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Fuel Quality Standards Amendment Bill 2003

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2002-2003

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

FUEL QUALITY STANDARDS AMENDMENT BILL 2003

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

(Circulated by authority of the Minister for the Environment and Heritage,

The Honourable Dr David Kemp, MP)

 



FUEL QUALITY STANDARDS AMENDMENT BILL 2003

OUTLINE

The purpose of this Bill is to amend the Fuel Quality Standards Act 2000

(‘the Act’) to:

·          enable the Commonwealth to impose requirements for labelling of fuels at the point of sale; and

·          make a number of the existing offences under the Act ‘strict liability’ offences.

The Fuel Quality Standards Act 2000 was introduced to provide a national framework for controlling and improving fuel quality.  The Act aims to regulate fuel quality for environmental improvement, adoption of better engine and emission control technologies, and more effective engine operation. 

The amendments are necessary to enable the Commonwealth to introduce an effective and enforceable national labelling regime for fuels, which will complement the technical fuel standards.  This will ensure that motorists are appropriately informed about the nature of the fuel they are purchasing, before they buy.

The provisions enable the Minister responsible for the Act to set a fuel quality information standard for a particular supply of a particular fuel.   In the first instance, these provisions are expected to be used to institute a labelling requirement for the supply of ethanol-petrol blends to the end user (ie point-of-sale labelling).  This course of action was announced by the Government in April 2003 in order to address public concerns over the supply of unlabelled ethanol fuels.

The strict liability amendments are necessary to ensure that key provisions in the Act can be enforced. 

Financial Impact Statement

The Bill will have no significant impact upon the finances of the Commonwealth.  Enforcement of Fuel Quality Information Standards will be carried out as part of the existing monitoring and enforcement program under the Act and is not expected to entail any significant additional costs.



FUEL QUALITY STANDARDS AMENDMENT BILL 2003

NOTES ON CLAUSES

Clause 1 - Short Title

1.       This clause sets out that the short title by which the Act may be cited is the Fuel Quality Standards Amendment Act 2003.

Clause 2 - Commencement

2.       This clause specifies that all sections of the Act commence on the day on which the Act receives Royal Assent.  While the amendments relating to Fuel Quality Information Standards (FQISs) insert new offences, no actual FQIS requirements will exist until a Determination has been made under proposed section 22A.  Commencement of these offences on Royal Assent will therefore still allow for adequate notice of these offences.

Clause 3 - Schedule(s)

3.       This clause is the formal enabling provision for the Schedule to the Bill, providing that each Act specified in the Schedule is amended or repealed in accordance with the applicable items of that Schedule.  The clause also provides that other items of the Schedule have effect according to their own terms.

SUMMARY OF AMENDMENTS

Schedule 1 - Amendment of the Fuel Quality Standards Act 2000

Item 1 - Section 3

4.       This item amends the objects of the Act (section 3) to include a specific objective related to the new fuel labelling provisions.  The object has been worded generally so as not to unnecessarily restrict the nature and content of future fuel labelling and to provide flexibility in the application of the FQISs.  This reflects the fact that these provisions are enabling provisions for fuel labelling, rather than specific provisions requiring labelling of ethanol fuels, and it is not possible to predict all future situations which may give rise to a need for labelling or the provision of other information.

5.       This Item also changes the name of the heading from Main object of Act to Objects of Act

Item 2 - Subsection 4(1)

6.       This item inserts a definition of fuel quality information standard in subsection 4(1).

Item 3 - Subsection 4(1)

7.       This item inserts a definition of regulated person in subsection 4(1).  This definition was previously referred to in notes to subsections 17(1) and 18(2) but has been moved into the Definitions section for improved clarity.  (See also items 13 and 17.)

Item 4 - Subsection 9(2)

8.       This item amends subsection 9(2) to apply the existing relationship between Commonwealth fuel quality standards and State and Territory law to the new fuel quality information standards.

9.       Where the Commonwealth has specified an FQIS in respect of a specified supply of a specified fuel, the Commonwealth FQIS will operate to the exclusion of a State or Territory information/labelling standard in respect of the same characteristic, if the Regulations so prescribe.  For example, should the Commonwealth introduce point-of-sale labelling for ethanol blends, the Commonwealth’s label would override any State point-of-sale ethanol labelling requirements.

10.     This allows the Commonwealth to address consumer uncertainty through a uniform, national fuel labelling scheme.

Items 5, 6 and 7 - Section 11

11.     These items amend section 11 - the Overview of Part 2 - to reflect the new provisions in Part 2 relating to offences in regard to FQISs (Division 2), approvals to vary an FQIS (Division 3), and the making of FQISs (Division 6).

Item 8 - Subsection 12(1) (penalty)

12.     This item reduces the maximum penalty for supply of a non-compliant fuel under subsection 12(1) from 1000 penalty units to 500 penalty units.  This change is related to Item 10 which makes this offence a strict liability offence.  It is Government policy that strict liability offences should have lower penalties than would apply under a corresponding offence that was not one of strict liability. 

13.     Sub-section 4B(3) of the Crimes Act 1914 provides that a court may impose on a body corporate found guilty of an offence, a pecuniary penalty of up to 5 times the amount of the maximum pecuniary penalty that the court could impose on an individual convicted of the same offence.  The maximum penalty for a body corporate for this offence is therefore 2500 penalty units.  Under current penalty rates, this would translate to a maximum penalty of $275,000. 

14.     This penalty is significantly higher than that which is usually applied to strict liability offences.  This reflects the seriousness of the offence, the direct costs to the community that can arise from non-compliant fuel, and the large profits which can potentially be made from fuel adulteration and tax evasion.  The penalties must also be high enough to serve as a disincentive to fuel tampering in their own right.

15.     The note to this item changes the heading for section 12 from Supply of Fuel to Complying with Fuel Standards for the sake of clarity.

Item 9 - Subsection 12(1) (note)

16.     This removes the note in subsection 12(1) that refers the reader to Chapter 2 of the Criminal Code.  This note has been removed throughout the Act. 

17.     The notes were originally included in the Act because, at the time, Chapter 2 of the Criminal Code did not apply to all Commonwealth legislation.  Chapter 2 now applies to all Commonwealth legislation hence the note is no longer necessary.  This amendment does not affect the operation of the section.

Item 10 - At the end of section 12

18.     This item amends section 12 so that the offence set out in subsection (1) is a strict liability offence.  Similar amendments have also been made to sections 19 (item 19), 20 (item 22), 30 (item 29) and 31 (item 32).  These amendments address an issue that has arisen concerning enforcement of the key offences in the Act.

19.     Without strict liability applying to this offence, the prosecution would have to prove beyond reasonable doubt that a defendant had the required knowledge of the relevant fuel quality standards under the Act.  If a person is ignorant of, or mistaken about, those requirements then that person could not have the requisite intent to commit an offence.  Experience in administering the Act suggests that it is likely to be very difficult to provide such an awareness on the part of a defendant and that, as with many other regulatory offences, it is appropriate to create offences of strict liability.

20.     The penalty for this offence has been reduced to 500 penalty units (from 1000), consistent with the need to constrain penalties for strict liability offences (see Item 8).  It is important, however, that the maximum penalty for this offence reflects the potentially large profits that can be made from fuel adulteration.  Other Commonwealth legislation such as the Ozone Protection Act 1989 and the Environment Protection and Biodiversity Conservation Act 1999 also apply 500 penalty units to strict liability offences.

Item 11 - At the end of Division 2 of Part 2

21.     This item inserts a new section 12A in Division 2, entitled ‘Complying with fuel quality information standards’.  Section 12A creates an offence where a constitutional corporation or Commonwealth entity or person, in the course of constitutional trade and commerce, supplies fuel in Australia and the supply does not comply with the prescribed FQIS.  An offence will also be committed if a person holds an approval that varies the FQIS and the fuel supply does not comply with the FQIS as varied.

22.     An offence will not be committed, however, if the Minister has granted an approval that varies the FQIS in  respect of the supply, and the fuel meets the requirement(s) of that approval.  Nor will an offence be committed if the supply is in order to comply with a direction of order under an emergency law.

23.     This item provides that this offence is a strict liability offence and carries a criminal penalty of up to 60 penalty units for an individual.  The offence has been introduced as a strict liability offence in order to address issues identified and discussed in detail under item 10 (section 12) - that because of the difficulty of establishing a fault element that would depend on a defendant’s knowledge or otherwise of the relevant standards under the Act, it is appropriate for the offence to be one of strict liability.

24.     Sub-section 4B(3) of the Crimes Act 1914 provides that a court may impose on a body corporate found guilty of an offence, a pecuniary penalty of up to 5 times the amount of the maximum pecuniary penalty that the court could impose on an individual convicted of the same offence.  The maximum penalty for a body corporate for this offence is therefore 300 penalty units ($33,000 at current rates).



25.     This penalty has been set at the standard rate for strict liability offences.  As such, it is significantly lower than some other strict liability offences in the Act, such as the penalties for supplying non-compliant fuel.  This reflects the less serious nature of the offence.  If fuel meets the fuel standards but is not correctly labelled according to the FQIS this will primarily affect consumer information and choice.   By contrast, supply of non-compliant fuel can result in emissions that are dangerous to human health and the environment, and/or damage to a large number of vehicles. 

Item 12 - Subsection 13(1)

26.     This item varies subsection 13(1) to enable the Minister to grant an approval in writing that varies the FQIS with respect to specified supplies of fuel. 

27.     This power is inserted within the existing sections governing the granting an approval for a variation to the fuel standards, and hence would follow the same processes.  This includes the following:

·          Where an application for an approval is submitted, the application must be made in accordance with the Fuel Quality Standards Regulations 2001 (as amended) and be accompanied by the application fee prescribed in the Regulations;

·          In deciding whether or not to grant an approval, the Minister must consider the protection of the environment, the protection of occupational health and safety, the interests of consumers, the impact on economic and regional development, and any other matters he or she considers relevant.

·          The Minister may impose conditions on an approval to ensure that the objects of the Act are met

28.     The approvals process is intended to cover circumstances where the application of the FQIS would be inappropriate or excessively burdensome, and it is possible to vary the FQIS without compromising the objectives of the legislation.

Item 13 - Subsection 17(1) (note)

29.     This Item removes the note under subsection 17(1) which refers the reader to section 13 for a definition of regulated person .  This note has been replaced with a definition of a regulated person within the definitions section (section 4) for improved ease of use.

Item 14 - At the end of paragraph 17A(c)

30.     This item includes an FQIS approval under paragraph 17A(c).  The effect of this is that the Minister is required have a notice published in the Gazette setting out specified details of any approval to vary an FQIS, including the details of the variation and the reasons for granting the approval.  The notice must be published as soon as practicable after granting an approval to vary an FQIS.

31.     This requirement is intended to ensure the transparency of the approvals process.

Items 15 and 16 - Subsection 18(1) and 18(2) (notes)

32.     These items remove the notes in subsections 18(1) and 18(2) respectively, that refer the reader to Chapter 2 of the Criminal Code.  This note has been removed throughout the Act. 

33.     The notes were originally included in the Act because, at the time, Chapter 2 of the Criminal Code did not apply to all Commonwealth legislation.  Chapter 2 now applies to all Commonwealth legislation hence the note is no longer necessary.  This amendment does not affect the operation of the sections.

Item 17 - Subsection 18(2) (note 2)

34.     This Item removes the note under subsection 18(2) which refers the reader to section 13 for a definition of regulated person .  This note has been replaced with a definition of a regulated person within the definitions section (section 4) for improved ease of use.

Item 18 - Section 19 (note)

35.     This removes the note in section 19 that refers the reader to Chapter 2 of the Criminal Code.  This note has been removed throughout the Act. 

36.     The notes were originally included in the Act because, at the time, Chapter 2 of the Criminal Code did not apply to all Commonwealth legislation.  Chapter 2 now applies to all Commonwealth legislation hence the note is no longer necessary.  This amendment does not affect the operation of the section.

Item 19 - At the end of section 19

37.     This item amends section 19 so that the offence set out in subsection (1) is a strict liability offence. 

38.     The intention of this amendment is to address a similar issue to that identified, and discussed in detail, under item 10 (section 12) - that because of the difficulty of establishing a fault element that would depend on a defendant’s knowledge or otherwise of the relevant fuel standards under the Act, it is appropriate for the offence to be one of strict liability.

39.     The penalty for this offence is a maximum of 60 penalty units.  The application of strict liability would bring this section into line with the offences relating to record keeping where strict liability provisions already apply.

Item 20 - Subsection 20(1) (penalty)

40.     This item reduces the maximum penalty for altering fuel from 1000 penalty units to 500 penalty units.  This change is related to Item 22 which makes this offence a strict liability offence.  The penalty has been reduced in view of the change in the status of the offence. 

41.     Sub-section 4B(3) of the Crimes Act 1914 provides that a court may impose on a body corporate found guilty of an offence, a pecuniary penalty of up to 5 times the amount of the maximum pecuniary penalty that the court could impose on an individual convicted of the same offence.  The maximum penalty for a body corporate for this offence is therefore 2500 penalty units.  Under current penalty rates, this would translate to a maximum penalty of $275,000. 

42.     This penalty is significantly higher than that which is usually applied to strict liability offences.  This reflects the seriousness of the offence, the direct costs to the community that can arise from non-compliant fuel, and the large profits which can potentially be made from fuel adulteration and tax evasion.  The penalty must also be high enough to serve as a disincentive in its own right to fuel tampering.

Item 21 - Subsection 20(1) (note)

43.     This removes the note in subsection 20(1) that refers the reader to Chapter 2 of the Criminal Code.  This note has been removed throughout the Act. 

44.     The notes were originally included in the Act because, at the time, Chapter 2 of the Criminal Code did not apply to all Commonwealth legislation.  Chapter 2 now applies to all Commonwealth legislation hence the note is no longer necessary.  This amendment does not affect the operation of the section.

Item 22 - At the end of section 20

45.     This item amends section 20 so that the offence set out in subsection (1) is a strict liability offence.

46.     The intention of this amendment is to address a similar issue to that identified, and discussed in detail, under item 10 (section 12) - that because of the difficulty of establishing a fault element that would depend on a defendant’s knowledge or otherwise of the relevant fuel standards under the Act, it is appropriate for the offence to be one of strict liability.

Item 23 - Division 6 of Part 2 (heading)

47.     This item changes the heading of Division 6 of Part 2 from Fuel Standards to Fuel standards and fuel quality information standards to reflect the inclusion of the FQISs.

Item 24 - Subsection 21(5)

48.     This item amends subsection 21(5) - which requires that, in making a fuel standard, the Minister must have regard to the main object of the Act - to reflect the changes made to the objects section (section 3, see Item 1).  This does not change the effect or application of the section other than to account for the new object relating to the provision of information on fuels.

49.     Note 1 to this item changes the heading of section 21 from Making of standards to Making fuel standards to clarify that this section relates to the making of fuel standards, but not FQISs.  FQISs are covered under a later section (see Item 25).

50.     Note 2 to this item changes the heading of subsection 21(5) from Regard to be had to main object of Act to Regard to be had to objects of the Act, to reflect the change to the heading to section 3 (see Item 1).

51.     Note 3 to this item changes the heading of section 22 from Guidelines for more stringent standards to Guidelines for more stringent fuel standards to clarify that this section relates only to fuel standards, not to FQISs.

Item 25 - After section 22

52.     This item inserts a new section 22A which gives the Minister the power to make FQISs.  The form of this section largely follows the existing section 21 which covers the making of fuel standards.

53.     Subsection 22A(1) authorises the Minister to make a determination that specifies a FQIS for a specified type and supply of fuel.  Subsection 22A(4) states that a determination under subsection 22A(1) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .

54.     These provisions have been designed such that an FQIS relates to a specified supply of a specified fuel rather than simply a specified fuel.  This allows for a distinction to be made between, for example, the supply of fuel by a retailer to a motorist, and the supply of fuel by a wholesaler to a retailer.  The arrangements were designed in this manner in recognition of the fact that labelling and  information requirements are likely to be different for different points in the fuel chain. 

55.     For example, if the Government introduces an FQIS for ethanol blends, the determination might prescribe specific labelling requirements for petrol bowsers (supply of ethanol blends to motorists) but may also require that the wholesaler provide information to the retailer in relation to the ethanol content of the fuel (supply of ethanol blends to the retailer).  In this case the different FQIS requirements would relate to the same type of fuel (ethanol blends) but different types of supply of that fuel.

56.     In making an FQIS determination, the Minister must specify the information that must be provided in regard to the fuel supply, and the way in which the information is to be provided (subsection 22A(2)).  ‘Information’ might include the composition or attributes of the fuel, uses for which the fuel is not suitable, operability impacts, environmental impacts of the fuel, warnings or cautions around the fuel etc.  Reference to the way in which the information is to be provided would allow for requirements concerning, for example, location, position, size and colour of labels.

57.     While the intention of this legislation is to provide for a uniform, national labelling regime, exceptions may occur where there is a need to provide for more stringent labelling standards for fuel supplied in particular areas.  In making an FQIS for a particular supply, the Minister has the ability to describe a supply such that different FQISs apply to different geographic locations.  Subsection 22A(3) prescribes, however, that in making an FQIS, the Minister must not give preference to one State or part of a State, within the meaning of section 99 of the Constitution. 

58.     Subsection 22A(2) requires that the Minister have regard to the objects of the Act in making a determination for an FQIS.

Item 26 - After paragraph 24A(1)(b)

59.     This item amends subsection 24A(1) to provide that the Minister must consult the Fuel Standards Consultative Committee (FSCC) before making an FQIS.  This requirement also applies to the granting of approvals for variations to FQISs under the amended section 13. 



60.     The Minister must have regard to the recommendations of the FSCC when making a decision on an FQIS or an FQIS approval.  He/she must also consult the FSCC in respect of the period for which an approval for a variation to an FQIS is to apply.

Item 27 - Section 30 (penalty)

61.     This item reduces the penalty for supply of a prohibited fuel additive from 500 penalty units to 250 penalty units.  This change is related to Item 29 which makes this offence a strict liability offence.  The penalty has been reduced in view of the change in the status of the offence. 

62.     Sub-section 4B(3) of the Crimes Act 1914 provides that a court may impose on a body corporate found guilty of an offence, a pecuniary penalty of up to 5 times the amount of the maximum pecuniary penalty that the court could impose on an individual convicted of the same offence.  The maximum penalty for a body corporate for this offence is therefore 1250 penalty units.  Under current penalty rates, this would translate to a maximum penalty of $137,500. 

63.     This penalty is significantly higher than that which is usually applied to strict liability offences.  This reflects the seriousness of the offence and the direct costs to the community that can arise from non-compliant fuel and the use of prohibited additives (including environmental and health costs).  The penalty must also be high enough to serve as a disincentive in its own right to the supply of these additives.

Item 28 - Section 30 (note)

64.     This removes the note in section 30 that refers the reader to Chapter 2 of the Criminal Code.  This note has been removed throughout the Act. 

65.     The notes were originally included in the Act because, at the time, Chapter 2 of the Criminal Code did not apply to all Commonwealth legislation.  Chapter 2 now applies to all Commonwealth legislation hence the note is no longer necessary.  This amendment does not affect the operation of the section.

Item 29 - At the end of section 30

66.     This item amends section 30 so that the offence set out in subsection (1) is a strict liability offence.   

67.     The intention of this amendment is to address a similar issue to that identified, and discussed in detail, under item 10 (section 12) - that because of the difficulty of establishing a fault element that would depend on a defendant’s knowledge or otherwise of the relevant fuel standards under the Act, it is appropriate for the offence to be one of strict liability.

Item 30 - Section 31 (penalty)

68.     This item reduces the penalty for the importation of prohibited fuel additive from 500 penalty units to 250 penalty units.  This change is related to Item 32 which makes this offence a strict liability offence.  The penalty has been reduced in view of the change in the status of the offence. 



69.     Sub-section 4B(3) of the Crimes Act 1914 provides that a court may impose on a body corporate found guilty of an offence, a pecuniary penalty of up to 5 times the amount of the maximum pecuniary penalty that the court could impose on an individual convicted of the same offence.  The maximum penalty for a body corporate for this offence is therefore 1250 penalty units.  Under current penalty rates, this would translate to a maximum penalty of $137,500. 

70.     This penalty is significantly higher than that which is usually applied to strict liability offences.  This reflects the seriousness of the offence and the direct costs to the community that can arise from non-compliant fuel and the use of prohibited additives (including environmental and health costs). 

71.     The penalty must also be high enough to serve as a disincentive in its own right to the supply of these additives.

Item 31 - Section 31 (note)

72.     This removes the note in section 31 that refers the reader to Chapter 2 of the Criminal Code.  This note has been removed throughout the Act. 

73.     The notes were originally included in the Act because, at the time, Chapter 2 of the Criminal Code did not apply to all Commonwealth legislation.  Chapter 2 now applies to all Commonwealth legislation hence the note is no longer necessary.  This amendment does not affect the operation of the section.

Item 32 - at the end of section 31

74.     This item amends section 31 so that the offence set out in subsection (1) is a strict liability offence.

75.     The intention of this amendment is to address a similar issue to that identified, and discussed in detail, under item 10 (section 12) - that because of the difficulty of establishing a fault element that would depend on a defendant’s knowledge or otherwise of the relevant fuel standards under the Act, it is appropriate for the offence to be one of strict liability.

Item 33 - Subsection 39(3) (note)

76.     This removes the note in subsection 39(3) that refers the reader to Chapter 2 of the Criminal Code.  This note has been removed throughout the Act. 

77.     The notes were originally included in the Act because, at the time, Chapter 2 of the Criminal Code did not apply to all Commonwealth legislation.  Chapter 2 now applies to all Commonwealth legislation hence the note is no longer necessary.  This amendment does not affect the operation of the section.

Item 34 - Subsection 39(4)

78.     This item amends subsection 39(4) to clarify that the strict liability offence is the offence in subsection 39(3).  This amendment has been made for the sake of clarity and does not alter the operation of the subsection.

Items 35-39 - Subsections 42(2), 53(2), 62(1), 62(2) and 66(1) (notes)

79.     These items remove the notes in subsections 42(2), 53(2), 62(1), 62(2) and 66(1) that refer the reader to Chapter 2 of the Criminal Code.  This note has been removed throughout the Act. 

80.     The notes were originally included in the Act because, at the time, Chapter 2 of the Criminal Code did not apply to all Commonwealth legislation.  Chapter 2 now applies to all Commonwealth legislation hence the note is no longer necessary.  This amendment does not affect the operation of the sections.

Item 40 - Subsection 66(2)

81.     This item amends subsection 66(2) to clarify that the strict liability offence is the offence in subsection 66(1).  This amendment has been made for the sake of clarity and does not alter the operation of the subsection.

Item 41 - Subsection 67(5) (note)

82.     This item removes the note in subsection 67(5) that refers the reader to Chapter 2 of the Criminal Code.  This note has been removed throughout the Act. 

83.     The notes were originally included in the Act because, at the time, Chapter 2 of the Criminal Code did not apply to all Commonwealth legislation.  Chapter 2 now applies to all Commonwealth legislation hence the note is no longer necessary.  This amendment does not affect the operation of the section.

Item 42 - Subsection 67(6)

84.     This item amends subsection 67(6) to clarify that the strict liability offence is the offence in subsection 67(5).  This amendment has been made for the sake of clarity and does not alter the operation of the subsection.

Item 43 - At the end of subsection 68(1)

85.     This item amends subsection 68(1) to provide that the Minister may not delegate his powers under section 22A of the Act to set Fuel Quality Information Standards.  This is the same position as applies to fuel quality standards.