NPGA: ‘Unlawful’ DOT Rule to Cost Commercial And Residential Propane Consumers Millions

On the first working day of the Trump Administration – Monday, January 23 – a rule imposed by the federal Department of Transportation during the Obama Administration is set to impose $125 million in new costs on residential and commercial propane consumers, according to a January 18 alert from the industry group, the National Propane Gas Association.

President Barack Obama signed the Protecting Our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act  last June. This law strengthens the authority of the Pipeline and Hazardous Materials Administration and includes provisions that advance the safe transportation of energy and other hazardous materials.

However, this regulatory change, the association claims which, was made “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,” NEPGA claims in its statement.

Indeed, the APA requires that affected parties have an opportunity to comment on any changes that might create new obligations for stakeholders, according to the industry group

The end game: As of Monday, about 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.

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

To date, NPGA says, its petition for an emergency stay to protect the industry and propane consumers has gone unanswered.

“DOT misled the propane industry in the initial notice of proposed rulemaking saying, ‘Costs associated with the rule are estimated to be negligible annually…. [T]hese 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.”

NPGA’s SVP for Public and Governmental Affairs Phil Squair charges, “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 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, the association said.

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.

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