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Readers Forum: Gov. Schwarzenegger should sign bill encouraging oil
5 Comments | Oakland Tribune, Oct 3, 2009 | by Mark Murray
GOV. ARNOLD Schwarzenegger has the opportunity to sign a measure that will conserve oil, help reduce greenhouse gases, and stimulate green jobs and industry in the state, and it won't cost taxpayers a dime. SB 546 is supported by both the environmental and business communities. We hope the governor embraces this occasion and signs this ground-breaking piece of legislation.
SB 546 will increase funding to local governments for oil recycling programs, increase incentives for do it yourself (DIY) oil changers to recycle their oil and create direct incentives for re- refining used oil. Oil manufacturers have agreed to support, and voluntarily add to, an increase in the oil manufacturer's fund to fund this expanded recycling program.
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This self-funded program will not need or receive any support from the state general fund.
The bill will stimulate the "closed-loop" recycling and re- refining of used oil. Oil never wears out, and when cleaned, can be recycled and used "indefinitely."
Under SB 546, re-refiners of used oil will receive a direct economic incentive; manufacturers of oil whose products contain at least 70 percent re-refined content will have their payments to the oil manufacturer's fund reduced by half.
Oil, a strategic nonrenewable natural resource, is a costly, foreign-based resource that can and should be conserved through re- refining. Re-refining saves energy -- the production of re-refined oil takes one-third the energy of producing virgin crude and burning re-refined oil produces 42 percent less greenhouse gas emissions than the equivalent burning of "virgin" base oil. And re-refining the nation's used oil, instead of burning it, would save between 1.3 million and 2.5 million gallons of oil per day.
That SB 546 would stimulate the creation of new green jobs through increased re-refining of used oil only makes the bill that much more important and the governor's signature more vital. When SB 546 is signed, it will create incentives for re-refiners to locate in California over other states and it will create a wide range of jobs for Californians from every walk of life, including plant operators and managers, lab chemists, truck drivers, construction workers, administrative staff and maintenance workers.
Another extraordinary aspect of SB 546 is not just that it helps improve the environment, creates green jobs or updates the state's used oil program, which has not been updated since its inception in 1992, but that a diverse coalition of industry and environmental supporters have come together to support used oil recycling legislation.
Supporters of the bill include Sierra Club California, the California Chamber of Commerce, Californians Against Waste, Waste Management, Orange County Coastkeeper, Evergreen Oil, the city of Santa Monica, DeMenno/Kerdoon, Long Beach Mayor Bob Foster, World Oil and the city and county of San Francisco, to name a few.
In light of our ongoing dependence on foreign oil and the fact that oil production has either peaked or will peak within the next 50 years, the need to encourage the re-refining of used oil is clear. SB 546 is a great model for the collaborative creation of sound environmental and economic policy and the governor should sign this ground breaking and vastly beneficial bill into law.
Californians Against Waste is dedicated to conserving resources, preventing pollution and protecting California's environment through the development, promotion and implementation of waste reduction and recycling policies and programs.
Murray is the executive director of Californians Against Waste.
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1
Mphariss
Governor Should Veto SB 546
For the reasons set forth below, SB 546 should be vetoed by the governor -- a veto urged by four re-refiners of used oil.
Gary Colbert and Bill Magavern are correct that re-refining used oil is a closed-loop process that helps conserve a scarce resource and helps reduce greenhouse gases, but they are incorrect that SB 546 helps further the re-refining of used oil.
SB 546 taxes re-refined lube oil (12 cents per gallon), but does not tax the combustion of used oil. Taxing re-refining incentivizes the combustion of used oil, rather than providing an incentive for the re-refining of used oil. This is contrary to the recommendations of Lawrence Livermore National Laboratory, the consultant hired by the California Integrated Waste Management Board to make recommendations to encourage more re-refining, and is contrary to legislation (AB 907) drafted by the California Integrated Waste Management Board that eliminated the tax on re-refined lube oil.
The only incentive contained in SB 546 for the re-refining of used oil -- the incentive that, according to them, "will create new green jobs through expanded oil recycling and help advance the governor's environmental goals" -- is a 2 cent per gallon incentive that does not even go into effect until January 1, 2013. Significantly, the 2 cent per gallon incentive contained in SB 546 is 6 times smaller than the tax imposed on re-refined lube oil in SB 546 and is completely negated by the 12 cent per gallon tax on re-refined lube oil. This is the first time of which I am aware that a net tax on any industry (in this case, a 10 cent per gallon tax on re-refined lube oil) is claimed to be an incentive for the industry. In short, it simply is not.
SB 546 also mandates a study be conducted on re-refining. The purpose of the study is for California, the environmental state, to send a message that further study is required on re-refining, all in an attempt to preclude California legislation from becoming a precedent for federal or other state action. In February 2009, the oil industry urged the California Integrated Waste Mangement Board to conduct another study on re-refining and, at the urging of Evergreen, Californians Against Waste and others, the Board unanimously rejected the need for further study.
At the time, Mark Murray, Executive Director of Californians Against Waste, testified before the California Integrated Waste Management Board as follows: "You?ve been looking at this issue for several years. U.S. EPA, Department of Energy and your Board have all concluded that re-refined is the way to go. Now the industry ? the petroleum industry ? in desperation is looking for one more way of blocking the policies that you?ve highlighted at the beginning of this meeting in terms of the direction you want to go, in terms of incentives for re-refined. Now, not only do we need you to not fund this study, it doesn?t make any sense at this point in time, for you to fund another life-cycle analysis.?
While I generally agree with Bill Magavern and Gary Colbert on most issues, and certainly respect them, in this case I must respectfully disagree. With SB 546, the devil is clearly in the details, and SB 546 is not a "green" bill.
SB 546 is opposed by Safety-Kleen, the nation's largest re-refiner of used oil and the company where I work, along with three other re-refiners of used oil. SB 546 is also opposed by NORA, an association of more than 200 used oil collectors and recyclers. For the reasons set forth above, the governor should veto SB 546. -
2
Adam Love
Urge Governor to Veto SB 546
I am the lead author on the report commissioned by the
California Integrated Waste Management Board (report
finalized in 2008) that analyzed California?s used oil recycling
system and provided recommendations for ways the system
could be improved in order to fully recycle more of California?s
used oil. I strongly urge the governor to veto SB 546.
The reason the report was commissioned was because the
CIWMB staff needed an independent and technical analysis of
the used oil system from someone without any financial stake
in the outcome, in order to sort through the various
conflicting information on the topic ? as is clearly
demonstrated here. We spent approximately 2 years meeting
with various stakeholders from all sides, looked over the data
we were able to gain access to, and analyzed the dynamics
of a range of potential perturbation to the system. I know it
is a complex system to understand and even harder to
legislate with that background. The topic turns out to have
complexities in the dynamics of the used oil system which
results in certain policy claims that seem logical at face value
but are not actually beneficial when the whole system is
accounted for and understood. As a result, some of the
organizations who support this bill, including Californians
Against Waste, would be disappointed with the results if the
legislation were enacted.
Having spent extensive time to understand the system, I am
writing to express my continued opposition to SB 546. As I
have learned, almost everything claimed by stakeholders in
the used oil system is impacted by their financial interest and
has created confusion in the community. As someone with
absolutely no financial stake in the outcome, but is intimately
familiar with the industry, I want to point out that SB 546 is
flawed policy in numerous ways based on California?s goal of
re-refining more used oil back to base lube oil.
A few of the biggest examples are:
1. This legislation is likely to decrease the amount of used
oil collected and re-refined. The new testing regulations are
unnecessary, duplicative, and opposed by the DTSC. The
real objective of the testing requirement is to increase the
used oil collection market share for two large in-state oil
recyclers, who are already at capacity. The regulations
which would increase in-state market share actually are
punitive to California small businesses that are independent
used oil haulers, as the two in-state recyclers would avoid
market-based competition for paying for the used oil
collected. Reducing the number of haulers would decrease
the amount of used oil that is collected and lead to a
reduction in the amount of used oil available for re-refining
and increase the amount of used oil disposed of improperly.
2. This legislation maintains a net incentive toward used
oil burning over used oil re-refining. While California has a
goal to increase the amount of used oil re-refined back to
base lube oil, the incentives provided for in this legislation
(i.e., the $0.02/gal incentive beginning in 2013) do not meet
the financial threshold necessary to expect market-based
incentives to encourage additional re-refining of used oil. In
addition, it maintains a fee structure on the final re-refined oil
product that indirectly incentivizes the combustion of used oil
by $0.12/gal, six times the $0.02/gal incentive provided to
encourage re-refining and more than offsetting and negating
that $0.02/gal incentive.
3. This legislation requires a study on re-refining which is
unnecessary and is likely to harm national efforts for
increased re-refining. The state just completed the
Lawrence Livermore National Laboratory study that examined
and included in their analysis virtually all of the studies and
life-cycle analyses (LCA) that have been completed on re-
refining and used oil collection. Lawrence Livermore affirmed
that re-refining is the ?highest and best use? for used oil,
consistent with every other critical examination of used oil
recycling. The inclusion in SB 546 of an additional LCA would
not be expected to shed any additional information on the
value of re-refining and does not allow enough time to pass
for an evaluation of the impact of this legislation on used oil
recycling in California. While proposing a study or LCA always
seems reasonable, waiting for the result from such a study
would undermine efforts to use California?s legislation as
precedent for federal or other states? action, as further
action nationally will likely be delayed until the results are
determined. Given the critical flaws in SB 546, such an
evaluation could damage the effort for increased used oil re-
refining throughout the nation and into the future.
This legislation has additional policy flaws that harm the
overall used oil system. Now is the time for California to
support re-refining but with meaningful incentives, like those
provided in AB 907 (Chesbro). As a result, I recommend that
the governor veto this flawed legislation. -
3
thermofluids
RE: Readers Forum: Gov. Schwarzenegger should sign bill encour ...
Veto SB 546
Thermo Fluids Inc. (TFI) is an environmental services firm and we strongly oppose this bill. SB 546 restricts the flow of used oil and will have unintended consequences that will negatively affect the used oil recycling efforts in California.
SB 546 violates the Commerce Clause of the United States Constitution because it discriminates against out-of-state used oil transporters and recyclers and acts as an impermissible flow control measure. Used oil is an extremely valuable commodity that is shipped to neighboring states because California recyclers are not able process all the used oil generated each year. An estimated 15.6-million gallons of used oil are recycled outside of California each year.
California will continue to lag the rest of the nation in refining by 45% as determined by the May 2008 Lawrence Livermore National Laboratory study, which indicated the current national average for refining used oil is 18.2% while California?s is only 10.1%. California has only one re-refiner of used oil and giving incentives and permit expansions to only one company creates a monopoly in California. Further, one of the nation?s largest re-refiners exists just over the California?s border in Nevada could be disqualified from receiving and refining California generated used oil.
Why would a bill that promotes environmental sustainability prevent oil from being refined by out of state refiners? Because California?s used oil recycling program is working and does not need an infusion of re-refining subsidies or more duplicative and onerous rules. This bill offers no protection of California?s environment; it protects the interest of three used oil recycling companies by making it difficult to transport used oil from California.
The author, Senator Alan Lowenthal, has acknowledged certain technical issues remain in the bill. The management of 122 million gallons a year of used oil is a serious concern and problems with the bill should be resolved now, not compounded by enacting half-baked legislation. The concerns are significant and can be found in the Senate Journal on September 12th.
This bill is biased and based on incomplete data. SB 546 promotes used oil recycling by re-refining, but lacks a comprehensive Life Cycle Analysis (LCA) that addresses the costs, energy demand, or pollution effects of substituting Refined Fuel Oil (RFO) that is utilized for energy recovery with other crude products. Additionally, SB 546 assumes that re-refining used oil is more energy efficient or better for the environment than producing new lubricant from crude without having provided any data for peer review. The premise that re-refining is the highest and best use for recycling used oil should be confirmed before this hypothesis is used to build regulation that will prevent used oil from being recycled into other products for uses in other states.
SB 546 is opposed by 2 of the 3 largest used oil recyclers in the United States who recycle California?s used oil, several used oil re-refiners, California used oil generators, a petroleum lubricant provider who services California and the National Oil Recyclers Association (NORA).
For reasons listed above, Thermo Fluids Inc. strongly opposes this bill. -
4
Cody Group
RE: Readers Forum: Gov. Schwarzenegger should sign bill encour ...
As a party that has watched the used oil industry for years, I find it particularly interesting that the three largest used oil processors in California are also the biggest supporters of SB 546. If one takes a closer look at this bill, you will see that it is a wolf in sheep?s clothing as it is cloaked in overtones promoting environmental preservation and recycling, when in fact it will cripple the existing effective program. Please oppose this bill and petition the governor not to pass it. I would encourage you all to take a look at the following Q&A which was put together by a long time expert in the petroleum and sustainability business.
Is SB 546 Good For California?
ANSWERS
Questions that require more thought and answers;
? Does SB 546 change the present environmental law and if so what are the benefits?
Answer: The present used oil system is working well and there is no need or justification to require duplicitous testing. This would tie up resources and become a major disincentive to recycling.
? Do the present state and federal rules already offer effective protection and regulation?
Answer: As reported by the DTSC, the present used oil rules in California are working well and to require transporters to test all loads of used oil would be redundant as all processors are required by federal and state law to complete the necessary tests and have them available for review by the state regulating bodies.
? Have there been misleading or unsupported testimony by the sponsors of 546?
Answer: As evidenced in the assembly meeting video recordings which are viewable by the public, there were many misstatements made by the spokesman of those sponsoring this bill.
? What are the advantages of more testing other than duplicating and increasing costs and forming a bottleneck that will just collude the recycling process?
Answer: There are no advantages. Those claiming the intent of this bill is to reduce PCBs are not disclosing the fact there is not a problem with PCBs and that PCBs are not part of lubrication oils. It is akin to looking for gold in beach sand, as one may find miniscule sands, but not at a level that justifies the testing.
? Who are the sponsors of SB 546?
Answer: Among others, the two largest oil processors in California who control over 70% of the used oil market in the state.
? What do these sponsors have to gain by supporting SB 546 and are their motives to improve recycling in California or to monopolize used oil recycling in California?
Answer: California?s present used oil recycling program has been very effective as previously stated. The primary reason for the sponsors to support SB 546 could be to completely dominate the used oil market by eliminating out of state competition through the imposition of duplicitous processes that would make competitive operation in the state of California costly and prohibitive.
? Does the bill have the support of Environmental groups and the DTSC or other governmental bodies?
Answer: The DTSC and other environmental and waste management agencies have written statements and reports opposing dual testing in bills similar to SB 546, the most notable being the opposition of California SB 1195.
? What would be the cost should SB 546 become law?
Answer: SB 546 would assure that the hundreds and thousands of used oil generators and tax payers would lose as much as $60 Million per year due to the reduction in used oil value that would come from the marginalization of a free market and the funneling of these funds to the primary sponsors of this bill.
The loss of a competitive use oil market in California would also be a huge hit for re-refiners and the national move towards sustainability as California plays a major role providing over 124 Million gallons of used oil to fuel this movement.
? Will the passage of SB 546 encourage used oil generators to increase their recycling efforts?
Answer: State agencies agree that the passage of SB 546 would more than likely disincentive recycling and cause more dumping and damage to California?s delicate environment.
One must remember that 1 gallon of oil can contaminate 100 Million gallons of water.
? Will SB 546 prevent burning of low grade used oil fuel?
Answer: The bill requires load-to-load testing on out-of-state recyclers of used oil, a requirement the DTSC has repeatedly refused to require and which, by the DTSC?s refusal, has prompted the sponsors, the two largest used oil collectors in California, to seek a legislative solution. And while the sponsors of the bill will tell you the bill will prevent California from exporting contaminated used oil for combustion, what they will not tell you is that nothing in the bill actually precludes the contaminated used oil, once tested, from going out-of-state and being combusted. It simply forces the used oil to first go to the in-state facilities, which will then ship the used oil out-of-state for combustion.
? Since SB 546 will effectively curtail out of state competition for this valuable used lubrication oil thus drastically decreasing its value to the generators how will this encourage used oil recycling?
Answer: SB 546 not only reduces the value of oil to the generators, but also convolutes the recycling process for the re-refiners making it counter-productive to come into California to do business. California?s generators; its voters, its economy, and its environment stand only to lose.
? Does SB 546 help reduce Greenhouse Gases in any way?
Answer: By dissuading competition from re-refineries who allow oil to be used over and over again and instead funneling used oil to the major processors who make oil to burn, SB 546 would actually contribute to greenhouse gases.
One must consider that 1,000 gallons of burned oil can generate over 45lbs of ash and other pollutants such as lead and mercury.
? By marginalizing value and funneling used oil to just a small handful of processors within the state, does SB 546 benefit the environmental movement towards used oil sustainability especially considering the fact that California only has one permitted 20 year old re-refinery which can re-refine perhaps 10% of California?s used oil to be used over and over again as opposed to being burned for a cheap fuel and thus destroyed?
Answer: Not in anyway. The best way to benefit the environment and support sustainability is to assure the highest recycling incentives and make California?s used oil accessible to all who are willing to provide these incentives including supplying new re-refiners, in-state as well as out-of-state.
? What benefit does California gain by imposing regulations that discourages out of state re-refineries from participating in the crucial movement towards used oil sustainability?
o Is it not the intention of California?s regulations and programs to promote true sustainability and protect the environment by promoting re-refineries to turn this product into new oil to be used over and over again?
Answer: Out of state re-refineries are and can be part of the solution.
? Where are the facts and the findings to indicate that California?s current recycling regulations are producing PCB issues?
Answer: There have been considerable tests and reports to support that PCB levels present an extremely low risk in California?s used oil.
? Why is California and the sponsors of SB 546 trying to change an effective used oil recycling program that has been effective nationwide?
Answer: To benefit the sponsors of SB 546.
? If SB 546 is good for used oil recycling in California, why is it not fully supported by the California Integrated Waste Management Board(CIWMB), Department of Toxic Substances Control(DTSC), or the Lawrence Livermore National Laboratory(LLNL)?
Answer: It does not provide a solution for a more pressing need, which is the construction of more re-refineries. -
5
thermofluids
RE: Readers Forum: Gov. Schwarzenegger should sign bill encour ...
Thermo Fluids Inc. (TFI) is an environmental services firm and we strongly oppose this bill. SB 546 restricts the flow of used oil and will have unintended consequences that will negatively affect the used oil recycling efforts in California.
SB 546 violates the Commerce Clause of the United States Constitution because it discriminates against out-of-state used oil transporters and recyclers and acts as an impermissible flow control measure. Used oil is an extremely valuable commodity that is shipped to neighboring states because California recyclers are not able process all the used oil generated each year. An estimated 15.6-million gallons of used oil are recycled outside of California each year.
California will continue to lag the rest of the nation in refining by 45% as determined by the May 2008 Lawrence Livermore National Laboratory study, which indicated the current national average for refining used oil is 18.2% while California?s is only 10.1%. California has only one re-refiner of used oil and giving incentives and permit expansions to only one company creates a monopoly in California. Further, one of the nation?s largest re-refiners exists just over the California?s border in Nevada could be disqualified from receiving and refining California generated used oil.
Why would a bill that promotes environmental sustainability prevent oil from being refined by out of state refiners? Because California?s used oil recycling program is working and does not need an infusion of re-refining subsidies or more duplicative and onerous rules. This bill offers no protection of California?s environment; it protects the interest of three used oil recycling companies by making it difficult to transport used oil from California.
The author, Senator Alan Lowenthal, has acknowledged certain technical issues remain in the bill. The management of 122 million gallons a year of used oil is a serious concern and problems with the bill should be resolved now, not compounded by enacting half-baked legislation. The concerns are significant and can be found in the Senate Journal on September 12th.
This bill is biased and based on incomplete data. SB 546 promotes used oil recycling by re-refining, but lacks a comprehensive Life Cycle Analysis (LCA) that addresses the costs, energy demand, or pollution effects of substituting Refined Fuel Oil (RFO) that is utilized for energy recovery with other crude products. Additionally, SB 546 assumes that re-refining used oil is more energy efficient or better for the environment than producing new lubricant from crude without having provided any data for peer review. The premise that re-refining is the highest and best use for recycling used oil should be confirmed before this hypothesis is used to build regulation that will prevent used oil from being recycled into other products for uses in other states.
SB 546 is opposed by 2 of the 3 largest used oil recyclers in the United States who recycle California?s used oil, several used oil re-refiners, California used oil generators, a petroleum lubricant provider who services California and the National Oil Recyclers Association (NORA).
For reasons listed above, Thermo Fluids Inc. strongly opposes this bill.
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