Unlawful DOT Rule Could Cost Propane Consumers Millions

WASHINGTON, DC (January 18, 2017) — On the first working day of the Trump Administration, a rule imposed by the U.S. Department of Transportation (DOT) during the Obama Administration is set to impose $125 million in new costs on propane consumers. To date, The National Propane Gas Association’s (NPGA) petition for an emergency stay to protect the industry and propane consumers has gone unanswered.

On Monday, January 23, 2017, approximately 5 million propane cylinders, including many that are used for home heating, forklifts, and even grill cylinders, will be out of compliance with DOT regulations. In 2016, the Pipeline and Hazardous Materials Administration (PHMSA) made a major change to a decades-old regulation that, without explanation or justification, reduces the time propane marketers have to initially requalify a propane cylinder from 12 years to 10 years. This action is an unlawful violation of the Administrative Procedure Act (APA).

The APA requires that affected parties have an opportunity to comment on any changes that might create new obligations for stakeholders. DOT misled the propane industry in the initial notice of proposed rulemaking saying, “Costs associated with the rule are estimated to be negligible annually…These requirements would not impose new requirements on current non-holders of SPs [special permits].” In the rule PHMSA cites the number of affected business at 50. The reality is this rule affects thousands of companies, starting with approximately 3,000 propane marketers.

Phil Squair, NPGA’s Senior Vice President for Public and Governmental Affairs said, “This action is part of the legacy of an Administration that preferred regulatory bureaucracy over promoting American jobs and small businesses. We estimate that this rule will cost more than $125 million. Calling that amount of money ‘negligible’ indicates more education needs to be done with regard to how these kinds of regulations affect small businesses.”

In addition to the significant financial burden, this regulation will cause small business owners to choose between delivering fuel to more than 5 million homes that rely on propane for winter heating or keeping staff at the business to comply with this rule.

On Friday, January 13, 2016, NPGA filed a Petition for Rulemaking & Emergency Stay for Cylinder Requalification Requirements before PHMSA. The petition outlines the extensive reasons for issuing a halt on the enforcement of this rule until a lawful rulemaking process can commence.

National Propane Gas Association:

The National Propane Gas Association (NPGA) is the national trade association of the propane industry. NPGA represents approximately 2,800 companies, including producers, wholesalers, transporters, and retailers of propane gas as well as the manufacturers and distributors of associated propane equipment and appliances. 50 million Americans choose propane as their energy source. Propane is an abundant, American resource that supports small businesses and protects the environment.