The legislative issues facing the home heating industry are profound. The New England Fuel Institute, a nationally recognized organization of over 1,100 independent oilheat, propane, biofuel and motor fuel dealers and associated companies, is a prominent voice for the industry before regional and federal policy makers, media and the public. Jim Collura, vice president and director of legislative affairs for the Institute (pictured, at right), spoke to Maura Keller, contributing writer to Fuel Oil News, about the current legislative environment and how it is affecting the industry.
FON: How has the political environment in Washington, D.C., and the subsequent current legislative environment impacted the heating oil industry?
Collura: This is a unique environment that we are in because those of us who do advocacy in policy work in Washington DC, it is a different world than it was a year ago. The commonly held wisdom among folks in my line of work was that we would have a Democrat in the White House a year ago. This was based on polling data and the general pulse was that the White House would be Democrat. Obviously the 2016 election was a little bit of a shock in that the opposite happened. We now have the most unorthodox president in probably about 100 years. That means that every industry, every special interest group, every nonprofit, and everyone who has a stack in what Washington does has to reevaluate its agenda and how they conduct work here. And that is every single industry—both big and small—because every industry is affected by decisions made or not made in Washington. From that point of view, we came into the new year and we had done quite a bit of work reevaluating the policy agenda on various issues and how we would tackle those issues going forward and how the game would have to change, given how the field has changed.
FON: How is the New England Fuel Institute (NEFI) responding to this legislative environment? What are the biggest legislative and regulatory issues affecting the heating oil and propane industry in the Northeast?
Collura: We have had to reevaluate our policy agenda, as has every other trade association has done. One of the first opportunities that we identified is to tackle federal rules and regulations that were overly burdensome. The administration has made it a priority to identify within every single department agency commission burdensome and costly rules and regulations that stifle the American economy and make it more difficult for businesses to grow and invest in their operations and employees. Obviously, the heating and propane industry is, just like every aspect of the energy sector, heavily regulated. It may be even more so than most because of the nature of their operations—most of these companies are very diverse and are affected by a wide range of regulations from tax regulations to transportation regulations to fuel storage compliance with state, local and federal regulations.
To the extent that New England Fuel Institute (NEFI) can identify rules and regulations that could be performed or repealed to benefit our members while also ensuring environmental safety and best practices. For example, our members are often captured in regulations that are meant for different kinds of operations—transportation and highway regulations being one of those areas. The agencies monitoring these regulations cast a wide net because their main focus is long-haul operations. But most folks who deliver fuel to homes are short-haul operations. And they assume that everyone who owns a commercial vehicle or owns a truck is going to be someone who travels through multiple states and drive long distances. So, they structure the regulations with those folks in mind. They don’t always consider the short-haul operations, like heating oil and propane companies that deliver from home to home. They may cross state lines, especially in New England, where our geography is a bit different than the Midwest. So, we have had to look closely at those rules and regulations.
NEFI was also recently successful in working with coalition allies in pushing back against a regulation that would extend or arbitrarily expand the requirements of sleep apnea screening for commercial vehicles drivers. These types of regulations make it more difficult to put drivers in trucks and put them on the road. When that happens, it makes it more difficult for businesses to hire and retain drivers. The driver pool, especially in New England and the Northeast, is facing a hard time finding qualified commercial vehicle drivers. It is a very competitive issue right now. There are not enough available drivers, so the federal government establishing more regulations, without properly examining the consequences and thoroughly studying the impact on businesses like ours, can have a big impact on the market and competitiveness of our member companies. We have voiced concern about this for the last few years and it has been a top regulatory requirement for us. The current administration repealed and withdrew the proposed regulations, which is a big victory for us.
FON: What are some of the current rules and regulations that NEFI is working on?
Collura: One of the rules that we are currently working on and trying to bring some relief to our member companies is a rule that would require the installation of electronic devices to track the hours of service for drivers. While this may not impact all of our member companies, the cost could be a significant if you are required to retrofit your vehicle with these kinds of devices. Again, for short haul operations, there may not necessarily be a need for this kind of requirement especially considering a lot of these companies are very small and these kinds of costs can make or break their competitiveness.
We have also had longstanding concerns with how certain states have been administering the Low Income Home Energy Assistance Program (LIHEAP), which is a federal program that was established under the Reagan Administration. The LIHEAP program provides grant money to the states. Our industry is unique because not all our issues are Republican. There are some issues that are banner issues for Democrats that we strongly support and have been involved in advocating for. The LIHEAP program is one of those
The administration, in their fiscal year budget request back in March 2017, had proposed eliminating the program. That’s more than $3 billion a year into the states that would have been gone. And that money is used by states in the Northeast to help support their states’ fuel assistance program, which gives money to low income families or seniors who can’t afford their home heating costs. The LIHEAP program provides money to those states so they can keep their home warm. Historically, that’s a program that NEFI has always supported this program. Many of our members participate in it and their customers benefit from it. The loss of that program would have blown massive holes in state budgets. The states wouldn’t get have gotten rid of the program, rather they would have tried to find new revenue sources to meet their shortfall and that probably would have meant new taxes. They would have fallen back on things like a carbon tax or fuel specific taxes in order to meet those budgetary shortfalls. We immediately came [out] against it and communicated our opposition to it at the Northeast Congressional Delegation. We joined a LIHEAP coalition and thankfully Congress, in its most recent appropriation bills, is outright rejecting the President’s proposed elimination of the program and they plan to continue to fully fund LIHEAP. That’s another major victory for us.
FON: What types of future opportunities are there in the legislation arena?
Collura: President Trump has expressed interest in reevaluating how every federal program operates and he is looking for ways to make them work better for businesses. The LIHEAP program isn’t one we should be ignoring and there are probably areas where the LIHEAP program can be improved. We are currently looking at that and will develop some ideas and recommendations to take to the Department of Health and Human Services, which oversees the program. One of these issues is the leveraging program. Under the leveraging program the federal government gives matching funds under program as an incentive to get states to “leverage” more benefit from every dollar they get from the federal government. It encourages states to make every dollar they get from the federal government to go further. In the Northeast, many states have used the leveraging incentive to create programs in their states to avail themselves of the federal leveraging benefit that control prices for heating oil under the LIHEAP program. There are two different types of programs. The first type of discount off of retail, whereby the state basically says whatever gallon of heating oil you sell to a LIHEAP customer, it has to be a certain percentage discounted from the retail program. There is also margin over rack, which is a certain percentage they have to discount over the rack price. These two programs can sometimes be insufficient in meeting a company’s overhead, which causes the company to lose money on every gallon delivered under LIHEAP. This policy may discourage a company to participate in the program if the company is losing money. Let’s says a company has several low-income homes in the area, the company may try to find other solutions for those families, other than the LIHEAP program. Or they may decide as a business that they wouldn’t be able to survive in the LIHEAP program. We want the LIHEAP program to incentivize more companies to participate, not less. We will be bringing this forward on our agenda.
Also, recently the House republicans have been pushing for a boarder adjustment tax to help pay for tax reform. The board adjustment proposal would have levied a 20% tax rate on imported goods, including heating oil and propane. We expressed concerns to Congress on this during a hearing on this issue. It brought national attention to the impact this would have on the industry. Ultimately the proposal was killed and House republicans withdrew it. NEFI formed a special committee on tax policy and we continue to monitor tax reform very closely and examine the tax reform bill as it moves through the process and we will provide guidance to our members on the tax reform measures.
FON: What role does NEFI play within the biodiesel environment?
Collura: NEFI is actively engaged in biofuels policy issues. The heating oil side of the industry has embrace biodiesel as an important component to its long-term competitiveness. We fuel it has a way for many of members to be more competitive in the market, especially as they tackle state and local policies that seek to reduce the carbon footprint of heating fuel. It is a way for them to have a solution to bring to their local and state policy makers. Bioheat is an important of their future and in order to for our members to continue to sell bioheat and to make sure our local and state policies to be successful, which encourages the use of bioheat, NEFI wants to make sure the federal are right. These federal policies can dramatically impact the supply and prices for biofuels. NEFI is very engaged in partnership with others within the biodiesel industry on these issues, including the biodiesel tax credit, which expired last year. We are seeking to have that renewed and we are working on the Renewable Fuel Standard, which is a program created by Congress that’s managed by the EPA. This requires the production and blending of biodiesel and other biofuels for the fuel supply. Even though the program focuses on transportation fuels, heating oil is eligible under this program to generate a credit. NEFI has a strong partnership and good working relationship on policy issues with the biodiesel industry and we continue to have that relationship.
FON: What can industry players do to stay on top of the policies and legislation issues that affect them?
Collura: Be informed, contribute and participate. They can stay informed by making sure they are on top of the issues that affect their business. They should be aware of the issues and follow industry publications and understand what advocacy groups, like NEFI, are doing to stay of these issues. They should contribute financially and contributing time by joining associations. In some parts of the company there are local associations as well that they can join. Contribute info to the associations as to how issues impact their company. Participate in meetings with key lawmakers and attend the annual lobbying days. You can also participate in one-on-one meetings with members of Congress through your association.
Pictured above: Jim Collura, vice president and director of legislative affairs, New England Fuel Institute (NEFI).
Photo courtesy of NEFI.