Petroleum and Other Fuels Reporting Amendment (Minimum Stockholding Obligation) Rules 2022

EXPLANATORY STATEMENT

Issued by the authority of the Minister for Climate Change and Energy

Petroleum and Other Fuels Reporting Act 2017

Petroleum and Other Fuels Reporting Amendment (Minimum Stockholding Obligation) Rules 2022

Purpose and Operation

The Petroleum and Other Fuels Reporting Amendment (Minimum Stockholding Obligation) Rules 2022 (the Rules) amend the Petroleum and Other Fuels Reporting Rules 2017 (the principal POFR Rules) by prescribing various matters for the purposes of the minimum stockholding obligation (MSO) reporting aspects of the Petroleum and Other Fuels Reporting Act 2017 (POFR Act).

In particular, the Rules amend the principal POFR Rules by inserting:

• new definitions of several terms to ensure key terminology is defined consistently across the laws establishing the MSO scheme, including under the Fuel Security Act 2021 (FS Act), the Fuel Security (Minimum Stockholding Obligation) Rules 2022 (MSO Rules) and the principal POFR Rules, wherever appropriate;
• new reporting provisions to require importers and refinery operators (refiners) who are subject to the MSO under the FS Act, and third-party “intermediary market” participants (e.g. liquid fuel storage providers), to report information concerning:
  • their stockholdings of “MSO products” (as defined under the FS Act, and including stocks of feedstock that meet the requirements of section 25 of the FS Act) on a periodic basis;
  • storage information, including capacity, location and public or common pricing data, relating to the storage of MSO products on a periodic basis;
  • any Australian controlling corporation of a regulated importer or refiner;
  • total imports values for each MSO product in the previous calendar year on a yearly basis; and
• new auditing provisions allowing the conduct of audits of reports submitted by refiners, importers and intermediary market participants, where the Secretary holds concerns about the accuracy of information provided in such reports.

Further details of the Rules are set out at Attachment A.

Authority

The Rules are made pursuant to the POFR Act. In particular, section 41 of that Act includes the power for the Minister to make legislative rules. Additionally, the Rules are authorised under section 13B of the POFR Act, which enables rules relating to compliance audits relating to the FS Act to be made.

Regulatory Impact

An addendum to the Regulation Impact Statement (RIS) previously prepared in relation to the Act (reference numbers: 42904 and 20489) has been prepared for the purpose of MSO Rules in accordance with the Australian Government Guide to Regulation, which is available at pmc.gov.au. A copy of the Addendum to the RIS is included at the end of the Explanatory Statement to the MSO Rules. This instrument is consequential to those changes.

Statement of Compatibility with Human Rights

A Statement of Compatibility with Human Rights for the purposes of Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is set out at Attachment B.

Glossary of Terms

A Glossary of Terms is included in Attachment A.

Attachment A

Details of the Petroleum and Other Fuels Reporting Amendment (Minimum Stockholding Obligation) Rules 2022

GLOSSARY

PART 1 – PRELIMINARY

Section 1 – Name

This section specifies the name of this instrument made under the POFR Act as the Petroleum and Other Fuels Reporting Amendment (Minimum Stockholding Obligation) Rules 2022 (the Rules).

Section 2 – Commencement

This section provides that the Rules commenced immediately after the commencement of the MSO Rules. The MSO Rules commenced on the day after they were registered on the Federal Register of Legislation.

Section 3 – Authority

This section sets out the provision of the POFR Act under which these Rules are made. It references section 41 of the POFR Act, which confers power on the Minister to make legislative rules prescribing matters required or permitted to be prescribed, or necessary or convenient to be prescribed for carrying out the POFR Act. The power to make rules under this section includes the power to amend or revoke rules that have already been made, with any doubt about this resolved by subsection 33(3) of the Acts Interpretation Act 1901.

Section 4 – Schedules

This section is a machinery clause that provides that the Schedules to the Rules amend or repeal the instruments referred to therein in the manner set out in the Schedules.

Schedule 1—Amendments

Petroleum and Other Fuels Reporting Rules 2017

Item 1 – Section 4

This item inserts new definitions of key terms relating to the MSO scheme into the definitions provision of the principal POFR Rules. The primary purpose of these amendments is to ensure terms such as “MSO product”, “MSO activity” and “obligation day” are defined consistently across the laws establishing the MSO scheme, including under the FS Act, the MSO Rules and the principal POFR Rules. The import declaration (N10) and import declaration out of warehouse (N30) forms are also defined by the MSO Rules, recognising their importance to liability under the MSO and consistency with the Customs Act 1901. The forms are freely available from: https://www.abf.gov.au/imports/Pages/How-to-import/Import-declarations.aspx .

The MSO Rules are a legislative instrument incorporated from time to time and freely available at: www.legislation.gov.au.

Item 2 – At the end of section 5

This item amends section 5 of the principal POFR Rules. That section prescribes additional categories of covered activities for the purposes of paragraph (g) of the definition of “covered activity” in subsection 5(1) of the POFR Act. The effect of this amendment is to prescribe the activity of storing stocks as a “covered activity” under the POFR Act (noting the activities of refining and importing covered products are already covered activities under the POFR Act). This, in turn, enables reporting obligations under the POFR Act and principal POFR Rules to be extended to require reporting by an entities that store stock for the MSO which are held by an entity subject to the MSO, such as an intermediary market participant.

The POFR Act defines the covered activity of “holding stock” as both keeping a covered product in storage (subject to some exceptions), or holding a contractual right to take possession of a covered product. The addition of an extra “covered activity” of storing stock does not refer to holding a contractual right to take possession of the product, but only physically keeping the product in storage. It also covers storage that may be relevant to the MSO but would be covered by the exceptions in the POFR Act, such as certain pipeline storage.

Item 3 – Paragraph 19C(4)(a)

This item corrects a minor typographical error in paragraph 19C(4)(a) of the principal POFR Rules, by inserting the word “than”.

Item 4 – At the end of Division 3 of Part 2

New Subdivision D—Reports related to MSO products

This item inserts new Subdivision D (Reports related to MSO products) into Division 3 (Reports) of Part 2 (Reports of fuel information) of the principal POFR Rules. The new subdivision comprises new sections 19D-19K, which provide for:

• giving reports to the Secretary concerning:
  • MSO obligation day stockholding data;
  • MSO annual activity data;
  • New MSO entities;
  • Intermediary market participants;
  • Potential intermediary market participants; and
• the reporting timeframes;
• the conduct of audits of any reports which give rise to concerns about the accuracy of information reported under the new subdivision.

Appropriately, the new subdivision follows from:

• Subdivision B (Reports) of the principal POFR Rules, relating to other kinds of matters required to be reported by regulated entities regarding covered activities undertaken in relation to covered products under the principal POFR Rules; and
• Subdivision C (Reports related to Fuel Security Services Payment), which establishes other reporting obligations under the FS Act.

New section 19D  MSO reporting

This item inserts new section 19D into the principal POFR Rules.

Subsection 19D(1) provides that new Subdivision D sets out additional reporting requirements for section 11 of the POFR Act, and auditing arrangements for section 13B of that Act, to support the MSO scheme established under the FS Act.

Subsection 19D(2) provides some flexible options for calculating volumes of MSO stocks, which are required to be reported under new Subdivision D, in megalitres. During consultation on the draft Rules, some stakeholders requested that reported volumes of stocks for the MSO be reported in megalitres, rather than tonnes (i.e. the alternative unit of measurement required to be reported under other provisions of the principal POFR Rules). However, as megalitre volumes can change with temperature, pressure and density, subsection 19D(2) allows for possible alternative calculation and conversion mechanisms. It aims to reduce regulatory burden for industry, while still ensuring accurate and consistent reporting of stock volumes, by providing for conversion of data already used by regulated entities. Specifically, subsection 19D(2) allows reporting entities to choose the most appropriate calculation mechanism to align with their current reporting practices. They can either:

• choose to convert the volumes of fuel stocks to megalitres from other measurements in a way that is consistent with their reporting arrangements for excise or customs duty for those fuel products, or
• use a calculation that is consistent with standard industry practice used by the entity for other commercial or business reporting requirements.

The note to paragraph 19D(2)(b) advises the different information (e.g. standard temperature and pressure) that may be required when converting MSO stock volumes from tonnes into megalitres.

Subsection 19D(3) recognises that if a number of regulated entities within a corporate group are required to report, one entity can submit reports on behalf of the other members of the group. All members must consent to these arrangements and the consent must be communicated to the Secretary.

New section 19E  Reports—MSO obligation day stockholding data

This item also inserts new section 19E into the principal POFR Rules.

Subsection 19E(1) provides that regulated entities that are subject to the MSO under the FS Act (i.e. the importers and refiners operating in Australia that have triggered the obligation under section 10 of the FS Act), must report specified information to the Secretary within 72 hours from the end of each obligation day. Under section 15 of the MSO Rules, the obligation day frequency is fortnightly from 4 July 2023 – 1 July 2024, before changing to weekly from 1 July 2024. The report must be provided by the entity that undertook the covered activity of refining or importing the MSO product (as applicable).

Subsection 19E(2) provides that the 72 hour reporting timeframe excludes any periods that are public holidays in the Australian Capital Territory (ACT). As the MSO is a national obligation, the Australian Capital Territory has been chosen to standardise the reporting timing for each regulated entity; as it is the jurisdiction where scheme will be administered, it will capture the national public holidays including Christmas Day, New Year’s Day and Easter, and it celebrates a number of other public holidays. If the reporting day falls on a public holiday outside the ACT, the report will need to be provided before the 72-hour deadline without any further extensions applying.  

Subsection 19E(3) sets out the specific categories of fuel information that is required to be reported by regulated entities, relating to an entity’s MSO obligation day stockholding. This includes a breakdown of stocks for each MSO product held by a regulated entity in accordance with Division 5 of Part 2 of the FS Act.

For importers, this includes:

If stock is being held towards a regulated entity’s MSO using a legally enforceable arrangement entered into for the purpose of section 23 or section 24 of the FS Act, the names of the entities will also need to be provided, along with the product volume split and relevant period for which the arrangements are to be in force.

Further, any volumes of MSO products being held on behalf of another entity will need to be reported, including the name of each entity that the MSO product/s are being held for, as well as product volumes held and relevant time periods under the legally enforceable arrangements.

For refiners, this includes:

If stock is being held towards a regulated entity’s MSO using arrangements under section 23 or section 24 of the FS Act, the names of these entities will also need to be provided, along with the product volume split and relevant period for which the arrangements are to be in force.

Further, any volumes of MSO products being held on behalf of another entity will need to be reported, including the name of each entity that the MSO product/s are being held for, as well relevant time periods under the legally enforceable arrangements. Any excess crude or unfinished product stock cannot be counted as stock on behalf of another entity, as per subsection 12(2) of the MSO Rules.

This information is required to be reported, along with the total volumes of each MSO product, so that the figure can be compared against the entity’s MSO for each product to determine whether they are compliant or non-compliant under the FS Act.

If any stock is being held by another entity through a legally enforceable arrangement under section 23 or section 24 of the FS Act, the names of the entities who are holding the stock (i.e. the intermediary market participant) must also be reported.

Further, regulated entities must also report if they are holding stock on behalf of another regulated entity under section 23 or section 24 of the FS Act, by providing the names and volumes of each MSO product being held on the other entity’s behalf on the obligation day. This will be used to cross-check the volumes and ensure there is no double-counting of stock.  

Regulated entities must report the volumes for crude oil and unfinished refinery product if feedstocks at a refinery are treated as stocks of an MSO product under section 25 of the FS Act.

Finally, if a regulated entity has become aware of any errors in any previous MSO obligation day stockholding data report, this must be disclosed to the Secretary, and updated figures must be provided.

Subsection 19E(4) clarifies that the classes of information required to be reported under new paragraphs 19E(3)(b) and (e) satisfy the reporting requirements for paragraph 24(d) of the FS Act.  

New section 19F  Reports—MSO annual activity data

This item also inserts new section 19F into the principal POFR Rules.

Subsection 19F(1) provides that regulated entities that are subject to the MSO under the FS Act (i.e. the importers and refiners operating in Australia who have triggered the obligation under section 10 of the FS Act), must report specified information to the Secretary within 21 days after the end of the calendar year. The report must be provided by the entity that undertook the covered activity of refining or importing the MSO product (as applicable).

Subsection 19F(2) sets out the specific categories of fuel information that is required to be reported by regulated entities. This includes:

• The total import and/or production volumes for each MSO product (gasoline, kerosene and diesel) from the previous calendar year. These figures must be reported to the nearest megalitre.

-          This information will be used to check whether the MSO trigger thresholds have been exceeded for each MSO product, and if so, to calculate the entity’s designated quantity for each MSO product in accordance with sections 10 or 15 of the FS Act.  Specific information is necessary if section 5 of the MSO Rules results in another party also making an import of MSO products. This includes:

-          The names and associated volume/s of each entity where an MSO product was also imported by them in the previous calendar year; and

-          The total volume, rounded to the nearest megalitre, which is then proposed to be allocated for other entities, and is therefore disregarded for the purposes of calculating the original entity’s MSO for each MSO product.

• Storage information regarding the total storage capacity for each MSO product, the location of any storage site the entity owns, leases or uses, the breakdown of the storage capacity for each MSO product at each site, whether the site is owned, leased or used, and whether the site operated at any time during the calendar year whereby it would have allowed entities to store MSO products at the site.

-          This data is currently collected by the ACCC and shared with the Department under section 95ZPA of the Competition and Consumer Act 2010, which gives an authorised entrusted person the discretion to disclose information that will assist the Department to exercise its functions under the POFR Act and FS Act. New arrangements to streamline the process provide the Department with the ability to share data collected through these Rules with the ACCC. This aligns with the objectives of the FS Act, as it will give the Department a greater understanding of the overall fuel storage capacity, and therefore fuel security capacity, for Australia.

-          Details regarding any prices that are publicly or commonly offered in relation to storage must also be reported, to enable oversight by the Department of costs in the intermediary market, including the Secretary’s functions relating to monitoring such prices under the MSO Rules.

• Further details of any legally enforceable arrangements entered into by regulated entities regarding storage of stocks by another entity, including the identities of the contracting parties (including any intermediary market participant who stores the stock on behalf of the importer or refiner that is subject to the MSO), volumes of MSO products being stored, and time periods for the arrangements.

-          This will give the Secretary an understanding of how the intermediary fuel market is operating, to complement the snapshot of data (i.e. names of other entities holding stock on behalf of a regulated entity and volumes of such stock) provided under new paragraphs 19E(3)(c) and 19E(3)(d) of the principal POFR Rules.

• Any changes to the Australian controlling corporation (defined under section 8 of the FS Act), including name and contact details for the new entity.

-          If this information has not already been shared with the Department at the time of the change, this provides an opportunity for the entity to update these details. As the Australian controlling corporation is also liable for any failure to comply with the MSO, this provides the necessary information for the Department to get in touch with them if required.

Paragraph 19F(2)(a) specifies that, for annual reports submitted by importers, the total import values should be based on the N10 forms and the N30 forms provided to the Australian Border Force (ABF). This can then be cross-checked against the data that ABF shares with the Department under section 31 of the POFR Act.

It is intended that the values reported by a refiner under paragraph 19F(2)(b) will be able to be calculated by adding the monthly production data for the previous year that will have already been reported under Subdivision B of Division 3 of Part 2 of the principal POFR Rules (with the expectation that this data reporting field will be automatically populated in the Department’s online reporting system).

Subsection 19F(3) specifies that the new annual reporting requirements apply in relation to the 2023 calendar year and subsequent calendar years, so that they do not start until 2024, i.e. after the MSO scheme has begun to operate.

New section 19G  Reports—New MSO entities

This item also inserts new section 19G into the principal POFR Rules.

Subsection 19G(1) provides that importers and refiners operating in Australia who have imported or refined more than the threshold value of an MSO product during a calendar year (ordinarily, 200 megalitres of gasoline, 250 megalitres of diesel and/or 250 megalitres of kerosene, per section 17 of the MSO Rules), must report specified information to the Secretary within 21 days after the end of the calendar year. This subsection specifically applies to entities that were not subject to the MSO during the financial year, but have refined or imported the quantities of MSO product that will trigger the MSO under section 10 of the FS Act during the previous calendar year. The report must be provided by the entity that undertook the covered activity of refining or importing the MSO product (as applicable).

Subsection 19G(2) sets out the specific categories of fuel information that is required to be reported in the above circumstances. This includes:

• The total import and/or production volumes for each MSO product (gasoline, kerosene and diesel) from the previous calendar year. These figures must be reported to the nearest megalitre.

-          This information will be used to check whether the MSO trigger thresholds have been exceeded for each MSO product and, if so, it will be used to calculate the entity’s designated quantity for each MSO product in accordance with section 10 of the FS Act.

• Storage information regarding the total storage capacity for each MSO product as well as the breakdown of the storage capacity at each location. 

-          By collecting this information the Department will gain a greater understanding of the overall fuel storage capacity, and therefore fuel security capacity, for Australia.

Paragraph 19G(2)(a) specifies that the total import values should be based on the N10 forms and the N30 forms provided to the ABF. This can then be cross-checked against the data that ABF shares with the Department, as permitted by section 31 of the POFR Act.

Subsection 19G(3) specifies that the new reporting requirements apply in relation to the 2023 calendar year and subsequent calendar years, so that they don’t start until 2024 i.e. after the MSO scheme has begun to operate.

New section 19H  Reports—Intermediary market participants

This item also inserts new section 19H into the principal POFR Rules.

Under subsection 19H(1) the owner of stocks of MSO products that have been stored, in the previous 6-month period (i.e. 1 July – 31 December or 1 January – 30 June), by an entity that is not subject to the MSO for those products for another entity that is subject to the MSO – and such storage is pursuant to a legally enforceable arrangement under section 23 and/or section 24 of the FS Act – must report specified information to the Secretary within 21 days from the end of the relevant 6-month period.

Subsection 19H(2) sets out the specific categories of fuel information that is required to be reported in the above circumstances. This includes:

• Storage information regarding the total storage capacity for each MSO product, the location of any storage site the entity undertaking the covered activity of storing stocks owns, leases or uses, the breakdown of the storage capacity for each MSO product at each site, whether the site is owned, leased or used, and whether the site operated at any time during the calendar year whereby it would have allowed entities to store MSO products at the site.

-          This data is currently collected by the ACCC and shared with the Department under section 95ZPA of the Competition and Consumer Act 2010, which gives an authorised entrusted person the discretion to disclose information that will assist the Department to exercise its functions under the POFR Act and FS Act. New arrangements to streamline the process provide the Department with the ability to share data collected through these Rules with the ACCC. This aligns with the objectives of the FS Act, as it will give the Department a greater understanding of the overall fuel storage capacity, and therefore fuel security capacity, for Australia.

-          Details regarding any prices that are publicly or commonly offered in relation to storage must also be reported, to enable oversight by the Department of costs in the intermediary market, including the Secretary’s functions relating to monitoring such prices under the MSO Rules.

• Details regarding any legally enforceable arrangements that were in place over the previous 6-month period including the identities of the contracting parties (including any intermediary market participant who stored the stock on behalf of the importer or refiner that is subject to the MSO), the volumes of each MSO product stored, and the time periods of the arrangements.

-          This data will be used to cross-check the information that importers and refiners provide under new sections 19E and 19F of the principal POFR Rules.

Subsection 19H(3) specifies that the 6-month periods that will require reports start from 1 July 2023 to 31 December 2023 (so that the first such reports will need to be submitted to the Secretary by no later than 21 January 2024). Each subsequent 6-month period from 1 January to 30 June and from 1 July to 31 December will require a report if the conditions referred to above have been met. 

New section 19J  Reports—Potential intermediary market participants

This item also inserts new section 19J into the principal POFR Rules.

Subsection 19J(1) provides that entities are subject to reporting obligations under this section if they undertake the covered activity of holding stocks at any time from 1 July 2023 to 30 June 2024, and are capable of storing stock of MSO products on behalf of another entity. Unlike section 19H, this section specifies that the reporting requirement will only be triggered once, where an entity is not subject to the MSO under the FS Act, and has not stored MSO products on behalf of another entity that is subject to the MSO under the FS Act. If the entity is captured by these conditions, they must report specified information to the Secretary by 21 July 2024 (21 days after the end of the financial year). The report must be provided by the entity that undertook the covered activity of holding stocks of covered products that are MSO products.

Subsection 19J(2) sets out the specific categories of fuel information that is required to be reported in the above circumstances. This includes:

• Storage information regarding the total storage capacity for each MSO product on 30 June 2024, the location of any storage site the entity owns, leases or uses, the breakdown of the storage capacity for each MSO product at each site, whether the site is owned, leased or used, and whether the site operated at any time during the financial year ending 30 June 2024whereby it would have allowed entities to store MSO products at the site.

-          This data is currently collected by the ACCC and shared with the Department under section 95ZPA of the Competition and Consumer Act 2010, which gives an authorised entrusted person the discretion to disclose information that will assist the Department to exercise its functions under the POFR Act and FS Act. New arrangements to streamline the process provide the Department with the ability to share data collected through these Rules with the ACCC.

-          This aligns with the objectives of the FS Act, as it will give the Department a greater understanding of the overall fuel storage capacity, and therefore fuel security capacity, for Australia.

• A brief description of why the site/s have not stored stock for MSO entities under legally enforceable arrangements allowed under section 23 or 24 of the FS Act is also required, which will provide a more holistic view of the storage availability in the fuel market. It is expected that some storage sites may never be able to participate in the intermediary market due to other influencing factors, even if they are technically capable of storing MSO products on behalf of another entity.

New section 19K  Audit of MSO reports if concern about reports

This item also inserts new section 19K into the principal POFR Rules.

Section 19K makes provision for the preparation of audit reports, for the purpose of subsection 13B(1) of the POFR Act, in relation to the auditing of compliance with section 11 of the POFR Act so far as that section relates to the giving of reports that relate to MSO activities undertaken in relation to MSO products by regulated entities.

Section 19K empowers the Secretary to require audits of particular reports made under sections 19E (MSO obligation day stockholding data), 19F (MSO annual activity data) or 19H (Intermediary market participants) of the principal POFR Rules, where the Secretary holds concerns about the accuracy of information provided in any such report. In these circumstances, the Secretary may require the person who submitted the report to obtain an audit report in relation to either the report which is being questioned for accuracy, or the next report that will be submitted under the same section (19E, 19F or 19H). This request must be made in writing.

Subsection 19K(2) provides that the audit report must be prepared by a registered greenhouse and energy auditor in accordance with the requirements for reasonable assurance engagements under the NGER (Audit) Determination.

Subsection 19K(3) provides that the audit report must report whether reported MSO information complied with the requirements of Subdivision D and was fairly presented. This would include (if appropriate in the circumstances) a reasonable assurance conclusion that there is no misstatement in the matter being audited that is material or pervasive enough to affect the matter being audited as a whole. The use of registered national greenhouse and energy auditors recognises the significant skills this category of auditors have with energy auditing relevant to the MSO. These auditors already apply the NGER (Audit) Determination standard for greenhouse and energy audits, safeguard audits and audits under the Emissions Reduction Fund. Whether the information was “fairly presented” would take into account the understanding of that term in auditing, including that matters of substance are reflected in the presentation of the information.

Subsection 19K(4) of the principal POFR Rules requires that the report be provided to the Secretary within specified timeframes; namely:

• if the Secretary has required an audit of a report that has already been provided under section 19E, 19F or 19H – no later than 90 days after being notified an audit is required
• if the Secretary has required an audit of a report that has not yet been provided under section 19E, 19F or 19H – no later than 60 days after the day the report was due to be provided, although an alternative timeframe may be negotiated between the person and the Secretary.

More time is given to prepare audits of past reports as it is understood that searching for and locating older documentation and files may be more time consuming than providing current information.

These audit reporting provisions complement, and are supported by, the duties applying under sections 13C and 13D of the POFR Act for persons to provide reasonable facilities and assistance for audits and to comply with requirements in relation to reports of audits.

Under subsection 19K(5), the Secretary is limited to requiring such an audit once per financial year, unless a significant discrepancy is identified in the fuel information reported which would justify further audits to be undertaken.

As the MSO scheme develops over time, the need for audits can be reassessed to ensure they are proportionate and do not impose unnecessary costs or regulatory burden. As these audits are a compliance activity, there is no merits review of the decision to request such reports.

The NGER (Audit) Determination is already defined by the POFR Rules and incorporated as in force from time to time. It is available from www.legislation.gov.au.

Attachment B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Petroleum and Other Fuels Reporting Amendment (Minimum Stockholding Obligation) Rules 2022.

These Rules are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The Petroleum and Other Fuels Reporting Amendment (Minimum Stockholding Obligation) Rules 2022 (the Rules) amends the Petroleum and Other Fuels Reporting Rules 2017 (the principal POFR Rules) by prescribing various matters for the purposes of the minimum stockholding obligation (MSO) reporting aspects of the Petroleum and Other Fuels Reporting Act 2017 (POFR Act).

In particular, the Rules amend the principal POFR Rules by inserting:

• new definitions of several terms to ensure key terminology is defined consistently across the laws establishing the MSO scheme, including under the Fuel Security Act 2021 (FS Act), the Fuel Security (Minimum Stockholding Obligation) Rules 2022 (MSO Rules) and the principal POFR Rules, wherever appropriate;
• new reporting provisions to require importers and refinery operators (refiners) who are subject to the MSO under the FS Act, and third-party “intermediary market” participants (e.g. liquid fuel storage providers), to report information concerning:
  • their stockholdings of “MSO products” (as defined under the FS Act, and including stocks of feedstock that meet the requirements of section 25 of the FS Act) on a periodic basis;
  • storage information, including capacity, location and public or common pricing data, relating to the storage of MSO products on a periodic basis;
  • any Australian controlling corporation of a regulated importer or refiner;
  • total imports values for each MSO product in the previous calendar year on a yearly basis; and
• new auditing provisions allowing the conduct of audits of reports submitted by refiners, importers and intermediary market participants, where the Secretary holds concerns about the accuracy of information provided in such reports.

Human rights implications

These Rules engage, or may engage, the following rights:

The Rules will regulate entities rather than individuals

As noted at paragraph 1.11 of the Parliamentary Joint Committee on Human Rights – Guide to Human Rights, published in June 2015, which is a freely available document that outlines the key human rights that form part of the Parliamentary Joint Committee on Human Rights’ mandate (available at https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Human_ Rights/Guidance_Notes_and_Resources):

“Under the UN human rights treaties, human rights belong to individuals and groups of individuals. The treaties do not confer rights on companies or other incorporated bodies.”

This is relevant, as the amendments to the principal POFR Rules made by these Rules will regulate corporate entities rather than individuals. For example, these Rules will establish new reporting obligations under the principal POFR Rules, with which the regulated entity captured by the MSO scheme, and fuel storage providers will be obliged to comply. Such entities are body corporate refinery operators, fuel importers or storage operators. Therefore the new reporting obligations are not imposed on individuals.

Likewise, the new requirements allowing the Secretary to request audit reports if they are concerned about the accuracy of information provided apply to the “person” who has submitted the reports that are the subject of the audits. Therefore, the Rules apply the term “person” to denote a refinery or import operator (see also the definition of “person” under sections 2B and 2C of the Acts Interpretation Act 1901).

Given the above, it is unlikely any provisions of the Rules will regulate or limit the human rights of individuals.

Right to privacy – Article 17 ICCPR

While noting that the Rules will regulate the conduct of entities that are not individuals, out of an abundance of caution, consideration has been given to the possibility that the Rules engages the right to privacy of individuals.

New subsections 19E – 19J of the principal POFR Rules, to be inserted under item 2 of Schedule 1 to the Rules, set out the specific categories of fuel information that are required to be reported, including:

The relevant fuel information is required to be reported to determine whether the MSO is achieving the desired fuel security outcomes. No personal information will be required to be reported under the new provisions. In any case, if personal information was inadvertently collected in reports submitted under the provisions, it would be “protected information” in accordance with the definition of that term in section 5 of the POFR Act and would therefore be protected from inappropriate handling, use or disclosure under Part 4 (Secrecy and Disclosure) of the POFR Act. The Privacy Act 1988 would also apply. Therefore, it is highly unlikely the Rules engage or limit the right to privacy.

Right to freedom of expression – Article 19 ICCPR

New section 19K of the principal POFR Rules, to be inserted under item 2 of Schedule 1 to the Rules, may engage the right to freedom of expression in Article 19 of the ICCPR.

Under those new provisions, the Secretary could require an independent registered greenhouse and energy auditor to undertake audits of entities’ compliance with reporting obligations under section 19E, 19F or 19H of the Rules.

 Further, 19K will expressly prescribe:

This therefore engages the right to freedom of expression by regulating the format or manner of the form of such audit reports.

However, the limitations on freedom of expression that may be imposed by these measures are reasonable and proportionate, as they will ensure that audits are conducted consistently with international standards and are of sufficient quality and vigour to provide a meaningful assessment of the accuracy of data reported by entities. The veracity and accuracy of such data will be crucial to the integrity of the MSO scheme.

Article 19(3) of the ICCPR permits restrictions on the freedom of expression as provided by law and necessary to protect the rights of others and national security or public order, and this would extend to the restrictions on expression outlined above.

Given the above, the restrictions are considered compatible with Article 19 of the ICCPR because they will promote the integrity of the MSO scheme by enabling the Department to assess their compliance with the MSO fuel reporting obligations under new Subdivision C of Division 3 of Part 2 of the principal POFR Rules.

Right not to incriminate oneself – Article 14(3)(g) ICCPR

While noting the matters referred to above regarding the fact the Rules will primarily regulate entities that are not individuals, for completeness consideration has been given to whether the obligations established under the Rules to report certain matters potentially engage the right not to incriminate oneself.

It is noted that any obligation to “report” specified matters under new sections 19D – 19J of the principal POFR Rules is intended to only relate to information relevant to the MSO scheme and it is not the policy intention that the provision would abrogate ordinary common law privileges, such as the privileges against self-incrimination, self-exposure to a civil penalty and legal professional privilege. Accordingly, the Rules do not limit the right of individuals not to incriminate oneself.

Conclusion

This instrument is compatible with human rights because, while there are very few provisions of the Rules that regulate or engage the human rights of individuals, to the extent that they may limit human rights, those limitations are reasonable, necessary and proportionate.

The Hon Chris Bowen MP

Minister for Climate Change and Energy