Title VII of the Energy Act of 2000 (P. L. 106-469) authorized the creation of the national Oilheat research alliance (NORA) pending a favorable referendum by the Oilheat industry. Such referenda were conducted and NORA came into existence on February 6, 2001. Pursuant to the legislation NORA collects a fee on all gallons of dyed no. 2 distillate sold for Oilheat. Sales of no. 1 distillate for Oilheat can also be subject to the fee. NORA has implemented a fee collection system that became effective with sales after February 28, 2001.
The legislative scheme places considerable oversight responsibilities on the Department of Energy (DOE). For instance in section 706(d) the alliance budget must be submitted to the Secretary of Energy and the expenses of the department incurred overseeing NORA must be reimbursed (up to the cost of two DOE employees). More importantly the collection system contemplated in the law falls upon certain wholesale distributors defined in section 703(14) that is the class of the DOE prime suppliers. Likewise the products defined in section 703 (5) and (6) which are subject to the fee follow DOE specifications rather than common industry terms (No. 1 distillate vs. kerosene).
The critical exemption from the NORA fee is set out in section 707(c) as no. 1 distillate and no. 2 dyed distillate sold for uses other than Oilheat. To interpret that exempt one must refer to the definition of Oilheat in section 703(7) which is “that used as a fuel for non-industrial commercial or residential space or hot water heating”. NORA has elaborated on this definition in its instructions on its collection report forms 782B and 782C.
The fee is only due on fuel used for Oilheat which is defined in the law as being “used for non-industrial commercial or residential space or hot water heating.” 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). Exempt uses include fuel used by vessels, railroads in trains, utilities for power generation, farmers in agriculture production, industrial use in equipment and the military.
In arriving at this definition NORA looked to, already established, DOE categories used in their reporting systems. For instance in the reporting instructions for EIA forms 782A, 782B and 821 and the published reports prepared from the data collected commercial use covers governments (federal, state and local) as well as colleges and hospitals. By contrast military, railroads, electric utilities and vessel bunkering are separate categories. There is a very large industrial category, but it does not cover any governmental function except road building and asphalt production.
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 that 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.
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