BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 546|
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THIRD READING
Bill No: SB 546
Author: Lowenthal (D)
Amended: 4/20/09
Vote: 21
SENATE ENV. QUALITY COMMITTEE : 5-2, 4/27/09
AYES: Simitian, Corbett, Hancock, Lowenthal, Pavley
NOES: Runner, Ashburn
SENATE APPROPRIATIONS COMMITTEE : 8-3, 5/11/09
AYES: Kehoe, Corbett, DeSaulnier, Hancock, Leno, Wolk,
Wyland, Yee
NOES: Cox, Denham, Walters
NO VOTE RECORDED: Oropeza, Runner
SUBJECT : Used oil
SOURCE : DeMenno/Derdoon
Evergreen Oil, Inc.
DIGEST : This bill (1) makes a variety of changes to the
statutes of regulating used lubricating oil; (2) raises the
fee paid by lubricating oil manufacturers; (3) increase the
incentives paid for recycling used oil and also reduces the
number of used oil collectors that can apply for
incentives; (4) increases the testing requirements for used
oil transporters; and (5) requires that transporters be
inspected annually.
ANALYSIS :
CONTINUED
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Existing law:
1. Pursuant to Health and Safety Code (HSC) commencing with
Section 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 Section 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 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:
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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 five 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 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.
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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 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.
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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 payments for program implementation
from $10,000,000 to $13,000,000 annually.
H. States that any increase in the lubricating oil
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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 percent 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
affect the fund.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12
Fund
Waste Board Enforcement $100
$100 Special*
DTSC Enforcement Unknown, potentially up to $1,000
Special*
Additional grants to local $3,500 $7,000
$7,000 Special*
Governments
Reduced incentive payments ($650) ($1,300)
($1,300) Special*
(net effect)
New incentive payments
$600 Special*
for re-refined oil
* California Used Oil Recycling Fund. Fully offset by
additional fee revenues.
SUPPORT : (Verified 5/13/09)
DeMenno/Kerdoon (co-source)
Evergreen Oil, Inc. (co-source)
California Independent Oil Marketers Association
Coast Oil Company, LLC
Waste Management
OPPOSITION : (Verified 5/13/09)
Independent Waste Oil Collectors and Transporters
Safety-Kleen Systems, Inc.
Thermo Fluids Inc.
Western States Petroleum Association
ARGUMENTS IN SUPPORT : According to the author's office,
this bill encourages the best re-use of used oil in
California and reduces toxic air pollution resulting from
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some uses of used oil. It also updates the Act to better
address the current state of used oil recycling in
California.
The California Independent Oil Marketers Association
supports this bill as a way to change the fact that only 10
percent of California's used oil is currently re-refined
into useable product. Re-refining used oil into useable
products is a commercially viable and environmentally
beneficial achievement. Further it reduces carbon
emissions by assuring the oil stays I the stream of
commerce, rather than being burned.
Waste Management indicates the bill has the following
qualities in the promotion of environmentally management of
used oil: (1) establishment of a definition of re-refined
oil; (2) providing for the development and implementation
of an education program to promote used oil waste reduction
and recycling; (3) increasing the fees on oil manufacturers
and redirect grant funds toward promoting the manufacture
of re-refined lubricating oils; (4) requiring the board to
pay re-refining incentives; and (5) requiring used oil to
be tested and analyzed prior to shipment to a transfer or
recycling facility.
ARGUMENTS IN OPPOSITION : The Western States Petroleum
Association writes, "In addition to increasing the current
recycling fee on the sale of lubricating oil from 4 to 6
cents per quart, SB 546 authorizes the California
Integrated Waste Management Board (CIWMB) to "adjust" the
fee annually based on the Consumer Price Index. WSPA
opposes this automatic adjustment authority, which bears no
relationship to revenue forecasts or any other objective
measure of actual program funding needs. This provision
also strips the Legislature of its oversight role for
future fee increase."
"SB 546 would arbitrarily exempt finished lubricants
blended from re-refined base oil from the recycling fee
assessment. Whether the used oil is generated from virgin
stock or re-refined stock, the end of life collection and
re-use/recycling infrastructure needs are the same, and
thus both sources should be subject to the recycling fee.
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SB 546 eliminates recycling incentive payments for used oil
generated by "certified used oil collection centers".
While we appreciate the proponents' desire to direct more
revenue toward collection of used oil fro so-called
"do-it-yourself" generators, we are concerned that this
provision will serve as a disincentive, particularly for
small auto repair shops, to offer their facilities as
certified collection centers.
"SB 546 seeks to incentivize re-refining of used oil
through a complex architecture of adjustments to incentive
payment amounts and new criteria governing the eligibility
of recipients. WSPA is concerned that significant changes
in the flow of revenue through the used oil chain of
custody will de-stabilize the program. While we cannot
predict the outcome, we are concerned about the potential
for reversing a two-decade upward trend in used oil
recycling rates."
TSM:do 5/13/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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