NSW Implements New Requirements For Vapour Recovery Systems

21st Oct 2016

The Protection of the Environment Operations (Clean Air) Regulation 2010 (‘PEO Clean Air Regulation’) provides the framework for managing emissions from motor vehicles and fuels across NSW. Under the said regulation, the NSW Environment Protection Authority (‘EPA’) has implemented strict requirements for vapour recovery systems at service stations across the Greater Metropolitan Area of NSW in an effort to reduce fuel vapours and reduce any adverse impact service station operations have on the environment generally. Vapour recovery compliance has the potential to significantly impact thousands of service station owners and operators across NSW, which as a result places scrutiny on the drafting of environmental management, protection and compliance clauses within lease agreements for service station sites in NSW.

Vapour recovery (‘VR’) systems at service stations are designed in two stages, VR1 and VR2. Whilst VR1equipment, generally speaking, captures vapours from storage tanks whilst a petrol tanker delivers fuel at a petrol station, the general rationale regarding the VR2 equipment regulations aims to capture vapours at the petrol dispenser whilst a motorist refuels their vehicle.

Under the PEO Clean Air Regulation:

  • Service stations which have a throughput of less than 500,000 litres of petrol per year are exempt from VR1 and VR2
  • All service stations in the Sydney, Central Coast, Illawarra and Lower Hunter regions which have a throughput of more than 500,000 litres of petrol per year must comply with VR1 Such ongoing compliance was required by and took effect as of 1 January 2015.

Also, pursuant to the PEO Clean Air Regulation, and noting that the phased rollout of VR requirements having generally commenced in 2010, we are now approaching the final stage which focuses on VR2compliance for affected sites. In respect of this final VR2 rollout phase, Section 68 of the PEO Clean Air Regulation states that VR2 requirements will apply to:  

‘from 1 January 2017 … an existing petrol service station (other than a modified petrol service station) within the Sydney Metropolitan Area-B, but only from the first time the petrol service station has a throughput of more than 3.5 million litres of petrol’

As a result of the above time frames regarding VR2 compliance on existing services stations fast approaching (i.e. 1 January 2017), significant costs will have to be expended in order for service stations to remain compliant.

The key issue arising out of the new regulation requirements surrounds the onus of responsibility for payment of such compliance upgrade works to service stations in NSW. Determining who must bear the costs of devising new and ongoing systems to satisfy compliance measures at service stations in NSW should be of paramount concern for both Lessors and Lessees. Failure to comply with the new regulations may also carry heavy penalties and fines, adding further cost and expense for the responsible party.

As such, it is necessary for both Lessors and Lessees of service station sites in NSW to have their lease documents and obligations reviewed in order to determine which party is liable for devising these systems. Such action is highly recommended in light of the significant costs and time associated with such extensive works necessary for compliance with the new regulations on fuel vapour recovery.

For further information or assistance with any service station related enquiries, please contact James Hatzopoulos at Rostron Carlyle Lawyers on (02) 9307 8900 or by email to j.hatzopoulos@rclaw.com.au.

JAMES HATZOPOULOS
SENIOR ASSOCIATE

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