[Senate Hearing 111-718]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-718
 
                             PERC AND NORA

=======================================================================


                                HEARING

                               before the

                         SUBCOMMITTEE ON ENERGY

                                 of the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   TO

RECEIVE TESTIMONY ON THE PROPANE EDUCATION AND RESEARCH COUNCIL (PERC) 
             AND NATIONAL OILHEAT RESEARCH ALLIANCE (NORA)

                               __________

                           SEPTEMBER 29, 2010


                       Printed for the use of the
               Committee on Energy and Natural Resources




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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

BYRON L. DORGAN, North Dakota        LISA MURKOWSKI, Alaska
RON WYDEN, Oregon                    RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana          SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey          JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas         ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
EVAN BAYH, Indiana                   JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan            BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel
                                 ------                                

                         Subcommittee on Energy

                  MARIA CANTWELL, Washington, Chairman

BYRON L. DORGAN, North Dakota        JAMES E. RISCH, Idaho
RON WYDEN, Oregon                    RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana          JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey          SAM BROWNBACK, Kansas
BERNARD SANDERS, Vermont             JROBERT F. BENNETT, Utah
EVAN BAYH, Indiana                   JIM BUNNING, Kentucky
DEBBIE STABENOW, Michigan            JEFF SESSIONS, Alabama
MARK UDALL, Colorado                 BOB CORKER, Tennesse
JEANNE SHAHEEN, New Hampshire

    Jeff Bingaman  and Lisa Murkowski are Ex Officio Members of the 
                              Subcommittee

                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff U.S. Senator From New Mexico.................     1
Gaffigan, Mark, Director, Natural Resources and Environment, 
  Government Accountability Office...............................     2
Huber, John, President, National Oilheat Research Alliance, 
  Alexandria, VA.................................................    10
Risch, Hon. James E., U.S. Senator From Idaho....................     2
Willis, Roy W., President and Chief Executive Officer, Propane 
  Education and Research Council, Inc............................    16

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    33

                              Appendix II

Additional material submitted for the record.....................    43


                             PERC AND NORA

                              ----------                              


                     WEDNESDAY, SEPTEMBER 29, 2010

                               U.S. Senate,
                            Subcommittee on Energy,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:02 a.m., in 
room SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman 
presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. OK. Why don't we get started with the 
hearing? Thank you all for coming.
    The hearing today is to discuss the Propane Education and 
Research Council, known as PERC, and the National Oilheat 
Research Alliance, known as NORA. These check-off programs for 
propane and oilheat have been in existence for more than a 
decade. NORA's authorizing legislation has now lapsed, making 
it a good time to reevaluate the programs.
    Last April, I asked the Government Accountability Office to 
look into the management and expenditures of each of these 
organizations. I had concerns that the publicly available 
budgets and meeting minutes for each of the programs suggested 
that consumer education was consuming a disproportionate share 
of program resources. The other two statutory functions of each 
program--safety and training, and research and development--
appeared to receive comparatively little funding.
    The resulting GAO report suggests that the original concern 
that consumer education had become the dominant objective of 
the programs was well founded; 51 percent of PERC expenditures, 
65 percent of NORA expenditures are related to consumer 
education. Meanwhile, research and development consumed about 
the same amount of the budget as administrative expenses in 
each of those programs--8 percent for PERC, 6 percent for NORA. 
It does seem a stretch to call either of these a research 
council or alliance at this point.
    A more troubling concern emerged out of the GAO report. It 
seems the programs have taken liberties in defining ``consumer 
education,'' which, in their view, includes activities that 
most of us would call lobbying. While there are restrictions 
against ``influencing legislation or elections'' in the 
statutes that set up each of the programs, apparently this has 
not been interpreted as a strict ban on all lobbying 
activities.
    GAO raised several questions about congressional intent 
behind that statutory language. I think I can safely say many 
of us who were in office at the time intended that PERC and 
NORA be research organizations primarily and not lobbying 
organizations.
    I also note that GAO highlighted that one of PERC's 
strategic objectives related to consumer education is to 
increase propane use. It strikes me that we are essentially 
allowing a fossil fuel industry to tax itself or its consumers, 
the customers, in order to lobby and increase its market share. 
I am not sure how many of our colleagues think that is a policy 
we should be putting into law.
    I understand that both PERC and NORA undertake many 
activities that are well within the parameters of what Congress 
intended when it established these programs. However, it is not 
clear to me that the benefits outweigh the costs at this point.
    It is important we have a public conversation about the 
future of PERC and NORA. I thank the witnesses, 3 witnesses who 
have come forward today for being with us to give us their 
views on these important topics.
    Senator Risch, why don't you go ahead with any opening 
statement you have, and then we will hear from the witnesses.

        STATEMENT OF HON. JAMES E. RISCH, U.S. SENATOR 
                           FROM IDAHO

    Senator Risch. Mr. Chairman, thank you.
    Thank you, first of all, for asking for the GAO report, and 
thank you for setting this important hearing. It seems that 
Congress doesn't spend nearly enough time in its oversight role 
because of the reach and the breadth of everything that 
Congress undertakes these days. So it is important that we do 
review these, and as you say, now is really an appropriate time 
to do that.
    So, again, thank you, Mr. Chairman. With that, I am anxious 
to hear the witnesses.
    The Chairman. All right. Let me just introduce the 3 
witnesses, and then we will hear from each of them. Mark 
Gaffigan is director of the Natural Resources and Environment 
Section in the Government Accountability Office. Thank you for 
being here.
    Mr. John Huber is president of NORA, the National Oilheat 
Research Alliance in Alexandria. Thank you for being here.
    Mr. Roy Willis is president and chief executive officer of 
PERC, the Propane Education and Research Council here in 
Washington.
    Mr. Gaffigan, why don't you go ahead? If you could make the 
main points you think we need to understand, and we will 
include your complete statement in the record in the case of 
each witness. Go right ahead.

  STATEMENT OF MARK GAFFIGAN, DIRECTOR, NATURAL RESOURCES AND 
         ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Gaffigan. Thank you, Chairman Bingaman.
    Chairman Bingaman and Ranking Member Risch, good morning. I 
am pleased to be here to testify on PERC, the Propane Education 
and Research Council, and NORA, the National Oilheat Research 
Alliance.
    As you know, PERC and NORA were authorized by Congress to 
collect assessments to address 3 high-priority areas for 
propane and oilheat--research and development, safety and 
training, and consumer education. As Chairman Bingaman 
mentioned, GAO recently completed a report on how PERC and NORA 
have spent assessments collected, how PERC and NORA activities 
achieve strategic goals, the extent to which key statutory 
requirements were met, and the role of Federal oversight. My 
testimony today summarizes GAO's findings on these 4 questions.
    First, the majority of assessments collected were spent on 
what PERC and NORA classified as consumer education. 
Specifically, between 1998 and 2008, PERC collected about $350 
million in assessments and, together with its affiliated State 
associations, reported spending about half, or $179 million, on 
consumer education.
    Total reported spending in the other two priority areas was 
less than half consumer education spending, with about $51 
million for safety and training and about $28 million for 
research and development.
    NORA collected about $107 million between 2001 and 2008 
and, together with its State associations, reported spending 
almost two-thirds, or $68 million, on consumer education. Total 
reported spending in the other two priority areas was about 
one-third of consumer education spending, with about $18 
million for education and training and about $6 million for 
research and development.
    It was not always clear to us how PERC and NORA activities 
met strategic goals. In the area of research and development, 
both PERC and NORA reported R&D activities that clearly appear 
consistent with their stated goals. For example, PERC reported 
research that has reduced pollutants that supports a strategic 
R&D goal to improve environmental performance.
    However, in other areas, such as safety and training, it 
was not always clear how PERC and NORA activities met strategic 
goals. For example, PERC safety and training activities include 
a certified employee training program. But it was unclear to us 
how this program contributed to reducing propane incidents and 
accidents, which is a PERC strategic goal for safety and 
training.
    In fact, a PERC-contracted study showed that incidents and 
accidents had slightly increased between 1998 and 2000, but 
PERC took no action to continue the study, which may have 
helped modify training to address causes of incidents and 
accidents.
    NORA did not have data on oilheat incidents and accidents, 
nor did it have a strategic goal in this area. Thus, it is 
difficult to determine whether training activities are 
succeeding or need to be modified.
    Our review identified several PERC and NORA activities that 
appear to meet the requirements of the act, such as development 
of bylaws and preparation of annual reports. However, other 
activities raise issues, most notably whether certain types of 
activities involving Congress or politically affiliated 
entities, such as a grantee use of funds to attend political 
conventions, were covered by lobbying restrictions in the 
authorizing acts.
    A lack of specificity in the language of the acts regarding 
some of the requirements, including the lobbying restrictions, 
raises issues about meeting requirements. Regarding potential 
lobbying, even if the activities in question are permitted, did 
Congress anticipate that assessment funds would be used for 
activities such as attending political conventions, 
particularly when classified as consumer education?
    Furthermore, issues remain about whether Congress 
anticipated that such a high proportion of funding would go to 
education activities in comparison to the lesser funding given 
to the other two priority areas. In particular, research and 
development was a key priority area of interest during 
congressional deliberations. But it has accounted for less than 
10 percent of assessment funding for both PERC and NORA.
    Finally, compounding the lack of specificity in the 
statutes is the lack of a specific enforcement mechanism to 
clarify and enhance compliance through proactive Federal 
oversight. While the Department of Commerce is required to 
conduct price analyses of propane and oilheat, in both cases, 
Commerce was not even aware of these requirements until they 
were raised to their attention by the GAO. Neither act requires 
Commerce to take a proactive oversight role, and it has not 
done so.
    DOE is granted oversight authority in both acts but 
continues to believe it does not have an oversight role for 
either PERC or NORA. Clearly, in light of the lack of any 
specific requirements in the statutes for Federal agencies to 
conduct oversight, Federal oversight is likely to remain 
limited.
    In conclusion, as Congress considers the reauthorization of 
NORA or potential changes to PERC's authorizing statute, it may 
wish to consider whether it wants to specify prioritization of 
activities, clarify allowable activities, and require DOE to 
undertake a more proactive Federal oversight role.
    Mr. Chairman, this concludes my opening remarks. I have 
submitted a written statement for the record, and I welcome any 
questions that you might have.
    Thank you.
 Prepared Statement of Mark Gaffigan, Director, Natural Resources and 
             Environment, Government Accountability Office
    Mr. Chairman and Members of the Subcommittee:
    Thank you for the opportunity to discuss highlights of our report 
on the extent to which the Propane Education and Research Council 
(PERC) and National Oilheat Research Alliance (NORA) implement consumer 
education, research and development, and safety and training programs 
related to the use of propane and heating oil.\1\ Tens of millions of 
Americans rely on propane and heating oil for heat, hot water and--in 
the case of propane--cooking and motor fuel. Within the last 15 years, 
Congress authorized the creation of two national entities to undertake 
propane and oilheat research and development, safety and training, and 
consumer education programs and provided the U.S. Department of 
Commerce (Commerce) and the U.S. Department of Energy (DOE) with 
certain related authority. The Propane Education and Research Act of 
1996 (the Propane Act)\2\ and the National Oilheat Research Alliance 
Act of 2000 (the Oilheat Act)\3\ authorized the establishment of PERC 
and NORA, respectively. The Oilheat Act expired on February 6, 2010, 
and is under consideration for reauthorization,\4\ but the Propane Act 
does not expire.
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    \1\ GAO, Propane and Heating Oil: Federal Oversight of the Propane 
Education and Research Council and the National Oilheat Research 
Alliance Should Be Strengthened, GAO-10-583, (Washington, D.C.: June 
30, 2010).
    \2\ Pub. L. No. 104-284, 110 Stat. 3370 (Oct. 11, 1996).
    \3\ Pub. L. No. 106-469, 114 Stat. 2029 (Nov. 9, 2000).
    \4\ The Congressional Budget Office, in a March 2, 2010 cost 
estimate, determined that reauthorizing NORA for one additional year 
would have no impact on the federal budget. The Budget Office also 
indicated that it believed that NORA's activities should be considered 
governmental in nature because assessments collected by NORA are 
compulsory and enforced by the federal government's sovereign 
authority.
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    PERC and NORA fall into a category of federally-authorized programs 
known as check-off programs. To fund check-off programs, a fraction of 
the wholesale cost of a product is set aside by the producer and 
deposited into a common fund to be used to benefit producers and 
consumers. Similar programs are in place for agriculture commodities, 
including, for example, milk, as well as beef, pork, and cotton, among 
other commodities. To fund PERC operations, each gallon of odorized 
propane gas sold is assessed $0.005.\5\ To fund NORA operations, each 
gallon of heating oil sold is assessed $0.002.
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    \5\ As propane is naturally odorless, an odorant is added as a 
means of detecting a leak. Virtually all commercial propane is 
odorized.
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    In preparing this testimony, we relied on our work supporting the 
accompanying report. This report examined: (1) how PERC and NORA spent 
the assessments they have collected; (2) the extent to which PERC's and 
NORA's reported activities help to achieve the results defined in their 
strategic goals; (3) the extent to which PERC and NORA's activities 
have met key requirements; and (4) the extent to which PERC's and 
NORA's activities and spending received federal oversight. To do our 
work, we examined PERC's and NORA's spending from the first year of 
operation--1998 for PERC and 2001 for NORA--through 2008; performance, 
response to the authorizing statutes; and coordination with applicable 
federal agencies. We assessed the reliability of financial data from 
PERC and NORA by analyzing related documentation, examining the data to 
identify obvious errors or inconsistencies, and working with PERC and 
NORA officials to identify data problems and determined the data to be 
sufficiently reliable for our purposes. We also reviewed PERC and NORA 
financial statements, annual reports, meeting minutes, and other 
reports and obtained information and views on both PERC and NORA from a 
wide range of officials in DOE and the Departments of Commerce and 
Agriculture and the private sector. The report contains a more detailed 
explanation of our scope and methodology. Our work was conducted in 
accordance with generally accepted government auditing standards.
                               background
    PERC and NORA provide the framework for propane and oilheat 
producers and marketers to establish self-help, non-federal programs of 
research and development, training, safety, and consumer education 
activities. Both the Propane Act and the Oilheat Act outline key 
procedural, administrative, and spending requirements to administer 
these programs. To help with that administration, PERC has about 30 
staff, a national council, and 5 advisory committees, while NORA has 2 
staff, an executive committee, and 3 advisory committees. Both the 
Propane and Oilheat Acts specify three areas as mandatory functions and 
priorities for PERC and NORA's programs and projects, although the Acts 
do not specify a particular funding level or ranking. The three 
mandatory areas are:

   Research and development: The Propane Act requires PERC to 
        develop programs that provide for research and development of 
        clean and efficient propane utilization equipment. The Oilheat 
        Act directs similar oilheat-related research and development 
        and directs NORA to fund projects in the demonstration stage of 
        development.
   Safety and training/education and training: Both the Propane 
        Act and the Oilheat Act require development of programs to 
        enhance consumer and employee safety and training. PERC refers 
        to this program area as ``safety and training,'' while NORA 
        refers to it as ``education and training.'' Projects that fall 
        into this spending category include developing employee 
        training materials and conducting training courses for industry 
        personnel.
   Public/consumer education: The Propane Act directs PERC to 
        develop projects to inform and educate the public about safety 
        and other issues associated with the use of propane. Similarly, 
        the Oilheat Act directs NORA to develop programs that provide 
        information to assist consumers and other persons in making 
        evaluations and decisions regarding oilheat. Such activities 
        have included the development of radio, television, and print 
        advertising directed at consumers and industry professionals.
    While there are certain restrictions on the types of activities 
        PERC and NORA can undertake, which I will discuss later, the 
        Acts generally do not prohibit PERC and NORA from conducting 
        programs or projects beyond these mandatory areas, and both 
        organizations have carried out additional activities. PERC, for 
        example, has spent funds on agriculture and engine fuel 
        programs. In addition, to coordinate its activities with other 
        parties, as required by the Propane Act, PERC has established 
        an industry programs area to provide support, data, and other 
        services to the propane industry and maximize its impact. 
        Likewise, in 2004 and 2005, NORA funded an oil tank training 
        and education program for tank installers, inspectors, and 
        insurers to address concerns about storage tanks, which NORA 
        officials stated spanned all three mandatory areas in the 
        statute.
    By statute, both PERC and NORA give a portion of the assessments 
        collected to state propane and oilheat associations with 
        similar missions.\6\ Pursuant to the Propane Act, PERC gives 20 
        percent of its assessments to state propane associations. 
        According to PERC, its oversight of these funds includes a PERC 
        council review of a state association's proposed use for these 
        funds and the submission of periodic and final reports from the 
        state associations. The Oilheat Act requires NORA to give 15 
        percent of its assessments each year to qualified state 
        associations, which may then request to receive any portion of 
        the remaining 85 percent of the assessments collected in their 
        states. NORA's oversight of state expenditures is similar to 
        PERC's, but state associations are required by NORA to submit 
        quarterly reports on program spending. Both PERC and NORA are 
        also expressly authorized by their statutes to use the 
        assessments they collect to meet general and administrative 
        expenses.
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    \6\ The PERC and NORA state associations are private enterprises 
and not state government entities.

    Mr. Chairman, our report provides detailed information about our 
four findings, which are summarized in the following sections.
    perc and nora spent over half of their collected assessments on 
                           consumer education
    According to our analysis of PERC's and NORA's audited financial 
statements, annual reports, and other financial information they 
provided to us, together PERC and NORA collected $458 million in 
assessments through 2008, and they spent over half on consumer 
education programs, with far less spent on the other two priority areas 
of research and development and safety and training. Specifically, from 
1998 to 2008, PERC collected about $350.6 million. During those years, 
PERC and its affiliated state propane associations spent over $318.5 
million as follows:

   $178.6 million for consumer education (50.9 percent),
   $50.7 million for safety and training (14.5 percent),
   $28.1 million for research and development (8 percent),
   $20 million for industry programs (5.7 percent),
   $12.5 million on agriculture programs (3.6 percent),
   $5.8 million on engine fuel programs (1.7 percent), and
   $22.7 million for general and administrative expenses (6.5 
        percent).

    The remaining balance of about $32.1 million was unspent, mostly 
reflecting, according to PERC, approved commitments to future 
spending.\7\
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    \7\ In estimating PERC's unspent balance, we found discrepancies 
between the rebate totals in their annual financial statements and 
annual reports, and a requested breakdown of cost data by program 
area--e.g., consumer education and research and development. As a 
result, the $32.1 million includes some amount representing the 
discrepancy involving these data.
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    Consistent with its authorizing statute, PERC allocated $69.5 
million (19.8 percent of its assessments) to state propane 
associations.\8\
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    \8\ According to PERC data, state propane associations spent about 
49.3 percent of the assessments PERC provided to them on consumer 
education, 38.5 percent on safety and training, 9.8 percent on industry 
programs, 0.7 percent on agriculture, 1.1 percent on research and 
development, and 0.5 percent on engine fuel work.
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    According to our analysis of NORA's audited financial statements, 
annual reports, and other NORA information provided us, from 2001 to 
2008, NORA collected over $107.4 million.\9\ Together, NORA and the 
affiliated state associations spent a total of about $101.6 million, as 
follows:
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    \9\ NORA's outside accountant informed us that, of the $107 million 
total, NORA had collected approximately $103 million and had accrued 
receivables of $4 million at the end of 2008.

   $68.4 million (63.7 percent) on consumer education programs,
   $17.8 million (16.5 percent) on education and training,
   $6.2 million (5.8 percent) on research and development,
    $300,000 (0.3 percent) on oil tank training, and
   $8.9 million (8.3 percent) on general and administration 
        expenses, and special projects.

    NORA had not yet spent $5.8 million; however, according to NORA 
officials, approximately two thirds of the $5.8 million balance has 
been designated for future expenditure but has not yet been disbursed. 
Consistent with its authorizing statute, NORA allocated $80.4 million 
(74.9 percent of assessments) to state oilheat associations.\10\
---------------------------------------------------------------------------
    \10\ According to NORA data, state associations spent about 81.4 
percent of the assessments NORA provided to them on consumer education, 
18.0 percent on education and training, and 0.6 percent on research and 
development.
---------------------------------------------------------------------------
 perc and nora report activities in all program areas, but it was not 
    always clear how those activities helped achieve strategic goals
    PERC's research and development and agriculture program activities 
appeared consistent with strategic goals, but it is not clear to what 
degree consumer education, safety and training, engine fuels, and 
industry activities helped achieve these goals. For example, a key goal 
of PERC's consumer education activities was to increase propane usage, 
but studies provided to GAO were inconsistent about whether propane 
usage actually increased. NORA's research and development activities 
were generally consistent with its strategic goals, but because NORA's 
strategic plan lacked goals for its consumer education, education and 
training, and oil tank program areas, GAO could not determine if these 
activities achieved desired results.
 some perc and nora activities appear to meet statutory requirements, 
  but others raise issues about coverage of the acts and other matters
    Some PERC and NORA activities appeared to meet the requirements of 
the Acts. For example, as called for in the Propane Act, PERC maintains 
a 21-member council; has submitted its annual draft budget to the 
Secretary of Energy each year from 2000 through 2009; and has had its 
financial records audited by a certified public accountant at least 
annually since 1998. As called for in the Oilheat Act, NORA has 
coordinated its activities with industry associations and others to 
ensure the efficient delivery of services and avoid unnecessary 
duplication; does not appear to support advertising or promotions of 
oilheat; publishes a budget and an annual report for public review and 
comment each year; and appears to make its council meetings, including 
those of its executive committee, open to the public.
    However, other activities raised issues about coverage of the Acts 
and other matters, specifically the following:

          PERC and NORA activities related to Congress and politically 
        affiliated entities. The Propane Act prohibits the use of PERC 
        assessment funds for certain ``lobbying'' activities, 
        specifically for ``influencing legislation or elections,'' 
        except for recommending to the Secretary of Energy any changes 
        in the Act or other statutes that would further the Act's 
        purposes. The Oilheat Act contains similar provisions. However, 
        some of PERC's and NORA's activities--particularly 
        communications and expenditures related to Congress or to 
        politically affiliated entities--raised issues about the 
        coverage of the Acts. We found, for example, that PERC paid for 
        a grantee to attend activities associated with the Republican 
        and Democratic national conventions, for a grantee to 
        contribute thousands of dollars to several politically active 
        organizations, and for a grantee to spend thousands of dollars 
        to host Senate and House receptions. We also found, for 
        example, that minutes of an August 2008 NORA executive 
        committee meeting indicated that the NORA president said he was 
        seeking state senators' support for NORA reauthorization, and 
        that a December 2008 NORA-qualified Massachusetts state 
        association newsletter indicated that the NORA president 
        traveled to Washington to urge both Massachusetts senators to 
        support NORA reauthorization. However, neither the Propane Act 
        nor the Oilheat Act provides guidance on what constitutes 
        ``influencing legislation or elections;'' there is little 
        pertinent legislative history; no court has addressed what this 
        language means as used in these statutes; and other federal 
        laws containing similar language have been interpreted in 
        different ways. As such, it is not clear whether or not the 
        Propane Act's or the Oilheat Act's prohibitions cover those 
        types of activities. Assuming PERC and NORA's activities were 
        permitted, issues remain about whether Congress anticipated 
        that the assessment funds would be used for these activities 
        and whether they qualify as ``consumer education'' under the 
        Acts. Issues also remain about whether Congress anticipated 
        that such a high proportion of the groups' funding would go to 
        consumer education activities, in comparison to the relatively 
        little support given to research and development, a key area of 
        congressional interest as the laws were debated prior to 
        enactment.
          PERC funding of consumer education activities after spending 
        restrictions were triggered. PERC initially designated certain 
        activities as ``consumer education'' but, when price-based 
        restrictions on consumer education programs were triggered in 
        2009, it redesignated and continued the activities as 
        ``residential and commercial'' matters. The Propane Act 
        specifies that if the 5-year average rolling price index of 
        consumer grade propane exceeds a particular price threshold, 
        PERC's activities must be restricted to research and 
        development, training, and safety. Commerce notified PERC in 
        August 2009 that this price composite index threshold had been 
        exceeded. We found that, after the August notification, PERC 
        approved three grants, including a no-cost change order to a 
        previously approved grant. These grants initially had been 
        proposed and approved as consumer education grants, which would 
        be prohibited under the restriction, and amended their 
        designation to a new program area called ``residential and 
        commercial'' matters. The Propane Act does not specifically 
        define the scope of activities permitted under the price 
        restriction nor the activities that must cease.\11\ The 
        resulting lack of a precise statutory line between permitted 
        and prohibited activities creates difficulty in assessing 
        compliance with the restriction.
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    \11\ The Oilheat Act, by contrast, contains a broad definition of 
``consumer education'': ``the provision of information to assist 
consumers and other persons in making evaluations and decisions 
regarding oilheat and other nonindustrial commercial or residential 
space or hot water heating fuels.''

    NORA monitoring of state associations. It is unclear whether NORA's 
monitoring procedures are adequate to detect non-compliance among its 
state grantees if it occurs. The Oilheat Act requires NORA to monitor 
the use of funds it provides to state associations and impose any terms 
and conditions it considers necessary to ensure compliance with the 
Act.\12\ The Oilheat Act also requires NORA to establish policies and 
procedures that conform to generally accepted accounting principles 
(GAAP) for auditing compliance with the Act. According to NORA's 
president, Nmonitoring of state associations included, among other 
things, policies and procedures to review state grants and 
disbursements and requirements in grant agreements with the state 
associations that specify the authorized and unauthorized use of NORA 
assessment funds. However, based on our review of general ledger 
entries, financial statements, and certain other reports and 
information prepared by selected state associations, we were unable to 
determine whether spending by state associations of NORA funds met the 
requirements of the Oilheat Act. For example, based on our review of 
the general ledger expenditures entries for 2006 to 2008, we found that 
hundreds of entries indicated only that a purchase was made, with no 
details as to the type of or reason for the purchase.
---------------------------------------------------------------------------
    \12\ The Propane Act contains no similar explicit monitoring 
requirement for PERC.
---------------------------------------------------------------------------
          federal oversight of perc and nora has been limited
    While Commerce has issued propane and oilheat market and impact 
studies as required by the Propane and Oilheat Acts, DOE's oversight of 
PERC and NORA has been limited. The Propane Act requires Commerce to 
prepare two reports: (1) an annual analysis of changes in the price of 
propane relative to other residential energy sources; and (2) an 
analysis done at least every 2 years examining, among other things, 
whether PERC's operation has had an adverse impact on propane consumers 
and propane prices. We found that Commerce has fulfilled these 
requirements. The Oilheat Act also requires Commerce, beginning in 2002 
and every year thereafter, to prepare an annual oilheat price analysis 
similar to its price analysis of propane. The department had not been 
fulfilling this requirement because it became aware of it only after 
meeting with us during our review; however, in April 2010, it issued a 
2008 oilheat price analysis. DOE, on the other hand, has not been 
exercising its oversight authority for either PERC or NORA, and DOE 
officials told us that they believe that DOE has no oversight role 
regarding either one. Yet DOE is empowered to review both 
organizations' annual budgets; to recommend activities and programs it 
deems appropriate; and, in PERC's case, to require submission of 
reports on compliance, violations, and complaints regarding 
implementation of the Propane Act. Indeed, although DOE is authorized 
to be reimbursed by PERC for the department's PERC-related oversight 
costs (up to the average salary of two DOE employees), DOE told us it 
has never requested reimbursement because it has never incurred any 
oversight costs. This current lack of oversight is part of a 
longstanding pattern; in a 2003 report, we found that DOE's oversight 
of PERC was lacking and recommended that the department take corrective 
action.\13\ In its comments on our 2003 report, DOE stated that the 
Commerce Department rather than DOE had oversight responsibility and, 
therefore, DOE did not act on our recommendation. We found that DOE's 
position regarding PERC remains unchanged. Importantly, as neither the 
Propane nor the Oilheat Act contains a specific enforcement mechanism 
for any potential PERC or NORA violations, any oversight program 
implemented by a federal agency would be hampered.
---------------------------------------------------------------------------
    \13\ GAO, Propane: Causes of Price Volatility, Potential Consumer 
Options, and Opportunities to Improve Consumer Information and Federal 
Oversight, GAO-03-762 (Washington, D.C.: June 27, 2003).
---------------------------------------------------------------------------
         conclusions and matters for consideration by congress
    In conclusion, because PERC's and NORA's authorizing statutes do 
not provide for a particular funding level for specific activities or 
indicate a ranking among the activities designated as priorities, they 
afford PERC and NORA wide latitude in deciding how and in what amounts 
they spend assessments collected. Since the legislative history of both 
statutes indicates that a need for research and development funding was 
a key factor driving the legislation, PERC's and NORA's decisions to 
spend over half of their funding on consumer education raises issues 
about whether these funds are being used as Congress anticipated. 
Furthermore, while some PERC and NORA activities appeared to meet 
statutory requirements, the lack of specificity in the language of the 
statutes raises issues about what activities are covered under certain 
provisions of the acts. While we did not determine, and do not express 
an opinion about, whether or not the requirements were met, these 
uncertainties highlight the need to clarify some of the statutes' 
definitions and requirements. Compounding the lack of specificity in 
the requirements of the statutes is the lack of a specific enforcement 
mechanism that would enhance compliance through proactive federal 
oversight. A final concern is the fact that, despite our 2003 
recommendation that DOE exercise its oversight authority regarding 
PERC, DOE continues to believe it does not have an oversight role for 
either PERC or NORA. In light of the lack of any specific requirements 
in the statutes for federal agencies to conduct oversight, federal 
oversight is likely to remain very limited.
    In our report, we suggested that as Congress considers whether to 
reauthorize NORA or amend PERC's authorizing statute, it may wish to 
impose greater specificity on the requirements it has established and 
to establish mechanisms to enhance compliance with those requirements. 
Specifically, we suggested that Congress may wish to consider

   specifying any prioritization of activities it wants to be 
        undertaken and detailing more specifically which activities are 
        prohibited (such as some of those involving lobbying);
   subjecting PERC's and NORA's activities to review, 
        interpretation and approval by an independent, designated 
        entity and specifying a federal oversight role by requiring DOE 
        to monitor and oversee the expenditure of PERC and NORA funds; 
        and
   establishing a specific enforcement mechanism, and expressly 
        authorizing DOE to refer any potential violations of law to 
        appropriate enforcement authorities.

    In commenting on our report, PERC interpreted certain information 
differently in several cases. PERC also believes the Propane Act allows 
it to fund all of the types of activities it has conducted related to 
Congress and politically affiliated entities but welcomes clarification 
by Congress regarding the Act's current lobbying restrictions. NORA did 
not disagree and, in some aspects, agreed with the report. The 
Department of Commerce agreed with the report's general findings 
regarding the agency's statutory obligations to conduct certain 
analyses. DOE did not comment.
    Mr. Chairman, this concludes my prepared statement. I would be 
happy to respond to any questions you or other Members of the Committee 
may have at this time.

    The Chairman. Thank you very much.
    Mr. Huber, go right ahead.

 STATEMENT OF JOHN HUBER, PRESIDENT, NATIONAL OILHEAT RESEARCH 
                    ALLIANCE, ALEXANDRIA, VA

    Mr. Huber. Good morning, Chairman Bingaman and Ranking 
Member Risch.
    My name is John Huber, and I am president of the National 
Oilheat Research Alliance. I greatly appreciate the opportunity 
to testify before you today regarding NORA, its research, 
education, and training accomplishments and goals, and to 
respond to any concerns you may have regarding the GAO's recent 
review of our operations.
    NORA worked extensively with the GAO during the review 
audit process, and the NORA board has moved to adopt their 
recommendations, and the industry looks forward to working with 
the committee in making the appropriate changes in the 
underlying statute in the reauthorization process.
    As you know, the National Oilheat Research Alliance Act 
authorized the heating oil industry to conduct a referendum to 
create NORA and to permit a small fraction of the cost of home 
heating oil to be set aside to fund important research and 
development, energy conservation, safety, training, and 
consumer education initiatives. This assessment is borne by the 
home heating oil industry and not consumers.
    Today, 23 States participate in the program. Since its 
enactment, the act has benefited millions of American consumers 
of home heating oil and supported thousands of jobs at no cost 
to the Federal Government. NORA has also benefited the 
approximately 50,000 individuals employed by the heating oil 
industry, the overwhelming majority of whom work for small 
local businesses in communities across the country. The 
industry provides secure, well-paying jobs, benefits, and 
pensions to many Americans.
    NORA's research, training, and education programs have 
ensured that consumers have access to lower cost, highly 
efficient equipment that operates safely. Much of NORA's 
research and development work has been done in conjunction with 
the Department of Energy's Brookhaven National Laboratory. NORA 
has worked closely with DOE on its roadmap for research 
activities. In addition, NORA has undertaken several projects 
in partnership with the New York State Energy Research and 
Development Authority.
    The 3 primary focus areas of NORA's research activities are 
energy efficiency, renewable fuels and power sources, and fuel 
storage quality and safety.
    NORA-sponsored research has developed highly efficient 
boilers and furnaces. In 2000, the top efficiency for 
oilheating equipment was 86. Today, consumers can purchase a 
furnace with 95 percent efficiency and a boiler with a rating 
of 93. Without this effort, the tax credits provided by 
Congress would not have been available to the millions of 
consumers who use oilheat.
    Second, NORA has worked with BNL to ensure that the 
industry and its consumers understand the efficiency of the 
combined heating and hot water systems common in oilheated 
homes. Through these efforts, NORA has been a key factor in 
helping oilheat consumers reduce the volume of oil they use by 
significant amounts. In fact, our research shows decreases 
approaching 30 percent in the last decade.
    NORA has worked to develop an ASTM specification for 
biofuels to allow these renewable to be used in heating 
equipment. NORA is now working with the National Biodiesel 
Board to determine what level of biodiesel can be safely used 
in an oilheating system and what changes need to be made to a 
system that would allow it to use 100 percent biodiesel.
    NORA did extensive research on fuel properties, the proper 
way to analyze the fuel, and appropriate measures to improve 
the fuel. This research was collected in a guide for oilheat 
retailers.
    NORA has worked with manufacturers of tanks and the 
National Fire Protection Association to develop guidelines for 
the proper installation of tanks. This was translated into a 
tank installation and maintenance book, a training curriculum, 
and certification program.
    Additional research accomplishments are detailed in my 
written testimony.
    The second leg of NORA's efforts, as established by 
Congress, is to improve training and safety. NORA has done this 
in many areas. There are approximately 20,000 service 
technicians in the industry. Prior to NORA, the type of 
training they received was inconsistent, often dependent on 
anecdotes, and did not focus on the means to improve comfort 
for consumers safely and efficiently.
    To respond to these challenges, NORA established a 
certification program and a new training manual that is now the 
industry standard. We have 18,000 participants in our program.
    NORA has also been responsible for developing and 
disseminating information to affiliated industries, including 
plumbers and contractors, real estate agents, home inspectors, 
and tank installers. From its inception, NORA has worked to 
educate consumers about the importance of maintenance of 
equipment and keeping current on newer, highly efficient 
products. This is a strategic goal for the alliance's consumer 
education expenditures.
    This has grown in importance over the past decade. Oilheat 
prices have fluctuated significantly, straining the limited 
household budgets of many oilheat consumers. NORA worked 
aggressively to educate consumers about what was causing the 
price increases and, more importantly, how they could lower 
their own household heating costs.
    As I indicated earlier, NORA has made great efforts to 
ensure its operations are transparent and accountable to the 
oilheat industry, the Department of Energy, and Congress. NORA 
publishes its budget annually on its Web site. It also seeks 
public and DOE comment and then transmits these documents to 
Congress. We believe this improves the program.
    The NORA board is eager to work with the Congress and with 
any Federal agency to improve the transparency and the 
operation of the program.
    In conclusion, we believe that NORA has played an 
instrumental role in assisting oilheat consumers while, at the 
same time, strengthening thousands of small businesses in the 
oilheat industry--from improving training, safety, and consumer 
education while also making critical advances in energy 
efficiency.
    We thank you for conducting this hearing. The industry 
looks forward to working with you, the committee, and the 
Congress to improve the authorizing statute and the operations 
of NORA.
    [The prepared statement of Mr. Huber follows:]
Prepared Statement of John Huber, President, National Oilheat Research 
                        Alliance, Alexandria, VA
    Good morning Chairman Bingaman, Chairwoman Cantwell, and Ranking 
Members Murkowski and Risch. My name is John Huber, and I am President 
of the National Oilheat Research Alliance (NORA). I greatly appreciate 
the opportunity to testify before you today regarding NORA, its 
research, education, and training accomplishments and goals, and to 
respond to any concerns you may have regarding the General 
Accountability Office's (GAO) recent review of our operations.
    As you know, the National Oilheat Research Alliance Act of 2000 
authorized the heating oil industry to conduct a referendum to create 
NORA and to permit a small fraction of the cost of home heating oil to 
be set aside to fund important research and development, energy 
conservation, safety, training, and consumer education initiatives. 
This assessment is borne by the home heating oil industry and not 
consumers. Today 23 states participate in the program. Since its 
enactment, the Act has benefited millions of American consumers of home 
heating oil, and supported thousands of jobs, at no cost to the federal 
government. NORA has also benefited the approximately 50,000 
individuals employed by the heating oil industry, the overwhelming 
majority of whom work for small local businesses in communities across 
the country. The industry provides secure, well-paying jobs, benefits, 
and pensions to its technicians, administrative workers, and other 
service personnel.
    NORA's research, training, and education programs have ensured that 
consumers have access to lower cost, highly efficient equipment that 
operates safely. NORA began its operations in February 2001, and has 
operated continuously since then with the exception of two short time 
periods when operations had to be suspended pending reauthorization.
    Today, I will provide you with a brief overview of NORA's research, 
education, and training activities to date and the fundamental 
principles that have guided NORA's operation since its inception.
        developing next-generation technologies through research
    NORA has enabled significant funding to be devoted to improving the 
safety and energy efficiency of oilheating equipment. This has been of 
critical help to the industry, which is comprised of mostly very small 
businesses, with less than a dozen employees, that do not have 
sufficient resources to devote to R&D on their own.
    Much of NORA's research and development work has been done in 
conjunction with the Department of Energy's (DOE) Brookhaven National 
Laboratory, expanding on prior work previously conducted by DOE. This 
partnership has been greatly valued by NORA. We continue to use 
Brookhaven's facilities and employees, who have brought their extensive 
training and knowledge to the Oilheat industry and have left the fruits 
of their research in the public domain for the benefit of all in the 
industry. Indeed, NORA's partnership with DOE is longstanding, having 
originated prior to its original authorization in 2000, when the 
Department hosted a workshop to develop a roadmap for Oilheat industry 
research activities, which was approved and funded by NORA at its first 
Board meeting. We revisited this roadmap in 2007 and developed 
additional thinking on how to improve the services and equipment 
available to Oilheat consumers.
    In addition, NORA has undertaken several projects in partnership 
with the New York State Energy Research and Development Authority 
(NYSERDA). NORA has had Board members from NYSERDA, and NORA and 
NYSERDA have either jointly funded projects at Brookhaven, or NYSERDA 
has supported projects that NORA is conducting independently. 
Additionally, NORA and NYSERDA attempted to develop a joint liquid 
fuels research center together.
Increasing Energy Efficiency
    A particular focus of NORA-sponsored research has been improvement 
of the energy efficiency of Oilheat appliances. First, NORA has 
developed highly efficient boilers and furnaces. In 2000, the top 
efficiency for oilheating equipment was 86. Today, consumers can 
purchase a furnace with 95 percent efficiency and a boiler with a 
rating of 93. Without this effort the tax credits provided by Congress 
last year for highly efficient equipment would not have been available 
to the millions of consumers who use Oilheat for their home.
    Second, the industry and the researchers at Brookhaven National 
Laboratory have noted for many years that the efficiency ratings 
published by the Department of Energy do not properly reflect the 
efficiency of the combined heating and hot water systems common for 
oilheated homes. NORA contracted with Brookhaven National Laboratory to 
study this issue, and better assess the true heating efficiency of 
modern oilheated systems. This research provided key insights on how 
much fuel would be consumed by families using Oilheat, and what 
strategies were successful in improving overall efficiency. From this 
research, NORA developed a calculator to assist consumers in selecting 
the most efficient equipment for their home.
    Lastly, NORA has worked to address the amount of heat that is often 
lost because it is vented into the outdoors. We are currently working 
on a project that would allow for near condensing appliances. It is 
possible that such a solution could provide an effective and economical 
method of raising efficiency with existing appliances.
    Through these efforts, we have been a key factor in helping our 
customers reduce the volume of oil they use by significant amounts. In 
fact, research we have done indicates that in recent years, we are 
seeing decreases in consumption approaching 30 percent.
Utilizing Renewable Fuels and Power Sources
    NORA has worked to develop an ASTM specification for biofuels, so 
that these renewable fuels can be used in heating equipment. As a way 
to reduce electrical use and also use the light energy from the burner, 
NORA is also conducting studies on the use of photovoltaics in the 
heating system that could generate power for the unit, and possibly for 
other appliances. Additionally, NORA is now working with the National 
Biodiesel Board to determine what level of biodiesel can be safely used 
in an Oilheating system, and what changes need to be made to a system 
that would allow it to use 100 percent biodiesel.
Fuel Storage, Safety, and Quality
    NORA has worked with Brookhaven to study the fuel utilized in 
Oilheat appliances. While the fuel NORA uses is similar to diesel, it 
is stored differently, and is used differently than diesel. NORA did 
extensive research on fuel properties, the proper way to analyze the 
fuel, and appropriate measures to improve the fuel. This research was 
collected in a guide for Oilheat retailers. This research has been 
vital to the industry in improving the fuel they deliver to their 
customers.
    NORA has also supported efforts within states to move aggressively 
to lower the amount of sulfur in heating oil. Sulfur has been an 
impediment to increased efficiency and economical heat exchangers. NORA 
is conducting a project to assess what new materials for more efficient 
heat exchange will become available with this new fuel.
    The commitment to environmental safety and the proper storage of 
oil is a priority for NORA, the industry and consumers. NORA worked 
with manufacturers of tanks and the National Fire Protection 
Association to develop guidelines for the proper installation of tanks. 
This was translated into a tank installation and maintenance book, 
which was accompanied by a training curriculum and certification 
program. During the course of this work, NORA developed a working 
relationship with the Institute for Building and Home Safety, and we 
developed brochures for consumers on monitoring their tanks and 
ensuring they operate safely.
    Additional research accomplishments of NORA's are detailed in the 
attached report.*
---------------------------------------------------------------------------
    * Document has been retained in subcommittee files.
---------------------------------------------------------------------------
                     improving training and safety
    The second leg of NORA's efforts as established by Congress is to 
improve training and safety. NORA has done this in many areas. There 
are approximately 20,000 service technicians in the industry. Prior to 
NORA, the type of training they received was inconsistent, often 
dependent on anecdotes, and did not focus on the means to improve 
comfort for consumers safely and efficiently. To respond to those 
challenges, NORA established a certification program.
    Education has been one of the critical components of NORA since its 
inception. The NORA statute establishes that a goal of the funds is to 
enhance consumer and employee safety and training. Effective education 
is key to the implementation of new technologies. It also is essential 
to adopting procedures and methodologies that reduce accidents, and 
improve the safety of the product. Additionally, proper training is 
essential to the proper installation and maintenance of oilheating 
equipment. Failure to install equipment properly and to maintain it can 
lead to leaking tanks which can affect drinking water, it can impact 
whether the system operates effectively, and in extreme cases 
improperly installed heating equipment can result in physical harm or 
fatalities.
    NORA's strategic plan has been to closely integrate research and 
development and education. First, all educational materials need to be 
verified as accurate. In many areas, common knowledge has been the 
guiding posts for education. NORA rigorously examines such claims to 
ensure they are true before adopting them in training materials. 
Second, in developing a research agenda, NORA evaluates whether the 
research or technology development will be field implementable. 
Developing technology that will not be acceptable to the industry or 
consumers does not benefit Oilheat consumers. Finally, NORA works to 
ensure that knowledge developed through research and development 
migrates into the field, where it benefits Oilheat consumers.
    NORA utilizes a two tier system for education. Generally, all of 
the educational materials and programs are developed in a coordinated 
fashion at the national level, and the dissemination of the 
information, the labs for training technicians, and the actual training 
are conducted pursuant to the grants developed with the state 
organizations.
Investments in Industry Training and Related Materials
    Prior to NORA there was no systematic method for coordinating 
various training entities and ensuring training materials for industry 
technicians are high quality and updated on a regular basis. One of 
NORA's initial goals was to develop training materials that are 
readable, accurate, and current. Prior to NORA, the industry had failed 
on each of these tests. The training manual for technicians was based 
on a 40-year-old book, it contained inaccurate and improper 
information, and had third and fourth generation photocopies as part of 
the text.
    NORA developed a new training manual that is now the industry 
standard. This required each chapter to be written and reviewed by a 
technical committee, and then to be designed and have graphics 
developed. A manual which had been undergoing revision was redesigned 
in 2001-2002 in an effort to modernize this resource as an interim 
step. However, in 2006, NORA began a more ambitious effort to remake 
the book from the ground up. This effort was completed early in 2008, 
when the book was released. This book has now been converted into the 
metric system and is also used by the Canadian oilheating industry.
    NORA has also developed a number of video training programs for the 
industry. To date NORA has produced 16 videos. These videos include 
instruction on how to install tanks, customer service, installation and 
maintenance of controls, how to deliver oil safely, how to tune-up a 
burner, how to respond to a no-heat call, how to drive a retail truck, 
understanding efficiency and why it is important to be environmentally 
cautious when delivering oil. These videos are available to anyone, and 
NORA also distributed a copy of all of the videos and the textbook to 
the industry.
    NORA has also produced ``Heating Oil Storage Tanks, Guide to 
Quality Installation and Maintenance''. Research indicated that the 
primary problem with tanks and their failure was improper installation, 
and lack of maintenance. Thus, the industry was challenged to respond 
to this problem with a new way of doing business. It was determined 
that leaks or other issues from tanks were in many cases attributable 
to the industry installing tanks in accordance with their understanding 
of best practices, and not the requirements of the parties who had 
developed installation codes. To respond to that issue, NORA utilized 
the installation guides from the Steel Tank Institute and the National 
Fire Protection Association as the backbone for this book, and also 
included installation guides from each tank manufacturer. Additionally, 
NORA developed a method for systematically examining the tank at 
different times in the lifecycle of the customer owning the tank and in 
accordance with industry-recognized best practices. The development of 
this program was handled under a special allocation of the Board to 
respond to tank issues. The NORA Board then directed each of the state 
organizations to utilize these training programs in their state and to 
make this training available.
    Lastly, NORA has developed an Advanced Training Manual. This book 
was completed in 2004 and was designed to educate technicians on the 
true efficiency of an appliance.
Implementation of Technical Education
    Development and distribution of materials and is only the first 
step in a full implementation of a training regime. Technicians and 
owners must also understand and support expanded education. NORA has 
several strategies in place to further that effort.
    First and most importantly, NORA has implemented a national 
certification program. In 2001, NORA took over the program that had 
been jointly developed by the Petroleum Marketers Association of 
America (PMAA) and the National Association of Oilheat Service Managers 
(NAOHSM). NORA certifies technicians at several levels and for several 
skill sets. Our introductory program is termed the bronze certification 
and is designed for new entrants to the industry. For more experienced 
technicians, we have a silver certification program, and for 
technicians who have studied our Advanced Manual on efficiency, we have 
a gold certification.
    In addition to these core certifications, NORA also certifies 
technicians who have participated in our one-day tank training program. 
Additionally, we provide a certification for technicians who study the 
whole house heating system, and who have learned how to evaluate heat 
losses from a home and can help customers save energy.
    Additionally, the certification program requires scoring tests, 
analyzing test results, and maintaining a test center. Responding to 
technician, company, and educator questions and issuing certifications, 
badges, and letters to technicians on a continuous basis is required. 
Nearly 18,000 participants have completed the certification program.
    Additionally, NORA has participated in several forums in the 
industry and helped support a number of educational opportunities for 
managers and company trainers. These opportunities include a Train the 
Trainer program. Under this program, NORA and NAOHSM have hired outside 
experts to teach the art of teaching to trainers in the industry.
Expanding Training Outreach
    NORA has also been responsible for developing and disseminating 
information to affiliated industries. These industries include plumbers 
and contractors, real estate agents, home inspectors, and tank 
installers. It also includes educating personnel in the industry on the 
facts about Oilheat and the progress that has been made to improve 
efficiency and improve its end use performance.
    The state organizations affiliated with NORA develop and implement 
a number of educational programs. Since 2001, the types of activities 
in each state have been similar; the predominant variation is the 
amount of the budget invested in any single program. To accomplish 
this, the states have often provided scholarships or reduced fees for 
new entrants to the industry. While introductory training is critical, 
learning is a lifelong process. Thus, NORA encourages and supports 
continuing education classes for technicians. These will typically be 
2-4 hour training sessions focused on a particular type of equipment 
with the goal of having the technicians understand the appropriate 
service requirements. These classes also include tank training, to 
ensure tanks are installed and operating safely.
    NORA, through the qualified state organizations, has also conducted 
training for affiliated industries such as real estate agents, 
builders, plumbers, HVAC contractors, and home inspectors. Each of 
these individuals deal with heating oil customers sometime in the 
lifecycle of the home, and ensuring that they can recognize safe or 
unsafe equipment, efficient and nonefficient equipment, and the best 
ways to get value out of a heating system is critical to the Oilheat 
consumer.
                      advancing consumer education
    NORA has also invested significantly in consumer education. Over 
the past decade, Oilheat prices have fluctuated significantly, 
straining the limited household budgets of many Oilheat consumers. 
There were a number of reasons for these price increases, including the 
Y2K problem, increased consumption in China and India, Hurricanes Rita 
and Katrina, and the wars in Iraq and Afghanistan as well as commodity 
market volatility. Each of these factors placed significant upward 
pressure on prices, and bore negative consequences for consumers of 
energy products. To that end, NORA worked aggressively to educate 
consumers about what was causing the price increases and more 
importantly how they could lower their own prices.
    Many customers who use heating oil have very inefficient heating 
systems. Many consumers have boilers that were converted from burning 
coal, and are thus very inefficient. Others have boilers and burners 
manufactured in the 1970's before the development of flame retention 
burners. Even boilers manufactured in the 1980's and 1990's can be 
inefficient compared to a modern boiler with a modern burner and 
advanced controls. During the high energy prices of the 2000's it was 
important to provide consumers options and advice on how they might be 
able to reduce their energy consumption and save precious household 
dollars. Encouraging consumers to look at new equipment thus was a 
strategic goal for the Alliance's consumer education expenditures.
                    accountability and transparency
    NORA has made great efforts to ensure its operations are 
transparent and accountable to the Oilheat industry, the Department of 
Energy, and Congress. NORA publishes its budget annually, seeks public 
and Agency comment, and then transmits these documents to Congress for 
comment. We believe this improves the program's operation and provides 
an opportunity for NORA to interface with the appropriate agencies and 
improve the product we provide.
GAO Inquiry and Recommendations
    NORA worked extensively with the GAO during the review/audit 
process. While there are certain aspects and conclusions of the report 
that we find to be either incomplete or inaccurate, the NORA Board has 
moved to adopt some of the common sense recommendations, and looks 
forward to working with the Committee in making the appropriate changes 
in the underlying statute in the reauthorization process for those 
changes that are beyond the scope of the Board.
    GAO raised and evaluated a number of issues in their report. One 
area of concern was Board representation. As described to GAO, when the 
Alliance was being considered by Congress, it was anticipated that 24 
states would be in the Alliance, and that there would be a Board 
representative from each of those states. However, during the founding 
of the Alliance, three states that Congress anticipated participating 
including, Alaska, Minnesota, and Michigan, did not hold a referendum.
    GAO also identified several members who appeared to lack a lapse in 
service. These individuals provided affidavits indicating their service 
had been appropriately limited and Board minutes confirmed their 
service interruptions. We would acknowledge that the annual report 
issued by NORA, which was designed to show the leaders participating in 
NORA both in the year of issuance and the year of the annual report, 
lacked clarity. However, the limitation of service was fully complied 
with.
    GAO also raised issues regarding the appropriate delivery of the 
budget and recommended that it be provided to multiple offices within 
the Department of Energy. The law requires the budget to be provided to 
the Secretary, which was complied with. Additionally, the budget is 
posted on the website, so it was easily and readily available to all 
offices within DOE. A similar issue was raised with the audit, which 
has been posted to the internet each year. The GAO also raised a number 
of issues regarding lobbying activities by organizations with which 
NORA works. We would note that the statute places no limits on lobbying 
activities of organizations, but rather clearly directs that NORA funds 
shall not be used to affect legislation or elections. To ensure that 
this limitation is complied with, GAO recommended that NORA require 
anyone receiving grants or funds to stipulate that they have complied 
with the lobbying restrictions at the completion of the contract. This 
is similar to restrictions currently in other federal statutes. NORA 
has this restriction in its contracts, and now requires back end 
certification.
                               conclusion
    In conclusion, we believe NORA has played an instrumental role in 
bolstering the Oilheat industry--from improving training, safety, and 
consumer education to making critical advances in energy efficiency and 
other technologies. We believe the industry is best served by the 
continued operation and strengthening of NORA.
    We thank you for conducting this hearing. The industry continues to 
stand willing to work with the Chairman and the Congress to improve the 
statute and the operations of NORA.

    The Chairman. Thank you very much.
    Mr. Willis.

   STATEMENT OF ROY W. WILLIS, PRESIDENT AND CHIEF EXECUTIVE 
        OFFICER, PROPANE EDUCATION AND RESEARCH COUNCIL

    Mr. Willis. Thank you, Senators.
    I appreciate the opportunity to testify this morning. Two 
objectives for my oral remarks. I want to take the opportunity 
to update the committee on some of the ongoing work that PERC 
is doing and the results of the work that we have done, and 
also to respond to the GAO report.
    PERC has active programs in research, safety, training, and 
as you know, our education function as an operation of the PERA 
statute is currently restricted. That impairs PERC's 
operations, but it is, by no means, debilitating.
    In the research area, we have a different perspective than 
the GAO report on the total investment that the council has 
made in the research. The GAO report reflects research 
investments made by only the research--through the Research and 
Development Advisory Committee of the council. Two other 
research advisory committees, Agricultural and Engine Fuel, 
conduct research programs in those specialty areas.
    In total, through the last year, the council has invested 
$81 million in research, and it has leveraged that investment 
with matching funds totaling $119 million from private sector 
and Government sources, Government providing only about $8 
million of that matching funds. Most of it is private 
investment.
    Our research portfolio is broad and, like the propane 
market itself, very diverse. It has produced important results. 
School buses that reduce greenhouse gas emissions by 24 
percent, according to EPA certifications. Ways to use heat, 
steam, and flame to control weeds, pathogens, and sterilize 
soils for more organic agriculture.
    We have worked with other organizations to create hybrid 
power systems that combine propane generators with solar and 
wind power to improve overall efficiency and reliability of 
off-grid systems. We have worked with manufacturers to develop 
hand-held appliances like leaf blowers, trimmers, and other 
lawn care that EPA has recognized as clean air technologies.
    One of the more promising products from our research 
portfolio are the commercial-grade mowers that reduce criteria 
air pollutants by more than 60 percent and present an 
opportunity to improve the structural efficiency overall of the 
propane industry itself with broader utilization. These mowers 
also eliminate spillage in the environment, which the EPA says 
from small mowers represents annual spillage equal to one and 
half times the spillage from the Exxon Valdez incident.
    Our research program is also exploring ways that renewable 
propane can be produced on a commercial scale and how other 
biomass-based renewable resources, such as dimethyl ether, can 
be blended into the current propane energy supply to expand 
supplies and to make it more renewable and sustainable.
    Our safety programs include an extensive catalogue of 
consumer safety materials that are available online and in 
print. We have an ongoing safety outreach program for the 50 
million Americans who use propane for outdoor grilling. 
According to the National Fire Protection Association, 
incidents involving propane grilling accidents have been 
reduced by more than 50 percent over the last decade.
    Fire safety experiments have been conducted on a variety of 
components utilized in the propane delivery system and home 
fuel systems. We have also done testing on container materials, 
regulators, tank coatings, and other things, which improve the 
safety of the fuel delivery system.
    Working in collaboration with Government and private sector 
organizations, including the Chemical Safety Board, the 
National Fire Protection Association, the Occupational Safety 
and Hazard Administration, we have an ongoing program to update 
our training and consumer information to deal with safety 
issues as they arise in the marketplace.
    Training programs are a major part of what PERC does. We 
have developed a world-class training program for firefighters 
and other emergency responders that have been adopted by more 
than 30 States as part of their fire training academy 
curriculum. We have developed computer-based work force 
training and have trained more than 100,000 employees in that 
program since it was adopted by PERC.
    We have a growing number of specialty programs to train 
architects, developers, home builders, plumbers, heating and 
air conditioning contractors that focus on safe design and 
installation of propane systems, compliance with green building 
standards, and comparative analysis for various appliances.
    I want to turn to the GAO report and deal directly with the 
issues respecting lobbying. PERC complies with the law. No 
assessments have ever been used to influence legislation or 
elections. PERC has never urged any lawmaker to support or 
oppose any bill, amendment, or other legislative activity.
    PERC funds have never been used to support or oppose any 
candidate for public office. GAO did not find any instance 
where PERC funds had been used for legislative or elective 
activities.
    The issue, as I understand it, is whether our education 
efforts, to the extent they included outreach to Congress and 
partisan-affiliated organizations, were anticipated by 
Congress. As I have said in our written response and in our 
written testimony, PERC welcomes clarification and guidance on 
this point.
    I see that my time has expired.
    [The prepared statement of Mr. Willis follows:]
  Prepared Statement of Roy W. Willis, President and Chief Executive 
            Officer, Propane Education and Research Council
    My name is Roy Willis. I am president and CEO of the Propane 
Education and Research Council, Inc., a commodity program authorized 
under the Propane Education and Research Act of 1996 (Public Law 104-
284). It is a honor to appear before the subcommittee to offer 
testimony on the activities of the Council and to address issues 
related to the recent review of the activities of the Council and the 
National Oilheat Research Alliance conducted by the Government 
Accountability Office at the request of the Senator Jeff Bingaman, 
chairman of the Senate Committee on Energy and Natural Resources.
    The Council began full operations in January 1998, when assessment 
collection began. That followed an industry-wide referendum of 
producers and retailers conducted in the summer of 1997 in which more 
than 90 percent of both propane producers and propane retailers 
approved the creation of the Council and the levy of the assessment on 
themselves. I was employed by the Council in March 1998 and have led 
the organization since.
    From the outset, the Council has endeavored to faithfully and 
transparently implement the Act and to serve the public and the 
industry through programs that advance the priorities of the Act, 
namely employee and consumer education, research and development of 
clean and efficient propane utilization equipment, and public education 
about safety and other issues related to the use of propane. The 
Council has compiled an extensive record and has made important 
progress in each of these priority activities.
    As this subcommittee meets, Americans from coast to coast are 
benefiting directly from the work of the Council:

   Firefighters in all 50 states have access to propane-
        specific training that the Council provides free to every fire 
        department in the country.
   Hundreds of people in Michigan, Georgia, Texas, California, 
        and other states have jobs building clean trucks, vans, and 
        school buses that reduce pollution and provide reliable, 
        affordable transportation, based on fuel systems research and 
        developed primarily with Council funding.
   Tens of thousands of industry employees are being trained by 
        modern, computer-based workforce training products developed by 
        the Council.
   Builders, architects, and other construction professionals 
        have analytical resources and training products useful in 
        guiding the safe installation and efficient use of propane in 
        new construction and renovation projects.
   An extensive portfolio of research on propane utilization 
        equipment, funded by the Council, is under way at public and 
        private research facilities in pursuit of safer, cleaner, more 
        efficient ways to use propane to meet essential energy needs.
   Propane consumers have access online and in print to a 
        diverse collection of safety materials and other guidance on 
        the installation, upkeep, and use of propane and propane 
        appliances.

    These are but a few examples of the work that is being done because 
the Congress authorized the Council to pursue these activities and 
provided the mechanism to fund them. Before the Council's creation, 
very little, if any, of this work was being done by the government or 
the private sector.
    Propane is a small part of the country's energy supply--about 2 
percent. Yet its reach is extraordinary. Nearly 10 million American 
homes use propane for a basic energy need--cooking, hot water, and 
space heating. More than 70 percent of American farms and national 
parks rely on propane. According to the Department of Energy, nearly 
half of the country's fleet of dedicated alternative-fueled vehicles 
run on propane. The overwhelming majority of forklifts are propane-
powered. To serve these vital energy needs, more than 56,000 men and 
women work every day in the production, storage, transportation, and 
delivery of propane. Most of them work for the small businesses that 
arrange for supplies and deliver propane in all 50 states to literally 
millions of homes, fleets, farms, and businesses.
                             the gao review
    Regarding the GAO's recommendation that federal oversight be 
strengthened, the Council stands ready to provide appropriate 
assistance to the Congress in making improvements to the Propane 
Education and Research Act. At present, the Council does not know how 
that oversight might be designed and implemented and so cannot offer a 
more specific point of view. The Council acknowledges that an oversight 
regime exists for federal agricultural check-off programs and that such 
oversight can provide for greater government involvement in the 
decisions that check-off programs make regarding the resources 
available to them solely as a consequence of federal authority. In the 
Council's view, if a mandatory oversight requirement is to be 
implemented, it should establish standards and procedures to guide 
decision making and not substitute agency determinations for the 
leadership responsibility that Congress has rightly vested in the 
governing body under the Act.
    The GAO report discussed a number of specific issues. Chief among 
them are the relative levels of funding given to the four priorities 
under the Act and, specifically, expenditures for certain education 
activities.
Spending for Priority Activities
    The Act gives the Council responsibility for determining the 
appropriate funding level for each of the statutorily mandated 
functions. The allocation of funds has been and continues to be made on 
the basis of the best available information and opportunities to have a 
positive impact through Council-sponsored programs and projects. Every 
statutory function has received considerable attention and substantial 
funding from the Council.
    Educating the public about propane has received the largest share 
of Council funding. These efforts are based on vital market data, as 
are all Council programs and projects. and they are implemented under a 
disciplined system of project management and financial controls, 
subject to ongoing measurement and evaluation, and implemented with 
oversight by dedicated advisory committees and subject matter experts 
on staff or under contract.
    Due to the restriction of its activities under Section 9 of the 
Act, which began August 4, 2009, and continues to be in force, the 
Council eliminated spending on generic advertising in residential and 
commercial markets and other forms of broad public education. Attached 
to this testimony are several graphs that show that the Council has 
been adjusting funding levels throughout its existence, with more funds 
over time being allocated to technology initiatives through its 
research and development, engine fuel, and agriculture activities.
    In determining the level of funding that the Council has dedicated 
to the research function, it is vital to consider two factors: 1) the 
funding for research for agriculture and engine fuel projects; and 2) 
the funding the Council was able to attract through leveraging its 
investments. This information was provided to GAO, which acknowledged 
receipt of it but did not quantify these investments in its report. The 
attached graphs illustrate that the Council's direct investment of 
$81.3 million for all research projects was leveraged against $119.6 
million in third-party funding for a total research investment of more 
than $200 million. That compares favorably against total assessment 
collections of approximately $350 million.
    GAO raised the issue of whether certain education activities were 
lobbying. The Council strictly complies with the law. The Council does 
not support or conduct lobbying in any way. Each PERC program is 
subject to a disciplined system of project management and financial 
controls, including legal review. Regarding the expenditures GAO 
highlighted, the Council and the grantee were advised by legal counsel 
that the activities are lawful. Yet, I acknowledge that, without 
context, this spending can create an unfortunate appearance--too close 
to the line. As CEO, I take responsibility for it. I also have taken 
action: terminating the program. I did so not because of legal concerns 
but because the Council strives to avoid even the appearance of 
impropriety.
    Clearly, not all communications with Congress and other 
policymakers is lobbying. The federal rules for agricultural check-
offs, for instance, anticipate that that check-offs will correspond 
with Congress. The rules provide straightforward guidance that check-
offs report factually on the results of their activities and not 
advocate a policy position. The content of Council-sponsored messages, 
in fact, met the requirements of that rule. (Copies of advertising 
messages were provided to the subcommittee.)
    Ultimately, these are speech questions. Three times since the 
Council was authorized in 1996 the U.S. Supreme Court addressed the use 
of assessment funds for speech activities. Obviously, whatever federal 
oversight may be developed, it must be consistent with the court's 
ruling regarding speech activities by check-off programs.
                        coordinating with others
    The Propane Act requires the Council to ``coordinate its activities 
with industry trade association and others as appropriate to provide 
efficient delivery of services and to avoid unnecessary duplication of 
activities.'' [Emphasis added.] the Council takes exception to the 
report's questioning whether the Council has coordinated its activities 
with federal agencies. The Council acknowledges that federal agencies 
are clearly within the scope of the term ``others.'' And, from the 
outset, the Council has maintained program of coordinating its 
activities with federal and state entities. The Council has worked with 
federal agencies primarily on a project-by-project basis and, as a 
result, has been able to successfully leverage its research investments 
with government funding for the Council projects totaling $8.2 million.
Energy
    The Council's coordination with the Department of Energy (DOE) on 
research programs dates from the creation of the Council's first 
technology roadmap. At the Council's request, in 1999 and 2000 DOE 
provided limited funding and made available personnel from the National 
Energy Technology Laboratory to assist in developing the foundational 
document for the Council's research activities, The Propane Vision and 
Technology Roadmap. The Council has engaged with DOE on a number of 
projects and programs and actively participates in its Clean Cities 
program. Earlier this year, several entities with which the Council 
routinely coordinates, and the Council itself, were the recipients of 
more than $30 million in DOE Clean Cities grants for deployment of 
propane alternative fuel technology, much of which owes its existence 
to the technology investments that the Council has made.
    The Council has briefed DOE officials under three administrations 
on the activities of the Council. The Council made a particular effort 
to discuss the Act and to specifically identify the provision in the 
Act that authorized the Council to reimburse the Secretary of Energy 
for two full-time employees for their work on Council matters. No 
administration has designated or appointed a department employee to 
coordinate with the Council, and none has asked for reimbursement. 
Virtually all contact between DOE and the Council has been initiated by 
the Council.
National Parks
    The Council has not limited its coordination with federal agencies 
to DOE. Because approximately 75 percent of national parks use propane 
for a major energy need, the Council has maintained a long-running 
outreach program to the Department of the Interior's National Park 
Service. The Council has collaborated with the service on several 
demonstration projects--and we have one under way at Denali National 
Park. We have held Council meetings in national parks and presently 
work with a park service task force to coordinate efforts to improve 
safety, training, and energy efficiency related to propane use in the 
parks.
Agriculture
    The Council also has a long history of coordinating with 
agriculture agencies and research institutions. The Council has 
successfully developed grants and obtained co-funding from the 
Department of Agriculture (USDA) for numerous research and 
demonstration projects. The Council has invested considerable resources 
over many years to coordinate its works with the USDA's Agriculture 
Research Service (ARS). That coordination has included multiple 
investments by the Council on a key ARS research initiative to replace 
methyl bromide and other chemicals with propane-fueled heat, steam, and 
flame to sterilize soils, control pathogens, and manage weeds and 
pests. We work together on individual projects of mutual interest as 
they arise.
Commerce
    The Council has also cooperated with the Department of Commerce, 
which is required by the Propane Act to conduct an annual price 
analysis and, every other year, a market survey.
State Agencies
    The Council also regularly coordinates with several state agencies, 
including the California Air Resources Board (CARB), the California 
Energy Commission (CEC), the New York State Energy Research and 
Development Authority, and the Texas Railroad Commission's Alternative 
Fuels Research and Education Division (AFRED), to name a few. With 
respect to CARB, the Council coordination is focused on emissions 
certification programs that are essential to bringing to market 
vehicles (on-road and off-road) and stationary engines (for irrigation 
and electricity generation) throughout much of the United States. With 
AFRED, the Council has established an extensive record of collaboration 
and cooperation to conduct research, to demonstrate propane equipment, 
vehicles and appliances, and to develop and host technology forums to 
train industry personnel on the propane utilization equipment that come 
out of the Council's research portfolio.
    In addition to its work with state and federal agencies, the 
Council has established an ``industry programs'' area to coordinate its 
activities with industry trade associations at the state, national, and 
international level.
                               conclusion
    The Council has actively pursued fulfillment of all of the 
statutory obligations and mandates of the Propane Education and 
Research Act and other applicable laws. The Council has made sound 
investment decisions that were appropriate and reasonable given the 
conditions and opportunities available when those decisions were made. 
The Council's programs and projects are managed under a well-defined 
system of rules, policies, and procedures, and are subject to ongoing 
measurement and evaluation. The Council has successfully deployed 
safety, training, educational programs and propane utilization 
equipment from its research efforts have gained some success in the 
marketplace, enabling energy consumers to improve their energy 
efficiency, safety, and environmental performance.
    Thank you again for the opportunity to appear and respond to any 
questions you may have.

    The Chairman. Thank you all very much.
    Let me see if, Senator Risch, did you wish to ask a few 
questions? You had indicated you might have to leave.
    Senator Risch. I do have to leave. Thank you, Mr. Chairman. 
I will yield to yourself.
    The Chairman. OK. Let me start just to ask you, Mr. 
Gaffigan, to describe your understanding of how the program 
works. This is one of the so-called check-off programs. Now 
this is essentially the various companies that are in these 
businesses are assessed a fee, as I understand it.
    Is that fee then passed on to their customers, or is it 
not? Or is this something that comes out of their profits? Is 
it voluntary? Is it required of them? What is the general way 
in which this program functions?
    Mr. Gaffigan. The assessment is required. However, I want 
to be clear. We didn't look at this--the issue of whether this 
is passed on to the consumers or not, we did not look at that 
in this review because, frankly, we don't see it as a 
requirement. We have looked in the Oilheat Act, and there is no 
provision in there that says it can or cannot be passed on to 
the consumer.
    There is a provision in the PERC authorization, and I will 
read it to you. It basically says the council may take no 
action nor may any provision of this act be interpreted as 
establishing an agreement to pass along to consumers the cost 
of the assessment.
    Here is what we understand, and again, we looked at this in 
the last couple of days as we prepared for the hearing and this 
issue was raised to us. PERC says--and this is from their own 
guidance--as a result, PERC does not determine whether or not 
the company that pays the initial assessment can collect the 
amount of the assessment from the consumer. This is a decision 
that must be made individually by each company that pays the 
assessment. So, to us, it is not clear whether, ultimately, the 
consumer pays it or not.
    As far as NORA goes, Mr. Huber, in his statement, says this 
is not passed on to the consumers. Again, we do not see 
anything in the act that addresses this one way or the other. 
We did find that--this is a NORA Form 782B, and we found this 
this morning. This addresses the pass-through, the fee, and it 
indicates that the retailer may choose whether to list the fee 
separately or to include it in the price.
    So, again, we are not sure how much of the price is 
ultimately passed on to the consumer or whether it is itemized. 
To be honest with you, I think, in either PERC or NORA's case, 
it would be kind of hard to prove unless it is itemized.
    One of our staff members is actually a heating oil 
recipient and customer. They actually brought in the bill, and 
it is itemized on here--NORA tax, 0.2 of a cent has been added 
to her bill. So we are happy to provide any of this for the 
record. So I would say in some cases, it looks like some 
consumers have paid. At least one consumer has paid the NORA 
assessment.
    The Chairman. All right. Let me ask Mr. Huber, are there 
functions that are handled by NORA that cannot be handled by 
the National Association for Oilheat Research and Education? 
This is NAORE, I guess. I don't know. I think you are also 
president of that organization, as I understand it.
    Mr. Huber. I am the secretary to that organization.
    The Chairman. Oh, OK. Why is that organization not the 
appropriate organization to do the various things that NORA is 
currently doing?
    Mr. Huber. OK. When the industry established NORA back 
before it was enacted by Congress kind of as an overall working 
group to try to pass this legislation back in the late 1990s, 
they established an organization that would put money aside to 
do appropriate legislative lobbying activities, what have you. 
That was named the National Oilheat Research Alliance.
    When the bill was moving through the legislative process, 
legislative counsel requested that that organization be renamed 
to the National Association for Oilheat Research and Education. 
The industry has used that as a place to put separate funds 
essentially to do legislative lobbying activities in support of 
the NORA statute. So that is what that--the primarily purpose 
of that organization is to do that, and then the second 
activity of that organization is to review board nominations 
and then appoint members to the NORA board.
    The Chairman. OK. But is there any reason you know of why 
that organization, this National Association for Oilheat 
Research and Education, could not take on the responsibilities 
of NORA as well?
    Mr. Huber. I think that, overall, I mean, as an industry, I 
think that for 20 or 30 years, this industry has looked at its 
needs in research and development. The Department of Energy 
used to do those, a significant part of that, consumer 
education and an education and training program. These 
thousands of small businesses were just not capable of working 
cooperatively together without a statute by Congress to allow 
them to do that.
    So, essentially, I would say that the industry, in 
communicating to its consumers, to doing effective R&D, and to 
doing effective education and training, as a separate 
organization, was failing, and that is why they turned to 
Congress to do it.
    The Chairman. Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    Thank you all for testifying this morning.
    Mr. Huber, as I am sure you are aware, New Hampshire, which 
is the State that I represent, has a very high percentage of 
households that are heated by oil, mine included in that. I 
know that that is true for most of the Northeast.
    Just for my personal understanding, can you break out where 
homes are mostly heated by oil and how the rest of the country 
breaks down when it comes to heating by oil?
    Mr. Huber. Yes, absolutely.
    First, thank you, Senator Shaheen, for all your help on the 
NORA statute in the last couple of years. But essentially, we 
are a Northeast industry. We have a big part of the Midwest and 
then parts in the Northwest. We traditionally have had a lot of 
the older housing stock in the inner cities, such as Boston or 
Manchester or New York City. So we have a pretty good share in 
those inner cities, those old neighborhoods, post-war 
development.
    Then we have a lot of rural America, where people are not--
electricity is not a viable option. In a lot of the Northeast, 
it is just not economically viable. Propane can be an 
alternative, and heating oil can be a very efficient, cost-
effective choice. So, for a lot of the rural America, oilheat 
has a good share in that part of the country, too, particularly 
in the Northeast because we get a lot of water product into the 
harbors in Portsmouth or Portland or Boston, which allows for a 
very efficient delivery system. So we have a very good economic 
advantage in those areas.
    Senator Shaheen. OK. You pointed out in your testimony that 
the board had looked at the GAO report and come up with a plan 
to address the concerns raised in that report. Can you speak a 
little more directly to some of the proposals in the plan that 
you think would address the concerns raised by GAO, 
specifically the consumer education issue that was raised and 
how that is going to be addressed?
    Also, the safety, I know one of the things that it points 
at is that you don't actually track the improvements to safety 
that you think result from the work that you do.
    Mr. Huber. From the GAO's perspective, there were a couple 
of issues. We do work closely with the State affiliates. When 
NORA was founded, there was a thought that using the 
infrastructure in place was an effective way of getting 
delivery of products, whether it was education and training or 
consumer education into the field. So, we have used those to 
hire the appropriate contractors, do the appropriate consumer 
education pieces, and put those into the field.
    GAO expressed some concerns that it was not a tight enough 
circle and that perhaps some of those funds were being used for 
legislation. So they indicated that they would like us to do a 
certification of all those funds, indicating that they were not 
being used for legislative activities. So we have adopted that 
into our contracts, and we adopted that as a final thing that 
they must do a certification on any funds received.
    Second thing is just kind of using those as field agents. 
Over time, the accounting system that we use has allowed us to 
essentially pay all the bills for the State associations for 
the NORA program. So if they hire an educator, they could 
basically send the bill to us, indicate that is for an 
education program to do this, and we would basically pay the 
bill, and then it would roll into our system.
    The consumer education----
    Senator Shaheen. Can I just interrupt you for a minute?
    Mr. Huber. Sure.
    Senator Shaheen. When you do that, is there a mechanism to 
track what those safety educators actually do in States?
    Mr. Huber. You know, that is an excellent question as to 
the safety educators. We basically depend on the local service 
technicians. As you know, this industry is a very--probably one 
of the least integrated industries in the country. Our largest 
company probably has a 1 to 2 percent market share. From there, 
they go to the 0.001 market share. So we have companies with 1, 
2, 3 employees servicing 500 to 1,000 accounts.
    Trying to develop an effective tracking mechanism, how 
everything is working, is very difficult. Getting a data source 
together is almost impossible. I mean, we do work closely with 
the manufacturers who would be getting recalls of equipment 
that are possibly not broken or have some issues that they know 
because they will be more of a repository.
    A lot of this is also--as small business manufacturers, a 
lot of that information is also closely held. So it is, to a 
large degree, we have to depend on the industry alerting us to 
problems. One of the areas that we worked extensively on was 
tanks. The heating oil tank storage system is probably the--
maybe the weak link in our system, and we were alerted to that 
as a problem.
    We worked with a lot of the manufacturers of tanks, 
indicating how installation should occur, how maintenance 
should occur. Worked with the Institute for Business--Building 
and Home Safety, which is the insurance homeowner association, 
to try to figure out an effective strategy to get better 
equipment, better inspections, and better activity going on.
    So, we did develop a certification program. Some of those 
insurance companies have encouraged their consumers to use 
NORA-certified tank installers and inspectors, all as a way to 
try to push it through on a private basis.
    Senator Shaheen. Thank you. My time is up, Mr. Chairman.
    The Chairman. Let me ask a few other questions.
    Mr. Willis, you have a National Propane Gas Association in 
your industry. Why is it your view that the functions that PERC 
performs could not be adequately handled by that association?
    Mr. Willis. Senator, I don't have a history with the 
association. I came to the propane industry when I was elected 
or selected to--as its president.
    My understanding, however, of the history is that the 
association had, in several instances, attempted to create 
voluntary programs in the industry and had programs in work 
force training and programs in consumer education. Those 
programs ran into obstacles in terms of being able to sustain a 
level of funding that enabled them to continue those programs 
in a cost-effective way.
    As to the research, much like the heating oil industry, the 
propane industry is made up of thousands of small businesses 
spread across all 50 States. The wherewithal economically to 
make long-term investments in research, many of the PERC 
projects can take 2 to 3 years to work through the research 
cycle.
    There is no competitive advantage or opportunity for a 
single industry member to sustain those kind of programs with 
their corporate funding, and I am not aware of any effort that 
had been made to develop a major research program inside the 
association. There was a research committee inside of the NPGA 
at the time I came to PERC, but it was largely unfunded.
    The Chairman. OK. Let me ask Mr. Gaffigan, we have been 
talking here about why these voluntary organizations that exist 
could not perform the functions. Did you look at that, as to 
whether or not the participation in PERC and in NORA should be 
voluntary rather than required or what the effect of making 
that change would be?
    Mr. Gaffigan. Right. We didn't assess that as part of our 
review, but we did have conversations with PERC and NORA about 
this issue, and we have looked at some of the history. I guess 
a couple of things come to mind.
    One, both the referendums that established these 
organizations had full support going forward. So, again, it 
begs the question of why that full support can't translate into 
some voluntary contributions?
    The other question I would ask is why, what makes these two 
particularly different than any other industry that has a trade 
association? There are many other industries perhaps who have 
multiple vendors. If we look in the energy sector in 
particular, as we look to new sources of energy, whether it is 
geothermal and solar, many of these entities are startups. They 
may follow the same structure.
    So I guess the question I would ask is, is it the Federal 
Government's role to get involved in providing or authorizing 
these types of assessments? I think the bottom line is, if it 
is difficult for them to get the voluntary contributions, then 
they need the Federal Government to provide this requirement 
that these fees be paid, so it is a required contribution plan.
    If the Federal Government wants that to continue--and that 
is a legitimate policy choice--and they have expectations as to 
what that work that money is going to go toward, then I think 
the Federal Government needs to put in the proper language to 
specify what those expectations are and to ensure some 
oversight because, right now, neither one of those things 
exists.
    The Chairman. Let me ask both Mr. Huber and Mr. Willis 
what, in your view, would be the proper oversight function, 
say, in the Department of Energy? Is that where it ought to be 
lodged, and what would you see as the proper function for 
either the Department of Energy or any other Federal agency in 
oversight of the way this funding is spent and how the program 
works?
    Mr. Huber.
    Mr. Huber. The Department of Energy would certainly be--
would appear to be the most appropriate place for oversight. 
But I have to acknowledge that the Department of Energy has 
very little interest in the heating oil industry. They have 
withdrawn from doing any research and development in that area. 
So they have kind of walked away from this sector of 8 million 
consumers and the businesses that I work with.
    As part of the statute, we did provide funding so if DOE 
did want to have oversight, that it would be funded by the 
assessment. We allowed for two employees, two full-time 
equivalents to be paid for with NORA funds for that type of 
oversight interaction. So that would probably be the most 
appropriate agency to work with. We would welcome the 
opportunity to work with them.
    I think the other organization is we are trying to move 
more toward the biofuels and renewable fuels. So even looking 
at the Department of Agriculture, trying to move us in that 
direction could be a helpful step.
    The Chairman. Mr. Willis.
    Mr. Willis. I would certainly agree with Mr. Huber's 
remarks that the Department of Energy is a logical place for 
oversight. The council has had very similar experiences in 
terms of working with DOE. We have been very successful working 
with DOE on a project-by-project basis.
    Since the council has been created, we have briefed the 
Clinton administration, the Bush administration, and the Obama 
administration on the act and paid special attention to the 
provisions of the act that enabled the Secretary to designate 
employees to work with the council and specifically underscored 
the fact that resources are available to compensate the 
department for its oversight of the council.
    All 3 administrations did not act on the provisions in the 
act. If oversight is to be had, I think it has to be mandated, 
quite candidly. As I have said in my written remarks, the 
Supreme Court has 3 times ruled on the use of assessment funds 
for education activities, and I certainly think that oversight 
at the department on those programs would certainly ensure that 
these programs are operating in compliance with the court's 
recent decision on that matter.
    The Chairman. Senator Shaheen.
    Senator Shaheen. Yes. I would like to explore that issue a 
little further as well. Mr. Gaffigan, when you looked at the 
oversight piece, the statute is ambiguous with respect to how 
it addresses DOE's oversight of the programs? Is that a fair--
--
    Mr. Gaffigan. I would characterize it that DOE has 
oversight authority.
    Senator Shaheen. Right.
    Mr. Gaffigan. It just chooses not to exercise it.
    Senator Shaheen. Did you talk to them about why?
    Mr. Gaffigan. This goes back to 2003, when we first did a 
report on the PERC area. They don't view that they have an 
oversight role. In fact, back then, they were pointing to the 
Department of Agriculture, saying, ``Well, they are the ones 
that are supposed to do the price analysis.''
    So it was very much a finger-pointing ``not us, it is 
them.'' Neither one is really interested in doing it. They are 
not interested in being reimbursed for it. They have other 
things to do.
    That being said, I think there has been some interaction 
and coordination on some of the efforts because, Mr. Huber is 
right, traditionally, in the fossil fuels area, the Federal 
Government has backed off on R&D. But there is still some work 
ongoing.
    For example, in energy efficiency and renewable energy, 
there are efforts to look at propane-powered vehicles, which I 
think is in concert with the PERC, some of the PERC 
initiatives. I think you should look at each one of those 
areas. So R&D, that would be an area to look at.
    USDA is obviously involved in the biodiesel, looking to 
mingle it with oilheat and looking at supplanting some of the 
traditional oilheat that we use in the current burners. As far 
as safety and training, DOT plays a role in the transportation 
of propane.
    Senator Shaheen. Right.
    Mr. Gaffigan. So there are activities going on there. As 
far as consumer education, which is the bulk of what is 
characterized as the efforts, if you think of consumer 
education as what consumers should know about propane or 
oilheat and the prices, we do have the Energy Information 
Administration, which its total budget is $110 million. 
Roughly, if you combine PERC and NORA together, their budget is 
about half of that.
    Now I know that PERC and NORA don't spend all their money 
on consumer education, but they do spend a good amount. I am 
not aware of what kind of coordination might be going on there, 
but you can find out information about propane and oilheat 
currently from the EIA.
    Senator Shaheen. Let me ask you on the consumer education 
piece, one of the things that I think you mentioned in your 
testimony was that there were funds that were used to send 
representatives to national political conventions. Can you just 
describe a little bit more about how you discovered that and 
how it was justified by--were both organizations doing that, 
and how did they justify that?
    Mr. Gaffigan. Yes. I think here we have to make a 
distinction between PERC and NORA. We did not find that in the 
case of NORA. The NORA concerns were, what were the State 
associations doing? Seventy-five percent of the money goes back 
to the State associations, and Mr. Huber talked about some of 
the issues we raised. I think the certification is good.
    But a couple of other things I think they need to do is to 
monitor what is going on down at the States. When we looked at 
some of the ledgers that provided detail on what was spent, the 
item would say ``purchase.'' We had no idea, and I don't think 
anyone could have an idea of what is involved.
    You have to understand that NORA, its central office, is 
pretty small. Mr. Huber is also wearing the hat of NAORE. So I 
think he is part Superman as he tries to do all these things. 
But I think that the monitoring of the States is important and 
also separation of funds so that they can address the issues 
that we identified. We would see State association newsletters 
that would be touting calls for action and going to Congress 
and saying, ``We need support. We are going to do this.''
    NORA's position was that they did not pay for that, that 
that came from the State association dues. Without the 
separation of funds, though, and the monitoring, I don't know 
how you have that insurance. Interesting enough, PERC, which 
only has about 20 percent of the money that goes to the States, 
they actually require the separation of the funds.
    Turning to PERC and our concerns on lobbying there, that 
was the one example of folks going to the political convention, 
and it was a grantee. The grantee is the NPGA, which was 
mentioned earlier.
    We asked the NPGA what they did with the money they got 
from PERC, and they provided a list of the things they used the 
money for. One of them was, and it is spelled out in our report 
in several other instances, one was to provide--to pay for 
folks to go to the political conventions, both Democrat and 
Republican. There were other instances of moneys paid to 
political-affiliated entities and such.
    When we raised this, PERC and both NORA have taken the 
stand that the ``lobbying'' restriction does not address these 
activities specifically. It talks about influencing legislation 
and influencing elections. In neither one of these cases did 
they view that this involved that.
    We did not make a judgment either way. So when Mr. Huber or 
Mr. Willis says they complied with the law, we have no view on 
that. We only point out that the statutes can be interpreted in 
different ways, and we go through some legal discussion in our 
report that shows, in some cases, other interpretations where 
these could potentially involve political activities or maybe 
approach the line, if you will, on lobbying restrictions.
    Other cases, if you take a strict look at it, those folks 
who went to a political convention were not addressing any 
specific legislation or affecting any election. So that has 
kind of been the give and take on that issue.
    Senator Shaheen. Mr. Chairman, can I ask a follow-up 
question?
    The Chairman. Go ahead.
    Senator Shaheen. Mr. Willis.
    Mr. Willis. Yes, Senator?
    Senator Shaheen. Since PERC has been identified as the 
organization that actually funded people to go to national 
political conventions, and I appreciate your statement about 
saying that you had complied with the law, although, as Mr. 
Gaffigan points out, there are different ways to interpret what 
the law says with respect to using funds for partisan 
activities.
    I think most--I would certainly say that sending somebody 
to a convention, even if you send them to both conventions, 
that that is a partisan activity. So, I guess I would ask you 
how you justify that as a use of the funds?
    Mr. Willis. Senator, I think it is critically important to 
make a distinction in terms of the activity that actually 
occurred. We did not fund anyone to attend, to register, and to 
participate directly in either the Democratic or Republican 
conventions.
    As you know, surrounding conventions there are a number of 
forums, roundtable discussions, receptions, and others that are 
cleared by the House and Senate Ethics Committee as nonlobbying 
events. The grantee----
    Senator Shaheen. Only if you eat standing up.
    Mr. Willis [continuing]. Attended those. Beg your pardon?
    Senator Shaheen. Go ahead.
    Mr. Willis. Those are the events that were attended. These 
programs were part of a larger consumer education initiative 
that, as the GAO has rightly said, have received a considerable 
part of the funding that PERC has allocated since its 
beginning. We are not doing any of that now because we are 
restricted under the PERA statute.
    That program primarily focuses on the 5 strategic values 
that are involved in energy decisionmaking--clean, efficient, 
reliable, safe, and economic value. We primarily targeted our 
effort in the residential and commercial markets, which are the 
largest consumers of propane, but we have also engaged in a 
broad conversation, what we call a national energy 
conversation, with as many of the decision-makers as we can 
correspond with that influence how energy decisions are made in 
this country.
    That includes journalists. It includes private business 
leaders and public policymakers. We did that in part because 
our own study showed that awareness of how propane can be used 
to meet national energy policy objectives was incredibly low, 
almost not part of the discussion at all. At 2 percent of the 
Nation's energy supply, propane and heating oil are often 
completely overlooked when they can provide important 
contributions to meeting those national policy objectives.
    That has been our objective. We thought it was an important 
contribution to the national energy conversation. As I said, in 
retrospect, in aggregate, all of the funds or expenditures that 
GAO highlighted in its report constitute 0.09 of 1 percent of 
the total expenditure, but they are detracting from, I think, 
the most important work. We have taken this action. We have 
terminated that program, and we have absolutely no intention of 
dealing with that again, in part because of the appearance that 
it creates.
    We thought that the action not only complied with the law--
both the grantee and the council conducted legal review as part 
of our overall project management and received clearance on 
those. As GAO says, it didn't make a determination that there 
was a direct violation. But, clearly, one of the challenges 
that both Mr. Huber and I have leading a congressionally 
authorized organization is how best to communicate the results 
of what we are doing to Members of Congress.
    I was a former trade association--I could do that by 
walking around and visiting each individual office, but that is 
also a tactic that lobbyists use. So this really gets to the 
content of the speech, what the overall objectives are, and 
that is why I have said in my report I do think that if you 
really want to focus on developing an on point oversight role 
for a Federal agency, it is in that area of education that is 
most appropriate, in my view.
    Senator Shaheen. Thank you.
    The Chairman. Did you have any additional questions?
    Senator Shaheen. Actually, I have two other.
    The Chairman. Why don't you go ahead?
    Senator Shaheen. OK. Mr. Huber, one of the things you 
pointed out in your testimony--and as I said, I heat my home 
with oil. So I can appreciate this--is that in 2000, oilheat 
equipment was 86 percent efficient, and as the result of 
technological advances, which NORA helped to fund, it is now 95 
percent efficient.
    Can you track a direct connection between what NORA has 
done to improve that efficiency, and how does that compare to 
other parts of the country where NORA may not have been 
involved in addressing efficiency?
    Mr. Huber. Thank you, Senator.
    Yes, I mean, part of it is that the oil heating industry 
got to that point and just kind of froze in time. We were the 
efficiency leader for many decades, and then the natural gas 
industry eclipsed us in efficiency.
    A lot of the manufacturers, as you know, are small 
manufacturers, too. They are local community businesses making 
boilers or furnaces, very small scale. Putting the research and 
development, the engineering time into trying to go to the next 
step is very difficult.
    So we initiated efforts with manufacturers to look at 
technology that the natural gas wasn't using and apply those to 
heating oil technology as a way to move that efficiency level 
up.
    So that was a key step. I think there is a manufacturer in 
your State, Buderus, that has very highly efficient equipment 
from Europe. They are an American manufacturer now, which is 
terrific and very important.
    The other thing we did, I think, is trying to educate 
consumers into what efficiency is. For our types of units, the 
combined heat and hot water systems, DOE does not really have a 
good metric for tracking the efficiency of those. So a lot of 
the AFUE numbers that we put on appliances are not really 
reflective of the in-use efficiency.
    So we worked with Brookhaven National Laboratory to do more 
of an in-use testing of the type of equipment that might be 
installed in a home, ran a lot of boilers to try to figure out 
what is the best efficiency for a boiler operating in Maine is 
different than in Virginia or New Hampshire or Vermont. Each of 
those has its own local climate characteristics.
    So we worked with them to do that, put it on our Web site, 
and then train our technicians so that they can say it may be 
stamped with an 86 percent efficiency, but it is really like a 
55 percent in-use efficiency. You can get up to 78 and 80 
percent efficiency by changing out equipment or doing 
modifications to the equipment, which I think is all part--I 
mean, part of the challenge of an organization like ours is we 
do not raise significant amounts of money compared to what 
Congress appropriates, obviously.
    We don't do tax benefits that can encourage customers to 
buy a particular piece of equipment. We don't do grants. We 
have none of those abilities to do that, either legally or with 
our budget. We just can't do it.
    So what we have to do is really work through a threefold 
process of, one, get the equipment available; two, get the 
technicians and the companies that we work with to see this as 
better technology that is a good solution for their homeowners; 
and then work with them and their homeowners to understand that 
that is an improvement to the technology and will help save 
them money and efficiency. Without all those 3 working 
together, none of them are going to work. So that is why it is 
critical that we do it.
    As I said, we do see significant decreases in energy 
consumption year by year in the heating oil sector, far greater 
than any deterioration in share or warmer weather in the 
winter. I think the industry has been working very hard with 
its customers to lower their energy bills each winter.
    Senator Shaheen. Recognizing the nature of the industry and 
the challenges of tracking that data, I think that would be 
very helpful as we are looking at the benefits that NORA and 
PERC, for that matter, can provide to have as much data 
available as possible.
    Mr. Huber. Absolutely.
    Senator Shaheen. Mr. Chairman, the last thing I wanted to 
do is just ask. I have a number of letters that have been sent 
to my office in support of NORA. If we could include those in 
the record, I would appreciate it.
    The Chairman. We will be glad to include those.
    Senator Shaheen. Thank you.
    The Chairman. Thank you.
    Thank you all for being here. It is useful testimony, and 
we appreciate it.
    That will conclude our hearing.
    [Whereupon, at 11 a.m., the hearing was adjourned.]
                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

       Responses of John Huber to Questions From Senator Sanders
    Question 1. Please respond broadly to the GAO report and discuss 
NORA's role in research and development, consumer education, and also 
any steps NORA is taking to respond to the GAO report.
    Answer. During its existence, the National Oilheat Research 
Alliance (NORA) has set the standard for industry-wide cooperative 
activity with its professionalism, effectiveness and, most importantly, 
satisfaction from its supporting members. Through its rigorous 
commitment to activities that benefit all of its members, customers, 
and the public at large, NORA is able to harness the collective 
strength of its companies and their resources to share cutting-edge 
technological advances, the latest in training methods, and promising 
environmental initiatives throughout the industry.
               research and environmental responsibility
    NORA has supported and engaged in a wide variety of research 
efforts, many of which are tailored to improving the sustainability and 
efficiency of oilheat. NORA, often working with New York State Energy 
Research and Development Authority (NYSERDA), has developed many new 
technologies. In addition, we have been continuously working with 
NYSERDA on studying the fuel components of oilheat to maximize fuel 
performance for oilheat consumers. This study includes:

   Fuel Interactions and stability, and the impact on fuel 
        performance;
   Better understanding of what causes fuel to degrade in 
        storage; and
   How heating oil and biofuel work can be safely integrated 
        into existing equipment.

    NORA has developed the scientific evidence which has encouraged the 
industry to use low sulfur fuel. The evidence demonstrates that this 
fuel is good for the environment, good for energy efficiency, and good 
for customers. In addition to these major projects, NORA is also 
working on numerous issues of interest to the industry and its 
consumers, including a study on improving furnaces and boiler heat 
exchangers to maximize the heat delivered to the home. Such 
developments will lower the cost of the appliance and increase its 
efficiency. NORA also evaluated the efficiency of combined appliances. 
While these appliances are very efficient at delivering heat and hot 
water, there has not been an effective way of measuring their 
efficiency. NORA conducted a wide-ranging and thorough study in 
conjunction with the New York State Research and Energy Development 
Authority (NYSERDA). This research was translated into a calculator for 
service technicians to use in helping consumers evaluate and select the 
most efficient boiler for their home. NORA believes that the project 
should be expanded to provide technicians an easy way to evaluate 
equipment in homes, and compare it to new equipment.
    Other research projects include:

   Extensive Work to Develop an Electronic Smoke Tester
   Developed Static Tank Tightness Testing
   Developed a Five-Ton Heat Pak
   Developed a Two-Stage Furnace
   Developed Condensing Furnace Technology
   Developed Smart Controls for Burners
   Developed Condensing Boiler
   Developed Ultra Clean White Flame Burners
   Developed Low Mass Ultra Efficient Water Heater
   Developed Modulating Heating Oil Burners

    Current research projects include:

   Next Generation Venting Solutions for High Efficiency 
        Appliances
   Oil Fired Heat Pump with Efficiencies of 140 Percent
   Self-Powering Heating Oil Furnace with Thermophotovoltaics
   Next Generation Heating Oil Blend of Heating Oil and 
        Biodiesel
                     education, training and safety
    NORA is committed to ensuring that professionals in the oilheat 
industry have access to the latest innovations in oilheat technology. 
NORA is making it easy for oilheat professionals to be aware of the 
most up-to-date methods and practices to help them deliver the most 
outstanding customer service possible. During the past three years, 
NORA has:

   Standardized Certification Program: NORA created a 
        standardized certification program for technicians through 
        establishment of the NORA Education Center. There are over 
        16,000 technicians that participate in this certification 
        program. It is accepted as the training requirement in Vermont 
        and New Hampshire, and New York uses it as its preferred 
        training program. Many insurance companies now use this 
        certification and affiliated training in their risk management 
        programs.
   Oilheat Technician's Manual: NORA has revised a 
        comprehensive technician's manual along with an instructor's 
        guidebook and visual aides.
   NORA Fulfillment Center: NORA has established the Center to 
        afford easy access to NORA products and materials, including 
        professional training video tapes, business education tools, 
        and consumer information aids.
   New Training Information for Service Providers: Through new 
        training information, NORA has responded to a host of consumer 
        issues, including troubleshooting, system tuneup and efficiency 
        procedures, and fuel delivery, and how to deliver fuel to 
        protect the environment.
   Education Center website (www.noraed.org): Through the 
        development of the website, the industry will have 
        instantaneous online access to NORA training materials.
   Career Outreach Programs: NORA supported an initiative by 
        the National Association of Oilheat Service Managers (NAOHSM) 
        to provide career outreach programs to encourage bright, hard-
        working young people to consider a career in the Oilheat 
        industry.
   Training Videos: NORA developed 16 training videos, which 
        have been distributed to all of the service personnel in the 
        industry. Additionally, these videos are available for download 
        on the NORAed website.
   Oil Storage Best Practices: NORA developed a comprehensive 
        approach to the storage of oil in tanks. This approach included 
        developing a cooperative relationship with insurers and state 
        regulators. As a result of this project, NORA developed a 
        training manual and curriculum, video training, and a 
        certification program. Additionally, NORA developed a 
        recommended procedure for cleaning up releases from heating oil 
        tanks.
   National Energy Conservation Analyst: NORA developed a 
        ``National Energy Conservation Analyst'' program, which 
        educates heating oil technicians on whole-home energy 
        conservation. Energy Conservation technicians who participate 
        in this program get an understanding of how the house envelope 
        interacts with the heating system, how to evaluate the house, 
        and how to recommend solutions for customers.

    In addition, NORA is playing an active role in supporting statewide 
education and training activities for state and local professionals. 
The following are samples of some of the activity that has occurred 
throughout the United States:

          Connecticut: With NORA support, the non-profit ITEC 
        Vocational-Technical School delivered 250 presentations to 
        realtors to help them understand how to handle the 
        environmental responsibilities of underground storage tanks. 
        ITEC communicated with 550 of the state's leading construction 
        companies about new, high efficiency oil heating equipment that 
        reduces emissions and saves consumers money. NORA also helped 
        serve the training and licensure needs of over 1,000 people who 
        go through the Independent Connecticut Petroleum Association's 
        (ICPA) Technical Education Center each year, some of whom are 
        being retrained for new careers the State's professional energy 
        conservation technician trade. ITEC is expanding into training 
        workers to view the home and business as an entire energy unit, 
        expanding their skills to include Building Performance 
        Institute (BPI) energy conservation training. With NORA's 
        leadership in a new program started in 2009, ITEC has also 
        received state approval for the first solar/thermal 
        certification program in Connecticut as the new Oilheat and 
        solar/thermal applications join as a single energy delivery 
        system.

          Indiana: Supported extensive seminars and training programs.

          Kentucky: Developed an outreach program for oilheat consumers 
        in the state.

          Nevada: Helped expand continuing education programs from 
        service technicians to help for energy auditors, home 
        inspectors, and front office and management personnel.

          New York: Provided new heating equipment for technical/trade 
        schools. In New York City, high school students are regularly 
        trained and tested for careers as technicians. Long Island 
        established a cooperative agreement with the local community 
        colleges and now has an extensive heating oil education 
        program.

          New Jersey: Established month-long Basic Oilheat Technician 
        Education Programs conducted at local county college 
        facilities.

          North Carolina: Enhanced published training materials and 
        created new HVAC training programs in 10 in the North Carolina 
        community college system. 50 technicians per year are 
        certified.

          Maine: Produced safety manuals in both print and electronic 
        forms. Operates a state of the art training facility in the 
        City of Brunswick provides certification training, and hundreds 
        of continuing education classes throughout the state.

          Pennsylvania: Provides a certification program and a full 
        slate of continuing education classes. Each year nearly 500 
        technicians receive certification.

          Vermont: Helped create permanent statewide training 
        facilities including the Vermont Fuel Education Center in 
        Montpelier; the Green Mountain Technology and Career Center in 
        Hyde Park; the Vermont Technical College in Randolph, and the 
        Howard Dean Education Center in Springfield and purchased new 
        oilheat equipment for training purposes. Over 700 technicians 
        are trained annually at these facilities.

          Virginia: Provided cross-training opportunities for 
        oilheating technicians to work on joint Oilheat/air 
        conditioning systems.

          Washington: Supported scholarships to the Oilheat Service 
        Technology School in Seattle as well as certification and 
        training programs, and continuing education.

    The training and certification programs operated by NORA and the 
qualified state associations have provided employment opportunities for 
thousands of individuals over the last decade. These dedicated 
individuals provide safe and comfortable homes for millions of 
families. They also have jobs that provide a good salary and benefits, 
which enables them an opportunity to be homeowners and raise families.
                putting technology to work for consumers
    NORA is committed to helping its state partners communicate the 
latest oilheat benefits, technological advancements, and enhanced 
customer service techniques to existing and potential oilheat 
customers. NORA is helping consumers understand the industry's ongoing 
commitment to providing safe, efficient, reliable oilheat services in 
an environmentally sound and thoughtful manner.
    Through a variety of outreach efforts NORA is working to ensure 
that home inspectors, real estate professionals, and consumers are 
aware of the improvements in oilheat technology. Among the published 
materials for use in these consumer education and outreach programs 
NORA helped produce:

   A Homeowner's Guide that describes the benefits of on-site 
        fuel supply, the cleanliness and efficiency of oilheat systems, 
        and information about storage for real estate purchasers 
        considering homes with existing oilheat systems; and
   An energy efficiency pamphlet that provides consumers 
        helpful suggestions for efficient use of oilheat, helping them 
        save money on heating costs.

    NORA also supports the efforts of state associations that emphasize 
the productive role oilheat plays in local communities. These state 
associations regularly distribute materials for homeowners on how to 
use oilheat safely and efficiently. These extensive consumer education 
activities provide continuous information to consumers in each of the 
states--advising customers of how to save energy, how to use Oilheat 
safely and efficiently, and what types of equipment they should use to 
improve efficiency.
                               conclusion
    As a result of the services that NORA provides, oilheat consumers, 
companies, employees, and manufacturers are working together to improve 
efficiency. Oilheat consumers have greatly benefited from the 
development of more efficient appliances and the invaluable services 
that technicians and companies that understand the benefits the 
equipment. For nearly twenty years the amount of oil consumed per 
household stayed relatively level. However, in the middle of this 
decade, with NORA's support, Oilheat customers were able to make 
strides in energy efficiency that had not been seen since the 1970's. 
NORA's data has shown a decrease in consumption of nearly 30 percent, 
which is supported by both dealer information and overall collections 
to NORA. This dramatic decrease in demand, which would not have 
occurred without NORA, provides benefits to customers, to the country, 
and to the environment.
  response to concerns raised in the government accountability office 
                              (gao) report
    In its report, the GAO raised several issues regarding NORA program 
operation. Below are NORA's responses to these concerns.
Heating Oil Tank Insurance Program
    GAO characterized the NORA heating oil tank insurance program as 
being outside of NORA's priority area. However, NORA dedicated 
substantial funds to working to resolve the issue of homeowner tanks 
and insurance. In several states, homeowners were having difficulty 
obtaining coverage for their homes if they had an Oilheat system. NORA 
believed that leaking tanks, including those that are not maintained 
properly, presented both a hazard to the environment and to the 
insurability of homes, and clearly presented safety issues. To that 
end, the Board dedicated substantial sums to attempt to respond to the 
problems. We conducted research on tanks and why they fail; worked with 
state environmental commissioners on appropriate cleanup standards for 
Oilheat tanks that might leak; and we investigated different methods to 
determine whether an underground tank might leak. NORA also developed 
educational materials to better train our technicians on how to install 
tanks properly, to inspect them periodically, and to understand the 
warning signs that might indicate a tank is leaking. In conjunction 
with the homeowner's insurance industry, we also developed consumer 
brochures to educate consumers on best practices for tank maintenance 
and warning signs of leaks. NORA does not believe that these activities 
are outside the scope of the statute, and certainly they are not an 
overhead or ``administrative'' expense.
Consumer Education and Training
    GAO indicated that NORA did not have a strategic plan for consumer 
education, and training. GAO reached that conclusion based on reviewing 
the strategic plans that were developed for NORA's research and 
development program, which did not include consumer education and 
training. Further, NORA disagrees with the GAO's assertion that its 
strategic plan(s) statement ``lacked goals.'' These program areas are 
designed, among other things, to ensure that there are qualified 
technicians; that homeowners know the attributes of oilheat; and that 
homeowners are aware of both safety issues and ways to reduce 
consumption. Section 706 of the National Oilheat Research Alliance Act 
of 2000 establishes that NORA is to work in these areas and develop 
programs for each of these areas. NORA developed very successful 
programs in each of these areas but did not have a Roadmap as was used 
for our long term research programs.
    Additionally, GAO asserts that consumer education was not 
considered a priority in the legislation, and does a brief review of 
the Congressional history of the underlying Act. However, GAO neglects 
to discuss H.R. 3610, which was passed by the House in the 105th 
Congress and is the predecessor bill to the bill that was enacted into 
law. Then-Chairman Dan Schaeffer (RCO) of the Energy and Power 
Subcommittee conducted a hearing in the spring of 1998, and there was 
extensive discussion of consumer education by the industry and by 
competing fuels. Subsequent to that hearing, a discussion with utility 
representatives was conducted and a better definition of consumer 
education, as well as limits on consumer education, was incorporated 
into the final statute. It is clear from the existing statute and its 
discussion of consumer education, that it was a priority and was well 
considered. The industry handouts to Congress anticipated that the 
program would have revenues of $22 million per year. A report generated 
by DOE, ``Oilheat Research Agenda, A Ten Year Blueprint for Residential 
Oilheat Research and Development in the Twenty-First Century'', May 
1997 (BNL-52529) anticipated yearly research and development 
expenditures of $2.5 million from both DOE and NORA. At the time DOE 
was expending $500,000. Thus, the industry anticipated spending less 
than 10 percent of the total budget on research and development.
Transparency and Accountability
    GAO asserts that there is no quantitative data to evaluate NORA's 
activities despite NORA providing detailed information on education and 
training. NORA's certification program is utilized by the states of 
Vermont and New Hampshire. Additionally the New York State Energy and 
Research and Development Authority (NYSERDA) in its contracts for 
training references NORA's certification and training program, and 
Underwriters Laboratory (UL) uses it as part of its installation 
guidelines for tanks. Also, several insurance companies that write 
policies to Oilheat companies cite the NORA training and certification 
program and require that it be used by policy holders as part of their 
risk management programs.
    GAO used a government database that reflected a small number of 
safety incidents in its comments on education and training. NORA and 
several contractors carefully reviewed the database that GAO used to 
identify the number of incidents from Oilheat and found that the 
database produced by the Consumer Product Safety Commission (CPSC) was 
generated from hospital information and did not provide detailed 
information on the incidents. Most of the incidents recorded were 
related to so-called ``puff backs'', which allegedly resulted in carbon 
monoxide problems. NORA provided GAO a detailed memorandum on this 
issue, which found that all of the incidents originated in one hospital 
in New York, which may indicate that the data was not being gathered 
uniformly or accurately, and that the ``puff backs'', which is 
analogous to a backfire in a car, happened in the furnace or chimney. 
The exhaust gases would continue to be discharged through the chimney, 
and thus carbon monoxide poisoning is not likely to be related to this 
accident. Finally, two of the incidents referenced in the report are 
from 2008 and were related to one homeowner rubbing oil in his eyes, 
and another stumbling over the heating unit while intoxicated. NORA 
could find no relationship between its training and these events, and 
CPSC advised us that these studies are not designed to evaluate 
training, and are not supplemented with forensic information which 
would substantiate data and provide useful information for trainers.
    GAO also states that ``NORA officials said that NORA has not 
conducted any studies to ascertain whether its efforts have increased 
public awareness of Oilheat.'' I discussed consumer education with the 
GAO on more than one occasion during the audit process and explained 
the limitations of consumer research and its abilities to provide 
meaningful information. I further indicated that in recent years, NORA 
had not undertaken in-depth surveys on public awareness and that in the 
final years of NORA's authorization, it was difficult to support 
spending substantial sums of funding on consumer research, and the 
Board did not believe such expenditures were justified.
    In the exit conference on April 6, 2010, the GAO expressed a 
preference for precise correlative data concerning NORA's message and 
how it changed consumer behavior or attitudes. After completing many 
studies, however, it became apparent to the NORA Board that such 
correlative data is imprecise and is particularly difficult to obtain 
with a high profile product and when many of the attributes of the 
product (e.g. price) change rapidly. GAO also indicated that they were 
looking for data showing that consumers wanted to use more ``Oilheat''. 
However, that has never been the goal of the organization, rather we 
have been working to reduce consumption and improve efficiency.
Lobbying Activities and Expenditures
    First, GAO described legislative (or lobbying) activities by 
independent state associations. These state associations are 
independent corporations and fund their government relations advocacy 
with the private dues of their members and not NORA funds. The 
discussion of these state associations and their activities is thus 
unrelated to NORA's compliance with the law.
    Second, GAO states that the ``NORA president said that he was going 
to try to get state senators to support NORA reauthorization.'' 
Regarding this alleged lobbying activity, I was briefing the Executive 
Committee of NORA. At the conclusion of the meeting, I highlighted the 
steps that were being taken to have NORA's enabling legislation 
reauthorized. The Executive Committee in planning NORA's operations 
clearly needed to be advised of the legislation affecting the program, 
whether they could enter into long term contracts, and whether funds 
would be available.
    Third, GAO states that ``In his interview and follow-up discussion 
with the GAO on October 13, 2009, the President of the Massachusetts 
Oilheat Council (MOC), Michael Ferrante, stated that John Huber 
attended the meeting with Ron Carlton of Senator Kennedy's office 
because in his conversation with Mr. Carlton.'' Mr. Carlton had a 
number of questions regarding NORA's expenditures and budgeting and the 
MOC agreed that I should attend the meeting. Responding to 
Congressional inquiries does not constitute ``influencing legislation 
or elections.'' Further, my attendance at the meeting did not utilize 
any funds collected by NORA and my time was compensated by a third 
party.
    Fourth, GAO discussed a newsletter reporting on Congressional 
activities. As you know, the volatility in heating oil prices has been 
a problem for customers and companies. Independent of NORA, the heating 
oil retailers initiated an effort to advocate for greater regulation of 
energy derivatives, which impact heating oil prices. The New York City 
association, in its customer newsletter, included an article indicating 
that Oilheat retailers were working in this area, and Congress was also 
attempting to pass legislation. There was no call to action or ways to 
contact Congress. It should be further noted that the newsletter mostly 
focused on how to reduce oil consumption, and due to GAO's continuing 
focus on this issue, the New York City Association as a precaution 
repaid the funds that were used for this article.
    Lastly, GAO asserts that the Chairman of NORA asked the Petroleum 
Marketers Association of America (PMAA) to lobby on NORA's behalf. The 
reference is to Chairman Robert Boltz who operates a small heating oil 
company in Pennsylvania. Mr. Boltz also served on PMAA's Executive 
Committee. Mr. Boltz indicated that NORA did not do lobbying, and 
instead PMAA did the lobbying for the industry. Mr. Boltz was 
explaining the different roles of the two groups to GAO to clarify that 
funds provided to NORA were not used for legislative activities.
Department of Energy Outreach and Coordination
    GAO raised a concern that the proposed budget should have been 
submitted to the Office of Fossil Energy and the Office of Energy 
Efficiency and Renewable Energy within the Department of Energy (DOE). 
NORA explained to the GAO that the budget was submitted to DOE's Office 
of Policy and International Affairs. In earlier years, the budget was 
submitted to the Secretary, without a sub-office, and comments were 
never received. In the early 2000's, NORA and the Office of Policy 
completed several projects together, and thus it seemed appropriate to 
send the budget to those offices. GAO's desire to have the budget sent 
to other offices is not required by the statute. Further, in my twenty 
years of working with DOE, those offices have had limited interest in 
the oilheating industry, whereas the Policy Office has had an ongoing 
and active interest in the industry.
NORA Board Response to the GAO Report
    At its most recent meeting, the NORA Board took two steps to 
respond to concerns raised in the GAO Report. First, as GAO requested, 
we have instituted a back-end certification of legal compliance for 
grantees to ensure compliance. Second, GAO expressed concern about lack 
of accounting records by state grantees. While we disagree with that 
analysis, we have instituted a new accounting procedure that has NORA 
paying all expenses for contractors directly. Thus, any concerns with 
commingled funds or improper accounting by grantees will no longer be 
an issue. Third, we have recaptured the fee for the newsletter prepared 
by the New York Oilheating Association that described Congress' efforts 
to regulate the commodity markets. Additionally, we will take 
appropriate administrative actions to resolve any written 
correspondence regarding the Board and where the budget should be sent.
    Question 2. What is the potential to reduce greenhouse gas 
emissions from oilheat using advanced biofuel blends? What effect would 
moving to a biofuel blend have on safety and cost?
    Answer. The potential for switching from Oilheat to an advanced 
biofuel is unlimited. According to a report issued by the Northeast 
States for Coordinated Air Use Management, which examined the full 
lifecycle of different fuels, today's soy biodiesel has a carbon 
intensity of 35.1 and ultra low sulfur heating oil has a carbon 
intensity of 93. Thus, for every gallon of biofuel used will displace 
two-thirds of a gallon of petroleum based oil, and every percentage of 
biofuel used is equivalent to converting 1000 homes in Vermont to 
alternative fuels. This can be done with no capital cost or disruption 
to customers.
    Additionally, crops such as algae and wood will move into 
production, and we believe that that will lead to significant 
improvements. Additionally, we have worked with a company that can turn 
waste cellulosic material into a heating oil additive. Their process 
can essentially yield a negative greenhouse gas score due to the 
avoided emissions associated with material decomposing.
    However, NORA is very concerned with the safety implications of a 
switch to biofuel. Firstgeneration biofuels are less toxic than heating 
oil, and their air emissions would be superior. However, our main 
concern is to ensure that the fuel operates reliably to avoid household 
damage, or no-heat calls. NORA conducted an exhaustive study on low-
percentage blends, and the regulatory authorities have indicated that a 
blend of 5 percent is equivalent to the existing fuel. We are currently 
working to identify a higher blend without affecting safety. We are 
testing at a variety of blend levels, and it is our expectation that 
the point of equivalence for existing fuels will be 15-20 percent. A 
movement to this level would be equivalent to switching nearly 20,000 
households to an alternative fuel with no capital cost. The industry is 
now working on new equipment that can burn 100 percent biofuels. The 
conversion is fairly inexpensive for new equipment, probably in the 
$15-25 range, while a retrofit would be in the $300-500 range. The cost 
of various biofuels has ranged widely, and the lack of a tax credit 
affects its cost to consumers. NORA does not track pricing 
differentials; however, information we received in May at the end of 
the heating season indicated that the price differential was 
approximately one cent per percentage. As the market develops, we hope 
that this differential falls.
                                 ______
                                 
       Response of Roy W. Willis to Question From Senator Sanders
    Question 1. Please respond broadly to the GAO report, and any steps 
PERC is taking to respond to the report.
    Answer. Thank you for the opportunity to respond broadly to the 
Government Accountability Office review and discuss the Council's 
actions in response to it.
    As CEO, I have a responsibility to provide forward-looking 
leadership that enables PERC to deploy the resources available to it to 
benefit consumers, the industry that pays the assessment, and the 
public at large. The GAO review presented an opportunity, as well as a 
necessity, to reflect on the work of the Propane Education and Research 
Council over its first decade of operations. That reflection has helped 
the Council and me plan for the future.
    Generally speaking, a GAO review is one of many tools that can aid 
congressional oversight. In this instance, the GAO recommendation for 
ongoing oversight by the Department of Energy--a recommendation that 
GAO first made in 2003--was not explored in the report or at the 
subcommittee hearing. The department neither responded to the GAO's 
recommendation nor was present as a witness at the hearing. It does not 
appear that DOE wants the job of overseeing the Council's programs. The 
Council has no objection to agency oversight, a structure that appears 
to work adequately for the federal commodity programs in agriculture. 
As it has from the outset, the Council is working with DOE and other 
agencies on several projects. The Council also has modeled key programs 
on similar DOE programs, particularly for research, development, and 
deployment of clean, efficient technologies.
    I urge great caution in relying on the GAO report to reach a 
definitive conclusion about the Council's activities. The report spent 
considerable space musing on whether some Council expenditures could be 
considered lobbying--a point that the Committee's press releases 
focused on before and after the hearing. In reality, this discussion is 
nothing more than innuendo. GAO acknowledged that it could not and did 
not make the determination that the expenditures it highlighted were 
lobbying in fact or in law. It struck me as incongruent with an 
objective review of the Council's first decade of operations that so 
much of the GAO report (and the Committee's public discussion of it) 
would focus on expenditures that, in total, represent less than one-
tenth of 1 percent of Council expenditures over the 10-year period 
covered by the report. I reiterate my statement in the record that PERC 
does not lobby and never has lobbied, nor has the Council ever 
supported any candidate in any election, either directly or indirectly; 
and nothing in the GAO report refutes that statement.
    This is not a trivial matter, and we do not take it lightly. Even 
though in aggregate these questioned activities represent a tiny 
portion of total Council expenditures, they clearly distract from the 
important work that PERC is doing. So this is what we've done: 1) we 
terminated the programs highlighted by GAO, and 2) we no longer sponsor 
or participate in any way in the propane industry's annual Washington, 
D.C., meetings--not because these program are unlawful, but because we 
want to avoid even the appearance of impropriety. Still, it is 
important that PERC correspond with Congress concerning the results of 
its activities, and we welcome clarification and guidance on how best 
to do so.
    Since the GAO review, the Council has moved forward on the 
strategic plan it adopted in December 2007. That plan is firmly 
grounded in the Propane Act and is primarily focused on the statutory 
mandate to support ``research and development of clean and efficient 
propane utilization equipment.'' Earlier this month (October 2010), the 
Council approved budget recommendations for 2011 in which 55 percent of 
program funding is dedicated to research. Training and safety 
initiatives receive the most funding after research. As I noted in my 
written statement, the GAO report significantly underreports the 
investment in research that the Council has generated through direct 
and matching funds. Nearly $200 million was committed to PERC-sponsored 
research projects during the period reviewed by GAO.
    The Council believes that the most beneficial outcome from 
``research and development of clean and efficient propane utilization 
equipment'' is a commercial product that consumers can use to improve 
energy efficiency and reduce environmental impact compared with other 
fuel choices. For the propane checkoff, this research strategy means 
using assessment funds to create an incentive for manufacturers and 
research institutions (public and private) to collaborate on building 
new appliances, equipment, and vehicles that can find a place in the 
market and meet essential consumer energy needs. The propane industry 
itself is not a direct economic beneficiary of these products, since 
its members are not manufacturers and rarely merchants of the products. 
At best, propane retailers can hope to compete for the fuel load that 
these products create. For that to happen, the manufacturer must 
commercialize the product and support it through sales and marketing; 
otherwise, the investment of research funds is nonproductive. Thus, the 
Council has approached its research initiatives with a 
commercialization perspective.
    To optimize oversight of its expanding research portfolio, the 
Council hired Dr. Steve Wayne from the University of Memphis, a 
talented engineer and educator who previously served as CEO of a 
technology development firm, to lead our research efforts. He 
immediately began work on two vital objectives: 1) to unify our three 
research programs, and 2) to establish a state-of-the-art project 
management system. The Council has adopted and customized the Stage-
Gate project management system, which DOE uses for its Industrial 
Technology Program. All Council projects are managed within that 
process. We now have $74 million invested in 157 projects for research, 
training, and safety. We are moving forward with important work.
    The GAO report also led the Council to make a number of ministerial 
changes. For instance, the Council recast its budget to clarify the 
research work being done in the agricultural and engine fuel arenas. I 
have also established a senior management task force to review the 
Department of Agriculture's guidelines for agriculture checkoff 
programs and make recommendations on appropriate provisions that the 
Council can voluntarily adopt to improve its operations.
    Senator Sanders, for the past 12 years, the Propane Education and 
Research Council has diligently pursued a multidisciplinary program of 
consumer and employee safety, workforce and end-user training, research 
and development of clean and efficient propane utilization equipment, 
and public education on safety and other issues related to the use of 
propane, including energy efficiency, emissions reduction, and 
alternatives for transportation, agriculture, and distributed 
generation. It is highly unlikely that this work will be done absent 
the checkoff framework that the Propane Education and Research Act 
provides.
    Thank you again for your interest.
      Response of Mark Gaffigan to Question From Senator Bingaman
    Question 1. During the hearing, you referenced a home heating oil 
customer's bill, which showed an itemized charge for a ``NORA tax''. 
Could you please submit a copy of that bill for the record?
    Answer. 
    
    
                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

    [Due to the large amount of materials received, only a 
representative sample of statements follow. Additional statements have 
been retained in subcommittee files.]

  Statement of David C. Eisler on behalf of Maloof Consultants, Inc., 
                               Medina, OH
    My name is David C. Eisler, on behalf of Maloof Consultants, Inc. I 
am an Attorney licensed in Ohio, and have practiced in the areas of 
real estate and energy law. This testimony responds to the testimony of 
Roy Willis, CEO of the Propane Education and Research Council (PERC) 
The statute creating PERC defines its purpose as follows:

          ``The Council shall develop programs and projects and enter 
        into contracts or agreements for implementing this chapter, 
        including programs to enhance consumer and employee safety and 
        training, to provide for research and development of clean and 
        efficient propane utilization equipment, to inform and educate 
        the public about safety and other issues associated with the 
        use of propane. . .'' 15 U.S.C. Sec. 6404(f).

    The GAO notes that greater oversight is necessary in light of 
PERC's possible lobbying activities outside of its authority, and the 
marked imbalance between funds devoted to advocacy and funds devoted to 
research, then makes certain recommendations concerning amendments to 
address a sharper definition of its authority and a more active 
oversight mechanism. Mr. Willis responds that PERC has been a 
responsible steward of the funds collected pursuant to the statute's 
authority, and has demonstrated transparency in its financial 
reporting, and thus the statute requires no reform or amendment. I 
agree that amendment to the statute is needed, but proposes that this 
committee go further to specifically address the issue of American 
energy independence, cost-efficiency and propane safety as it relates 
to human health arising from the differences between HD5 propane and 
so-called ``commercial grade'' propane. The first, HD5 propane, derived 
from natural gas processing, the American Society for Testing and 
Materials defines by specific chemical formula requiring no less than 
90% chemical propane, and the other, ``commercial grade'' propane, 
derived from oil refining, is required only to hold a flame, ASTM 
Standard 1835. The statute is silent as to this critical issue, 
despite, as The GAO report notes, propane is ``a byproduct of both 
crude oil refining and natural gas processing with approximately equal 
amounts of total propane produced from each process.'' GAO-10-583 
``Propane and Heating Oil'' at 3. The difference in these products, 
their value, their performance, and their safety as relates to human 
health, must be addressed and must be addressed soon, especially as new 
supplies of propane are quickly coming on stream.
    Propane is a naturally occurring substance with a chemical formula 
of C3H8, which is isolated from natural gas during the gas 
fractionation processing. ``HD5 Propane'' is a gas available for use as 
a motor and heating fuel, which, pursuant to the nationally recognized 
ASTM Standard 1835 consists of not less than 90% chemical propane, no 
more than 2.5% butane and no more than 5% propylene. This substance is 
transported on various federally regulated pipelines, most of which are 
owned by Enterprise Products, LLP, which only accept HD5 propane for 
transportation, because, as a fungible, anyone who ships on the lines 
can rely on its makeup. Historically, propylene has not been present in 
the natural gas fractionation process, but in the event it is found, 
has been separated and marketed as plastics feedstock. ``Commercial 
Propane'' and ``Commercial Grade Propane'' are names for a gaseous 
mixture that is stored under pressure as a liquid and is used as home 
heating and cooking fuel. Pursuant to ASTM Standard 1835, it consists 
of any mixture of gases that is capable of holding a flame when in a 
gaseous state. This mixture of gases varies dramatically each time it 
is produced as a byproduct of oil refining and can still be called 
``commercial grade'' propane because it needs only to hold a flame. The 
contrast between the efficiencies of HD5 as a true fungible, providing 
consistent fuel and BTU value with each gallon, and ``commercial 
grade'' propane, the fuel and BTU value of which is entirely 
unpredictable can only be estimated. Because the promotion of rational 
economic and energy planning is clearly within the mandate of PERC, the 
difference between HD5 propane and ``commercial grade'' propane goes to 
the heart of its mandate. The actual cost of HD5 propane per BTU can be 
measured predictably and consistently, which will provide for 
meaningful and progressive economic and energy planning. The actual 
cost of ``commercial grade'' propane, measured by the cost per BTU, can 
never be accurately measured, only broadly estimated, which frustrates 
economic and energy planning. Unless PERC recognizes and addresses the 
distinction between HD5 propane and ``commercial grade'' propane, 
progress in economic and energy planning for propane as a fuel will be 
wholly frustrated. Add to these economic considerations the human 
health and safety considerations, and the urgency of the distinction 
between HD5 propane and ``commercial grade'' propane is clear. 
Congressional amendment to the authorizing act will be required to 
address these vital issues.
    The National Propane Gas Association (NPGA), one of the industry 
organizations that formed PERC upon its authorization in 1996, and 
takes part in choosing the PERC Council membership, has promulgated a 
Material Safety Data Sheet that identifies ``Commercial Grade'' 
propane, the mixture of gases that holds a flame when in the gaseous 
state, with chemical propane, C3H8, a food-grade ingredient that may be 
used for aerosol propellants, by reference to FDA regulations 
describing chemical propane, when ``Commercial Grade'' propane contains 
benzene, toluene, butadiene (Agent Orange), ethylbenzene and xylene, 
all of which have been identified as dangerous carcinogens. In so 
doing, they have identified the gaseous mixture containing known 
carcinogens as a non-toxic food-grade substance, safe to use for home 
heat, where these carcinogens are aspirated, or for home cooking and 
grilling, where these carcinogens are deposited on food and ingested. 
For the very reason that ``Commercial Grade'' propane contains these 
known carcinogens, other industrialized nations forbid its use for home 
heat and cooking. It is no mistake therefore that the material 
promulgated by PERC has made no distinction between HD5 propane and 
``commercial grade'' propane.
    This is the very issue that PERC can and must address, both in the 
producer and the end-user arenas: how the byproduct of oil refining is 
to be transported and processed so that it yields HD5 propane, while 
consumers are educated as to the difference between the two propane 
grades until the supply is readjusted. The supply of HD5 is limited 
only by the willingness of the industry to make the effort to transport 
and process oil refinery byproduct. Since HD5 lasts up to 50% longer 
than ``commercial grade'' propane, and generally 30% longer, its value 
cannot be reasonably questioned. Since HD5 propane has a fixed formula, 
and the processing method used to produce it excludes the carcinogens 
present in ``commercial grade'' propane, its health and safety benefits 
can in like manner be unquestioned.
    The NPGA represents suppliers and transporters of propane as well 
as retailers and dealers. It is in the interests of all of these 
parties to suppress the distinction between HD5 propane and 
``commercial grade'' propane, to frustrate reform of the industry. 
Reform would benefit the United States economically, benefit our energy 
independence and the health and safety of our citizens. Reform would 
also require of the oil refineries considerable effort: to either 
transport the byproduct containing propane to Texas for processing and 
separation in its unique salt dome caverns, or to establish gas 
processing plants in the northern tier. So long as ``commercial grade'' 
propane, with all its inefficiencies, hidden costs and dangers to human 
health and safety, can be sold on par with HD5 propane, the oil 
refineries and the retailers that sell their product have every reason 
to maintain the status quo, despite its cost to American energy 
independence and the American public.
    As it stands, the propane market is dominated by a very few players 
that, having suppressed the distinction between HD5 propane and 
``commercial grade'' propane, have developed ways to profit from the 
very distinction they have kept from the public. HD5 propane is 
transported by pipeline, with origins in Mt. Belvieu Texas and Arcadia, 
Louisiana. ``Commercial grade'' propane is transported by truck from 
the oil refineries that market it to the various national retailers. 
Because the pipeline transportation of HD5 propane is substantially 
controlled by a single entity, the scarcity of HD5 can be controlled at 
will. The same entity that controls the pipeline transportation of HD5 
propane also controls the maritime terminals, from which HD5 propane is 
shipped abroad at a high loading premium, which is controlled by the 
very entity that controls the pipeline. The scarcity of HD5 propane 
domestically justifies the sale of ``commercial grade'' propane to 
customers on a par with HD5, despite the dramatically lesser cost of 
``commercial grade'' to the marketer, its demonstrable inferiority as a 
fuel, and as a hazard to human health. It is clear that PERC is fully 
authorized to conduct research to address this issue, to advise the 
public as to this issue and coordinate efforts to reform the industry 
to the benefit of the participants as well as the public. It is equally 
clear that PERC has no motivation whatsoever to do so with its present 
makeup, the lack of a clear mission and the lack of Congressional 
oversight, as noted by the GAO. It is equally clear that the interests 
presently represented by PERC, those of the producers, transporters, 
and their marketers, have every motivation to continue to suppress the 
distinction between HD5 propane and ``commercial grade'' propane.
    The lengths to which these players, represented by the NPGA, will 
go to suppress the distinction between HD5 propane and ``commercial 
grade'' propane are dismaying but not surprising. One small marketer 
has made the superiority of HD5 propane the cornerstone of its brand, 
and the NPGA has complained to the Ohio Attorney General and the FTC 
claiming that the marketer had engaged in false advertising. When that 
small marketer brought suit against the NPGA, a suit that is ongoing, 
efforts were made to cut off its supply of HD5 by means of manipulation 
of the pipeline's ``minimum inventory'' rule, which the marketer had 
already challenged in a tariff protest before the Federal Energy 
Regulatory Commission, see Enterprise T. E. Products Co. Tariff 19, 
FERC Docket 10-203. The intent of this attempt to cut off supply was to 
silence the marketer, and silence the challenge to the status quo the 
marketer created. This small marketer is ready with a tariff complaint, 
which it will file in the event that it is again thrown off the 
pipeline as a shipper.
    This small shipper has not been the first to advocate the 
superiority of HD5 propane and to market based on the distinction 
between HD5 propane and ``commercial grade'' propane. Beginning in 
1999, a much larger propane retailer, then the eighth largest by 
gallons, began to vigorously market its product based on the 
distinction between HD5 propane and ``commercial grade'' propane. 
Within two years of its advocacy of HD5 propane, third parties 
initiated plans for its dismemberment, plans that are preserved in 
emails that have been conclusively authenticated leading computer 
forensic examiners. Among the devices used to take down Level Propane 
was the theft of millions of dollars in customer checks in the months 
leading up to its involuntary bankruptcy in June, 2002, and judge 
shopping on the day the involuntary bankruptcy petitions were filed to 
assure that the right bankruptcy judge, Judge Baxter, in Cleveland, 
Ohio, presided over the case. An extrinsic objection to the email 
evidence in which it was planned that Judge Baxter preside over the 
bankruptcy proceedings was that the judge draw was random, so the 
assignment of a particular judge, even though part of a plan to take 
over Level Propane, could not be assured. This objection was tested by 
reviewing that day's docket to ascertain whether the random draw 
procedure was frustrated in order to ``judge shop.'' Conceivable only 
in light of the email narrative, in which Judge Baxter is mentioned as 
a participant in the scheme, the docket review demonstrates that judge 
shopping occurred, right at the clerk's window.
    The Level Propane involuntary petitions were filed on June 6, 2002 
in the Northern Ohio Bankruptcy Court. The Public Access to Court 
Electronic Records (PACER) docket shows 84 new cases filed that day, 
bearing case numbers 02-16105 through 02-16189. The Level Propane 
Gases, Inc. petitions received the case numbers 02-16172 through 02-
16178. At the time all bankruptcy petitions were filed on paper, in 
person, with the Clerk of the Bankruptcy Court. The judges were 
assigned using an automated random number generator. The Local Rules 
were silent as to the order in which the judge was chosen, the case 
number stamped on the paper petition and the paper petition time-
stamped. When these petitions were filed, June, 2002, two (2) judges 
sat in the Cleveland Office of the Northern District, Judge 
Morgenstern-Clarren and Judge Baxter. A third seat, vacant since June, 
2000, would not be filled until October, 2002.
    Immediately before the Level Propane petitions were filed, Attorney 
Jonathan Krainess filed four separate petitions: 02-16167, 02-16169, 
02-16170 and 02-16171 all but one of which, 02-16170, drew Judge 
Morgenstern-Clarren. Case No. 02-16170 drew Judge Baxter. Another 
petition, 02-16168, filed by Attorney Barbara Brown-Daniels, drew Judge 
Morgenstern-Clarren. Immediately after the last of the Level Propane 
petitions, 02-16178, Jonathon Krainess filed 02-16179, which drew Judge 
Morgenstern-Clarren. The filing fee receipt for the case filed by Ms. 
Brown-Daniels bore the number 104989.The single filing fee receipt for 
the Level Propane cases bore the number 104990, the filing fee receipt 
for all five of the cases filed by Mr. Krainess bore the number 104991.
    Attorney Krainess was in front of those filing the Level Propane 
Bankruptcy. He allowed Attorney Brown-Daniels to file her single case, 
leaving those filing the Level Propane cases immediately behind him. He 
drew Judge Morgenstern-Clarren for 02-16171. He then allowed the Level 
Propane cases in front of him, which drew Judge Baxter. Mr. Krainess 
then filed 02-16179, which drew Judge Morgenstern-Clarren. Chance is 
severely reduced when there are two judges on the draw, as there were 
on June 6, 2002. Chance is eliminated altogether when those filing at 
the counter see the judge chosen. Mr. Krainess permitted his filing of 
no less than five cases to be interrupted by the filing of eight (8) 
involuntary corporate petitions. The facts of the docket speak loudly 
that those filing the Level Propane cases knew they needed to file 
their cases in front of Mr. Krainess' last petition to get Judge 
Baxter. With the facts in this state there can be no doubt that Judge 
Baxter was chosen specifically by those filing the Level Propane 
petition as the judge to preside over these cases. As he presided over 
this case, initiated as an Involuntary Chapter 7 liquidation brought by 
creditors, but converted the following week into a voluntary Chapter 11 
Reorganization, the going-concern assets were sold within a year to a 
national competitor, and its sole owner saddled with a $90MM debt as 
co-signer that he can never hope to discharge, thereby precluding his 
re-entry into the propane industry. I recently conducted an informal 
internet search of ``judge shopping and federal courts'' and found no 
instance of comparable to the Level case. That petitioning parties 
would go to such length to shop for the right judge to advance their 
goals, key among them the suppression of the distinction between HD5 
propane and ``commercial grade'' propane, speaks loudly to the 
importance of the distinction between HD5 propane and ``commercial 
grade'' propane to the oil refining and pipeline industry. It is worth 
noting that Judge Baxter has recently announced his retirement, years 
prior to the end of his term as Bankruptcy Judge.
    In context these lengths make sense: the NPGA, who begged Level to 
join as a member, hailing it as an innovator, in December, 2000, 
expelled Level weeks later, on the pretext of consumer billing 
disputes, retaining the $40,000 in dues Level Propane paid, knowing 
that the disputes would be publicized as they solicited Level Propane's 
membership in December, 2000. One of its leading members, Amerigas, 
took control of Level's going-concern assets within 8 weeks of their 
sale out of the Bankruptcy Estate to Horizon Propane, owned by the late 
Dick Jacobs, which had acted as ``manager'' of the Debtor during the 
brief time it operated under Bankruptcy Court jurisdiction, only to 
purchase the going concern at a fraction of even its hard-asset value.
    As the preceding narratives demonstrate, it is of exceeding 
importance to the NPGA, one of the two trade associations mandated to 
establish and select members of the PERC Council, that debate over HD5 
propane and ``commercial grade'' propane be suppressed. It is in the 
national interest that this debate be had and concluded in order to 
strengthen our energy independence, create greater efficiencies in the 
propane supply by assuring the quality of the supply and to protect the 
health of the millions of propane purchasers who use it for home heat 
and for cooking, including the 50 million households that use exchange 
bottles to fuel their grills at home, with fuel that deposits known 
carcinogens and Agent Orange directly onto their grilled meals. I 
further note that propane is the only home-heating ad cooking fuel 
available for many rural and semi-rural households, many of whom are 
among our most disadvantaged households, where heating oil is 
unavailable and the infrastructure cost cannot justify natural gas 
service. Providing these households with costly, inefficient and 
hazardous heating fuel when cost-effective and safe heating fuel is 
readily available is surely an issue that PERC can and should address. 
It will take this Committee to initiate overhaul of the authorizing act 
to make PERC answerable to these grave and real issues and to provide 
the sort of oversight necessary to assure that this responsibility, 
funded by a statutory check-off, and undertaken by an agent of the 
United States, is appropriately and fully discharged.
                                 ______
                                 
                          Vermont Fuel Dealers Association,
                                                    Montpelier, VT.
Hon. Jeff Bingaman,
Chairman, Committee on Energy & Natural Resources, 304 Dirksen Senate 
        Office Building, Washington, DC.
    Dear Mr. Chairman: The Vermont Fuel Dealers Association represents 
nearly 300 small businesses that provide heat and hot water to 3 out of 
every 4 homes in the state of Vermont. This letter is intended to 
provide a statement for the record on the subcommittee hearing to 
receive testimony on the National Oilheat Research Alliance (NORA) 
program on September 29, 2010.
    This report was requested by your office and makes a number of 
suggestions on ways to strengthen the oversight and operation of the 
NORA program. Most of these suggestions are good, and we believe that 
many or most of them have already been addressed voluntarily by NORA 
and its participating states, or can be effectively addressed in a 
reauthorization bill. However, the GAO report did not describe the 
important successes that NORA has accomplished in many of the states, 
and how important it is to the industry and its customers.
    Activities funded by NORA have benefited Vermonters through 
increases in energy efficiency, energy conservation, and operational 
safety. This has included long-term studies of mechanical features, 
tank maintenance and installation, and new technologies. NORA has 
educated thousands of qualified home energy specialists and technicians 
and provided for their continued education into safety practices, 
conservation, and new home efficiency technologies and alternatives 
such a Bioheat. The NORA Silver Course is required for all heating 
technicians in Vermont.
    NORA also has an extensive track record in the research, 
development and deployment of cutting-edge home heating equipment. NORA 
has developed highly efficient boilers and furnaces. Before NORA, the 
top efficiency for oilheating equipment was 86. Today, consumers can 
purchase a furnace with 95 percent efficiency and a boiler with a 
rating of 93. These are very substantial gains, which are helping 
consumers heat their homes more efficiently at a lower cost, something 
that is critical to consumers facing eversteeper energy prices. NORA is 
also working to bring a ``cleaner and greener'' product to market, as 
well as technical programs on energy auditing of oilheat homes and the 
integration of solar into existing systems.
    Each year, the NORA program provides our state with approximately 
$150,000 for these purposes. And again, these funds are provided at 
zero cost to the federal government. The program is funded by a small 
fraction (one-fifth of a cent) of the wholesale price of a gallon of 
heating oil. The program was given a 4-year ``sunset'' and was renewed 
with overwhelming and bipartisan support of Congress in 2005. However, 
the program has again expired and collections were suspended on 
February 6, 2010.
    But in order for NORA to continue its great work serving businesses 
and consumers in our state, and help our nation towards a secure energy 
future, it must first be reauthorized. We are hopeful that you will 
afford the program at least a brief extension (until February, 2012) as 
soon as a viable vehicle presents itself, and that you will support a 
broader, longer-term reauthorization that not only renews the program, 
but also implements modifications as per the GAO report and embraces 
the cleaner and greener future that the oilheat industry sees and wants 
for itself.
    Thank you for your consideration.
            Sincerely,
                                                 Matt Cota,
                                                Executive Director.
                                 ______
                                 
                         Oilheat Manufacturers Association,
                                    Pawlet, VT, September 23, 2010.
Hon. Jeff Bingaman,
Chairman, Senate Energy and Natural Resources Committee, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: I am the Executive Director of The Oilheat 
Manufacturers Association. It is a not for profit corporation 
established in 1993. It was created by concerned manufacturing firms 
that supply the core equipment to the Oilheat Industry with the 
specific intent to promote the growth and well being of the Oilheat 
Industry by providing technical, education, and related marketing 
support. OMA's members range from boiler, furnace, fuel additive, and 
burner manufacturers to makers of heating system components, controls, 
and testing equipment for the Oilheat Industry in North America. OMA 
works to: develop and provide technical product information to the 
industry; develop and encourage the use of industry standards to insure 
reliable quality products and services; as well as promote and maintain 
public awareness of the benefits of these products and services to 
society.
    Our Association has worked very closely with The National Oilheat 
Research Alliance since its inception. NORA has been critical to our 
member companies, and is essential to our efforts to serve our 
customers. NORA has helped us with the research needed to develop many 
of the high efficiency appliances for oilheating customers. Without 
their efforts, we would not have been able to bring these appliances 
that qualified for the federal high efficiency tax credit to the 
market. NORA has also helped the industry develop solutions to 
environmental problems that are associated with storing oil. Finally, 
NORA has helped lead the industry to a cleaner and greener fuel, one 
with low sulfur, and one with a renewable component, bioheat. We look 
forward to working with NORA to develop even more efficient boilers and 
furnaces that will be able to fully exploit the benefits of this new 
heating fuel.
    NORA has helped our customers' employees understand these advances. 
Without the training NORA has done, we would have a very difficult time 
selling our new high tech products to the industry. NORA has taught our 
customer's technicians to embrace new technology and to understand how 
to install and service it properly so it operates at maximum safety, 
efficiency, and reliability. Further, NORA has developed a cost 
effective and efficient method of communicating to our customers what 
they can do to save energy, and how they can use Oilheat safely and 
efficiently.
    It is very important that NORA be reauthorized as soon as possible, 
otherwise we will not advance, and these gains will be lost. I hope 
that you will be able to make the improvements to the bill so that this 
important program can be reestablished.
            Sincerely,
                                          Robert G. Hedden,
                                                Executive Director.
                                 ______
                                 
                         Oilheat Institute of Rhode Island,
                                   Warwick, RI, September 27, 2010.
Hon. Jeff Bingaman,
Chairman, Committee on Energy & Natural Resources, 304 Dirksen Senate 
        Office Building, Washington, DC.
    Dear Mr. Chairman: Our association wishes to submit this statement 
for the record on the subcommittee hearing to receive testimony on the 
National Oilheat Research Alliance program to be conducted on September 
29, 2010.
    This report was requested by your office and makes a number of 
suggestions on ways to strengthen the oversight and operation of the 
NORA program. Most of these suggestions are good, and we believe that 
many or most of them have already been addressed voluntarily by NORA 
and its participating states, or can be effectively addressed in a 
reauthorization bill. However, the GAO report did not describe the 
important successes that NORA has accomplished in many of the states, 
and how important it is to the industry and its customers.
    The Oil Heat Institute is a member-driven oil/bio-fuel, trade 
association with sixty-five member companies. More than 165,000 homes 
(408,000 citizens) in Rhode Island heat with oil, with a total revenue 
of nearly $356 million and $41 million in payroll.
    The NORA program has provided our state with about $300,000 a year, 
which we have primarily used for the purposes of consumer education and 
technical education.
NORA Benefits Nationally
    The expiration of the program has terminated the many activities 
funded through the assessment have benefited consumers through 
increases in energy efficiency, energy conservation, and operational 
safety. This has included long-term studies of mechanical features, 
tank maintenance and installation, and new technologies. NORA has 
educated thousands of qualified home energy specialists and technicians 
and provided for their continued education into safety practices, 
conservation, and new home efficiency technologies and alternatives 
such a Bioheat.
    NORA has also an extensive track record in the research, 
development and deployment of cutting-edge home heating equipment. NORA 
has developed highly efficient boilers and furnaces. Before NORA, the 
top efficiency for oilheat equipment was 86. Today, consumers can 
purchase a furnace with 95 percent efficiency and a boiler with a 
rating of 93. Even further reductions will be possible in the near 
future with the introduction of ultra-low sulfur heating oil. Several 
states have already approved mandates that will take effect in the 
coming years, and NORA will be essential in developing, testing and 
bringing to market a new generation of affordable, ultra-efficient 
heating systems designed to utilize this cleaner-burning fuel.
    NORA is also working to bring a more environmentally secure product 
to market, including Bioheat. It has successfully tested and secured 
manufacturer and UL support for up to a five percent (B5) heating oil 
and biodiesel bio-blend. A mandate for this fuel has already passed in 
Massachusetts and New York City, and several other states are 
considering similar renewable fuel requirements. If all heating oil in 
the country were at least a B5 blend, 400 million gallons of oil could 
be conserved annually. Meanwhile, NORA continues to research even 
higher bioblends, with the goal of reaching a 20 percent bio-blend by 
the end of the decade.
NORA Benefits for Rhode Island
    Rhode Island is a heavily-licensed state in trades. When licensing 
began about 35 years ago, the majority of the technicians with master 
licenses were grandfathered in. Our industry had a training program for 
entry-level licensing but no training program was available for 
advancement to the mid-level or the master level. As these masters 
retired, our industry suffered a severe shortage of licensed workers.
    NORA has enabled us to train several hundred entry-level 
technicians. We worked with the state's technical college to develop an 
advanced-training curriculum, approved by the state apprenticeship 
council, for technicians to receive the mid-level and master licenses. 
We have now trained close to 100 technicians in that program. In 
addition, we have been able to use NORA funds to provide discounted 
pricing for unemployed and underemployed workers and some scholarships 
for graduating high school students and former military.
    Technology has been constantly improving through the research done 
by NORA, and we have been able to offer seminars and classes for on-
going training of technicians.
    The expiration of NORA will affect our ability to move forward. In 
order for NORA to continue its great work serving businesses and 
consumers in our state and help our nation towards a secure energy 
future, it must first be reauthorized. We are hopeful that you will 
afford the program at least a brief extension (until February, 2012) as 
soon as a viable vehicle presents itself and that you will support a 
broader, longer-term reauthorization that not only renews the program, 
but also implements modifications as per the GAO report and embraces 
the cleaner and greener future that the oilheat industry sees and wants 
for itself.
            Yours truly,
                                             Julie A. Gill,
                                            Executive Director/CEO.
                                 ______
                                 
                         Oil Heat Council of New Hampshire,
                                   Fremont, NH, September 24, 2010.
Hon. Jeff Bingaman,
Chairman, Committee on Energy & Natural Resources, 304 Dirksen Senate 
        Office Building, Washington, DC.
    Dear Mr. Chairman: On behalf of the Oil Heat Council of New 
Hampshire and its member dealers, I would like to provide you with 
information on how important the National Oilheat Research Alliance 
(NORA) is to consumers and businesses in New Hampshire.
    Oilheat is an important product to the New Hampshire economy, to 
the state's mostly small business, family-owned and operated home 
energy companies, and to the people they employ and customers they 
serve. The majority of homes in our state (nearly 300,000) rely on home 
heating oil to keep their families warm each winter. There are 143 
businesses with nearly 2,000 employees all working directly in the 
delivery of oilheat, the sale of efficient oilheating equipment, and 
related technical service and repair.
    Additionally, there are many affiliated industries that provide 
goods and services to the home heating oil industry in New Hampshire 
and abroad. For example, our state is home to one of the most advanced 
boiler manufacturers in the country. It is also hope to several 
terminals and storage companies that serve the region, fuel price 
hedging companies, and there are lawyers, insurance dealers, tank 
manufactures and truck maintenance and sales companies, all which serve 
the broader industry.
    NORA has been a key in improving the product for consumers, 
especially in the areas of conservation, efficiency and future 
renewable fuels. Through its research, we have seen the development of 
new home heating technologies and their deployment into the market. In 
fact, NORA's research shows that the boilers manufactured in New 
Hampshire may be the most efficient choice for most homeowners. NORA is 
also engaged in research and testing that will be able to bring to 
market heating oil with a sustainable fuel component, and plans in the 
near future to research the conversion of wood--an abundant resource 
vital to New Hampshire's economy--into a sustainable biofuel that can 
be burned cleanly and efficiency in home heating systems.
    Additionally, New Hampshire is dependent on NORA for technical 
training, safety training and continuing education for home energy 
professionals. Thousands of families in our state depend on well 
trained, qualified technicians that can professionally and safely 
service home heating equipment in the middle of our cold winters. 
NORA's training is critical to that effort, and indeed, is the official 
technical training certification program under law in the State of New 
Hampshire.
    Finally, making sure customers are aware of best-practice 
conservation and safety practices, advances in efficiency technologies 
and new, sustainable fuel alternatives is critical. If customers do not 
know about new high efficiency appliances, the progress of biofuels, 
tanks that are more secure, tax credits for new equipment, or the need 
to maintain their appliances, all of the training and new equipment is 
meaningless. We are very proud of the work we have done in New 
Hampshire to educate our customers and employees to the advances that 
are occurring. And they are responding positively.
    Unfortunately, Congress did not act to extend the NORA program. We 
would strongly encourage you to enact a short term extension of the 
program, and then closely scrutinize the program, make necessary 
adjustments, and then enact a long-term renewal. We appreciate your 
holding this hearing, and providing us an opportunity to describe how 
important this program is to our state.
    Again, ours is a mostly small business industry. There is much we 
would not have been able to accomplish--and much yet to be 
accomplished--were it not for the NORA program. We hope you will 
support the program's renewal and urge your colleagues to do the same.
    Thank you for your consideration.
            Sincerely,
                                               Bob Garside,
                                                         President.
                                 ______
                                 
                                New England Fuel Institute,
                                 Watertown, MA, September 29, 2010.
Hon. Jeff Bingaman,
Chairman, Committee on Energy & Natural Resources, 304 Dirksen Senate 
        Office Building, Washington, DC.
    Dear Chairman Bingaman: On behalf of the New England Fuel Institute 
and its 1,300 member companies, we write today to provide a statement 
for the record on the subcommittee hearing to receive testimony on the 
National Oilheat Research Alliance (NORA) program, scheduled for 
September 29, 2010.
    The New England Fuel Institute (NEFI) is a 501(c)(6) member 
services trade association representing the mostly small business, non-
utility home heating industry. While we have members in 27 states, most 
of our members are located in New England and the broader northeast 
region. The majority of our members are home heating oil distributors 
and many provide heating and cooling system sales, repair and servicing 
and home energy auditing and consultation services. Many market a 
variety of other products, including propane, kerosene and wood 
pellets, and some are offering alternatives such as Bioheat, 
geothermal and solar.
    Our association offers a variety of services to the home heating 
industry, including regulatory compliance assistance for home heating 
companies, a leading industry magazine and weekly electronic 
newsletter, group health and dental programs, the largest home heating 
industry trade show in the northeast, and public policy advocacy in the 
region and in Washington, DC.
    In the past we have also partnered with NORA, other industry trade 
groups and government entities in the Oilheat Visions conference, a 
very popular industry-wide business and technology forum held on even 
numbered years, offering information on cutting edge business 
practices, efficiency technologies and renewable/alternative energy 
solutions for the home heating oil industry. Due to NORA's expiration, 
there was no Visions conference this year.
    Our association advocates in support of the NORA program as it is 
vital to the members and states we serve. However, we do not receive 
NORA funds. All advocacy work in support of NORA and other public 
policy initiatives, including promotion of a more environmentally 
secure and domestic fuel, further regulation and limits on energy 
speculators, government incentives for energy efficiency and 
conservation and federal funding for low income fuel assistance and 
weatherization programs, are funded by dues and contributions by our 
association membership.
    We also understand that several NORA affiliates in states that do 
receive funding have submitted statements for the record and therefore 
we will not go into benefits of NORA on a state-by-state basis. But we 
can speak to its benefits on a regional basis in New England. In fact, 
our Watertown, Massachusetts offices also house a separate 501(c)(3) 
education foundation that partners with NORA to offer technical 
training and education programs and materials to home heating oil 
businesses and professionals throughout the region. NEFI Education 
Foundation funds are not used for lobbying activities of any kind, nor 
does its staff engage in such activities.
About the NORA Education and Fulfillment Centers
    The NORA Education Center administers oilheat curriculum testing 
and accreditation for the entire industry. The Center currently serves 
oilheat professionals nationwide, maintains the credentials for the 
nearly 10,000 oilheat service technicians in its system, and oversees 
NORA Certification programs at the Bronze, Silver, and Gold level s. 
Bronze and silver certification tests are based on NORA's Oilheat 
Technicians Manual and the Gold certification test is based on 
Efficient Oilheat: An Energy Conservation Guide, also referred to as 
the ``Gold Manual''.
    The goal of NORA's continuing education program is to maintain 
sufficient technical and safety know-how within the existing oilheat 
workforce, to develop and train new oilheat technicians, and therefore 
strengthen the oilheat industry. Along with new courses, NORA 
constantly provides new training materials to help keep up with a 
changing industry.
    The Watertown education facility also houses the NORA Fulfillment 
Center, which maintains inventory and processes and ships orders for 
technical training, safety, consumer education and compliance resources 
to oilheat businesses and professionals. Approximately 60 percent of 
sales are for the NORA Oilheat Technicians Manual. The majority of 
other sales are for safety and technical service and training DVDs, 
posters and brochures. Many of these products still remain in inventory 
despite NORA's expiration on February 6, 2010. However, reauthorization 
will be needed in order to maintain available supply and the staffing 
needed to process and ship these resources to oilheat businesses, 
professionals and training facilities.
    Again, the above NORA centers are independent of our association, 
and they are managed and funded through the NORA program. In fact, 
because the home heating oil industry is primarily a regional industry 
comprised of mostly family-owned and operated small businesses (unlike 
larger, integrated energy companies such as natural gas utilities), the 
industry would not be able to provide the necessary technical and 
safety training and consumer education so vital to its businesses and 
consumers. Several state governments now require NORA training and 
certification in their licensing and continuing education programs, and 
so it is vital that, for this reason above all else, Congress 
expeditiously approve a renewal of the NORA program.
Importance of NORA in Oilheat Consumer Education
    As previously mentioned, due to the small business nature of the 
industry, it relies heavily on the NORA program for consumer education 
not only in promoting the benefits and dispelling myths about the 
product, but perhaps more importantly, for education on best practices 
in conservation, efficiency and safety, as well as to promote awareness 
of new technologies and alternatives, such as the availability of high 
efficiency heating systems and renewable fuel such as Bioheat.
    As a recent example of the importance of NORA in consumer 
education, when Hurricane Earl recently threatened the northeastern 
United States, especially the coasts of New York and New England, many 
homeowners, schools, hospitals and businesses were wondering how to 
prepare their home heating oil systems for the storm. Before the storm 
hit, NORA funding (despite the little funding that remains after its 
expiration) helped to pay for a media release on pre-storm heating 
system precautions and preparations. Although Earl turned out to have 
less of an adverse impact on the region that was thought, if the storm 
did turn out to be a major disaster, NORA's media release would have 
helped, and NORA would have been able to do more to get the word out if 
it had been renewed and not had its funding stream cut-off.
NORA is Vital for an Environmentally Secure and Efficient Fuel
    The contributions that NORA has made to oilheat industry in the 
research, development and deployment of new Oilheating technologies and 
alternatives cannot be overstated. And as we have already mentioned 
several times, it is unlikely that without NORA the industry could have 
accomplished so much, especially given the mainly regional and small 
business nature of this industry.
    First, you should note the accomplishments that NORA has already 
made in advancing a cleaner and more efficient product. Before NORA, 
the top efficiency for Oilheating equipment was 86 AFUE. Today, 
consumers can purchase a furnace with as much as 95 AFUE and a boiler 
with a rating of 93 AFUE. This enables Oilheating consumers who wish to 
upgrade existing systems to take advantage of federal, state and local 
tax credits. However, these higher efficiency technologies tend to be 
expensive to produce and their availability is limited. Hopefully, that 
is about to change.
    NORA has, over the last ten years, partnered with government 
researchers at DOE's Brookhaven National Laboratory, with state energy 
agencies and with equipment manufacturers to test and approve for use 
ultra-low sulfur (15ppm sulfur) home heating oil. Unlike other 
distillate fuels such as on-road diesel fuel, home heating oil has 
still not made the leap to ultra-low sulfur and in most states heating 
oil can have high sulfur content of 2,500ppm or even greater. This 
higher sulfur results in higher particulate emissions and is harmful to 
Oilheating equipment.
    However, many northeast states now see the benefits (again, proven 
with the help of NORA) of going to ultra-low sulfur heating oil, 
including healthier and more environmentally friendly emissions and 
reduced need for service calls. Moreover, the fuel is better on 
existing Oilheating equipment and will enable U.S. manufacturers to 
produce and market a new generation of more affordable and ultra-
efficient home heating equipment currently produced and used in Europe 
(which has already made the move to lower sulfur heating oil).
    Several Northeastern states have already passed or proposed laws 
that will transition heating oil in their states to lower sulfur 
heating oil in the coming years, including Maine, Connecticut, New 
York, New Jersey and Pennsylvania. Massachusetts, Vermont, Rhode 
Island, New Hampshire and other Northeastern states are likely to see 
the introduction of similar legislation in the coming year. As states 
and the broader region consider such policies, NORA will be vital in 
insuring a smooth transition, educating consumers and businesses and 
bringing the aforementioned ultra-efficient heating systems to market 
in the U.S.
NORA is vital for a Lower Carbon, Domestic Heating Fuel
    In the past ten years, NORA has also been involved in the research 
and testing of a new, renewable home heating fuel, which they have 
named and trademarked Bioheat. Bioheat is a blend of conventional, 
petroleum-based heating oil with an ASTM-compliant biodiesel. Thanks to 
NORA and its research and testing of the fuel, Bioheat is now approved 
for use by equipment manufactures, ASTM and UL in blends of up to five 
percent (B5). If all home heating oil were subject to a 5 percent 
blend, as much as 400 million gallons of conventional oil could be 
displaced annually, reducing both greenhouse gas emissions and 
dependence on foreign energy.
    Meanwhile, NORA continues to research even higher bio-blends, with 
the goal of reaching a 20 percent bio-blend by the end of the decade. 
And as members of Congress well know, biodiesel is a very diverse 
biofuel that can be created from a variety of feedstock (e.g. soybeans, 
animal fats and waste cooking oil, etc.). If reauthorized, NORA is 
expected to engage in research and development into a variety of 
biofuel sources, including wood--an abundant resource in many 
Northeastern states--and the possibility of its use in creating a 
sustainable biofuel that can be blended for heating oil.
    And like lower sulfur heating oil, additional testing and research 
into Bioheat will be vital as states consider blending requirements in 
an effort to reduce greenhouse-gas emissions. The Commonwealth of 
Massachusetts, State of Connecticut and the New York City government 
have already approved biofuel blending mandates for heating oil, and 
several other states are expected to consider such requirements in the 
near future. But without the NORA program, a successful transition will 
be very difficult if not impossible.
NORA Reauthorization is Vital
    We are pleased that you have chosen to proceed with a hearing into 
the NORA program, its mission and the best use of its funds. We are 
confident that you will find that, not only has the NORA program been 
responsible and worthwhile, but it has been vital to oilheat states, 
businesses, professionals and consumers, and is integral to the 
transitioning to a more environmentally friendly, domestically produced 
and efficient Oilheating product.
    Following this hearing, we hope that you and your staff will commit 
to a short-term extension for the program through February, 2012 as 
soon as a legislative vehicle presents itself, and that you will work 
to pass a longer-term reauthorization that not only renews the program, 
but also implements modifications as per the GAO report and embraces 
the cleaner and greener future that the oilheat industry sees and wants 
for itself.
    Thank you for your consideration.
            Sincerely,
                                               Shane Sweet,
                                                   President & CEO.
                                           Howard Peterson,
          Chairman of the Board (Peterson Oil Svc., Worcester, MA).
                                 ______
                                 
                             Massachusetts Oilheat Council,
                           Wellesley Hills, MA, September 27, 2010.
Hon. Senator Jeff Bingaman,
Chairman, Committee on Energy & Natural Resources, 304 Dirksen Senate 
        Office Building, Washington, DC.
    Dear Mr. Chairman: On behalf of the Massachusetts Oilheat Council 
and its 350 member companies, I write today to provide a statement for 
the record on the subcommittee hearing to receive testimony on the 
National Oilheat Research Alliance (NORA) program on September 29, 
2010.
    This report was requested by your office and makes a number of 
suggestions on ways to strengthen the oversight and operation of the 
NORA program. Most of these suggestions are good, and we believe that 
many or most of them have already been addressed voluntarily by NORA 
and its participating states, or can be effectively addressed in a 
reauthorization bill. However, the GAO report did not describe the 
important successes that NORA has accomplished in many of the states, 
and how important it is to the industry and its customers.
    The NORA program is vital to advancing and improving home energy 
conservation, efficiency and consumer education as well as the 
environmental security, energy independence, and adequate technical 
training of home energy contractors in our state. There are 
approximately 750 heating dealers in our state, most of who are small 
businesses and together employ over 7000 hard working Americans. Each 
heating season, these companies serve nearly 1 million households with 
oilheat, biofuel, and the installation and maintenance of highly 
efficient heating systems, and related services.
    Each year, the NORA program provides our state with over $1 million 
dollars for these purposes. And again, these funds are provided at zero 
cost to the federal government. The program is funded by a small 
fraction (one-fifth of a cent) of the wholesale price of a gallon of 
heating oil. The program was given a 4-year ``sunset'' and was renewed 
with overwhelming and bipartisan support of Congress in 2005. However, 
the program has again expired and collections were suspended on 
February 6, 2010.
How NORA Benefits All Americans
    The expiration of the program has terminated the many activities 
funded through the assessment have benefited consumers through 
increases in energy efficiency, energy conservation, and operational 
safety. This has included long-term studies of mechanical features, 
tank maintenance and installation, and new technologies. NORA has 
educated thousands of qualified home energy specialists and technicians 
and provided for their continued education into safety practices, 
conservation, and new home efficiency technologies and alternatives 
such a Bioheat.
    NORA has also an extensive track record in the research, 
development and deployment of cutting-edge home heating equipment. NORA 
has developed highly efficient boilers and furnaces. Before NORA, the 
top efficiency for oilheat equipment was 86. Today, consumers can 
purchase a furnace with 95 percent efficiency and a boiler with a 
rating of 93. Even further reductions will be possible in the near 
future with the introduction of ultra-low sulfur heating oil. Several 
states have already approved mandates that will take effect in the 
coming years, and NORA will be essential in developing, testing and 
bringing to market a new generation of affordable, ultra-efficient 
heating systems designed to utilize this cleaner-burning fuel.
    NORA is also working to bring a more environmentally secure product 
to market, including Bioheat. It has successfully tested and secured 
manufacturer and UL support for up to a five percent (B5) heating oil 
and biodiesel bio-blend. A mandate for this fuel has already passed in 
Massachusetts and New York City, and several other states are 
considering similar renewable fuel requirements. If all heating oil in 
the country were at least a B5 blend, 400 million gallons of oil could 
be conserved annually. Meanwhile, NORA continues to research even 
higher bio-blends, with the goal of reaching a 20 percent bio-blend by 
the end of the decade.
How NORA Benefits the State of Massachusetts
    In Massachusetts, NORA funds have helped train hundreds of oilheat 
technicians on the latest home heating equipment and installation 
techniques. The funds have also been used to reach out to oilheat 
dealers and consumers statewide to educate them on new, cleaner burning 
fuels including biofuels blended with ultra low sulfur home heating 
oil. Also, NORA dollars were instrumental this year in helping our 
association receive a first-in-the-nation stimulus funds grant that 
provides rebates to consumers who install new, highly efficient oil-
fired home heating systems. A key element in this program is our 
association's willingness to use NORA funds to train oilheat personnel 
on ``whole-house'' energy efficiency measures.
    But in order for NORA to continue its great work serving businesses 
and consumers in our state, and help our nation towards a secure energy 
future, it must first be reauthorized.
    We are hopeful that you will afford the program at least a brief 
extension (until February, 2012) as soon as a viable vehicle presents 
itself, and that you will support a broader, longer-term 
reauthorization that not only renews the program, but also implements 
modifications as per the GAO report and embraces the cleaner and 
greener future that the oilheat industry sees and wants for itself.
    Thank you for your consideration.
                                          Michael Ferrante,
                                                         President.
                                 ______
                                 
                                          Super Fuel Corp.,
                                     Bronx, NY, September 24, 2010.
Hon. Jeff Bingaman,
Chairman, Senate Energy and Natural Resources Committee, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman, I manage a small family owned home heating oil 
company in business since 1907. We serve areas of New York such as the 
Bronx, Manhattan and Westchester counties. We deliver fuel oil and 
service heating equipment. We also install new high efficiency boilers 
and oil burners.
    The National Oilheat Research Alliance has been a critical part of 
our industry. They provide research and development which has helped 
advance our industry to where it is today. They also provide training 
to our technicians at all levels from beginner to advanced. This 
training is crucial to help our technicians keep up with the 
advancements in new technology which keeps our customers operating 
their heating systems at the highest level of efficiency.
    NORA needs to be reauthorized as soon as possible, so that our 
industry can continue to advance. I hope you will be able to make 
improvements to the bill so that this vital program can be 
reestablished.
            Sincerely,
                                          Timothy J. Bunyan
                                 ______
                                 
                                                    Castle,
                                  Harrison, NY, September 23, 2010.
Hon. Jeff Bingaman,
Chairman, Senate Energy and Natural Resources Committee, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: My family operates a retail and wholesale fuel 
oil company in the New York City metropolitan area. We employ over 200 
people and service thousands of residential customers. Our company, 
like several thousand other businesses in our industry; provides a 
valuable and essential commodity to our customers, servicing the 
equipment well, and ensuring that our customers have access to the best 
space heating technology available.
    The National Oilheat Research Alliance has been critical to our 
company and industry and is essential to our efforts to serve our 
customers. NORA has helped develop high efficiency heating equipment 
and appliances for Oilheat customers. Without the efforts of NORA, our 
thousands of customers would not have had access to equipment that 
qualified for the federal high efficiency tax credit and would have 
consumed and paid for a great deal more fuel oil. NORA has also helped 
our industry develop solutions to environmental problems associated 
with fuel storage. Very importantly, NORA has helped lead the industry 
to a cleaner and greener fuel with low sulfur and a renewable bioheat 
component.
    NORA developed and funded training that has helped our employees 
understand these advances. Without the NORA-sponsored training, it 
would have been impossible to find qualified new employees, train them 
appropriately, and have them embrace new technology. Through NORA's 
efforts, a cost-effective and efficient method of communicating to our 
customers has been developed, keeping them informed about what they can 
do to save energy, and how they can use Oilheat safely and efficiently.
    It is crucial that NORA be reauthorized as soon as possible. 
Otherwise, all these strides toward cleaner, greener, safer, and more 
efficient use of Oilheat may be lost. I fervently hope that you will 
ensure that this important program is reestablished for the benefit of 
millions of Oilheat customers and thousands of family-owned businesses 
that serve them.
            Very truly yours,
                                           Carla L. Romita,
                                             Senior Vice President.
                                 ______
                                 
                                         Cota & Cota, Inc.,
                             Bellows Falls, VT, September 24, 2010.
Hon. Jeff Bingaman,
Chairman, Senate Energy and Natural Resources Committee, U.S. Senate 
        Washington, DC.
    Dear Mr. Chairman: I operate a small heating oil company in Bellows 
Falls, VT. We employ 80 people and service 10,000 homes Southeastern 
Vermont and Southwestern New Hampshire. I, like several thousand other 
businesses in our industry provide a valuable and essential commodity 
to our customers, servicing the equipment well, and ensuring our 
customers have access to the best technology available.
    The National Oilheat Research Alliance has been critical to our 
company, and is essential to our efforts to serve our customers. NORA 
has helped develop many of the high efficiency appliances for 
oilheating customers. Without their efforts, we would not have had 
appliances that qualified for the federal high efficiency tax credit. 
NORA has also helped the industry develop solutions to environmental 
problems that are associated with storing oil. Finally, NORA has helped 
lead the industry to a cleaner and greener fuel, one with low sulfur, 
and one with a renewable component, bioheat.
    NORA has helped our employees understand these advances. Without 
the training that has occurred, we would have a very difficult time in 
bringing new employees into the industry, having them trained 
appropriately, and having them embrace new technology. Further, NORA 
has developed a cost effective and efficient method of communicating to 
our customers what they can do to save energy, and how they can use 
Oilheat safely and efficiently.
    Without NORA we will not be able to successfully make heating oil a 
bio-blended environmentally friendly fuel. It is very important that 
NORA be reauthorized as soon as possible, otherwise we will not 
advance, and these gains will be lost. I hope that you will be able to 
make the improvements to the hill so that this important program can be 
reestablished.
            Sincerely,
                                                 Sean Cota,
                                                         President.
                                 ______
                                 
                                                   Genesee,
                                                       Seattle, WA.
Hon. Jeff Bingaman,
Chairman, Committee on Energy & Natural Resources, 304 Dirksen Senate 
        Office Building, Washington, DC.
    Dear Mr. Chairman: As owner of a 3rd generation family business, I 
write today to provide a statement for the record on the subcommittee 
hearing to receive testimony on the National Oilheat Research Alliance 
(NORA) program on September 29, 2010.
    This report was requested by your office and makes a number of 
suggestions on ways to strengthen the oversight and operation of the 
NORA. program. Most of these suggestions are good, and we believe that 
many or most of them have already been addressed voluntarily by NORA 
and its participating states, or can be effectively addressed in a 
reauthorization bill. However, the GAO report did not describe the 
important successes that NORA. has accomplished in many of the states, 
and how important it is to the industry and its customers.
    The NORA program is vital to progress in home energy conservation, 
efficiency and consumer education as well as the environmental 
security, energy independence, and adequate technical training of home 
energy contractors in our state, There are hundreds of companies in our 
industry like mine that are family owned small businesses, who together 
employ thousands of hard working Americans. My company alone serves 
over 7,000 households with the oilheat fuel and related services each 
heating season.
    Each year, the NORA program provides our state with vital funding 
for these purposes. And again, these funds are provided at zero cost to 
the federal government. The program is funded by a small fraction (one-
fifth of a cent) of the wholesale price of a gallon of heating oil. The 
program was given a 4-year ``sunset'' and was renewed with overwhelming 
and bipartisan support of Congress in 2005. However, the program has 
again expired and collections were suspended on February 6, 2010.
How NORA Benefits All Americans
    The expiration of the program has terminated the many activities 
funded through the assessment have benefited consumers through 
increases in energy efficiency, energy conservation, and operational 
safety, This has included long-term studies of mechanical features, 
tank maintenance and installation, and new technologies. NORA has 
educated thousands of qualified home energy specialists and technicians 
and provided for their continued education into safety practices, 
conservation, and new home efficiency technologies and alternatives 
such a Bioheat.
    NORA. has also an extensive track record in the research, 
development and deployment of cutting-edge home heating equipment. NORA 
has developed highly efficient boilers and furnaces. Before NORA, the 
top efficiency for oilheat equipment was 86. Today, consumers can 
purchase a furnace with 95 percent efficiency and a boiler with a 
rating of 93. Even farther reductions will be possible in the near 
future with the introduction of ultra-low sulfur heating oil. Several 
states have already approved mandates that will take effect in the 
coming years, and NORA will be essential in developing, testing and 
bringing to market a new generation of affordable, ultra-efficient 
heating systems designed to utilize this cleaner-burning fuel.
    NORA is also working to bring a more environmentally secure product 
to market, including Bioheat. It has successfully tested and secured 
manufacturer and UL support for up to a five percent (B5) heating oil 
and biodiesel bio-blend. A mandate for this fuel has already passed in 
Massachusetts and New York City, and several other states are 
considering similar renewable fuel requirements. If all heating oil in 
the country were at least a B5 blend, 400 million gallons of oil could 
be conserved annually. Meanwhile, NORA continues to research even 
higher bioblends, with the goal of reaching a 20 percent bio-blend by 
the end of the decade.
How NORA Benefits the State of Washington
    The state of Washington has been a pioneer in biodiesel production 
and innovation, as well as commercial and residential uses of 
biodiesel. Residents in Washington State fully embrace these 
sustainable and environmental initiatives. NORA's work in biodiesel 
R&D, as it relates to home heating, is a crucial link in. driving 
biodiesel to broad residential use in our state.
    But in order for NORA to continue its great work serving businesses 
and consumers in our state, and help our nation towards a secure energy 
future, it must first be reauthorized. We are hopeful that you will 
afford the program at least a brief extension (until February, 2012) as 
soon as a viable vehicle presents itself, and that you will support a 
broader, longer-term reauthorization that not only renews the program, 
but also implements modifications as per the GAO report and embraces 
the cleaner and greener future that the oilheat industry sees and wants 
for itself.
    Thank you for your consideration.
            Sincerely,
                                           Steven T. Clark,
                                                         President.
                                 ______
                                 
             Independent Connecticut Petroleum Association,
                                  Cromwell, CT, September 23, 2010.
Hon. Jeff Bingaman,
Chairman, Committee on Energy & Natural Resources, 304 Dirksen Senate 
        Office Building, Washington, DC.
    Dear Mr. Chairman: On behalf of the Independent Connecticut 
Petroleum Association, its 575 member companies and their 13,000 
Connecticut-based employees, I write today to provide a statement for 
the record on the subcommittee hearing to receive testimony on the 
National Oilheat Research Alliance (NORA) program on September 29, 
2010.
    This report was requested by your office and makes a number of 
suggestions on ways to strengthen the oversight and operation of the 
NORA program. Most of these suggestions are good, and we believe that 
many or most of them have already been addressed voluntarily by NORA 
and its participating states, or can be effectively addressed in a 
reauthorization bill. However, the GAO report did not describe the 
important successes that NORA has accomplished in many of the states, 
and how important it is to the industry and its customers.
    Through 2009 and the expiration of the NORA statute on February 6, 
2010, Connecticut received approximately $1 million a year in NORA 
funds. Of that amount, approximately 70% of those funds went into 
producing consumer information campaigns on the importance of Oilheat 
energy conservation. Forty-five years ago, the average consumer in 
Connecticut used just over 1,200 gallons of heating oil annually. 
Today, that same consumer uses 800 gallons. The decrease in per-
consumer consumption of 33% is a testament to our industry's efforts to 
bring the latest and most efficient equipment to market and how 
successful our consumer information campaigns have been in encouraging 
the important ethic of reducing consumption, increasing efficiency, and 
reducing emissions.
    Our consumer education campaigns also include informing the public 
about the benefits of the growing market we have in supplying Bioheate. 
We strongly believe that the evolution of our industry in blending 
cleaner burning, domestically produced renewable fuels with traditional 
heating oil not only reduces our reliance on foreign energy, it also 
significantly reduces our industry's carbon footprint. ICPA wrote and 
succeeded in passing legislation in the most recent session of our 
General Assembly that would, by the end of this decade, displace 20% of 
our traditional heating oil with cleaner, domestically produced 
renewables, In achieving this goal we will also have reduced greenhouse 
gas emissions from our industry by almost 50%.
    For most of the remainder of our NORA funding, approximately 25% of 
the $1 million we receive in NORA funding, we subsidize training and 
education among professional technicians in our state through our State 
of Connecticut certified private, non-profit, vocational technical 
school. These funds lower the average cost of attending heating, 
ventilation and air conditioning licensing programs by 33%. Our school 
retrains unemployed and displaced workers, has partnerships with job 
retraining agencies and the Connecticut Department of Labor, and serves 
veterans and qualifies for VA benefits. Our school leads our industry 
into expanding skills into viewing the whole home as an energy unit and 
provides Building Performance Institute [BPI] certification training. 
Our school was the first in Connecticut to be certified by our State 
Department of Higher Education to offer Solar Thermal certification 
training that weds two solar technologies with Oilheat backup, further 
reducing traditional oil needs with solar technology applications.
    For all of the energy conservation programs driven by both Congress 
and our state, none can be successful without trained, licensed 
professionals whose skills learned in our school can be applied to the 
goals and objectives our federal and state government sets out for 
energy efficiency programs.
    The research and development efforts undertaken by NORA, and the 
new equipment coming into the marketplace that is so dramatically 
better in efficiency, cannot be successfully used in consumer's homes 
unless there are trained, licensed personnel who know how to install 
and maintain that equipment.
How NORA Benefits All Americans
    The expiration of the program has terminated the many activities 
funded through the assessment have benefited consumers through 
increases in energy efficiency, energy conservation, and operational 
safety. This has included long-term studies of mechanical features, 
tank maintenance and installation, and new technologies. NORA has 
educated thousands of qualified home energy specialists and technicians 
and provided for their continued education into safety practices, 
conservation, and new home efficiency technologies and alternatives 
such a Bioheat.
    NORA has also an extensive track record in the research, 
development and deployment of cutting-edge home heating equipment. NORA 
has developed highly efficient boilers and furnaces. Before NORA, the 
top efficiency for Oilheat equipment was 86. Today, consumers can 
purchase a furnace with 95 percent efficiency and a boiler with a 
rating of 93. Even further reductions will be possible in the near 
future with the introduction of ultra-low sulfur heating oil. Several 
states have already approved mandates that will take effect in the 
coming years, and NORA will be essential in developing, testing and 
bringing to market a new generation of affordable, ultra-efficient 
heating systems designed to utilize this cleaner-burning fuel.
    However, in order for NORA to continue its great work serving 
businesses and consumers in our state, and help our nation towards a 
secure energy future, it must first be reauthorized. We are hopeful 
that you will afford the program at least a brief extension (until 
February, 2012) as soon as a viable vehicle presents itself, and that 
you will support a broader, longer-term reauthorization that not only 
renews the program, but also implements modifications as per the GAO 
report and embraces the cleaner and greener future that the Oilheat 
industry sees and wants for itself.
    Thank you for your consideration.
            Sincerely,
                                   Eugene A. Guilford, Jr.,
                             President and Chief Executive Officer.
                                 ______
                                 
                        Maine Energy Marketers Association,
                                                     Brunswick, ME.
Hon. Jeff Bingaman,
Chairman, Committee on Energy & Natural Resources, 304 Dirksen Senate 
        Office Building, Washington, DC.
    Dear Mr. Chairman: On behalf of the Maine Energy Marketers 
Association and its 440 member companies which include over 12,000 
Maine employees, I write today to provide a statement for the record on 
the subcommittee hearing to receive testimony on the National Oilheat 
Research Alliance (NORA) program on September 29, 2010.
    This report was requested by your office and makes a number of 
suggestions on ways to strengthen the oversight and operation of the 
NORA program. Most of these suggestions are good, and we believe that 
many or most of them have already been addressed voluntarily by NORA 
and its participating states, or can be effectively addressed in a 
reauthorization bill. However, the GAO report did not describe the 
important successes that NORA has accomplished in many of the states, 
and how important it is to the industry and its customers.
    Maine received approximately $600,000 per year while the NORA 
statute was in place. Of that $600,000, close to 50% was directly used 
to subsidize tuition for students to learn the HVAC trade, provide 
state of the art training facilities for that training and to encourage 
and inform high school students to understand and consider the 
opportunities of working independently, with a technical job, as an 
alternative or in association with college education. At our technical 
center and at affiliated Community Colleges we have trained hundreds of 
technicians; many are retrained unemployed or displaced workers, as we 
partner with the Maine Career Centers to get Maine back to work.
    It is of paramount importance that Maine has a well trained and a 
sufficient workforce to carry out the State's and Congress's goals for 
energy efficiency and emissions reductions. Without proper training, 
these goals will likely miss their mark.
    The other half of the grant was primarily used to educate the 
public about energy conservation. 30 years ago the average Maine 
household used approximately 1,300 gallons, today the average home uses 
about 850. Further advances in technology and a more informed public is 
continuing to reduce that usage. NORA has been instrumental in 
providing research and development of the new efficient technology and 
is the primary voice for oilheat conservation. In many instances, 
combining heating equipment upgrades and conservation measures, homes 
reduce their usage by 50%. The Maine Energy Marketers Education 
Foundation recently completed a study that indicates that typical 
replacement of boilers with higher efficiency and indirect hot water 
production save the homeowner between 20% and 40% of their heating fuel 
bill annually. Combining these efficiencies with weatherization and 
conservation is what gets one to the 50% savings level.
    These NORA funds are provided at zero cost to the federal 
government. The program is funded by a small fraction (one-fifth of a 
cent) of the wholesale price of a gallon of heating oil. The program 
was given a 4-year ``sunset'' and was renewed with overwhelming and 
bipartisan support of Congress in 2005. However, the program has again 
expired and collections were suspended on February 6, 2010.
How NORA Benefits All Americans
    The expiration of the program has terminated the many activities 
funded through the assessment that have benefited consumers through 
increases in energy efficiency, energy conservation, and operational 
safety. This has included long-term studies of mechanical features, 
tank maintenance and installation, and new technologies. NORA has 
educated thousands of qualified home energy specialists and technicians 
and provided for their continued education into safety practices, 
conservation, and new home efficiency technologies and alternatives 
such a Bioheat.
    NORA has also an extensive track record in the research, 
development and deployment of cutting-edge home heating equipment. NORA 
has developed highly efficient boilers and furnaces. Before NORA, the 
top efficiency for oilheat equipment was 86. Today, consumers can 
purchase a furnace with 95 percent efficiency and a boiler with a 
rating of 93. Even further reductions will be possible in the near 
future with the introduction of ultra-low sulfur heating oil. Several 
states have already approved mandates that will take effect in the 
coming years, and NORA will be essential in developing, testing and 
bringing to market a new generation of affordable, ultra-efficient 
heating systems designed to utilize this cleaner-burning fuel.
    NORA is also working to bring a more environmentally secure product 
to market, including Bioheat. It has successfully tested and secured 
manufacturer and UL support for up to a five percent (B5) heating oil 
and biodiesel bio-blend. A mandate for this fuel has already passed in 
Massachusetts and New York City, and several other states are 
considering similar renewable fuel requirements. If all heating oil in 
the country were at least a B5 blend, 400 million gallons of oil could 
be conserved annually. Meanwhile, NORA continues to research even 
higher bioblends, with the goal of reaching a 20 percent bio-blend by 
the end of the decade.
    However, in order for NORA to continue its great work serving 
businesses and consumers in our state, and help our nation towards a 
secure energy future, it must first be reauthorized. We are hopeful 
that you will afford the program at least a brief extension (until 
February, 2012) as soon as a viable vehicle presents itself, and that 
you will support a broader, longer-term reauthorization that not only 
renews the program, but also implements modifications as per the GAO 
report and embraces the cleaner and greener future that the oilheat 
industry sees and wants for itself.
    Thank you for your consideration.
                                                  Jamie Py,
                             President and Chief Executive Officer.
                                 ______
                                 
      National Association of Oil Heating Service Managers,
                           East Petersburg, PA, September 24, 2010.
Hon. Jeff Bingaman,
Chairman, Senate Energy & Natural Resources Committee, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: My name is Judy Garber and I serve as the 
executive director of the National Association of Oilheating Service 
Managers (NAOHSM). NAOHSM was founded in 1954. The mission of NAOHSM is 
to provide technical education to our membership. Our 1400 members 
include manufacturers of oil heating equipment, wholesalers, 
instructors at HVAC and technical colleges, small business owners and 
managers from across the Northeast and Mid-Atlantic regions. We 
represent those that specify, service and maintain oil fired equipment.
    The National Oilheat Research Alliance (NORA) has been critical to 
NAOHSM members and is essential to our efforts to serve our customers. 
NORA has helped develop many of the high efficiency appliances for oil 
heating customers, Without their efforts, we would not have had 
appliances that qualified for the federal high efficiency tax credit. 
NORA. has also helped the industry develop solutions to environmental 
problems that are associated with storing oil. Finally, NORA has helped 
lead the industry to a cleaner and greener fuel, one with low sulfur 
with a renewable component called Bioheat.
    The advance of NORA. has been critical to NAOHSM's mission of 
education. Without the training that has occulted we would have had a 
difficult time in bringing new employees into the industry and having 
them trained appropriately. New technologies require training that 
needs to be developed and delivered in a consistent and efficient 
manner. NORA and NAOHSM work hand in hand to make that happen.
    Mr. Chairman; it is imperative that NORA be reauthorized as soon as 
possible, otherwise we will not advance and all these gains will be 
lost. I hope that you will be able to make the improvements to the bill 
so that this important program can be reestablished.
            Regards,
                                               Judy Garber,
                                                Executive Director.
                                 ______
                                 
                              Oil Heat Comfort Corp., Inc.,
                                 Hauppauge, NY, September 24, 2010.
Hon. Jeff Bingaman,
Chairman, Senate Energy & Natural Resources Committee, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: On behalf of the L.I. oil heating industry which 
I represent, and the approximately 600,000 consumers whom we serve, I 
write to urge your support for the renewal of the National Oilheat 
Research Alliance (NORA), a federal program vital to home energy 
conservation, efficiency and consumer education, as well as the 
technical training needs of home energy contractors in the Long Island 
region.
    Since its enactment a decade ago, activities funded through the 
NORA assessment have benefited consumers through increases in energy 
efficiency, energy conservation, and operational safety. This has 
included long-term studies of mechanical features, oil tank maintenance 
and installation, and new technologies. NORA has educated thousands of 
qualified home energy specialists and technicians, and has provided for 
their continued education into vital safety practices, energy 
conservation, new home efficiency technologies, and alternatives such 
as bioheat.
    On a local level here on Long Island, NORA...(through Oil Heat 
Comfort Corp. of L.I.)...continues to fund and support the HVAC/
Workforce Development Center located at the Suffolk County Community 
College Brentwood Campus. Through our efforts and NORA funding, SCCC 
offers the only NYS Education Dept. approved Associates Degree Program 
in HVAC and Applied Sciences available in the entire L.I. region. Over 
the past 10 years, this facility and program...(now housed in a new, 
state-of-the-art building which opened last year)...has provided 
technical training and employment for hundreds of new and existing home 
energy technicians. In addition, OHCC continues to provide an extensive 
energy awareness and technical training program to over 5000 realtors 
and home inspectors located throughout Long Island!
    NORA also has an extensive track record in the research, 
development and deployment of cutting-edge home heating equipment, in 
conjunction with its partners at the Oilheat R&D Program at Brookhaven 
National Laboratory, NORA has helped to develop a new generation of 
highly efficient boilers and furnaces. Today, consumers can purchase a 
furnace with 95 percent efficiency and a boiler with a rating of 93. 
These are very substantial gains, which are helping consumers heat 
their homes more efficiently at lower cost, something that is critical 
to consumers facing ever-steeper energy prices. NORA is also working to 
bring a ``cleaner and greener'' ultra-low sulfur product to market, as 
well as technical programs on energy auditing of oilheat homes and the 
integration of solar into existing systems.
    But in order for NORA to continue its great work serving Long 
Island's business and residential consumers, while helping our nation 
move towards a more secure energy future, the program must not only be 
reauthorized, but should also be strengthened in accordance with the 
recommendations of a recent Government Accountability Office report. 
Legislation to implement these changes, create more transparency in the 
program, increase the percentage of NORA dollars that go to research, 
development and deployment, and give federal support to a new, cleaner 
and renewable domestically produced home heating fuel will, hopefully, 
be considered in the next Congress.
    Thank you in advance for your support for NORA and, in turn, for 
your continued support of the business community, consumers, and the 
energy future of our region and state.
            Sincerely yours,
                                              Kevin Rooney,
                                           Chief Executive Officer.
                                 ______
                                 
                                   McCoy Oil Company, Inc.,
                                   Midland, NC, September 27, 2010.
Hon. Jeff Bingaman,
Chairman, Senate Energy and Natural Resources Committee, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: I operate a small heating oil company in 
Midland. We employ 6 people and service 500 customers. I am like 
several thousand other businesses in our industry; trying to provide a 
valuable and essential commodity to our customers, servicing the 
equipment well, and ensuring our customers have access to the best 
technology available.
    The National Oilheat Research Alliance has been critical to our 
company, and is essential to our efforts to serve our customers. NORA 
has helped develop many of the high efficiency appliances for 
oilheating customers. Without their efforts, we would not have had 
appliances that qualified for the federal high efficiency tax credit. 
NORA has also helped the industry develop solutions to environmental 
problems that are associated with storing oil. Finally, NORA has helped 
lead the industry to a cleaner and greener fuel, one with low sulfur, 
and one with a renewable component, bioheat.
    NORA has helped our employees understand these advances. Without 
the training that has occurred, we would have a very difficult time in 
bringing new employees into the industry, having them trained 
appropriately, and having them embrace new technology. Further, NORA 
has developed a cost effective and efficient method of communicating to 
our customers what they can do to save energy, and how they can use 
Oilheat safely and efficiently.
    It is very important that NORA be reauthorized as soon as possible, 
otherwise we will not advance, and these gains will be lost. I hope 
that you will be able to make the improvements to the bill so that this 
important program can be reestablished.
            Sincerely,
                                      Douglas D. McCoy, Jr.
                                 ______
                                 
                           Brennan Oil & Heating Co., Inc.,
                                              North Providence, RI.
Hon. Jeff Bingaman,
Chairman, Senate Energy and Natural Resources Committee, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: I operate a small heating oil company in North 
Providence, Rhode Island. We employ 26 people and service 3500 
customers. We are a family-owned small business and have been serving 
our customers for 44 years. We provide not only Oil delivery but Full-
Service to our customers. We install, maintain and tune equipment and 
ensure our customers have access to the best technology available.
    The National Oilheat Research Alliance has been critical to our 
company, and is essential to our efforts to serve our customers. NORA 
has helped develop many of the high efficiency appliances for Oilheat 
customers. Without their efforts, we would not have had appliances that 
qualified for the federal high efficiency tax credit. NORA has also 
helped the industry develop solutions to environmental problems that 
are associated with storing oil. Finally, NORA has helped lead the 
industry to a cleaner and greener fuel, one with low sulfur, and one 
with a renewable component, Bioheat.
    NORA has helped educate our employees to understand these advances 
and implement them across the customer base. Without the training NORA 
provides, we would have a very difficult time in bringing new employees 
into the industry, having them trained appropriately, and having them 
embrace new more efficient technology. Further, NORA has developed a 
cost effective and efficient method of communicating to our customers 
what they can do to save energy, and how they can use Oilheat safely 
and efficiently.
    It is very important that NORA be reauthorized as soon as possible, 
otherwise the industry as a whole will not advance, and these gains 
will be lost. I hope that you will be able to make the improvements to 
the bill so that this important program can be reestablished and 
approved permanently.
    Thank You for your all work in Washington.
            Sincerely,
                                         Dennis R. Brennan,
                                                         President.
                                 ______
                                 
                                          Anchor Fuel, LLC,
                                Middletown, RI, September 23, 2010.
Hon. Jeff Bingaman,
Chairman, Senate Energy and Natural Resources Committee, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: I operate a small heating oil company in 
Middletown, RI. We employ 9 people and service 3500 customers. I am 
like several thousand other businessess in our industry; trying to 
provide a valuable and essential commodity to our customers, servicing 
equipment well, and ensuring our customers have access to the best 
technology available.
    The National Oilheat Research Alliance has been critical to our 
company, and is essential to our efforts to serve our customers. NORA 
has helped develop many of the high efficiency appliances for Oilheat 
customers. Without their efforts, we would not have had appliances that 
qualified for the federal high efficiency tax credit. NORA has also 
helped the industry develop solutions to environmental problems that 
are associated with storing oil. Finally, NORA has helped lead the 
industry to a cleaner and greener fuel, one with low sulfur, and one 
with a renewable component, bioheat.
    NORA has helped educate our employees to understand these advances. 
Without the training that has occurred, we would have a very difficult 
time in bringing new employees into the industry, having them trained 
appropriately, and having them embrace new technology. Further, NORA 
has developed a cost effective and efficient method of communicating to 
our customers what they can do to save energy, and how they can use 
Oilheat safely and efficiently.
    It is very important that NORA be reauthorized as soon as possible, 
otherwise we will not advance, and these gains will be lost. I hope 
that you will be able to make the improvements to the bill so that this 
important program can be reestablished.
            Sincerely,
                                          Roberta J. Fagan,
                                                Operations Manager.

                                    

      
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