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Bills Digest No. 30 2003-04
Fuel Quality Standards Amendment Bill 2003
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Fuel
Quality Standards Amendment Bill 2003
Date Introduced:
26 June 2003
House:
House of Representatives
Portfolio:
Environment and Heritage
Commencement:
Royal Assent
To amend the Fuel Quality Standards Act 2000 in
order to:
-
establish a regulatory framework for fuel labelling in Australia
-
permit State and Territory laws to be overridden where the Commonwealth
has made fuel quality information standards, and
-
create strict liability offences for the key offence provisions of the Act.
The Fuel Quality Standards Act 2000 (the Act)
established a legal framework for the setting of national fuel quality
standards. The object of the Act is to regulate the quality of fuel supplied
in Australia
in order to:
-
reduce the level of pollutants and emissions arising from the use
of fuel that may cause environmental and health problems
-
facilitate the adoption of better engine technology and emission
control technology, and
-
allow engines to operate more effectively.(1)
The Act does not exclude the operation of State and Territory
laws, provided that these laws are capable of concurrent operation with
the Act. However, where spelt out in regulations, the Act does override
State and Territory laws relating to fuel standards.(2)
The Act is administered by the Minister for the Environment
and Heritage. Under the Act, the Minister may determine a base fuel standard.(3)
Provision is also made for the Minister to determine for ‘more stringent
parameters to apply’ to that fuel in specific areas of Australia,
having regard to written guidelines.(4) The guidelines are
disallowable by either House of Parliament under section 46A of the Acts
Interpretation Act 1901. Guidelines relating to the issues to be considered
in applying more stringent parameters have not yet been tabled.
The Act was assented to on 21 December 2000. Most sections commenced on 23
March 2001 and the remainder on 1 January 2002. Section 71 of the Act requires the Secretary
to prepare and give the Minister a report on the operation of the Act
as soon as practicable after the end of each financial year and the Minister
to table the report within 15 days of receipt. The first report on the
operation of the Act is expected to be tabled on 14 October 2003.(5)
The issue of blending ethanol with petrol has attracted
a lot of press and public comment since late 2002. The negative publicity
has concentrated on reports that ethanol levels higher than ten per cent
may accelerate wear on engine components and fuel lines, and reduce fuel
economy. A number of vehicle makers have advised that ethanol concentrations
above ten per cent may limit or void warranties. Some petrol suppliers
have placed stickers on bowsers advising motorists that their petrol ‘contains
no ethanol’.
Prior to 2002 fuel ethanol had also been promoted positively
as an octane enhancer and as reducing greenhouse emissions. More recently
some farming groups have promoted ethanol as a potential saviour of Queensland’s
sugar industry and as a benefit to rural development in general. In 2001
the Government announced a policy to expand local ethanol production.
The Government’s target is reported to be 350 million litres a year of
domestically produced ethanol by 2010, up from around 135 million litres
now. The increased figure would represent about two per cent of Australia’s
fuel use. For more information on fuel ethanol, see the Parliamentary
Library publication Fuel Ethanol – Background and Policy Issues,
by Mike Roarty and Richard
Webb (Current Issues Brief No. 12, 2002-03), 10
February 2003.(6)
In a move which the press reported as an attempt to rebuild
public confidence in fuel ethanol,(7) the Minister for the
Environment and Heritage, Hon Dr David Kemp,
announced on 11 April 2003 that the Government would set a
10 per cent limit on the volume of ethanol blended with petrol, and require
the mandatory labelling of ethanol blended fuels.(8) Only some
State and Territory Governments have used their own power to require labelling
of ethanol blends sold to motorists.(9) On 7 May 2003, the Fuel Standard (Petrol) Amendment Determination
2003 (No. 1), made by the Minister under section 21 of the Act, was gazetted.(10)
This Determination caps the volume of ethanol that can be blended with
petrol at 10 per cent. It commenced on 1 July 2003.
This Bill, which was introduced on 26
June 2003, addresses the second of the Government’s policy
commitments on fuel ethanol. The Bill itself does not actually introduce
ethanol labelling. Its purpose is to establish an enforceable national
labelling system for fuels so that motorists are made aware of the nature
of the fuel they are purchasing before they buy. The proposed amendments
will allow the Minister to set a fuel quality information standard for
a particular supply of a particular fuel. Specific labelling standards
will be introduced through the gazettal of a (disallowable) determination
after the amendments have been passed. In April 2003 the Government announced
that, in the first instance, these powers are expected to be used to institute
a national labelling requirement for the supply of ethanol-petrol blends
to the end user (that is, at the bowser).(11) However, the
powers could also be used for fuels other than ethanol, if labelling was
found to be in the public interest.
On 20 August
2003 the Senate accepted the recommendation of the Selection
of Bills Committee and referred the provisions of the Bill immediately
to the Senate Environment, Communications, Information Technology and
the Arts Legislation Committee for inquiry. The principal issues that
the Committee is to consider are:
-
the provisions of the Bill particularly in relation to the development
of fuel quality information standards, and
-
the effectiveness of the Bill to deliver an enforceable labelling
regime for fuels that achieves both informed consumer choice in fuel
purchases, and increased likelihood of the key provisions of the Act
being enforceable.(12)
The Committee is to report on 28 October 2003.
This Bill amends the Act to create strict liability offences
for the key offence provisions. Where strict liability applies to an offence,
the prosecution does not need to prove any fault on the part of the defendant,
for example, recklessness, negligence, or in the case of this Bill, that
the defendant had the required knowledge of the applicable fuel standard
as determined by the Minister. Strict liability offences are those which
do not require guilty intent for their commission, but for which there
is a defence if the wrongful action was based on a reasonable mistake
of fact.(13) The Explanatory Memorandum for this Bill
states that ‘Without strict liability …, the prosecution would have to
prove beyond reasonable doubt that the 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 (prove?)
such an awareness on the part of the defendant and that, as with many
other regulatory offences, it is appropriate to create offences of strict
liability’.(14)
In 2002 the Senate Standing Committee on the Scrutiny
of Bills conducted an enquiry into the application of absolute and strict
liability offences in Commonwealth legislation. The Attorney-General’s
Department advised the Committee that it has issued guidelines for the
application of strict liability. The main points were that:
-
Commonwealth offences should generally require proof of fault, but
there are circumstances where strict liability may be appropriate
-
Commonwealth policy in the Criminal Code reflects the common
law position that fault must be proven for each element of an offence,
the only exceptions being where there is express legislative provision
that an offence or element of an offence carries strict liability
-
the appropriateness of strict liability must be considered in relation
to each element of every offence to which it is proposed to be applied
-
strict liability has been applied in the following cases:
- if strict liability is applied:
- the penalty should not include imprisonment
- the maximum penalty should in general be no more than 60 penalty
units ($6,600 for an individual and $33,000 for a body corporate).(15)
The Senate Standing Committee on the Scrutiny of Bills
concluded that the supposed merits of strict liability and the criteria
for its application should be subject to strong safeguards and protections
for those affected. The Committee’s report, dated June 2002, includes
lists of principles to apply to the application and administration of
strict liability so as to provide maximum protection for those affected.(16)
Item 1 of Schedule 1 amends the objects of the
Act to include a specific objective relating to the proposed fuel labelling
provisions. These are enabling provisions for fuel labelling in general,
rather than specific provisions requiring the labelling of ethanol blended
fuels. The amendments in this Bill enable the Minister to make a determination
about specific fuel quality information standards. The Minister’s Determinations
are tabled in both Houses of Parliament and published in the Commonwealth
of Australia
Gazette.
Item 2 inserts a definition of a fuel quality
information standard.
Item 4 amends section 9 of the Act. Section 9
provides that, in general, the Act is not intended to exclude the operation
of State and Territory laws, providing these laws are capable of concurrent
operation with the Act. Currently, an exception is provided where fuel
standards are spelt out in Commonwealth regulations. Item 4 provides
another exception. Where specific fuel quality information standards
are spelt out in regulations, the Act is intended to override State and
Territory laws relating to the same characteristics. The Explanatory
Memorandum gives the following 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’.(17)
The purpose of this requirement is to impose a uniform, national fuel
labelling scheme.
Item 25 inserts provisions that allow the Minister
to determine fuel quality information standards. The information standards
must deal with a specified supply (for example, to the motorist; or by
a wholesaler to a retailer) of a specified kind of fuel. According to
the Explanatory Memorandum, these requirements are designed to
recognise that labelling and information requirements are likely to be
different at different points along the supply chain. The information
standard must specify the information about the fuel that the Minister
is satisfied should be provided in the public interest, and the way in
which that information is to be provided. For example, ‘information’
might include the composition or attributes of the fuel, the uses for
which the fuel is not suitable, likely effects on the operation of an
engine, environmental impacts of the fuel, warnings or cautions around
the fuel.(18) References 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.(19)
Proposed subsection 22A(3) makes it clear that
the Minister’s determination must be consistent with section 99 of the
Constitution. Section 99 says that the Commonwealth ‘shall not, by any
law or regulation of trade, commerce, or revenue, give preference to one
State or any part thereof over another State or part thereof’. The main
issue in determining whether the application of a different labelling
standard to different geographic locations would be consistent with section
99, would likely be whether the variation would provide some sort of tangible
commercial advantage to some individuals or companies connected with the
fuel sector over their counterparts in other regions or States.(20)
Proposed subsection 22A(4) provides that the Minister’s
determination of a fuel quality information standard is disallowable by
either House of Parliament under section 46A of the Acts Interpretation
Act 1901.
In determining a fuel quality information standard the
Minister is required to have regard to the objects of the Act (in section
3), that is reducing the levels of pollutants and emissions that can cause
environmental and health problems, facilitating the adoption of better
engine technology and emission control technology, and enabling the efficient
operation of motor vehicle engines.
Item 26 provides that, in determining a fuel quality
information standard, the Minister must consult with the Fuel Standards
Consultative Committee (FSCC). The FSCC is established by section 24
of the Act. Its membership consists of one representative of each State
and Territory, one or more representatives of the Commonwealth, one or
more people representing fuel producers, one person representing a non-government
body with an interest in the protection of the environment, and one person
representing the interests of consumers. The Minister must have regard
to any recommendations of the FSCC arising out of the consultations.
Item 43 provides that the Minister may not delegate
his or her powers to set fuel quality information standards.
Amendments proposed by this Bill will create a number
of strict liability offences under the Act. A summary of the proposed
changes is as follows:
-
item 10 amends section 12 (supply of fuel)
-
item 19 amends section 19 (supplies of fuel to be accompanied
by documentation)
-
item 22 amends section 20 (alteration of fuel that is covered
by a fuel standard)
-
item 29 amends section 30 (supply of a fuel additive), and
-
item 32 amends section 31 (importation of a fuel additive).
The purpose of these amendments is to make it easier
to enforce key offences under the Act. Where strict liability applies
to an offence, the prosecution does not need to prove any guilty intent
on the part of the defendant, but a defence of ‘reasonable mistake’ is
available to an accused person.
Item 8 reduces the maximum penalty for a strict
liability offence from 1000 penalty units to 500 penalty units (that is,
from $110,000 to $55,000). According to the Explanatory Memorandum,
it is Government policy that strict liability offences should have lower
penalties than would apply if a corresponding offence was not one of strict
liability.(21) Subsection 4B(3) of the Crimes Act 1914
provides that a corporation found guilty of the same offence may be liable
to a penalty up to five times the amount potentially applying to an individual.
Item 8 also provides that the maximum penalty for a corporation
convicted of the same offence is 2500 penalty units ($275,000). The Explanatory
Memorandum comments that this penalty is significantly higher than
that which is usually applied to strict liability offences. According
to the Explanatory Memorandum, this reflects the seriousness of
the offence, the direct costs to the community that can arise from non-compliant
fuel, and the large profits that can potentially be made from fuel adulteration
and tax evasion. The penalty is also designed to serve as a disincentive
in its own right to fuel tampering.(22) This ‘five times’
financial penalty for corporations applies to all the amendments to offences
under this Bill. Similar amendments to the maximum penalties for other
strict liability offences in the Act are made by item 20 (which
amends subsection 20(1)), item 27 (amending section 30), and item
30 (amending section 31).
State and Territory Ministers for Consumer Affairs have
urged the Commonwealth Government to introduce a uniform national labelling
regime for ethanol blended fuels by 31 October 2003.(23) It
seems unlikely that this date can be met, given that the Bill has been
referred to a Senate Committee for inquiry. The Senate Environment, Communications,
Information Technology and the Arts Legislation Committee has been asked
to report by 28 October 2003. The fuel quality information standards
which the proposed amendments give the Minister the power to determine,
are disallowable instruments under section 46A of the Acts Interpretation
Act 1901. Such instruments must be notified in the Commonwealth of
Australia
Gazette and may take effect from either a specified date, or the
date of notification. The Minister’s determination of fuel quality information
standards must also be tabled in each House of Parliament within 15 days
of making the determination.
-
Fuel Quality Standards Act 2000, section 3.
-
ibid., section 9.
-
ibid., section 21.
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ibid., section 22.
-
Advice from the Department of Environment and Heritage, 3 September 2003. The report on the operation
of the Act will be tabled as part of the Department’s annual report
for 2002-2003.
Section 72 of the Act provides for an independent
review of the operation of the Act to be undertaken as soon as possible
after the second anniversary of the commencement of Part 2 of the
Act (that is, two years after 1
January 2002). The Minister is required to table the report
of the independent review in each House of Parliament within 15 sitting
days of its receipt.
-
http://www.aph.gov.au/library/pubs/CIB/2002-03/03Cib12.htm
For the situation with fuel ethanol in the United
States, see the Library of Congress
publication entitled Fuel ethanol: background and public policy issues,
by Brent D. Yacobucci and Jasper
Womach, Congressional Research Service, 2002. Web resource available
at http://dpl/Books/2002/CRS/FuelEthanol.pdf
The United States Congress has recently debated the Energy Policy
Act of 2003, a wide-ranging bill which contains an ‘ethanol amendment’
(Senate Amendment 850). The amendment passed the U.S. Senate on 5 June 2003 with a vote of 67 to
29.
-
‘A fresh start for ethanol’ (Editorial) Sydney Morning Herald, 24 July 2003.
-
Hon Dr David Kemp, ‘Federal Government to set 10 per cent ethanol
limit’, Media Release, K0076, 11 April 2003.
-
At the beginning of May 2003, Victoria
introduced laws requiring service stations to display labels revealing
the ethanol content of fuel (‘Labels warn of ethanol’, by Ian
Haberfield, Sunday Herald Sun, 27 April 2003, p. 24). According
to press reports, New South Wales was preparing its own draft labelling
legislation when the Commonwealth announced that it would legislate
to cap the amount of ethanol in petrol (‘Deadline set for ethanol
content labelling’, by Megan Saunders, Weekend Australian, 2 August
2003, p. 7).
-
Commonwealth of Australia
Gazette, No. GN18, 17 May 2003. The Determination was tabled in both
Houses of Parliament on 13 May 2003.
-
Hon Dr David Kemp, ‘Federal Government to set 10 per cent ethanol
limit’, Media Release, K0076, 11 April 2003.
-
Senate Selection of Bills Committee, ‘Ninth Report of 2003’, Appendix
2 and 3, Senate Hansard, 20 August 2003, p. 13742.
-
Senate Standing Committee for the Scrutiny of Bills, Application
of Absolute and Strict Liability Offences in Commonwealth Legislation,
Sixth Report of 2002, 26
June 2002, p. 258.
-
Explanatory Memorandum, p. 4.
-
Senate Standing Committee for the Scrutiny of Bills, op. cit., p.
259.
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ibid., p. 285-288.
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Explanatory Memorandum, p. 3.
-
ibid., p. 8.
-
ibid., p. 8.
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See Dixon J in Crowe v Commonwealth (1935) 54 CLR 69 at 92.
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Explanatory Memorandum, p. 3.
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Explanatory Memorandum, p. 3.
-
Ministerial Council on Consumer Affairs Meeting Friday
1 August 2003, Communique, at http://www.consumer.gov.au/html/mcca_meeting.htm
(The decision on Ethanol is under Strategy 3 – Education). This decision
was also reported in the press as ‘Deadline set for ethanol content
labelling’, by Megan Saunders, Weekend Australian, 2 August 2003,
p. 7; ‘Ethanol to be labelled’, by Lorna Edwards, Age, 2 August 2003,
p. 9.
Rosemary Bell
9 September 2003
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 2003
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