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.
-
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.
-
ibid., p. 285-288.
-
Explanatory Memorandum, p. 3.
-
ibid., p. 8.
-
ibid., p. 8.
-
See Dixon J in Crowe v Commonwealth (1935) 54 CLR 69 at 92.
-
Explanatory Memorandum, p. 3.
-
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
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