sr-081109-1lCity Council Meeting: July 28, 2009
Agenda Item: I ° ~-
To: Mayor and City Council
From: Dean Kubani, Director, Office of Sustainability and the Environment
Subject: Support for SB 546 (Lowenthal) Waste Oil Re-Refined Oil
Recommended Action
Staff recommends the City Council support SB 546 and direct staff to take appropriate
actions
Executive Summary
SB 546 is a bill up-dating the state's used oil program. The bill (1) establishes a
definition of re-refined oil based on the American Petroleum Institute (API) standards;
(2) provides direct incentives to re-refiners by relieving re-refiners from the California .
Integrated Waste Management Board's (CIWMB) oil manufacturer's fee for base tubes
containing at least 70% re-refined base tube; (3) provides for the development and
implementation of an education program to promote used oil recycling and waste
reduction by directing the CIWMB to educate the public about the importance of re-
refining and source reduction; and (4) requires used oil to be tested and analyzed prior
to shipment to a transfer or recycling facility in order to ensure that California is not
exporting used. oil pollution to neighboring states. This bill incentivizes the use of re-
refined oil by increasing the fees on oil manufacturers and redirecting grant funds
toward promoting the manufacture of re-refined lubricating oils. This bill encourages the
sustainable use of a limited resource, oil, by supporting the market for re-refined base
oils, used oil, which would otherwise be burned off as a cheap source of bunker fuel.
This bill is consistent with the City's sustainable city policies:
Background
For nearly 20 years the City of Santa Monica has been the recipient of Used Oil and
Filter Recycling grants from the California Integrated Waste Management Board
(CIWMB) for the. implementation of outreach programs targeting Do-It-Yourself (DIY) oil
changers. In order to close the loop and encourage a market for re-refined oil, the City's
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fleet along with many other private and public fleets within the state have used various
brands of re-refined oil.
SB 546 is a modernization of California's used oil program, emphasizing: increased Do-
It-Yourself (DIY) collection of used oil, "closed-loop" re-refining of used oil in order to
incentivize re-refining, and ensuring California does not export used oil pollution to
neighboring states. The authors of the bill collaborated with the CIWMB and the
Department of Toxic Substances Control (DTSC) to develop this bill.
The underlying need for the legislation is based on conserving oil, a strategic non-
renewable resource, and "closed-loop" recycling of used oil. The United States
generates approximately 1.3 billion gallons of waste oil each year, of which Californians
generate more than 160 million gallons. Only 10% of that used oil is re-refined. Re-
refining the nations used oil, instead of burning it, would save between 1.3 and 2.5
million gallons of oil per day. Passage of SB 546 would also set a precedent for the
nation.
Discussion
Arguments in Favor
According to the author's office, this bill encourages the best re-use of 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.
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 in the stream of commerce, rather than being burned.
The bill promotes the collection of used oil by increasing the financial incentives for the
collection of used oil from $0.04 per quart to $0.10 per quart in an effort to incentivize
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the collection of used oil from "Do-It-Yourself' car owners. While California's used oil
program has been effective at institutionalizing the collecting of used oil from
commercial sources, millions of gallons of oil are still not collected from consumers..
This enhanced incentive will increase oil collection from the public and reduce illegal
disposal of used oil.
Approximately 35 million gallons of California's used oil, containing toxic pollution, and
annually shipped out-of-state, untested and untreated, for burning. California requires
all in state used oil recycling; transfer, and storage facilities as well as out-of-state rail
shipments to test their oil to ensure that it does not contain dangerous PCB's and
halogens. The only loop-hole in the state's testing program is direct truck shipments. of
used oil to out-of-state facilities. SB 546 would require that direct truck shipments of
used oil to out-of-state facilities be tested in California to California standards, thereby
preventing the exportation of pollution to neighboring state.
Arquments in Opposition
The Western States Petroleum Association (WSPA) opposes the fee increase because
they believe it bears no relationship to revenue forecasts or other objective measures of
actual program funding needs. They also believe that the provision also strips the
Legislation of its oversight role for future fee increase.
WSPA also contends that SB 546 will serve as a disincentive, particularly for small auto
repair shops, to offer their facilities as certified collection centers, and the group is
concerned that the bill may contribute to reversing atwo-decade upward trend in used
oil recycling rates.
Financial Impacts & Budget Actions
There are no immediate financial impacts associated with Council support of this bill.
The potential long term impacts if the bill is adopted into law are the reduced cost of re-
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refined oil due to increased supply and increased CIWMB used oil recycling grant fund
allocations to implement outreach and education program.
Prepared by:
James Conway, Senior Environmental Analyst
Approved:
Dean Kubani ~
Director ,Office of Sustainability and the
Environment
Forwarded to Council:
afnont Ewell
Manager
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