Brief(1)
S.B. 158 would enact the Kansas Propane Education and Research Act. Under the provisions of the bill, the Kansas Propane Education and Research Council would be appointed by the Governor from a list of nominees submitted by qualified industry organizations within 60 days of the effective date of the bill. Under the bill, the term "qualified industry organization" would mean any organization or industry trade association the members of which are engaged in the sale or distribution of odorized propane, or the sale of propane utilization equipment, to the ultimate consumer. The Council would consist of nine members, including four representing retail marketers of propane; two representing wholesalers, resellers, suppliers, and importers of propane; two members representing manufacturers and distributors of propane gas equipment and transporters of propane; and one public member. All would be residents of the state.
In addition to other authorities given to the Council under the provisions of the bill, the Council could employ an executive director and other employees and would be required to develop programs and projects and enter into contracts or agreements for implementing the Act. These efforts would include, but would not be limited to, programs to enhance consumer and employee safety and training, programs to provide research and development to improve existing propane technology, programs to increase efficiency of propane use, and any other programs to educate the public about the safety and environmental aspects of propane.
The bill would authorize an assessment to be set by the Council at not greater than $.005 per gallon on odorized propane sold in the state to be imposed on the wholesaler, reseller, supplier, or importer who first sells, offers for sale, or uses odorized propane in the state. Moneys collected by the Council could be expended only for the purposes of the Act and could not be used in any manner for marketing or for influencing legislation or for political campaign contributions, except that the Council may recommend to the Legislature changes in the Act or other statutes which would further the purposes of the Act. The term "marketing" in the bill would be defined to mean any paid promotional advertising that promotes one energy source over another. The bill would limit the administrative costs to 25 percent of the amount of funds collected.
One provision of the bill would provide that the price of propane would be determined by market forces consistent with antitrust laws and that no provision of the Act would be interpreted as allowing a pass through to consumers of the assessment determined by the Council. Funds collected through the assessment and any other funds received by the Council would be invested only in obligations of the United States or any agency of the United States, in general obligations of any state or any political subdivision of any state, in interest-bearing accounts or certificates of deposit of a bank that is a member of the Federal Reserve System, or in obligations fully guaranteed as to principal and interest by the United States.
Another provision of the bill would allow the Council, upon its own initiative, or upon the petition of retail marketing representing at least 35 percent of the total volume of odorized propane sold at retail in Kansas, to hold a referendum to determine whether the industry favors termination or suspension of the assessment provided by the bill. The termination or suspension would not take effect unless it was approved by retail marketers representing more than 50 percent of the total volume of odorized propane sold at retail in the state.
Finally, the bill would subject any person who unreasonably fails or refuses to pay any assessments due to legal action by the Council to recover the assessment, plus interest and costs.
Background
This bill was introduced at the request of a spokesperson for the Propane Marketers Association of Kansas. At the hearing on the bill, two spokespersons from this organization appeared in support of the bill. Testimony from this organization indicated that there was a need to enhance safety. The conferee noted that there were programs in other states such as Texas, Oklahoma, and Missouri. A spokesperson from the Kansas Cooperative Council also appeared in support of the bill.
The Senate Committee on Energy and Natural Resources amended the bill to clarify the definition of the term "marketing," to prohibit moneys collected by the Council from being used for marketing, and to provide that the price of propane would be determined by market forces consistent with antitrust laws and that no provision of the bill could be interpreted as allowing a pass through to consumers of the propane assessment.
The fiscal note on the original bill states that the Department of Agriculture indicates there would be no fiscal effect on the operation of propane use licensing and regulations. The note also states that the Department of Transportation indicates that the passage of the bill would have no fiscal effect on the regulation of the transportation of propane. Finally, the note indicates that since there is no data on the number of gallons of propane sold in Kansas each year, that the Division of the Budget has no estimate of the amount of revenue that would be generated by the assessment.
1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html