Assessment Fee - Collection System Brief Explanation
The Act envisions a system in which individual states decide whether or not to participate in the program by a referendum of their retailers and wholesalers. If a state chooses to participate, up to 85% of the funds derived from that state will be returned to that state for technical training and consumer education. As such, it is clear that we must run a collection program based upon destination state. Following the successful referenda, NORA was constituted on February 6, 2001 and will implement fee collection systems beginning March 1, 2001.
The Department of Energy(DOE) is the federal agency empowered by the Act with oversight authority. The Energy Information Administration has collected information on a destination state basis since the 1970's on its 782b and 782c reports. The 782b reports break out the type of user who is purchasing fuel. This information forms the basis of NORA's budget projections. The 782c report is sales data from 450 prime suppliers who move bulk products to market via international or interstate commerce. NORA is using the 782c reporting companies and reporting system as a basis for its wholesale collection system in the Northeastern part of the country (PAD I and II). In those areas there is a majority use of dyed #2 product for oil heat. Prime suppliers will collect the fee on their sales to all non prime suppliers. NORA will supplement DOE's exclusionary list if they become aware of companies who meet the criteria and should be included. In those areas retailers who make exempt sales to non oil heat consumers will be eligible for refunds. In the Northwestern part of the country (PAD IV and V) where oil heat is a very minority use of the product, the retailers will collect on their sales to oil heat consumers.
The Act authorizes the collection of the assessment fee on all dyed #2 distillate and all #1 distillate no matter what the sulfur content is. However, the Act exempts users of fuel for purposes other than oil heat from paying the fee. To accomplish this goal NORA has defined exempt use and set up the refund or collection system to collect only from the oil heat users. The fee is only due on fuel used for oil heat that is defined in the law as being used for non industrial commercial or residential space or hot water heating." Exempt uses include fuel used by vessels, railroad, utilities, farmers and the military. The fee is due on sales to consumers who use the fuel to heat space, whether by forced air or boilers, or water. Among the included uses are residential (private and commercial), retail shops or malls, institutions (including hospitals and dormitories) and rental facilities (hotels, assembly halls and offices).
In defining the fuels upon which the collection will occur at wholesale, the dual use of certain fuels poses a problem. All dyed #2 and #1 distillate product regardless of the sales label is subject to the fee. Additionally, products such as biodiesel which are blended into the fuel, are also subject to the fee.
NORA is collecting at wholesale from the prime wholesalers on form 782c, from retailers on form 782b and making refunds to retailers on form 782a.
In the legislative findings Congress repeatedly pointed to the need for research, development, training and consumer education for the 30,000,000 Americans that rely on oilheat for commercial and residential space and hot water heating. These intended benefits will flow to government facilities using oilheat as well as all other commercial and residential users. There is nothing in the findings or the law to suggest that the NORA fee is a tax upon state or local governments which would be prohibited under the doctrine of intergovernmental immunity. It is simply a fee to fund research for improvements in oilheat technology for the benefits of all users. If this fee had to be categorized it would be similar to agricultural commodity research fees or the superfund fee to clear up contaminated sites, not a tax for the privilege of using oilheat.