Posted on February 24, 2017 by Anna Sinclair 1

Caltex Australia Petroleum is fined a record amount for petrol spill

Caltex Australia Petroleum Pty Ltd (Caltex) has been convicted and ordered by the Land and Environment Court to pay a record fine of $400,000 and costs of $450,000 for a petrol spill at its Banksmeadow fuel terminal in Port Botany.

Caltex pled guilty to a Tier 1 offence under s116(1)(d) of the Protection of Environment and Operations Act 1997 for an incident in July 2013 where a hose disengaged from a petrol storage tank during an abnormal petrol transfer operation.

Approximately 157,200 litres of unleaded petrol escaped from the tank into a surrounding bund dousing two onsite contractors who were subsequently taken to hospital. Workers from neighbouring industrial premises were evacuated and local roads were closed due to the potential risk of fire or explosion.

The offence

The offence Caltex was charged with required that two elements be made out. Firstly, that a person had negligently caused the petrol to escape in a manner that harms or is likely to harm the environment. Second, that Caltex (as the occupier of the premises) negligently, in a material respect, contributed to the conditions which gave rise to the commission of the first offence.

A contractor of Caltex negligently caused the petrol to escape by undertaking the product transfer when he was intoxicated and incorrectly fitting and failing to properly secure the head of the hose to the petrol tank.

Caltex had negligently, in a material respect, contributed to the conditions which gave rise to the commission of the offence because of a number of factors, including that it had:

• caused the product transfer to be carried out without any risk assessment in accordance with its own operating procedures,
• caused the product transfer to be carried out using temporary equipment, at night under inadequate lighting, and
• issued a work permit for the transfer in contravention of its own work procedures.

Fortunately, no serious environmental harm resulted from the spill as the fuel was captured in the bund that surrounded the tank. The Court found that harm caused to the environment, mainly air, and to human health, was generally minor and transient.

Takeaways

This case demonstrates the importance of companies both having and following risk assessment and operating procedures for all of their operations, particularly where the procedure is not a standard procedure. This is one of many cases that highlight the liability of a company for the failures of a contractor.

Simple mistakes may create significant impacts and risks to safety and the environment as well as leading to significant costs.

In addition to the fine of $400,000, Caltex  lost $111,000 worth of marketable product, paid net clean-up costs of $347,000, and spent $403,000 on rectification/improvement, and at least $805,000 in complying with its enforceable undertakings to settle the workplace related prosecution for the same incident. It has now agreed to pay the prosecutor’s costs of $450,000, and the cost of appropriate advertisements.

The judgment can be read here.