[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
U.S. GOVERNMENT PRINTING OFFICE
62-474 WASHINGTON : 2010
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
20402-0001
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\5\ As propane is naturally odorless, an odorant is added as a
means of detecting a leak. Virtually all commercial propane is
odorized.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
Consistent with its authorizing statute, PERC allocated $69.5
million (19.8 percent of its assessments) to state propane
associations.\8\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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:
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
\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.