MBN S.B. 925 75(R)BILL ANALYSIS


ENERGY RESOURCES
S.B. 925
By: Ogden (Hawley)
5-8-97
Committee Report (Amended)


BACKGROUND 

In 1991, the Texas Legislature created the first propane "checkoff"
program in the United States. The law established a dedicated fund in the
state treasury to receive fees paid by the industry on first Texas sales
of odorized propane in Texas.  The Railroad Commission uses the money to
operate propane research, public education, and marketing programs through
its Alternative Fuels Research and Education Division (AFRED).  In 1996,
the United States Congress enacted the federal Propane Education and
Research Act.  Under the Act, the National Propane Gas Association and the
Gas Processors Association will hold separate retailer and supplier
referendums.  If both referendums pass, a Propane Education and Research
Council (PERC) will be formed.  The federal Act mandates a joint fee
collection process with existing state programs and allows states to keep
up to 20 percent of the federal money collected for use on programs
approved by PERC.  Texas' share of the national checkoff is estimated at
$80,000 annually.   

PURPOSE

As proposed, S.B. 925 simplifies Texas' checkoff system and makes it
consistent with the federal system; authorizes the Railroad Commission to
enter into an agreement with the national Propane Education and Research
Council to collect the national assessment on all liquified petroleum gas
odorized in Texas and receive a rebate of 20 percent of collections; and
authorizes the Railroad Commission to enter into agreements with
counterpoint organizations in other states to collect and transfer state
assessments on liquified petroleum gas that is odorized in one state and
delivered in another. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the Railroad Commission in SECTION 6
(Section 113.246(d), Natural Resources Code)  and SECTION 7 (Section
113.246(d), Natural Resources Code) of this bill.  Existing rulemaking
authority for the Railroad Commission is expanded to include applicable
federal laws in Section 7 (Section 113.246(a), Natural Resources Code) of
this bill.   

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 113.243(b), Natural Resources Code, effective as
provided by SECTION 8(b) of this Act, to provide that the Alternative
Fuels Research and Education Fund (fund) consists of money from amounts
collected by the Railroad Commission (RRC) under an agreement with another
state in accordance with Section 113.246(c). 

SECTION 2. Amends Section 113.243(b), Natural Resources Code, effective as
provided by SECTION 8(b) of this Act to provide that the fund consists of
money from assessments, rebates on assessments, and other money collected
by RRC under the Propane Education and Research Act (P.L. 104-284) or
other applicable federal law.  Makes a conforming change. 

SECTION 3. Amends Section 113.2435(c), Natural Resources Code, to require
rules adopted and promulgated by RRC under this section to specify a
limitation on the proportion of the fund usable for the rebate program
that limits the proportion usable to not more than 50 percent, rather than
25 percent, of the funds available. 

SECTION 4. Amends Section 113.244, Natural Resources Code, to provide that
a fee is imposed  on odorized liquified petroleum gas (LPG), rather than
on the first sale of odorized LPG, delivered into any means of conveyance
to be sold and placed into commerce.  Provides that the fee is in an
amount determined by a certain formula, except as provided by Subsection
(e).  Deletes a provision regarding collection of the fee.  Requires the
fee to be in an amount determined by a certain schedule. Requires the
owner of LPG at the time of odorization or at the time of import of
odorized LPG to pay the fee based on the net amount of odorized LPG sold
and placed into commerce.  Requires the fee to be collected and remitted
to RRC as provided by Section 113.245 by the person who odorizes the LPG
or imports odorized LPG.  Deletes a provision regarding the computation of
the fee. Defines "time of import."  Provides that the fee does not apply
to a delivery of odorized LPG destined for export from the United States,
rather than from this state, if the LPG is in continuous movement to a
destination outside the United States, rather than this state.  Requires
the fee on LPG destined for export to another state and in continuous
movement to a destination on that state to be assessed at the rate in
effect in that state, if RRC is party to an agreement with that state's
propane education and research program.  Authorizes RRC to transfer fees
collected under Subsection (e) of this section to the agency or
organization in the other state that is party to RRC's agreement with that
state. 

SECTION 5. Amends Section 113.245, Natural Resources Code, to require each
person responsible for collecting and remitting a fee on a delivery of
LPG, rather than each operator of a loading rack, to file a report with
RRC and remit the amount of fees required to be collected or paid during
the preceding month, on or before the 25th day of the month following the
end of each calendar month. Makes conforming changes. 

SECTION 6. Amends Section 113.246, Natural Resources Code, effective as
provided by SECTION 8(b) of this Act as follows: 

Sec.  113.246.  New heading: RULES REGARDING FEES; AGREEMENTS WITH OTHER
STATES.  Authorizes RRC to enter into an agreement with an agency of or an
organization in another state to coordinate the administration,
collection, reporting, and payment of the fees payable or collected under
this subchapter and the other state's propane education and research
program created by that state's law or rule.  Sets forth items that may be
contained in the agreement. 

SECTION 7. Amends Section 113.246, Natural Resources Code, to require RRC
to adopt rules necessary for the administration, collection, reporting,
and payment of the fees payable or collected under the Propane Education
and Research Act of 1996 or other applicable federal law.  Authorizes RRC
to enter into an agreement with an agency or organization in another state
and with the national Propane Education and Research Council regarding
fees.  Sets forth items that may be contained in the agreements. 

SECTION 8. (a) Effective date: September 1, 1997, except as otherwise
provided by this section. 

(b) Effective date for SECTIONS 1 and 6: September 1, 1997, unless
SECTIONS 2 and 7 of this Act take effect on that date, in which case
SECTIONS 1 and 6 of this Act have no effect. 

(c) Effective date for SECTIONS 2 and 7: upon the later of either
September 1, 1997, or the date on which RRC by order acknowledges receipt
and acceptance of a written report by an independent auditing firm
confirming that the industry referenda required under Section 4 of the
Propane Education and Research Act of 1996 have been approved by producers
representing two-thirds of the total volume of propane voted in the retail
marketer class. 

SECTION 9. Emergency clause.

EXPLANATION OF AMENDMENTS

Amendment #1 adds new subsection (6) in SECTION 3 of S.B. 925 to state
that the name or seal of the commission shall not be used on any
advertising that promotes the propane water heater rebate program. 
 Amendment #2 adds new subsection(e) in SECTION 7 of S.B. 925 to state
that none of the funds payable or collected under or by the authority of
the Propane Education and Research Act of 1996 may be spent on the
promotion or marketing of propane use in on-the-road vehicles.