Calendar No. 473

104TH CONGRESS

2D SESSION S. 1646

[Report No. 104–298]

A BILL

To authorize and facilitate a program to enhance

and for other purposes.the benefit of propane consumers and the public,safety education in the propane gas industry forsafety, training, research and development, and

JUNE 27, 1996

Reported with an amendment
II

Calendar No. 473

104TH CONGRESS

2D SESSION S. 1646

[Report No. 104–298]

To authorize and facilitate a program to enhance safety, training, research

and development, and safety education in the propane gas industry

for the benefit of propane consumers and the public, and for other

purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 27 (legislative day, MARCH 26), 1996

Mr. DOMENICI (for himself, Mr. FORD, Mr. DOLE, Mr. LOTT, Mr. HEFLIN,

Mr. SHELBY, Mr. FAIRCLOTH, Mr. SIMPSON, Mr. COCHRAN, Mr.

INHOFE, Mr. WARNER, Mr. HELMS, Mr. MCCONNELL, Mr. THURMOND,

Mr. BURNS, Mr. JOHNSTON, Mr. BINGAMAN, Mr. NICKLES, Mr. LUGAR,

Mrs. KASSEBAUM, Mr. COATS, Mr. GRAMS, Mr. KYL, Mr. COVERDELL,

Mr. PRYOR, Mr. BOND, Mr. BUMPERS, Mr. HARKIN, Mr. THOMAS, Mr.

GREGG, Mr. SMITH, and Mrs. HUTCHISON) introduced the following bill;

which was read twice and referred to the Committee on Energy and Natural Resources

JUNE 27, 1996

Reported by Mr. MURKOWSKI, with an amendment

[Insert the part printed in italic]

A BILL

To authorize and facilitate a program to enhance safety,

training, research and development, and safety education

in the propane gas industry for the benefit of propane

consumers and the public, and for other purposes.
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Propane Education

5 and Research Act of 1996’’.

6 SEC. 2. FINDINGS.

7 Congress finds that—

8 (1) propane gas (also known as liquefied petro9 leum gas) is an essential energy commodity that pro10 vides heat, hot water, cooking fuel, and motor fuel,

11 and has many other uses to millions of Americans;

12 (2) the use of propane is especially important to

13 rural citizens and farmers, offering an efficient and

14 economical source of gas energy;

15 (3) propane has been recognized as a clean fuel

16 and can contribute in many ways to reducing pollu17 tion in cities and towns of the United States; and

18 (4) propane is primarily domestically produced,

19 and the use of propane provides energy security and

20 jobs for Americans.

21 SEC. 3. DEFINITIONS.

22 In this Act:

23 (1) COUNCIL.—The term ‘‘Council’’ means a

24 Propane Education and Research Council estab25 lished under section 4.
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1 (2) INDUSTRY.—The term ‘‘industry’’ means

2 persons involved in the United States in—

3 (A) the production, transportation, and

4 sale of propane; and

5 (B) the manufacture and distribution of

6 propane utilization equipment.

7 (3) INDUSTRY TRADE ASSOCIATION.—The term

8 ‘‘industry trade association’’ means an organization

9 exempt from tax, under paragraph 3 or 6 of section

10 501(c) of the Internal Revenue Code of 1986, that

11 represents the propane industry.

12 (4) ODORIZED PROPANE.—The term ‘‘odorized

13 propane’’ means propane that has had odorant

14 added to it.

15 (5) PRODUCER.—The term ‘‘producer’’ means

16 the owner of propane at the time at which the pro17 pane is recovered at a gas processing plant or refin18 ery.

19 (6) PROPANE.—The term ‘‘propane’’—

20 (A) means a hydrocarbon, the chemical

composition of which is predominantly C3H8 21 ,

22 whether recovered from natural gas or from

23 crude oil; and

24 (B) includes liquefied petroleum gas or a

25 mixture of liquefied petroleum gases.
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1 (7) PUBLIC MEMBER.—The term ‘‘public mem2 ber’’ means a member of the Council, other than a

3 representative of producers or retail marketers, rep4 resenting significant users of propane, public safety

5 officials, academia, the propane research community,

6 or other groups knowledgeable about propane.

7 (8) QUALIFIED INDUSTRY ORGANIZATION.—The

8 term ‘‘qualified industry organization’’ means the

9 National Propane Gas Association, the Gas Proc10 essors Association, a successor of the National Pro11 pane Gas Association or the Gas Processors Associa12 tion, or a group of retail producers or marketers

13 that collectively represent at least 25 percent of the

14 volume of propane produced or sold, respectively, in

15 the United States.

16 (9) RETAIL MARKETER.—The term ‘‘retail mar17 keter’’ means a person engaged primarily in the sale

18 of odorized propane to ultimate consumers or to re19 tail propane dispensers.

20 (10) RETAIL PROPANE DISPENSER.—The term

21 ‘‘retail propane dispenser’’ means a person that

22 sells, but is not engaged primarily in the business of

23 selling odorized propane to ultimate consumers.

24 (11) SECRETARY.—The term ‘‘Secretary’’

25 means the Secretary of Energy.
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1 SEC. 4. REFERENDA.

2 (a) CREATION OF PROGRAM.—

3 (1) IN GENERAL.—The qualified industry orga4 nizations may conduct a referendum among produc5 ers and retail marketers for the creation of a Pro6 pane Education and Research Council.

7 (2) EXPENSES.—A referendum under para8 graph (1) shall be conducted at the expense of the

9 qualified industry organizations.

10 (3) REIMBURSEMENT.—The Council, if estab11 lished, shall reimburse the qualified industry organi12 zations for the cost of the referendum accounting

13 and documentation.

14 (4) INDEPENDENT AUDITING FIRM.—The ref15 erendum shall be conducted by an independent au16 diting firm agreed to by the qualified industry orga17 nizations.

18 (5) VOTING RIGHTS.—Voting rights in the ref19 erendum shall be based on the volume of propane

20 produced or odorized propane sold in the calendar

21 year previous to the year in which the referendum

22 is conducted, or other representative period agreed

23 to by the qualified industry organizations.

24 (6) CERTIFICATION OF VOLUME OF PRO25 PANE.—All persons voting in the referendum shall
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1 certify to the independent auditing firm the volume

2 of propane the person represents.

3 (7) APPROVAL.—On the approval of persons

representing 2 4 ⁄3 of the total volume of propane voted

in the retail marketer class and 2 5 ⁄3 of all propane

6 voted in the producer class, the Council shall be es7 tablished.

8 (b) TERMINATION OR SUSPENSION.—

9 (1) REFERENDUM.—On the Council’s initiative,

10 or on petition to the Council by producers and retail

11 marketers representing 35 percent of the volume of

12 propane produced and sold, respectively, in the Unit13 ed States, the Council shall conduct a referendum to

14 determine whether the industry favors termination

15 or suspension of the Council.

16 (2) EXPENSE.—A referendum under paragraph

17 (1) shall be conducted at the expense of the Council.

18 (3) INDEPENDENT AUDITING FIRM.—The ref19 erendum shall be conducted by an independent au20 diting firm selected by the Council.

21 (4) TERMINATION OR SUSPENSION.—Termi22 nation or suspension shall take effect if approved

23 by—

(A) persons representing more than 1 24 ⁄2 of

25 the total volume of odorized propane in the pro-
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ducer class and more than 1 1 ⁄2 of the total vol2 ume of propane in the retail marketer class; or

(B) persons representing more than 2 3 ⁄3 of

4 the total volume of propane in produced or sold

5 in the United States.

6 SEC. 5. PROPANE EDUCATION AND RESEARCH COUNCIL.

7 (a) SELECTION OF MEMBERS.—

8 (1) SELECTION BY QUALIFIED INDUSTRY ORGA9 NIZATIONS.—The qualified industry organizations

10 shall select all retail marketer, public, and producer

11 members of the Council.

12 (2) ALLOCATION.—The producer organizations

13 shall select the producer members of the Council,

14 the retail marketer organizations shall select retail

15 marketer members, and all qualified industry organi16 zations shall select the public members.

17 (3) VACANCIES.—Vacancies in unfinished terms

18 of Council members shall be filled in the same man19 ner as original appointments.

20 (b) REPRESENTATION.—In selecting members of the

21 Council, the qualified industry organizations shall give due

22 regard to selecting a Council that is representative of the

23 industry, including representation of—

24 (1) gas processors and oil refiners among pro25 ducers;
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1 (2) interstate and intrastate operators among

2 retail marketers;

3 (3) large and small companies among producers

4 and retail marketers, including agricultural coopera5 tives; and

6 (4) all geographic regions of the country.

7 (c) MEMBERSHIP.—

8 (1) IN GENERAL.—The Council shall consist of

9 21 members, including—

10 (A) 9 members representing retail market11 ers;

12 (B) 9 members representing producers;

13 and

14 (C) 3 public members.

15 (2) QUALIFICATIONS.—Each Council member

16 representing retail marketers or producers shall be a

17 full-time employee or owner of a business in the in18 dustry that the member represents or a representa19 tive of an agricultural cooperative.

20 (3) DISQUALIFICATION.—No employee of a

21 qualified industry organization or other industry

22 trade association shall serve as a member of the

23 Council, and no member of the Council may serve

24 concurrently as an officer of the board of directors
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1 of a qualified industry organization or other industry

2 trade association.

3 (4) LIMITED COMPANY REPRESENTATION.—Not

4 more than 1 person from any company (or affiliate

5 of the company) may serve on the Council at any

6 given time.

7 (d) COMPENSATION.—

8 (1) IN GENERAL.—Subject to paragraph (2),

9 Council members shall receive no compensation for

10 services performed or reimbursement for expenses

11 relating to services performed.

12 (2) EXCEPTION FOR PUBLIC MEMBERS.—A

13 public member may, on request, be reimbursed for

14 reasonable expenses directly related to participation

15 by the member in Council meetings.

16 (e) TERMS.—

17 (1) LENGTH OF TERMS.—A Council member

18 shall serve a term of 3 years.

19 (2) NUMBER OF TERMS.—A Council member

20 may not serve more than 2 full consecutive terms.

21 (3) MAXIMUM CONSECUTIVE YEARS.—A mem22 ber filling an unexpired term may serve not more

23 than 7 consecutive years.

24 (4) RETURN OF FORMER MEMBERS.—A former

25 member of the Council may return to the Council
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1 only if the member has not been a member for a pe2 riod of 2 years.

3 (5) INITIAL APPOINTMENTS.—Initial appoint4 ments to the Council shall be for terms of 1, 2, and

5 3 years, and shall be staggered to provide for the se6 lection of 7 members each year.

7 (f) FUNCTIONS.—

8 (1) IN GENERAL.—The Council shall develop

9 programs and projects and enter into contracts or

10 agreements for implementing this Act, including pro11 grams to—

12 (A) enhance consumer and employee safety

13 and training;

14 (B) provide for research and development

15 of clean and efficient propane utilization equip16 ment;

17 (C) inform and educate the public about

18 safety and other issues associated with the use

19 of propane; and

20 (D) provide for the payment of the costs of

21 implementing subparagraphs (A) through (C)

22 with funds collected under this Act.

23 (2) COORDINATION.—The Council shall coordi24 nate activities with industry trade associations and

25 others as appropriate to provide efficient delivery of
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1 services and to avoid unnecessary duplication of ac2 tivities.

3 (g) USE OF FUNDS.—

4 (1) UNITED STATES AGRICULTURE INDUS5 TRY.—Not less than 5 percent of the funds collected

6 through assessments under this Act shall be used for

7 programs and projects intended to benefit the agri8 culture industry in the United States.

9 (2) COORDINATION.—The Council shall coordi10 nate the use of funds under paragraph (1) with agri11 culture industry trade associations and other organi12 zations representing the agriculture industry.

13 (3) USE OF PROPANE AS AN OVER-THE-ROAD

14 MOTOR FUEL.—The percentage of funds collected

15 through assessments under this Act to be used in

16 any year for projects relating to the use of propane

17 as an over-the-road motor fuel shall not exceed the

18 percentage of the total market for odorized propane

19 that is used as an over-the-road motor fuel, based on

20 an historical average of the use of propane as an

21 over-the-road motor fuel during the 3-year period

22 preceding the year in which the funds are used.

23 (h) PRIORITIES.—Issues related to research and de24 velopment, safety, education, and training shall be given
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1 priority by the Council in the development of programs

2 and projects.

3 (i) ADMINISTRATION.—

4 (1) CHAIRMAN.—The Council shall select a

5 Chairman from among the members of the Council.

6 (2) OFFICERS.—The Council shall select from

7 among the members of the Council such officers as

8 the Council considers necessary.

9 (3) COMMITTEES.—The Council may establish

10 committees and subcommittees of the Council.

11 (4) RULES AND BYLAWS.—The Council shall

12 adopt rules and bylaws for the conduct of business

13 and the implementation of this Act.

14 (5) INDUSTRY COMMENT AND RECOMMENDA15 TIONS.—The Council shall establish procedures for

16 the solicitation of industry comment and rec17 ommendations on any significant plan, program, or

18 project to be funded by the Council.

19 (6) ADVISORY COMMITTEES.—The Council may

20 establish advisory committees of persons other than

21 Council members.

22 (j) ADMINISTRATIVE EXPENSES.—

23 (1) LIMITATION ON EXPENSES.—The adminis24 trative expenses of operating the Council (not in25 cluding costs incurred in the collection of the assess-
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1 ment under section 6) plus amounts paid under

2 paragraph (2) shall not exceed 10 percent of the

3 funds collected by the Council in any fiscal year.

4 (2) REIMBURSEMENT.—The Council shall an5 nually reimburse the Secretary for costs incurred by

6 the United States relating to the Council.

7 (3) LIMITATION ON REIMBURSEMENT.—A reim8 bursement under paragraph (2) for any fiscal year

9 shall not exceed the amount that the Secretary de10 termines is twice the average annual salary of em11 ployees of the Department of Energy.

12 (k) BUDGET.—

13 (1) REVIEW AND COMMENT.—Prior to August

14 1 of each year, the Council shall publish for public

15 review and comment a budget plan for the next cal16 endar year, including the probable costs of all pro17 grams, projects, and contracts and a recommended

18 rate of assessment sufficient to cover the costs.

19 (2) SUBMISSION.—Following review and com20 ment under paragraph (1), the Council shall submit

21 the proposed budget to the Secretary and to Con22 gress.

23 (3) RECOMMENDATIONS BY SECRETARY.—The

24 Secretary may recommend any program or activity

25 that the Secretary considers appropriate.
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1 (l) RECORDS.—

2 (1) IN GENERAL.—The Council shall keep min3 utes, books, and records that clearly reflect all of the

4 actions of the Council.

5 (2) PUBLIC AVAILABILITY.—The Council shall

6 make the minutes, books, and records available to

7 the public.

8 (3) AUDIT.—The Council shall have the books

9 audited by a certified public accountant at least once

10 each fiscal year and at such other times as the

11 Council may determine.

12 (4) COPIES.—Copies of an audit under para13 graph (3) shall be provided to all members of the

14 Council, all qualified industry organizations, and any

15 other member of the industry on request.

16 (5) NOTICE.—The Council shall provide the

17 Secretary with notice of meetings.

18 (6) ADDITIONAL REPORTS.—The Secretary may

19 require the Council to provide reports on the activi20 ties of the Council and on compliance, violations,

21 and complaints regarding the implementation of this

22 Act.

23 (m) PUBLIC ACCESS TO COUNCIL PROCEEDINGS.—

24 (1) IN GENERAL.—All meetings of the Council

25 shall be open to the public.
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1 (2) NOTICE.—The Council shall provide the

2 public at least 30 days’ notice of Council meetings.

3 (3) MINUTES.—The minutes of all meetings of

4 the Council shall be made readily available to the

5 public.

6 (n) ANNUAL REPORT.—

7 (1) IN GENERAL.—Each year the Council shall

8 prepare and make publicly available a report that in9 cludes an identification and description of all pro10 grams and projects undertaken by the Council dur11 ing the previous year and those planned for the up12 coming year.

13 (2) RESOURCES.—The report shall detail the

14 allocation and planned allocation of Council re15 sources for each program and project.

16 SEC. 6. ASSESSMENTS.

17 (a) IN GENERAL.—The Council may levy an assess18 ment on odorized propane in accordance with this section.

19 (b) AMOUNT.—

20 (1) INITIAL ASSESSMENT.—The Council shall

set the initial assessment at no greater than 1 21 ⁄10

22 cent per gallon of odorized propane sold and placed

23 into commerce.

24 (2) SUBSEQUENT ASSESSMENTS.—Subsequent

25 to the initial assessment, annual assessments shall
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1 be sufficient to cover the costs of the plans and pro2 grams developed by the Council.

3 (3) ASSESSMENT MAXIMUM.—An assessment

shall not be greater than 1 4 ⁄2 cent per gallon of odor5 ized propane, unless approved by a majority of those

6 voting in a referendum in the producer class and the

7 retail marketer class.

8 (4) MAXIMUM INCREASE.—An assessment may

not be raised by more than 1 9 ⁄10 cent per gallon of

10 odorized propane annually.

11 (5) OWNERSHIP.—The owner of odorized pro12 pane at the time of odorization, or at the time of im13 port of odorized propane, shall make the assessment

14 based on the volume of odorized propane sold and

15 placed into commerce.

16 (6) DUE DATE.—Assessments shall be payable

17 to the Council on a monthly basis not later than the

18 25th of the month following the month in which the

19 assessment is made.

20 (7) EXPORTED PROPANE.—Propane exported

21 from the United States is not subject to the assess22 ment.

23 (8) LATE FEE.—The Council may establish a

24 late payment charge and rate of interest to be im-
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1 posed on a person that fails to remit or pay to the

2 Council any amount due under this Act.

3 (c) ALTERNATIVE COLLECTION RULES.—The Coun4 cil may establish an alternative means of collecting the as5 sessment if the Council determines that the alternative

6 means is more efficient and effective.

7 (d) INVESTMENT OF FUNDS.—Pending disbursement

8 pursuant to a program, plan, or project, the Council may

9 invest funds collected through assessments, and any other

10 funds received by the Council, only in—

11 (1) obligations of the United States or an agen12 cy of the United States;

13 (2) general obligations of a State or political

14 subdivision of a State;

15 (3) an interest-bearing account or certificate of

16 deposit of a bank that is a member of the Federal

17 Reserve System; or

18 (4) obligations fully guaranteed as to principal

19 and interest by the United States.

20 (e) STATE PROGRAMS.—

21 (1) IN GENERAL.—The Council shall establish a

22 program coordinating the operation of the Council

23 with the programs of any State propane education

24 and research council created by State law, or any

25 similar entity.
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1 (2) COORDINATION.—The coordination shall in2 clude a joint or coordinated assessment collection

3 process, a reduced assessment, or an assessment re4 bate.

5 (3) REDUCED ASSESSMENT OR REBATE.—A re6 duced assessment or rebate shall be 20 percent of

7 the regular assessment collected in a State under

8 this section.

9 (4) PAYMENT OF ASSESSMENT REBATES.—An

10 assessment rebate may be paid only to—

11 (A) a State propane education and re12 search council created by State law or regula13 tion that meets requirements established by the

14 Council for specific programs approved by the

15 Council; or

16 (B) a similar entity, such as a foundation

17 established by the retail propane gas industry

18 in a State that meets requirements established

19 by the Council for specific programs approved

20 by the Council.

21 SEC. 7. COMPLIANCE.

22 (a) IN GENERAL.—The Council may bring a civil ac23 tion in a United States district court to compel compliance

24 with an assessment levied by the Council under this Act.
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1 (b) COSTS.—A successful action for compliance under

2 this section may require payment by the defendant of the

3 costs incurred by the Council in bringing the compliance

4 action.

5 SEC. 8. LOBBYING RESTRICTIONS.

6 No funds collected by the Council shall be used in

7 any manner to influence legislation or an election, but the

8 Council may recommend to the Secretary changes in this

9 Act or other statutes that would further the purposes of

10 this Act.

11 SEC. 9. MARKET SURVEY AND CONSUMER PROTECTION.

12 (a) PRICE ANALYSIS.—

13 (1) IN GENERAL.—Not later than 2 years after

14 establishment of the Council and annually there15 after, the Secretary of Commerce, using only data

16 provided by the Energy Information Administration

17 and other public sources, shall prepare and make

18 available to the Council, the Secretary, and the pub19 lic an analysis of changes in the price of propane rel20 ative to other energy sources.

21 (2) METHODOLOGY.—

22 (A) IN GENERAL.—The propane price

23 analysis shall compare indexed changes in the

24 price of consumer grade propane to a composite

25 of indexed changes in the price of residential
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1 electricity, residential natural gas, and refiner

2 price to end-users of number 2 fuel oil on an

3 annual national average basis.

4 (B) ROLLING AVERAGE PRICE.—For pur5 poses of indexing changes in consumer grade

6 propane, residential electricity, residential natu7 ral gas, and end-user number 2 fuel oil prices,

8 the Secretary of Commerce shall use a 5-year

9 rolling average price beginning with the year 4

10 years prior to the establishment of the Council.

11 (b) AUTHORITY TO RESTRICT ACTIVITIES.—

12 (1) IN GENERAL.—If in any year the 5-year av13 erage rolling price index of consumer grade propane

14 exceeds the 5-year rolling average price composite

15 index of residential electricity, residential natural

16 gas, and refiner price to end-users of number 2 fuel

17 oil in an amount greater than 10.1 percent, the ac18 tivities of the Council shall be restricted to research

19 and development, training, and safety matters.

20 (2) NOTIFICATION.—The Council shall inform

21 Congress and the Secretary of Energy of any restric22 tion of activities under this subsection.

23 (3) REANALYSIS.—On the expiration of each

24 180-day period beginning on the date on which ac25 tivities are restricted under paragraph (1), the Sec-
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1 retary of Commerce shall conduct a new propane

2 price analysis described in subsection (a).

3 (4) END OF RESTRICTION.—Activities of the

4 Council shall continue to be restricted under this

5 subsection until the percentage described in para6 graph (1) is 10.1 percent or less.

7 SEC. 10. PRICING.

8 Notwithstanding any other provision of this Act, the

9 price of propane shall be determined by market forces.

10 The Council shall take no action, and no provision of this

11 Act shall establish an agreement to, pass along to consum12 ers the cost of the assessment provided for in section 6.

13 SEC. 11. RELATION TO OTHER PROGRAMS.

14 Nothing in this Act shall preempt or supersede any

15 other program relating to propane education and research

16 organized and operated under the laws of the United

17 States or any State.

18 SEC. 12. REPORTS.

19 (a) IN GENERAL.—Not later than 2 years after the

20 date of enactment of this Act, and not less than once every

21 2 years thereafter, the Secretary of Commerce shall pre22 pare and submit to Congress and the Secretary a report

23 examining whether operation of the Council, in conjunc24 tion with the cumulative effects of market changes and

25 Federal programs, has had an effect on propane consum-
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1 ers, including residential, agriculture, process, and nonfuel

2 users of propane.

3 (b) CONSIDERATION BY THE SECRETARY OF COM4 MERCE.—The Secretary of Commerce shall—

5 (1) consider and, to the extent practicable, in6 clude in the report submissions by propane consum7 ers;

8 (2) consider whether there have been long-term

9 and short-term effects on propane prices as a result

10 of Council activities and Federal programs; and

11 (3) consider whether there have been changes in

12 the proportion of propane demand attributable to

13 various market segments.

14 (c) RECOMMENDATIONS.—To the extent that the re15 port demonstrates that there has been an adverse effect

16 on propane prices, the Secretary of Commerce shall in17 clude recommendations for reversing or mitigating the ef18 fect.

19 (d) FREQUENT REPORTS.—On petition by an af20 fected party or on request by the Secretary of Energy,

21 the Secretary of Commerce may prepare and submit the

22 report required by this section at less than 2-year inter23 vals.