Propane storage strategies sought in federal legislation

Photo by LP Gas staff

LP Gas attended the Propane Days national lobbying event last week in Washington, D.C., where industry members discussed a handful of key issues with their elected officials.

The National Propane Gas Association (NPGA), which hosted the annual event, underscored propane supply security during part of these discussions, especially as it relates to the agriculture market and the overall impact on the industry.

Specifically, the industry discussed support for propane in the Farm Bill, which is the most important piece of legislation Congress deals with as it relates to farming and agriculture programs, according to NPGA. Typically, the Farm Bill is renewed every five years, but last year it was given a one-year extension. The House Agriculture Committee has passed the Farm, Food, and National Security Act of 2024 (H.R. 8467) – its version of the Farm Bill.

Industry members went to Capitol Hill to explain how agriculture producers and rural America will benefit from incentives to increase their propane storage. More propane storage for farmers on-site will alleviate downstream impacts like those faced in 2013-14 when propane retailers delivered 235 million more gallons than the previous year just to meet fall grain drying demand. That significant increase in propane use left many retailers undersupplied heading into the winter heating season and ultimately led to regional supply shortages and price spikes.

Photo: Propane Education & Research Council

NPGA and the industry see an opportunity to address this issue with the Farm Storage Facility Loan Program, which provides financing to agriculture producers to build or upgrade commodity storage facilities. The problem is that propane isn’t recognized as a qualified expense in that program, even though more than 80 percent of grain dryers run on propane, as the association notes.

“Propane has been used for over 100 years in farming,” says Rhett Johnson, senior manager of legislative affairs at NPGA, during a Propane Days webinar. “This program, kind of shockingly, wouldn’t allow [agriculture producers], for now, to build propane storage on-site.”

So, the propane industry urged legislators to pass H.R. 1290 and S. 621, which would include propane in the loan program and allow agriculture producers to access additional capital specifically for more propane storage.

Photo: Dmytro Diedov/iStock / Getty Images Plus/Getty Images

State of CFATS

Consistent with the industry’s push to open more propane storage opportunities at agriculture producer locations, NPGA also has advocated for a propane exemption in the Department of Homeland Security’s (DHS) Chemical Facility Anti-Terrorism Standards (CFATS) program, as outlined in H.R. 1623.

The program sets a ceiling on the amount of propane any agriculture producer, household or retailer can store. It has required facilities storing at least 60,000 pounds of propane to report its inventory to CFATS. DHS’ list of agriculture facility exemptions has not included propane used for fuel, heating or drying – which the industry is out to change.

One key detail here: Congress allowed the statutory authority for CFATS to expire on July 28, 2023, so there is currently no enforcement of the regulations.

“A lot of our businesses are still spending a lot of money to comply with the regulations of CFATS, if and when it is reauthorized,” Johnson says. “We’re hoping to carve out an agriculture exemption to allow farmers to have more propane on-site so they don’t have to call their propane marketer to have them deliver it, multiple times a day in some cases.”

Still, NPGA and the industry are working to bring attention to these issues and urging the passage of this year’s Farm Bill – for the sake of agriculture producers and propane retailers.