BILL ANALYSIS
AB 907
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2009-2010 Regular Session
BILL NO: AB 907
AUTHOR: Chesbro
AMENDED: May 11, 2009
FISCAL: Yes HEARING DATE: July 6, 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" as oil that meets specified
characteristics including flashpoint and contaminant
levels including not more than 5 ppm polychlorinated
biphenyls (PCBs).
b) Defines 'recycled oil" as oil that meets specified
characteristics including flashpoint and contaminant
levels including not more than 2 ppm PCBs.
c) Defines "used oil recycling facility", "used oil
storage facility" and "used oil transfer facility.
d) 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.
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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 :
1) 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 in compliance with applicable federal
regulations.
c) Revises the requirements for certifying a used oil
recycling facility to including out-of-state facilities.
d) Establishes registration requirements for a
rerefineing facility as specified.
e) Increases the allocation paid to Department of Toxic
Substances Control (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.
2) 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 collection centers for contaminated loads of
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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.
3) 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) Deletes the annual report requirement for the local
government programs.
f) Eliminates the funding formula that allocated
specific amounts, based on percentages of the amount of
money left in the fund after core program areas are
funded, to specific grant programs.
g) 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.
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h) Increases the amount available to local jurisdictions
payments for program implementation from $10,000,000 to
$13,000,000 annually.
i) 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.
4) 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 January 1, 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 100% 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 the IWMB to set a rerefining incentive of
two cents per quart 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.
COMMENTS :
1)Purpose of Bill . According to the author, AB 907 would
authorize the IWMB to develop a program to provide
incentives to manufacturers of re-refined oil, and to
develop additional capacity for the re-refining of used oil
within the State of California. It provides for an update
of the Act which has not been substantially changes since
its inception in 1992.
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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
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
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of 58.8 percent.
3)Rerefined Oil . Rerefining is environmentally beneficial
method of managing used 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 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
constituents such as heavy metals or PCBs.
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.
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7)Related Legislation . SB 546 (Lowenthal) contains content
similar to this bill. It was heard by this Committee on
April 27, 2009. It is set for hearing in the Assembly
Natural Resources Committee on July 6, 2009. The bills are
substantially similar; the main differences being that SB
546:
a) Contains a provision for testing of all used oil
shipped out-of-state.
b) Requires, for payment of the recycling incentive, that
used oil be treated to "recycled" oil standards, rather
than "used" oil standards.
c) Authorizes the IWMB to begin making rerefined
incentive payments on January 1, 2014 rather that January
1, 2010.
d) Sets the rerefined oil incentive payment at not less
than $0.02 per gallon, rather than $0.02 per quart.
8)Policy Considerations . This bill eliminates the formula
that has been in place since the Act took effect for fund
allocation. The formula specified the amount and allocation
of funds in excess of the base program support including 40%
for local governments. As this bill eliminates that formula
and the definite 40% allocation to local governments, the
author may wish to examine the funding allocation in the
bill to ensure that local jurisdictions retain necessary
resources to implement successful programs.
Also, AB 907 proposes limiting the payment of the recycling
incentive for certified centers to just the oil generated by
the public, instead of all the used oil generated as part of
the center's business. As with the consideration offered by
the author for certified centers in small rural areas of the
state that allows them to claim the recycling incentive if
60% of the used oil recycled comes from the public, a
similar approach may be warranted for other certified
centers.
9)Amendments Needed . Amendments are necessary for effective
implementation of AB 907.
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This bill deletes the requirement that local
jurisdictions report annually on their progress on
implementing a used oil collection program and any
changes to the jurisdictions program. This report should
be submitted at least annually to track progress. The
bill should be amended accordingly.
The bill exempts rerefined lubricants that have 100%
rerefined base lubricant from payment of the recycling
fee. This is not a practical standard. However, the
Public Contract Code 12209 (e) sets a standard for state
agencies of purchasing lubricants with a minimum of 70%.
The bill should be amended to reflect that standard.
The rerefined oil incentive must be changed from $0.02
per quart to $0.02 per gallon to provide for adequate
funds for the program.
Lastly, as this bill is substantially similar to AB
546, chaptering amendments will be necessary.
SOURCE : Californians Against Waste
SUPPORT : Safety-Kleen Systems, Inc.
Sierra Club California
OPPOSITION : DeMenno / Kerdoon
Evergreen Oil, Inc.
Independent Waste Oil Collectors and
Transporters
Western States Petroleum Association