Regulation and compliance
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Fuel Security Framework
Under the Fuel Security Framework, the Department of Climate Change, Energy, the Environment and Water administers a number of pieces of fuel security legislation and carries out related regulatory activities under one cohesive structure.
The framework allows the department to deliver vital fuel security measures effectively and efficiently, with a relative and appropriate amount of regulatory burden on industry. Bringing together the administration of related legislation allows the department to focus on open, transparent communication with regulated entities and other stakeholders.
The department regulates fuel security and fuel quality in four pieces of legislation under the framework:
- The Fuel Security Act 2021 – gives a legislative framework for administering the Fuel Security Services Payment and Minimum Stockholding Obligation.
- The Petroleum and Other Fuels Reporting Act 2017 – ensures reliable monitoring of the transport fuel market through reporting of selected petroleum and other fuel data to government (for more information see mandatory reporting of petroleum statistics).
- The Fuel Quality Standards Act 2000 – ensures the supply of quality liquid fuels and, where appropriate, information about the fuel (for more information see regulating Australian fuel quality).
- The Liquid Fuel Emergency Act 1984 – provides authority for government action to prepare for and manage liquid fuel resources during a national liquid fuel emergency (for more information see modernising Australia’s fuel legislation and the LFE Act 1984.
Given the different regulatory requirements, the department’s compliance actions will likely be different across these pieces of legislation. However, the overarching approach to regulation and compliance under the framework is outlined in the Regulatory Posture Statement (below). The Compliance and Enforcement Policy and Compliance and Enforcement Matrix show how the department will implement this approach.
Regulatory Posture Statement
The department will oversee administration of new and existing liquid fuel security regulatory functions under the framework. These include the Fuel Security Services Payment, the Minimum Stockholding Obligation and fuel quality standards.
While developing these new functions, the department will engage with the regulated community to ensure the regulatory settings are meeting the policy objectives of the government and are fit for purpose. The department will ensure there is ongoing clear and consistent communication of its approach to regulation, providing transparency of our processes, expectations, and compliance responses.
Due to minimum stockholding and reporting obligations as a result of the Fuel Security Act 2021, the department will work with entities, particularly in the initial 12 months, to assist them to comply with the framework. This approach supports the department’s aim of achieving voluntary compliance from regulated entities and recognises that non-compliance during the early stages of implementation may be inadvertent.
Under the framework, the department will take a risk-based approach to compliance, escalating or decreasing intervention in response to the behaviour of regulated entities. The Compliance and Enforcement Matrix provides an overview of the tools and interventions available to the department to scale its response to varying levels of non-compliance.
The department’s approach to regulation under the framework is based on the following principles:
- Minimise regulatory costs: Develop efficient processes and clear guidance that help keep regulatory costs to the minimum needed for industry to achieve compliance.
- Effective engagement: Actively engage with regulated entities using clear and effective communication, working with them to help them understand their rights, meet their obligations and minimise instances of inadvertent non-compliance.
- Risk-based approach: Enable proportionate enforcement, with clear accountability and transparency in actions and consistency in decision making.
- Data-driven assessments: Use data and analysis, including verification through data sharing arrangements to assess compliance and inform our regulatory response and risk differentiation.
- Continuous improvement: Continuously improve regulatory performance, capability and culture to ensure processes remain appropriate as the regulatory setting matures. This includes acting on analysis of, and stakeholder feedback on, the effectiveness of the regulation.
The department will monitor and assess compliance under the framework through online systems, and will report on compliance in line with our legislative requirements. As our compliance functions mature, the department will continue to consult with industry to ensure our systems remain fit for purpose.
Compliance and Enforcement Policy
The Compliance and Enforcement Policy provides the regulated community with guidance on the department’s overarching approach to compliance and enforcement in administering the following fuel legislation, including associated subordinate legislation (such as rules) and policies:
- Fuel Security Act 2021 (FS Act)
- Petroleum and Other Fuels Reporting Act 2017 (POFR Act)
- Fuel Quality Standards Act 2000 (FQS Act)
- Liquid Fuel Emergency Act 1984 (LFE Act).
As these pieces of legislation vary in scope, objectives and maturity, this policy is intended to provide high-level guidance only. It does not reduce, extend, or modify obligations or powers contained in legislation. The policy also assists but does not control the department’s compliance-related decisions. Each decision will consider all matters relevant to the circumstances.
This policy complements the department’s Compliance Policy. It provides more tailored, targeted information for members of the regulated community who are subject to fuel security and fuel quality legislation. It will be reviewed and updated as needed to make sure it accurately reflects our approach to compliance and enforcement.
If there is any inconsistency between this policy and the legislation under which a statutory function, power or discretion is exercised, the legislation will prevail.
Regulatory context
Australia’s fuel security is essential for our national security and supports our economy. The Australian Government is committed to ensuring Australia has access to the fuel needed to keep the country moving, while managing the transition to net zero emissions.
To deliver on the government’s goal, the department has responsibility for fuel security and quality activities. We are increasing domestic fuel storage and maintaining domestic refining capability. We are improving fuel quality, and protecting consumers and our economy from supply disruptions. The department is working to make sure Australia’s fuel security meets our needs during an emergency and general supply requirements into the future. We are also exploring market diversification to manage the energy transition.
The department administers the following fuel legislation to meet each Act’s objectives, listed in Table 1.
Table 1 - Objectives of fuel security and fuel quality legislation
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Legislation |
Objectives |
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FS Act |
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POFR Act |
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FQS Act |
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LFE Act |
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Approach to compliance
To achieve the objectives in Table 1, and ensure our compliance approach aligns with the principles from the Regulatory Posture Statement, our responsibilities are:
- supporting the regulated community to understand their rights and obligations under fuel legislation
- periodically reviewing our approach to compliance, and ensuring regulatory settings are appropriate
- providing clear, consistent communication to the regulated community on our approach to regulation
- monitoring and verifying compliance
- taking proportionate, risk-based and intelligence-led action against suspected non-compliance
- collecting, analysing and publishing (where allowed) information and data on petroleum statistics. We may also collect, analyse and publish other results such as those reported under the FQS Act
- continuously building capacity to strengthen compliance.
The department views compliance as a shared responsibility with the regulated community. We expect members of the regulated community to:
- be aware of, and comply with, requirements under relevant legislation, policies, and guidance
- ensure proper procedures and processes are in place to achieve compliance
- ensure all information submitted to the department is correct and true
- seek independent legal and other advice as necessary to help them understand or comply with obligations
- self-report any compliance issues they become aware of. Entities should also cooperate with the department to resolve them.
Compliance and Enforcement Matrix
The department will take intelligence-led, risk-based action against suspected non-compliance in line with legislation, and consistent with our regulatory posture statement. The diagram below outlines how the department will:
- use available tools to gather intelligence on compliance. This will inform how we scale our responses to instances of non-compliance. See ‘Compliance tools’ below for more detail.
- scale actions in response to the behaviour of regulated entities and the risks to fuel security. See ‘Response to non-compliance’ for more information.
See the text alternative for the Compliance and Enforcement Matrix
Managing compliance
To ensure we are achieving the objectives of the fuel legislation in Table 1, we must have the appropriate systems and tools in place to:
- track compliance
- verify compliance
- detect non-compliance
- deter non-compliant behaviour
- assess improvements or breakdowns in compliance
- assess current and emerging risks of non-compliance.
We will develop compliance and enforcement priorities to respond to fuel security and quality risks in Australia. We will develop these priorities through intelligence, risk assessments and engagement with stakeholders. Our compliance priorities will be reviewed annually and published on our website.
Compliance tools
Monitoring and inspections
We will use data collected and information from a range of sources to monitor compliance with the relevant fuel legislation to inform any compliance actions. This will include data entities provide through applications, reports, and submissions. It may also include information from third parties such as other agencies and open data from other intelligence sources. We will also undertake regular market monitoring to inform our compliance approach.
The department can respond to various circumstances using different levels of monitoring:
- Routine monitoring – used to help entities achieve compliance and to see if entities are compliant. Specific activities may include:
- checking reports or submissions to ensure entities are complying with their obligations
- collecting and analysing data to:
- identify trends in behaviour
- confirm the accuracy of reports (including through using third party data)
- detect possible non-compliance.
- Responsive monitoring – triggered by certain events (such as receiving an allegation of non-compliance). Specific activities may include:
- requesting information and documents
- site inspections (including to collect a fuel sample)
- carrying out audits.
- Proactive monitoring – to gather intelligence on non-compliance risks in the fuel market. Specific activities may include:
- analysing fuel markets and industry developments to improve our understanding of market practices and changes
- voluntary engagement of the regulated community
- using the results of past compliance and monitoring activities to produce intelligence to help in future approaches.
Inspections are a more active form of monitoring. While monitoring is generally a desktop-activity undertaken remotely, an inspection sees an accredited inspector conduct a site visit to gather data and information to inform compliance processes. For example, under the Fuel Quality Monitoring Program, inspectors visit retail sites to collect fuel samples for testing to help monitor fuel quality.
Audits
Audits allow the department to assess compliance with relevant fuel legislation. Examples of the types of audits the Secretary may need include, but are not limited to:
- Under the MSO:
- Compliance audits if the Secretary has reasonable grounds to suspect an entity has, or will, breach their obligations under the MSO.
- The Secretary has the power to appoint an auditor to carry out an audit of an entity’s compliance with the Act or the rules.
- Under the FSSP:
- Participating entities were required to submit an audit report for the 2021–22 financial year.
- The Secretary may also request an audit report be prepared where there are concerns about the accuracy of an entity’s FSSP report.
A registered greenhouse and energy auditor must carry out these audits. The specific requirements for these audits are set out in the FS Act, POFR Act and associated rules, and the National Greenhouse and Energy Reporting Act 2007 and associated determinations.
Investigations
If an investigation is necessary, compliance officers will conduct a thorough investigation. An investigation would include the views of relevant internal and external subject matter experts. The officers would also prepare a report for the appropriate delegate to consider and authorise. The report will include (but is not limited to):
- circumstances – provide context for the alleged non-compliance
- impacts – provide the impact the alleged non-compliance has on meeting the legislative objectives
- data and analysis – provide evidence to inform transparent and defensible conclusions that support consistency in decision making
- compliance response – recommend response actions to address the non-compliance that are lawful, appropriate, proportionate and fair
Response to non-compliance
The Compliance and Enforcement Matrix provides an overview of how the department will interact with entities under the framework. It shows how our response to non-compliance will be informed by intelligence to ensure it is appropriate and proportionate. The department will also consider:
- the compliance tools available
- the risk of harm
- the consequences of the non-compliance
- the intent/motivation of the regulated entity
- the regulated entity’s compliance history
- frequency of the non-compliance
- the characteristics of the regulated entity
- whether the response will discourage future instances of non-compliance.
The department will ensure compliance activities are undertaken in a manner that demonstrates accountability, timeliness, and proportionality. We will make evidence-based decisions and be firm but fair, considering the appropriate action within the context of the risks to Australia’s fuel security. The department will take the least burdensome approach to change non-compliant behaviour. This approach seeks to foster a culture of voluntary compliance under the framework.
It is important to note that the Compliance and Enforcement Matrix is an example only. To ensure a response is appropriate, all factors will be considered on a case-by-case basis. The department may decide to use the strongest enforcement option available under legislation in response to non-compliance because it led to severe harm to human health and/or the environment, even if the entity was ‘inadvertently’ non-compliant.
Governance
Information disclosure
If allowed by the legislation, we may publish details of non-compliance or enforcement if it helps achieve our regulatory outcomes. We will also publish details of non-compliance or enforcement activities where this is required by law.
Our regulatory performance will be captured in the broader department’s reporting processes as required under the Public Governance, Performance and Accountability Act 2013 and the Public Governance, Performance and Accountability Rule 2014.
The department must report annually on the operation of certain legislation it administers, which may include our compliance activities. Where compliance activities are reported, we will generally include de-identified statistical information only. However, we may also include compliance and enforcement information on a specific regulated entity, where permitted or required by the relevant legislation.
The department’s Liquid Fuels Branch will conduct evaluations to assess the design, implementation and/or results of activities under the framework. Our compliance and enforcement approach will help inform this evaluation process. It will also identify if activities are delivering intended outcomes. Further information on evaluations can be viewed in our Evaluation Framework.
Review of decisions
Members of the regulated community can seek a review of certain decisions made under the FQS Act, FS Act, and LFE Act. The relevant piece of legislation will outline information such as:
- specific decisions that are reviewable
- who is responsible for reviewing a decision. For example, a review by a delegate in the department, and/or by the Administrative Appeals Tribunal
- the timeframe for applying for a review.
Regulated entities who do not agree with an administrative decision under fuel legislation may also seek judicial review of the decision under the Administrative Decisions (Judicial Review) Act 1977.
If you have any questions about reviewable decisions under fuel legislation we administer, please email us
Freedom of information
The Freedom of Information Act 1982 (FOI Act) provides the legal right to ask for access to information that the department holds.
Before you make an FOI request, email us to ask for the information you want so we can see if we can give you this information directly. This process is often faster than making a formal FOI request. If you are not satisfied with our response you may use the department’s online form to make an FOI request.
The department considers each FOI request on a case-by-case basis. We determine whether to release or refuse information requests in accordance with the FOI Act.
Please go to the department’s FOI information page for more information.
Reporting non-compliance
If you see something that you suspect, or know, does not comply with the legislation under the framework, please email us. The information you provide will be handled in a confidential manner.
Further information
If you have any questions about this policy, please email us
Read more
- See the full version of the Compliance and Enforcement Policy
- Australia’s Fuel Security
- Regulating Fuel Quality
