New NPGA Chairman’s Top Priorities: Industry Participation

Convincing the new generation of propane marketers to get involved with the National Propane Gas Association (NPGA); increasing overall NPGA and PropanePAC membership; and preventing what he called “some degree of demand destruction” caused by subsidized natural gas expansion are three main goals for new NPGA Chair Charlie Ory.
CharlieOry

Sworn in during the association’s board meeting June 8 ahead of Propane Days in Washington, D.C., Ory spoke to attendees about those goals for the next year. On persuading younger members to join the NPGA board and committees, he told BPN in an interview following Propane Days, “I think it’s really important we get some new blood in the industry, new ideas, and face the next 100 years with some optimism.”

The new NPGA chair, who is president of Aero Propane (Apache Junction, Ariz.), began his talk by mentioning some of NPGA’s accomplishments over the past two years under its two previous chairs, David Lugar and Gary France. Ory said France’s role as a small marketer from Wisconsin helped the industry gain more attention from Midwestern governors during the supply and infrastructure problems of winter 2013-2014, and Lugar was at the helm as Congress enacted the Propane Education and Research Enhancement Act, which resulted in the lifting of the public education restriction on the Propane Education & Research Council (PERC). The PERC episode was a strong illustration of the importance of NPGA’s work for the industry, Ory noted.

“Without NPGA, it would have been tough for him to have the correct information and the professional presentation to get some things done and put us in a much better light than we would have been.”

He continued his presentation by expressing the need for the younger generation to get more involved with NPGA. Although he is pleased that the association’s Benchmarking Council has seen so much growth, he is concerned that more young people are involved in that group than with NPGA itself. He emphasized that the Benchmarking Council would not exist without NPGA. As chair, he plans to attend at least one Benchmarking Council meeting and ask members to get more involved with NPGA so they can tell the association what issues are important to them.

“I’m going to invite them to join governmental affairs, TS&S [Technology, Standards & Safety], Conventions, or the Member Services committee, whatever interests them, in order to give us a broader cross-section of the industry,” said Ory, who is a long-time member of the TS&S Committee. “NPGA offers everybody a broad forum to introduce what they think is important and what we should think is important, and move their agenda forward.” He added that the networking and knowledge he receives as a member of TS&S “far outweighs any cost” of membership.

After talking about some of his goals as chair, he went on to address some “demand destruction” challenges the propane industry faces. First on his list is what he calls “subsidized natural gas expansion.” Cheap natural gas commodity prices have resulted in legislation to encourage natural gas expansion at the expense of the propane industry.

He explained that the commodity price of natural gas is around $3 per MMBtu. But adding another $5 to $10 is necessary to get that gas to customers’ homes, which changes the equation dramatically.

“If state legislators understood this, I don’t think they would be so gung-ho about pushing subsidized expansion,” Ory commented.

He noted that the NPGA board authorized $500,000 for the association to assist states in fighting legislation to carry out what he calls “uneconomic expansion” of natural gas pipelines. NPGA director of state affairs Lesley Garland is leading the effort to track natural gas bills in all 50 states.

“If it’s uneconomic expansion, we’re going to do our best to assist the states in fighting that,” he stressed. Hiring Garland was the first phase of NPGA’s program, and getting technology in place to track activity of the state legislatures is the second. As part of the program, the NPGA executive committee authorized $24,000 to help fight House Bill 4303, a natural gas expansion bill in Michigan.

“And we are pleased that the state reported they think they’re gaining traction and that there is a good chance the bill will be defeated. But we know it’s going to come back and come back.”

In addition to being encouraged by efforts to slow natural gas expansion, he is excited about other programs such as the Congressional Propane Caucus, which will help the propane industry keep legislators up to date on important issues. He felt the recent Propane Days event was productive for the propane industry, and his Arizona group received a warm reception from legislators and staff members about joining the caucus. Twenty-two members of Congress were part of the caucus as of mid-June, and Ory hopes to see the caucus grow larger than the natural gas caucus.

“Hopefully I’m not being overly optimistic, but I think we’ll be close to 100 members by the time the next Congress convenes, and that just gives us a wonderful place to start.”

He looks forward to visiting propane marketers in various states in his travels as NPGA chair.

“You don’t talk to a single past chairman [without hearing] that the hospitality is exceptional, and the opportunity to meet members across the U.S. is pretty great.”    —Daryl Lubinsky

Congressional Propane Caucus Grows

When Congress announced the founding of the Congressional Propane Caucus on May 21, the caucus included 10 founding members: co-chair, Rep. Robert E. Latta (R-Ohio); co-chair, Rep. Tim Walz (D-Minn.); Rep. Chris Collins (R-N.Y.); Rep. Sean Duffy (R-Wis.); Rep. Mike Kelly (R-Pa.); Rep. Ron Kind (D-Wis.); Rep. Dave Loebsack (D-Iowa); Rep. Rick Nolan (D-Minn.); Rep. Tom Reed (R-N.Y.); and Rep. Peter Welch (D-Vt.).
Propane Caucus

Soon after Propane Days, the Caucus announced that 12 additional members of Congress had signed on as of June 18: Rep. Jeff Denham (R-Calif.); Rep. Charles Dent (R-Pa.); Rep. Elizabeth Esty (D-Ct.); Rep. Garrett Graves (R-La.); Rep. Glenn Grothman (R-Wis.); Rep. David Jolly (R-Fla.); Rep. Steve King (R-Iowa); Rep. John Moolenaar (R-Mich.); Rep. Mike Pompeo (R-Kan.); Rep. Reid Ribble (R-Wis.); Rep. Steve Stivers (R-Ohio); and Rep. David Young (R-Iowa).

Other News and Notes from Propane Days

  • Rep. Bob Latta (R-Ohio) addressed the Propane Days crowd during the morning program on June 9. As a member of the House Energy & Commerce Committee, he shared insights into the role of propane in the country’s energy portfolio. He noted the supply concerns he heard from constituents during the 2013-2014 winter and the industry’s positive response to that situation. Since that time, he and his staff have worked closely with NPGA to address how to solve current policy shortcomings. NPGA chairman Charlie Ory presented Latta with a resolution from the NPGA board of directors recognizing his accomplishments on behalf of the propane industry.
    PropaneDays McClendon
  • Daryl F. McClendon received the Distinguished Service Award, NPGA’s highest honor for an industry member. It has only been awarded 40 times in the last 65 years.
McClendon has been an active member of the propane industry for about 50 years, and he has served as past president of NPGA and past chairman of the NPGA Executive Committee, the NPGA Governmental Affairs Committee, the NPGA International Committee, the NPGA Cylinder Exchange Council, and the NPGA GASCheck Task Force. He also served as one of the founding PERC council members and as past PERC chair.

Propane Days began with an exclusive reception and dinner at the Anderson House of the Society of the Cincinnati. Nearly 80 NPGA members attended this event. During the dinner portion of the evening’s program, the PropanePAC Steering Committee recognized outgoing PropanePAC chairman Jeff Taylor (Eastern Propane Gas Inc.) for his three years of leadership. The steering committee also recognized previous PAC chairmen in attendance for their continued dedication and guidance, including Joe Armentano (Paraco Gas Corp.), Chris Cafarella (Sharp Energy Inc.), and Gary France (France Propane Service Inc.). Joseph Buschur (McMahan’s Bottle Gas) will serve as chairman for the next two years.
PropaneDays Latta

Productive Propane Days Leads to Doubling of Caucus

The propane industry’s annual trip to Washington, D.C. for Propane Days is usually productive, and this year was no exception. After meetings between groups of propane marketers and their representatives in Congress, several Congress members signed on to the Congressional Propane Caucus. The caucus, which Congress formed in May to keep members informed about issues and news in the propane industry, more than doubled in size to 22 members immediately following Propane Days.
Propane Days group photos

Propane marketers reported that members of Congress and their staff members were receptive to the various issues the propane group raised. Joe Buschur of McMahan’s Bottle Gas (Dayton, Ohio) was part of a group from Ohio that met with a staff member for Ohio Congressman Steve Stivers at 3:30 p.m. on June 9.

“[Later that day], when he came to the reception at 5 p.m., he informed us that Congressman Stivers had already joined the Propane Caucus,” Buschur said.

The National Propane Gas Association (NPGA) reported that about 250 of its members attended this year’s Propane Days, which took place June 8 to 10 at the Hyatt Regency Washington on Capitol Hill. In addition to asking members of Congress to join the Congressional Propane Caucus, NPGA’s members visited Congressional offices to discuss issues such as extensions of tax credits, modifying propane autogas’ excise tax calculation, and achieving parity with natural gas in EPA’s CAFE standards.

The fact that the 114th Congress includes about 74 new members who are less familiar with the propane industry added to the challenges of this year’s Propane Days, Matt Bisenius, NPGA director of legislative affairs, told BPN after Propane Days. “Having our guys going up there and pounding the pavement is going to pay nice dividends for us when we follow up on our issues.”

Bisenius added that he felt parity with natural gas in CAFE standards was an issue that particularly resonated with Congress members and their staffs.

“The idea that neither Congress nor EPA should be picking winners and losers is a message that a lot of the members enjoy,” he stated.

U.S. Rep. Bob Latta (R-Ohio) and political commentator Charles Krauthammer spoke at the Propane Days session on June 9, and Bisenius noted that the standing ovations Latta and Krauthammer received from attendees was a testament of how excited the propane industry was to be at the event.

The ovations also showed that “we have recovered from a difficult winter two winters ago and are ready to be very productive,” Bisenius noted.

Following the June 9 morning meeting, propane marketers and other propane industry representatives headed out to the various Congressional offices to ask Congress members to join the caucus. They also focused on three additional issues in their discussions.

Issue 1: Extend Tax Credits
Because Congress is considering broader tax reform, getting representatives to focus on extending tax credits is a challenge, Bisenius noted. He has heard that a large-scale tax reform package would probably not pass this year. But NPGA wants tax credits to be included as part of any tax extenders package that goes into effect.

“Once we get in to actual tax reform, we’re happy to be a part of that discussion,” he commented, adding that the association has worked with the House Ways and Means Committee and the Senate Finance Committee to make sure they are aware of what the propane industry’s expectations in any tax reform package would be.

Issue 2: Excise Tax Equalization
Users of gasoline and propane for highway fuel pay an excise tax of 18.3 cents per gallon. But the tax is levied on a volumetric, per-gallon basis rather than an energy-content basis, which NPGA feels puts propane, a cleaner-burning fuel than gasoline, at a competitive disadvantage.

Bisenius acknowledges that many legislators can see the situation is unfair to the propane industry. “We’re encouraging people to adopt cleaner fuels — alternative fuels — but because of the way the tax code is written, we’re punishing people for choosing that, and I think members on both sides of the aisle realize there’s a problem with that.” He sees a good opportunity for the propane industry to get propane taxed on an energy-content basis. Opportunities could come through a stand-alone bill or as part of a larger bill, such as the highway bill, being considered later this year.

“Those are the types of things we’re going to look to build on after Propane Days,” Bisenius said.

Issue 3: Parity in CAFE Standards
To help automakers comply with Corporate Average Fuel Economy (CAFE) Standards adopted in the 1970s to improve vehicle fuel efficiency, automakers can earn CAFE credits for producing alternative-fuel, dual-fuel, or bi-fuel vehicles. For most alternative fuels, the CAFE credits that manufacturers can earn are subject to a cap. But two types of vehicles are exempt from the cap: electric and natural gas. The propane industry at Propane Days asked legislators to also exempt bi-fuel propane autogas vehicles from the CAFE credit gap so they can gain parity with natural gas.

Additionally, when the EPA released its latest GHG standards for model year 2017 and later automobiles, it included a “multiplier incentive” for certain types of fuels. Alternative-fueled vehicles, including electric and natural gas, were given the multiplier incentive, granting a regulatory advantage to incentivize their production. While propane meets the same goals as these other alternative fuels in reducing GHGs, it was not granted a multiplier incentive in the final rule.

Bisenius has heard from members of Congress that they were willing to contact the Environmental Protection Agency to remedy the situation.

“This Congress has not been shy about holding EPA accountable, so that’s something that is a pretty easy ask for us to make when you point out that it truly is, at least in our opinion, an arbitrary distinction that EPA is making.”

Bisenius, who joined NPGA last August and previously served as a staff member handling energy issues for U.S. Rep. James Sensenbrenner (R-Wis.), added that the propane industry’s work in talking to legislators and staff members about all the issues has an impact.

“It’s hearing from the constituents who really make it known to them that this is something that’s important and should be taken seriously.”

Propane Days attendees noted the strong support they received from legislators at the event. Lisa Hill, executive director of the Alabama Propane Gas Association (APGA), said her group participated in meetings with eight of Alabama’s nine Congressional offices. The group held a productive meeting with Sen. Jeff Sessions.

“Sen. Sessions is a huge supporter of propane as an autogas,” Hill stated. “Alabama has always been very fortunate to have great Congressional delegation support for the propane gas industry. This year, APGA was pleased to have Samuel Maubanc, general manager of the European LPG Association, as our guest. Samuel attended meetings with us and gave great insight into how autogas is successful in Europe.”

Buschur from Ohio noted that his group met in 2013 with an aide to Congressman Latta, and that later that evening the aide showed up at a reception for the propane industry to ask additional questions.

“This was an experience we were not used to, and we felt very good that he took the time to learn about our industry,” Buschur stated. “Following the winter of 2013-14, he really got involved with the propane industry and introduced a couple of bills that were passed. This reaffirmed for those of us from Ohio the importance of Propane Days.”    —Daryl Lubinsky

DOT Compliance and ‘The Safety Fitness Standard’

By Brent Bauer...
DOT has selected your propane company for a compliance review. Do you know what to expect? What records will be reviewed? Is your recordkeeping up to date? Are you prepared? Whether a DOT examination is conducted by a federal investigator or a state motor carrier enforcement official, they will look at records about your company, drivers, and vehicles, including packagings such as cargo tanks. It is the responsibility of propane motor carriers to know and comply with all applicable federal and state motor carrier safety and hazardous materials regulations. Motor carriers must demonstrate compliance by adhering to specific recordkeeping requirements. Persons who drive commercial motor vehicles are subject to specific qualification requirements and responsibilities. Motor carriers have specific duties with respect to the qualification of their drivers and must not allow unqualified drivers to operate commercial motor vehicles (CMVs).
PERS logoEvery motor carrier must systematically inspect, repair, and maintain all CMVs under its control and maintain records to demonstrate compliance, including identifying information for each vehicle and a schedule of inspections to be performed. Your propane company must show that you have a systematic maintenance program in place.

In order to be prepared for a compliance review, propane motor carriers should be familiar with 49 CFR Part 385, “The Safety Fitness Standard” and, of course, all applicable Federal Motor Carrier Safety Regulations (FMCSR) and Hazardous Materials Regulations (HMR). Carriers should also be familiar with certain definitions, including the meaning and importance of the term “safety management controls.”

The Safety Fitness Standard
A satisfactory safety rating is based on the degree of compliance with the safety fitness standard for motor carriers. For intrastate transportation, motor carriers must meet the applicable state requirements. To meet the safety fitness standard, the motor carrier must demonstrate it has adequate safety management controls in place that function effectively to ensure acceptable compliance with applicable safety requirements to reduce the risk associated with:

• Commercial driver’s license standard violations (Part 383);
• Inadequate levels of financial responsibility (Part 387);
• The use of unqualified drivers (Part 391);
• Improper use and driving of motor vehicles (Part 392);
• Unsafe vehicles operating on the highways (Part 393);
• Failure to maintain accident registers/accident reports (Part 390);
• The use of fatigued drivers (Part 395);
• Inadequate inspection, repair, and maintenance of vehicles (part 396);
• Transportation of hazardous materials, driving/parking violations (Part 397);
• Violation of hazardous materials regulations (Parts 170-177); and
• Motor vehicle accidents and hazardous materials incidents

Definitions
For the purposes of Part 385:

Compliance review is an on-site examination of motor carrier operations, such as drivers’ hours of service, maintenance and inspection, driver qualification, commercial driver’s license requirements, financial responsibility, accidents, hazardous materials, and other safety and transportation records to determine whether a motor carrier meets the safety fitness standard. A compliance review may be conducted in response to a request to change a safety rating, to investigate potential violations of safety regulations by motor carriers, or to investigate complaints or other evidence of safety violations. The compliance review may result in the initiation of an enforcement action.

Safety audit is an examination of a motor carrier’s operations to provide educational and technical assistance on safety and the operational requirements of the federal motor carrier safety regulations and applicable hazardous material regulations, and to gather critical safety data needed to make an assessment of the carrier’s safety performance and basic safety management controls. Safety audits do not result in safety ratings.

Safety management controls can be defined as the systems, policies programs, practices, and procedures used by a motor carrier to ensure compliance with applicable safety and hazardous materials regulations that ensure the safe movement of products and passengers through the transportation system, and to reduce the risk of highway accidents and hazardous materials incidents resulting in fatalities, injuries, and property damage.

Satisfactory safety rating indicates that a motor carrier has in place and functioning adequate safety management controls to meet the safety fitness standard prescribed in §385.5. Safety management controls are adequate if they are appropriate for the size and type of operation of the particular motor carrier.

Conditional safety rating indicates a motor carrier does not have adequate safety management controls in place to ensure compliance with the safety fitness standard that could result in occurrences listed in §385.5 (a) through (k).

Unsatisfactory safety rating indicates a motor carrier does not have adequate safety management controls in place to ensure compliance with the safety fitness standard, which has resulted in occurrences listed in §385.5 (a) through (k).

Safety Management Controls
As defined above, safety management controls are the systems, policies, programs, practices, and procedures used by a motor carrier to ensure compliance with applicable safety and hazardous materials regulations.

It is not enough to know what regulations are applicable to your propane company. It is imperative to have a system in place that designates responsibilities to ensure proper records are maintained and updated as necessary. There are numerous records that have recurrent requirements, such as the annual inquiry and review of driving records, medical examinations, periodic vehicle inspections, hazmat employee training, and review of time records and driver’s logs.

Without a system in place to remind when records need to be reviewed and updated, it will be difficult to remain compliant and meet specific recordkeeping requirements.

Factors in Determining a Safety Rating
The factors to be considered in determining the safety fitness and assigning a safety rating include information from safety reviews, compliance reviews, and any other data, which may include all or some of the following:
  • Adequacy of safety management controls. The adequacy of controls may be questioned if their degree of formalization, automation, etc., is found to be substantially below the norm for similar carriers. Violations, accidents or incidents that are substantially above the norm for similar carriers will be strong evidence that management controls are either inadequate or not functioning properly.
  • Frequency and severity of regulatory violations.
  • Frequency and severity of driver/vehicle regulatory violations identified during roadside inspections.
  • Number and frequency of out-of-service driver/vehicle violations of motor carrier operations.
  • Increase or decrease in similar types of regulatory violations discovered during safety or compliance reviews.
  • Frequency of accidents and hazardous materials incidents; indicators of preventable accidents; and whether such accidents, hazardous materials incidents, and preventable accident indicators have increased or declined over time.
  • Number and severity of violations of CMV and motor carrier safety rules, regulations, standards, and orders that are issued by a state and compatible with federal rules, regulations, standards, and orders.

Notification of Safety Fitness Determination (§385.11)
FMCSA will provide a motor carrier written notice of any safety rating resulting from a compliance review as soon as practicable, but not later than 30 days after the review. The notice will take the form of a letter issued from FMCSA’s headquarters office and will include a list of FMCSR and HMR compliance deficiencies that the motor carrier must correct.
If the safety rating is “satisfactory” or improves a previous “unsatisfactory” safety rating, it is final and becomes effective on the date of the notice.
In all other cases, a notice of a proposed safety rating will be issued. It becomes the final safety rating after the following time periods:
• For motor carriers transporting hazardous materials in quantities requiring placarding — 45 days after the date of the notice.
• For all other motor carriers operating CMVs — 60 days after the date of the notice.
• A proposed safety rating of “unsatisfactory” is a notice to the motor carrier that FMCSA has made a preliminary determination that the motor carrier is “unfit” to continue operating in interstate  commerce, and that the prohibitions in §385.13 will be imposed after 45 or 60 days if necessary safety improvements are not made.
• A motor carrier may request FMCSA to perform an administrative review of a proposed or final safety rating. The process and the time limits are described in §385.15.
• A motor carrier may request a change to a proposed or final safety rating based upon its corrective actions. The process and the time limits are described in §385.17.

Unsatisfactory-Rated Motor Carriers; Prohibition on Transportation; Ineligibility for Federal Contracts (§385.13)
Generally, a motor carrier rated “unsatisfactory” is prohibited from operating a CMV. Information on motor carriers, including their most current safety rating, is available from FMCSA on the Internet at www.safersys.org, or by telephone  at (800) 832-5660.

Motor carriers transporting hazardous materials in quantities requiring placarding are prohibited from operating a CMV in motor carrier operations in commerce beginning on the 46th day after the date of the FMCSA notice of proposed “unsatisfactory” rating.

All other motor carriers rated as a result of reviews are prohibited from operating a CMV in motor carrier operations in commerce beginning on the 61st day after the date of the FMCSA notice of proposed “unsatisfactory” rating. If FMCSA determines that the motor carrier is making a good-faith effort to improve its safety fitness, it may allow the motor carrier to operate for up to 60 additional days.

Penalties
If a proposed “unsatisfactory” safety rating becomes final, FMCSA will issue an order placing out of service the motor carrier’s operations in commerce. The out-of-service order shall apply both to the motor carrier’s operations in interstate commerce and to its operations affecting interstate commerce.

If a motor carrier’s intrastate operations are declared out of service by a state, FMCSA must issue an order placing out of service the carrier’s operations in interstate commerce. The following conditions apply:

• The state that issued the intrastate out-of-service order participates in the Motor Carrier Safety Assistance Program and uses the FMCSA safety rating methodology provided in this part; and
• The motor carrier has its principal place of business in the state that issued the out-of-service order.
• The order prohibiting the motor carrier from operating a CMV in interstate commerce shall remain in effect until the state determines that the carrier is fit.
• Any motor carrier that operates CMVs in violation of this section is subject to the penalty provisions of 49 U.S.C. 521(b) and appendix B to part 386 of the FMCSRs.

Revocation of Operating Authority
If a proposed “unsatisfactory” safety rating or a proposed determination of unfitness becomes final, FMCSA will, following notice, issue an order revoking the operating authority of the owner or operator. For purposes of this section, the term “operating authority” means the registration required under 49 U.S.C. 13902 and §392.9a of this subchapter. Any motor carrier that operates CMVs after revocation of its operating authority will be subject to the penalty provisions listed in 49 U.S.C. 14901.

Determining If a Carrier Has Basic Safety Management Controls
During a compliance review or safety audit, FMCSA gathers information by reviewing a motor carrier’s compliance with “acute” and “critical” portions of the FMCSR and HMR.

Acute regulations are those where noncompliance is so severe as to require immediate corrective actions by a motor carrier regardless of the overall basic safety management controls of the motor carrier. Critical regulations are those where noncompliance relates to management and/or operational controls. These are indicative of breakdowns in a carrier’s management controls.

The list of the acute and critical regulations, used in determining if a carrier has basic safety management controls in place, is located in Part 385, Appendix B, VII, titled “List of Acute and Critical Regulations.” Noncompliance with acute and critical regulations are indicators of inadequate safety management controls and usually higher than average accident rates.

Conducting a Self-Assessment
The best way to assure regulatory compliance for your propane company is to determine if you have adequate safety management controls in place. Use the List of Acute and Critical Regulations in Appendix B of Part 385 to conduct a self-assessment of your operation. When doing so, take note of key words you will see frequently, such as knowingly, allowing, permitting, failing, using, causing, and requiring. These are words you do not want to see in a motor carrier investigator’s report.

To learn more about DOT’s safety fitness standard and safety rating process, refer to your copy of the FMCSR or go online to www.fmcsa.dot.gov/regulations or contact PERS at (800) 728-2482, www.pers-er.com.

Since 1995, Brent Bauer has served as part of the management team at PERS (Professional Emergency Resource Services), a 24-hour emergency contact center that also provides DOT regulatory compliance services for hazmat shippers and carriers, including numerous propane marketers nationwide. Contact him at This email address is being protected from spambots. You need JavaScript enabled to view it..