Fuel Industry (Improving Fuel Resilience) Amendment Act 2023
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Fuel Industry (Improving Fuel Resilience) Amendment Act 2023
Public Act |
2023 No 58 |
|
Date of assent |
30 August 2023 |
|
Commencement |
see section 2 |
Contents
The Parliament of New Zealand enacts as follows:
1 Title
This Act is the Fuel Industry (Improving Fuel Resilience) Amendment Act 2023.
2 Commencement
(1)
This Act comes into force on 1 July 2024.
(2)
However, section 14 to the extent that it inserts subpart 2 of Part 4 (stockholding obligation) comes into force on 1 January 2025.
3 Principal Act
This Act amends the Fuel Industry Act 2020.
4 Section 3 amended (Purpose)
5 New section 3A inserted (Act does not apply to certain reserve fuel)
After section 3, insert:
3A Act does not apply to certain reserve fuel
This Act does not apply to—
(a)
fuel that is imported, for the purpose of holding reserve fuel stock, by the Crown or under an agreement with the Crown; or
(b)
any activities or any person in respect of that fuel.
6 Section 13 amended (Regulations under this subpart)
In section 13(2)(b)(iii), replace “this Act”
with “Parts 1 to 3”
.
7 Section 20 amended (Regulations under this subpart)
In section 20(2)(b), replace “this Act”
with “Parts 1 to 3”
.
8 Section 24 amended (Consumer information requirements may be prescribed)
In section 24(3)(b), replace “this Act”
with “Parts 1 to 3”
.
9 Section 25 amended (Purposes of this subpart)
In section 25(b), replace “this Act”
with “Parts 1 to 3”
.
10 Section 27 amended (Information disclosure requirements may be prescribed)
In section 27(3)(b), replace “this Act”
with “Parts 1 to 3”
.
11 Section 29 repealed (Information sharing between Commission and chief executive)
Repeal section 29.
12 Part 3 heading amended
In the Part 3 heading, after “miscellaneous provisions”
, insert “for purpose of Parts 1 to 3”
.
13 New section 50 inserted (This Part does not apply to Part 4 matters)
After section 49, insert:
50 This Part does not apply to Part 4 matters
This Part does not apply to any matters under Part 4, except as otherwise provided in sections 69(3) and 70.
14 New Parts 4 and 5 inserted
After Part 3, insert:
Part 4 Promotion of resilience of engine fuel supplies in New Zealand
Subpart 1—Preliminary provision
51 Interpretation
In this Part, unless the context otherwise requires,—
compliance period,—
(a)
during the initial period, means a calendar month:
(b)
after the initial period, means the compliance period specified in the regulations
fuel importer means a fuel industry participant that imports fuel into New Zealand
information disclosure requirement means the obligation imposed by subpart 3 and any regulations referred to in section 63
initial period, in respect of an obligation fuel, means the period that starts with the commencement of subpart 2 and that ends on the earlier of the following:
(a)
the date on which regulations provide that the initial period ends in respect of that type of fuel:
(b)
the end of the 5-year period referred to in section 61 (review)
minimum level of cover means the level of engine fuel stock that represents the minimum number of days for which the fuel stock must last in order to meet the daily fuel demand or consumption, where—
(a)
the minimum number of days for the initial period is set in section 57(3); and
(b)
the minimum number of days after the initial period is set in the regulations
obligation fuel has the meaning given in section 54
obliged person has the meaning given in section 53
regulations means regulations made under subpart 6
stockholding obligation or obligation means the obligation imposed by subpart 2 and any regulations made for the purpose of that obligation.
Subpart 2—Stockholding obligation
Application
52 Purpose of this subpart
The purpose of this subpart is to promote the resilience of engine fuel supplies by requiring certain fuel industry participants to hold a certain level of engine fuel stocks in New Zealand to mitigate the risk of fuel supply disruptions.
53 Persons to which obligation applies
(1)
During the initial period, this subpart applies to every fuel industry participant (an obliged person) that, during a compliance period,—
(a)
is a fuel importer of a type of obligation fuel; and
(b)
owns or operates a bulk storage facility for that type of obligation fuel or has the right to draw that type of obligation fuel at a bulk storage facility.
(2)
After the initial period, this subpart applies to every fuel industry participant (an obliged person)—
(a)
that is of a type described in subsection (1); or
(b)
that is of an additional type or types specified in the regulations.
(3)
The Minister may recommend regulations for the purpose of subsection (2)(b) only if the Minister is satisfied that—
(a)
fuel industry participants of that type or those types supply (in the form of production or import) a significant volume of fuels to the New Zealand fuel market (that is, their market share must be significant); and
(b)
the fuel supplied by fuel industry participants of that type constitute a significant proportion of the energy used by the transport sector in New Zealand.
54 Fuel on which obligation is based
This subpart applies to the following types of engine fuel (obligation fuel):
(a)
during the initial period, the types referred to in section 57(2); and
(b)
after the initial period, any type or types that are specified by the regulations to be obligation fuels.
55 Disregarded fuels
The following are disregarded for the purpose of this Part and the regulations:
(a)
fuel held under an agreement with the Crown for the purpose of compliance by the Crown with New Zealand’s obligation, under Article 2 of the International Energy Agreement (within the meaning given in section 2 of the International Energy Agreement Act 1976), to maintain the emergency reserve commitment set out in that Article:
(b)
fuel imported for consumption by the Crown (for example, by the New Zealand Defence Force).
Imposition of stockholding obligation
56 Imposition of obligation
Each obliged person must hold minimum stock, of each type of obligation fuel in respect of which it is an obliged person, at a level that is sufficient to sustain the minimum level of cover required by this Part and the regulations.
57 Initial obligation
(1)
This section sets the stockholding obligation for the initial period.
(2)
The types of obligation fuel to which the initial stockholding obligation applies are—
(a)
diesel (within the meaning of regulation 5(1) of the Engine Fuel Specifications Regulations 2011):
(b)
petrol (within the meaning of regulation 5(1) of the Engine Fuel Specifications Regulations 2011):
(c)
aviation kerosene (being kerosene-type fuel that is used in aviation turbine engines).
(3)
The required number of days of demand or consumption, for the purpose of the minimum level of cover, is—
(a)
21 for diesel:
(b)
28 for petrol:
(c)
24 for aviation kerosene.
(4)
The formula for translating minimum level of cover to the required minimum stockholding volume for each obliged person and each fuel type is—
a = b × c
where—
- a
is the obliged person’s stockholding obligation (that is, the minimum stock of the fuel type (measured in thousands of litres) that the person must hold, on an average basis, during the compliance period to sustain the minimum level of cover required by this Part and the regulations), where average means an average of daily stock level (measured or estimated) over the compliance period
- b
is the required number of days that is referred to in subsection (3) for the fuel type and for the purpose of the minimum level of cover
- c
is the obliged person’s average daily demand or consumption (that is, the obliged person’s average daily drawings from bulk storage facilities in New Zealand at which the obliged person has the right to draw fuel, during the 12-month period that ends 4 months before the compliance period begins, of the fuel type (measured in thousands of litres per day)).
(5)
Engine fuel counts as minimum stock if—
(a)
the stock is—
(i)
in a bulk storage facility in New Zealand; or
(ii)
fuel cargo in a vessel within New Zealand’s exclusive economic zone that is scheduled for delivery to a New Zealand port; and
(b)
the fuel complies with any requirements of the regulations for counting fuel as minimum stock.
58 Regulations relating to stockholding obligation
(1)
The regulations may provide for matters relating to the stockholding obligation, including all or any of the following matters:
(a)
for any period and any fuel,—
(i)
how each obliged person’s stockholding obligation must be calculated for each compliance period:
(ii)
requirements relating to circumstances, characteristics, location, and ownership or drawing rights for counting fuel as minimum stock:
(iii)
when the initial period ends:
(b)
for each period after the initial period,—
(i)
the type or types of engine fuel that are obligation fuels (which may be prescribed by reference to either or all of the circumstances or characteristics of the fuel or other matters):
(ii)
the type or types of fuel industry participant that are obliged persons in respect of obligation fuel (in which case, section 53(3) applies):
(iii)
matters relating to the minimum level of cover required.
(2)
The regulations may provide—
(a)
different obligations for different types of things (for example, different stockholding levels for different fuels at different locations or for different periods); and
(b)
for recalculation of obligations (for example, if a person ceases to be an obliged person, for the recalculation of other persons’ obligations).
(3)
The Minister may recommend regulations for matters referred to in this section only if—
(a)
the Minister has had regard to the resilience of supplies of each type of obligation fuel; and
(b)
the Minister has had regard to the current or recent commercial stockholding levels for that type of fuel; and
(c)
the Minister considers that the stockholding obligation balances the following objectives:
(i)
that there are sufficient engine fuel stocks available in New Zealand to meet demand and to adequately manage the impacts of plausible fuel supply disruption scenarios; and
(ii)
that the economic costs associated with complying with the stockholding obligation are not disproportionate.
59 Exemptions from stockholding obligation
(1)
The Minister may exempt by notice an obliged person, or a class of obliged persons, from all or any of their stockholding obligation.
(2)
The Minister may grant the exemption only if—
(a)
the Minister is satisfied that exceptional circumstances beyond the reasonable control of the obliged person have prevented, or are likely to prevent, the obliged person from complying with the obligation, for example,—
(i)
a natural disaster that has affected fuel storage facilities, or a crisis that has affected international shipping routes; or
(ii)
other exceptional circumstances prescribed in the regulations; and
(b)
the Minister has taken into account—
(i)
the impact of the circumstances on fuel imports and fuel storage capacity; and
(ii)
the duration of the circumstances; and
(iii)
the level of control of the fuel importer over the circumstances; and
(iv)
the time required to achieve compliance with the obligation; and
(v)
the impact on fuel resilience in regions; and
(c)
the Minister is satisfied that—
(i)
there is good reason for granting the exemption that outweighs the interests of the public in having the obligation met; and
(ii)
the extent of the exemption is not broader than is reasonably necessary to address the matters that gave rise to the exemption.
(3)
The regulations may prescribe—
(a)
circumstances in which exemptions may be granted:
(b)
matters related to the process for exemptions:
(c)
the maximum period during which an exemption may continue in force:
(d)
when and how other obliged persons’ stockholding obligations may be recalculated as a result of an exemption.
(4)
The Minister may grant the exemption unconditionally or subject to any conditions that the Minister may prescribe in the notice.
(5)
The Minister’s reasons for granting the exemption (including why the exemption is appropriate) must be published together with the exemption.
(6)
An exemption granted under this section is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | The maker must publish it in accordance with the Legislation (Publication) Regulations 2021 | LA19 s 74(1)(aa) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114 | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
Entitlement agreements
60 Entitlement agreements as mechanism for meeting obligations
(1)
This section applies if an obliged person enters into an agreement with another person that records a transfer of the right to count an amount of fuel stocks for the purpose of complying with a stockholding obligation.
(2)
Only the transferee of the right is treated as the holder of the stock (for the purpose of counting the amount towards compliance with the stockholding obligation after the transfer).
Example 1
A and B are both obliged persons and an agreement records a transfer from A to B of the right to count an amount of fuel stocks for the purpose of complying with a stockholding obligation. Only B holds the amount for the purpose of compliance with the stockholding obligation after the transfer.
Example 2
A fuel importer sells an amount of imported stock to a consignor who will maintain ownership of the stock in a bulk supply facility until it is drawn down by the fuel importer. The agreement records a transfer from the consignor to the fuel importer of the right to be considered the holder of the amount for the purpose of complying with a stockholding obligation. Only the fuel importer is treated as the holder of that amount for that purpose (despite the consignor being the owner of the stock).
(3)
The regulations may set requirements related to entitlement agreements and their use.
Review
61 Review
(1)
The Minister must review the stockholding obligation within 5 years after the commencement of this subpart.
(2)
The review of the stockholding obligation must take into account the following considerations:
(a)
the Government’s emissions budget and emissions reduction plan:
(b)
fuel demand in New Zealand:
(c)
the fuel mix for the transport fleet:
(d)
any relevant data and findings on the resilience of supply chains, such as national and regional fuel stocks data and reports on resilience of international and domestic fuel supply chains:
(e)
domestic fuel production capacity.
Subpart 3—Information disclosure requirements for purpose of this Part
62 Obligation to comply with information disclosure requirements
(1)
Every fuel industry participant to which requirements prescribed by the regulations apply must comply with those requirements.
(2)
Without limiting subsection (1), a fuel industry participant must disclose information to the chief executive in any circumstances prescribed by the regulations.
(3)
The fuel industry participant must disclose the information in any form and manner specified by the chief executive.
Compare: 2020 No 60 s 26
63 Information disclosure requirements may be prescribed
(1)
The regulations may prescribe requirements relating to record keeping, and the retention and disclosure of information, about the resilience of engine fuel supplies in New Zealand, including—
(a)
fuel stocks of industry participants identified in regulations and obliged persons at national, regional, and bulk storage facility levels:
(b)
international supply chains:
(c)
contingency arrangements (such as compliance plans):
(d)
any other information considered necessary for planning and implementing the stockholding obligation.
(2)
In particular, the regulations may prescribe—
(a)
the kinds of fuel industry participants, the engine fuels, and other matters that the regulations apply to:
(b)
the information that must be recorded and retained:
(c)
the methodologies that must be applied in recording the information:
(d)
the circumstances in which information must be disclosed to the chief executive (for example, when requested by the chief executive, at a specified time, or on the occurrence of a specified event):
(e)
requirements for the contents of information disclosed to the chief executive to be independently assessed for accuracy and certified by an auditor who is approved by the chief executive (in the prescribed manner, if any, for that purpose):
(f)
requirements relating to the publication of information that is required to be disclosed to the chief executive.
(3)
The Minister may recommend regulations only if the Minister has had regard to the need for—
(a)
transparency and timeliness of information about fuel industry participants’ fuel stockholding levels at national, regional, and bulk storage facility levels and at specific locations (such as Auckland International Airport):
(b)
information required for assessing the adequacy of fuel stockholding levels in New Zealand for meeting New Zealand demand in a plausible fuel supply disruption scenario.
Compare: 2020 No 60 s 27
64 Publication of analysis or summary
The chief executive may,—
(a)
for the purpose of this Part, analyse and summarise any information disclosed to them under this subpart; and
(b)
publish any resulting analysis or summary.
Compare: 2020 No 60 s 28
Subpart 4—Pecuniary penalties under this Part
65 Pecuniary penalties under this Part
(1)
The High Court may, on the application of the chief executive, order a person to pay to the Crown a civil pecuniary penalty if satisfied that the person—
(a)
has contravened any of the provisions of the following:
(i)
the stockholding obligation:
(ii)
an information disclosure requirement; or
(b)
has attempted to contravene any of those provisions; or
(c)
has aided, abetted, counselled, or procured any other person to contravene any of those provisions; or
(d)
has induced, or attempted to induce, any other person, whether by threats or promises or otherwise, to contravene any of those provisions; or
(e)
has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by any other person of any of those provisions; or
(f)
has conspired with any other person to contravene any of those provisions.
(2)
The amount of any pecuniary penalty must not exceed,—
(a)
in the case of an individual, $100,000 for each act or omission; or
(b)
in any other case, the greater of the following for each act or omission:
(i)
$5 million:
(ii)
either,—
(A)
if it can be readily ascertained and if the court is satisfied that the contravention occurred in the course of producing a commercial gain, 3 times the value of any commercial gain resulting from the contravention; or
(B)
if the commercial gain cannot readily be ascertained, 10% of the turnover of the person and all its interconnected bodies corporate (if any) in each accounting period in which the contravention occurred.
(3)
In determining an appropriate penalty under this subpart, the court must have regard to all matters referred to in section 30(6).
(4)
Sections 30(7) and (8), 31, 34, and 40(c) apply with any necessary modifications.
Subpart 5—Enforceable undertakings
66 Chief executive may accept undertakings
(1)
The chief executive may accept a written undertaking given by, or on behalf of, a person in connection with any matter relating to the enforcement of this Part.
(2)
The person may withdraw or vary the undertaking with the consent of the chief executive.
Compare: 1986 No 5 s 74A
67 Matters included in undertakings
(1)
An undertaking under section 66 may, without limitation, include either or both of the following:
(a)
an undertaking (which may include a compliance plan) to take action to avoid, remedy, or mitigate any actual or likely contravention, or possible contravention, of this Part:
(b)
an undertaking to pay to the chief executive all or part of the chief executive’s costs incurred in investigating, or bringing proceedings in relation to, a contravention, or possible contravention, of this Part.
(2)
If the chief executive accepts an undertaking that involves payment of the chief executive’s costs, the chief executive must make the following information publicly available:
(a)
the amount of the chief executive’s costs that has been undertaken to be paid; and
(b)
a brief description of the circumstances and nature of the contravention or possible contravention of this Part to which the undertaking relates.
(3)
In this section, a contravention means any of the following:
(a)
an actual contravention:
(b)
aiding, abetting, counselling, or procuring a contravention:
(c)
inducing a contravention, whether by threats, promises, or otherwise:
(d)
being in any way, directly or indirectly, knowingly concerned in, or party to, a contravention:
(e)
conspiring with any other person in a contravention.
Compare: 1986 No 5 s 74B
68 Enforcement of undertakings
(1)
If the chief executive considers that a person has breached an undertaking given under section 66, the chief executive may apply to the High Court for an order under subsection (2).
(2)
The court may make any 1 or more of the following orders if it is satisfied that the person has breached a term of the undertaking:
(a)
an order directing the person to comply with the term:
(b)
an order directing the person to pay to the Crown an amount not exceeding the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach.
Compare: 1986 No 5 s 74C
Subpart 6—Regulations and other miscellaneous provisions
69 Regulations under this Part
(1)
The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations—
(a)
providing for anything that this Part says may or must be provided for by regulations:
(b)
providing for anything incidental that is necessary for carrying out, or giving full effect to, this Part.
(2)
The Minister may recommend regulations under this Part only if—
(a)
the Minister has consulted any fuel industry participants that the Minister considers are likely to be significantly affected by the regulations; and
(b)
the Minister is satisfied that the regulations are necessary or desirable after having regard to the purpose of this Part and to the relevant costs and benefits.
(3)
Section 48 applies to any regulations made under this Part.
(4)
Regulations made under this section are secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
Compare: 2002 No 40 s 168(1)(k), (l), (2)
| Legislation Act 2019 requirements for secondary legislation made under this section | ||||
| Publication | PCO must publish it on the legislation website and notify it in the Gazette | LA19 s 69(1)(c) | ||
| Presentation | The Minister must present it to the House of Representatives | LA19 s 114 | ||
| Disallowance | It may be disallowed by the House of Representatives | LA19 ss 115, 116 | ||
| This note is not part of the Act. | ||||
70 Chief executive may approve forms
Section 49 applies with any necessary modifications.
Part 5 General provisions
Information sharing
71 Information sharing between Commission and chief executive
(1)
The Commission and the chief executive, and any other person with functions, powers, or duties under this Act, may use any information provided under this Act, or a copy of any document provided under this Act, for any purpose of this Act.
(2)
The Commission may provide to the chief executive, and the chief executive may provide to the Commission, any information, or a copy of any document, that the Commission or the chief executive (as the case may be)—
(a)
holds in relation to the exercise of powers, or the performance of functions and duties, in respect of this Act; and
(b)
considers may assist the other for any purpose of this Act.
(3)
The Commission or the chief executive must not provide any information or document under this section unless satisfied that appropriate protections are or will be in place to maintain the confidentiality of the information or document (including information that is personal information within the meaning of the Privacy Act 2020).
72 Sharing of information and documents with other entities
(1)
The chief executive may provide to a public service agency or a statutory entity (other than the Commission) any information, or a copy of any document, that the chief executive—
(a)
holds in relation to the performance or exercise of the chief executive’s functions, powers, or duties under this Act or any other legislation; and
(b)
considers may assist the public service agency or statutory entity in the performance or exercise of its functions, powers, or duties under any legislation.
(2)
The chief executive may provide information, or a copy of a document, under this section only if satisfied that—
(a)
doing so will not substantially affect the performance of their functions; and
(b)
appropriate protections are or will be in place to maintain the confidentiality of the information or document provided (in particular, information that is personal information within the meaning of the Privacy Act 2020).
(3)
The chief executive may use any information, or a copy of any document, in the chief executive’s performance or exercise of their functions, powers, or duties under any legislation if the information or copy is provided to the chief executive by a public service agency or a statutory entity (other than the Commission).
(4)
In this section,—
public service agency has the meaning given in section 5 of the Public Service Act 2020
statutory entity means an entity or office named in Schedule 1 of the Crown Entities Act 2004.
Compare: 1986 No 5 s 99AA
73 Effect of information sharing provisions
(1)
Sections 71 and 72 apply despite anything to the contrary in any contract, deed, or document.
(2)
Nothing in section 71 or 72 limits—
(a)
the Privacy Act 2020; or
(b)
section 99AA of the Commerce Act 1986; or
(c)
any provision of this Act or any other legislation that allows the use or disclosure of information (for example, section 17 of the Crown Entities Act 2004).
15 Schedule 1 amended
In Schedule 1,—
(a)
insert the Part set out in the Schedule of this Act as the last Part; and
(b)
make all necessary consequential amendments.
Schedule New Part 3 inserted into Schedule 1
Part 3 Provision relating to Fuel Industry (Improving Fuel Resilience) Amendment Act 2023
6 Transitional provision about compliance with stockholding obligation
(1)
This clause applies to an obliged person that is unable to comply with all or any of the provisions of subpart 2 of Part 4 (stockholding obligation) within the period of 2 years after the commencement of that subpart because of circumstances that are beyond the reasonable control of the obliged person despite their best endeavours.
(2)
The obliged person may submit to the chief executive terms and conditions based on the obliged person’s circumstances (for example, a compliance plan).
(3)
The chief executive may accept those terms and conditions if—
(a)
the chief executive considers that they are likely to lead to compliance within a time that is reasonable in the circumstances; and
(b)
the chief executive has taken into account the matters referred to in section 59(2)(b); and
(c)
the chief executive is satisfied of the matters referred to in section 59(2)(c); and
(d)
the chief executive makes a summary of those terms and conditions, and their reasons for accepting them, publicly available.
(4)
If accepted, the terms and conditions are treated as if they were an enforceable undertaking accepted under section 66.
Legislative history
1 June 2023 |
Introduction (Bill 257–1) |
|
6 June 2023 |
First reading and referral to Economic Development, Science and Innovation Committee |
|
9 August 2023 |
Reported from Economic Development, Science and Innovation Committee (Bill 257–2) |
|
15 August 2023 |
Second reading |
|
22 August 2023 |
Committee of the whole House, third reading |
|
30 August 2023 |
Royal assent |
This Act is administered by the Ministry of Business, Innovation, and Employment.
Versions
Fuel Industry (Improving Fuel Resilience) Amendment Act 2023
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