BILL ANALYSIS
SB 546
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2009-2010 Regular Session
BILL NO: SB 546
AUTHOR: Lowenthal
AMENDED: April 20, 2009
FISCAL: Yes HEARING DATE: April 27, 2009
URGENCY: No CONSULTANT: Caroll
Mortensen
SUBJECT : CALIFORNIA OIL RECYCLING ENHANCEMENT ACT
SUMMARY :
Existing law :
1)Pursuant to Health and Safety Code (HSC) commencing with
25250, et seq., establishes management standards for used
oil including:
a) Defines "used oil and 'recycled oil" as oils that meet
specified characteristics including flashpoint and
contaminant levels.
b) Defines "used oil recycling facility", "used oil
storage facility" and "used oil transfer facility.
c) Establishes transportation, testing and storage
requirements.
2)Pursuant to the California Oil Recycling Enhancement Act
(Act) commencing with 48600 of the Public Resources Code:
a) Prescribes a program to increase the amount of used
oil recycled in California.
b) Establishes the Integrated Waste Management Board
(IWMB) as the implementing agency for the Act.
c) Establishes a fee of 16 cents per gallon on new
lubricating oil sold in California that is paid by
manufacturers to fund the program activities under the
SB 546
Page 2
Act.
d) Provides a recycling incentive payment of 16 cents a
gallon to every industrial generator, curbside collection
program, and certified used oil collection centers for
the used oil they collect, as specified.
e) Provides grants to local governments and other
entities to further the Act.
This bill :
1) Adds a new section to the HSC regarding the management of
used oil that:
a) Requires testing, by an accredited laboratory as
described, of a load of used oil before it is shipped to
a transfer facility, recycling facility or a facility
located out-of-state. The used oil must not have a
flashpoint of more than 100 degrees Fahrenheit, a
concentration of polychlorinated biphenyls (PCBs) of
more than 5 parts per million (ppm), and a concentration
of 1000 ppm of halogens or less.
b) Requires the testing in #1 above to be accomplished
by a registered hazardous waste transporter prior to
acceptance at a transfer or recycling facility or
shipped out-of-state unless the oil was tested by the
generator or the transfer or recycling facility.
c) Exempts used oil that is generated by used oil
collections centers that accept used oil only from the
public.
d) States that the new section does not limit or affect
a testing requirement that the Department of Toxic
Substances Control (DTSC) requires as part of a permit.
e) Requires the person performing the test must keep
records for three years and is subject to audit by DTSC.
f) Requires for used oil shipped out-of-state, that the
transporter report annually on or before March 1 to DTSC
SB 546
Page 3
regarding how much, when and where the oil was shipped,
with information, as prescribed, about the receiving
facility.
g) Requires a signed certification by the transporter
that the oil shipped out-of-state conformed to the
requirements in #1 above, including information about
the accredited laboratory that did the testing.
h) Requires DTSC to inspect transporters annually to
determine compliance with the new section.
2) Pursuant to the Act, relating to used oil management:
a) Defines "rerefined oil" as a lubricant base stock or
oil base derived from used oil and meets specified
standards.
b) Changes the definition of "used oil hauler" to
include those that transfer to an out-of-of state
facility as specified.
c) Revises the requirements for certifying a used oil
recycling facility to including out-of-state facilities.
d) Establishes certification requirements for a
rerefineing facility as specified.
e) Requires a used oil recycling facility to report to
the IWMB each quarter the amount of oil recycled and the
amount of that oil that was recycled to specified purity
standards.
f) Increases the allocation paid to DTSC to oversee used
oil facilities , including those out-of-state, that are
managing used oil pursuant to implementation of the Act
from $250,000 to $350,000.
3) Under the Act, relating to the operation of certified used
oil collection centers:
a) Adds to the provisions of law that allows the IWMB to
reimburse collections centers for contaminated loads of
SB 546
Page 4
used oil, reimbursement for the actual costs incurred if
the oil is contaminated with PCBs.
b) Allows publicly funded used oil collection centers in
small rural counties to be eligible for the
reimbursements in (a) above.
c) Limits total expenditures from "a" and "b" above to
$200,000 annually.
d) Limits the incentive payment in #5 (d) below, to only
be made on used oil accepted from the public.
e) Changes the time period for re-certification of a
used oil collection center from two years to four years.
4) Under the Act relating to general program areas:
a) Adds efforts to reduce the amounts of used oil
generated and increase the use of products made from
used oil, including rerefined oil as program
responsibilities.
b) Deletes the authority of the IWMB to issue loans.
c) Adds "private entities" to the list of recipients
eligible for grants.
d) Adds the management of used oil filters and promoting
the use of rerefined lubricants as an eligible program
expense.
e) Eliminates the funding formula that allocated
specific amounts, based on percentages of the amount
money left in the fund after core program areas are
funded, to specific grant programs.
f) Replaces the formula in "e" above with a requirement
that the IWMB allocate the remaining funds as grants and
contracts, approved by the IWMB in a public meeting, to
further the intent of the Act.
g) Increases the amount available to local jurisdictions
SB 546
Page 5
payments for program implementation from $10,000,000 to
$13,000,000 annually.
h) States that any increase in the lubricating oil fee
(fee) shall not require a corresponding increase in the
amount of funds transferred to the Farm and Ranch Solid
Waste Cleanup and Abatement Account.
5) Under the Act as it relates to the fee and incentive
payments:
a) Increases the amount of the fee paid by manufacturers
from 16 cents per gallon to 24 cents per gallon of new
lubricating oil sold in California.
b) Commencing in 2011, authorizes the fee to be
increased or decreased based on the Consumer Price Index
on an annual basis.
c) Adds to the list of products exempt from payment of
the fee to oil sold as a finished lubricant that
contains at least 60% rerefined base lubricant.
d) Increases the amount of the recycling incentive paid
to certified collection centers, industrial generators,
and curbside collection operators from 16 cents per
gallon to 40 cents per gallon.
e) Requires that used oil be treated to the "recycled"
oil standard of purity or the standard for "rerefined
oil" to qualify for payment of the incentive.
f) Requires the IWMB, on or after January 1, 2014, to
set a rerefining incentive of two cents per gallon to be
paid to a facility that meets specified requirements.
Allows the IWMB to increase the incentive if it does not
adversely effect the fund.
COMMENTS :
1) Purpose of Bill . According to the author, this bill
encourages the best re-use of used oil in California and
reduces toxic air pollution resulting from some uses of
SB 546
Page 6
used oil. It also updates the Act to better address the
current state of used oil recycling in California.
2) Background . The IWMB's Used Oil Recycling Program has a
structure similar to the "bottle bill" program at the
Department of Conservation which establishes a deposit on
beverage containers with the unredeemed deposits used to
fund collection, recycling and market development efforts.
The IWMB's Used Oil Recycling Program (program) develops
and promotes alternatives to the illegal disposal of used
oil by establishing a statewide network of collection
opportunities and undertaking outreach efforts to inform
and motivate the public to recycle used oil. Program
responsibilities include:
Providing the public with convenient collection
locations for used oil.
Increasing the demand for rerefined oil.
Developing methods to motivate the public to recycle
their used oil.
Providing grants to local governments, nonprofit
organizations, and for research and demonstration
projects.
The Act, which is administered by the IWMB, was passed in
1991, and is designed to discourage the illegal disposal of
used oil. This law requires oil manufacturers to pay to the
IWMB $0.16 for each gallon of lubricating oil sold in
California. Registered industrial generators, curbside
collection programs, and certified collection centers are
eligible to receive $0.16 for each gallon of used
lubricating oil recycled.
The fee provides between $15 and $19 million per year to
fund program activities. $3 million is allowed for
SB 546
Page 7
administration, approximately 20% is used to pay the
recycling incentives; and the remainder is used for grants
to local governments and non-profit groups. The fee and
incentive has not been revisited since the inception of the
Act.
In 2007 lubricating oil sales totaled 150.0 million gallons,
and 88.3 million gallons were recycled for a recycling rate
of 58.8 percent.
3)Rerefined Oil . Rerefining is an energy-efficient and
environmentally beneficial method of managing used oil.
Less energy is required to produce a gallon of rerefined
base stock than a base stock from crude oil. Rerefined is a
lubricant base stock or oil base that has been derived from
used oil and was processed using a series of mechanical or
chemical methods, or both, including but not limited to,
vacuum distillation, followed by solvent refining or
hydrotreating; capable of meeting the Physical and
Compositional Properties, as defined under the American
Society for Testing and Materials (ASTM) D6074-99; and
processed into a material that has a quality level suitable
for use in a finished lubricant.
4)Other Uses of Used Oil . Used oil can also be treated and
used as a fuel in marine diesel engines. Asphalt flux used
in roofing materials is another marketable product. Outside
of California it is often burned for energy. Large
industrial boilers burn the used oil and for energy and on a
smaller scale small quantities of used oil are burned in
specially designed heaters to provide space heating for
small businesses.
5)Transport and Testing of Used Oil . Used oil in California
must be handled as a hazardous waste. The management of
used oil is governed by HSC 25250 et seq. that establishes
tracking and testing procedures. Testing requirements are
imposed at recycling, storage and recycling facilities,
however used oil that is picked up from generators and
shipped directly out of California is not tested. If the
oil tests outside the standards for used oil, it must be
managed differently to protect against the hazardous
SB 546
Page 8
constituents such as heavy metals or PCBs. This bill
requires direct truck shipments of used oil to out-of-state
facilities be tested in California to recycled oil
standards.
6)Out-of-State Recycling Facilities . Currently, used oil that
is part of the Act through the incentive payments must only
go to approved facilities in California that meet rigorous
standards. Used oil that is shipped out-of-state should be
managed at facilities that meet federal requirements. This
bill, for used oil that is part of the Act, would require
out-of-state recycling facilities participating in
California's incentive program to certify that they are
operating in compliance with federal law and meet
environmental compliance standards.
7)Related Legislation . AB 907 (Chesbro) contains content
similar to this bill. It is set for hearing in the Assembly
Natural Resources Committee April 27, 2009.
8)Amendments Encouraged . This bill contains drafting errors
and could benefit from some reorganization for clarity. The
author should work with Committee staff to ensure those
changes are made as the bill moves through the process.
SOURCE : DeMenno/Kerdoon and Evergreen Oil, Inc.
SUPPORT : California Independent Oil Marketers
Association
OPPOSITION : Independent Waste Oil Collectors and
Transporters
Safety-Kleen Systems, Inc.