BILL ANALYSIS C.S.H.B. 3220 By: Howard 04-25-95 Committee Report (Substituted) BACKGROUND The Used Oil Recycling program was created by Acts 1991, 72nd Leg., ch. 303, eff. Sept. 1, 1991 and amended by Acts 1993, 73rd Leg., ch. 899, eff. Oct. 1, 1993. At the time the program was established, the Environmental Protection Agency (EPA) had not promulgated their final rules related to used oil or oil filters. The rules, once adopted, were inconsistent with Texas' law and with the rules adopted by the Texas Natural Resource Conservation Commission (TNRCC). The original legislation addressed used oil; no provisions were made for used oil filters. Subsequent to the enactment of legislation, the TNRCC adopted rules regarding used oil and used oil filters (18 TexReg 6493, effective Oct. 6, 1993) that are among the most stringent in the nation. The current eight cent per gallon fee attached to the sale of oil has raised approximately $8 million per year. The fund has returned an average of $2.6 million per year, for the past four years, to the state's general revenue fund. The TNRCC has used up to 20 percent of the fund for administrative costs. There have been 60 direct grants made to local governments for a total of $2,474,212 since the beginning of the grant program in 1992. In 1993 additional grants were made to Councils of Government for a total of $1,518,940 of which 62% of the total was re-distributed to local communities for used oil collection. PURPOSE HB 3220 will make Texas' regulations consistent with federal standards, provide more specific legislative direction for the management of used oil filters, and create an incentive program for private industry through which more used oil collection centers will be established. HB 3220 will also cap administrative costs, reduce available funds through a lower fee on motor oil, and provide for a fee sunset. RULEMAKING AUTHORITY It is the committee's opinion that this bill expressly grants additional rulemaking authority to the Texas Natural Resource Conservation Commission (TNRCC) in SECTION 5 [Sec. 371.028 (a) and (b), Health and Safety Code]. It is also the committee's opinion that the bill does not expressly grant rulemaking authority but amends existing rulemaking authority of the TNRCC in the following section of the bill: in SECTION 5 (Sec. 371.023, Health and Safety Code); in SECTION 5 (Sec. 371.024, Health and Safety Code); and in SECTION 5 (Sec. 371.026, Health and Safety Code). SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 371.001, Health & Safety Code, as follows: Sec. 371.001 amends the short title of this act from Used Oil Collection, Management, and Recycling Act to Texas Used Oil Collection, Management, and Recycling Act. SECTION 2. Amends Section 371.002, Health and Safety, by deleting current findings and adding new findings as follows: (1) when properly managed and recycled, used oil is a valuable energy resource (2) used oil can be recycled into a number of different products (3) improper disposal of used oil is a significant environmental problem (4) there is a need for an expanded statewide network of oil collection sites (5) the private sector, with incentives, is best equipped to establish and operate used oil collection centers (6) the need for publicly operated used oil collection centers should diminish; the need is greatest in more sparsely populated areas (7) the Environmental Protection Agency (EPA) has issued final regulations classifying and regulating used oil and used oil filters (8) the current Texas used oil and used oil filter program imposes more stringent requirements than the EPA rules (9) limited public money is needed to finance infrastructure investments to collect, manage and recycle used motor oil (10) the federal standards establish a balanced approach SECTION 3. Amends Subchapter A, Chapter 371, Health and Safety Code, by adding 371.0025 as follows: Sec. 371.0025 states that the purposes of this chapter are to ensure that the Texas used oil program is consistent with the federal program, and to establish a program to promote public and private do-it-yourselfer used oil collection centers. SECTION 4. Amends Section 371.003, Health and Safety Code, by deleting the existing definition of "public used oil collection center" and as follows: (2) "Commission" means the Texas Natural Resource Conservation Commission. (3) "Do-it-yourselfer used oil collection center" means a site that accepts or aggregates and stores used oil collected from household do-it-yourselfers. If the registered do-it-yourselfer used oil collection center is also a used oil generator, the center may commingle household do-it-yourselfer used oil with its own self-generated used oil. (4) "Household do-it-yourselfer (DIY) used oil" means oil that is derived from a household, including used oil generated through the maintenance of a personal vehicle or equipment. (5) "Household do-it-yourselfer used oil generator" means an individual who generates household do-it-yourselfer used oil. (6) "New tank" means a tank that will be used to store or process used oil. (7) "Processing" means chemical or physical operations designed to produce from used oil fuel oils, lubricants, or other oil-derived products. (8) "Reclaiming" means processing material to recover a usable product or regenerating material, rather than used oil. (9) "Recycling" adds subsection (C) to the current definition to include burning used oil for energy recovery. (10) "Rerefining" means applying processes to material composed primarily of used oil to produce high-quality base stocks for lubricants or other petroleum products. (11) "Used oil" means any oil that has been refined from crude oil, that as a result is contaminated; deletes language calling "used oil" unsuitable for its original purpose. (12) "Used oil aggregation point" means a site that accepts, aggregates or stores used oil collected from other used oil sites owned by the owner of the aggregation point, or from household do-it-yourselfers. (13) "Used oil burner" means a facility where used oil not meeting specific requirements is burned for energy recovery in specified devices. (14) "Used oil collection center" means a site or facility registered by the commission to manage used oil and accepts oil from used oil generators who transport used oil in shipments of not more than 55 gallons and household do-it-yourselfers. (15) "Used oil fuel marketer" means a person who directs a shipment of off-specification used oil or first claims that used oil to be burned for energy recovery meets used oil specifications. (16) "Used oil generator" means any person, by site, who produces used oil or first causes used oil to become subject to regulation. (17) "Used oil processor or rerefiner" means a facility that processes used oil. (18) "Used oil transfer facility" means a transportation-related facility where shipments of used oil are held for more than 24 hours and not longer than 35 days. (19) "Used oil transporter" means a person who transports used oil or owns or operates a used oil transfer facility. SECTION 5. Chapter 371, Subchapter B, Health and Safety Code, is amended as follows: Sec. 371.021 adds used oil filters to the public education program. Sec. 371.022 requires high volume automobile oil retailers to include instructions for disposal of used oil filters on the already required sign posted in a prominent place. Sec. 371.023 is amended as follows: (a) adds private entities to the list of possible recipients of grants for used oil collection programs. Stipulates that the grant program is for the purpose of encouraging the collection, reuse, and recycling of household do-it-yourselfer used oil. (b) Allows the commission to approve a grant for curbside pickup of containers of household do-it-yourselfer used oil, retrofitting of municipal solid waste equipment to facilitate curbside pickup, establishment of do-it-yourselfer used oil collection centers at locations accessible to the public, provision of containers and other materials and supplies that can be used to store household do-it-yourselfer used oil, and any other activity the advisory committee established in Subsection (e) determines will encourage the proper recycling of household do-it-yourselfer used oil. (c) Is added to allow the commission, through the Texas Department of Commerce, to extend grants during 1995 to any entity that participates in the processing or recycling of used oil filters. The grant is for the development or enhancement of structures for recycling used oil filters; the aggregate amount is capped at $500,000. (d) Is added to require the commission to only make grants directly to a do-it-yourselfer used oil collection center or group of centers. Grants to entities which redistribute funds are prohibited. (e) Is added to require the commission to appoint an advisory committee for the used oil program. (f) The commission by rule is required to establish procedures for the application for and criteria for the award of grants under this section. Sec. 371.024 is amended as follows: (a) Encourages all appropriate businesses and government agencies to serve as do-it-yourselfer used oil and used oil collection centers. (b) Requires a do-it-yourselfer used oil collection center and a used oil collection center to register with the commission and report to the commission biannually. (c) Requires the commission to adopt rules governing the registration of and reporting by do-it-yourselfer used oil and used oil collection centers. (d) Requires the commission by rule to adopt standards for managing and operating a do-it-yourselfer used oil collection center or a used oil collection center. (e) Allows the commission to impose a fee to cover the actual cost of registering do-it-yourselfer and used oil collection centers. Adds a requirement that private entities which serve voluntarily as do-it-yourselfer used oil collection centers are exempt from registration fee. Sec. 371.0245 is amended as follows: (a) Requires the commission to reimburse do-it-yourselfer or used oil collection centers for costs associated with the center's disposal of household do-it-yourselfer used oil collected that, unknown to the collection center, is unfit for recycling or has been commingled with other oils and is unsuitable for recycling. (b) A registered do-it-yourselfer used oil collection center is eligible for reimbursement if it demonstrates that the center has established procedures to minimize the risk that the center will mix used oil the center generates or collects from the public with hazardous wastes and that the center can document the volume of used oil the center collects from the public during any period or length of time under review by requiring individuals who leave do-it-yourselfer oil to provide their names, addresses, and approximate amount of oil left. Deletes requirement that do-it-yourself oil be kept in a separate container. (c) The owner or operator of a registered do-it-yourselfer used oil collection center may presume that an amount of less than five gallons of used oil collected from a member of the public is not mixed with a hazardous substance. (d) A registered do-it-yourselfer used oil collection center may not be reimbursed for more than $7,500 in any state fiscal year; changed from $5,000. (e) Requires all reimbursements made under this section to be paid out of the used oil recycling fund which shall not exceed an aggregate amount of $500,000 each fiscal year. Sec. 371.0246 is amended as follows: (a) An owner or operator of a do-it-yourselfer used oil collection center may apply for reimbursement from the commission. (b) An application for reimbursement shall be submitted on an approved form. (c) In addition to already existing requirements, an application for reimbursement must contain (4) a copy of any manifest or shipping documents that accompanied the transportation of the shipment of used oil, and (6) documentation required before acceptance of a hazardous waste by the disposal facility that accepted the contaminated used oil for treatment and/or disposal. (d) Claims for reimbursements are subject to funds available for reimbursement. Sec. 371.025 is not amended. Sec. 371.026 is amended as follows: (a) The commission is required to adopt rules governing registration and reporting of used oil handlers other than generators. The rules shall require the handler to register biannually, report biannually, provide evidence of familiarity with applicable state laws and rules applicable to used oil handling, and provide proof of financial responsibility for liability that may be incurred in handling used oil. (b) Requires the commission by rule to adopt reasonable management and safety standards for the handling of used oil. (c) Allows the commission to impose a registration fee in an amount sufficient to cover the actual cost of registering used oil handlers. (d) Is added to allow a used oil transporter to consolidate or aggregate loads of used oil for the purposes of transportation. Also allows a used oil transporter to conduct incidental processing operations not designed to produce used-oil-derived products or used oil fuel. Sec. 371.027 changes "department" to "commission". Sec. 371.028 is amended as follows: (a) Requires the commission to establish, not later than January 1, 1996, rules, standards and procedures as necessary to implement the used oil program. They must be consistent with federal used oil management standards. (b) The classification of used oil filters is an exception to Subsection (a). Requires the commission to adopt rules, standards and procedures consistent with the federal classification of used oil filters, no later than January 1, 2000. SECTION 6. Section 371.041, Health and Safety Code, is amended as follows: (b) A person commits an offense if the person: (1) not amended (2) knowingly mixes or commingles used oil with waste that is to be disposed of in landfills or directly disposes of used oil on land (3) knowingly transports, treats, stores, disposes, recycles, causes to be transported, or otherwise handles any used oil without complying with registration requirements. (4) intentionally applies used oil to roads or land (5) violates an order of the commission to cease and desist (6) makes any false statement or representation in any document filed, maintained, or used for program compliance (c) It is an exception to the application of Subsection (b) if a person unknowingly disposes into the environment any used oil not properly segregated from other solid wastes. (d) Reference to "solid waste" is changed to "waste". (e) It is an exception to the application of Subsection (b)(2) if the mixing or commingling of used oil with waste is the result of an oil change that results in the generation of a used oil filter under 40 CFR 261.4(b)(13). SECTION 7. Amends Section 371.042, Health and Safety Code, as follows: (a) Except as provided by Subsection (b), an offense under 371.041 is punishable by a fine of not less than $100 or more than $10,000 for each act of violation or each day of a continuing violation, imprisonment for a term not to exceed five years, or both. (b) If the defendant has been previously convicted, the offense is punishable by a fine of not less than $200 or more than $20,000 for each act of violation or each day of a continuing violation, imprisonment for a term not to exceed 10 years, or both. SECTION 8. Section 371.043, Health and Safety Code, is amended as follows: (c) Reference to "Section 371.026" is changed to "Section 371.024". (d) Changes "department" to "commission". SECTION 9. Sec. 371.061, Health and Safety Code, is amended as follows: (b)(3) Changes "department" to "commission". (c) The commission may use money in the fund only for the purposes authorized by this chapter. Adds grants to public and private do-it-yourselfer used oil collection centers as well as registration of do-it-yourselfer used oil centers and used oil handlers as authorized purposes. Stipulates that the administrative costs of implementing this chapter are not to exceed six percent of the fund balance in any fiscal year. (d) Requires the commission to set aside 25 percent of the fees collected under Section 371.062 for the sole purpose of restoring environmental quality that have been contaminated through improper used oil management. This subsection expires on January 1, 1998. SECTION 10. Sec. 371.062, Health and Safety Code, is amended as follows: (a) Definitions are amended as follows: (1) "First sale" adds a stipulation to the current definition that the term does not include the sales of automotive oil to any subsequent purchaser who maintains a registered do-it-yourselfer used oil collection center at the location where the oil is changed. (4) "Permitted distributor" is added to mean a distributor who maintains a distribution center in this state and exports from this state more than 25,000 gallons of automotive oil on an annual basis. Stipulates that a permitted distributor is required to file an application with the comptroller for a nonassignable permit. The comptroller is required to promulgate the application form, and may deny or revoke a permit if false information is submitted. (b) A permitted distributor, as well as an oil manufacturer, who makes a first sale of oil is liable for a fee. (f) A permitted distributor, as well as an oil manufacturer, is obligated to follow the requirements of this subsection. (j) The fee imposed under this section is one cent per quart or four cents per gallon of automotive oil. Language referring to adjusting the fee rate is deleted. (m) A distributor must obtain a permit from the comptroller; the comptroller is required to adopt an application for the permit which must include the business name, the location, the names of principal officers of the corporation or members of the partnership (if applicable), any other information required by the comptroller. (n) Allows the comptroller to deny or revoke a permit under Subsection (m) if false information is submitted. (o) A permit under Subsection (m) may not be assigned. (p) Establishes expiration date of January 1, 2000 for fee imposed under this section. SECTION 11. (a) The change in law made by this Act to Section 371.042, Health and Safety, applies only to an offense committed on or after the effective date of this Act. (b) An offense committed before the effective date of this Act is covered by the law in effect when the offense was committed. SECTION 12. (a) Effective date: September 1, 1995, except as provided by Subsection (b). (b) Effective date for Section 371.062(j), Health and Safety,: January 1, 1996. SECTION 13. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substantial differences between the original HB 3220 and the committee substitute for HB 3220 are as follows: HB 3220 as filed Committee Substitute for HB 3220 §371.002 (4) states that there is a need for a network of public and private used oil collection sites. §371.002 (4) states that there is a need for a network of used oil sites (does not refer to "public and private". Does not have corresponding provision. §371.002 adds two new Subsections: (5) the private sector, with incentives, is best equipped to establish and operate used oil collection centers (6) the need for publicly operated used oil collection centers should diminish; the need is greatest in more sparsely populated areas §371.0021 References used oil filter federal rules as promulgated on the effective date of this Act not later than January 1, 2000. This language is cleaned up and changed to §371.028 (b) which requires the commission to adopt rules, standards, and procedures consistent with the federal classification of used oil filters no later than January 1, 2000. §371.0021 States than no rule which the TNRCC makes for the purpose of the state administration of the used oil program shall be more stringent than corresponding federal regulations. This language is not in the substitute. However, similar language is found in §371.028 (a) which requires the commission to establish, not later than January 1, 1996, rules, standards and procedures as necessary to implement the used oil program, and provides that they must be consistent with federal used oil management standards. §371.003 Includes definitions for "Aboveground tank", "Container", "Existing tank", and "Tank". §371.003 does not include definitions for "Aboveground tank", "Container", "Existing tank", or "Tank". §371.003 (5) "Do-it-yourselfer used oil collection center" means any site that accepts or aggregates and stores used oil collected from household do-it-yourselfers. §371.003 (3) "Do-it-yourselfer used oil collection center" means a site that accepts or aggregates and stores used oil collected from household do-it-yourselfers. The substitute adds that if the registered do-it-yourselfer used oil collection center is also a used oil generator, the center may commingle household do-it-yourselfer used oil with its own self-generated used oil. Does not have a definition of "Reclaiming". §371.003 (8) defines "Reclaiming" to mean processing material to recover a usable product or regenerating material. §371.003 (11) Defines "Recycling" as a material which is used, reused or reclaimed as described at 40 CFR 261.1(c). §371.003 (9) defines "Recycling" by adding subsection (C) to the current definition to include burning used oil for energy recovery. §371.003 (12) Defines "Rerefining distillation bottoms" as the heavy fraction produced by vacuum distillation of filtered and dehydrated used oil. §371.003 (10) is the corresponding definition in the substitute, but is changed to "Refining" and means applying processes to material composed primarily of used oil to produce high-quality base stocks for lubricants or other petroleum products. §371.003 (22) Defines "Used oil transporter" as any person who transports used oil, collects used oil from more than one generator and transports it, and owners and operators of used oil facilities. The definition also stipulates that the transporter is allowed to consolidate or aggregate loads of used oil for the purposes of transportation. Also allows a used oil transporter to conduct incidental processing operations not designed to produce used-oil-derived products or used oil fuel. §371.003 (19) Defines "Used oil transporter" as a person who transports used oil or owns or operates a used oil transfer facility. The language allowing a transporter to consolidate or aggregate loads of used oil for the purposes of transportation and conduct incidental processing operations not designed to produce used-oil-derived products or used oil fuel is found in §371.026 (d) of the substitute. Contains §371.0211 ADOPTION OF FEDERAL USED OIL STANDARDS. Similar language is in changes to Sec. 371.028 of the substitute. §371.023 (c) Requires the commission by rule to establish procedures for the application for and criteria for the award of grants pursuant to this section. §371.023 (f) is the corresponding subsection in the substitute. A new §371.023 (c) is added to the substitute to allow the commission, through the Texas Department of Commerce, to extend grants during 1995 to any entity that participates in the processing or recycling of used oil filters. The grant is for the development or enhancement of structures for recycling used oil filters; the aggregate amount is capped at $500,000. §371.024 (b) Requires a do-it-yourselfer used oil collection center to register with the commission and report to the commission annually. §371.024 (b) Requires a do-it-yourselfer used oil collection center and a used oil collection center to register with the commission and report to the commission biannually. §371.024 (a) - (e) refer to "do-it-yourselfer used oil collection center(s)". §371.024 (a) - (e) refer to "do-it-yourselfer used oil collection center(s) and used oil collection center(s)." §371.0245 refers to a "do-it-yourselfer used oil collection center". §371.0245 refers to a "do-it-yourselfer used oil collection center or a used oil collection center". The original bill deleted §371.025 LIMITATION OF LIABILITY. The substitute includes §371.025 LIMITATION OF LIABILITY, but it is not amended from current law. §371.026 refers to used oil transporters, marketers, and recyclers. §371.026 refers to "used oil handlers other than generators". §371.026 (a) Registration and reporting is annual. §371.026 (a) Registration and reporting is biannual. The corresponding language in the original is found in §371.003 (22) under the definition of "Used oil transporter". §371.026 (d) Is added to allow a used oil transporter to consolidate or aggregate loads of used oil for the purposes of transportation. Also allows a used oil transporter to conduct incidental processing operations not designed to produce used-oil-derived products or used oil fuel. §371.028 The rulemaking deadline is July 1, 1995. There is no provision for rules to be consistent with federal rules. §371.028 (a) The rulemaking deadline is January 1, 1996. Commission rules are required to be consistent with federal rules. (b) is added to require the commission to adopt rules, standards and procedures consistent with the federal classification of used oil filters, no later than January 1, 2000. §371.041 (b)(2) a person commits an offense if the person knowingly commingles used oil with waste that is to be disposed of in landfills. §371.041 (b)(2) a person commits an offense if the person knowingly commingles used oil with waste that is to be disposed of in landfills or directly disposes of used oil on land. §371.041 (b)(3) a person commits an offense if the person transports, markets, or recycles used oil without complying with registration requirements. §371.041 (b)(3) a person commits an offense if the person knowingly transports, treats, stores, disposes, recycles, causes to be transported, or otherwise handles used oil without complying with registration requirements. No similar provision. §371.041 (b)(6) is added to stipulate that a person commits an offense if that person makes any false statement or representation in any document filed, maintained, or used for program compliance §371.041 (e) Exception is date specific to January 1, 2000. §371.041 (e) Exception is not date specific. §371.042 (a) and (b) state that an offense under Section 341.041 is a Class C misdemeanor. §371.042 (a) and (b) delete references to Class C misdemeanor and specify punishment: (a) Except as provided by Subsection (b), an offense under 371.041 is punishable by a fine of not less than $100 or more than $10,000 for each act of violation or each day of a continuing violation, imprisonment for a term not to exceed five years, or both. (b) If the defendant has been previously convicted, the offense is punishable by a fine of not less than $200 or more than $20,000 for each act of violation or each day of a continuing violation, imprisonment for a term not to exceed 10 years, or both. §371.043 (c) refers to §371.026. §371.043 (c) deletes reference to §371.026. §371.062 (a)(1) The term "First Sale" does not include the sales of automotive oil to the US Government or its instrumentalities. The term also does not include the sales of automotive oil to a permitted distributor. §371.062 (a)(1) does not include this provision. §371.062 (m) Automotive fee expires on January 1, 2000. §371.062 (p) is the corresponding Subsection in the substitute. Sec. 371.062 of the filed version contains similar language. §371.062 Adds new Subsections (m) - (o) as follows: (m) A distributor must obtain a permit from the comptroller; the comptroller is required to adopt an application for the permit which must include the business name, the location, the names of principal officers of the corporation or members of the partnership (if applicable), any other information required by the comptroller. (n) Allows the comptroller to deny or revoke a permit under Subsection (m) if false information is submitted. (o) A permit under Subsection (m) may not be assigned. SUMMARY OF COMMITTEE ACTION HB 3220 was considered by the House Committee on Environmental Regulation in a public hearing on April 25, 1995. The chair recognized Rep. Howard to explain the bill. The committee considered a complete substitute to HB 3220. The following persons testified in favor of the bill: Steve Perry, representing Texaco & Star Enterprise Nancy Sauer, representing Pennzoil Company Ty Nilsson, Director-Marketing Services, Purolator Products, Inc., representing Filter Manufacturers Council Frank Denton, Quick Lube operator, representing himself and Automotive Oil Change Association Randall A. Roessler, Quick Lube operator/owner, representing Automotive Oil Change Association, Texas Operators Group - AOCA Four amendments were offered to the substitute, all of which were adopted without objection. The substitute as amended was adopted without objection. The chair directed the staff to incorporate the amendments into the substitute. HB 3220 was reported favorably as substituted, with the recommendation that it do pass and be printed, by a record vote of seven (7) ayes, no (0) nays, no (0) pnv, and two (2) absent.