	Mandatory Functions and Priorities for PERC and NORA’s Programs and Projects

As discussed in our June 2010 report, both the Propane and Oilheat Acts  specify three areas as mandatory functions and priorities for PERC’s and  NORA’s programs and projects.follows:   The three mandatory areas are as
Research and development: The Propane Act requires PERC to  develop programs that provide for research and development of clean  and efficient propane utilization equipment. The Oilheat Act directs  similar oilheat-related research and development and directs NORA to  fund projects in the demonstration stage of development. Safety and training/education and training: Both the Propane Act  and the Oilheat Act require development of programs to enhance  consumer and employee safety and training. PERC refers to this  program area as “safety and training,” and NORA refers to it as  “education and training.” Projects that fall into this spending category  include developing employee training materials and conducting  training courses for industry personnel. Public/consumer education: The Propane Act directs PERC to  develop projects to inform and educate the public about safety and  other issues associated with the use of propane. Similarly, the Oilheat  Act directs NORA to develop programs that provide information to  assist consumers and other persons in making evaluations and  decisions regarding oilheat. Such activities have included the  development of radio, television, and print advertising directed at  consumers and industry professionals. To fund their operations, PERC and NORA assess each gallon of  propane or heating oil, respectively. Specifically, to fund PERC  operations, each gallon of odorized propane gas sold is assessed  $0.004. Certain Activities Raised Issues about Whether They Were Covered by Restrictions in the Acts

In our June 2010 report, we found that some PERC and NORA activities  appeared to meet the requirements of the acts, but certain other activities,  such as some activities involving Congress or politically affiliated entities,  raised issues as to whether they were covered by the Propane and  Oilheat Acts’ specific lobbying restrictions. Even when we  assumed PERC’s and NORA’s activities were permitted, issues remained  about whether Congress anticipated that the assessment funds would be  used for these activities, particularly when PERC and NORA had  classified this spending as “consumer education,” one of the functions  that the acts require PERC and NORA to carry out. Issues also remained about whether Congress anticipated that  such a high proportion of the groups’ funding would go to consumer  education activities (i.e., more than half), in comparison to the relatively  little support given to research and development (i.e., 8 percent for PERC  and less than 6 percent for NORA), which had been a key area of  congressional interest as the laws were debated prior to enactment. Federal Oversight of PERC and NORA Has Been Limited, Unlike Federal Oversight of Agriculture Check-off Programs

In our June 2010 report, we found that the federal oversight of PERC and  NORA was limited, which was in contrast to the routine federal oversight  of agriculture check-off programs that had existed. This lack of oversight is part of a long-standing pattern. For example, in a June 2003 report, we found that DOE’s oversight of  PERC was lacking and recommended that the department take corrective  action.Commerce rather than DOE had oversight responsibility and, therefore,  DOE did not act on our recommendation. Consistent with our suggestion, when Congress reauthorized NORA in  2014, it amended the Oilheat Act to, among other things, provide that in  the event of a violation of the act, the Secretary of Energy is to notify  Congress of the noncompliance and provide notice of the noncompliance   With respect to PERC, although Congress made  on NORA’s website.technical clarifications to the Propane Act in 2014 as noted above, it did  not address this suggestion we made in 2010.
Why GAO Did This Study

Congressionally authorized research and promotion programs, also known as check-off programs, may be established under federal law at the request of their industries. These programs are designed to increase the success of businesses that produce and sell certain commodities, such as milk and beef. To fund such programs, producers set aside a fraction of the wholesale cost of a product and deposit the monies into a common fund.
In June 2010, GAO reported on two such programs, PERC and NORA, for the propane and oilheat industries (GAO-10-583). Legislation is currently being considered for a check-off program for the concrete and masonry industry. For this testimony, GAO focused on (1) mandatory functions and priorities for PERC and NORA programs and projects, (2) whether PERC and NORA activities were covered by certain legal requirements, and (3) federal oversight of PERC and NORA. For the 2010 report, GAO reviewed relevant laws, financial statements, annual reports, meeting minutes, and other reports. GAO also interviewed officials from the departments of Energy and Commerce and the private sector. GAO updated legislative information in July 2015.
GAO's June 2010 report suggested that Congress consider clarifying certain requirements and specifying priority ranking, expenditures, and a DOE oversight role. When Congress reauthorized NORA in 2014, it amended the Oilheat Act by, among other things, taking actions on GAO's suggestions.

What GAO Found

As GAO reported in June 2010, the Propane Education and Research Act of 1996 (the Propane Act) and the National Oilheat Research Alliance Act of 2000 (the Oilheat Act), which authorized the establishment of the Propane Education and Research Council (PERC) and National Oilheat Research Alliance (NORA), specified the following areas as mandatory functions and priorities:
Research and development : The Propane Act requires PERC to develop programs for research and development of clean and efficient propane utilization equipment. The Oilheat Act directs similar oilheat-related research and development and directs NORA to fund demonstration projects.
Safety and training/education and training : Both acts require development of programs to enhance consumer and employee safety and training. PERC refers to this area as “safety and training,” and NORA refers to it as “education and training.”
Public/consumer education : The Propane Act directs PERC to develop projects to inform and educate the public about safety and other issues associated with the use of propane. Similarly, the Oilheat Act directs NORA to develop programs that provide information to assist consumers and other persons in making evaluations and decisions regarding oilheat. Such activities have included developing radio, television, and print advertising.
To fund their operations, the acts require PERC and NORA to assess each gallon of odorized propane gas or heating oil sold at $0.004 and $0.002, respectively.
GAO found that some PERC and NORA activities appeared to meet the requirements of the acts, but certain other activities raised issues. For example, activities involving Congress or politically affiliated entities raised issues about whether they were covered by the acts' specific lobbying restrictions. Even if these activities were permitted, issues remained about whether Congress anticipated that assessment funds would be used to fund them, particularly when PERC and NORA classified this spending as “consumer education”—one of the functions required by the acts. Other issues GAO identified related to whether Congress anticipated that PERC and NORA would allocate the majority of their funding to education activities over the past decade (more than half), while allocating relatively little financial support to research and development (8 percent for PERC and less than 6 percent for NORA). When the laws were debated and before they were enacted, research and development had been a key area of congressional interest and ultimately was reflected as both a mandatory “function” and a high-focus “priority” in the final version passed by Congress
GAO found limited federal oversight of PERC and NORA. As of June 2010, the Department of Energy had not used the oversight authority granted by the Propane and Oilheat acts, such as by reviewing budgets or making recommendations to PERC and NORA, as authorized by law. This lack of oversight was long-standing. For example, in a 2003 report GAO had found that DOE's oversight of PERC was lacking and recommended corrective action.