Max Pakinga-Barber

The closure of the Strait of Hormuz in 2026 during the US-Israel/Iran War highlighted the fragility of New Zealand’s supply of essential fuels. New Zealand relies heavily on imported fuel to operate its transport network, agricultural sector, and the broader economy. At the time of writing, while fuel remains on hand, prices have risen sharply and continuity of supply cannot be taken for granted.

This explainer explores the legal and policy frameworks for New Zealand’s preparation for and response to significant fuel supply disruptions

New Zealand’s fuel market

Since the Marsden Point Oil Refinery closed in 2022, New Zealand relies entirely on private sector imports of refined petroleum, mostly from Asia with shipping times of at least 17 days. Fuel arrives at one of nine ports nationwide, where it transfers into bulk storage terminals before being piped to distribution hubs like Auckland's Wiri terminal or trucked to retailers. It reaches the public through service stations and truck stops, or is delivered directly to sectors such as farming, health, and construction.

International obligations

New Zealand is a party to the Agreement on an International Energy Programme (“Energy Agreement”). The Energy Agreement requires member states to hold 90 days’ worth of net import demand, to be released to the global market in a fuel emergency. New Zealand meets this obligation primarily through purchasing offshore options contracts rather than holding stocks domestically. The International Energy Agency (“IEA”), which administers the Energy Agreement, can also direct that member states implement domestic measures, including regulation to restrain consumption and demand, once certain fuel emergency thresholds in the Energy Agreement are triggered.

As an international treaty, the Energy Agreement is only legally binding in New Zealand to the extent it is incorporated in legislation. The International Energy Agreement Act 1976 (“IEAA”) provides a mechanism for New Zealand to fulfill its obligations under the Energy Agreement, but it does not make that agreement legally binding on New Zealand. However, breaches are likely to damage New Zealand’s international standing, meaning there are strong reputational incentives to comply with IEA directions.  

In the 2026 crisis, New Zealand and other member states voted in March 2026 to release 400 million barrels of oil to the global market. While the IEA recommended that member states implement demand restraint regulations, this is not direction binding on member states as a matter of international law.

Domestic readiness framework

National fuel plan

In 2024, MBIE published the National Fuel Plan (“NFP”) as a readiness and response framework for fuel disruptions. The NFP sets out the responsibilities of fuel companies and various government agencies to prepare for and respond to a fuel crisis. Primary responsibility for readiness rests with the fuel industry, which have responsibilities as ‘life line utilities’ under the Civil Defence Emergency Management Act 2002 (“CDEMA”) to ensure continued supply to critical functions

The NFP also sets out the different levels of a response to a significant fuel supply disruption, with the state having a correspondingly greater role the more severe the disruption (see below).  

Minimum stockholding obligations

Separately, the Fuel Industry Regulations 2021 impose minimum stockholding obligations on importers of ‘obligation fuels’, calculated in thousands of litres. The minimum stockholding obligation is calculated by multiplying the required number of days of obligation fuels (28 for petrol, 24 for aviation fuel, and 21 for diesel) multiplied by the average daily demand from the previous reporting year.

The minimum stockholding obligations are separate from New Zealand’s obligations under the Energy Agreement. They are explicitly focused on security of domestic supply.

Government response to fuel supply disruptions

Response levels

The NFP sets out four levels for a response to a supply disruption. The first two levels (which apply in minor to moderate supply disruptions) involve activation of civil defence governance frameworks but with limited direct state intervention. Levels 3 and 4 (which cover major to severe disruptions) contemplate full activation of civil defence powers (including declaration of states of emergency), as well as imposition of governmen regulations to restrain fuel demand. The same framework applies to local/regional supply disruptions caused by natural disasters as to national disruptions caused by global supply shocks.

In March 2026, the government tweaked NFP response levels (now re-labelled ‘phases’). The phases are in substance similar to the response levels under the NFP, but with a much greater emphasis that any government intervention will be exceptional, limited, and temporary. The government is currently consulting with fuel suppliers and consumer groups about the detail of phases 3 and 4.

Non-coercive measures to address fuel disruptions

While industry has the primary responsibility at phases 1 and 2, there are several mechanisms the government can use to both reduce demand and increase supply. To achieve the former, the government can activate messaging advising consumers how to reduce fuel, issuing non-binding directions for certain fuel conservation practices (such as working from home), and adjusting work practices in the public sector. To achieve the latter, it can relax land transport regulations to provide for transport bottlenecks (only effective in local emergencies) and lower engine fuel specifications to allow a wider range of fuels to enter the New Zealand market.

Civil defence powers

The NFP also contemplates that certain fuel supply disruptions are likely to be managed under states of emergency declared under the CDEMA. Doing so activates a statutory coordination framework between central and local government and lifeline utilities, as well as providing for emergency powers (although less extensive than the powers available under demand restraint regulations).

Demand restraint regulations

The government is empowered to make mandatory demand restraints via regulations made under the Petroleum Demand Restraint Act 1981 ("PDRA"). While the government has signalled that these powers will only be exercised in phases 3 and 4, this promise does not act as a direct legal constraint on their use.

Similar demand restraint powers are available under the IEAA, but the powers are narrower and subject to relatively greater constraints. In a supply disruption, the government is therefore more likely to rely on the PDRA.

Content

The PDRA grants the Cabinet unusually broad regulation-making powers. These include controlling or prohibiting the sale and supply of fuel, imposing rationing schemes, restricting motor vehicle use, and exempting persons acting under the regulations from both legislative and contractual obligations. Regulatory powers can be sub-delegated directly to the Minister of Energy by direction, including directing supply to specified persons.

Constraints

The legal constraints on these powers are minimal. The only express condition is that regulations must be directed at restraining demand for petroleum products, or ensuring their equitable distribution when supply is, or is likely to be, short. Notably, an actual supply disruption is not required to trigger the powers. There are none of the procedural safeguards common to modern legislation, such as mandatory considerations, consultation requirements, or other procedural/oversight mechanisms, though the Minister must undertake "appropriate consultations" before issuing directions under any regulations made.

Controversial features

This latitude for unchecked executive action reflects the legislation's origins in the interventionist ‘Think Big’ era before the liberalizing reforms of Lange government after 1984. Several features are particularly controversial by contemporary legislative standards.

The breadth of available interventions is striking. Rationing, price controls, and sweeping restrictions on vehicle use (reminiscent of Muldoon-era "carless days") are all legally available to the current government, even as it has signaled a cautious approach to the 2026 crisis. The ability to sub-delegate wide interventionist powers directly to the Minister further bypasses the limited scrutiny that accompanies Cabinet regulations of general application.

The duration of any regulations is also a concern. PDRA regulations are confirmable instruments, expiring after five years unless confirmed by Parliament through primary legislation. This contrasts sharply with states of emergency under the CDEMA, which expire after 7 days without formal extension.

Perhaps most controversial is the power under s 7(2)(a)to exempt persons acting under the regulations from liability for breaching other legislation or contracts. Provisions of this kind, known as Henry VIII clauses, allow the executive to override Parliament and come with a high risk of abuse unless the power is narrow and constrained (which is not the case withs 7(2)(a)). Modern courts apply strict and narrow interpretations to such clauses.

The PDRA is, in short, a product of a different era, out of step with modern legislative norms and judicial expectations. Whether it will prove adequate if the 2026 fuel crisis deepens, or whether the government will need to follow its predecessor's Covid-19 example and enact purpose-built legislation, remains an open question.

For further information on this or similar issues please contact Director, Brigitte Morten

Buying alcohol over the Easter break can often cause confusion. The Sale and Supply of Alcohol (Sales on Anzac Day Morning, Good Friday, Easter Sunday, and Christmas Day) Amendment Act 2026, which takes effect on Good Friday 2026, has relaxed some prior Easter trading rules.  

Here are four things you need to know so you don't get caught dry:

1.      Most off licences can’t sell alcohol on Good Friday or Easter Sunday. That includes all supermarkets, bottle stores, wineries, breweries and anywhere that sells alcohol to take away.

2.       There’s an exception to off-licence rules for wineries. These businesses are allowed to sell wine off-licence from their cellar door if they make the wine on site or harvest the grapes used to make the wine on site.  

3.      On licences like bars, restaurants, and cafes with a licence to sell alcohol to be drunk on-site can sell alcohol on Good Friday and Easter Sunday within their authorised opening hours. Old restrictions that required consumers to be a guest at the premises or be “on the premises to dine” to be eligible to be served alcohol were abolished in 2026.  

4.      Trading on Saturday and Monday is not affected.

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Summary

Three vaping businesses were unsuccessful in challenging regulations setting the maximum permissible nicotine concentration in vaping products.

Background

In 2020, Parliament amended what is now the Smokefree Environments and Regulated Products Act 1990 (“Act”) by including vaping-related products as ‘notifiable products’ under the Act. Section 84(1)(a) of the Act allows the Governor-General to make regulations prescribing safety requirements for notifiable products.

The applicants were three related companies that manufacture, import, and sell vaping products (“Companies”).

On 11 August 2021, The Smokefree Environments and Regulated Products Regulations 2021 (“Original Regulations”) came into effect. The applicants had challenged the validity of these regulations in earlier proceedings.

While those proceedings were afoot, the government began a process to clarify an ambiguity in the Original Regulations. It was unclear under those regulations whether the maximum allowable nicotine concentration in a class of vaping products was 50mg/mL or 28.5mg/mL.

The Minister of Health submitted two papers to Cabinet in mid-2023. The papers set out the details of targeted consultation undertaken by officials (which included consultation with vaping industry participants) and options analysis. The papers recommended that the regulatory limited be set at 28.5mg/mL.

Cabinet approved the recommended changes to the regulations on 21 August 2023, and they came into effect the following month (“Amended Regulations”).

Upon learning this, the Companies filed judicial review proceedings claiming that the Amended Regulations were unlawful. Broadly, their challenge focused on inadequate consultation and a lack of evidence of a link between nicotine concentration in vaping products and resulting user harm.

The High Court rejected the Companies’ claim on all grounds. The court found no duty to consult, and held that the evidential criticisms, while framed a legal errors, were in substance a challenge to the merits of the decision (and therefore outside the scope of judicial review).

The Companies appealed to the Court of Appeal.

The case

The issues on appeal were whether the Ministry had a duty to consult on the Amended Regulations, whether they had consulted adequately, and whether the decision was rendered unlawful by the allegedly inadequate advice provided by officials.

Duty to consult

The Companies accepted there was no duty under the Act to consult but argued a common law duty to consult arose due to the significant public health and commercial impacts of the Amended Regulations. Alternatively, they argued the Ministry’s voluntary consultation created a duty to do so adequately.

The court squarely rejected that the Minister had any duty to consult. Formally, the Amended Regulations were made by the Governor-General acting on the advice of the Executive Council – following a decision of Cabinet. Previous case law held that it would highly unusual for consultation to be legally required for Cabinet decisions like making regulations. If consultation was intended by Parliament, the Act would have said so.

The court also rejected the claim that the Ministry’s voluntary decision to consult imposed legal duties on the Ministry as to how that consultation was undertaken. Consultation was good governance practice. Imposing legal duties on voluntary consultation would strongly disincentivise the practice.

Finally, the court held on the evidence that even if a duty to consult existed, the Companies failed to demonstrate the process was inadequate.

Inadequate advice

Relying on the earlier Court of Appeal decision Air Nelson Ltd v Minister of Transport, the Companies argued that the Amended Regulations were unlawful as they were based on official advice that was neither fair, accurate, nor adequate. The advice, the Companies claimed, was so on-sided that only one rational outcome was possible.

The court held that the Companies had mischaracterised the Air Nelson decision. That case concerned advice that failed to address matters that the Minister was legally required to consider. It did not establish a principle that the decision-maker must have all conflicting views before them when making decisions.

In this case, Cabinet made a high-level policy decision as a time-limited but democratically accountable body. It was not acting as a court or tribunal, but rather as a body making high level public policy in the general public interest. In such situations, individuals had limited rights to have their specific views put before the decision-maker.

In any event, the court found that the advice to Cabinet was sufficiently balanced. The Companies’ detailed criticisms of minutiae in official advice were matters for debate, not failures to consider mandatory considerations. The Ministry was not obliged to present industry or other specific arguments in detail and Cabinet was not required to consider them; it was permissible for Cabinet to deal with such matters at a macro level. Unlike in Air Nelson, the Minister and Cabinet were adequately informed of opposing views.

Result

The court dismissed the appeal and the Amendment Regulations remained in force.

The decision affirms important administrative law principles, including that the courts:

1. are unlikely to recognise non-statutory rights to consultation, particularly in high-level policy decisions; and

2. will not otherwise impose exacting procedural requirements on high level policy decisions, particularly those of Cabinet.

For futhur informatiion on this or similar cases please contact Director, Brigitte Morten