U.S. GOVERNMENT PRINTING OFFICE

64–064CC WASHINGTON : 2000

THE NATIONAL OILHEAT RESEARCH ALLIANCE

ACT OF 1999

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER

OF THE

COMMITTEE ON COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

ON

H.R. 380

APRIL 5, 2000

Serial No. 106–133

Printed for the use of the Committee on Commerce

(

2

COMMITTEE ON COMMERCE

TOM BLILEY, Virginia, Chairman

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

MICHAEL G. OXLEY, Ohio

MICHAEL BILIRAKIS, Florida

JOE BARTON, Texas

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

Vice Chairman

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

BRIAN P. BILBRAY, California

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

CHARLIE NORWOOD, Georgia

TOM A. COBURN, Oklahoma

RICK LAZIO, New York

BARBARA CUBIN, Wyoming

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

JOHN D. DINGELL, Michigan

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RALPH M. HALL, Texas

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

RON KLINK, Pennsylvania

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

TOM SAWYER, Ohio

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

THOMAS M. BARRETT, Wisconsin

BILL LUTHER, Minnesota

LOIS CAPPS, California

JAMES E. DERDERIAN, Chief of Staff

JAMES D. BARNETTE, General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON ENERGY AND POWER

JOE BARTON, Texas, Chairman

MICHAEL BILIRAKIS, Florida

CLIFF STEARNS, Florida

Vice Chairman

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

ED WHITFIELD, Kentucky

CHARLIE NORWOOD, Georgia

TOM A. COBURN, Oklahoma

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

ED BRYANT, Tennessee

ROBERT L. EHRLICH, Jr., Maryland

TOM BLILEY, Virginia,

(Ex Officio)

RICK BOUCHER, Virginia

KAREN MCCARTHY, Missouri

TOM SAWYER, Ohio

EDWARD J. MARKEY, Massachusetts

RALPH M. HALL, Texas

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ALBERT R. WYNN, Maryland

TED STRICKLAND, Ohio

PETER DEUTSCH, Florida

RON KLINK, Pennsylvania

JOHN D. DINGELL, Michigan,

(Ex Officio)

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3

C O N T E N T S

Page

Testimony of:

Allen, Don, President, E.T. Lawson and Sons ............................................... 3

Woosnam, Douglas, Director of Public Affairs, Allenergy Marketing Company, LLC ...................................................................................................... 6

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THE NATIONAL OILHEAT RESEARCH

ALLIANCE ACT OF 1999

WEDNESDAY, APRIL 5, 2000

HOUSE OF REPRESENTATIVES, COMMITTEE ON COMMERCE, SUBCOMMITTEE ON ENERGY AND POWER, Washington, DC.

The subcommittee met, pursuant to notice, at 11:30 a.m., in room

2322, Rayburn House Office Building, Hon. Joe Barton (chairman)

presiding.

Members present: Representatives Barton, Shimkus, Wilson,

Bryant, Ehrlich, McCarthy, Sawyer, Markey, Boucher, Pallone,

Wynn, and Strickland.

Staff present: Cathy Van Way, majority counsel; Jason Bentley,

majority counsel; Elizabeth Brennan, legislative clerk; Sue Sheridan, minority counsel; and Rick Kessler, professional staff member.

Mr. BARTON. The subcommittee will come to order on the next

hearing as soon as we get our witnesses in attendance. Members

are strongly urged to stay for the next hearing.

If we could, if, Mr. Ehrlich and Mr. Shimkus, if y’all wish to converse with our past panel, if you will leave the hearing room so we

can start this hearing.

Today we are going to hold a legislative hearing on H.R. 380, the

National Oilheat Research Alliance Act, introduced on January 19,

1999, by Congressman Greenwood of Pennsylvania, a member of

the full committee, not a member of the subcommittee.

I want to welcome our two panelists to the hearing on this legislation.

This bill, as introduced by Mr. Greenwood, would allow the heating oil industry to establish an oilheat check-off fee to fund research, development and consumer education programs related to

heating oil. As was brought home to Members of Congress this past

winter, heating oil plays an important role in keeping homes and

businesses warm in the winter in many parts of the country, especially in the Northeast.

The purpose of the legislation before the subcommittee would be

to give this industry greater resources to undertake research and

development activities targeted at finding new and more efficient

ways to use heating oil. Significantly, the bill which was proposed

by the oilheat industry does not require the expenditure of significant amounts of Federal dollars.

I want the panelists to know and the members of the subcommittee to know that the chairman of the subcommittee, myself,

has very serious reservations about this legislation. I really don’t

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see, if the heating oil industry wants to establish this type of fund,

it needs Federal legislation to do so. If it is as widely supported by

the heating and oil industry as it is claimed to be, there would be

no need for legislation making contributions to the fund mandatory.

I am also concerned that the fee becomes another surcharge that

will be passed on to consumers. Although the amount of the fee is

small, it does raise the price of heating oil at a time when some

consumers are having difficulty meeting the price that they already

have to pay.

Finally, I would like to see as we take testimony what the assurances are that the money raised by the fee is going to be used as

intended by the legislation. Recently, a Washington Post newspaper article highlighted the potential for abuse with these types

of fees when there is not sufficient accountability. I understand

supporters of the legislation are also concerned about the potential

for abuse and that they are taking steps to address it.

Today’s hearing is an important hearing. A fair number of members of the subcommittee and full committee on both sides of the

aisle have cosponsored this legislation, and Congressman Greenwood has been very cooperative in trying to address some of the

concerns that I have raised, and the primary reason we are holding

the hearing is because Congressman Greenwood has been such an

advocate of this legislation and has been very cooperative in trying

to work out some of the concerns.

The chair would recognize Mr. Sawyer for an opening statement

if he wishes.

Mr. SAWYER. Mr. Chairman, I appreciate the opportunity and

will forego it.

Mr. BARTON. Would the gentleman from Illinois, Mr. Shimkus,

wish to be recognized for an opening statement?

Mr. SHIMKUS. It is part of what I submitted for the first hearing.

Mr. BARTON. Gentleman from Maryland, Mr. Wynn, for an opening statement.

Mr. WYNN. Thank you, Mr. Chairman.

I am not going to make an opening statement, but I will say that

I had a line of concerns similar to yours with respect to why this

industry-based project needs a Federal imprimatur. So, with that,

I yield.

Mr. BARTON. I thank the gentleman from Maryland.

The gentleman from New Jersey, Mr. Pallone, who I believe is

a sponsor of the legislation, would you like to be recognized for a

opening statement?

Mr. PALLONE. Thank you, Mr. Chairman.

Just briefly, as you mention, I am a cosponsor and supporter of

the bill. The Act, the National Oilheat Research Alliance Act,

would enable the oilheat industry to establish an industry-funded

check-off program that supports industry research and development, safety training and consumer education without Federal

funding. Just in my own district, we have about 815,000 households—that is State-wide, I should say—that use oilheat and about

215,000 occupied housing units in my district that use oilheat. And,

of these, about 20 percent—they amount to about 20 percent of the

total, and there are about 409 oilheat businesses that employ about

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4,000 people. So I only mention these numbers because they represent substantial employment and heating consumption figures.

The legislation before us today would not require any support

from the Federal Government. It is only enabling legislation. The

NORA legislation, as I understand it, also is virtually identical to

legislation that was unanimously passed by the House and Senate

Commerce Committees in 1996. That is the Propane Education and

Research Act that this is modelled after. And, of course, that Propane Act was subsequently enacted by Congress and signed into

law. So I think they are using that as a model, and that certainly

has served us well, and I think we could do the same for this industry and help them in their research efforts.

I would support the bill and thank you for the time, Mr. Chairman.

Mr. BARTON. I thank the gentleman from New Jersey.

Welcome, gentlemen. It is always the case that the second hearing or the second panel doesn’t have the attendance that the first.

Plus, we are beginning to push the lunch hour, but there is actually quite a bit of interest and support for the legislation that you

two gentlemen are here to testify. So don’t take the lack of panelists as a lack of interest.

We are going to put your statements in the record in their entirety. We will recognize Mr. Allen for 7 minutes to summarize his,

and then we will recognize Mr. Woosnam.

So, Mr. Allen, we want to welcome you to the subcommittee.

Your statement is in the record in its entirety, and you are recognized for 7 minutes to elaborate on it.

STATEMENT OF DON ALLEN, PRESIDENT, E.T. LAWSON AND

SONS

Mr. ALLEN. Chairman Barton and members of the subcommittee,

my name is Don Allen; and I appreciate this chance to testify in

support of H.R. 380, the National Oilheat Research Alliance Act. I

am President of E.T. Lawson, a company based in Hampton, Virginia, that distributes heating oil. I also serve as cochair of the legislative NORA effort and am Vice President of the Petroleum Marketers Association, our national trade association.

On behalf of PMAA and the heating oil industry, I am pleased

to share with you our strong support for H.R. 380. The NORA legislation is modeled after the propane check-off program that was

approved by this committee and enacted into law in 1996. Like the

propane bill, H.R. 380 would allow for an industry-funded checkoff program in which a small portion of the wholesale price of

oilheat will be used to support activities such as research and development, safety, training and consumer education, all without

Federal funding or involvement.

As in the case of the propane check-off, the NORA program will

provide substantial benefits to our industry and its over 30 million

consumers. NORA will promote energy efficiency and consumer and

worker safety, all of which will help to lead to lower fuel costs and

a cleaner environment. The NORA legislation also will create parity for our industry.

Unfortunately, the heating oil industrial, unlike our main competitors, currently does not benefit from a nationwide industry proVerDate 11-MAY-2000 07:18 Sep 08, 2000 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 64064.TXT HCOM2 PsN: HCOM2
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gram. By way of explanation, our industry is made up of over 7,000

small businesses that employ almost a quarter of a million workers. These businesses are small, family owned enterprises that

compete against each other and other sources of fuel to meet the

energy needs of millions of consumers. The diverse nature of our

industry means that no single company or no 10 single companies

or no 50 single companies has enough market share to fund these

needs.

NORA is a fair, self-help measure that will enable our industry

to compete on a level playing field with other energy sources.

As you know, Mr. Chairman, the House of Representatives

passed a measure almost identical to H.R. 380 in the last Congress,

but the Senate did not consider the legislation before the 105th

Congress adjourned. The Senate has now unanimously approved

NORA in this session of Congress. As the NORA legislation goes

through the House the second time, it continues to have the support of virtually every local, State, regional and national trade association affiliated with our industry.

In addition to solid industry support, H.R. 380 has been endorsed

by many notable third parties, including consumer, environmental

and labor groups. H.R. 380 also has broad bipartisan support from

128 House cosponsors, including a majority of the members of this

subcommittee.

In summary, NORA will help create a level playing field by providing the heating oil industry with the same type of programs that

competing energy sources enjoy. The program requires no Federal

funding and essentially no Federal involvement, and the bill will

benefit consumers as well as the environment. Given the broadbased bipartisan support for H.R. 380 from both within and outside

of our industry, we hope that the House of Representatives will act

swiftly to pass this important legislation just as it did in 1998.

Thank you, Mr. Chairman, for holding this hearing and allowing

me to share my support for this bill.

[The prepared statement of Don Allen follows:]

PREPARED STATEMENT OF DON ALLEN ON BEHALF OF THE PETROLEUM MARKETERS

ASSOCIATION OF AMERICA AND THE NATIONAL OILHEAT RESEARCH ALLIANCE

Chairman Barton and Members of the Subcommittee, my name is Don Allen and

I appreciate this chance to testify in support of HR 380, the National Oilheat Research Alliance Act. I am president of E.T. Lawson, a company based in Hampton,

Virginia that distributes heating oil. I serve as co-chair of the Legislative Action

Committee for the NORA Alliance, which is a coalition of marketers and

distributers of heating oil who strongly support HR 380. I am also the regional vice

chairman of the Petroleum Marketers Association of America (PMAA).

On behalf of PMAA and the heating oil industry, I am pleased to share with you

our strong support for HR 380. To summarize, HR 380 will help our industry compete on a level playing field with other energy sources that already national, industry programs like NORA; it is a fair, self-help measure that requires no federal

funding or basically no federal involvement; and it will provide important benefits

to the millions of American consumers of heating oil and it will benefit the environment.

HR 380 Is Based on a Successful Law and Has Solid Support from Every Segment

of the Heating Oil Industry and Respected Third Parties

The NORA legislation is modeled after the propane check-off program that was

approved by this Subcommittee and the House Commerce Committee before being

enacted into law in 1996. Using that program as a model, we have tried to provide

as much flexibility as possible to those who will participate in the NORA check-off

program.

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Like the propane bill, HR 380 would allow for an industry-funded check-off program in which a small portion of the wholesale price of oilheat will be used to support activities such as research and development, safety, training, and consumer

education—all without federal funding or involvement. As in the case of the propane

check-off, the NORA program will provide substantial benefits to our industry and

its millions of consumers. NORA will promote energy efficiency and consumer and

worker safety that will help lead to lower fuel costs and a cleaner environment.

Our industry and legislators, including Chairman Bliley and Congressman Greenwood, have worked long and hard to craft a compromise, non-controversial bill. HR

380 is the product of these efforts. To reach a consensus on the NORA legislation,

we have consulted representatives of every competing energy source, as well as both

the U.S. Department of Energy and the Department of Justice.

As you know, Mr. Chairman, the House of Representatives passed a measure almost identical to HR 380 in the last Congress, but the Senate did not consider the

legislation before the 105th Congress adjourned. The Senate has now unanimously

approved NORA in this session of Congress.

As the NORA legislation goes through the House for the second time, it continues

to have the support of virtually every local, state, regional, and national trade association affiliated with our industry including PMAA, 25 state trade associations,

labor unions and many other industry groups. In fact, we have conducted surveys

that show powerful industry support for an industry-financed check-off program. A

professional polling firm conducted a nationwide survey of the industry in 1997 and

found that 96% of the industry supports creation of a program like NORA. Our industry has long-held a strong desire to develop the means to support R & D, improve safety and training, and provide consumer education—all without unnecessary involvement of the federal government. The NORA check-off program is just

the type of program that will accomplish our industry’s objectives.

In addition to the strong industry support for NORA, HR 380 also has been endorsed by many notable third parties, including the Consumer Energy Council of

America Research Foundation, the National Environmental Policy Institute, the Fiberglass Tank & Pipe Institute, and the International Brotherhood of Teamsters.

HR 380 also has broad, bipartisan support from 128 House cosponsors, including a

majority of the members of this Subcommittee.

NORA Will Support Parity for the Heating Oil Industry

Currently, the heating oil industry, unlike our main competitors, does not benefit

from a nationwide industry program. Our industry is made up of over 7,000 businesses that employ almost 250,000 workers. These businesses are small, familyowned enterprises that compete against each other and other sources of fuel to meet

the energy needs of millions of consumers. The diverse nature of our industry means

that no single company has a large enough stake to fund such a program. NORA

is a fair, self-help measure that will enable our industry to compete on a level playing field with other energy sources.

Oilheat’s main competitors have long-benefited from nationwide industry programs that the federal government has either established or supported. These programs support many of the same activities that we hope to undertake under NORA.

The Gas Research Institute (GRI), for example, conducts a variety of industry activities, including R & D, that are designed to benefit gas consumers and the industry.

GRI, which was traditionally funded and supervised under the Federal Energy Regulatory Commission’s regulatory authority, has been very successful at helping the

natural gas industry meet its important needs.

Operation of the NORA Check-off Program

The NORA check-off program will support research and development, safety,

training, and consumer education—all important activities that the oilheat industry

greatly needs to address. These activities will help lower consumers’ energy bills,

and they will help create a cleaner environment.

Under HR 380, the check-off program will only go into effect if industry support

is fully documented through the referendum process. After the legislation becomes

law, a referendum will be conducted among oilheat retail marketers and wholesale

distributors to authorize the creation of the check-off and the ‘‘National Oilheat Research Alliance’’ to manage the program for the industry. The industry organization

will cover the costs of the referendum, although it will be reimbursed with checkoff funds if the Alliance is established.

For the NORA check-off program to go into effect, two-thirds of those voting in

both the retail marketer class and wholesale distributor class must vote their approval. The total volume of oilheat sold to consumers or the total volume of dyed

distillate sold at the terminal rack during the previous year or other similar period

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will determine the voting rights among retail marketers and wholesale distributors

respectively. Once the NORA check-off is established, a majority vote of both classes

can terminate the program. If individual states do not wish to participate in the program, they may opt out of it.

Following the approval of the industry, the qualified industry organization will select 61 members for the board of the National Oilheat Research Alliance. These

members will represent all segments of the heating oil industry. No more than 11

Alliance members will be selected each year to serve as an Executive Committee

which will manage the Alliance and coordinate the check-off operations.

The NORA program allows a small portion of the wholesale price of oilheat to be

collected and used to fund key industry activities. H.R. 380 provides for an assessment of $.0020 per gallon of dyed distillate or number one distillate.

NORA Will Provide Important Benefits for Our Industry, Its Consumers, and the Environment

The NORA program promises to provide direct benefits for our industry, its consumers, and the environment. HR 380 outlines several key areas of focus including

research and development, safety, training, and consumer education needs.

In particular, check-off funds will support research and development of new technologies and more efficient equipment and appliances. It will also help our industry

provide employee and consumer training and safety efforts, as well as key consumer

outreach initiatives, including cooperative advertising with state associations and

builder outreach.

Under NORA, our industry will be able to cooperate with top research facilities—

including universities and laboratories—to develop ground-breaking technologies. In

turn, NORA will help our industry by enabling members to share research discoveries with the market through information, new products, and new systems. Advances in areas such as fuels and fuel quality, venting systems, heat transfer technology, and system engineering will help to increase efficiency and improve equipment usage. In turn, both American consumers and oilheat companies will benefit

from lower costs. As R & D leads to cleaner fuels and more efficient equipment, the

environment will also benefit from NORA and the important advances that this program will pioneer.

In summary, NORA will help create a level playing field by providing the heating

oil industry with the same type of program that competing energy sources enjoy,

the program requires no federal funding and essentially no federal involvement; and

the bill will benefit consumers, as well as the environment. Given the broad-based,

bipartisan support for HR 380 from both within and outside of our industry, we

hope that the House of Representatives will act swiftly to pass this important legislation, just as it did in 1998.

Mr. Chairman, thank you for holding this hearing and for allowing me to share

our strong support for HR 380.

Mr. BARTON. Thank you, Mr. Allen, and thank you for being brief

in your testimony. We appreciate that.

We would now like to recognize Mr. Woosnam. Your statement

is in the record, and you are recognized for up to 7 minutes to

elaborate on it.

STATEMENT OF DOUGLAS WOOSNAM, DIRECTOR OF PUBLIC

AFFAIRS, ALLENERGY MARKETING COMPANY, LLC

Mr. WOOSNAM. Thank you, Mr. Chairman.

My name is Doug Woosnam. I live in New Hope, Pennsylvania.

I presently work for ALLEnergy Marketing Company. Our company’s retail operations serve approximately 73,000 residential customers and seven of the Mid-Atlantic and Northeast States plus

the District of Columbia. We deliver over 95 million gallons of

home heating oil, 4 million gallons of propane and over 200 million

gallons of gasoline, diesel and other petroleum products. We also

market natural gas to homes and businesses from New Jersey to

New Hampshire and operate wholesale terminals that provide supply to other retail heating companies in our region.

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I am here to share our strong support for the NORA legislation,

the National Oilheat Research Alliance Act, H.R. 380, and to thank

my Congressman, Jim Greenwood, for sponsoring this important

legislation.

We are also very grateful to Chairman Bliley for his continued

support of our efforts and to you, Mr. Chairman, for holding today’s

hearing. We also appreciate the assistance that many members of

this committee have pledged to H.R. 380, including the support of

17 subcommittee members who have cosponsored this legislation.

This bill represents the years of hard work that our industry has

spent in developing an industry-financed program to support research and development, safety, consumer education and other key

initiatives. Through the NORA program, our industry will be able

to meet its most vital needs through its own efforts, with minimal

government involvement and no government cost. We are enthusiastic about the benefits that the NORA program will provide for

our industry and the 30 million Americans who use heating oil.

H.R. 380 is essentially identical to a bill that the House passed

unanimously in 1998 after being considered by this subcommittee

and the full Commerce Committee but which, unfortunately, was

not considered by the Senate before the end of the 105th Congress.

In November, 1999, the Senate considered and unanimously approved its companion version of the NORA legislation. Now that

the Senate has acted, we are hopeful that the House of Representatives will take swift action to pass the NORA legislation once

again.

The NORA program promises to benefit consumers in a number

of ways. For example, one of the most important aspects of the

NORA program is that it will enable our industry to fund important research and development efforts.

A 1997 report conducted by Brookhaven National Lab for the

United States Department of Energy outlined a comprehensive research agenda for the development of more efficient burning equipment, more effective heat transfer technology and other similar activities. As the report notes, the innovations that will help result

from our R&D efforts financed by NORA will help reduce consumers’ fuel bills by increasing energy efficiency through better

fuel quality and more efficient burners. The BNL report also points

out that these advances in fuel efficiency will help create a cleaner

environment.

As the National Environmental Policy Institute has also noted,

NORA-financed research and development will lead to improved

fuel quality, more efficient equipment and improved heat transfer

devices, all of which will produce substantial environmental benefits.

NEPI is one of the many diverse organizations—including the

Consumer Energy Council of America, labor unions, the propane

industry and other industries and organizations—that have endorsed the NORA legislation.

As I have just noted, the NORA legislation has been endorsed by

the Consumer Energy Council of America; and we are very pleased

that the Nation’s oldest public interest energy policy organization

has recognized that NORA will lead to impressive benefits for consumers of heating oil.

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In the area of consumer education, NORA-financed outreach will

help consumers in a number of ways—a simple reminder to customers to tune up their equipment each year or notifying them of

new technology improvements that could save them a significant

amount of money. Obviously, safety and training activities focused

both on the industry employees and consumers will also provide

significant benefits to the consumer and the industry and all States

in which oilheat is utilized.

With your permission, Mr. Chairman, I would like to include the

Consumer Energy Council’s endorsement letter into the record.

To conclude, we believe that H.R. 380 will create tangible benefits for our industry—more importantly, its consumers and the environment.

Thank you again, Mr. Chairman, for the opportunity to testify

here today.

[The prepared statement of Douglas Woosnam follows:]

PREPARED STATEMENT OF DOUGLAS WOOSNAM, DIRECTOR OF PUBLIC AFFAIRS, ALLENERGY MARKETING CO., LLC

Mr. Chairman and Members of the Subcommittee, I am Doug Woosnam, I live in

New Hope, PA and I presently work for AllEnergy Marketing Co., LLC. Our company’s retail operations serve approximately 73,000 residential customers in 7 of the

Mid-Atlantic and Northeast states plus the District of Columbia. We deliver over 95

million gallons of home heating oil, 4 million gallons of propane and 200 million gallons of gasoline, diesel and other petroleum products. We also market natural gas

to homes and businesses from New Jersey to New Hampshire and operate wholesale

terminals that provide supply to other retail heating oil companies in our region.

I am here to share our strong support for the National Oilheat Research Alliance

(NORA) Act, H.R. 380, and to thank my Congressman, Jim Greenwood, for sponsoring this important legislation. We are also grateful to Chairman Bliley for his

continued support of our efforts, and to you, Mr. Chairman, for holding today’s hearing. We also appreciate the assistance that many members of this subcommittee

have pledged to HR 380, including the support of the 17 subcommittee members

who have cosponsored this legislation.

Background of HR 380: Both the House and Senate Have Already Unanimously Approved NORA—But in Different Sessions of Congress

This bill represents years of hard work that our industry has spent in developing

an industry-financed program to support research and development, safety, consumer education, and other key initiatives. Through the NORA program, our industry will be able to meet its most vital needs through its own efforts, with minimal

government involvement and at no government cost. We are enthusiastic about the

benefits that the NORA program will provide for the heating oil industry and the

30 million American consumers of heating oil.

HR 380 is essentially identical to a bill that the House passed unanimously in

1998 after being considered and approved by this subcommittee and the full Commerce Committee. Unfortunately, time ran out in the 105th Congress before the

Senate could consider the legislation. In 1999, the Senate considered and then

unanimously approved its companion version of the NORA legislation. Congressman

Greenwood reintroduced his NORA measure in January and HR 380 now has 128

cosponsors, almost evenly divided between republicans and democrats from diverse

geographic parts of the country.

NORA is Modeled on Established Law—The Successful Propane Check-off Program

HR 380 is nearly identical to the check-off program for propane which was enacted into law in 1996 (The Propane Education and Research Act of 1996 (PERA),

Public Law 104284 (15 U.S.C. 6401, et seq.)). NORA is basically the same checkoff legislation, with some slight modifications to account for the differences between

the two types of fuel, and with some adjustments made to make the program more

flexible. For example, the NORA check-off program is only intended to operate in

the 24 states that have the highest levels of heating oil consumption. HR 380 calls

for a referendum in each of these states in order to provide flexibility for those in

the industry. If a state does not wish to participate in the NORA program, it can

simply decline to conduct a referendum or it can defeat the referendum. In this way,

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industry participants and individual states can determine whether or not they wish

to be participants in the NORA check-off program.

The recent, substantial success of the propane check-off program provides further

support for our view that the NORA program will help the heating oil industry provide direct, tangible benefits for consumers. After a vast majority of both the producer and retail marketer classes voted in favor of the propane check-off, the Propane Education and Research Council (PERC) went into effect in July 1997. After

nearly three years in operation, the program continues to have overwhelming industry support, and for good reason. Funds from the propane check-off have been used

to address many of the industry’s most vital research, development, safety, training,

and consumer education needs.

PERC has used assessed funds to support a number of programs, including, for

example, the production and widespread distribution of an educational video that

is designed to ensure compliance with new safety guidelines for the propane industry. The video illustrates how to safely satisfy the new guidelines for overfilling prevention devices (OPD) which are devices that are intended to improve customer

safety. Through programs such as this one, the propane check-off program has provided great benefits to the industry and propane consumers. There is every reason

to believe that the NORA check-off program would enjoy the same success.

NORA Will Support Vital Industry Needs, Including Research and Development Efforts, That Will Benefit Consumers and The Environment

One of the most important aspects of the NORA program is that it will enable

our industry to fund much-needed research and development efforts. A 1997 report

conducted by the Brookhaven National Laboratory for the U.S. Department of Energy outlines a comprehensive research agenda for the development of more efficient

burning equipment, more effective heat transfer technology, and other similar activities. The BNL report identifies a number of fields of research that will help improve reliability, maintenance, and efficiency. In particular, the report identifies fuel

quality research, equipment diagnostics-service tools, and venting research that

would help improve equipment performance and efficiency. As the report notes, the

innovations that will result from R & D efforts financed by NORA will help reduce

consumers’ fuel bills by increasing energy efficiency through better fuel quality and

more efficient burners.

In fact, the BNL report concluded that the NORA program ‘‘will provide economic

support to millions of American households by reducing fuel bills and thousands of

small family businesses in the United States who will gain from having satisfied

consumers and reduced operating costs.’’ According to BNL, consumers will receive

a high rate of return for each dollar spent since R & D will increase efficiency and

improve heat transfer technology. Further, the NORA program will lower maintenance, repair, and service costs by improving training for service technicians. The

BNL report also points out that these advances in fuel efficiency will help create

a cleaner environment.

The National Environmental Policy Institute has also noted that NORA-financed

research and development will lead to improved fuel quality, more efficient equipment, and improved heat transfer devices—all of which will produce substantial environmental benefits. NEPI is one of the many diverse organizations—including the

Consumer Energy Council of America, labor unions, and the propane industry—that

has endorsed the NORA legislation.

The endorsement of the Consumer Energy Council of America (CECA), which is

the nation’s oldest public interest energy policy organization, is especially important

to us. CECA has recognized that NORA will lead to impressive benefits for consumers of heating oil. In the area of consumer education, for example, NORA-financed outreach will help consumers in a number of ways. A simple reminder to

customers to have their equipment tuned up, or notifying them of new technology

improvements, could save customers a significant amount of money. Obviously, safety and training activities (focused both on industry employees and on consumers)

also will provide significant benefits to the consumer and the industry in all states

in which oilheat is utilized.

To conclude, we believe that the NORA program contemplated in HR 380 will provide the best means for allowing our industry to finance research and development,

training, safety and consumer information without the use of tax dollars or a government bureaucracy. In turn, these activities will create tangible benefits for our

industry, its consumers, and the environment.

Thank you again, Mr. Chairman, for the opportunity to testify today.

Mr. BARTON. Thank you, Mr. Woosnam.

10

If this were not a democracy, I could say there is a quorum and

move the bill right now. That wouldn’t be fair.

I am going to recess briefly, go vote. I should be back within 10

minutes.

We are in recess for approximately 10 minutes. I would ask our

witnesses to stay close to the hearing room because as soon as we

get back we will try to have the questions.

[Brief recess.]

Mr. SHIMKUS [presiding]. Okay. We will call this hearing back

into session.

I will begin with my 5 minutes of questioning, and we will see

if any of my colleagues come back, and, if not, then we will be finished.

Really, I have a series of four questions that I would like for you

both to address, and we will see how far I get along in the process.

First question, would you please explain how rural consumers of

heating oil, including farmers and ranchers, would be affected by

the NORA program?

Mr. WOOSNAM. This program is only designed to affect those people who consume the product for heating fuels. So a farmer who

uses diesel for their tractors or equipment and other nonheating

purposes would not be included, would not be affected, would not

pay.

Mr. ALLEN. But those residents in rural areas who use home

heating oil to heat would receive the same benefits as urban and

suburban dwellers. They would receive benefits from the research

and development that would create new products. It would be more

efficient and better for the environment. They would receive benefits from the training that could be provided to small businesses

that serve those rural farmers and ranchers. You know how small

businesses are when it comes to training. There are no line items

in their budget for that to consider that function. They will benefit

just like our suburban and urban users.

Mr. SHIMKUS. Very good.

In the testimony that we had and some of the written testimony,

it was stated that there is a substantial percentage of those in the

industry who support the legislation that we have before us. Can

you briefly tell me if you perceive any opposition and where that

opposition is coming from?

Mr. ALLEN. Congressman, I have been involved in this for 6

years, and during that time we have gone around to 20 of the 24

States personally to promote this program, and in that time we

have addressed concerns and put together a bill before you that, to

my knowledge, at this point has no opposition either from within

the industry or outside of the industry. It has been a long process

and what today is before you is something that is broadly supported, as evidenced by the number of cosponsors on this committee and in the House.

Mr. SHIMKUS. And may be evidenced by the lack of people here.

Mr. Woosnam.

Mr. WOOSNAM. Just to support what Mr. Allen just said, I mean,

we reached out to labor unions, again, the Consumer Energy Council, which I think is acknowledged as one of the most senior of consumer watchdog groups. Even our competition in the natural gas

11

industry has weighed in, and we believe that the product you have

before you has been very well vetted, so to speak.

Mr. SHIMKUS. Give me a brief synopsis of how do we expect

NORA funds will be spent.

Mr. ALLEN. Just as this legislation prescribes. The legislation

says it will be used for research and development, develop new

products, more reliable products and cleaner products. We have

great needs, and we will do that. The legislation says that we can

use it for training our infrastructure, for improving their safety

practices.

As you know, there are 7,000 small family businesses who sell

heating oil to the over 30 million American consumers. They vitally

need the training that this bill would provide so we can compete

in the 21st century. And then, finally, we have many publics that

we must educate. We must educate architects, builders, regulators,

people who deal with our business daily and our own consumer

about the new oilheat we are going to create.

Mr. WOOSNAM. Again, I would support what Don said. One of our

critical issues right now is finding qualified technicians, and NORA

funds could be used to work with local technical institutes to establish training programs to bring new people into the marketplace,

employees.

But the big thing I say is this is a consumer benefit because people will be better informed about the product they are using to heat

their homes.

Mr. SHIMKUS. And knowing and understanding the make-up of

this committee and having friends from the northeastern States—

I was outside the room, so I don’t know if the question of price fluctuations came up. How do you perceive NORA to be helpful in addressing heating oil concerns and price fluctuations? Of course,

with the oil shortage or the restriction of importation or actually

processing that OPEC has done, is this going to be helpful or harmful in this whole address to my colleagues in the northeastern

States on the issue of price?

Mr. ALLEN. This legislation we view as a vehicle to prevent happening from what happened again. It cannot happen to our industry again. It destroys the confidence of our consumers within our

industry. It destroys the confidence of our coworkers in what we do,

and it destroys the financial aspects of a heating oil dealer. Your

cash lines are exploded. Your margins are decreased. We cannot

allow this to happen.

NORA, we think, can cause solutions to occur. My own particular

company has used price protection for its consumers for 10 years.

This last year my 8,000 customers experienced no price spike.

There are countless other dealers like myself throughout the

oilheat industry who have offered these programs. NORA, we

think, can provide consumers the awareness of that choice. It can

through education bring more dealers, train them in how to manage this type of program. These are the types of things we think

NORA can do to prevent this from happening again.

Mr. WOOSNAM. I have nothing to add to Mr. Allen’s statement.

Mr. SHIMKUS. Having none of my colleagues return, what I will

do is leave the record open for the requisite number of days if they

want to submit questions to you all.

12

And, with that, having no other members here and no other

questions, I will adjourn this hearing.

[Whereupon, at 12 noon, the subcommittee was adjourned.]