Propane Education and Research Council
The Propane Education and Research Council (PERC) is a significant funder of anti-electrification campaigns in the United States, outpacing even the American Gas Association (AGA). PERC has spent millions of dollars on broadcast TV ads and social media influencers to persuade the public and policymakers to halt building electrification, according to a January 2023 New York Times investigation and records obtained by the Energy and Policy Institute. The group can fund its anti-electrification campaign through the money collected from a congressionally sanctioned fee on propane sales.
The Propane Education and Research Act (PERA) of 1996 established PERC, which allows the organization to collect over $40 million annually from a $.005 cent fee on all sales of odorized propane. Despite well-documented congressional intent for PERC to fund educational, research and safety projects, unspecific legislative language and a lack of federal oversight allows the group to spend millions on marketing and public relations campaigns. In the last three years, PERC has diverted millions in funding from its research and safety programs to bolster its self-described “provocative anti-electrification messaging,” including disinformation about electric vehicles and batteries. The PERC campaign also features high-profile HGTV influencers. Despite repeated warnings from the Government Accountability Office, no federal agency has exercised its legal responsibility to rein in PERC’s spending.
What is PERC?
The Propane Education and Research Act (PERA) of 1996 authorized the establishment of the Propane Education and Research Council (PERC), which is known as a federal “checkoff program” that typically support specific agricultural commodities. PERA authorizes the propane industry to collect a fee (currently $.005) on every gallon of propane sold in the US. PERA requires no re-authorization from Congress to continue collecting funds. Similar checkoff programs include the National Dairy Promotion and Research Board and the National Pork Board.
According to the Government Accountability Office and a 1996 report from the Senate Committee on Energy and Natural Resources, the PERA Act was intended to support “research and development, training, safety and consumer education activities.” However, PERC spends comparatively little on these categories, while over 50% of its budget is allocated towards “consumer education.” PERA does not define “consumer education,” and PERC uses this category for various activities, including marketing and PR campaigns.
PERC is prohibited from funding lobbying efforts and must provide public access to its council meetings. Oversight of PERC is the responsibility of the Department of Energy and the Department of Commerce, but Government Accountability Office reports have found that both agencies need to properly exercise their oversight responsibilities. With no active oversight, PERC has spent millions of dollars on advertising campaigns in response to federal and state policies encouraging more climate-friendly technologies, such as heat pumps and electric vehicles, which don’t use propane. As described in the New York Times investigation, many of PERC’s campaigns skirt or possibly violate the PERA’s prohibition on “influencing legislation”
PERC’s planned budget for 2023 is $43 million, which was approved at its November 2022 meeting in Destin, FL. Notably, PERC increased its annual marketing budget by an additional $2 million for just under $10.5 million. When combined with the $7.6 million expense category described as its “environmental campaign,” which primarily consists of additional public relations and marketing spending, PERC’s marketing spending makes up 53.5% of the budget. The increased spending on the marketing-related expense categories comes at the expense of PERC’s “safety and training” and “product development and research” expense categories. Safety and training expenses have been reduced from 12.7% to 9.3% of the overall budget since 2021. Product development and research expenses have seen an even more significant decline from 21.5% to 12%. The high percentage of spending on marketing, which PERC sometimes refers to as “consumer education,” was a key concern of the Government Accountability Office (GAO) in its previous reports.
A 2010 GAO audit report of PERC for 1998 through 2008 found $178.6 million allocated for consumer education, which was 50.9% of its budget during the ten-year timespan. Only $50.7 million was spent on safety and training (14.5%), and $28.1 million on research and development (8%). The remainder was $20 million for industry programs (5.7%), $12.5 million for agriculture programs, $5.8 million for engine fuel programs (1.7%), and $22.7 million for general and administrative expenses (6.5%). As early as 2003, GAO raised concerns that the consumer education category spending was primarily spent on marketing and promotional activities to sell more propane. The report notes that while this isn’t prohibited by PERA, “there is some indication in the legislative history that assessment funds were not intended to be used primarily for these purposes.” GAO references a Senate report that explicitly notes, “[w]hile the focus of most agricultural check-off programs is marketing and promotion, the emphasis of the propane check-off program is research and development.”
GAO Reports and Senate Oversight of PERC
- 2003 GAO Report: Propane: Causes of Price Volatility, Potential Consumer Options, and Opportunities to Improve Consumer Information and Federal Oversight
- 2010 GAO Report: Federal Oversight of the Propane Education and Research Council and National Oilheat Research Alliance Should Be Strengthened
- 2010 Senate Energy and Natural Resources Hearing: PERC and NORA
- 2015 GAO Statement: Check-Off Programs Observations from the Propane and Heating Oil Programs
The Government Accountability Office raised the alarm over PERC’s activities in 2003, 2010, and 2015, recommending more oversight of the checkoff program. In GAO’s 2003 report, the federal watchdog took the Department of Commerce (DOC) and the Department of Energy (DOE) to task for failing to exercise their oversight responsibilities. In response, the DOC agreed to the GAO’s 2003 recommendation to produce an annual propane price index and biennial effectiveness report as required by PERA. EPI, however, could not locate either DOC report after 2010. On the other hand, DOE has taken no action, even after the GAO issued two more reports in 2010 and 2015 highlighting DOE’s failure to perform oversight. The GAO has stressed that PERA allows DOE to seek reimbursement from PERC for the equivalent of the salary of two full-time employees to oversee the organization.
In 2010, the Senate Energy and Natural Resources Committee held a hearing regarding GAO’s findings. In his opening remarks, Chairman Bingaman sharply criticized PERC’s abuse of consumer education spending:
I also note that GAO highlighted that one of PERC’s strategic objectives related to consumer education is to increase propane use. It strikes me that we are essentially allowing a fossil fuel industry to tax itself or its consumers, the customers, in order to lobby and increase its market share. I am not sure how many of our colleagues think that is a policy we should be putting into law.
PERC’s CEO, Roy Willis, fought back in response to GAO’s findings during the hearing and in questions submitted to PERC from committee members. In response to Senator Sanders, Willis accused GAO of using “innuendo” to raise concerns about possible lobbying violations. Willis further reiterated his position that PERC does not lobby and that they “welcome clarification and guidance” regarding their activities.