An underground petroleum storage system or "UPSS" refers to the entire system of underground tanks, pipes, valves and other equipment designed to store and handle petroleum products. Leakages from an UPSS can often go unnoticed for a prolonged period. In addition to the obvious environmental impact that this can cause, such as groundwater contamination, persistent leaks can have a major impact on neighbouring properties and impose significant costs on the UPSS owners and operators.

According to the Service Station Survey conducted by the Australian Institute of Petroleum (AIP),[1] there were an estimated 2,700 active service station sites in NSW as at the end of 2003, most of which have multiple underground tanks and piping. In addition, according to the Australian Petroleum Agents and Distributors Association, there are more than 600 fuel terminals and depots[2] and numerous other commercial and industrial premises that may also use UPSS, such as local council depots, automotive retail and hire premises, airports and petroleum refineries.

In order to take a preventative approach to minimise the risk of contamination from UPSS in New South Wales, the Protection of the Environment Operations (Underground Petroleum Storage Systems) Regulation 2008 was made under the Protection of the Environment Operations Act 1997 ("POEO Act"). The UPSS Regulation will begin its phased commencement from 1 June 2008. This means that the application of some of the requirements under the UPSS Regulation are deferred where planning approval, commencement of installation, or commissioning of a UPSS occurred before 1 June 2008. Such a UPSS is referred to as an "old storage system".

The UPSS Regulation requires owners and operators to regularly check for leaks in the fuel tanks and pipes used to store and handle petroleum products. Owners and operators also now need to meet minimum standards in their day-to-day environmental management of these storage systems. These requirements are formulated so as to adopt performance standards that are consistent with the "Code of Practice, The Design, Installation and Operation of Underground Petroleum Storage Systems" published by the AIP[3] and the EPA Victoria 2003 "Guidelines on the Design, Installation and Management Requirements for Underground Petroleum Storage Systems".

While the UPSS Regulation introduces new standards for UPSS equipment and its operation, it is important to remember that under the POEO Act, there are existing notice powers and that, in most cases, it is an offence under the POEO Act if fuel tanks are leaking or substances are escaping from a UPSS causing environmental harm (for example, the pollution of waters). The UPSS Regulation does not replace, but will complement, existing requirements in relation to underground fuel tanks under the Occupational Health and Safety Act 2000.

Who does the UPSS Regulation apply to?

The UPSS Regulation applies to persons "responsible" for an UPSS, that is, the person who has the management and control of the UPSS or had the management and control of the UPSS immediately before it was decommissioned (ie. abandoned or rendered unusable permanently). This might include the current or previous owner, lessee or operator of an UPSS.

The UPSS Regulation does not apply to liquefied petroleum gas storage systems or where the premises operates under an environment protection licence, which would set out operating standards in the licence conditions.

It is also important to note that the definition of petroleum in the UPSS Regulation includes used oil.

What does the UPSS Regulation cover?

The UPSS Regulation contains requirements regarding the installation, modification, repair and decommissioning of UPSS, design and installation of groundwater monitoring wells, the use of UPSS, and record-keeping requirements.

Installation, modification, repair and decomissioning of UPSS

The UPSS Regulation requires certain documentation to be provided to the person responsible for an UPSS installed or modified after 1 June 2008 that shows it to have been properly designed, installed, equipped and tested before it can be used for the first time after installation or modification.

One of the equipment requirements relates to a mandatory pollution protection equipment that is required upon modification of a UPSS. This requirement does not apply to old storage systems unless the modification is a significant modification as defined in the UPSS Regulation.

There is also a testing requirement after a UPSS has been repaired following the discovery of a leak if the repaired UPSS is to recommence operations after 1 June 2008.

After 1 June 2008, if a UPSS is decommissioned or if a modification involved the removal or replacement of any tank, a validation report prepared in accordance with EPA guidelines must be served on the relevant local authority in a prescribed period.

Groundwater monitoring wells

The UPSS Regulation stipulates that a UPSS must not be used unless groundwater monitoring wells are installed on the storage site. Further, the person responsible for the UPSS must be provided with documentations that show that the groundwater monitoring wells are properly designed and installed.

Requirements regarding the installation of Groundwater Monitoring Wells will not apply to old storage systems until 1 June 2011. However, if a groundwater monitoring well is to be installed for an old storage system before 1 June 2011, the person responsible for the UPSS must be provided with documentations that show that the groundwater monitoring wells are properly designed, though the installation requirements may not need to be complied with.

Use of UPSS

The UPSS Regulation requires that a UPSS can only be used in accordance with an Environment Protection Plan. It sets out a range of issues that an Environment Protection Plan must address, information it must include, monitoring procedure design requirements, and documentations that it must contain. The requirement for an Environment Protection Plan will not apply to old storage systems until 1 June 2009.

There are also requirements to check, test and maintain loss monitoring instruments and to record data gathered. If a discrepancy is detected by a loss monitoring instrument, the UPSS Regulation requires action to be taken to investigate, to confirm existence of a leak, to fix the leak and to record details of any action taken.

There are additional requirements that relate to the monitoring of groundwater monitoring wells for contamination. These requirements will not apply to old storage systems until 1 June 2011.

Record-keeping

An incident log and a record of significant modifications is required to be kept. The UPSS Regulatioin also sets out a range of documents that need to be kept for seven years after their creation or seven years after the decommissioning of the UPSS to which they refer.

Within 30 days after a change in responsibility for an UPSS, documents for that system are required to be passed on to the person newly responsible for it.

Penalty for non-compliance

The maximum penalty for non-compliance of record-keeping requirements is 100 penalty units (currently $11,000) for an individual or 200 penalty units (currently $22,000) for a corporation.

For non-compliance of other requirements, the maximum penalty is 200 penalty units (currently $22,000) for an individual or 400 penalty units (currently $44,000) for a corporation.

Who will be the regulator?

The New South Wales Environment Protection Authority (EPA) will be the appropriate regulatory authority for matters arising under UPSS Regulation for the first four years after the regulation commences. After 4 years, the role will be passed back to local councils, who are currently, and will continue to be, the appropriate regulatory authority for all other matters at UPSS sites under the POEO Act.

The EPA has the power to issue guidelines by means of an EPA Gazettal notice. The UPSS Regulations sets out certain documents deemed to be such guidelines from the commencement of the regulation.

The Department of Environment and Climate Change is also in the process of preparing guidelines for implementing the new Regulation. The Guidelines are expected to be published on its website soon.

How does the NSW regime compare to that elsewhere in Australia?

The "Guidelines on the Design, Installation and Management Requirements for Underground Petroleum Storage Systems" released in Victoria in February 2003 was the first comprehensive state-level regime targeted at managing UPSS contamination. The Victorian Guidelines incorporated measures set out in relevant Standards Australia documents such as Australian Standard AS 4897:2008 The design, installation and operation of underground petroleum storage systems and aim to provide practical guidance for owners/operators of UPSS by setting out minimum requirements for UPSS in general. The Victorian Guidelines also adopted a phased approach in the application of new standards.

Corresponding regimes in South Australia, Western Australia, Tasmania, the Australian Capital Territory and Northern Territory and the NSW UPSS Regulation draw heavily on the Victorian approach.

The only significantly different approach comes from Queensland, where facilities that store crude oil or petroleum products are regulated differently depending on the storage capacity of the facility. Thresholds for this purpose are detailed in Environmental Protection Act 1994 (Qld) and its accompanying regulating Environmental Protection Regulation 1998. In February 2007, the Queensland EPA released a guideline entitled "Assessment and approval process for environmental authorities for petroleum activities". The purpose of this guideline is to explain how the administering authority processes and decides applications for environmental authorities for petroleum activities pursuant to the Environmental Protection Act.

 

[1] Regulatory Impact Statement - Proposed Protection of the Environment Operations (Underground Petroleum Storage Systems) Regulation 2005.
Regulatory Impact Statement - Proposed Protection of the Environment Operations (Underground Petroleum Storage Systems) Regulation 2005.[2] Ibid.

[3] This Code of Practice was withdrawn from publication or sale by the Australian Institute of Petroleum as of 28 March 2008 and partially subsumed by Australian Standard AS 4897:2008 "The design, installation and operation of underground petroleum storage systems".

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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.