Report text available as:

  • TXT
  • PDF   (PDF provides a complete and accurate display of this text.) Tip ?

105th Congress                                            Rept. 105-787
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1
_______________________________________________________________________


 
             NATIONAL OILHEAT RESEARCH ALLIANCE ACT OF 1998

                                _______
                                

                October 6, 1998.--Ordered to be printed

_______________________________________________________________________


  Mr. Bliley, from the Committee on Commerce, submitted the following

                              R E P O R T

                        [To accompany H.R. 3610]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Commerce, to whom was referred the bill 
(H.R. 3610) 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, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................     7
Background and Need for Legislation..............................     7
Hearings.........................................................     9
Committee Consideration..........................................     9
Roll Call Votes..................................................    10
Committee Oversight Findings.....................................    10
Committee on Government Reform and Oversight.....................    10
New Budget Authority, Entitlement Authority, and Tax Expenditures    10
Committee Cost Estimate..........................................    10
Congressional Budget Office Estimate.............................    10
Federal Mandates Statement.......................................    12
Advisory Committee Statement.....................................    12
Constitutional Authority Statement...............................    13
Applicability to Legislative Branch..............................    13
Section-by-Section Analysis of the Legislation...................    13
Changes in Existing Law Made by the Bill, as Reported............    16

                               amendment

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``National Oilheat Research Alliance Act 
of 1998''.

SEC. 2. FINDINGS.

  The Congress finds that--
          (1) oilheat is an important commodity relied upon by 
        approximately 30,000,000 Americans annually as an efficient and 
        economical energy source for commercial and residential space 
        and hot water heating;
          (2) oilheat equipment operates at efficiencies among the 
        highest of any space heating energy source, reducing fuel costs 
        and making oilheat an economical means of space heating;
          (3) the production, distribution, and marketing of oilheat 
        and oilheat equipment plays a significant role in the economy 
        of the United States accounting for approximately 
        $12,900,000,000 in expenditures annually and employing millions 
        of Americans in all aspects of the industry;
          (4) only very limited Federal resources have been made 
        available for oilheat research, development, safety, training, 
        and education efforts, to the detriment of both the oilheat 
        industry and its 30,000,000 consumers; and
          (5) the cooperative development, self-financing, and 
        implementation of a coordinated national oilheat industry 
        program of research and development, training, and consumer 
        education is necessary and important for the welfare of the 
        oilheat industry, including wholesale distributors and retail 
        marketers, as well as for the general economy of the United 
        States and the millions of Americans who rely on oilheat for 
        commercial and residential space and hot water heating.

SEC. 3. DEFINITIONS.

  For the purposes of this Act--
          (1) the term ``Alliance'' means a National Oilheat Research 
        Alliance created pursuant to section 4 of this Act;
          (2) the term ``consumer education'' means the provision of 
        information that will assist consumers and other persons in 
        making evaluations and decisions regarding oilheat and other 
        nonindustrial commercial or residential space or hot water 
        heating fuels;
          (3) the term ``exchange'' means an agreement that entitles 
        each party or its customers to receive product from the other 
        party and requires only an insubstantial portion of the volumes 
        involved in the exchange to be settled in cash or property 
        other than the product;
          (4) the term ``industry'' means those persons involved in the 
        production, transportation, and sale of oilheat, and in the 
        manufacture and distribution of oilheat utilization equipment, 
        in the United States, but such term does not include the 
        ultimate consumers of oilheat;
          (5) the term ``industry trade association'' means an 
        organization exempt from tax, under section 501(c) (3) or (6) 
        of the Internal Revenue Code of 1986, representing participants 
        in the industry;
          (6) the term ``No. 1 distillate'' means fuel oil classified 
        as No. 1 distillate by the American Society for Testing and 
        Materials;
          (7) the term ``No. 2 dyed distillate'' means fuel oil 
        classified as No. 2 distillate by the American Society for 
        Testing and Materials which is indelibly dyed in accordance 
        with regulations prescribed by the Secretary of the Treasury 
        pursuant to section 4082(a)(2) of the Internal Revenue Code of 
        1986;
          (8) the term ``oilheat'' means--
                  (A) No. 1 distillate; or
                  (B) No. 2 dyed distillate,
        which is used as a fuel for nonindustrial commercial or 
        residential space or hot water heating;
          (9) the term ``public member'' means a member of the Alliance 
        described in section 5(c)(6);
          (10) the term ``qualified industry organization'' means the 
        National Association for Oilheat Research and Education or a 
        successor organization;
          (11) the term ``qualified State association'' means the 
        industry trade association or other organization that the 
        qualified industry organization, or, after its establishment 
        under this Act, the Alliance, determines best represents retail 
        marketers in a State;
          (12) the term ``retail marketer'' means a person engaged 
        primarily in the sale of oilheat to the ultimate consumer;
          (13) the term ``Secretary'' means the Secretary of Energy; 
        and
          (14) the term ``wholesale distributor'' means a person who--
                  (A) produces;
                  (B) imports; or
                  (C) transports across State boundaries and among 
                local marketing areas, and
        No. 1 distillate or No. 2 dyed distillate, and sells such 
        distillate to another person who does not produce, import, or 
        transport distillates as described in this paragraph.

SEC. 4. REFERENDA.

  (a) Creation of Program.--The industry, through the qualified 
industry organization, may conduct, at its own expense, a referendum 
among retail marketers and wholesale distributors for the creation of a 
National Oilheat Research Alliance. The Alliance, if established, shall 
reimburse the qualified industry organization for the cost of 
referendum accounting and documentation. Such referendum shall be 
conducted by an independent auditing firm. Voting rights of a retail 
marketer in such referendum shall be based on the volume of oilheat 
sold in a State by the retail marketer in the previous calendar year or 
other representative period. Voting rights of a wholesale distributor 
in such referendum shall be based on the volume of No. 1 distillate and 
No. 2 dyed distillate sold in a State by the wholesale distributor in 
the previous calendar year or other representative period, weighted by 
the ratio of the total volume of No. 1 distillate and No. 2 dyed 
distillate sold for nonindustrial commercial and residential space and 
hot water heating in that State to the total volume of No. 1 distillate 
and No. 2 dyed distillate sold in that State. Upon approval of those 
persons representing two-thirds of the total volume of oilheat voted in 
the retail marketer class and two-thirds of the total weighted volume 
of No. 1 distillate and No. 2 dyed distillate voted in the wholesale 
distributor class, the Alliance shall be established, and shall be 
authorized to levy assessments in accordance with section 6. All 
persons voting in the referendum shall certify to the independent 
auditing firm the volume of oilheat, No. 1 distillate, or No. 2 dyed 
distillate represented by their vote. Except as provided in subsection 
(b), a State shall not participate in the Alliance if less than 50 
percent of the retail marketer vote in that State, subject to the 
volumetric voting rules established by this subsection, is in favor of 
the creation of the Alliance. A qualified State association may notify 
the qualified industry organization within 90 days after the date of 
the enactment of this Act in writing that a referendum under this 
subsection will not be conducted in that State.
  (b) Subsequent State Participation.--A State that has not 
participated initially in the Alliance may subsequently elect to 
participate by conducting a referendum in accordance with subsection 
(a).
  (c) Termination or Suspension.--On the Alliance's own initiative, or 
on petition to the Alliance by retail marketers and wholesale 
distributors representing 35 percent of the volume of oilheat or 
weighted No. 1 distillate and No. 2 dyed distillate in each class, the 
Alliance shall, at its own expense, hold a referendum, to be conducted 
by an independent auditing firm selected by the Alliance, to determine 
whether the industry favors termination or suspension of the Alliance. 
Termination or suspension shall not take effect unless it is approved 
by persons representing more than one-half of the total volume of 
oilheat voted in the retail marketer class and more than one-half of 
the total volume of weighted No. 1 distillate and No. 2 dyed distillate 
voted in the wholesale distributor class, or is approved by persons 
representing more than two-thirds of the total volume of fuel voted in 
either such class.

SEC. 5. NATIONAL OILHEAT RESEARCH ALLIANCE.

  (a) Selection of Members.--Except as otherwise provided in subsection 
(c)(3), the qualified industry organization shall select all members of 
the Alliance. The qualified industry organization shall select a member 
representing a State from a list of nominees submitted by that State's 
qualified State association. Vacancies in unfinished terms of Alliance 
members shall be filled in the same manner as were the original 
appointments.
  (b) Representation.--In selecting members of the Alliance, the 
qualified industry organization shall give due regard to selecting a 
Alliance that is representative of the industry, including 
representation of--
          (1) interstate and intrastate operators among retail 
        marketers;
          (2) wholesale distributors of No. 1 distillate and No. 2 dyed 
        distillate;
          (3) large and small companies among wholesale distributors 
        and retail marketers; and
          (4) diverse geographic regions of the country.
  (c) Membership.--The membership of the Alliance shall be as follows:
          (1) One member representing each State with oilheat sales in 
        excess of 32,000,000 gallons per year.
          (2) If less than 24 States are represented under paragraph 
        (1), one member representing each of the States with the 
        highest volume of annual oilheat sales as necessary to cause 
        the total number of States represented under paragraph (1) and 
        this paragraph combined to equal 24.
          (3) 5 representatives of retail marketers, one each to be 
        selected by the qualified State associations of the 5 States 
        with the highest volume of annual oilheat sales.
          (4) 5 additional representatives of retail marketers.
          (5) 21 representatives of wholesale distributors.
          (6) 6 public members, who shall be representatives of 
        significant users of oilheat, the oilheat research community, 
        or other groups knowledgeable about oilheat.
Other than the public members, Alliance members shall be full-time 
employees or owners of businesses in the industry, except that members 
described in paragraphs (3), (4), and (5) may be employees of the 
qualified industry organization or an industry trade association.
    (d) Compensation.--Alliance members shall receive no compensation 
for their services, nor shall Alliance members be reimbursed for 
expenses relating to their service, except that public members, upon 
request, may be reimbursed for reasonable expenses directly related to 
their participation in Alliance meetings.
    (e) Terms.--Alliance members shall serve terms of 3 years and may 
serve not more than 2 full consecutive terms. Members filling unexpired 
terms may serve not more than a total of 7 consecutive years. Former 
members of the Alliance may be returned to the Alliance if they have 
not been members for a period of 2 years. Initial appointments to the 
Alliance shall be for terms of 1, 2, and 3 years, as determined by the 
qualified industry organization, staggered to provide for the 
subsequent selection of one-third of the members each year.
    (f) Functions.--(1) The Alliance shall develop programs and 
projects and enter into contracts or agreements for implementing this 
Act, including programs--
          (A) to enhance consumer and employee safety and training;
          (B) to provide for research, development, and demonstration 
        of clean and efficient oilheat utilization equipment; and
          (C) for consumer education,
and may provide for the payment of the costs thereof with funds 
collected pursuant to this Act. The Alliance shall coordinate its 
activities with industry trade associations and others as appropriate 
to provide efficient delivery of services and to avoid unnecessary 
duplication of activities.
    (2) Research, development, and demonstration activities authorized 
under paragraph (1)(B) shall include all activities incidental to 
research, development, and demonstration of clean and efficient oilheat 
utilization equipment. Such activities include obtaining a patent, 
including payment of attorney's fees for making and perfecting a patent 
application. Such activities do not include research, development, and 
demonstration of oilheat utilization equipment with respect to which 
technically feasible and commercially feasible operations have been 
verified, except that funds may be provided for improvements to 
existing equipment until the technical feasibility and commercial 
feasibility of the operation of those improvements have been verified.
    (3) Activities authorized under paragraph (1)(A) or (B) shall not 
include advertising, promotions, or consumer surveys in support of 
advertising or promotions.
    (g) Priorities.--Issues related to research, development, and 
demonstration, safety, consumer education, and training shall be given 
priority by the Alliance in the development of its programs and 
projects.
    (h) Administration.--The Alliance shall select from among its 
members a Chairman and other officers as necessary, may establish and 
authorize committees and subcommittees of the Alliance to take specific 
actions the Alliance is authorized to take, and shall adopt rules and 
bylaws for the conduct of business and the implementation of this Act. 
The Alliance shall establish procedures for the solicitation of 
industry comment and recommendations on any significant plans, 
programs, and projects to be funded by the Alliance. The Alliance may 
establish advisory committees of persons other than Alliance members. 
Each member of the Alliance shall have 1 vote in matters before the 
Alliance.
    (i) Administrative Expenses.--(1) The administrative expenses of 
operating the Alliance (not including costs incurred in the collection 
of the assessment pursuant to section (6) plus amounts paid under 
paragraph (2) shall not exceed 7 percent of the funds collected in any 
fiscal year, except that during the first year of its operation such 
expenses and amounts shall not exceed 10 percent of such funds.
    (2) The Alliance shall annually reimburse the Secretary for costs 
incurred by the Federal Government relating to the Alliance. Such 
reimbursement for any fiscal year shall not exceed the amount that the 
Secretary determines is 2 times the average annual salary of 1 employee 
of the Department of Energy.
    (j) Budget.--Before August 1 each year, the Alliance shall publish 
for public review and comment a budget plan for the next calendar year, 
including the probable costs of all programs, projects, and contracts 
and a recommended rate of assessment sufficient to cover such costs. 
Following this review and comment, the Alliance shall submit the 
proposed budget to the Secretary and to the Congress. The Secretary may 
recommend programs and activities the Secretary considers appropriate. 
The Alliance shall not implement a proposed budget until after 
receiving the Secretary's recommendations, or after the expiration of 
60 days after submitting the proposed budget, whichever occurs first.
    (k) Records; Audits.--The Alliance shall keep books and records 
that clearly reflect all of the acts and transactions of the Alliance 
and make public such information. The books of the Alliance, including 
fee assessment reports and applications for refunds, shall be audited 
by a certified public accountant at least once each fiscal year and at 
such other times as the Alliance may designate. Copies of such audit 
shall be provided to the Secretary, all members of the Alliance, the 
qualified industry organization, and to other members of the industry 
upon request. The Alliance shall establish policies and procedures for 
auditing compliance with this Act that shall conform with generally 
accepted accounting principles. The Secretary shall make available to 
the Alliance any information the Alliance requests for auditing 
compliance, except for information the Secretary is prohibited by law 
from releasing.
    (l) Public Access to Alliance Proceedings.--(1) All meetings of the 
Alliance shall be open to the public after at least 30 days advance 
public notice.
    (2) The minutes of all meetings of the Alliance shall be made 
available to and readily accessible by the public.
    (m) Annual Report.--Each year the Alliance shall prepare and make 
publicly available a report which includes an identification and 
description of all programs and projects undertaken by the Alliance 
during the previous year as well as those planned for the coming year. 
Such report shall also detail the allocation or planned allocation of 
Alliance resources for each such program and project.
    (n) Calculation of Oilheat Sales.--For purposes of this section, 
the volume of oilheat sold annually in a State shall be determined on 
the basis of information provided by the Energy Information 
Administration with respect to the preceding calendar year or other 
equivalent period.

SEC. 6. ASSESSMENTS.

    (a) Amount.--The Alliance shall set the initial assessment at no 
greater than two tenths of 1 cent per gallon of No. 1 distillate and 
No. 2 dyed distillate. Thereafter, annual assessments shall be 
sufficient to cover the costs of the plans and programs developed by 
the Alliance, except that under no circumstances shall the assessment 
be greater than one-half cent per gallon of No. 1 distillate and No. 2 
dyed distillate unless approved by a majority of those voting in a 
referendum in both the retail marketer class and the wholesale 
distributor class. In no case may the assessment be raised by more than 
one tenth of 1 cent per gallon of No. 1 distillate and No. 2 dyed 
distillate annually, and no increases may occur unless approved by a 
two-thirds vote of the Alliance.
    (b) Collection Rules.--The assessment shall be collected upon the 
sale of No. 1 distillate and No. 2 dyed distillate by a wholesale 
distributor to a person other than a wholesale distributor, including a 
sale made pursuant to an exchange. The wholesale distributor shall be 
responsible for payment of the assessment to the Alliance and shall 
provide to the Alliance certification of the volume of fuel sold. A 
person who has no ownership interest in No. 1 distillate or No. 2 dyed 
distillate shall not be responsible for payment of an assessment under 
this section. Assessments shall be made on all No. 1 distillate and No. 
2 dyed distillate sold in a State that is participating in the 
Alliance, and are payable to the Alliance on a quarterly basis. Any No. 
1 distillate or No. 2 dyed distillate previously assessed shall not be 
subject to further assessment. A wholesale distributor who fails within 
one year of sale to receive payments from a purchaser for No. 1 
distillate or No. 2 dyed distillate sold may apply for a refund 
directly from the Alliance. Such refund may not exceed the amount of 
the assessments levied upon the No. 1 distillate and No. 2 dyed 
distillate for which payment was not received. The owner of No. 1 
distillate and No. 2 dyed distillate imported after the point of sale 
described in the first sentence of this subsection shall be responsible 
for payment of the assessment to the Alliance at the point at which the 
product enters the United States, and shall provide to the Alliance 
certification of the volume of fuel so imported.
    (c) Exclusions.--No. 1 distillate and No. 2 dyed distillate sold 
for uses other than oilheat are excluded from the assessment. The 
Alliance shall establish rules and procedures for refunding to 
wholesale distributors, and to retail marketers or other end users who 
purchase from a wholesale distributor, assessments collected on 
excluded gallons.
    (d) Alternative Collection Rules.--The Alliance may establish, or 
approve a State's request for, an alternative means of collecting the 
assessment if another means is found to be more efficient and 
effective. The Alliance may establish a late payment charge and rate of 
interest to be imposed on any person who fails to remit or pay to the 
Alliance any amount due under this Act.
    (e) Investment of Funds.--Pending disbursement pursuant to a 
program, plan, or project, the Alliance may invest funds collected 
through assessments, and any other funds received by the Alliance, only 
in obligations of the United States or any agency thereof, in general 
obligations of any State or any political subdivision thereof, in any 
interest-bearing account or certificate of deposit of a bank that is a 
member of the Federal Reserve System, or in obligations fully 
guaranteed as to principal and interest by the United States.
    (f) State Programs.--
          (1) Coordination.--The Alliance shall establish a program 
        coordinating the operation of the Alliance with those of any 
        similar State, local, or regional program created by State law 
        or regulation, or similar entity.
          (2) Funds made available to qualified state associations.--
                  (A) Base amount.--The Alliance shall make available 
                to each State's qualified State association 15 percent 
                of the funds raised in the State pursuant to the 
                assessment under this section.
                  (B) Request for additional amount.--A qualified State 
                association may request that the Alliance provide any 
                portion of the remaining 85 percent of the funds raised 
                in the State. A request under this subparagraph shall--
                          (i) specify the amount of funds requested;
                          (ii) describe in detail the specific uses for 
                        which the requested funds are sought;
                          (iii) include a commitment to comply with 
                        this Act in using the requested funds; and
                          (iv) be made publicly available.
                The Alliance shall not provide any funds in response to 
                a request under this subparagraph unless it determines 
                that the funds will be used to directly benefit the 
                oilheat industry. The Alliance shall monitor the use of 
                funds provided under this subparagraph, and shall 
                impose whatever terms, conditions, and reporting 
                requirements it considers necessary to ensure 
                compliance with this Act.

SEC. 7. COMPLIANCE.

  The Alliance may bring suit in Federal court to compel compliance 
with an assessment levied by the Alliance under this Act. A successful 
action for compliance under this section may also require payment by 
the defendant of the costs incurred by the Alliance in bringing such 
action.

SEC. 8. LOBBYING RESTRICTIONS.

  No funds collected by the Alliance shall be used in any manner for 
influencing legislation or elections, except that the Alliance may 
recommend to the Secretary changes in this Act or other statutes that 
would further the purposes of this Act.

SEC. 9. DISCLOSURE.

  Any consumer education activity undertaken with funds provided by the 
Alliance shall include a statement that the activities were supported, 
in whole or in part, by the Alliance.

SEC. 10. VIOLATIONS.

  (a) Prohibition.--Any consumer education activity, undertaken with 
funds provided by the Alliance, that includes--
          (1) a reference to a private brand name;
          (2) a false or unwarranted claim on behalf of oilheat or 
        related products; or
          (3) a reference with respect to the attributes or use of any 
        competing product,
is prohibited.
  (b) Filing and Transmittal of Complaints.--A public utility aggrieved 
by a violation described in subsection (a) may file a complaint. Such 
complaint shall be transmitted concurrently to the Alliance and to any 
qualified State association undertaking the consumer education activity 
with respect to which the complaint is made. Upon receipt of a 
complaint under this subsection, the Alliance, and any qualified State 
association undertaking the consumer education activity with respect to 
which the complaint is made, shall cease those consumer education 
activities until--
          (1) the complaint is withdrawn; or
          (2) a court of jurisdiction has determined that the consumer 
        eduction activity complained of does not constitute a violation 
        of subsection (a).
  (c) Resolution by Parties.--Not later than 10 days after a complaint 
is filed and transmitted under subsection (b), the complaining party, 
the Alliance, and any qualified State association undertaking the 
consumer education activity with respect to which the complaint is made 
shall meet to attempt to resolve the complaint. If the issues in 
dispute are resolved in those discussions, the complainant shall 
withdraw its complaint.
  (d) Judicial Review.--A public utility filing a complaint under this 
section, the Alliance, a qualified State association undertaking the 
consumer education activity with respect to which a complaint under 
this section is made, or any aggrieved person, may seek relief under 
this section in Federal court. A public utility filing a complaint 
under this section shall be entitled to temporary and injunctive relief 
enjoining the consumer education activity with respect to which a 
complaint under this section is made until--
          (1) the complaint is withdrawn; or
          (2) a court of jurisdiction has determined that the consumer 
        eduction activity complained of does not constitute a violation 
        of subsection (a).
  (e) Attorneys Fees.--In any case in Federal court in which the court 
grants a public utility injunctive relief under subsection (d), the 
public utility shall be entitled to recover its attorneys fees from the 
Alliance and any qualified State association undertaking the consumer 
education activity with respect to which a complaint under this section 
is made. In any case under subsection (d) in which the court determines 
a complaint under subsection (b) to be frivolous and without merit, the 
prevailing party shall be entitled to recover its attorneys fees.

SEC. 11. SUNSET.

  This Act shall cease to be effective 4 years after the date on which 
the Alliance is established.

                          PURPOSE AND SUMMARY

    H.R. 3610 authorizes the oilheat industry to establish an 
oilheat check-off fee to fund research, development, and 
consumer education activities with respect to heating oil and 
heating oil utilization equipment. Under the bill, the oilheat 
industry is authorized to conduct a referendum among its 
retailers and wholesalers for the creation of a National 
Oilheat Research Alliance (``NORA'' or ``Alliance''). If the 
oilheat industry approves such a referendum, NORA would be 
authorized to collect annual assessments from oilheat 
wholesalers to cover its planning and program costs. The 
Alliance would then be authorized to allocate these collected 
funds to conduct research and development of oilheat 
utilization equipment, to promote consumer education, and to 
inform and educate the public about safety and other issues 
associated with the use of oilheat.

                  BACKGROUND AND NEED FOR LEGISLATION

    Heating oil plays a vital role in keeping homes and 
businesses warm in the winter in many parts of the United 
States. In 1996, homes and businesses purchased more than 10 
billion gallons of heating oil, with most of it concentrated in 
New England and the Mid-Atlantic States. Heating oil was used 
in an estimated 10.7 million households and more than 500,000 
commercial buildings. In all, over 10 billion dollars was spent 
on heating oil in 1996. Heating oil use in the U.S. has 
declined since the 1970s when demand was at its peak. This 
decline occurred for a number of reasons: increased 
availability of natural gas; the development of more efficient 
electric heating systems; and the investment in energy 
conservation by homes and businesses.
    Oilheat is virtually the only home heating fuel without a 
national industry promotion program. Thus, in order for home 
heating fuel to compete with other home heating fuels on a fair 
and equitable basis, it must obtain greater resources. This 
bill would allow the oilheat industry to do research, 
education, and marketing without using any Federal money. In 
particular, H.R. 3610 allows the heating oil industry to 
establish an oilheat check-off fee to fund research, 
development, and consumer education programs related to 
oilheat. The program is made mandatory rather than voluntary to 
prevent ``free-riders;'' that is, marketers or producers who 
would not contribute to the program, but would receive benefits 
from it.
    Specifically, H.R. 3610 authorizes the oilheat industry to 
conduct a referendum among its retailers and wholesalers for 
the creation of a National Oilheat Research Alliance. According 
to the bill, if the oilheat industry approves such a 
referendum, NORA would be authorized to collect annual 
assessments from oilheat wholesalers to cover its planning and 
program costs. H.R. 3610 then permits the Alliance to allocate 
these collected funds to conduct research and development of 
oilheat utilization equipment, to promote consumer education, 
and to inform and educate the public about safety and other 
issues associated with the use of oilheat.
    Under the terms of H.R. 3610, NORA cannot be established 
unless a majority of the oilheat industry desires it. 
Specifically, the bill directs the oilheat industry to conduct 
a referendum among oilheat producers and retail marketers to 
determine if such a program is wanted by the industry. Two-
thirds of both the producers and marketers must vote in favor 
of this program in order for the program to be established. A 
majority vote by both groups or a two-thirds vote by the 
combined groups could also terminate the program.
    Once the program is established, the Alliance is allowed to 
assess and collect a mandatory fee from oilheat wholesale 
distributors based on the volume of oilheat sold and placed 
into commerce. The initial amount of fees to be collected is no 
greater than \2/10\ of one cent per gallon. However, this 
amount can rise \1/10\ of one cent per year until the fee 
assessment is capped at \1/2\ of one cent per gallon. The 
oilheat industry has indicated that it expects to raise 
approximately $20 million during NORA's first year of 
existence. Any increase in fee assessment may not occur unless 
approved by two-thirds of the Alliance. In addition, the 
Alliance may bring suit in Federal court to compel compliance 
with the Act, including payment of the fee assessment.
    Funds collected through the assessment may be used to fund 
consumer and employee safety and training programs, research 
and development of clean and efficient oilheat utilization 
equipment, and for public education on safety and other issues 
associated with the use of oilheat (including advertising 
campaigns). Importantly, no funds collected through the fee can 
be used to lobby Congress. In addition, each year, the Alliance 
must prepare and make publicly available a report which 
includes an identification and description of all programs and 
projects undertaken by the Alliance during the previous year, 
as well as those planned for the coming year. Significantly, 
before August 1 each year, the Alliance must publish for public 
review and comment a budget plan for the next calendar year, 
including the probable costs of all programs, projects, and 
contracts, and a recommended rate of assessment sufficient to 
cover such costs. Following this review and comment, the 
Alliance must submit the proposed budget to the Secretary of 
Energy and to the Congress.
    One of the objectives of H.R. 3610 is to assemble an 
oilheat Alliance that is representative of the entire industry. 
Therefore, NORA would be representative of the diverse 
geographical regions of the country, and would include 
representation from interstate and intrastate operators among 
retail marketers, wholesale distributors, and both large and 
small companies among wholesale distributors and retail 
marketers. To that end, the membership of NORA is to be 
comprised of the following: one member from each State with 
oilheat sales over 32 million gallons per year; ten retail 
marketers (including 1 each from the five States with the 
highest volume of annual oilheat sales); 21 wholesale 
distributors; and six public members to represent oilheat 
consumers and the oilheat research community. Importantly, no 
members of NORA will receive any compensation for their 
service.
    In addition, given the competitive nature of the oilheat 
industry and its sensitive pricing structure, proponents of the 
bill believe it is unlikely that the annual assessment will be 
passed along to consumers. However, in the event that it is 
passed along, it is expected to cost residential consumers of 
oilheat only $1.00-1.50 per year. Moreover, it has been 
estimated by industry and in a study conducted by the 
Brookhaven National Laboratory that consumers should receive 
more than $4.00 in benefits for every dollar spent on research.

                                HEARINGS

    The Subcommittee on Energy and Power held a hearing on H.R. 
3610, the National Oilheat Research Alliance Act of 1998, on 
June 16, 1998. The Subcommittee received testimony from the 
following witnesses: Mr. Don Allen, Co-Chairman, Legislative 
Action Committee, National Oilheat Research Alliance; Mr. Jack 
Sullivan, President, New England Fuel Institute; Mr. Jerry 
Gass, Director, Corporate Communications and Governmental 
Affairs, Southern States Cooperative; Mr. Craig G. Matthews, 
Executive Vice President, Marketspan; and Mr. Roy Willis, 
President, Propane Education and Research Council.

                        COMMITTEE CONSIDERATION

    On September 17, 1998, the Subcommittee on Energy and Power 
met in open markup session and approved H.R. 3610, the National 
Oilheat Research Alliance Act of 1998, for Full Committee 
consideration, amended, by a voice vote. On September 24, 1998, 
the Full Committee met in open markup session and ordered H.R. 
3610 reported to the House, amended, by a voice vote, a quorum 
being present.

                            ROLL CALL VOTES

    Clause 2(l)(2)(B) of rule XI of the Rules of the House 
requires the Committee to list the recorded votes on the motion 
to report legislation and amendments thereto. There were no 
recorded votes taken in connection with ordering H.R. 3610 
reported. An En Bloc Amendment offered by Mr. Greenwood 
clarifying the provisions with respect to consumer education 
activities, was agreed to by a voice vote. A motion by Mr. 
Bliley to order H.R. 3610 reported to the House, amended, was 
agreed to by a voice vote, a quorum being present.

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of 
the House of Representatives, the Committee held a legislative 
hearing and made findings that are reflected in this report.

              COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

    Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of 
the House of Representatives, no oversight findings have been 
submitted to the Committee by the Committee on Government 
Reform and Oversight.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the Committee finds that 
H.R. 3610, the National Oilheat Research Alliance Act of 1998, 
would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

                        COMMITTEE COST ESTIMATE

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of 
the House of Representatives, the following is the cost 
estimate provided by the Congressional Budget Office pursuant 
to section 402 of the Congressional Budget Act of 1974:
                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 2, 1998.
Hon. Tom Bliley,
Chairman, Committee on Commerce, House of Representatives, Washington, 
        DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3610, the National 
Oilheat Research Alliance Act of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Kim Cawley 
(for federal costs), and Jean Wooster (for the private-sector 
impact).
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.R. 3610--National Oilheat Research Alliance Act of 1998

    Summary: H.R. 3610 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 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 
initial annual assessment of up to two-tenths of 1 cent per 
gallon of No. 1 distillate and No. 2 dyed distillate 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 allow the distillate assessment to be changed or 
terminated if there is sufficient industry support.
    Assuming that the industry would choose to establish the 
alliance, CBO estimates that enacting H.R. 3610 would increase 
both governmental receipts and outlays from direct spending by 
$16 million to $17 million a year over the authorized four-year 
period (fiscal years 1999 through 2002). 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.
    The bill contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments. H.R. 3610 would 
impose a private-sector mandate, as defined by UMRA, on 
producers, importers, and transporters 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 H.R. 3610 would increase governmental receipts 
and direct spending (from the disbursement of such receipts) by 
$16 million in each of fiscal year 1999 and 2000, and by $17 
million in each of fiscal years 2001 and 2002. For purposes of 
this estimate, CBO assumes that the industry will vote to 
establish the National Association for Oilheat Research 
Alliance, and that the distillate assessment will be set at 
two-tenths of 1 cent per gallon of distillate sold. CBO 
believes that the cash flows related to the alliance should 
appear in the budget as governmental receipts and direct 
spending because the payments between companies would stem from 
exercise of the sovereign power of the federal government.
    The estimates of annual assessments are based on recent 
industry data on the amount of distillate sold in the United 
States retail market. 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 2002. Although the Department of Energy projects 
that distillate sales for residential and commercial heating 
will continue to decline slightly, we assume the alliance would 
adjust the assessment on sales to increase funding for this 
program to keep pace with anticipated inflation.
    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 H.R. 3610 would affect both direct 
spending and receipts in equal and offsetting amounts; 
therefore, pay-as-you-go procedures would apply, but H.R. 3610 
would have no net budgetary impact in each year. The changes in 
outlays and governmental receipts that are subject to pay-as-
you-go procedures are shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                          By fiscal years, in millions of dollars--
                                           ---------------------------------------------------------------------
                                             1999   2000   2001   2002   2003   2004   2005   2006   2007   2008
----------------------------------------------------------------------------------------------------------------
Changes in outlays........................     16     16     17     17      0      0      0      0      0      0
Changes in receipts.......................     16     16     17     17      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: H.R. 3610 would 
impose a private-sector mandate on producers, importers, and 
transporters of heating oil that is sold in the retail market 
and used for nonindustrial commercial or residential space or 
hot water heating, who would be required to pay an annual 
assessment to the National Oilheat Research Alliance. Based on 
testimony of representatives of the industry in a Congressional 
hearing, CBO assumes that the retail marketers and wholesale 
distributors would vote favorably on a referendum to establish 
the alliance. CBO estimates that the annual assessments would 
total $16 million in each of the next two years, and $17 
million in 2001 and 2002, well below the annual $100 million 
threshold established in UMRA.
    Estimate prepared by: Federal Costs: Kim Cawley. Impact on 
the Private Sector: Jean Wooster.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                       federal mandates statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      advisory committee statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   constitutional authority statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  applicability to legislative branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             section-by-section analysis of the legislation

Section 1. Short title

    This section establishes the short title of this 
legislation as the ``National Oilheat Research Alliance Act of 
1998''.

Section 2. Findings

    Section 2 sets forth the findings of the Congress with 
respect to the legislation.

Section 3. Definitions

    This section defines several terms for use in the Act 
including ``Alliance,'' ``qualified industry organization,'' 
``qualified State association,'' and ``retail marketer.'' 
Importantly, this section also defines ``consumer education'' 
as ``the provision of information that will assist consumers 
and other persons in making evaluations and decisions regarding 
oilheat and other nonindustrial commercial or residential space 
or hot water heating fuels.''

Section 4. Referenda

    Subsection (a) provides for the industry, through the 
qualified industry organization, to conduct at its own expense 
a referendum among retail marketers and wholesale distributors 
of heating oil for the creation of a National Oilheat Research 
Alliance. If the Alliance is established, the qualified 
industry organization shall be reimbursed for the cost of the 
referendum accounting and documentation. The voting rights of 
retail marketers in the referendum shall be based on the volume 
of oilheat sold in a State by that marketer in the previous 
calendar year or other representative period. Wholesale 
distributors' voting rights are based on the volume of No. 1 
distillate and No. 2 dyed distillate sold in a State by the 
wholesale distributor in the previous calendar year or other 
representative period, weighted by the ratio of the total 
volume of those fuels sold for nonindustrial commercial and 
residential space and hot water heating in that State to their 
total volumes sold in the State. The Alliance shall be 
established if two-thirds of the volumes voted in the retail 
marketer class and two-thirds of the volumes voted in the 
wholesale distributor class approve it. A State shall not 
participate in the Alliance if less than 50 percent of the 
retail marketer vote in that State, based on the volumetric 
voting rules, is in favor of the creation of the Alliance. In 
addition, a qualified State association may notify the 
qualified industry organization within 90 days after enactment 
that a referendum will not be conducted in that State. 
Subsection (b) provides that if a State that has chosen not to 
participate initially in the Alliance subsequently decides it 
would like to participate, it may do so by conducting a 
referendum in accordance with subsection (a).

Section 5. National Oilheat Research Alliance

    Section 5 provides for the selection of members of the 
Alliance and establishes many of the rules with which it must 
comply.
    Specifically, subsection (a) provides that members of the 
Alliance shall be selected by the qualified industry 
organization based on a list of nominees submitted by a State's 
qualified State association.
    Subsection (b) requires that in selecting members of the 
Alliance, the qualified industry organization must give regard 
to selecting an Alliance that is representative of the 
industry, including representation of interstate and intrastate 
retail marketers, wholesale distributors of No. 1 distillate 
and No. 2 dyed distillate, large and small companies, and 
geographic diversity.
    Subsection (c) establishes the number and type of members 
the Alliance must have.
    Subsection (d) provides that Alliance members may not be 
compensated for their services or be reimbursed for expenses 
relating to their service, except that public members may be 
reimbursed for expenses directly related to their participation 
in Alliance meetings.
    Subsection (e) sets three-year terms for Alliance members 
with the limitation that members cannot serve more than two 
full consecutive terms. Former members of the Alliancemay 
return only if they have not been members for at least two years. The 
subsection also provides that initial appointments are to be staggered 
to provide for the subsequent selection of one-third of the members 
each year.
    The Alliance is authorized to develop programs and enter 
into contracts or agreements to implement the Act by subsection 
(f). This includes programs to enhance consumer and employee 
safety and training, provide research, development and 
demonstration of clean and efficient oilheat utilization 
equipment, and for consumer education. The activities are to be 
paid for out of the funds collected under this Act and must be 
coordinated with industry trade associations and others to 
avoid unnecessary duplication of activities. Advertising, 
promotions, or consumer surveys in support of advertising or 
promotions are prohibited under the Act.
    Subsection (g) requires that the Alliance give priority in 
the development of its programs to issues related to research, 
development, and demonstration, safety, consumer education, and 
training.
    Subsection (h) establishes the requirements for the 
administration of the Alliance. It provides for the Alliance to 
select a Chairman and other officers and establish advisory 
committees. This subsection also provides that each Alliance 
member has one vote in matters before the Alliance.
    Subsection (i) limits the administrative expenses of 
operating the Alliance to 7 percent of the funds collected, 
except in the first year in which the limit is 10 percent. The 
Alliance is also required to reimburse the Secretary of Energy 
annually for any costs incurred by the Federal government in 
relation to the Alliance.
    Subsection (j) requires the Alliance to publish its budget 
annually and submit it to Congress and the Secretary of Energy 
and not to implement a proposed budget until after receiving 
the Secretary's recommendation or the expiration of 60 days 
after submitting the budget.
    The Alliance is required to keep books and records that 
reflect its activities by subsection (k).
    Subsection (l) requires that all meetings of the Alliance 
be open to the public after 30 days public notice and that the 
minutes of all meetings shall be publicly available.
    Subsection (m) requires the Alliance to prepare an annual 
report.
    Subsection (n) provides that a determination of the volume 
of oilheat that was sold in a given year will be based on 
information provided by the Energy Information Administration.

Section 6. Assessments

    Subsection (a) provides that the initial assessment under 
this Act cannot be greater than two-tenths of one cent per 
gallon of heating oil. That amount can be raised by not more 
than one-tenth of one cent per gallon of heating oil annually 
to a maximum of one-half cent per gallon to cover the costs of 
the plans and programs developed by the Alliance. No increase 
in the fee can occur unless approved by a two-thirds vote of 
the Alliance.
    Subsection (b) establishes the rules for collection of the 
fee.
    Subsection (c) provides that fuel sold for purposes other 
than oilheat are excluded from the assessment.
    Under subsection (d), the Alliance is authorized to 
establish alternative means of collecting the assessment and 
late fees for nonpayment.
    Subsection (e) limits the investment of funds collected 
under this Act pending their disbursement.
    Subsection (f) provides for the Alliance to return 15 
percent of the funds collected in each State to the State's 
qualified State association. A qualified State association can 
request any portion of the remaining 85 percent of the funds 
raised in the State by making certain showings.

Section 7. Compliance

    This section authorizes the Alliance to bring suit in 
Federal court to compel compliance with an assessment levied by 
the Alliance under this Act. If the compliance action is 
successful, the Alliance is authorized to seek payment by the 
defendant of the costs incurred by the Alliance in bringing 
such action.

Section 8. Lobbying restrictions

    Section 8 prohibits any funds collected by the Alliance 
from being used in any manner for influencing legislation or 
elections. The only exception to this prohibition is that the 
Alliance may recommend to the Secretary of Energy changes in 
the Act or other statutes that would further the purposes of 
the Act.

Section 9. Disclosure

    This section requires that any consumer education activity 
undertaken with funds provided by the Alliance shall include a 
statement that the activities were supported, in whole or in 
part, by the Alliance.

Section 10. Violations

    Subsection (a) prohibits consumer education activities from 
including references to private brand names, making false or 
unwarranted claims on behalf of oilheat or related products, or 
making reference to the attributes of any competing product.
    Subsections (b), (c), (d) and (e) provide a process for the 
speedy resolution of complaints for violations of Section 10.

Section 11. Sunset

    This section provides for the Act to sunset four years 
after the date on which the Alliance is established.

         changes in existing law made by the bill, as reported

    This legislation does not amend any existing Federal 
statute.