State Governmental Affairs
The propane gas industry is highly regulated at the state and local levels. NPGA works closely with policymakers at the state level to ensure that the safety and reliability of propane gas service is maintained. In addition, since issues under debate at the state level can have a national affect on the propane industry and its customers, NPGA coordinates with state propane gas associations to ensure that accurate and timely information is available regarding industry operations.
From the earliest days of the industry, a fundamental safety principle has been that only the owner of a propane container, or his designated agent, should fill it. This industry safety requirement is justifiable since only the owner knows how the container has been used and has a vested interest in its proper use and maintenance and is, therefore, accountable. Accountability is very important for safety. Accountability underpins industry practices, industry standards, and state and federal laws and regulations, as will be demonstrated in the State Container Law Analysis.
State container laws restrict the filling of propane storage tanks, or containers, to their owners or someone with their authorization. A typical law states, in part, “An LP-gas container shall be filled only by the owner or upon the owner’s authorization.” NPGA strongly supports state containers laws, and believes that certain misunderstandings about such laws can be resolved. For further information on this important safety aspect of the propane industry, please review our State Container Law Analysis last updated in January 2012.
Why Propane Should Not Be Regulated as a Utility
NPGA strongly opposes initiatives, whether legislative or regulatory in nature, to subject propane or propane dealers to the jurisdiction of state public utility commissions. Doing so would fundamentally change the nature of the propane industry and how it relates to its customers with respect to either price or terms and conditions of service.
There are many reasons why the public utility model is inappropriate for propane delivery service. First, propane dealers do not have the attributes of a public service company: they do not deliver propane to consumers by way of permanent physical connections, they do not have an exclusive service territory in which the state has authorized them to operate, they are not monopolies, and they do not have the power of eminent domain. In sharp contrast, providers of regulated public utility services deliver their services by way of a permanent physical connection and are franchised by the state to operate as monopolies exclusively within a given service territory. Such attributes necessitate regulatory control of these entities’ prices and services.
While propane may be viewed as a necessity of life by some customers who use it as a fuel for heating and cooking, other fuels which are sold and distributed in a fashion similar to propane (such as fuel oil, coal, wood, kerosene, and others) are not said to be affected with the public interest and have not been subjected to PUC regulation. Food, clothing, gasoline, and housing are also necessities of life, but these industries are not regulated as public utilities.
Court and public service commission rulings have consistently upheld the view that propane is not a regulated public utility service. Practically speaking, given the current status of the industry, it would be extremely difficult for public utility commissions to apportion propane dealers’ service territories, set rates, and apply other traditional regulatory measures to the sale and delivery of propane. At this point, subjecting propane dealers to control by public utility commissions would result in a severe disruption in service as extensive hearings would be required to determine which dealer would become the exclusive supplier in a given area and how the “losing” dealers would be compensated for the loss of their business. The latter issue could engender claims that certain dealers are being deprived of their property rights in violation of the United States and state constitutions, further disrupting what is now a well-functioning industry.