All Australian States and Territories have comprehensive laws and regulations that are designed to protect the natural environment. Consequently, every business owner has an absolute obligation to ensure that they do not pollute the environment. Importantly, these laws don’t simply say that businesses should take reasonable action to prevent pollution – they state that businesses must not pollute our air, our water or our soil.

Pollution events will inevitably occur (e.g. spills and tanker crashes). But the business costs associated with these events extend well beyond the mere clean-up costs if the regulator determines that a business has not taken all reasonable steps to prevent the pollution risk in the first place.

“Perhaps the most significant risk for our industry, apart from the pollution risk arising from fuel spills, is the leakage of fuel from underground fuel tanks”, said ACAPMA CEO Mark McKenzie.

This risk is an insidious one. The very nature of leaks from underground tanks means that the leaks are not visible in the same way that they are for above ground tanks – and the fact that these tanks are in the ground means that they result in immediate contamination of soil (and likely flow of fuel into any nearby groundwater).

Over the last 12 months, four Australian States (Victoria, NSW, South Australia and Tasmania) have sought to increase their focus on the management of Underground Petroleum Storage Systems.

In NSW and Victoria, these changes have simply involved a revision of current practices and survey of fuel retail businesses in respect of their loss monitoring procedures. In South Australia, the Environmental Protection Authority is moving to introduce a licencing system for UPSS that will carry an annual fee and place conditions on the operator in respect of loss monitoring practices.

In the last few weeks, the Tasmanian EPA has issued a letter to all service station operators reinforcing the fact that it is not sufficient to simply have a monitoring system in place (e.g. SIRA) but that operators must also have processes in place to demonstrate that these results are being reviewed daily – and that action is being taken where anomalies in volumes of wet stock are detected.

“The actions of regulators in many jurisdictions is a timely warning to all of us about the need to ensure that the loss monitoring practices at each and every site are sound, particularly given that the high financial costs association with a prosecution (i.e. fines and clean-up costs) are generally business destructive – as opposed to simply being financially inconvenient”, said Mark

Loss monitoring is not simply about contracting someone to undertake daily reconciliation of your ‘ins’ (i.e. tanker deliveries) and ‘outs’ (i.e. fuel dispensed to customers). With the exception of NSW (where there is a requirement to install groundwater observation wells and the like to monitor losses of fuel from liable sites), loss monitoring involves the application of the analysis on a daily basis to ensure that there are no abnormalities in tank volumes (e.g. SIRA method) plus the existence of a process for investigating anomalies and repairing any leaks that are detected.

“Simply performing a daily analysis, or having someone do it for you, is not enough of itself. Business owners must be able to demonstrate that someone with appropriate skills and knowledge is reviewing the results of these analyses on a daily basis to ensure compliance – and that they have a process for investigating anomalies”, said Mark

Every fuel retailer should have loss monitoring practices in place for every site that they operate. These practices should incorporate four main elements, namely:

  • Daily monitoring of wet stock volumes. This must be performed using a procedure that identifies volume anomalies (i.e. losses) of 0.76l per hour at 95% confidence level. This equates to identification of anomalies of 18 litres or more over a 24-hour period.
  • Daily review of results by a ‘suitably qualified person’. This need not be an external contractor (although that is often easier), but if it is done in-house, the review should be completed by someone who understands the dynamics of losses and knows how to identify results that require loss investigations
  • A process of escalation, investigation and repair of leaks. An anomaly doesn’t necessarily mean that there is a leak in your UPSS but rather there is a substantial risk of one. As a result, the business should have a documented process for the immediate communication of anomalies to management and a formal process for leak investigation (and repair of any leaks that are detected). This process must ensure timely investigation as a matter of priority.
  • Maintenance procedures and record keeping. The high level of accuracy required for loss monitoring means that it is important that all systems and equipment used for daily monitoring are regularly calibrated and maintained as per manufacturer specifications (including pump calibration). Businesses are legally required to keep maintenance records and loss monitoring records either on site, or at an easily accessible off-site location.

Further information about loss monitoring for fuel retail businesses can be found in ACAPMA’s Best Practice Guide entitled: Loss Monitoring of Underground Petroleum Storage Systems (2017 version). This Guide can be downloaded HERE.

“There is a bit of work involved in loss monitoring these days but the business cost of this effort pales by comparison with the large financial losses and business destruction that is caused as a result of a major contamination event”, said Mark

“The recent actions of UPSS regulators in four states therefore provides a timely warning to all of us about the importance of having comprehensive loss monitoring practices in place”, concluded Mark