BILL ANALYSIS
SB 546
Page 1
Date of Hearing: July 6, 2009
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Nancy Skinner, Chair
SB 546 (Lowenthal) - As Amended: June 29, 2009
SENATE VOTE : 23-15
SUBJECT : Used oil.
SUMMARY : Raises the fee paid by lubricating oil manufacturers
from 16 cents to 24 cents per gallon; increases the incentives
paid for recycling used oil; increases the testing requirements
for used oil transporters and requires that transporters be
inspected annually.
EXISTING LAW :
1)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"; and,
c) Establishes transportation, testing and storage
requirements.
2)Pursuant to the California Oil Recycling Enhancement Act
(Act):
a) Prescribes a program to increase the amount of used oil
recycled in California;
b) Establishes a manufacturer fee of 16 cents per gallon on
new lubricating oil sold in California to fund the Act.
c) 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. Provides grants to
local governments and other entities.
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THIS BILL :
1)Requires testing, by an accredited laboratory as described, of
each truckload 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 under1000 ppm for halogens.
2)Requires the testing 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.
3)Requires the person performing the test to keep records for
three years, subject to audit by the Department of Toxic
Substances (DTSC).
4)Requires that transporters of used oil shipped out-of-state to
report annually to DTSC regarding how much, when, and where
the oil was shipped, including specified information about the
receiving facility.
5)Requires DTSC to perform annual inspections of transporters
and requires DTSC to charge the transporter for any costs
associated with the inspection.
6)Defines "rerefined oil" as a lubricant base stock or oil base
derived from used oil and meets specified standards.
7)Changes the definition of "used oil hauler" to include those
that transport to an out-of-state facility, as specified.
8)Revises the requirements for certifying a used oil recycling
facility to include out-of-state facilities and establishes
certification requirements for rerefining facilities, as
specified.
9)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 and, beginning in 2011, authorizes the fee
to be increased or decreased based on the Consumer Price Index
on an annual basis.
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10)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.
11)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. Establishes a rerefining incentive of 2
cents per gallon on and after 2014 and authorizes the
California Integrated Waste Management Board (CIWMB) to
increase this incentive beginning 2015, as specified.
12)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.
13)Authorizes CIWMB to certify or recertify a used oil recycling
facility located out-of-state, if the facility registers with
CWIMB and declares, under penalty of perjury, that it is
operating in compliance with federal requirements. Specifies
that certified out-of-state recycling facilities are eligible
to receive the recycling incentive for California used oil.
14)Authorizes CIWMB to certify or recertify a used oil
rerefining facility located out-of-state if the facility
certifies to CIWMB that the facility produces rerefined base
lubricant meeting the specifications for rerefined oil.
Specifies that certified out-of-state rerefining facilities
are eligible for rerefining incentive for California used oil.
15)Specifies that out-of-state facilities eligible for an
incentive are subject to audit by DTSC to verify the
applicable requirements for certification. Requires
out-of-state facilities to enter into an agreement with DTSC
to pay DTSC's full expenses for conducting the audit,
including any inspection costs.
16)Updates and clarifies the provisions authorizing CIWMB to
issue payments to local governments for local used oil
collection programs and increases the total amount available
for this purpose from $10 million to $13 million annually.
17)Makes the following changes to the requirements for certified
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used oil collection centers:
a) Extends the certification period from two to four years.
b) Specifies that facilities that service motor vehicles
are only eligible for the recycling incentive for the
portion of used oil that they collect from the public (and
not the used oil generated in the course of doing
business).
a) Adds uncertified publicly funded used oil collection
centers in small rural counties to the list of entities
that can receive reimbursement for the cost of managing
used oil that is contaminated with hazardous substances.
11)Clarifies requirements relating to CIWMB-issued grants for
used oil, and specifies that projects that promote the
manufacture of rerefined lubricating oil are eligible for
grant funding.
12)Adds "private entities" to the list of recipients eligible
for grants.
13)Eliminates the funding formula that allocated specific
amount,s based on percentages of the amount money left in the
fund after core program areas are funded, to specific grant
programs.
14)Makes related technical and clarifying changes.
FISCAL EFFECT : According to the Senate Appropriations
Committee, the estimated net impact of the changes in the bill
is the generation of about $1.6 million in revenues beyond the
expenditures required in the bill.
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 used
oil. It also updates the Act to better address the current
state of used oil recycling in California.
2)Background . CIWMB's Used Oil Recycling Program has a
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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
CIWMB'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; and,
providing grants to local governments, nonprofit
organizations, and for research and demonstration projects.
The Act, which is administered by CIWMB, was passed in 1991
and is designed to discourage the illegal disposal of used
oil. This law requires oil manufacturers to pay CIWMB 16
cents for each gallon of lubricating oil sold in California.
Registered industrial generators, curbside collection
programs, and certified collection centers are eligible to
receive 16 cents 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 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
adjusted 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%.
3)Rerefined Oil . Rerefining is an energy-efficient and
environmentally beneficial method of managing used oil.
50-80% less energy is required to produce a gallon of
rerefined base stock than a base stock from crude oil.
Rerefined oil 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 vacuum
distillation followed by solvent refining or hydrotreating and
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
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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 some quantity of used oil is 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 Health and Safety Code 25250 et seq. that
establishes tracking and testing procedures. Most used oil
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 constituents such as heavy metals or PCBs. This
bill requires direct truck shipments of used oil out-of-state
facilities to be tested in California to recycled oil
standards.
The federal and state requirements are the same for halogens
(1000 ppm), so if a load were to test high for halogens it
would be managed as a hazardous waste in-state or
out-of-state. However, for PCBs, the state limit is 5 ppm
while the federal limit for used oil is 50 ppm. If a load
were to test above 5, but below 50, it could be hauled to an
out of state used oil facility and processed as used oil.
Independent used oil haulers have expressed significant
concerns with the testing requirements of this bill. Testing
individual loads would require the trucks to sit idle while
testing is completed, which is anticipated to have an economic
impact. Generally, the turnaround time for testing varies
from 24 hours to a few days, and faster testing is more
expensive. There are 722 California certified labs that can
conduct the testing, located throughout California and in
neighboring states, including Washington, Oregon, Nevada, and
Arizona. Should this bill put independent haulers out of
business, it has the potential to impact used oil collection
in California.
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6)Out-of-State Recycling Facilities . Currently, used oil that
is eligible for incentive payments must only go to approved
facilities in California that meet specified 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 Senate
Environmental Quality Committee on July 6, 2009.
8)Suggested amendments . In order to address the significant
concerns related to in-state testing requirements in this
bill, the committee may wish to amend the bill to clarify that
haulers who demonstrate that they are transporting oil to an
out-of-state facility that is certified or registered with
CIWMB, and that has entered into an MOU with DTSC to ensure
testing to California standards at the facility do not have to
conduct in-state testing. Haulers transporting used oil to
uncertified facilities and have not entered into the MOU would
be required to do load testing before leaving California.
REGISTERED SUPPORT / OPPOSITION :
Support
Ramos Environmental Services
San Francisco Environment
Sierra Club California
Opposition
Automotive Oil Change Association
Cal-Tax
Chico Drain Oil Service
Independent Waste Oil Collectors and Transporters
NORA
North American Lubricants
Oil Changer
Oil Re-Refining Company
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Safety-Kleen Systems, Inc.
Thermo Fluids
Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
319-2092