Fuel Security (Temporary Reduction—Securing Regional Supply) Instrument 2026

The instrument depends on a small set of defined concepts that determine who can rely on the temporary reduction and what behaviour is required.

MSO product and obligation day: The instrument uses the terms MSO product and obligation day, but does not redefine them within the instrument. Instead it notes that these expressions are defined in section 5 of the Fuel Security Act 2021 (s4 note). Therefore those Act definitions determine which fuels are captured and when obligation days occur.

Subject to the minimum stockholding obligation: The instrument applies only to entities that are subject to the minimum stockholding obligation in relation to an MSO product (s5(1)(a)). The meaning of that phrase is supplied by the Act (s4 note).

Diesel and gasoline: The statutory 20 per cent reduction is limited to MSO products that are diesel or gasoline. Other MSO products are not affected by the instrument (s5(1)(b)).

Written plan and reduction period: The instrument sets a condition precedent to the reduction: the entity must have given the Secretary a written plan that complies with the content requirements in section 6 (s5(1)(c)). The reduction period is expressly defined as starting on the day the plan is given and ending at the end of 30 June 2026 (s5(3); s6(2)).

Secretary’s written notice and reasonable steps: Two administrative preconditions appear in the operative grant of the reduction. The Secretary must give written notice to the entity stating the reduced minimum in megalitres (s5(2)(a)). Secondly, the entity must be taking all reasonable steps to carry out the plan (s5(2)(b)). The instrument does not define what “reasonable steps” means in this context, nor does it prescribe the Secretary’s criteria for evaluating those steps.

Prioritisation and allocation duties in the plan: Section 6 sets out three categories of obligations the plan must explain how the entity will carry out throughout the reduction period. The plan must explain: working with Commonwealth, States and Territories to prioritise regional, agricultural and maritime consumers likely to face shortages (s6(1)(a)); supplying distributing entities that primarily supply regional areas and have or will have shortages (s6(1)(b)); and, where relevant, taking reasonable steps to allocate supplies to wholesale spot markets if the entity regularly supplies those markets (s6(1)(c)). The instrument defines distributing entity for this purpose as an entity that purchases an MSO product for supply to another entity (s6(2)).

Administrative interplay with the Act: The instrument expressly contemplates that entities may need to provide further information to the Secretary under section 36 of the Act (note to s6). The instrument is made under s16A of the Act (s3), so its operation is bound within whatever enforcement, information and sanctioning mechanisms are set in the parent Act.

Temporary measure: The instrument creates a time-limited reduction that cannot extend beyond 30 June 2026, by express commencement and repeal mechanics (s2; s7). The reduction only applies on obligation days that fall within the reduction period as specified (s5(3)).

Primary subjects: The instrument affects entities that are subject to the minimum stockholding obligation under the Fuel Security Act 2021 in relation to diesel or gasoline (s5(1)(a), (b)). The instrument does not alter obligations for MSO products other than diesel or gasoline. Which entities are in scope for being “subject to the minimum stockholding obligation” depends on the Act’s section 5 definitions; this instrument assumes those definitions as given (s4 note).

Secondary affected parties: Several counterparty groups are affected indirectly by the instrument’s reallocation aims and the behavioural requirements it imposes on covered entities. Those groups include:

• Distributing entities, defined here as entities that purchase MSO products for supply to another entity (s6(2)). The instrument directs supplying entities to prioritise provision to distributing entities that primarily supply regional areas and have or will have shortages (s6(1)(b)). Distributing entities that predominantly serve regional customers may receive prioritised supplies.

• Regional, agricultural and maritime consumers. The plan must explain how an entity will work with governments to prioritise and facilitate supplying MSO products to regional, agricultural or maritime consumers who are or are likely to face shortages during the reduction period (s6(1)(a)). Those consumer groups are a stated recipient class for reprioritisation.

• Wholesale spot market participants. Where a supplying entity has been regularly supplying wholesale spot markets, its plan must explain how it will take reasonable steps to allocate supplies to those markets (s6(1)(c)). That creates a duty to consider maintaining spot market flows that could affect spot market participants and price discovery.

Who makes decisions: The Secretary of the relevant Commonwealth department is the decision-maker as regards whether the reduction applies to a particular entity. The instrument requires the Secretary to give written notice to the entity stating the reduced minimum in megalitres before the reduction applies (s5(2)(a)). The Minister made the instrument under the Act but the operational step of granting the reduction is taken by the Secretary.

Who bears the compliance cost: Entities subject to the minimum stockholding obligation bear the compliance costs directly. They must prepare and deliver the written plan described in section 6 and thereafter be “taking all reasonable steps” to carry it out to qualify for the 20 per cent reduction (s5(2)). The instrument notes entities may need to provide additional information under section 36 of the Act (note to s6), which imposes potential information-gathering costs on covered entities.

Temporal coverage and contingent benefit: The benefit , a 20 per cent reduction in minimum stocks , only becomes available to those entities that both submit the required plan and receive the Secretary’s written notice, and only for obligation days occurring during the reduction period (s5(2), s5(3)). If an entity does not provide the plan, does not receive notice, or is not “taking all reasonable steps”, it remains subject to the full minimum stockholding obligation.

Duties created by the instrument: The instrument imposes a narrowly described set of duties on entities seeking the stockholding reduction, consisting primarily of the obligation to prepare and deliver a written plan and to act in accordance with it.

• Produce and give a written plan to the Secretary. The plan must explain how the entity will, throughout the reduction period, (a) work with Commonwealth, States and Territories to prioritise and facilitate supplying diesel and gasoline to regional, agricultural and maritime consumers likely to face shortages, (b) supply the MSO product to distributing entities that primarily service regional areas and have or will have shortages, and (c) where the entity has been regularly supplying wholesale spot markets, take reasonable steps to allocate supplies to those markets (s6(1)(a)-(c)). The plan is a condition precedent for the reduction (s5(1)(c)).

• Take “all reasonable steps” to carry out the plan. The instrument conditions the 20 per cent reduction on, among other things, the entity “taking all reasonable steps” to carry out the plan (s5(2)(b)). The instrument does not define “reasonable steps” or set benchmarks; that assessment is left to administrative application.

• Provide additional information if required. The instrument notes that the entity may need to give other information to the Secretary under section 36 of the Act (note to s6). Section 36 of the Act is not reproduced in the instrument but is explicitly referenced as a possible source of further duties.

Rights and administrative actions under the instrument:

• Right to the reduced minimum quantity once conditions met. If the Secretary issues written notice to the entity stating the reduced minimum in megalitres, and the entity is taking all reasonable steps to carry out its plan, the statutory minimum that the entity must hold on specified obligation days is reduced by 20 per cent (s5(2)). The instrument requires the Secretary to communicate the reduced minimum in writing (s5(2)(a)).

• Temporal limitation and contingency. The reduction only applies to obligation days that occur in the period starting on the day the plan is given and ending at the end of 30 June 2026 (s5(3)). A right to reduced holdings therefore depends on timing of plan submission and the Secretary’s issuance of written notice.

Operational discretion and administrative control:

• The Secretary exercises operational discretion. The Secretary must signal the reduced minimum in writing; the instrument provides no formula for converting the percentage reduction into megalitres in the notice, though it requires the notice to state the reduced minimum in megalitres (s5(2)(a)). The Secretary also has the power to request additional information under s36 of the Act (note to s6). The instrument leaves assessment of whether an entity is “taking all reasonable steps” to the Secretary or another decision-maker in the Act’s administrative framework.

• The Minister’s role is to make the instrument. The instrument itself was made by the Minister for Climate Change and Energy (signature and date shown at front of the instrument). The Minister does not have day-to-day operational duties in the instrument’s text.

Limits on duties: The instrument does not itself create broader allocation obligations beyond what is required to be included in the plan. It requires the plan to explain intended actions; it does not directly mandate particular allocation volumes, timelines, or penalties for failing to achieve specific allocations. The phrase “take reasonable steps” repeatedly appears in relation to carrying out plan commitments, implying a standard of conduct rather than strict performance obligations (s5(2)(b); s6(1)(c)).

The instrument does not itself create or specify monetary penalties, criminal offences, or explicit civil sanctions. It operates within the enforcement framework of the Fuel Security Act 2021, being made under section 16A of that Act (s3). The instrument therefore relies on the parent Act for any powers to compel compliance, impose penalties, or take enforcement action.

Mechanisms for administrative enforcement implicit in the instrument:

• Conditionality of benefit. The primary enforcement lever built into the instrument is conditional entitlement. The 20 per cent reduction only applies where the Secretary has given written notice stating the reduced minimum in megalitres and the entity is “taking all reasonable steps” to carry out the plan (s5(2)(a), (b)). The Secretary’s decision to issue the written notice, and to assess whether an entity is taking all reasonable steps, is the instrument’s operational control point.

• Information-gathering and supervisory powers. The instrument explicitly notes the Secretary may require other information under section 36 of the Act (note to s6). While the instrument does not reproduce section 36, the cross-reference indicates that the Act’s information-gathering powers will be available to the Secretary in supervising compliance with plans and with the instrument’s conditions.

Absence of express sanctions in the instrument: Because the instrument does not itself set penalties, it leaves open questions about consequences if an entity is found not to be “taking all reasonable steps” or if the plan is not carried out. Those consequences, whether administrative (for example, revocation of the Secretary’s written notice), civil, or criminal, must be sought in the Act. The instrument’s silence means a reviewer must examine the Fuel Security Act 2021 for explicit enforcement provisions.

Practical enforcement actions available to the Secretary: Based on the instrument’s text, the Secretary has at least two practical enforcement actions: (1) refuse to issue the written notice of the reduced minimum quantity, thereby denying the entity the 20 per cent reduction; and (2) require the entity to provide further information under section 36 of the Act to substantiate that it is taking all reasonable steps (note to s6). The instrument does not specify a formal revocation process for already-issued notices, nor does it establish administrative review pathways or internal appeal rights.

Burden of proof and administrative assessment: The instrument places the evidential burden informally on the entity to show it is taking all reasonable steps to carry out the plan. The absence of a statutory definition of “reasonable steps” means the Secretary will have latitude in applying an objective or context-specific standard, depending on the Act’s interpretive provisions and departmental practice which are not contained in the instrument.

Record keeping and staff resources for oversight: From an enforcement perspective, the Secretary will require adequate information and resourcing to assess plans and monitor whether entities are taking reasonable steps. The instrument’s reference to section 36 suggests the Secretary may expect entities to provide documentary evidence. The instrument itself, however, imposes no disclosure timetable or format for such evidence.

Primary statutory relationship: The instrument is made under section 16A of the Fuel Security Act 2021, and it explicitly relies on definitions contained in section 5 of the Act (s3; s4 note). Its operation is therefore contingent on the scope and machinery of the Fuel Security Act 2021. Any interpretation of terms such as MSO product, obligation day, or being subject to the minimum stockholding obligation must be made by reference to section 5 of the Act (s4 note).

Information powers and administrative provisions: The instrument explicitly signals potential interplay with section 36 of the Act by noting that an entity may need to provide other information to the Secretary under that section (note to s6). This creates a direct channel to the Act’s information collection and compliance mechanisms. Enforcement, penalties, internal review, and administrative process that might apply to non-compliance with plans are not in the instrument but are likely governed by other provisions of the Act.

No express override of other Commonwealth or State laws: The instrument requires entities to work with Commonwealth, States and Territories to prioritise and facilitate supply to regional, agricultural and maritime consumers (s6(1)(a)). That requirement anticipates federal-state coordination, but the instrument does not amend or displace State or Territory laws governing supply, transport, licences, or environmental regulation. Compliance with existing licencing, transport, customs or petroleum storage regulations remains necessary, although the instrument does not expressly address those regimes.

Contractual implications: The instrument alters statutory minimum stockholding obligations conditionally, which can affect contractual allocations between suppliers and purchasers. The instrument requires entities to explain in their plan how they will allocate supplies to distributing entities and, where relevant, the wholesale spot market (s6(1)(b), (c)). These obligations could interact with private contracts to the extent that statutory obligations take precedence or require reallocation of product. The instrument does not itself remedy contractual disputes or provide compensation mechanisms for parties whose supply is deprioritised.

Regulatory hierarchy and administrative discretion: The Secretary’s written notice (s5(2)(a)) is a formal administrative decision that interacts with statutory obligations under the Fuel Security Act. The instrument leaves significant discretion to the Secretary in both issuing the notice and in assessing whether entities are taking reasonable steps to implement their plans (s5(2)(b)). Any challenge to such a decision would likely engage administrative law remedies outside the instrument, but the instrument does not specify review pathways or rights of appeal.

Limited cross-reference to other Commonwealth powers: Aside from the direct references to the Act’s sections, the instrument does not cite or amend other Commonwealth statutes. It is a time-limited regulatory adjustment that should be read as an instrument implementing the Act’s authority for a temporary period.

This instrument is a single, self-contained legislative instrument made in 2026. The instrument provides its name as the Fuel Security (Temporary Reduction,Securing Regional Supply) Instrument 2026 and is dated 16 March 2026 with the Minister’s signature (front matter). It commences the day after registration (s2) and is expressed to be made under section 16A of the Fuel Security Act 2021 (s3).

The instrument contains an express repeal clause: it is repealed at the end of 30 June 2026 (s7). There are no amendment provisions within the instrument itself; it does not provide for extensions, renewals, or amendments by administrative action other than the Secretary’s operational steps (issuing written notice). The instrument does not include any savings or transitional provisions beyond its statement of the reduction period and repeal date.

No prior versions or schedules are contained in the instrument. The instrument’s content is compact and time-limited. Any change to the reduction period, percentage reduction, or scope (for example extending beyond diesel and gasoline) would require a subsequent instrument or amendment made under the Act’s authority, or an amendment to the Act itself. The instrument does not provide delegated power to vary the percentage reduction or to extend the repeal date.

Because the instrument references definitions and powers in the Fuel Security Act 2021 (s4 note; note to s6), any change to those Act provisions through parliamentary amendment or other instruments might affect the instrument’s practical operation, but the instrument itself contains no internal amendment history, schedules, or footnotes indicating prior versions.

The instrument text does not record any litigation. The instrument is a regulatory instrument made under the Fuel Security Act 2021; the text contains no case references, no recorded judicial consideration, and no statements about legal challenges. The instrument’s concise form and the fact it is temporary and time-limited mean any litigation arising from it would be post-enactment and outside the instrument’s text.

Because the instrument delegates operational discretion to the Secretary (notably the requirement that the Secretary give written notice and the Secretary’s potential use of section 36 information powers), potential grounds for administrative law challenge could hypothetically include whether the Secretary correctly applied the “taking all reasonable steps” standard or whether procedural fairness and reasoned decision-making were observed. However, the instrument itself contains no record of contested decisions or judicial outcomes. Any actual litigation would need to be sourced from external records and is not described in this instrument.

Practitioners should therefore note that the instrument creates administrative rights and duties that could generate reviewable decisions , for example, refusal to issue the Secretary’s written notice, decisions about adequacy of a plan, or findings that an entity is not taking reasonable steps. Such decisions may attract merits or judicial review under general administrative law principles, but the instrument does not itself provide judicial interpretations or precedents.

Several operational and legal uncertainties arise directly from the instrument’s text that entities and advisers should note.

“Taking all reasonable steps” is undefined. The instrument conditions the 20 per cent reduction on the entity “taking all reasonable steps” to carry out the plan (s5(2)(b)). The instrument does not define this standard, explain whether it is to be assessed objectively or relative to the entity’s commercial constraints, or set out any evidence that would satisfy the Secretary. That creates practical uncertainty about what proof an entity should retain and how stringently the Secretary will assess compliance.

Reduction applies only after a written notice from the Secretary. The 20 per cent reduction does not commence automatically on giving the plan. The Secretary must give written notice stating the reduced minimum in megalitres before the reduction is effective (s5(2)(a)). If the Secretary delays issuing the notice, the entity will remain subject to the full minimum holding. The instrument therefore creates a sequencing risk: timely receipt of notice is necessary to capture the reduction for obligation days within the reduction period.

Temporal dependency and narrow window. The reduction period runs from the day the plan is given to the Secretary until the end of 30 June 2026 (s5(3); s6(2)). Given that the instrument commenced after registration and is repealed on 30 June 2026 (s7), entities that delay plan submission may forfeit days within the reduction period. Timing of submission is consequential.

Scope limited to diesel and gasoline. Only MSO products that are diesel or gasoline are eligible for the 20 per cent reduction (s5(1)(b)). Entities holding other MSO products are unaffected and remain subject to pre-existing minimum stockholding obligations.

Plan content is descriptive, not prescriptive. Section 6 requires that the plan “explain how” the entity will carry out certain prioritisation and allocation functions (s6(1)). The instrument stops short of mandating specific allocation quantities, timetables or metrics. That leaves the Secretary to judge whether the explanation is satisfactory and whether actions taken meet the “reasonable steps” threshold.

Spot markets treated differently. Where an entity has been regularly supplying wholesale spot markets, the plan must show the entity will “take reasonable steps to allocate supplies” to those markets (s6(1)(c)). The instrument does not require guaranteed allocation volumes to the spot market nor define “reasonable steps” here either. Entities with significant spot market exposure will need to design allocations that both meet plan expectations and reconcile commercial obligations.

Interplay with section 36 information powers. The instrument flags that entities may need to supply additional information under section 36 of the Act (note to s6). The instrument does not specify what information or the timeframe, so entities should be prepared to respond to further information requests.

Administrative discretion on converting percentage to megalitres. The instrument requires the Secretary’s notice to state the minimum quantity in megalitres as reduced under the 20 per cent formula (s5(2)(a)). The instrument does not prescribe a conversion method or rounding rules. Drafting of plan and internal calculations should therefore be precise and supportable.

No express remedies or sanctions in the instrument. The instrument does not state what happens if an entity fails to implement its plan, beyond the implication that the reduction will not apply if the entity is not taking reasonable steps (s5(2)(b)). The absence of explicit remedies or penalties in the instrument means enforcement actions will depend on the provisions of the Fuel Security Act 2021 and administrative practice.

Definition of distributing entity is broad. The instrument defines distributing entity as an entity that purchases an MSO product for supply to another entity (s6(2)). That could include resellers, wholesalers, and other intermediaries. Entities preparing plans must identify relevant distributing entities and justify prioritisation choices.

To qualify for the 20 per cent temporary reduction and to manage implementation risk, entities subject to the minimum stockholding obligation in relation to diesel or gasoline should take the following steps, grounded in the instrument’s text.

1. Confirm coverage under the Act. Verify that the entity is “subject to the minimum stockholding obligation” in relation to diesel or gasoline as per the definitions in section 5 of the Fuel Security Act 2021, which the instrument explicitly references (s4 note). If doubt exists about whether an entity falls within that definition, legal advice should be sought, because the instrument’s benefit only applies to covered entities (s5(1)(a)).

2. Draft the written plan to meet section 6 requirements. Prepare a written plan that addresses each of the elements in s6(1):

   • Explain how the entity will work with Commonwealth, States and Territories to prioritise and facilitate supply to regional, agricultural and maritime consumers who are or will be likely to face shortages during the reduction period (s6(1)(a)).

   • Explain how the entity will supply MSO products to distributing entities that primarily supply regional areas and have or will have shortages during the reduction period (s6(1)(b)). Identify which distributing entities are intended recipients and provide supporting data where possible.

   • If the entity has been regularly supplying wholesale spot markets, explain what “reasonable steps” will be taken to allocate supplies to those markets (s6(1)(c)). If the entity does not regularly supply spot markets, state that clearly.

   The plan should be detailed enough to allow the Secretary to assess feasibility and the entity’s ability to implement it.

3. Document and preserve evidence of “reasonable steps”. The reduction requires the entity to be “taking all reasonable steps” to carry out the plan (s5(2)(b)). To satisfy that condition, entities should create a contemporaneous audit trail that documents decisions, communications with governments and distributing entities, inventory movements, logistical measures, and commercial rationale for prioritisation. Records should support that the actions taken are consistent with the plan and constitute reasonable steps in the commercial and operational context.

4. Submit the plan promptly to the Secretary. The reduction period starts on the day the plan is given to the Secretary and ends on 30 June 2026 (s5(3)). The Secretary must issue written notice stating the reduced minimum in megalitres before the reduction applies (s5(2)(a)). Early submission increases the window of obligation days for which the reduced minimum might apply.

5. Seek confirmation in writing from the Secretary. Do not assume the reduction applies until the Secretary has issued the written notice required by s5(2)(a). Request a clear written statement of the reduced minimum in megalitres and, if possible, obtain the Secretary’s acknowledgment of the plan’s content and any conditions attached.

6. Anticipate and respond to information requests. The instrument notes entities may need to provide other information under section 36 of the Act (note to s6). Prepare to respond to information requests promptly and in accordance with any timelines given by the Secretary.

7. Reconcile plan commitments with commercial contracts. Where the plan contemplates reallocating supplies away from some purchasers to prioritise regional or distributing entities, review contractual obligations to assess whether such reallocations risk breach of contract. The instrument does not provide indemnity or compensation for contractual disruption.

8. Review internal systems for allocation and reporting. Ensure inventory management, sales allocation, and logistics functions can operationalise the prioritisation required by the plan. If the entity regularly supplies spot markets, create allocation rules that evidence “reasonable steps” to maintain spot market supply where required by the plan (s6(1)(c)).

9. Monitor obligation days and the repeal date. The instrument’s reduction only applies on obligation days within the reduction period, which ends on 30 June 2026 (s5(3); s7). Track obligation days and be ready to revert to full minimum holdings after the repeal date.

10. Maintain governance and escalation paths. Define roles for senior management and legal/compliance staff to oversee plan implementation. Because the Secretary retains assessment authority, have structured escalation for interactions with the Secretary and for preparing evidence that the entity is taking reasonable steps.

11. Consider administrative law remedies for contested decisions. If the Secretary refuses to issue the written notice or later withdraws it, administrative law remedies may be available, though the instrument does not specify review rights. Entities should preserve records and communications that would support any review application.

12. Engage with State and Territory counterparts. The plan requires working with Commonwealth, States and Territories to prioritise supplies (s6(1)(a)). Early engagement can smooth logistics and reduce disputes at the delivery interface.

Following these steps will position an entity to demonstrate compliance with the instrument’s requirements and to rely on the 20 per cent reduction where the Secretary issues the required written notice and the entity can show it is taking all reasonable steps to implement the plan (s5(2)).