Propane Industry Supports Fair Legislation for Emergency Deliveries

by Samuel Diamond

The story of old man winter tightening product flow for the deliverable fuels industry is well documented and bears not repeating here. However, one plot point that has shifted in recent years is consumer response to runouts and delivery delays.

“Normally these things were handled between customers and companies,” says New York Propane Gas Association (NYPGA) Legislative Chair Rick Cummings. “If you were dissatisfied, the first thing you’d do would be to call your propane company or another dealer in your area.” But today, Cummings says, some customers are just as likely to call their local TV station or legislator. That would explain this winter’s barrage of media coverage surrounding out-of-gas situations, as well as a subsequent wave of legislative proposals aimed at addressing concerns about emergency propane deliveries.

Policymakers across the Northeast turned their attention to fuel delivery rules and regulations this past season, with at least three states — Maine, Connecticut, and New York — bringing propane-related bills up for consideration. In some cases, bills were fast-tracked without the usual vetting process that would compare how their provisions stack up against existing legislation. In others, legislators reached out to industry stakeholders for their input and expertise.

Recognizing a need for clarity and consistency on issues like tank ownership and liability, NYPGA put its support behind New York State Senate Bill S7395D, sponsored by State Senator James Tedisco (R-49th District) with co-sponsorship from David J. Valesky (D-53rd District). Known as the “Propane Consumer Emergency Act,” this bill establishes ground rules for non-contracted propane deliveries during “emergency” situations and also codifies enforcement of propane delivery contracts under “normal” circumstances.

In other words, the bill defines “what is an emergency” versus “what is normal” and outlines some basic propane delivery rules for either case.

S7395D allows for a company to deliver propane to a tank that the company does not own, only under the following circumstances: The propane customer has tried “in good faith under an existing contract” to request a delivery from the tank owner, but still has not received the delivery within 24 hours, and a “federal, state or local state of emergency has been declared,” or severe weather poses an imminent danger of death, injury or damage to the building and its fixtures, or the Federal Motor Carrier Safety Administration (FMCSA) or New York State Department of Transportation has issued an hours-of-service waiver for propane deliveries.

Cummings explains, “If there’s a grievous situation where someone is in peril — it’s pretty rigorous, but if these things align — there’s a mechanism for that person to get propane.”

When such a situation arises, the bill states, the owner of the tank will assume no liability stemming from the emergency delivery, and the company that performs the delivery may not charge an extra fee for the fill, “in addition to any standard filling, refilling or delivery fee pursuant to this subdivision, excluding existing emergency fees.” The company completing the emergency delivery must also notify the tank owner of the name and address of the person receiving the fill, as well as the delivery date and quantity, “the pressure test readings and any changes made to the system within forty-eight hours.”

Notably, the bill establishes that for a company to fill a tank owned by someone else, that company must have liability insurance of at least $1 million, and the tank must have been inspected and certified, as the delivering company “assumes all liability that may result from improper filling and testing.”

Perhaps most important to New York’s propane dealers, however, is the bill’s final provision, which states: “Any existing contract between the owner of the [propane tank] and the customer remains in force until the end date of the contract or until it is terminated under options available to either party and under any other conditions not listed in this subdivision. In all circumstances other than those heretofore described, it is not permissible for any person, firm, limited liability company or corporation to remove or fill any [propane] without the consent of the [tank] owner…”

The irony of all this is that NYPGA and its members have been encouraging policymakers to codify such language for many years now. A bill that would have established propane tank ownership and delivery rules has passed the New York State Senate six times and the State Assembly twice, only to be vetoed by Governor Cuomo on both occasions, Cummings recalls. Reflecting on the sequence of events that brought this latest bill to the floor, he says, “In the dead of winter, we inherited a bad situation, but recognized how we could make it better for consumers while simultaneously doing something that could be a positive for the industry.”

The “win-win” nature of this legislation is a testament to many hours of hard work by Cummings and Tedisco, says Chris Scaturro, a supporter of the bill who serves as president of the Hudson Valley Oil & Energy Council and as propane manager for Porco Energy Corp. in Marlboro, NY. “Rick did this during one of the coldest cold snaps the Northeast has experienced in quite some time,” Scatturo remarks. “He was out there chasing this bill while running his company [Mulhern Gas of Hudson, NY].”

Although the bill was drafted with input from NYPGA, it does not include mention of propane tank locks or monitors, two devices that could present issues should a person rightfully request an emergency delivery from a company other than the tank owner. “Are there holes; will it need improvement? Absolutely,” Cummings acknowledges.

Still, NYPGA staff sees the bill as a workable compromise that provides needed assurance to both propane consumers and responsible fuel dealers. Wrapping up a review of the bill’s provisions, the organization’s Executive Director Shane Sweet concludes, “We could start at worse places.”

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