Fuel quality laws in Australia are primarily governed by the Fuel Quality Standards Act (2000) and its supporting regulations. These laws aim to protect the environment, public health, and consumer interests by regulating the quality of fuels sold in the country. Compliance with these standards is critical for fuel retailers to avoid significant penalties, including substantial fines and reputational damage.
In early 2020, the National Measurement Institute (NMI) assumed responsibility for administering compliance with the Fuel Quality Standards Act 2000. This role includes conducting sampling and testing to ensure the integrity of liquid fuel composition across Australia.
While the NMI’s fuel quality enforcement activities were curtailed during the COVID19 lockdowns of 2020 and 2021, the organisation has since increased its focus on testing the quality of fuel being sold to consumers. During this period, ACAPMA has been working with both the NMI and the Federal Department of Climate Change, Energy Efficiency, and Water (DCCEEW) to support this activity, as explored by ACAPMAg in June 2023 here.
Late last month, the NMI Release it’s Report on 2023-24 Compliance Activity and highlights (See Compliance with measurement regulation in 2023–24 | Department of Industry Science and Resources). The report states that 24 retail sites were found to be non-compliant with national fuel quality laws.
“Selling fuel that is not compliant with national fuel quality standards, either inadvertently or deliberately, is a clear breach of Australia’s fuel quality standards and all fuel retailers must take all reasonable steps to ensure that the fuel they are selling is compliant with these Standards”, said ACAPMA CEO Mark McKenzie.
“Further, any fuel retailer engaging in deliberately selling fuels that are not consistent with product labelling – such as selling lower fuel grades as premium fuel – is also breaching key provisions of Australian Consumer Law (2010) and deserves to be prosecuted to the full extent of the law”, said Mark.
As the Nation’s peak body for the fuel retail industry in Australia, ACAPMA has been working constructively with the NMI and the Department of Environment and Climate Change over the past 18 months to ensure that Australian motorists can be confident that the fuel that they are putting in their tank is compliant with all relevant laws.
To that end, all fuel retailers need to ensure that everyone in their business is aware of the obligations to comply with Australian Fuel Quality Laws – and to ensure that all reasonable steps are taken to ensure that all of the products they sell are marketed in compliance with Australian Consumer Laws.
1. Retailer obligations under Australian Fuel Quality Laws
Fuel retailers in Australia must ensure that all fuels sold at their outlets comply with the national fuel quality standards. These standards set precise specifications for various fuel types, including unleaded petrol, premium unleaded petrol, diesel, and biodiesel.
The operation of these laws, as they apply to Fuel & Convenience retailers are as follows:
- Compliance with National Standards
Retailers must only sell fuels that meet the specifications set out under the Fuel Quality Standards Regulations (2019). These specifications cover properties such as octane rating, sulphur content, and ethanol levels, depending on the fuel grade. - Record-Keeping and Reporting
Retailers are required to maintain accurate records of the fuels they sell, including details of fuel deliveries and supplier certifications. These records must be made available to regulatory authorities upon request. - Correct Marketing of Fuel Grades
Fuel retailers must ensure that fuels are marketed accurately in line with their specifications. Mislabelling or misrepresenting a fuel grade (e.g., labelling regular unleaded petrol as premium) can constitute a breach of the Competition and Consumer Act (2010). - Prohibition of Fuel Mixing Without Government Approval
Mixing different fuel grades or adulterating fuel with unapproved substances is strictly prohibited unless authorized by the relevant regulatory authority. Specifically, these laws prohibit fuel retailers mixing fuel additives at their individual sites. - Display of Relevant Information
Fuel retailers must display any mandated labels or information about the composition of fuels, such as ethanol content in ethanol-blended fuels, to inform consumers accurately. - Penalties for breaches of the Australian Fuel Quality Standards Act (2019)
The penalties for failing to comply with fuel quality laws are severe and include both fines and imprisonment. A summary of these penalties, as they apply to Fuel & Convenience retailers can be summarised as follows:
- Civil Penalties: Companies can face fines of up to $1.575 million per breach (as of 2024, indexed annually).
- Criminal Penalties: Individuals involved in deliberate or reckless breaches can face fines of up to $315,000, imprisonment for up to two years, or both.
3. Penalties for breaches of Australian Competition & Consumer Act (2010)
The accurate marketing of fuel grades is critical to maintaining compliance with both fuel quality laws and consumer protection laws. Misrepresentation of a fuel’s specifications or characteristics can harm consumer trust and potentially expose retailers to legal action under the ACL. Some examples of misleading conduct in the Australian fuel retail industry include the following:
- Marketing regular unleaded petrol as premium unleaded petrol when it does not meet premium specifications (e.g., lower octane rating).
- Selling fuel containing ethanol without clear labelling about the ethanol content.
- Advertising a fuel grade as “low sulphur” when it exceeds the sulphur limits specified under the FQSA.
If a retailer misrepresents the grade or quality of fuel, they can be prosecuted for Misleading and Deceptive Conduct under the Australian Competition and Consumer Act (2010). Penalties for such breaches include:
- For Corporations: Up to $50 million, or three times the value of the benefit obtained (if calculable), or 30% of the corporation’s annual turnover during the period of the breach.
- For Individuals: Fines of up to $2.5 million.
Misrepresenting fuel as being environmentally friendly (e.g., claiming a higher ethanol content than actual) can lead to additional penalties under laws governing false environmental claims.
4. Ensuring your business is compliant with fuel quality and marketing laws.
To avoid breaches of Australia’s fuel quality laws (and the risk of subsequent prosecution) it is suggested that fuel & convenience retailers should adopt the following procedures:
- Regular Testing: Retailers should conduct regular fuel quality testing to ensure compliance with national standards.
- Supplier Verification: Work with reputable suppliers and ensure that fuel certifications are obtained and reviewed for every delivery.
- Employee Training: Staff should be trained to understand the importance of fuel quality compliance, accurate marketing, and the legal consequences of non-compliance.
- Consumer Information: Ensure that clear and accurate information about fuel grades is prominently displayed at the point of sale.
- Audit and Record-Keeping: Maintain detailed records of fuel purchases and sales and conduct periodic audits to identify and rectify potential compliance issues.
5. Conclusion
Fuel quality laws in Australia impose stringent obligations on fuel retailers to ensure the quality and correct marketing of fuels. Non-compliance can result in severe penalties under both the FQSA and the ACL, including multi-million-dollar fines, imprisonment, and reputational damage.
Accurate marketing of fuel grades is particularly critical, as misrepresentation can lead to prosecution for misleading and deceptive conduct, with corporations facing penalties of up to $50 million. By adhering to these laws and implementing robust compliance measures, fuel retailers can avoid legal risks while maintaining consumer trust.
“Every service station operator in the country has an absolute obligation to ensure that their business sells fuel products that comply with Australian Fuel Quality Laws – and are sold in a manner that is consistent with Australian Competition and Consumer Law”, said Mark.
“ACAPMA has zero tolerance for any business that is deliberately selling non-compliant fuel products or switching fuel grades – given the obvious consumer detriment and the substantial competitive advantage that would be gained by these illegal actions”, added Mark.
“We have been working, and will continue to work, cooperatively with Australian authorities to ensure that any such businesses are identified and prosecuted to the full extent of the law”, concluded Mark.
ACAPMA
