[Senate Report 106-109]
[From the U.S. Government Publishing Office]





                                                       Calendar No. 217

106th Congress                                                   Report
  1st Session                    SENATE                         106-109

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



 
             NATIONAL OILHEAT RESEARCH ALLIANCE ACT OF 1999

                                _______
                                

                 July 20, 1999.--Ordered to be printed

                                _______


  Mr. Murkowski, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 348]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 348) to authorize and facilitate a 
program to enhance training, research and development, energy 
conservation and efficiency, and consumer education in the 
oilheat industry for the benefit of oilheat consumers and the 
public, and for other purposes, having considered the same, 
reports favorably thereon with amendments and recommends that 
the bill, as amended, do pass.
    The amendments are as follows:
    On page 12, line 7, after ``community,'' insert the 
following: ``State energy officials,''
    On page 24, after line 25, insert the following:

``SEC. 8. MARKET SURVEY AND CONSUMER PROTECTION.''

    ``(a) Price Analysis.--Beginning 2 years after 
establishment of the Alliance and annually thereafter, the 
Secretary of Commerce, using only data provided by the Energy 
Information Administration and other public sources, shall 
prepare and make available to the Congress, the Alliance, the 
Secretary of Energy, and the public, an analysis of changes in 
the price of oilheat relative to other energy sources. The 
oilheat price analysis shall compare indexed changes in the 
price of consumer grade oilheat to a composite of indexed 
changes in the price of residential electricity, residential 
natural gas, and propane on an annual national average basis. 
For purposes of indexing changes in oilheat, residential 
electricity, residential natural gas, and propane prices, the 
Secretary of Commerce shall use a 5-year rolling average price 
beginning with the year 4 years prior to the establishment of 
the Alliance.''
    ``(b) Authority to Restrict Activities.--If in any year the 
5-year average price composite index of consumer grade oilheat 
exceeds the 5-year rolling average price composite index of 
residential electricity, residential natural gas, and propane 
in an amount greater than 10.1 percent, the activities of the 
Alliance shall be restricted to research and development, 
training, and safety matters. The Alliance shall inform the 
Secretary of Energy and the Congress of any restriction of 
activities under this subsection. Upon expiration of 180 days 
after the beginning of any such restriction of activities, the 
Secretary of Commerce shall again conduct the oilheat price 
analysis described in subsection (a). Activities of the 
Alliance shall continue to be restricted under this subsection 
until the price index excess is 10.1 percent or less.''
    3. Renumber existing Sections 8 through 12 as Sections 9 
through 13.
    4. On page 28, after line 17, insert the following:
    ``(f) Savings Clause.--Nothing in this section shall limit 
causes of action brought under any other law.''

                         purpose of the measure

    The purpose of S. 348 is to authorize and facilitate a 
program to enhance training, research and development, energy 
conservation and efficiency, and consumer education in the 
oilheat industry for the benefit of oilheat consumers and the 
public.

                          background and need

    Heating oil plays a vital role in keeping homes and 
businesses warm in the winter in many parts of the country. In 
1996, homes and businesses purchased more than 11 billion 
gallons of heating oil, with most use concentrated in New 
England and the Mid-Atlantic states. Hearing oil was used in an 
estimated 10.8 million households and more than 500,000 
commercial buildings. In all, over 10 billion dollars was spent 
on heating oil in 1996. In the 1970s, demand for heating oil 
was at its peak. Use in the United States has declined since 
then and this decline is attributed to a number of factors: 
increased availability of natural gas; the development of more 
efficient electric heating systems; and the investment in 
energy conservation by homes and businesses. Other factors may 
include aggressive competition from electric utilities and 
environmental concerns.
    Oilheat does not have a national industry promotion program 
and the industry believes that one is necessary to ensure fair 
competition with other home heating fuels. The industry 
receives some research and development funding from the 
Department of Energy--$500,000 in FY 1998, $500,000 in FY 1999. 
For FY 2000, however, DOE did not request any funding. 
Brookhaven National Laboratory in New York has been involved in 
an oilheat research and development program and in conjunction 
with DOE and the National Oil Heat Research Alliance (NORA), 
has developed ``A Ten-year Blueprint for Residential Oilheat 
Research and Development in the Twenty-First Century.'' 
Industry anticipates that when the Alliance is functioning and 
receiving money from the assessment, DOE funds will be cut and 
the R&D effort will be fully funded by industry.
    Legislation is not required for the oilheat industry to 
form a voluntary trade association, collect membership dues, 
and use the money to conduct activities beneficial to the 
industry. Legislation is, however, required to establish a 
mandatory program that requires all industry participants to 
contribute to the program. The bill sponsors believe that a 
mandatory program is appropriate to avoid the so-called ``free-
rider'' problem. If a check-off is voluntary rather than 
mandatory, some in the industry might choose not to contribute, 
yet would benefit from R&D, educational, or promotional 
programs funded by others.

                          legislative history

    S. 348 was introduced on February 3, 1999 and referred to 
the Committee on Natural Resources. The Subcommittee on Energy, 
Development, Production and Regulation held a hearing on May 
20, 1999. At the business meeting on June 30, 1999, the 
Committee on Energy and Natural Resources ordered S. 348, as 
amended, favorably reported.

           committee recommendations and tabulation of votes

    The Committee on Energy and Natural Resources, in open 
business session on June 30, 1999, by a unanimous vote of a 
quorum present, recommends that the Senate pass S. 348, as 
amended, as described herein.

                          committee amendments

    During the consideration of S. 348, the Committee adopted 
four amendments. The first makes state energy officials 
eligible to serve as public members of the Alliance. The second 
requires the Secretary of Commerce to analyze changes in the 
price of oilheat relative to other energy sources each year and 
restrict the activities of the Alliance when the average price 
composite index for oilheat exceeds that of other home heating 
fuels. The third makes technical and conforming changes. The 
fourth makes it clear that the enforcement mechanism in Section 
12 does not limit causes of actions under other applicable 
laws.

                      section-by-section analysis

    Section 1 provides a short title.
    Section 2 describes findings regarding the use of oilheat 
as an energy source.
    Section 3 defines terms used in the Act.
    Section 4 describes how the referenda called for in the Act 
shall be conducted.
    Section 5 describes how the Alliance board shall be 
selected and the conditions of service.
    Section 6 provides the guidelines by which the Alliance 
shall function.
    Section 7 describes how the assessment shall be determined, 
collected, invested, used and monitored.
    Section 8 requires the Secretary of Commerce to conduct an 
analysis and report to Congress, and others, about changes in 
the price of oilheat. This section also gives the Secretary of 
Commerce the authority to restrict Alliance activities, 
depending on price changes in oilheat.
    Section 9 describes when and how the Alliance may bring a 
civil action in US District Court.
    Section 10 prohibits lobbying with assessment funds.
    Section 11 requires a disclosure about Alliance funding of 
consumer activities.
    Section 12 prohibits the use of Alliance funds for certain 
activities.
    Section 13 is a sunset provision.

                   cost and budgetary considerations

    The following estimate of the cost of this measure has been 
provided by the Congressional Budget Office:

                                     U.S. Congress,
                                Congressional Budget Office
                                     Washington, DC, July 14, 1999.
Hon. Frank H. Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 348, the National 
Oilheat Research Alliance Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kathleen 
Gramp (for federal costs), and Jean Wooster (for the private-
sector impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               congressional budget office cost estimate

S. 348--National Oilheat Research Alliance Act of 1999

    Summary: S. 348 would authorize the National Association 
for Oilheat Research and Education to conduct a referendum 
among retail marketers and wholesale distributors to determine 
if an industry research organization should be established. If 
there is sufficient industry support, the National Oilheat 
Research Alliance would be established for a four-year period 
to enhance consumer and employee safety and training; provide 
for research, development, and demonstration of oilheat 
equipment; and educate consumers. The alliance would be funded 
through an annual assessment of two-tenths of 1 cent per gallon 
of No. 1 distillate and No. 2 dyed distallate sold in the 
retail market and used for nonindustrial commercial or 
residential space or hot water heating. Funds collected through 
this assessment would be available to fund the alliance's 
programs without further appropriation by the Congress. The 
bill would restrict the types of activities that could be 
funded by the alliance if the Department of Commerce finds that 
oilheat prices have risen above a certain level.
    Assuming that the industry would choose to establish the 
alliance, CBO estimates that enacting S. 348 would increase 
both governmental receipts and outlays from direct spending by 
$16 million in 2000 and $15 million in each of the fiscal years 
2001 through 2003. Because the bill would affect direct 
spending and receipts, pay-as-you-go procedures would apply, 
but CBO estimates that the increase in annual receipts would be 
matched by outlay increases so that there would be no net 
budgetary impact for each year.
    S. 348 contains no intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act (UMRA) and would not impose 
costs on state, local, or tribal governments. S. 348 would 
impose a private-sector mandate, as defined by UMRA, on 
wholesale distributors of heating oil sold in the retail market 
and used for nonindustrial commercial or residential space or 
hot water heating. CBO estimates that the cost of this mandate 
would not exceed the annual threshold for private-sector 
mandates ($100 million in 1996, adjusted for inflation).
    Estimated cost to the Federal Government: CBO estimates 
that enacting S. 348 would increase governmental receipts and 
direct spending (from the disbursement of such receipts) by $16 
million in fiscal year 2000 and about $15 million in each of 
the fiscal years 2001 through 2003. For purposes of this 
estimate, CBO assumes that the industry would vote to establish 
the National Association of Oilheat Research Alliance. CBO 
believes that the cash flows related to the alliance should 
appear in the budget as governmental receipts and direct 
spending because the assessments would stem from exercise of 
the sovereign power of the federal government.
    The estimates of annual assessments are based on the bill's 
fixed rate of two-tenths of one cent per gallon and on recent 
industry data on the amount of distillate sold in the United 
States retail market. We estimate that collections and spending 
would decline gradually over time, consistent with the 
Department of Energy's projection of trends in distillate sales 
for residential and commercial heating. The authority to 
collect such assessments would expire four years after the 
National Oilheat Research Alliance is established. Thus, there 
would be no budgetary effects after 2003.
    Based on information from the Department of Commerce, CBO 
estimates that the cost of the studies required by the bill 
would have no significant effect on discretionary spending.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. CBO 
estimates that enacting S. 348 would affect both direct 
spending and receipts in equal and offsetting amounts; 
therefore, pay-as-you-go procedures would apply, but S. 348 
would have no net budgetary impact in each year. The estimated 
changes in outlays and governmental receipts are shown in the 
following table.

----------------------------------------------------------------------------------------------------------------
                                                          By fiscal year; in millions of dollars--
                                           ---------------------------------------------------------------------
                                             2000   2001   2002   2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays........................     16     15     15     15      0      0      0      0      0      0
Changes in receipts.......................     16     15     15     15      0      0      0      0      0      0
----------------------------------------------------------------------------------------------------------------

    Estimated impact on State, local, and tribal governments: 
The bill contains no intergovernmental mandates as defined in 
UMRA and would impose no costs on state, local, or tribal 
governments.
    Estimated impact on the private sector: S. 348 would impose 
a private-sector mandate on wholesale distributors of heating 
oil that is sold in the retail market and used for 
nonindustrial commercial or residential space or hot water 
heating. Those wholesale distributors would be required to pay 
an annual assessment to the National Oilheat Research Alliance 
if retail marketers and wholesale distributors vote favorably 
on a referendum to establish the alliance. Based on testimony 
of representatives of the industry in a Congressional hearing, 
CBO assumes that the referendum would be approved. We estimate 
that the annual assessments would total $16 million in 2000 and 
$15 million each year from 2001 through 2003, well below the 
annual threshold of $100 million established in UMRA.
    Estimate prepared by: Federal Costs: Kathleen Gramp. Impact 
on the Private Sector: Jean Wooster.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                      regulatory impact evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 348. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant economic responsibilities on private individuals 
and businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 348, as ordered reported.

                        executive communications

    On May 17, 1999, the Committee on Energy and Natural 
Resources requested legislative reports from the Department of 
Energy and the Office of Management and Budget setting forth 
Executive agency recommendations on S. 348. These reports had 
not been received at the time the report on S. 348 was filed. 
When the reports become available, the Chairman will request 
that they be printed in the Congressional Record for the advice 
of the Senate.

                        changes in existing law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill S. 348 as ordered 
reported.

                                

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