A state rule restricting who can fill a propane tank keeps Utah's propane prices higher than they should be, the state attorney general said.
Answering a complaint filed against the state in federal court, the attorney general said his fair business enforcement unit conducted a survey of propane gas prices between January and March. Prices fell an average 26.5 cents per gallon during the three-month period in areas where propane distributors ignored the state rule that says only the company leasing the tank can fill it.In the other areas where only lessors filled the tanks the price per gallon of propane dropped an average of only 10.87 cents.
Out of 14 states surveyed during the same period, the attorney general found that in general the price of propane declined more in the states that didn't have a similar restriction to Utah's than those that did.
The attorney general was answering a complaint filed against the state by Suburban Propane. The statewide propane distributor is seeking a declaratory judgment on whether the tank filling requirement and the state's Liquefied Petroleum Gas Board's adoption of it violates federal anti-trust laws.
The board, whose chairman works for Suburban Propane, has suspended enforcement of the rule until the judgment is issued.
An attorney general's opinion issued last March, in response to a distributor who complained about the rule, concluded that the tank filling requirement restrains trade. With 85 percent of the propane tanks in Utah owned by distributors and leased to customers, the opinion said, the tank-filling rule leaves the customer leasing the tank with no choice but to buy gas from the lessor, or owner of the tank.
Utah's propane industry didn't come up with the requirement. The state adopted it in 1987 from the NFPA (National Fire Protection Association) standards, which have been around for more than 40 years.
In its complaint, Suburban Propane said the requirement was adopted by the state for safety reasons. The company contends that if it doesn't have control over who fills its tanks, it risks having one of its tanks damaged or even explode, and then being liable for the mishap.
Without the rule, the complaint said, Suburban Propane is also deprived of "the opportunity to fill those tanks themselves and profit thereby."
But the attorney general contends safety is not the issue. Its answer to the complaint said containers in Utah are standardized and all propane handlers are tested and licensed by the state Liquefied Petroleum Gas Board.
As another defense to its opinion, the attorney general notes that last Thursday NFPA's liquefied petroleum gas committee "unanimously" changed the requirement to say any "qualified" person can fill a tank, not just tank owners.
Assistant attorney general Art Strong told the Deseret News that NFPA talked with the state about the anti-trust concerns, after the opinion was issued. "The only reason they (NFPA) changed it is because of our opinion," Strong said. "To the best of our knowledge no other state and federal agency has challenged the rule."