EPA-600/5-74-OZ5
July 1974
Socioeconomic Environmental Studies Series
Used Oil Law In the United States
and Europe
CD
Office of Research and Development
U.S. Environmental Protection Agency
Washington, D.C. 20460
-------
RESEARCH REPORTING SERIES
Research reports of the Office of Research and Development, Environmental
Protection Agency, have been grouped into five series. These five broad
categories were established to facilitate further development and appli-
cation of environmental technology. Elimination of traditional grouping
was consciously planned to foster technology transfer and a maximum inter-
face in related fields. The five series are:
1. Environmental Health Effects Research
2. Environmental Protection Technology
3. Ecological Research
4. Environmental Monitoring
5. Socioeconomic Environmental Studies
This report has been assigned to the SOCIOECONOMIC ENVIRONMENTAL STUDIES
series. This series includes research on environmental management,
economic analysis, ecological impacts, comprehensive planning and fore-
casting and analysis methodologies. Included are tools for determining
varying impacts of alternative policies, analyses of environmental plan-
ning techniques at the regional, state and local levels, and approaches
to measuring environmental quality perceptions, as well as analysis of
ecological and economic impacts of environmental protection measures.
Such topics as urban form, industrial mix, growth policies, control and
organizational structure are discussed in terms of optimal environmental
performance. These interdisciplinary studies and systems analyses are
presented in forms varying from quantitative relational analyses to manage-
ment and policy-oriented reports.
EPA REVIEW NOTICE
This report has been reviewed by the Office of Research and Development,
EPA, and approved for publication. Approval does not signify that the
contents necessarily reflect the views and policies of the Environmental
Protection Agency, nor does mention of trade names or commercial products
constitute endorsement or recommendation for use.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20102 - Price $3.65
-------
EPA-600/5-7^-025
July 1974
USED OIL LAW IN THE UNITED STATES AND EUROPE
by
William A. Irwin
Richard A. Liroff
Contract No. 68-01-2203
Program Element 1DA315
Roap/Task 2UACN-OU
Project Officer
John A. Jaksch, Ph.D.
Resources Analysis Staff
Washington Environmental Research Center
Office of Research and Development
U.S. Environmental Protection Agency
Washington, D.C. 20460
Prepared for
OFFICE OF RESEARCH AND DEVELOPMENT
U.S. ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
-------
ABSTRACT
This report briefly reviews existing information on the collection
and disposal of used automotive and industrial oils and on the
potential health risks of improper disposal of such oils. Provisions
of federal law governing disposal of used oils are analyzed. The
history of federal taxation of lubricating oils is recounted, as
is that of federal requirements for labeling products made from
used oils. State laws regulating used oil disposal and reproceessed
oil labeling are analyzed and the laws (and/or proposed laws)
of several other industrialized nations governing used oil collection
and disposal are described. The elements of a comprehensive pro-
gram for regulating used oil collection and disposal and alternative
means for implementing and funding such a program are discussed.
Recent Congressional bills relating to used oils are examined.
This report is submitted in partial fulfillment of Contract No.
68-01-2203 by the Environmental Law Institute under the sponsor-
ship of the Environmental Protection Agency. Work was completed
in July 1974.
ii
-------
CONTENTS
Abstract
Contents
Summaries of Appendices
List of Tables
Acknowledgments
Sections
I. Conclusions and Recommendations 1
Conclusions 1
Recommendations 3
II. Collection and Disposal of Used Oil: Environmental
Health Aspects of Selected Disposal Methods 5
Introduction 5
Definition 5
Collection of Used Oil 5
Disposal of Used Oil 7
Existing Surveys 7
EPA Data File 9
Survey of EPA Regional Administrators 10
Summary 10
Environmental and Health Consequences of Existing
Disposal Practices 11
Burning Used Automotive Crankcase Oil 11
Road Oiling 15
Rerefining Waste Products 16
Potential Toxicity and Carcinogenicity of Improperly
Disposed Used Oil 16
III. Federal and State Laws Affecting Used Oil Generation and
Disposal 21
Current and Potential Federal Jurisdiction 21
Definition of Used Oil and of Jurisdiction
Analyzed 21
Current Jurisdiction Under Existing Laws 21
Federal Water Pollution Control Act Amendments
of 1972 21
Section 311 21
Section 402 22
Section 313 24
Section 208 24
Marine Protection, Research and Sanctuaries Act
of 1972 25
S. 3954 25
Clean Air Act 26
Potential Additional Jurisdiction Under Existing
Law or Pending Bills 26
Clean Air Act, Section 112 26
Hazardous Waste Management Act of 1973 27
Toxic Substances Act 27
Conclusions 27
iii
-------
Federal Tax Treatment of the Rerefining Industry 28
Tax Code Treatment of Rerefiners, 1932-1964 28
The Excise Tax Reduction Act of 1965 32
Post-1965 Income Tax Regulations and Revenue
Rulings 36
Federal Reprocessed Oil Labeling Requirements 39
The Federal Trade Commission 39
Early FTC Action 39
The Mohawk Case 40
Double Eagle _! Case 42
Royal Oil 44
Double Eagle II 45
Tnade Regulation Ruling 46
Impact of FTC Trade Regulation Action 49
Post-Trade Regulation FTC Action 49
Proposals for Changing Labeling Requirements 50
EPA proposals 50
The National Oil Recycling Act 50
The EPA and Vanik proposals: An evaluation 50
The question of quality 51
A National Petroleum Inspection Program? 53
Conclusion 54
State Used Oil Disposal Controls 55
State Concern with Used Oil 56
States with Used Oil Management Programs 56
Maryland 56
Massachusetts 58
Vermont 61
States Expressing Concern for Used Oil 61
Colorado 62
Minnesota 62
New Jersey 62
Wisconsin 62
States Having Legal Mechanisms for Used Oil
Management 63
Scavenger Licensing Systems 63
Michigan 63
California 66
New York 67
Connecticut 69
Oklahoma . 70
Delaware 70
Other states1 licensing systems 71
Surface Storage Regulations 72
Solid Waste Disposal Regulations 72
States Having Comprehensive Oil Pollution Control
Statutes 74
States with Few Statutory Provisions Concerned
Explicitly with Oil Pollution 74
iv
-------
State Oil Container Labeling Laws 75
General Deception Statutes 75
Disclosure Provisions Specific to Reprocessed
Oil 76
State Labeling Laws: Legal Challenges 77
State Petroleum Product Inspection Laws 81
Alabama 81
California 82
Florida 83
IV. Used Oil Disposal in European Nations and Canada 84
Introduction 84
The Federal Republic of Germany 85
Introductory Summary 85
Explanations of the 1968 Law and Its Implementation 87
Definition of Used Oils in the 1968 Law 87
Legislative History 87
Definition of Mineral Oil 89
The Pick-Up of Amounts Less than 200 Liters 90
Quality of Rerefined Petroleum Products 93
Environmental Controls Governing Disposal Firms 93
Results of Implementing the Record-Keeping
Requirements 95
Administrative Expenses of the Reserve Fund 96
Disposal Firms1 Districts, Competition and Costs 97
Disposal Firms1 "Uncovered Costs" for Which
They Receive Payments 98
The Compensation Fee 99
The goods it applies to 99
Legal characteristics of the compensation fee 99
How the level of the compensation fee was
determined 100
The Interpretation of "Business" for Purposes of
Record-Keeping 102
Officials Responsible Under State Law for
Helping Administer the 1968 Law 102
Regulations Under the 1968 Law Applicable to
Inland Shipping 102
Legislative History of Used Oil'Provisions 103
1934-1945 103
Post-World War II Until 1963 103
December 1963 Law Enacting Subsidies for Rerefin-
ing 103
Amendment of the 1963 Law in Response to E.E.C.
Objections, April 1964 104
The First Report to the Parliament by the Minis-
try of Economics, June 1965 104
The Second Report to Parliament by the Ministry
of Economics, 1966 107
The Two-Year Extension of Subsidies for Rerefin-
ing 109
-------
The controversy over the bill 109
The Third Report to the Parliament by the Minis-
try of Economics, April 1968 111
Three Bills Prepared in 1968 Concerning Used Oil
Disposal 114
The governmentfs bill 114
Representative Dr. Schmidt's bill 116
Representative Stein's bill (Association of
German Industries) 118
The Committee's Report on the 1968 Used Oil
Statute 119
Denmark 121
European Economic Community 122
The Netherlands 126
Description of Used Oil Disposal Situation 126
Provisions of the Bill 127
Evaluation of Policy Alternatives 129
France 130
Used Oil Disposal Situation 130
Existing Legal Controls Applicable to Used Oil
Disposal 132
Proposed Decree Specific to Used Oil Disposal 133
Italy 134
United Kingdom 135
Canada 137
Provincial Legislation and Regulations 138
Municipal Controls 140
Belgium 140
V. Alternative Institutional Approaches to Used Oil Dis-
posal Control 142
Introduction 142
The Principal Problems 142
Addressing the Problems: Elements of Control 142
Alternative Institutional Approaches for Imple-
mentation 144
Interstate Compacts 145
Public Corporations 146
Grants-in-Aid 147
Permit Programs 148
Oil Industry's Internal Collection and Disposal 149
Positive Economic Incentives to Private Entre-
preneurs 150
Federal Taxation Policies 150
The Excise Tax Reduction Act of 1965 150
Congressional proposals for lube oil excise
tax reform 151
Federal Procurement Action 151
Credit 152
Federal Funding Options for Used Oil Programs —
Sources of Revenue 153
vi
-------
Disbursements from General Revenues 153
Impose a Disposal Fee at the Point of Final
Purchase or Disposal 153
Devote Proceeds from the Existing Excise Tax or
a Variant of it to a Used Oil Disposal Fund 154
Discard the Existing Excise Tax and Establish
a Disposal Fee 159
Summary — Funding Options 159
An Analysis of Congressional Proposals for Used
Oil Managment 159
H.R. 5902 159
Evaluation of the Vanik Bill 161
Revision of the Vanik Bill 162
S. 3625 162
Conclusion 162
vii
-------
Appendices
Appendix A:
Summary:
Appendix B:
Summary:
Appendix C:
Summary:
A Summary of Tax Code Provisions
Pertaining to Payment of Manu-
facturers' Excise Taxes on
Lubricating Oils
A "payment of an excise tax
of 6 cents per gallon by manu-
facturers or producers of
lubricating oil" is required
on all lubricating oils other
than imports, "cutting oils,
reclaimed oils, or oils seldom
used for lubricating purposes."
Lube oil to be exported, used
by the purchaser "as a supply
for vessels or aircraft," sold
to a "state or local govern-
ment for its exclusive use is
exempted from the excise tax."
State Used Oil Control Programs:
Selected Application and Record
Forms
Included are a collection of
used oil hauler application,
registration and recordkeeping
forms from Maryland, Massachusetts,
Michigan, California and New York.
Lube Oil Excise Tax: IRS Forms
These Internal Revenue Service
tax forms whose use is described
in Appendix A, cover the follow-
ing topics: Form 637 — Registra-
tion for Tax-Free Transactions
Under Chapter 32 of the Internal
Revenue Code, to be used by
producers and importers of
gasoline and manufacturers,
of lubricating oil; Form 4136 —
Computation of Credit for Federal
Tax on Gasoline, Special Fuels,
and Lubricating Oil; Form 720 —
Quarterly Federal Excise Tax
Return for quarterly payment
of excise taxes; and Form 843 —
Page
164
167
179
viii
-------
Appendix D:
Summary:
Appendix E:
Claim for rebate of excise taxes
paid. Instructions are attached
to all applications.
Report of the Federal Government
to the Federal Parliament of
the Federal Republic of Germany
on the Activity of the Reserve
Fund for the Used Oil Statute,
with translations of the Used
Oil Statute and the Implementing
Regulations
This appendix is a translation
of the report of the German
government to the Parliament
on the first three years of the
1968 Used Oil Statute. It
concludes that the law "has
proved itself splendidly. The
amount of used oil disposed of
in an environmentally harmless
manner has risen steadily since
the effectiveness of the law."
It recounts the activity of the
Reserve Fund established by the
law to fund payments to contrac-
tors for proper disposal and
explains that neither the compen-
sation fee of 7.50 DM per 100
kilograms of oil imported or
produced nor the payment rates
for incinerating or rerefining
used oils can be reduced.
The report contains appendices
with the texts of the Used Oil
Statute and of all the regula-
tions implementing it as of
March 1972. These appendices
are also translated in order to
provide a complete set of reference
materials for the German law.
Regulations Concerning the Gran-
ting of Temporary Subsidies for
the Production of Lubricating
Oils from Used Oils (Rerefined
Products)
Page
188
243
ix
-------
Summary;
Appendix F:
Summary:
Appendix G;
This appendix contains transla-
tions of the regulations imple-
menting the 1964 German law
which provided for temporary
subsidy payments to rerefiners
of used oils and the instruc-
tions of the Minister of Finance
implementing these regulations.
Many of the provisions of these
regulations foreshadow elements
of the implementation of the
1968 Used Oil Statute.
Motor Oil Sales and Used Oils
Generated, 1953-1965; Sales and
Uses of Lubricating Oils and
Used Oil Disposal, 1963-1967
These two graphs show, respec-
tively, 1) the parallel increases
in the amounts of motor oils
sold and used oils generated
in the Federal Republic of
Germany from 1953-1965 and
2) the amounts of lubricating
oils sold from 1963-1967
and how these amounts were used
(including how much of them were
collected as used oils).
Danish Used Oil Law and Accom-
panying Materials
Following a copy of the Danish
law on the removal of used oils
and chemicals is a general
explanation of the bill which
later became the law. The rules
implementing the law are included,
along with a bulletin of Infor-
mation on these rules for those
responsible for administering
them. This bulletin also
contains a model ordinance-
for municipalities to work from
in carrying out their duties
under the law and regulations.
The last two attachments are
letters to (1) member firms
of the Oil Trade Associations
248
249
-------
Appendix H:
Summary:
Appendix I:
Summary:
announcing an agreement for
free pick-up of used automobile
lubricating oils arranged by
the trade associations and (2)
the customers of the association
concerning how the disposal of
used automobile lubricating oil
would be arranged.
Commission of the European
Communities, Questionnaire
on the Disposal of Waste Oils
in the Member States of the
European Communities, 22 June
1973
This questionnaire is an effort
at comprehensive fact-gathering
as a basis for preparing a
regulation covering used oil
disposal in several European
countries (see Appendix I).
Commission of the European Communi-
ties, Proposal for a Directive
on the Disposal of Used Oils,
20 March 1974
The draft directive is the pro-
duct of the Commission's priority
on the disposal of waste oils
in its November 1973 action
program for the protection of the
environment. The directive
is designed "to ensure effective
protection of water, air and
soil against harmful effects
caused by the discharge, de-
posit and treatment of these
oils" and "is intended to
harmonize legislation, and
thus to create a coherent
system of legal provisions
applicable in all Member States"
of the E.E.C. The directive
would require used oils to be
disposed of by recycling, i.e.,
"regeneration and/or combustion."
264
276
xi
-------
TABLES
Page
Table 1. Lubricating Oil Tax Rebates for Off-Highway
Use 38
Table 2. Summary of State Scavenger Licensing Laws 64
Table 3. Chronology of General and Specific State
Oil Labeling Legislation 78
Table 4. Provisions of State Reprocessed Oil Labeling
Laws 80
Table 5. Prices and Classifications of Lubricating Oil
in the Federal Republic of Germany 94
Table 6. Lubricating Oil Excise Tax Receipts & Rebates
and Their Relationship to the Highway Trust Fund 155
xii
-------
ACKNOWLEDGMENTS
This report was prepared by members of the staff of the Environmental
Law Institute. The project director, Will A. Irwin, Esq., wishes to
thank his associate, Richard A. Liroff, for effective and unselfish
collaboration, and his assistants, Marguerite Mehlig and Ross D.
Pollack, Esq., for cheerful and valuable contributions to editing
and producing the report. In addition, thanks are given to:
Frederick R. Anderson, Esq., the executive director of the
Institute, and the entire Institute staff, for helpful cooperation;
Lynne Siena and Kip Woodward for quick fingers and alert minds
in typing the manuscript;
Francoise and Wolfgang Burhenne, legal officer and commission
chairman, respectively, of the International Union for Conservation
of Nature and Natural Resources, for generous hospitality and
assistance in Bonn, Federal Republic of Germany;
B. Risch of the Environment and Consumer Protection Service of
the Commission of the European Communities and Ing. J. Hopmans of
The Hague, a consultant to the Commission, for information about
used oil disposal in several European nations;
Ministerialrat F. Kruse of the Bundesministerium fur Wirtschaft
und Finanzen and Regierungsdirektor Irouschek of the Bundesamt
fur gewerbliche Wirtschaft, for complete information about the imple-
mentation of the Federal Republic of Germany's 1968 used oil statute;
Jonathan Bump, Esq., of Westminster West, Vermont, and Anne
Chacon of Washington, D.C., for careful translations of source
materials about used oil disposal in Denmark and The Netherlands,
respectively;
John A. Jaksch, the project officer for the Environmental
Protection Agency, for encouraging and professional guidance;
Several other persons in the United States and Europe for
generously providing essential information; and
Frances and Amanda Irwin, for providing a sense of why it is
worth caring.
Will A. Irwin exercised overall responsibility for the report and
wrote the first subsection of Section III, Section IV, and the first
four subsections of Section V (with the exception of the last por-
tion of the fourth subsection). Richard A. Liroff wrote the balance
of the report, with the exception of the last subsection of Section
II, (which was written by Ms. Mehlig). Section I was a j oint effort
of Messrs. Irwin and Liroff.
xiii
-------
SECTION I
CONCLUSIONS AND RECOMMENDATIONS
CONCLUSIONS
1. Used oils include waste oil as defined by section 104(m) of
the Federal Water Pollution Control Act Amendments of 1972
but not animal and vegetable oils or unused mineral oil wastes,
e.g., the wastes from drilling for, refining or transporting
petroluem. Used oils include mineral oils and mineral oil
products used in machines, motors, engines, compressors, cylinders,
axles, transmissions, transformers, turbines, cable or circuit
breaker insulations, spindles, and in other industrial appli-
cations .
2. Current practices of collecting and disposing of used oils in
the United States are erratic and may cause public health
hazards. Large quantities of used oils are disposed of in
ways that cannot be accounted for.
3. The Environmental Protection Agency has jurisdiction over the
disposal of used oils into waters of the United States under
the Federal Water Pollution Control Act Amendments of 1972 and into
ocean waters under the Marine Protection, Research, and Sanctu-
aries Act of 1972. It has jurisdiction over disposal by
burning insofar as particulate emissions are controlled under
state implementation plans to achieve ambient air quality
standards under the Clean Air Act, or are controlled by new
source performance standards for fossil fuel steam generators,
large incinerators or Portland cement plants. It has no juris-
diction over disposal of used oils on land. EPA's existing
regulatory authority does not offer comprehensive control of
collection and disposal of used oils. Disposal of used oils by
uncontrolled burning, by road oiling, by dumping on land, by
disposal in household garbage or down the drain, or by mixing
with fuel or home heating oils is not adequately controlled
under present federal laws.
4. Enactment of the Excise Tax Reduction Act of 1965 deprived
rerefiners of some of the tax advantages they previously enjoyed
under the Internal Revenue Code. Further, the Internal Revenue
Service in Revenue Ruling 68-108 interpreting the act gives virgin oil
marketers a tax advantage over rerefiners which could scarcely
have been intended by Congress.
5. Labeling on containers of reprocessed oil offered for sale is gov-
erned by Federal Trade Commission and state requirements for dis-
closure of previous use. These restrictions are the result of unethical
-------
trade practices engaged in by rerefiners in the 1940ls-1950's.
The courts have upheld the concurrent regulation of container
labeling by federal and state governments. Alternative labeling
requirements may be preferable, if product specifications and sim-
ple testing procedures can be established. If the federal govern-
ment changes its labeling requirements there is no guarantee
that states will change theirs. Existing state disclosure
requirements for reprocessed oils may not be found by the courts
to be in conflict with, and therefore pre-empted by, the newly
established federal requirements.
6. A survey of state laws for used oil management found only limited
legal and regulatory effort devoted to this task. A few states
have developed "used oil management" programs. Several more
have used oil hauler licensing programs of varied scope and effi-
cacy. About one-quarter of the states have oil storage regula-
tions and almost one-half have solid waste disposal regulations
applicable to used oil.
7. Petroleum product inspection laws vary considerably among the
states. Approximately 25 of the 40 states having general petro-
leum product laws have inspection statutes which include specific
references to lubricating oil quality control standards. The
other 15 of the 40 have petroleum product laws with no pro-
visions for lubricating oil or no provision for product quality
inspection.
8. The Federal Republic of Germany has a law providing for com-
prehensive control of the collection and disposal of used
oils which is funded by a special levy on the production and
importation of mineral oils. Denmark has a law requiring
municipalities to provide facilities for disposal of used oils.
France and Italy have laws designed to encourage rerefining
of used oils by reducing the tax on oil products made from
them. A bill is pending in The Netherlands which would provide
for national regulation of the collection and disposal of
used oils. A decree is pending in France which would prohibit
disposal of used oils into surface, marine or ground waters.
The Commission of the European Economic Community has submitted
a directive on the disposal of used oils for the approval of
the Council of Ministers of the E.E.C. which, if adopted,
would apply provisions similar to those existing in the Federal
Republic of Germany to all member nations of the Community.
9. Comprehensive control over improper disposal of useH oil
involves: 1) prohibitions on discharging them into water and
-------
limitations on depositing them on land and on burning them in
other than properly equipped incinerators; 2) opportunities
for persons with used oils to have them picked up or'accepted
by approved collectors without charge; 3) licensing and monitoring
of used oil collectors and their facilities; 4) licensing and
monitoring of ultimate disposers of used oil and their facilitfes;
5) requirements for complete record-keeping of the collection
and disposal of used oils; and 6) a program of public'information
about how to dispose of used oil properly and why it is impor-
tant to do so.
10. The means for assuring a comprehensive program of used oil
collection and disposal outlined in conclusion number 9 could
be implemented by: 1) interstate compacts; 2) public corporations;
3) grants-in-aid for government programs; 4) programs for licensing
the sale, collection and disposal of oil products; 5) require-
ments that the oil industry collect and dispose of their products
after use; 6) providing positive economic incentives to private
entrepreneurs in used oil collection and disposal businesses.
11. Public programs for the collection and disposal of used oil
could be funded by: 1) disbursements from general revenues;
2) imposing a disposal fee at the point of final purchase
or disposal; 3) devoting proceeds from the existing excise tax
(or a disposal fee in its stead) to a used oil disposal fund.
RECOMMENDATIONS
1. Internal Revenue Service Ruling 68-108, which is based on statu-
tory interpretation of questionable validity, should be revised.
Off-highway users of reprocessed oil should be permitted to
obtain refunds on the taxes paid on the virgin component of
such oils.
2. The Federal Trade Commission should consider changing its
labeling requirements for reprocessed oils. If quality speci-
fications and simple testing procedures can be established,
and products can be compared on the basis of their laboratory
and performance specifications, there is little purpose served
by distinguishing virgin oils from reprocessed oils. Any pro-
posal for new labeling requirements should be predicated on the
establishment of quality specifications. When new federal labeling
requirements based on quality specifications are established,
Congress should act to pre-empt state previous use disclosure
requirements.
3. States in which considerable quantities of used oils are
generated should establish programs regulating the collection
and disposal of used oil. Where used oil generation and disposal
is only a localized problem, county or municipal programs
are appropriate. Determinants of need for such a program
-------
include clean-up costs of unregulated dumping, health risks from
unregulated automotive crankcase oil burning, consumer fraud
resulting from mixing of used oils with domestic virgin fuels.
Elements of such programs are described in conclusion 9.
4. The federal government should establish a program of matching
grants to states wishing to implement used oil collection and
disposal control programs. Consonant with the "polluter pays
principle," state programs should be funded with revenues
from the existing federal lubricating oil excise tax or from
a modified version of it. This recommendation is made with the
recognition that the availability of federal grants might lead
some states which have no need for such programs to establish
them so as to qualify for federal aid. Despite this potential
for abuse, we believe a federal grant program advisable because
it will give needed assistance to existing programs while en-
couraging their development in states which need them but lack
sufficient resources for their operation.
-------
SECTION II
COLLECTION AND DISPOSAL OF USED OIL:
ENVIRONMENTAL HEALTH ASPECTS OF SELECTED DISPOSAL METHODS
INTRODUCTION
To properly evaluate alternative legal and administrative approaches
to used oil management, it is necessary to examine the existing
used oil stream. This section summarizes the existing data on
collection and disposal of used oil and discusses the implications
for human health of some existing disposal methods. For a thorough
survey of used oil generation, collection and disposal in one state,
see the Environmental Quality Systems, Inc. study of the state of
Maryland for the Maryland Environmental Service and U.S. Environ-
mental Protection Agency.
DEFINITION
For purposes of this report, used oil is considered to be any
mineral oil that has been refined and used. It includes principally
industrial oils and automotive lubricating oils. The report does
not discuss waste animal or vegetable oils that are often the by-
products of food processing operations or oily wastes from crude
petroleum production or from transportation of crude oil. Incidental
references to the vernacular and more general term "waste oil"
should be understood as used oil as defined above.
COLLECTION OF USED OIL
Used oil scavengers* collection procedures are influenced by market
demand for waste oil, though the impact of demand on collection
pricing is moderated in part by reported territorial and price-
fixing practices among scavengers. If demand for used oil is high,
a collector is provided with an incentive to collect used oil and sell
it at a profit. If the price he can obtain is sufficiently high,
he may even be willing to pay a waste oil generator for the privilege
of collecting his oil. On the other hand, if market demand for
used oil falls, collectors are less willing to provide collection
services and may charge a collection fee to cover their operating
costs. In low demand situations, the used oil generator is given
an incentive to dump his used oil on site so as to avoid collection
^-Environmental Quality Systems, Inc.. State of Maryland Waste Oil
Recovery and Reuse Program, EPA Office of Research and Development
Environmental Protection Technology Series Report EPA-670/2-74-
013, January 1974.
-------
charges, and an unscrupulous collector unable to locate a customer
for his collected used oil may simply resort to depositing his
collections in local dumps, down sewers, or elsewhere.
Four studies in the last seven years have addressed the matter of
collection. A 1967 American Petroleum Institute study showed
that of 817 service stations surveyed, 44.1 per cent sold used oils
to others, 29.9 per cent had it collected at no charge, and 21.5
per cent paid to have it collected. 15.3 per cent (or 125) of the
stations had experienced a change in collection procedure in the
preceding two years. Of these, 104 had formerly sold their oil;
62 now had to pay for collection, 32 obtained collection at no cost,
and 10 reported no collection.^
An A.D. Little study for Massachusetts, completed in January 1969,
reported that most service station operators were having difficulty
finding used oil collectors. Moreover, the service stations were
beginning to be charged for used oil collections whereas formerly
they were paid for their used oil. 88 per cent of service station
generated automotive waste oil, and 76 per cent of industrial used
oil was being collected.
A 1974 Environmental Quality Systems report for Maryland reported
that 25 per cent of used automotive lube generators paid for collec-
tion services, but 74 per cent paid nothing. Fifty per cent of the
industries responding to a survey question on collection indicated
that they paid nothing to have their used oil collected, but only
14 per cent of all the industrial respondents to the survey respon-
ded to this question.^
A 1973 Teknekron study summed up the general trend in collection
practices by noting that in the middle 1960fs collectors were paying
for used oil, by 1970 they were charging for collection service,
but by 1973 the price situation had returned to that of the middle
1960fs.5
Hearings on Water Pollution before the Subcommittee on Air and
Water Pollution~~of the Senate Committee on Public Works, "part""!,
90th Cong., 1st Sess. (August 1967), 290-302.
3A.D. Little, Inc., Study c>f Waste Oil Disposal Practices in Massa-
chusetts , Report to Commonwealth of Massachusetts, Division of Water
Pollution Control (January 1969).
4Supra, note 1.
^Teknekron, Inc. A Technical and Economic Study of Waste Oil Re-
covery. EPA Contract No. 68-01-1806, October 1973. Part III at 21.
-------
DISPOSAL OF USED OIL
Existing Surveys
Little is known about the disposal of used oil in America.
The American Petroleum Institute conducted a 1966-1967 survey of
817 service stations to determine the magnitude of the problem caused
by used oil disposal.** The survey found that while only 14 stations
(1.7 per cent of those surveyed) actually dumped their used oil,
43 per cent of the stations did not know the ultimate use of the oil
collected from them.
A 1968 A.D. Little study of used oil in Massachusetts found that of
the 15.5 million gallons of used oil generated, all but 4.5 million
were ultimately dumped into the terrestrial or aquatic environment.^
60 per cent of the 7.5 million gallons of automotive used oil col-
lected was reprocessed in Massachusetts to fuel oil and about 19
per cent was used for road oiling. 41 per cent of the 2.4 million
gallons of used industrial lubes collected was used as road oil and
37 per cent was locally dumped.
An analysis of used oil disposal practices by the Wisconsin Depart-
ment of Natural Resources found that most Wisconsin service stations
generating used oil were able to account for it.^ The survey did
not describe the disposal of oil sold over-the-counter, nor did it
describe industrial lubricating oil disposal practices. The study
revealed that one-third of lubricating oil drained is rerefined into
lubricating oil, one-third is reused as fuel oil, one-fifth is used
on farms for lubricating barn cleaners and controlling dust and weeds,
and the remainder is used for road oiling or is dumped on the ground.
The study did not clearly describe the percentage of the used oil
reprocessed prior to its use as fuel.
A 1973 study by the General Accounting Office of 97 federal facilities
in 25 states found few cases of outright dumping, though most facili-
ties having their used oil collected were unable to account for the
**Supra. note 2.
jSugra, note 3.
^Robert Ostrander and Stanton Kleinert, Drain Oil Disposal in
Wisconsin, Wisconsin Department of Natural Resources Technical
Bulletin No. 63, Madison, Wisconsin (1973).
-------
ultimate fate of their oil. A GAO follow-up of collectors, conduc-
ted principally by telephone, revealed that the collectors were
generally using the oil for fuel, taking it to a rerefiner, or
using it for dust abatement purposes.
A 1973 analysis by the General Services Administration of 97 GSA
motor pools generating 32,000 gallons of used lube oil in a six-
month period found that approximately 20,000 gallons of this oil
were given to collectors for disposal. ° The ultimate use of the
waste oil by collectors was not indicated. 6,700 gallons were dis-
posed to landfills, 1,300 gallons used for road oiling, and 4,200
gallons used for miscellaneous other purposes. GSA has since ordered
its motor pools not to dispose of waste oil in landfills. 1
An Army Audit Agency study of used oil disposal in FY1972 at 19
Army installations found 154,000 gallons of used oil being repro-
cessed and 868,000 gallons disposed of "using methods considered
to be ecologically unsound."^ Of 358,000 gallons given to con-
tractors, 117,000 were reprocessed, and 240,000 gallons were used
for road oiling and heating asphalt.
Among the instances of unsound disposal cited by the Army Audit
Agency were the following:
1. At Letterkenny Army Depot, 60,000 gallons were burned in
a ground level pit, thus polluting the air.
2. At Fort Bragg, 178,000 gallons of oil were disposed of
in the ground or poured down storm drains. Oil appeared
in streams and lakes in the vicinity of Fort Bragg.
3. At Fort Hood, 311,000 gallons of used oil were used for
dust control purposes. During heavy rains, the oil washed
into aquatic systems. Similar conditions were noted at
^Unpublished study. Results described in telephone interview with
John McNamara of GAO's Seattle office, November 6, 1973.
10"Survey of GSA Motor Pool Waste-oil Generation," June 25, 1973,
GSA memorandum. Copy in Environmental Law Institute files.
HGSA recognizes that some landfills can accept used oils without
environmental damage resulting. It was administratively easier,
however, just to issue a blanket prohibition. Conversation with Mr.
Rhodes, Motor Equipment Management Division, Federal Supply Service,
GSA, August 13, 1974.
"Audit of Selected Aspects of the Army's Resource Recovery Pro-
gram," Audit Report NE 73-71, Northeastern District, United States
Army Audit Agency, Philadelphia, Pa., January 30, 1973.
8
-------
Redstone Arsenal, the Military District of Washington,
the U.S. Military Academy and Fort Carson.
Most reports to date have ignored the over-the-counter market in
automotive lubricating oils. Very little is known about the exact
size of this market; the estimate generally quoted is 25-30 per cent
of the lube motor oil market consists of sales to individuals
who change their own oil.13 If 60 per cent of the do-it-yourselfers'
oil becomes used, this represents an absolute quantity of approximately
80 million gallons. The used oil generated by do-it-yourselfers
may be less than 60 per cent of their virgin oil purchases if a
significant proportion of these purchases is for "make-up" rather
than oil-change purposes.
Only one analysis has been conducted of disposal habits of do-it-
yourselfers. The Teknekron, Inc. study found that 58 per cent of the
used oil was being dumped: 33 per cent into backyards, 11 per cent
into sewers, 11 per cent into public dumps, and 3 per cent into empty
lots.14
EPA Data File
EPA's Office of Hazardous Materials maintains a data bank in which
discharges of used oil are listed, but only 177 entries can be
found for used oil for the past five years. Most of these reported
discharges are quite small in absolute magnitude and for all but
three of the entries the environmental damages and clean-up costs
associated with the discharges are reported to be "unknown".
The EPA figures are not comprehensive and cannot be relied upon as
indicating the magnitude of the used oil dumping problem; figures
for Baltimore Harbor alone, compiled by the Baltimore Port Authority,
show fifteen discharges of used oil for the nine month period beginning
March 1972.^ None of these discharges, even one of 750 gallons, is
listed in the EPA data bank.
The EPA listings also do not reveal reported used oil disposal
incidents in the State of Vermont. Since 1970 Vermont has received
13Estimate is from William Olcott, "Motor Oil Sales Flow from
Stations to Mass Merchandisers," National Petroleum News (August
1971), 52-58.
14Supra. note 5, Part II at 27.
15Reprinted in State of Maryland ..., supra, note 1.
-------
fourteen reports of the improper disposal of used oil; eleven involved
improper disposal to water. The Vermont official reporting this
information did not describe the quantities of oil involved Dut1fi
believes the reports are "no more than the tip of the iceberg."16
Survey of EPA Regional Administrators
In an effort to obtain additional information on used oil dumping, ELI
surveyed EPAfs regional administrators. They were asked to provide
information on numbers of used oil disposal incidents occurring and
environmental damages and clean up costs incident to them. Five
regions responded, two of which (Regions VII and VIII) referred
ELI to the computer file described above. Region II reported that
it was sure that used oil was entering the environment through
streams, sewers and illegal dumps, but it could not report any
instances of sewage treatment plant fouling, water supply fouling,
or ecosystem damage. Region II did report one major spill of used
oil resulting from failure of a lagoon dike at a used oil rerefinery.
Region III, like Region II, could not account for disposal of used
oil — "we don't know where it is going, so assume it is probably
ending up in the waters of the United States" — and, as Region II,
could not cite any major problems or damages resulting from used
oil dumping.
Region IV reported ten incidents in the past five years where oil
has forced the closing of water treatment plants. The nature of
the oil was not specified and the costs of these closings could not
be estimated. A newspaper report provided by Region IV described
a used oil spill whose estimated clean up cost was $5,000 to $7,000.
This report too was not listed on EPA's computer.
The lack of comprehensive used oil spill reporting data in the
EPA files may be a function of the division of oil spill regulation
responsibility between EPA and the Coast Guard. ^
The many studies to date of used oil disposal practices reveal
considerable uncertainty as to the fate of used oils, or else
provide evidence that untreated waste oil is being randomly dumped,
applied as a road oil, or burned as a fuel. The environmental
damages resulting from these disposal practices are of uncertain
magnitude, but this uncertainty could itself be due to the inadequacy
to the Environmental Law Institute, December 6, 1973.
17Executive Order 11735.
10
-------
of existing reporting systems. If the environmental damages are of
sufficient potential magnitude, then better control over disposal ought
to be sought.
ENVIRONMENTAL AND HEALTH CONSEQUENCES OF EXISTING DISPOSAL PRACTICES
Burning Used Automotive Crankcase Oil
Used automotive crankcase oils contain approximately one per cent
lead (by weight).1** xhe lead, whose source is fuel additives,
migrates to the oil from gasoline in the automobile engine.
Studies of combustion of 100 per cent crankcase oil conducted for
EPA by GCA Corporation reveal that 93 per cent of all the particulate
emissions generated are within the superfine dust category, i.e.,
are smaller than ten microns. ° 56.2 per cent of the major superfine
particulate pollutants are submicron size. Lead constitutes 35 per
cent of all the superfine used oil contaminants with 83.1 per cent
of these particles being submicron size. Submicron size particles
are of particular concern because they are deposited deeper in the
respiratory tract than large particles. To be abated, these sub-
micron size particles require high efficiency removal techniques —
fabric filters, scrubbers and, for some combustion processes,
electrostatic precipitators. The extent of deployment of these highly
efficient techniques varies among industries. ^
Studies by McCrone Associates for the Association of Petroleum
Rerefiners conducted at nine nationwide sites revealed that for every
10,000 gallons of used crankcase oil burned, between 400 and 720
pounds of lead oxides were produced.21 Not all these are emitted
from boiler stacks, however. Perhaps 25 per cent to 50 per cent
remain inside a boiler as slag. 2
1"Environmental Protection Agency, Report _to the Congress; Waste
Oil Study Authorized by §104(m). Pub. L. No. 92-500, April 1974 at 14.
•^See GCA, Monthly Progress Reports Nos. 3 and 4, unpublished.
Reports prepared for the Environmental Protection Agency, Contract
No. 68-01-1859. See also. Waste Oil Study, id.
20Waste Oil Study, id. at 72.
tlesults attached to "Association of Petroleum Rerefiners Message
to Government Officials, December 27, 1970." Copy in Environmental
Law Institute files.
Oil Study, supra, note 18, at 55.
11
-------
No federal standard specific to lead has been established under the
national ambient air quality standards or hazardous air pollutants
sections of the Clean Air Act, sections 109 and 112 respectively.
Lead concentrations are, however, subsumed within ambient air quality
standards for particulate matter and within particulate emissions
limitations established for certain new sources (section 111 of the
Clean Air Act) . The national primary ambient air quality standard
established for particulate matter is 75 micrograms per cubic
meter annual geometric mean and 260 micrograms per cubic meter maxi-
mum 24 hour concentration not to be exceeded more than once per year. J
At the state level, only Pennsylvania, Montana, and California have
established ambient air quality standards for lead. The Pennsyl-
vania and Montana standard is five micrograms per cubic meter aver-
aged over thirty days and the California standard is 1.5 micrograms
per cubic meter averaged over thirty days.^
The general relationship of atmospheric lead to human health can
be summarized as follows: Raised levels of lead in ambient air can
produce elevated levels of lead in the bloodstream. Elevated
lead levels in the blood in turn may produce adverse health con-
sequences in man. The considerable scientific controversy that
exists concerning this relationship may in P§*t explain the absence
of a federal air quality standard for lead. 5 Among the key issues
2340 C.F.R. Parts 50.6&50.7
^Pennsylvania: Pennsylvania Code Title 25, Rules and Regulations
Part I, Department of Environmental Resources; subpart C, Protec-
tion of Natural Resources; Article III, Air Resources; Chapter 131,
Ambient Air Quality Standards; §131.3; Adopted September 1, 1971,
amended January 27, 1972; Effective March 20, 1972; Montana: Montana
Administrative Code, ch. 14, subch. 1, §16.2.14(1)-S14040; California:
California Administrative Code, Title 17, Public Health, part III,
Air Resources, ch» 1, subch. 1, §70200.
"This generalization and the summary of key issues that follows is
based on a review of these materials: Opening Statement, EPA Deputy
Administrator John R. Quarles, Jr., Press Conference on Reducing Lead
in Gasoline, November 28, 1973; "Environmental Protection Agency,
EPA's Position on the Health Effects of Airborne Lead" (November
1972): "Environmental Protection Agency, EPA's Position on the Health
Implications of Airborne Lead" (November 1973); the ten symposium
papers published in Environmental Science and Technology, vol. 4,
nos. 3 and 4 (March, April 1970). Papers were originally prepared
for an American Chemical Society Symposium, Minneapolis, Minnesota,
April 14-15, 1969. Also see American Petroleum Institute Medical
Research Report #EA7102, "The Chronic Toxicity of Lead" (April 1971).
12
-------
are the following:
1. There are many sources of lead in the human environment,
the primary one being the daily diet. Disagreement exists
over the proportion of the human body burden of lead that
is attributable to inhalation and ingestion of lead from
the air, and thus there is some debate over the impor-
tance of establishing permissible levels for lead in ambient
air.
2. There is some dispute over the relationship of both body
lead burden and adverse health effects to the most widely
used indicator of exposure to lead, blood lead levels.
3. The linking of lead poisoning to exposure to high lead
level has resulted in establishment of occupational health
standards for lead. Not so clear are the consequences of
long term exposure to the comparatively lower lead levels
generally found in urban environments. These urban levels,
while low compared to occupational health standards,
are elevated when compared to suburban area levels.
4. Body burden of lead is a function of many factors, including
diet and ambient lead levels. The failure to control for
crucial variables, to establish control groups, and to
examine those exposed to lead at a pre-exposure point in
time has led to the questioning of various scientific
findings linking human health to the amount of lead in-
haled or ingested.
5. There may be a time lag between exposure to lead, ele-
vation of blood lead levels, and demonstration of symp-
toms of lead poisoning. Uncertain temporal relationships
make it difficult to determine what levels of ambient
lead and what periods of exposure produce adverse health
effects.
While not proposing any air quality or emission standards specific
to lead, EPA has concerned itself with lead concentrations out of
a need to establish a reference standard on the basis of which it could
prescribe the amounts of lead additives it would permit in gasoline.
EPA has authority to regulate fuel additives under section 211
of the Clean Air Act.
On the basis of its review of existing research, EPA concluded in
November 1972 that it was previously in error when it believed that
achievement of a 2 microgram per cubic meter air lead goal would
assure a reasonably complete degree of public health protection.
It concluded that "further air lead reductions below 2 micrograms
per cubic meter would seem indicated" and that "every effort
should, therefore, be-made to reduce all preventable lead exposures,
-------
including airborne lead, to the fullest extent possible.
26
EPA reexamined its November 1972 position and issued another posi-
tion paper in November 1973 which did not include a recommendation
that a particular level of ambient lead be achieved. EPA's principal
1973 conclusions can be summarized as follows:
A small but significant fraction of the adult population has blood
lead levels which are medically undesirable and should be reduced
if possible. Such levels occur in a much larger proportion of urban
children. Food is the largest contributer of lead to the general
population with other sources including water, air, and ingested
non-food items such as lead-based paint and dust. Lead from all
these sources should be reduced to the degree possible. Action had
already been taken to reduce the lead content of paint and actions
have also been taken to substantially reduce controllable sources
of lead in food. Lead in some drinking water supplies is higher
than desirable and efforts should be continued to reduce this
source of lead exposure. In EPAfs opinion, lead in gasoline is
the most important remaining source of controllable lead entering
the environment. Reduction of lead in gasoline will, therefore,
result in reduced exposure of man, both directly from reduction in
atmospheric lead, and indirectly from reduction of lead in dirt,
dust and at least to a minor extent, on and in foods.27
Consonant with this reasoning, EPA has issued regulations calling
for the reduction of the lead content of gasoline.28
6CA Corporation, working under contract to EPA, estimated ground
level concentrations of lead for certain applications of waste
oil as a fuel and concluded that certain large users, especially
utilities, could blend small percentages of low-treated or un*
treated used oil with their existing energy sources without necessarily
adding emission control equipment.29
The risk to human health from the burning of automotive used oil
will be reduced in the next decade as consumption of leaded gasoline
declines. The Mobil Oil Corporation estimates that should used
26EPA 1972 position paper, id., at VII-5.
27EPA 1973 position paper, supra note 25 at VIII-6 et. seq.
2838 Fed. Reg. 33734.
on
GCA/Technology Division, "Waste Automotive Lubricating Oil Reuse
As a Fuel," EPA Contract No. 68-01-1859, Draft Final Report July
1974 at 7.
14
-------
oil burning be sanctioned by EPA, 100 million gallons of lead-
containing used automotive oils will be available for this purpose.30
Road Oiling
Used automotive lubricating oil is often disposed of through use
as road oil. Road oiling abates dusty conditions and improves
road stability.
A recent EPA research project sought to ascertain the environmental
impact and effectiveness of used automotive oil's use as a road oil.
In brief, the researchers found that used crankcase oil was not a
very effective road oil, that it washed off rapidly in heavy rain
and that high concentrations of lead were found in runoff waters.
These findings have led some to question whether used automotive oil
should be used as a road oil in the future. For example, a recently
completed used oil study for the state of Maryland recommended that
Maryland forbid use of used automotive oil for this purpose.32
Two characteristics of the EPA study suggest that generalizations
based on it should only be made with great caution.33 First, the
road oil was applied at a rate of .45 gallons per square yard.
Second, the test was conducted on clay soils of low permeability.
Mr. Al Smith, Environmental Emergency Branch Chief of EPA's Region
IV has indicated that most road oiling in the southeastern United
States is done at a rate of .2 gallons per square yard on alluvial
soils of relatively high permeability. While no research specifically
designed to measure the effectiveness and environmental impact of
this road oiling has been conducted, Mr. Smith argues that the road
oiling is effective because it is being done on highly permeable
soils. He observes that much road oiling has been done in the
vicinity of Jackson and Vicksburg, Mississippi, and tests of ground
water conducted in conjunction with water well drilling operations
3°Letter from H.S. Kelly, Mobil Oil Corporation Products Department
to Mr. R.R. Wright, Jr., American Petroleum Institute, April 30,
1974. Copy in Environmental Law Institute files.
Frank J. Freestone, "Runoff of Oils from Rural Roads Treated to
Suppress Dust,11 Environmental Protection Agency, EPA-R2-72-054,
October 1972.
3^State of Maryland..., supra, note 1.
33rhis critique is based on a telephone interview of Mr. Al Smith,
January 21, 1974.
15
-------
in these areas reveal no elevated levels of lead or other heavy
metals. To be sure, Smith observes, road oiling may not be the most
judicious use of a used oil that can be burned for heat recovery
or reprocessed for reuse as a lube oil, but in the absence of a
market for the waste oil, its use as a road oil provides an
alternative to its random dumping.
Taken together, the EPA research results and the Smith critique
suggest that additional research ought to be conducted on the en-
vironmental impact and effectiveness of used lube oil use as a road
oil. While use on clay roads perhaps ought to be outlawed, use on
alluvial soils ought to be permitted where the oil cannot be econo-
mically collected for reprocessing purposes.
Rerefining Waste Products
Rerefining produces a variety of waste products. These include acid
sludge and spent clays. Landfilling of acid sludge and spent clay
is the most common disposal method and appears to be a reasonable
method of disposal provided sufficient safeguards are used to pro-
tect personnel, surface and ground waters.
POTENTIAL TOXICITY AND CARCINOGENICITY OF IMPROPERLY DISPOSED USED OIL
The potential health and environmental risks posed by the improper
disposal of used oils are just beginning to receive attention."
Chemical carcinogenesis, an area of cancer research long-neglected,
is just beginning to be developed as is the little explored field of
the toxicology of oil. ° The action and impact of carcinogenic
substances (i.e., how they are activated and how they affect the body)
and the control of their adverse effects remain little known.
The amount of used oil disposed is not necessarily directly related
Oil Study, supra,note 18 at 44.
35Waste Oil Study, supra, note 18, at 1-2.
^"International Agency for Research on gancer Monograph on the Evalua-
tion of Carcinogenic Risk of the Chemical to Man, vol. 3, Lyon,
1973 [hereinafter cited as IARC], at 1 et segj J.H. Milgrim, Tech-
nological Aspects of the Prevention, Control and Cleanup £f Oil
Spills, Energy Policy Project, Ford Foundation, presently unpublished
manuscript, at 1 et seq; Science, "Chemical Carcinogenesis: A Long-
Neglected Field Blossoms," March 8, 1974, vol. 183, 940-44, and
"Can Potential Carcinogens be Detected More Quickly?" at 943;
Dr. Sydney Siegal, National Institute of Health, Bioassay of Carcino-
genesis, telephone interview January 15, 1974.
16
-------
to the detrimental effects of carcinogens in that oil; a small
concentration of a toxic substance does not predicate little ill
effect.37
Levels of used oil pollution found to be "safe" in a laboratory
do not usually take into account long-term biological contamination
associated with the growth of cancers, nor can they account for the
way in which organisms are chemically affected by carcinogens.
More information is needed on dose-response levels of human beings,
the effect on humans of various amounts and intensities of concen-
trations of carcinogenic substances.3" Information about the cumu-
lative effects of biological magnification, one part of the puzzle
of the chemical carcinogenic potentiality of used oil, is sparse.
Until further research is conducted with waste oil (obtained from
samples received directly from polluted waters or collection depots),
its various chemicals isolated and broken down, the range of damage
at different concentrations for various periods of time will never
be understood.
Toxicity is a function of the chemical characteristics of a particular
used oil.*" In ascending order of toxicity the three major groups of
hydrocarbons in oil are alkanes (paraffins or saturates), alkenes
(found only in natural gas and cracked oil products, not crudes)
and aromatics. Alkanes are light fuels; the alkenes and aromatics
OT
J/Hal Snyder, U.S. Environmental Protectection Agency, Oil and Special
Materials, telephone conversation January 21, 1974; D.L. Woodhouse,
"The Carcinogenic Activity of Some Petroleum Fractions and Extracts,"
—• of Hygiene, London, vol. 48, 150, 1 et seq.
38IARC. supra.note 36. 12; S.F. Hedtke, "The Effects of Waste Oil
on Freshwater Aquatic Life," U.S. Environmental Protection Agency,
January 14, 1974, 2, 3; D.M. Martin, "Freshwater Laboratory Bioassays -
A Tool .in Environmental Decisions," No. 3, Contributions from the
Department of Limnology, Academy of Natural Sciences of Philadelphia,
1973, 22-25; Roya Nadeau, Environmental Protection Agency, Edison
Laboratory, Region II, telephone interview,January 21, 1974; H. E.
Stockinger, "Sanity in Research and Evaluation of Environmental
Health," Science, vol. 174, November 12, 1971, 663-64; Dr. S. Siegal,
supra.note 36.
3*Milgrim, supra, note 36.
40
Milgrim, supra, note 36; C. C. Twort & J. D. Fulton, "Experiments
on the Nature of the Carcinogenic Agents in Mineral Oils," J..of
Path. Bact., vol. 32, 1929, 149 et seq.; Woodhouse, supra, note 37,
121.
17
-------
the heavier fuels. Weathering (i.e. oxidation, evaporation,
dissolution and biological degradation) most readily occurs among
the alkanes, which have low boiling points. For the aromatics in
particular degradation is an extremely lengthy process. These
weather resistant hydrocarbons then, are the most toxic carcinogenic
components of oil. Moreover, it has been observed that the amount of
polynuclear aromatics in lubricating oil increases after use in a
motor vehicle; consequently it follows that waste oil is more toxic
than unused oil. Another of the possible difficulties arising
from the random dumping of used oil might be particles which have
settled in sediment; their degradation is exceptionally slow.^2
The greatest number of carcinogens found in used oil are relatively
unreactive chemicals such as polycyclic aromatic hydrocarbons.43 No
complete testing of used oil performed to date by either the Environ-
mental Protection Agency laboratories or by others, has entailed
a comprehensive analysis of the chemical composition of the hydro-
carbons of this oil, but has dealt almost exclusively with identifying
the metals and analyzing their effects. Yet, the only metal sus-
pected of having carcinogenic effects is cadmium, while at least
half a dozen or so chemical components of used oil (i.e., 3,4-
benzpyrene, dibenzathracene, dibenzpyrenes) have been known to induce
carcinomas.^
Some of the compounds in used oil may have toxic effects over a
lengthy period, but no experiments have been conducted over a long
enough span of time which would serve as possible indices for the
extent of the damage these toxins may cause. DNA is known to be
affected by carcinogens found in oil; modifications in DNA might
explain the preservation of distorted biological information from
the time of initial contact with a carcinogen to the time of appearance
P. Gross, "Third Annual Report on Gasoline Composition and Vehicle
Exhaust Gas Polynuclear Aromatic Content," CRC-APRAC Project No.
CAPE-6-68, Period Ending July 30, 1972; H. K. Newhall, R. E. Jentoff
& P. R. Ballinger, "The Effect of Unleaded Fuel Composition on Poly-
nuclear Aromatic Hydrocarbon Emissions," Chevron Research Company,
Society of Automotive Engineers, Inc., 1973, 1.
j. Freestone, supra, note 31, 1; Milgrim, supra, note 36.
supra, note 36,
and Industry, "Vehicle Exhausts in Relation to Public Health,"
Feb. 12, 1966, 290; IARC, supra note 36, Steiner, "Carcinogenicity
of Multiple Chemicals Simultaneously Administered," Cancer Research,
vol. 5, 632-35.
18
-------
of a tumor.^ In the case of skin tumors this latent period is
between 10 and 20 per cent of the hostfs life span. It must be
emphasized that the discussion in this paragraph relies upon data
from experiments conducted with only a few kinds of oil, not with
used oils.
Evidence clearly shows that the combination of oil with detergents
added to counteract overt oil contamination is more toxic than used
oil alone. " The synergistic and antagonistic reactions of the
components of the used oil among themselves and with potential chemical
treatments are other aspects of the chemistry of used oil which are
poorly understood.^' Acetone, sulphur and hydrochloric acid are
reagents having high potential antagonistic characteristics when
combined with carcinogenic chemicals in waste oil; the resulting
chemicals may have enhanced toxicity. ° Were these reactions to be
carefully observed and studied over a long period of time (more
than three years), the effects of the substances upon human beings
and other organisms might be calculated on a long-term basis.
Additives presently used for water filtration and purification should
be tested in reactions with the carcinogenic substances. Chlorine,
for example, is thought to increase the potential carcinogenicity
of chemicals already present in used oil (e.g.. phenyls), though it
purifies freshwater supplies for consumption.^
Continual releases of used oil in water systems may result in a
buildup of-sublethal carcinogenic material, the damage increasing
with time. Once the recovery capacity of the environment is exceeded
and absorbtion is no longer possible, considerable adverse health
impacts may follow. •*•
45iARC. supra, note 36.
J. Borneff, "Kanzerogene Substanzen in Wasser und Boden", 147 Archiv
fuer Hygiene 28, 39 (1963); Hedtke, supra, note 38, 2; IARC. supra, note 36
4: Martin, supra, note 38, 42; Stockholm Report, infra, note 50,~B54;
Toxic Substances.. The President's Council on Environmental Quality,
April 1971, iv; U.S. Environmental Protection Agency Preliminary Report to
Congress. April 1973 [hereinafter cited as EPA Prelim. Rep, to Cong..
April 1973],
^Hedtke, supra, note 38, 2; Steiner, supra, note 44, 632-35;
E. L. Wunder & D. Hoffman, Cancer, vol. 12, 1194-99.
ifef. Carcinogenic Action of Mineral Oils. "Introduction," Medical
Research Council, London, December 1966, 4.
^Hedtke, supra, note 38, 2; Martin, supra, note 38, 42.
-^Hedtke, supra, note 38, 44; W. Zimmermann, Pollution of Water and Soil
by Miscellaneous Petroleum Products, at B50 (General Report No. 2, Interna-
tional Water Supply Congress & Exhibition, Stockholm, June 15 to 19, 1964,
published by the International Water Supply Association, 34, Park Street,
London W.I.-, England).
19
-------
Studies and experiments should be conducted which seek to answer
whether improper disposal of used oils contributes to an increase in
the incidence of cancers and, if so, what percentage of the population
is exposed.
{1EPA Prelim. Rep, to Cong.. April 1973, supra, note 46, 20; R. Nadeau,
tmra. note 38.
supra, note 38.
20
-------
SECTION III
FEDERAL AND STATE LAWS AFFECTING
USED OIL GENERATION AND DISPOSAL
CURRENT AND POTENTIAL FEDERAL JURISDICTION
Definition of Used Oil and of Jurisdiction Analyzed
Not all oily wastes fall within the scope of the definition provided
in section 104(m) (1) of the FWPCA Amendments of 1972. That section
calls for a study of the general effects and potential market
of "used engine, machine, cooling and similar waste oil" (emphasis
added). This definition excludes animal and vegetable oils and
excludes unused mineral oil wastes,e.g., the wastes from drilling
for, refining, or transporting petroleum. It includes mineral oils
and mineral oil products which have been used in machines, motors,
engines, compressors, cylinders, axles, transmissions, transformers,
turbines, cable or circuit breaker insulations, and spindles.
This analysis of federal jurisdiction over disposal of used oils
within the boundaries of the United States and its territorial seas
distinguishes between current and potential federal jurisdiction,
i.e., laws which presently grant regulatory authority over used
oil to an agency of the U.S. government and laws or bills which may
do so in the future.
Current Jurisdiction Under Existing Laws
Federal Water Pollution Control Act Amendments of 1972 — Section
311 — The definition of oil in section 311(a)(1) includes a specific
reference to "oil refuse" and is comprehensive enough to include
used oil as defined above. Section 311(b)(3) prohibits the discharge
of oil "into or upon the navigable waters of the United States or
adjoining shorelines" in quantities determined in regulations issued
by the President to be harmful. By Executive Order No. 11735,
issued August 3, 1973, the President delegated the authority to
issue these regulations to the Administrator of the Environmental
Protection Agency. The regulations were issued in September 1970
under the predecessor provision to section 311(b)(3) and are regarded
by the Agency as continuing in effect without being reissued. They
provided that a discharge is harmful if it leaves a visible sheen
on the receiving water, a definition which withstood judicial review
in U.S. v. Boyd,1 decided in April 1973. A discharge is defined by
ELR 20434
21
-------
section 311(a)(2) as including spilling, leaking, pumping, emitting,
emptying or dumping. A harmful discharge must be reported to the
Coast Guard and is subject to a civil penalty after notice and an
opportunity for a hearing.2
Section 311(c)(l) authorizes the President to act to arrange for
the removal of any oil discharge (whether or not in harmful amounts) ,
a power which he has delegated to the heads of federal agencies having
responsibility under the National Contingency Plan. This plan is
required under section 311(c)(2) for the purpose of providing for
coordinated action to minimize damage from oil discharges. ^ The
Council on Environmental Quality has been assigned the responsibilities
of publishing and revising the plan.
Section 311(j)(1) likewise authorizes the President to issue regu-
lations establishing (1) methods for oil removal, (2) criteria for
local oil removal contingency plans, and (3) procedures, methods
and equipment to prevent and contain discharges of oil from water craft
or offshore facilities. The President has delegated these respon-
sibilities to the Administrator of the Environmental Protection
Agency and the Secretary of the Department in which the Coast Guard
is operating.^ For the implementing regulations, see 40 C.F.R. Part
112.
Section 402 — Direct discharges (i.e., not into a municipal sewer
system) of used oils in quantities less than harmful for purposes
of section 311 (for example, by a firm which cleans fuel oil tanks of
service station interceptors, e.g., the Metropolitan Sewer Cleaning
and Pumping Association of Washington, D.C.) are governed by the
requirement to obtain a permit contained in section 402 of the Federal
Water Pollution Control Act Amendments of 1972. (Presumably, harmful
discharges of oil prohibited by section 311 would not be eligible
for a permit under section 402.)
Section 301(a) proscribes the discharge of any pollutant (defined
in section 502(12) as any discharge from a point source into navigable
waters, arguably giving broader jurisdiction than section 311,
which refers to "navigable waters of the United States") unless
the discharge is authorized by a permit under section 318, 402 or
404. It is not likely that section 318, concerning permits to
2Section 311(b)(5)(6).
336 Fed. Reg. 16215.
*Exec. Order No. 11735
5ld.
22
-------
discharge pollutants in connection with an aquaculture project,
or section 404, concerning permits to discharge dredged or fill
material, would be applicable. Section 402, however, would be.
It authorizes the Administrator of the Environmental Protection
Agency, after an opportunity for a public hearing, to issue a permit
for the discharge of a pollutant or combination of pollutants
"upon condition that such discharge will meet either all applicable
requirements under sections 301, 302, 306, 307, 308 and 403 of this
Act, or prior to the taking of necessary implementing actions relating
to all such requirements, such conditions as the Administrator
determines are necessary to carry out the provisions of this Act."
Briefly, this means that the discharger must:
(1) meet by July 1, 1977, effluent limitations which shall
require application of the best practicable control
technology currently available, as defined by the Adminis-
trator of the EPA pursuant to section 304(b) of the
Act.6
(2) meet by July 1, 1977, any more stringent limitations established
pursuant to state law or other federal law or regulation or
required to meet water quality standards established
pursuant to the Act.'
(3) meet by July 1, 1983, effluent limitations which shall
require application of the best available technology
economically achievable for a category or class of point
source.8
(4) meet — if discharges in compliance with the effluent
limitations established in accordance with section 301(b)
(2) (A) would interfere with the attainment or maintenance
of water quality which will assure protection of public
water supplies and the protection and propagation of a
balanced population of shellfish, fish and wildlife, and
allow recreational activities in and on the water —
effluent limitations which can reasonably be expected to
contribute to the attainment or maintenance of such water
quality.
(5) meet — for discharges from facilities listed by category
by the Administrator of the EPA in accordance with section
306(b)(l)(A) — federal standards of performance reflecting
6Section 301(b)(1)(A).
7Section 301(b)(1)(C).
8Section 301(b)(2)(A).
9Section 302(a).
23
-------
the greatest degree of effluent reduction determined by
the Administrator to be achievable with the application of
the best available demonstrated control technology, if
the discharge is from a new source of that category, i.e.,
if construction of the facility was commenced after publica-
tion of proposed regulations by the Administrator for that
category in accordance with section 306(b)(1)(B).10
(6) meet effluent standards or prohibitions for toxic pollutants
(defined by section 502(13) listed by the Administrator
of the EPA in accordance with section 307(a)(l).l*
(7) monitor effluents as required in accordance with section
308(a)(4)(A) and permit access in accordance with section
308(a)(4)(B);
(8) comply with guidelines issued by the Administrator for
determining the degradation of the waters of the territorial
seas in accordance with section 403(c).
Section 313 — Section 313 of the FWPCA Amendments of 1972 provides
that all federal agencies having facilities or conducting activities
which may result in the discharge of pollutants "shall comply with
Federal ... requirements respecting control and abatement of pollution
to the same extent as any person is subject to such requirements ..."
Discharges of oil without a permit, or in violation of its conditions,
are liable to suit in accordance with section 309 or 505 of the
Federal Water Pollution Control Act Amendments of 1972 and with
section 17 of the Rivers and Harbors Appropriations Act of 1899, in
addition to the liability to civil penalties for harmful discharges
established by section 311(b)(6).
Section 208 — Section 208(b)(3) gives the Administrator of the EPA
authority to approve areawide waste treatment management plans
submitted by state governors for areas which have substantial water
quality control problems. These plans must include "a process to
control the disposal of pollutants on land or in subsurface exca-
vations within the area to protect ground and surface water quality.^
The Governor must designate a waste treatment management agency for
the area which the Administrator must accept unless the designated
agency does not have adequate authority to .implement the plan. 13
10Section 306(c).
1:LSection 307(d).
12Section 208(b)(2)(K).
13Section 208(c).
24
-------
Marine Protection, Research, and Sanctuaries Act of 1972 — Discharges
of amounts of oil into territorial waters which are not prohibited
as harmful under section 311(b)(3) of the Federal Water Pollution
Control Act Amendments of 1972 are not covered by section 402 of
the Act. Rather they are covered by the permit program established
by section 102 of the Marine Protection, Research, and Sanctuaries
Act of 1972. See comment 13(iii) on revisions to 40 C.F.R. Part
125. That section provides that the Administrator of the Environ-
mental Protection Agency may issue permits for the transportation
from the U.S. of material for the purpose of dumping it into ocean
waters if he determines that such dumping will not unreasonably
degrade or endanger human health, welfare, or amenities, or the
marine environment, ecological systems, or economic potentialities.
Section 102 also directs the Administrator to establish and apply
criteria for reviewing and evaluating permit applications.
Part 227 of 40 C.F.R. contains the EPA's criteria for evaluation of
permit applications for ocean dumping issued under authority of
Title I of Pub. L. No. 92-532. Section 227.22 provides:
Subject to the exclusion of paragraph (h) of this section, the
dumping, or transportation for dumping, of wastes containing
the following materials as other than trace contaminants will
not be approved by EPA.
• * *
(d) Crude oil, fuel oil, heavy diesel oil, and lubricating
oils, hydraulic fluids, and any mixtures containing these,
taken on board for the purpose of dumping, insofar as these are
not regulated under P.L. 92-500.
S. 3954 — The Senate Commerce Committee has ordered its bill
governing disposal of hazardous wastes, S. 3954, reported.
It will be referred to the Committee on Public Works for consideration
along with S. 1086. S. 3954 would establish standards
for products made wholly, or in part of recycled materials, and would
establish preferences in federal procurement and procurement by
federal contractors for items with the highest recycled materials
content where quality was substantially similar and the price sub-
stantially competitive. Further, it would govern the disposal of
1 ELR 46304. See also, section 2 of Pub. Law No. 93-254 amending
section 3(c) of the Act to provide that material includes oil (as
defined in section 311 of the FWPCA) "only to the extent that such
oil is taken on board a vessel or aircraft for the purpose of
dumping."
25
-------
hazardous wastes and establish a program to end the unsafe disposal
of all wastes, by joint federal action and mandated comprehensive
state planning and construction. Where state plans either were
inadequate or not adopted, federal override is provided, allowing
the Administrator to set standards. EPA would additionally set
standards to be met by mandatory state-administered permit programs
governing generators and ultimate disposers of hazardous wastes.
The bill would also establish a twelve member National Commission
on Environmental Costs to consider the advisability of establishing
a system of national disposal cost charges on all products other than
cons umab les .
Clean Air Act — The disposal of used oils by burning, either undiluted
or combined with other fuels or matter produces emissions of particu-
lates. Some of the particulate matter is heavy metals, principally
lead. These particulate emissions are controlled under the implemen-
tation plans for achieving national primary and secondary air quality
standards for particulate matter prepared by the states in accor-
dance with section 110 of the Clean Air Act, for approval by the
Administrator of the Environmental Protection Agency. If the used
oils are burned by a stationary facility subject to standards of
performance applicable to new sources of certain categories of
sources (e.g., fossil fuel steam generators, Portland cement plants
or large incinerators), under section 111 of the Act, then the par-
ticulate emissions must not exceed these standards of performance
if the facility was constructed or modified after the publication
date of the regulations containing the standards.^
Potential Additional Jurisdiction Under Existing Law or Pending Bills
Clean Air Act, Section 112 — If the Administrator of the Environ-
mental Protection Agency determines, as he has for mercury, beryllium
and asbestos, that lead is a hazardous air pollutant, i.e., an air
pollutant to which no ambient air quality standard is applicable
and which may cause or contribute to an increase in mortality or
an increase in serious irreversible, or incapacitating reversible,
illness, then the burning of used oils containing lead (e.g.,
crankcase drainings) will have to be conducted so as to comply with
emission standards for lead adopted in accordance with section 112
(b) (1) (B) .
40 C.F.R. §60.1.
26
-------
Hazardous Waste Management Act of 197316 — Section 3(4) of the
Administration's bill governing the disposal of hazardous wastes
on land defines hazardous wastes as "any waste or combination of
wastes which pose a substantial present or potential hazard to human
health or living organisms because such wastes are nondegradable
or persistent in nature or because they can be biologically magni-
fied, or because they can be lethal, or because they may otherwise
cause or tend to cause detrimental cumulative effects." Should this
bill or a modified version of it pass with this definition substan-
tially intact it is likely that its provisions would apply to the
disposal of used oils. A report to the EPA by the Battelle Institute
under section 212 of the Resource Recovery Act treated some used oils
as hazardous.
Toxic Substances Act-'-' — Depending on what action the conference
committee takes on this bill, its provisions could apply to used
oils.
Conclusion
Existing federal laws do not offer comprehensive control of used
oil collection and disposal. Additional control over collection,
storage and transportation is provided by some state laws, as
described below, and some municipal fire prevention ordinances
require service stations to have underground tanks to store used
oils. Municipal ordinances usually do not apply to other enter-
prises which generate used oil, often in large quantities.
Disposal of used oils by uncontrolled burning, road oiling,
dumping in household garbage or down household drains and municipal
sewers, mixing with fuel or home heating oils , and dumping on
land is inadequately controlled by existing laws. To what extent
these deficiencies should be remedied by local, state or federal
legislation depends upon a comparison of the benefits which would be
derived (e.g., for resource conservation, environmental protection
and health risk prevention) with the costs involved in implementing
the controls in a particular locale.
S. 1086, H.R. 4873. The report referred to in the last sentence
of this paragraph is entitled Program for the Management of Hazardous
Wastes. It is the final report of the Battelle Memorial Instituted
Pacific Northwest Laboratories to the Environmental Protection Agency
under Contract N. 68-01-0762. For discussions of used oils see
pages 133-135 and A-118.
17S. 426.
27
-------
FEDERAL TAX TREATMENT OF THE REREFINING INDUSTRY
Tax Code Treatment of Rerefiners. 1932-1964
The tax on lubricating oil dates to 1932, when a 4 cent a gallon
tax was levied as part of a broad effort to increase federal revenue
during the depression. The proceeds from the tax were treated as
general revenue, and were not earmarked for special use. In the
revenue bill passed by the House,18 the only lubricating oils to be
taxed were those of viscosities suitable for use in internal com-
bustion engines. However, the Senate voted to eliminate the vis-
cosity limitations of the House bill, noting that the tax could be
evaded by mixing taxfree light and heavy oils.19 The enacted Revenue
Act of 1932^0 reflected this Senate concern and imposed a tax of
4 cents per gallon to be paid by manufacturers or producers on all
grades of lubricating oil. The tax was raised an additional one-
half cent in 194021 and one and one-half cents in 194222 to produce
revenue to finance the war effort.
The applicability of the tax to the lubricating oil products of
the rerefining industry was the subject of a controversy spanning
twenty-four years focused on the question of whether the rerefiners
were to be treated as "manufacturers" under Internal Revenue reg-
ulations. Since only "manufacturers" were subject to the excise
tax, resolution of this definitional question was of considerable
interest to both the rerefiners and their competitors.
In the Revenue Act of 1932, no definition of "manufacturer" was pro-
vided, nor was there explicit exclusion of rerefined products from
tax. Twelve days after the act's enactment, the first Internal
Revenue regulations describing its scope were promulgated, but still
1 8
See H.R. Rep. No. 72-708 (March 8, 1932) at 35.
19See S. Rep. No. 72-665 (May 9, 1932) at 43.
20Pub. L. No. 72-154, section 601. Excise Tax on Certain Articles;
(c) There is hereby imposed upon the following articles sold
in the United States by the manufacturer or producer ... a
tax at the rates hereinafter set forth, to be paid by the
manufacturer, /or/ producer...:
(1) Lubricating oils, four cents a gallon...
21Revenue Act of 1940, section 1650.
22Revenue Act of 1942, section 608.
28
-------
0 o
no effort was made to define the term "manufacturer."1" One month
later, however, the regulations were amended, and included within
the definition of "manufacturer" or "producer" were all reprocessors
of used lubricating oil.^ The revised regulations were amended
by a Treasury Decision nine months later, in March 1933, which limited
the definition of "manufacturer" or "producer" to rerefiners using
one specified process which produced oil with substantially the same
physical and chemical characteristics of new lubricating oil.
The regulations were amended yet again, in September 1934, to provide
that:
"any person who cleans, renovates or refines used or waste lubricating
oil by any method or processing which produces an oil substantially
equivalent to new lubricating oil"
?fi
would be considered a "producer" or "manufacturer" (emphasis
added).
The Bureau of Internal Revenue seemed uncertain how to apply its
changing regulations. For example, in late 1933, the reprocessed
products of Super Refined Oil Company were being exempted from the
tax, while the reprocessed products of Triplex Oil Refining Company
and Keystone Oil Company were being taxed.^However, in early 1934,
Triplex received a ruling that its rerefining process did not consti-
tute it as a manufacturer or producer under the law, and in late
1934, Keystone received a refund for the taxes it had paid.
By 1938, SIR was reconsidering the wisdom of attempting to tax
reprocessed oil under its regulations. From the end of 1938 until
late 1954, favorable rulings were given all rerefiners who applied
for tax exemptions. " Though rerefiners were thus made exempt
from paying excise tax on their end products, they had to pay tax
on the virgin oil which they mixed with their reprocessed oil to
upgrade it. Had they been officially treated as "manufacturers,"
^Regulations 44 Relating to the Taxes on Lubricating Oil . . .
Under the Revenue Act of 1932 (1932 ed.) at 8.
24T.D. 4339, XI-2, C.B. 446 (1932).
25T.D. 4362, XII-1, C.B. 380 (1933).
26Regulations 44 (1934 ed.) at 33; section 314.40, Internal Revenue
Code of 1939.
27Example cited in "Memorandum: Excise Tax on Lubricating Oil,"
(Arlington, Virginia: Association of Petroleum Rerefiners, 1955)
at 2.
28
• Id.
29iT.
29
-------
they would have had to pay an excise tax on their end products, but
they would have been able to purchase virgin oil free of tax for use
in blending, for the BIR regulations stipulated that noi tax would
be imposed upon any material used in the manufacture or production
of a taxable article.30 A Treasury Department official familiar with
the history of reprocessed oil taxation contends that the Internal
Revenue Bureau declined to tax the rerefiners because it had diffi-
culty proving that the rerefiners* product was equivalent to virgin
lubricating oil.31 The rerefiners reply, however, that the quality
question was immaterial, and, that the Bureau actually declined to
tax them because it knew a tax could not withstand court challenge.
The rerefiners have contended that their products should be tax
exempt not because they were alleged to be qualitatively inferior,
but because Congress did not intend for the rerefining industry to be
taxed at all.32
The administrative decision to forego taxing the rerefiners stimulated
a series of legislative proposals to tax the rerefining industry.
Between 1939 and IS49, seven such bills were introduced by four members
of the House Ways and Means Committee and the Senate Finance Committee,
but none were reported from committee.33
In late 1950, Donald O'Hara, the Assistant General Counsel of the
National Petroleum Association, called to the Internal Revenue
Bureau's attention the fact that a rerefiner in an FTC proceeding
30
Section 620, Revenue Act of 1932.
3-*-In a report to a Council on Environmental Quality Task Force on
Waste Oil, John Copeland of Treasury's Office of Tax Analysis wrote:
"... Legend has it, the Bureau of Standards would not testify that
reclaimed oil was the equivalent of or substantially equivalent to
new oil." "Waste Oil Study" (May 25, 7-page mimeograph) at 1.
^Interview with V. T. Worthington, Executive Director of Association
of Petroleum Rerefiners, October 23, 1973.
33H.R. 5133 introduced into the 76th Congress on March 20, 1939 by
Rep. Disney; H.R. 6498 introduced into the 76th Congress on May 24,
1939 by Rep. Disney; H.R. 3071 introduced into the 77th Congress on
February 4, 1941 by Rep. Disney; Amendment to H.R. 7378 introduced
into the 77th Congress on August 3, 1942 by Sen. Guffey; H.R. 4386
introduced into the 81st Congress on June 9, 1949 by Rep. Gavin; S.
2172 introduced into the 81st Congress on June 30, 1949 by Sen. Mar-
tin; H.R. 5448 introduced into the 81st Congress on July 14, 1949 by
Rep. Gavin.
30
-------
had contended that the quality of his lubricating oil matched that
of most premium motor oils. 0THarafs implication was that the
rerefiner should be taxed. The Bureau responded by noting that three
unsuccessful attempts had been made to legislate an excise tax on
reclaimed and rerefined oil and that it was not going to alter its
position.35
In August 1954, OfHara filed suit on behalf of Barkow Petroleum
Company against the Commissioner of Internal Revenue. The suit
sought a mandatory injunction requiring IRS to collect excise tax
on reprocessed oils represented and sold as equivalent to new lubri-
cating oils.36
OfHara requested dismissal of the suit when he received a letter from
the Commissioner of Internal Revenue stating that the IRS would re-
examine its position on reprocessed oil and that it would, if neces-
sary, test the issue in the courts.37 The IRS notified the Association
of Petroleum Rerefiners in March 1955 that it was going to attempt
to tax reprocessed oil and that the rerefiners were welcome to test
the action judicially. But after meeting with the rerefiners to
discuss its proposed new policy, IRS abandoned it. Instead, in
T. D. 6197, the Service changed its definition of the term "manu-
facturer" to give recognition to the de facto taxation situation that
had existed since 1938. Its new definition provided that
The term "manufacturer" does not include (1) a person who
merely blends or mixes two or more taxable lubricating oils,
(2) a person who merely cleans, renovates, or refines used
or waste lubricating oil, or (3) a person who merely blends or
mixes one or more taxable lubricating oils with used or waste
lubricating oil which has been cleaned, renovated, or refined.
These rerefiners falling within class (2) were those who had been
legally subject to the excise tax on their end product, but who had
never paid such a tax because the quality equivalence of their end
product with virgin oil was not proved. Rerefiners in category (3)
were those who continued to produce nontaxable products on whose
virgin oil component an excise tax had been paid.
Reported in National Petroleum News. June 18, 1952, 44:25 at 33.
35Reported in National Petroleum News, July 22, 1953, 45:25 at 33.
The reference to three attempts probably refers to the seven bills
introduced into three Congresses. See,supra, note 33.
3"Barkow Petroleum Company v. T. Colemen Andrews, Commissioner of
Internal Revenue ( D. D.C.).
37Petition for dismissal filed October 21, 1954 following receipt
of letter from Commissioner Andrews dated October 15, 1954.
38T. D. 6197, Cum. Bull. 56-2, 803 (1956)
31
-------
The struggle over the revenue regulations had been intense because
they provided a competitive advantage in the lubricating oil market
to the rerefiners. For their products made exclusively of reprocessed
oil, the rerefiners were able to avoid the 6 cent a gallon tax paid
by their competitors, the virgin oil marketers. For those products
comprised of both virgin and reprocessed oil, if a 50-50 mix of
oils is assumed the rerefiners were given a 3 cent a gallon com-
petitive edge, for they only had to pay excise tax on that portion
of their product that consisted of virgin oil. The rerefiners
maintain that because their profit margin was so small, it was only
through maintenance of the tax distinction between their product
and virgin lubricating oil that they were able to continue operating.
The Excise Tax Reduction Act of 1965
In 1964, Congress and the administration began to weigh gradual
elimination of many excise taxes which had developed over the years
and which were widely viewed as imposing excessive burdens on the
marketplace. As part of its tax reduction program, the administration
suggested complete elimination of the excise tax on lubricating oils. °
At hearings on the administration proposal before the House Ways and
Means Committee, two speakers addressed their remarks to the pro-
posed reduction in the lubricating oil excise tax. Rudolph Cubi-
cciotti, representing the American Petroleum Institute and Pennsyl-
vania Crude Oil Association, organizations comprised of the major
virgin oil marketers, supported elimination of the tax. Noting
that lubricating oils used for non-lubricating purposes were tax-
exempt, he argued that the excise tax represented a tax on use of
a commodity, rather than on the commodity per se. He observed that
the tax also presented an administrative burden, for certificates
of tax exemption had to be maintained and processed. Furthermore,
he contended that the excise tax had developed in the course of
revenue emergencies which were no longer of any concern. Since the
tax served no non-revenue social policy goals, he argued, it should
39
See text accompanying notes 42 and 46.
section 202 of the administration proposal in "Legislative
History of H.R. 8371, 89th Congress, the Excise Tax Reduction Act
of 1965, Public Law 89-44," House Committee on Ways and Means,
89th Congress, 1st Session at 62 [hereinafter cited as ETRA Legislative
History] .
See Hearings on the Federal Excise Tax 'Structure Before the Commi-
ttee on Ways and Means, U.S. House of Representatives, 88th Con-
gress, 2nd Session, July-August, 1964 at 620-27 [hereinafter cited
as ETRA Hearings].
32
-------
be removed. Cubieciotti also observed that the tax was an especial
burden for farmers and motorists.
The second individual speaking on the lubricating oil tax question
was a representative of the Association of Petroleum Rerefiners. ^
V. T. Worthington, Executive Director of the Association, contended
that the rerefining industry would be hard hit by elimination of the
excise tax. He observed that the price level of rerefined products
was determined in large measure by the price set for virgin lubri-
cating products, and that the rerefiners1 profit margin was so small
that elimination of the 6 cent per gallon competitive edge provided
by the excise tax would drive many rerefiners out of business.
Worthington conceded that the reasons given for eliminating the
excise tax were forceful, but for equally compelling reasons, he
suggested, it should be retained. The industry, he said, performed
a public service by providing an alternative to the mere dumping
of used oil into the environment, an alternative that promoted resource
conservation and elimination of used oil as an environmental
pollutant. Worthington concluded that the excise tax status quo
should be maintained, with the tax accepted as creating, in effect,
a payment for the services of the industry. He noted in this con-
text that the virgin oil producers were themselves recipients of a
government subsidy, in the form of a 27.5 per cent depletion allowance.
The House Ways and Means Committee developed a statute which it
believed would eliminate much of the excise tax without unduly
harming the rerefiners. Section 202 of the House bill maintained
the 6 cent per gallon tax on lubricating oil^J and section 210 (a)
and (b) of the bill earmarked the tax proceeds for the Highway
Trust Fund. ^ However, section 202 also provided for a rebate of the
tax paid, when the tax was paid on lubricating oil purchased for
nonhighway use. The rebate provision was to be made section 6424(a)
of the Internal Revenue Code and was to read as follows :
If lubricating oil (other than cutting oils, as defined
in Section 4092(b), and other than oil which has previously
been used) is used otherwise than in a highway motor
vehicle, the Secretary or his delegate shall pay
(without interest) to the ultimate purchaser of such
lubricating oil an amount equal to 6 cents for each gallon
of lubricating oil so used.*"
42
.Id., at 686-90.
*3See,ETRA Legislative History, supra note 40 at 161.
44Id. at 177.
45—
Id. at 162.
33
-------
The Ways and Means Committee expressed concern for the economic
health of the rerefining industry in its report on the excise tax
reduction measure:
... your committee concluded that generally the lubricating
oil tax was an undesirable tax to continue. However, it was
recognized that to the extent that lubricating oil is used in
highway motor vehicles, the tax represents an appropriate charge
on the users of highways similar to the gasoline tax and the
tax on tires. The revenues from the gasoline and tire taxes
are presently assigned to the Highway Trust Fund. Your committee
also recognized that the outright repeal of this tax might also
present problems for the rerefiners of oil, who are not subject
to the lubricating oil tax and whose profit margin generally
is smaller than the amount of this tax. Therefore, to repeal
this tax outright in many cases would drive rerefiners out of
business. This would have the effect of encouraging the
dumping of used oil in our streams rather than salvaging it
through rerefining.
Your committee's bill for the reasons indicated above in
effect removes the tax on all lubricating oils except those
used in highway vehicles.46
The Senate Finance Committee believed that the House measure did not
provide adequate protection for the rerefining industry. Accordingly,
it sought to maintain the excise tax on lubricating oil by striking
the House bill's lubricating oil provisions. The Senate report
commented:
The House recognized that the outright repeal of this tax
might present problems for the rerefiners of oil who presently
are not subject to the lubricating oil tax and whose profit
margin generally is smaller than the amount of this tax. The
House recognized that to repeal this tax outright would drive
many rerefiners out of business and it was noted that this would
have the effect of encouraging the dumping of used oils in our
streams rather than salvaging it through rerefining.
It was pointed out to your committee that much the same type
of problem exists in the case of non-highway use ... Thus,
retaining the tax on lubricating oils for highway purposes
alone does not completely remove the competitive problem of
the rerefining industry nor remove the encouragement to dump
used oil. It was for these reasons that your committee fully
46
Id. at 231.
34
-------
restored the present tax in the case of ... lubricating oils.
Since much of this tax, as reconstituted by your committee,
is not basically a highway use revenue, your committee also
removed the provision in the House bill which would have allo-
cated this revenue share for the Highway Trust Fund. As com-
pared to present law, the changes made by your committee with
respect to lubricating oil will have no effect.^'
The tax reduction measure ultimately signed into law contained the
House lubricating oil tax provisions, the Senate1s serious reser-
vations notwithstanding. The law's legislative history reveals that
retention of the provisions was solely the consequence of a "log-
rolling" conference committee compromise. The Senate conferees
withdrew their objections to the House lubricating oil tax provisions
in exchange for the House conferees1 withdrawal of objections to a
Senate provision providing income tax credit to farmers for taxes
paid on gasoline used for farm or other nonhighway uses. °
47
Id. at 534.
Id. at 811, 815. The Senate had with its amendment
#7, deleted the lubricating oil provisions of the House bill. With
its amendment #101, it added the gasoline tax rebate for farmers.
The House agreed to the Senate addition of amendment #101, and in
exchange, the Senate withdrew amendment #7 that had deleted the
lubricating oil provisions. The "Statement of the Managers on the
Part of the House" explains the trade as follows:
Amendment No. 7: The bill as passed by the House continued
the 6-cent-a-gallon excise tax on lubricating oil, but pro-
vided for refunds to ultimate purchasers of taxes paid with
respect to such oil used for non-highway purposes. It also
allocated the tax attributable to lubricating oil used for high-
way purposes to the highway trust fund ...
The senate amendment deleted these provisions of the House bill.
The House recedes with amendments conforming to the action on
amendment No. 101 ...
Amendment No. 101: Under present law, farmers and other
non-highway users may obtain refunds of taxes used for farm
and other off-hi-g^way purposes. Credits for such taxes are
not provided. The bill as passed by the House made no change
in this refund procedure. Senate Amendment No. 101 provides
that the tax on gasoline used for farm use or other non-high-
way purposes may be credited against the farmer's or other
35
-------
Post-1965 Income Tax Regulations and Revenue Rulings
The Excise Tax Reduction Act (ETRA) caused the rerefiners to lose
their 3 cents per gallon competitive advantage in the nonhighway
lubricating oil market. Its effects can be demonstrated in the following
example:
Suppose that to a nonhighway user the net cost of both virgin oil
and a 50-50 blend of virgin and reprocessed oil is $1.20. Prior to
ETRA, the user would have had to pay an additional 6 cent on the
virgin oil product and an additional 3 cent tax on the blended
product. Other things being equal, the nonhighway user would have
preferred to purchase the relatively cheaper reprocessed product.
Following ETRA, the nonhighway user was eligible for a rebate on
the tax paid on virgin lubricating oil. Thus, the purchase price of
the 100 per cent virgin lubricating oil was reduced to its net cost
of $1.20. Theoretically, the purchase price of the mixed product
would also have been $1.20, if the tax was refunded on its virgin
oil component. With the two products at parity, it was unlikely
that a nonhighway user would be inclined to purchase a "used"
product when a "new" product could be had at no additional expense.
In theory, then,the rerefiner was likely to suffer somewhat from
ETRA, the good intentions of the House and Senate notwithstanding.
In practice, the rerefiner was to suffer even more, for under IRS
Revenue Ruling 68-108, the rerefiner and his offhighway customer were
declared ineligible for rebate of the tax on the virgin oil component
of blended products. The rerefiner was thus placed at a 3 cent per
gallon competitive disadvantage vis-a-vis the virgin oil marketer.
In reaching the 68-108 decision, IRS argued that even though a
rerefiner had "used" the virgin oil in his blending process, he had
not "used" it "otherwise than in a highway motor vehicle" within the
meaning of section 6424 of the Internal Revenue Code and thus he was
not entitled to a rebate. IRS maintained that the type of "use"
contemplated within section 6424 was:
user's income tax liability. Under the amendment, if the excise
tax on such gasoline exceeded the user's income tax liability
the excess would be refunded to the user.
The House recedes with an amendment which provides the same
procedure for lubricating oil used for non-highway purposes.
36
-------
use of lubricating oil (previously unused) through which use
the oil is consumed or rendered unfit for further use as a
lubricant. In the case of blending by the rerefiner, the
"new" oil is not consumed in the blending process but becomes
a part of the nontaxable resultant product which the company
sells to consumers who use it in non-highway vehicles.
Furthermore, the nonhighway user purchasing a blend of virgin and
reprocessed oil was not entitled to a rebate; for he was not using
"new" (previously unused) lubricating oil within the meaning of the
ETRA rebate provision, but was using the rerefiners1 nontaxable
product in the blending of which the virgin oil had become "used."
IRS's conclusions in 68-108 are quite questionable. First, as the
statute presently reads, it is the clear intent of Congress that the
lubricating oil tax in effect becomes a special fee paid by highway
users to promote highway building. While one might argue that the
rerefiners have an indirect interest in seeing highways built, so
that more automotive lubricating oil is consumed in their use,
one is hard-pressed to find any other logical nexus between the
rerefiners1 blending activity and highway use. Second, it could
scarcely have been the intent of Congress to have railroad purchasers
of blended reprocessed oil pay a tax that underwrites a highway
construction subsidy for the railroad1s competitors, the trucking
industry.50
Reversal of Revenue Ruling 68-108 is suggested because, on its face,
it places the rerefiners at a disadvantage in the nonhighway
lubricating oil,market. It permits rebate of excise taxes on virgin
oil products without permitting a rebate of taxes on reprocessed
products, it appears to run contrary to congressional intent, and
it produces an anomolous situation in whch railroads may pay subsidies
to their highway competitors.
The tax code distinctions between on- and off-highway use discussed
above are summarized in Table 1. The first two rows show that no
on- and off-highway use distinction existed prior to 1965. Rows
3 and 4 indicate congressional intent in enacting ETRA — off-
highway users of lubricating oils should not be taxed. The last two
rows illustrate the availability of tax rebates for off-highway
use under Revenue Ruling 68-108; rebates are available to off-
highway users of virgin lube oil, but are denied to off-highway
users of reprocessed oil.
49
Revenue Ruling 68-108, Cum. Bui. 68-1, 561.
This argument was made in a May 18, 1966 letter from the Rerefiners1
attorney to Mr. Bernard Fischgrund, Chief of IRSf Excise Tax Branch.
37
-------
Table 1. LUBRICATING OIL TAX REBATES FOR OFF-HIGHWAY USE
Rebate Availability
On-Highway Use
Off -Highway Use
Pre-ETRA
Virgin Oil Marketers
and Their Customers
Rerefiners and Their
Customers
*
Post-ETRA
per
Congressional
Intent
Virgin Oil Marketers
and Their Customers
.
s.
Rerefiners and Their
Customers
no
yes
no
yes
Post-ETRA
per
Revenue
Ruling
68-108
Virgin Oil Marketers
and Their Customers
Rerefiners and Their
Customers
no
yes
no
no
* No distinction was made in the pre-ETRA tax code between on- and off-highway use.
-------
Reconsiderations of Revenue Ruling 68-108 by the Internal Revenue
Service would be^consonant with the requirements of the National Environ-
mental Policy Act.51 Section 101(b)(6) of the law declares that the
federal government should improve its plans and programs to "enhance
the quality of renewable resources and approach the maximum attainable
recycling of depletable resources." Section 103 requires federal
agencies to review their policies and procedures as a first step in
bringing them into conformance with the national environmental
policy embodied in section 101. Further discussion of this Revenue
Ruling can be found in section V of this report.
FEDERAL REPROCESSED OIL LABELING REQUIREMENTS
Federal regulations and state laws provide that labels on containers
of reprocessed oil must disclose that the containers* contents have
been reprocessed from previously used lubricating oils. The dis-
cussion below surveys federal requirements for reprocessed oil
labeling and evaluates proposals made for their reform. State
laws are detailed in the section of this report on state jurisdiction.
The Federal Trade Cqn™1ssion
Since 1940, the FTC has concerned itself with the trade practices
of the oil reprocessing industry. In the twenty-four year period
1940-64, the Commission issued 17 orders and agreed to 26 stipulations
involving individual oil reprocessors. In 1964, it promulgated
a trade industry regulation applying to all oil reprocessors*
marketing practices.
Early FTC Action — Beginning in 1940, the FTC challenged repro-
cessors1 affirmative misrepresentation of their products. Individual
reprocessors were ordered, or agreed in stipulations, to end labeling
as "100% Pennsylvania Oil" products made from reprocessed crankcase
drainings. In some cases, misrepresentation involved products
whose tradenames (e.g., "Cert-o-Penn") could lead consumers to
believe they were purchasing lubricating oil refined from Pennsyl-
51Pub. Law No. 91-190, 42 U.S.C. §§4321 jat. seq.
52Economy By-Products Co., Inc., Stip. No. 2920 (August 27, 1940);
Mouren-Laurens Oil Co., et al, Stip. No. 3301 (December 9, 1941);
Free State Oil Co., Stip. No. 3584 (December 11, 1942); In the
Matter of Penn-Lab Oil Products Co., Docket No. 4524, 34 FTC 1049
(1942); In the Matter of Westville Refinery, Inc., Docket No. 4370,
36 FTC 402 (1943); In the Matter of Dabrol Products Corp. et al,
Docket No. 5656, 47 FTC 791 (1950).
39
-------
53
vania crude.J In addition to ordering the end of affirmative
misrepresentation of products, the Commission required reprocessors
to disclose that their products were made from previously used oil.
The Commission, in so ordering, observed that the public had a
preference for new oil and was therefore entitled to know the origin
C i
of its oil purchases.-^
From its early cases involving both affirmative misrepresentation and
non-disclosure, the Commission moved into the arena of simple non-
disclosure, wherein it sought to require reprocessors to indicate
on containers that their products had been reprocessed from used
lubricating oils. In these cases, for which stipulations and orders
were first reported in 1956, Commission staff maintained that since
the public preferred virgin products to reprocessed products, any
reprocessed oil container not indicating that its contents had been
manufactured from previously used oil was deceptive, for in the absence
of such disclosure, the public assumed that it was purchasing a
virgin oil product.55 The FTC staff argued further that, in these
proceedings, the reprocessors' contentions that their products were
equivalent in quality to virgin oil products were immaterial.
Four FTC decisions and court rulings following from them have been
selected for detailed examination here, for they highlight the major
issues attending oil container label regulation.
The Mohawk Case — In the Mohawk Case,5' the Commission staff obtained
testimony from retailers and consumers to the effect that when they
bought oil not labeled as "reprocessed" they assumed they were
purchasing virgin oil.5**
5In one proceeding, the FTC found the tradename and corporate name
alone misleading, even though there was no claim made that the product
was refined from 100 per cent Pennsylvania crude. See In the Matter
of Pennsylvania~6il Terminal, Inc., et al, Docket No. 5868, 48
FTC 356 (1951).
Sfestville Refinery, supra, note 52 at 405, 406.
55As in all the reprocessed oil proceedings, the bases of FTC autho-
rity were sections 5(a)(l) and 5(a)(6) of the Federal Trade Commis-
sion Act, 15 U.S-.C. §45(a)(l) and §46(a)(6), which declare unfair
methods of competition and unfair or deceptive practices in commerce
to be unlawful and which empower the Commission to prevent their use.
5°See dis'cussion, infra, accompanying footnotes 101-102.
57In the Matter of Mohawk Refining Corp. et al, Docket No. 6588,
54 FTC 1071 (1958).
5®"Transcript of Proceedings before Hearing Examiner J. Earl Cox
in the matter of Mohawk Refining Corporation," at 8, 35, 159, 197, 209,
215.
40
-------
Testimony revealed consumer preference for virgin lubricating
oil though purchase choice seemed more greatly influenced by price
and brand name considerations. Those preferring virgin lubricating
oil to reprocessed lubricating oil indicated that they had no factual
basis for their preference, but assumed that the virgin lubricating
oil was better. However, a few indicated that they would purchase
reprocessed oil if it could be proved to be equivalent in quality
to new oil.61
Mohawk's expert witnesses testified that within the industry,
purchases were made on the basis of specifications of finished oil,
not on the basis of feedstock source y and that virgin crudes from
various parts of the,Dnited States differed from one another in their
lubricating quality. They also indicated that virgin lubricating
oil marketers, except for those selling Pennsylvania oil, did not
reveal the sources of the crude feedstock they used in their lubri-
cating oil refining processes and that the public, in its purchasing,
was not interested so much in sources as it was in the finished
lubricating oils' SAE and API ratings.
The hearing examiner ruled against Mohawk. 5 He rejected its argument
that if it was required to disclose the source of its feedstock,
then marketers of virgin lubricating oil should be subject to similar
disclosure requirements."6 A cease and desist order was entered
which was upheld on appeal to the Commission. The final Commission
order read as follows:
It is ordered, That respondents, Mohawk Refining Corp ....
in connection with the offering for sale, sale and
distribution of lubricating oil in commerce, as "commerce"
is defined in the Federal Trade Commission Act, do forth-
with cease and desist from:
(1) Representing, contrary to the fact, that their lubric-
ating oil is refined or processed from other than previously
used oil;
59Id., at 8, 13, 142, 166, 171, 176, 188, 191,
202-03, 205, 253, 347.
60
•Id., at 14, 18, 173, 180, 191, 227.
61Id., at 143, 181, 192-93, 205, 217, 228.
62Id., at 242-54.
5?I1-, at 93-96.
^Id., at 256, 261, 270.
65Supra, note 57 at 1074.
66Id. at 1073.
41
-------
(2) Advertising, offering for sale or selling, any
lubricating oil which is composed in whole or in part of
oil which has been reclaimed or in any manner processed from
previously used oil, without disclosing such prior
use to the purchaser or potential purchaser in advertising
and in sales promotion material, and by a clear and
conspicuous statement to that effect on the container . . . 67
Mohawk appealed the FTC order to the Third Circuit U.S. Court
of Appeals.8 It contended that the FTC opinion and final order
were arbitrary and capricious and lacked substantial supporting
evidence; that the Commission erred in holding that failure to
disclose the source of Mohawk*s lubricating oil product was a viol-
ation of the Federal Trade Commission Act; and that the Commission
had erred in excluding testimony from the hearing record pertaining
to the selling practices of lubricating oil marketers. The court
unanimously upheld the FTC actions, ruling as follows: The public
prefers new oil to reprocessed used oil. Though the two might be
equivalent in quality, the public is being misled if it purchases
used oil that it believes to be new; "the public is entitled to get
what it chooses, though the choice may be dictated by caprice or by
fashion or perhaps by ignorance." Labeling is therefore necessary
to distinguish new oil from used oil. Furthermore, the Commission
did not err in excluding expert testimony to the effect that it was
industry practice not to disclose to wholesale or retail purchasers
the source of motor oils, but rather to sell oil on the basis of
SAE grades and API service classifications. These facts are immaterial,
because the record also indicated a desire on the part of dealers
and the public not to sell or buy rerefined motor oil.71
72
Double Eagle I Case — The Double Eagle I matter was decided by the
FTC on the same day as Mohawk, February 14, 1958, and it had the
identical outcome.
67 Id. at 1078.
_
68Mohawk Refining Corp et al v. FTC. 263 F2d 818 (3rd Cir. Ct. 1958) ;
1959 Trade Cases, If 69, 276.
70 Id. . at 1169, 277 citing FTC v. Algoma Lumber Co. . 291 U.S.
67, 77-78 (1934). : -
note 70 .
7^In the Matter of Frank M. Kerran et al Doing Business as Double Eagle
Refining Co., Docket No. 6432, 54 FTC 1035 (1958).
42
-------
Double Eagle argued that its rerefined product was equal in
quality to lubricating oil refined from virgin crude and that to
label it as being made from used oil would mislead an ignorant
public into believing it was a low grade product. Double Eagle
contended it would be unfair to require the use of a label which
would cause the public to undervalue its product and thereby decrease
sales. The rerefiner also contended that it performed a public
service by providing proper disposal of used
The full Commission responded that assertions of qualitative equality
were "immaterial" to its considerations, for it was solely concerned
with the question of whether the public was led to purchase rerefined
oil out of the mistaken belief that it was buying virgin lubricating
oil. " The Commission added that if consumers have a preference
for virgin goods, such a preference cannot be satisfied by imposing
upon them an article similar to a virgin one but having a non-
virgin origin.'" The Commission added, while upholding a hearing ex-
aminer's earlier decision, that the rerefiner's "public service"
argument was "without merit. "77 A cease and desist order similar
to that in Mohawk was entered.
The Double Eagle Refining Company brought suit in the Tenth Circuit
U.S. Court of Appeals in 1959 seeking to reverse the FTC order.78
The court, by a 2-1 vote, sustained the FTC action. The dissenting
judge based his opinion on the assumption that rerefined oil was
qualitatively equivalent to oil refined from virgin crude. He
reasoned as follows: Nothing can be found in the record to sustain
a finding that the public prefers new lubricating oil; the one wit-
ness describing public attitudes stated that purchasers desire
quality and prefer brand names . Omission of feedstock source
information has no relation to product quality and absent "affir-
mative misrepresentation" it is quality that is material in determining
whether there is customer deception. The fact that a buyer desires
a good oil or a brand name, oil does not mean he has any interest .
in the oil's origin. The assumption that the public prefers virgin
oil does not follow from the fact that the public seeks good oil;
yet the Commission made such an assumption, and from it found
73 Id., at 1041.
74M.
75Id., at 1039.
76Id., at 1040.
77Id., at 1041.
78Kerran et al v. FTC. 265 F.2d 2461 (10th Cir. Ct. 1959); 1959
Trade Cases, 1169, 322.
79
.Id.
43
-------
80
deception.
Royal Oil — The Royal Oil Corporation matter81was decided two
months after the Mohawk and Double Eagle I matters. Prior to the
filing of an FTC complaint against it, Royal Oil, a Maryland company,
had been labeling its reclaimed oil as "re-processed," in compliance
with a North Carolina statute.82 The FTC staff contended that though
required by North Carolina law, this label did not adequately dis-
close the used oil origins of the reclaimed product.83 The FTC
hearing examiner agreed and issued a cease and desist order similar
to those described above.8^ The full Commission affirmed the examiner's
decision, declaring that FTC action was not incompatible with state
action.85
The Royal Oil Corporation challenged the FTC order in the Fourth Circuit
U. S. Court of "Appeals§6R0yal argued that the FTC had no authority to
require any disclosure beyond that required by state laws. Royal
maintained that Congress had not entered this field of regulation,
80
.Id.
81In the Matter of Royal Oil Corp. et al, Docket No. 6702, 54 FTC
1291 (1958).
82Royal Oil marketed its oil in North Carolina. Chapter 119,
section 119-13.1-13.3, General Statutes of North Carolina. Section
119-13.2 reads as follows:
Labels required on sealed containers; oil to meet minimum
specifications. — It shall be unlawful to offer for sale
or sell or deliver in the State re-refined or reprocessed oil,
as hereinbefore defined, in a sealed container unless this
container be labeled or bear a label on which shall be expressed
the brand or trade name of the oil and the words "reprocessed
oil" in letters at least one-half inch high; the name and address
of the person, firm or corporation who has .re-refined or re-
processed said oil or placed it in the container; the Society
of Automotive Engineers (S.A.E.) viscosity number, the net
contents of the container expressed in U.S. liquid measure of
quarts, gallons, or pints; which label has been registered and
approved by the Gasoline and Oil Inspection Division of the
Department of Agriculture; and that the oil in each sealed
container shall meet the minimum specifications as hereinbefore
described for each Society of Automotive Engineers (S.A.E.)
viscosity number.
83Supra» note 81 at 1292.
84
Id., at 1298.
85—
Id., at 1299-1303.
86Roval Oil Corp. et al v. FTC. 262F.2d741 (4th Cir. Ct. 1959);
1959 Trade Cases 1f69, 234.
44
-------
and thus the FTC_could not nullify a valid state statute.
87
The Fourth Circuit panel unanimously upheld the FTC action, reasoning
as follows: Congress, through the Federal Trade Commission Act,
gave the Commission broad authority to restrain unfair competition.
Unless Congress specifically withdraws this authority, within
particular areas, the Commission can restrain unfair business practices,
even if these have been subject to state regulation. Furthermore,
the Commission can even order halted an unfair method of competition
authorized by state law.88 The FTC action, moreover, did not deprive
the company of equal protection under North Carolina law, though
its interstate marketed products might be subject to stiffer dis-
closure restrictions than its North Carolina competitors' intrastate
marketed products; intrastate competition is not subject to federal
regulation even though it competes with interstate commerce, because
interstate goods are in competition with intrastate goods beyond
federal control. Finally, although the testimony in the record
was not very strong as to possible deception of the public stemming
from incomplete label disclosure, it gave some indication that decep-
tions might occur. This, coupled with the Commission's own observa-
tions based on expert knowledge, was sufficient evidence that the
labels could be deceptive.89
Double Eagle II — In 1963, the Double Eagle Company became the
target of a second FTC complaint. In a resulting 1964 order^O
the full Commission decided that the company's compliance with
previous full disclosure rulings was inadequate. In this instance,
the Commission reversed an examiner's finding that no deception of
the public had occurred.91
The second Commission action against Double Eagle was evidently
prompted by a change in the FTC's standards of full-disclosure.
While in 1958 the Commission felt that the full disclosure goal was
adequately served by having a notice of previous use printed on
side panels of oil containers, by 1961 the Commission decided that
only front panel printing of a previous use disclosure would meet
this goal. This change in standards caused the Double Eagle Company,
which had altered its labeling to conform to a 1958 Commission order,
to fall into non-compliance.
87
Id.
89—
W-, at 1169, 235.
In the Matter of Double Eagle Lubricants et al, Docket no. 8589,
66 FTC 1039 (1964).
91Id. , at 1055.
45
-------
In reaching its Double Eagle II decision, the Commission decided
that it did not nave to examine the hearing record for evidence
of whether deception had been testified to, for its own visual
examination of the containers involved was adequate for deciding
if deception was likely to occur.92 The Commission found that it was,
and issued a cease and desist order requiring front panel disclosure
on Double Eagle's labels.^
Double Eagle petitioned the Tenth Circuit Court to review the FTC
order.^^ The court upheld the Commission, noting that though many
members of the public might testify that they had not been deceived,
the Commission was acting within its discretion when, exercising
its expert knowledge, it decided on the basis of visual inspection
that Double Eagle's container labels were deceptive.95
Trade Regulation Ruling — Having ruled on a number of cases involving
individual reprocessors, "" the Commission ultimately decided to
92
93Id., at 1066.
Id,,, at 1068.
94Double Eagle Lubricants et al v. FTC. 360 F.2d 268 (Kith Cir. Ct.
1965); 1965 Trade Cases 1171,613.
95ld., at 1171, 614.
^Orders: In the Matter of Salyer Refining Company, Inc. et al,
Docket No. 6339, 54 FTC 1026 (1958); In the Matter of High Penn
Oil Company, Inc., Docket No. 6492, 53 FTC 256 (1956); In the Mat-
ter of Deep Rock Refining Co., Docket No. 6579, 54 FTC 1123 (1958);
In the Matter of Acme Refining Corp. et al, Docket No. 6581, 54
FTC 1126 (1958); In the Matter of Lincoln Oil Company et al, Docket
No. 6669, 54 FTC 1080 (1958); In the Matter of Supreme Petroleum
Products, Inc., Docket No. 6682, 54 FTC 1129 (1958); In the Matter
of Allied Petroleum Corp., et al, Docket No. 6709, 54 FTC 1132
(1958) ; In the Matter of Seaboard Oil Company, et al, Docket No.
6717, 54 FTC 1135 (1958); In the Matter of Pierce Oil & Refining
Company, et al, Docket No. C-80, 60 FTC 342 (1962); In the Matter
of Porte Manufacturing Company, Inc., et al, Docket No. C-586 ,
63 FTC 682 (1963).
Stipulations were agreed to in the following cases: Virginia Iron
& Metal Company, Inc., et al, Stip. No.8785 (June 19, 1956);
Pioneer Oil Company, et al, Stip. No. 8786 (June 19, 1956); Thomp-
son Chemical Company, Stip. No. 8831 (November 6, 1956); United
Oil & Grease Company, et al, Stip. No. 8834 (November 6, 1956);
Jenney Manufacturing Company, Stip. No. 8835 (November 6, 1956);
Quincy Oil Company, et al, Stip. No. 8841 (December 11, 1956);
46
-------
establish a trade regulation rule governing sales of reprocessed
oil. The regulation;7 established after a public hearing, addressed
many of the issues discussed in earlier agency decisions. In
response to rerefiner assertions that they performed a public service
in disposing of used oil and that their products were as good as
or better than many oils produced entirely from virgin crude stock,
the Commission commented:
The value of the service rendered by this industry is
not germane to this consideration, nor is the equality
of reclaimed oil involved here, it ±3 not necessary,
therefore for the Commission to pass upon the relative
merits of new and reclaimed oil.98
The Commission determined in its ruling that it constitutes an
unfair method of competition and an unfair and deceptive act (1)
to represent used lubricating oil as new and unused; (2) to fail to
disclose clearly and conspicuously that such used lubricating oil
has been previously used, and (3) to use the term "rerefined" to
describe previously used lubricating oil unless the physical and
chemical contaminants acquired through previous use had been removed
Pacific Oil Company, et al, Stip. No. 8852 (January 1, 1957);
Three Rivers. Refining Company, et al, Stip. No. 9124 (November 18
1958); Warren Oil Company, et al, Stip. No. 9218 (September 1, 1959):
Christopher Oil Company, Stip. No. 9286 (May 12, 1960); State Wide
Oil Company, Stip. No. 9290 (May 26, 1960); Top Oil Company, Inc.,
et al, Stip. No. 9369 (December 13, 1960); Searle Petroleum Company
of Nebraska, et al, Stip. No. 9380 (January 12, 1961); Wynne Oil
Company, et al, Stip. No. 9384 (January 31, 1961); Gurley Oil Com-
pany, et al, Stip. No. 9385 (February 7, 1961); Kincheloe Oil Com-
pany (Industrial Oil Works Company), Stip. No. 9386 (February 16,
1961); Beckett Brothers, et al, Stip. No. 9386 (February 16, 1961);
Henley Oil Company, et al, Stip. No. 9434(May 25, 1961); Tulsa
Refined Oil Company, et al, Stip. No. 9457 (July 13, 1961); Graham
Penn Oil Company, et al, Stip. No. 9464 (July 18, 1961); R. E. Moore
Company, et al, Stip. No. 9471 (August 3, 1961); Jackson Oil Products
Company, et al, Stip. No. 9473 (August 23, 1961).
"'"Trade Regulation Rule Relating to Deceptive Advertising and Labeling
of Previously Used Lubricating Oil," 16 C.F.R. 406 (adopted
July 28, 1964; effective September 1, 1965.)
981 Id. , slip text at 4.
47
-------
by a refining process.^9
Although the Commission contended that oil quality was not germane
to its proceedings, it had nevertheless obtained information from
technical experts on the quality of rerefined oils. Research submitted
to the Commission disclosed that reprocessed lubricating oils were of
questionable durability. It was speculated that removal in the rere-
fining process of some of these oils1 important components produced
this shortcoming.100
In 1971, FTC Chairman Miles Kirkpatrick made the following comments
concerning reprocessed oil quality:
Technical experts ... are convinced that actual performance
capabilities of rerefined oil vary greatly in stringent
requirement areas such as motor oil because of the
unknown originiiof the waste oil. Although the purity of rere-
fined oil...can possibly be controlled by laboratory
99
Id.
— Accordingly, for the purpose of preventing such unlawful prac-
tices, the Commission hereby promulgates, as a Trade Regulation
Rule, its conclusions and determination that in connection with
the sale or offering for sale of lubricating oil composed in
whole or in part of previously used lubricating oil, in commerce,
as "commerce" is defined in the Federal Trade Commission Act,
it constitutes an unfair method of competition and an unfair
and deceptive act or practice to:
(1) Represent in any manner that such used lubricating oil is
new or unused; or
(2) Fail to disclose clearly and conspicuously that such used
lubricating oil has been previously used, in all advertising,
sales promotional material and on each front or face panel of
the container. For the purpose of this rule the front or face
panel means the part (or parts) of the container on which the
brand name is usually featured and which is customarily exposed
to the view of prospective purchasers when displayed at point of
retail sales; or
(3) Use the term "re-refined," or any other word or term of
similar import, to describe previously used lubricating oil
unless the physical and chemical contaminants acquired through
previous use have been removed by a 'refining process.
100Letter to FTC dated June 5, 1964 from R. E. Streets, Chief,
Power Sources Section, Chemistry and Materials Branch, Research
Division, Research and Development Directorate, U.S. Army Material
Command.
48
-------
specifications and testing, apparently many experts are convinced
that equally important characteristics such as durability under
in-use conditions cannot be determined without extensive per-
formance testing.101
Kirkpatrick added.that the Commission would re-examine its labeling
rule when "valid, impartial' scientific tests" are available indi-
cating that rerefined used motor oil is equal in quality and performance
to an acceptable grade of virgin motor oil.l°2 His comments suggest
that while the FTC did not officially weigh product quality in its
proceedings, its action in promulgating a trade rule may have been in
part motivated by a feeling that rerefined oil, though it met lab
specifications, might differ in its durability characteristics
from oil refined from virgin crude.
Impact of FTC Trade Regulation Action— The rerefiners contend that
the FTC trade regulation ruling hurt them economically.103 They
maintain that many middlemen marketing their products simply ceased
handling them so as to avoid a relabeling burden.104 They also con-
tend that the labeling decision changed their competitive posiiton
in the marketplace by altering retailers1 shelf-stocking habits.
Prior to the decision, apparently, rerefined oils competed directly
with the more expensive, high quality virgin lubricating oils, but
following the decision, the reprocessed products were placed in shelf
locations where they competed against somewhat less expensive low
quality virgin lubricating oils. Little data is available either
to support these contentions or to refute them.
Post-Trade Regulation FTC Action — In 1972 the FTC began to recon-
sider its trade regulation ruling. The reevaluation is part of a
broader study of labeling rules affecting "recycled" products.
Commission staff have met with EPA and Association of Petroleum
Rerefiners (APR) representatives, and have been furnished infor-
mation by the rerefiners on the quality of reprocessed oil. The
staff has prepared a labeling proposal for consideration by the full
Commission. It is presently undergoing review.
letter to Congressman Charles A. Vanik, August 19, 1971, at 2.
102
Id.
•1QO
See "Message to President Nixon, Members of Congress, The Fed-
eral Trade Commission, Pollution Control Agencies & Others From
Association of Petroleum Rerefiners1' (December 1972) , at 2.
104
Interview with V. T. Worthington, Executive Director, Association
of Petroleum Rerefiners, October 23, 1973.
l°50ral Presentation by Teknekron Inc.» contractors to EPA,
September 17, 1973.
49
-------
Proposals for Changing Labeling Requirements — EPA proposals —
EPA staff have suggested that FTC consider establishment of labeling
guides for recycled materials.106 Products made from recycled material
with performance characteristics which are essentially comparable
to those of products made from virgin materials would be treated
as new and would not be required to make a prominent "new" or
"recycled" disclosure. Products containing more than a specified
percentage of recycled material (i.e., post-consumer waste) would be
labeled as "recycled," and recycled products inferior in quality to
virgin products would have to have their limitations disclosed.
Previously used products subjected to little or no reprocessing
would have to be labeled as "used."
The National Oil Recycling Act — H.R. 5902 introduced by Represen-
tative Charles Vanik takes a somewhat different approach from EPA*s to
the labeling question.107 Section 3(2) of the Vanik bill defines
"recycled oil" as used oil which has been rerefined or otherwise
processed to remove the physical and chemical contaminants acquired
through use, which by itself or when blended with new oil or addi-
tives is substantially identical or superior to new oil Intended
for the same purposes. Section 7 (a) of the bill requires that re-
cycled oil shall be labeled as such when packaged for sale.
The EPA and Vanik proposals: An evaluation — Under the EPA pro-
posals, reprocessed oil would appear to fall under two labeling
categories. On the one hand, for that reprocessed product equivalent
in quality to new oil, no prominent source disclosure would have to
be made. On the other hand, for that reprocessed product containing
more than a specified percentage of recycled material (i.e., crank-
case drainings, which are a post-consumer waste), then regardless
of quality, a "recycled" label would be in order. As they apply
to used oil, the guidelines are ambiguous — a reprocessed product
equivalent in quality to new oil yet containing more than a specified
minimum percentage of reprocessed oil could fall within either of
the two regulatory guidelines just described.
The Vanik bill proposals do not have the ambiguity of the proposed
EPA guidelines, but they suffer from a shortcoming of another type.
Vanik would label all reprocessed blends as "recycled" if they were
equivalent in quality to virgin oils but his bill does not require
See Solid Waste Disposal Act Extension, Hearing before the Sub-
committee on Public Health and Environment of the House Committee on
Interstate and Foreign Commerce, 93rd Cong., 1st Sess., at 59.
Introduced March 20, 1973, Congressman Vanik re-introduced the bil
as H.R. 9338, H.R. 9339 and H.R. 9860, so as to add additional
cosponsors for it in accordance with House rules.
50
-------
that such blends contain more than a specified amount of reprocessed
oil to qualify for this label. In addition, his bill selects high
quality reprocessed oil for special labeling treatment. But unless
sales of recycled oil would be assisted by this procedure, there
seems to be no compelling reason to require special labeling.
The question of quality — An alternative approach to both the Vanik
and EPA proposals would be for all lubricating oil products, regard-
less of their feedstock source, to be subjected to engine and lab
tests to determine specifications, and to have the specifications
be the only labeling requirement. The matter of quality would need
to be resolved in any case as a first step in determining product
equivalence for purposes of labeling under both the Vanik and EPA
proposals.
Considerable controversy presently exists as to whether rerefined
oils are equivalent in quality to virgin lubricating oils. In ques-
tion are not only equivalence in lab specifications but equivalence
as well in engine performance tests. In June 1973 the rerefiners
furnished the FTC with results from an Armour Research Foundation
study of used oil drainings from throughout the country.108 Armour
reported that the drainings were rather uniform in composition, more
uniform in composition than virgin crude oils from different geographic
areas of the United States. The rerefiners assert that this finding
is significant because it means that a rerefinerfs feedstock is fairly
uniform, thereby eliminating the need for running expensive engine
performance tests to assess the quality of each batch of rerefined
oil. The rerefiners also furnished the results of a 1953 survey of
rerefined oils that disclosed product uniformity.
The rerefiners have always argued that their rerefined product is
equivalent in quality to virgin lubricating oils, but it is unclear
whether this equivalence is for lab tests or stricter engine performance
tests. As noted previously, research submitted to the FTC questioned
the durability of reprocessed oil.109
Some Defense Supply Agency procurement specifications explicitly
preclude the acquisition of reprocessed oil. A DSA study indi-
cated that the primary cause for the prohibition is the lack of substan-
tiating data of the quality of rerefined oil stocks.m DSA
Letter to William D. Dixon, Assistant Director, Rules & Guides, FTC,
from V. T. Worthington, June 25, 1973.
109see text accompanying footnote 99.
110MIL Spec MIL-L-46152; MIL-L-2104C.
Oil Recycling Study" (September 1972).
51
-------
reported Bureau of Mines tests on rerefined oil (discussed further
below) as indicating that many metal contaminants of waste oil can
be substantially removed by rerefining, but the effect of rerefining
on oil performance characteristics was unclear at the time the DSA
study was prepared.H2 The DSA study concluded that the Defense
Department should initiate a program to develop specifications for
an automotive lubricating oil containing rerefined stocks.H3
In March 1974 the Bureau of Mines issued the first detailed report
describing the results of its rerefined lubricating oil research.
While the principal objective of the research has been to develop
efficient methods for reclaiming used lubricating oils, secondary
objectives have included development of simple laboratory tests to
evaluate the quality of reclaimed lube oils and development of speci-
fication tests for both new and used oils to promote the market-
ability of recycled lubricating oil.
For the research conducted at its Bartlesville Energy Research Center,
the Bureau acquired samples of rerefined oils from manufacturers,
purchased at retail additional rerefined oils, produced by various
methods its own rerefined oils, and compared all these with virgin
oils. Comparisons were also made with used oils collected from the
Bartlesville automobile fleet and from local service stations.
All the commercially purchased rerefined oil samples were straight
mineral oils into which no additives had been blended. The researchers
commented:
Mineral oils generally will not stand the rigors of oxidation,
provide protection to the engine from wear and corrosion, nor
provide the lubricity required by today's modern automobile
without the help of additives. Therefore, it was a disappoint-
ment that the commercially rerefined oils purchased locally did
not contain most of the additives required to meet API service
designations for late-model automobiles (SC, SD, or SE).
These same oils might qualify for an SAE 30 viscosity designation and
might pass state-conducted viscosity tests, but the motorist purchasing
such oils for his late-model automobile might endanger his warranty
and risk damage to his engine.
The Bureau researchers found that the rerefined oils they tested
tended to have poor lubricity and poor oxidation stability, although
112
Supra, note 84 .
113Supra, note 84 •
H^Marvin Whisman et al, "Waste Lubricating Oil Research: An Investi-
gation of Several Rerefining Methods," (Bureau of Mines Report of
Investigations #RI7884, 1974).
52
-------
the addition of additives tended to minimize these adverse charac-
teristics. The researchers found that additive packages helped two
samples of rerefined oil pass corrosion resistance and wear tests
which they had previously failed.
While emphasis was placed on performance of rerefined oils, the per-
formance of new oils should' not be overlooked; two of the ten new
oil samples failed the foam test performed and one of the ten failed
a corrosion test.
A National Petroleum Inspection Program?
As indicated in the preceeding sections, some petroleum products —
both rerefined and virgin — do not conform to a number of accepted
standards of quality. In the section on state jurisdiction this will
also be found to be the case, and we will note in Addition that existing
state petroleum product inspection programs are able only to check
randomly for compliance with a few of the less telling indices of
quality.
Petroleum products, e.g., lubricating oils, can be tested for per-
formance (in stationary laboratory engines, for example) or subjected
to so-called laboratory bench tests. Performance tests are expensive,
however ($10,000 to $12,000 for a series of eight basic tests on a
sample), so neither states nor most producers can afford to conduct
them. Bench tests alone, however, are not a sufficient means for
determining the quality of lubricating oils. The parameters they check,
e.g., viscosity, are important but inadequate for a full analysis
of the quality characteristics of a sample of oil.
Currently, lubricating oils are performance and bench-tested by inde-
pendent laboratories. This is done to insure a credibility of re-
sults which would be absent if the oils were tested either by their
manufacturers or the producers of the additives which are vital con-
stituents. Often oils are put in cans without testing for compliance
with the levels of quality stated on the labels.
Because the quality of many petroleum products is erratic and because
most state inspection programs and non-major oil producers cannot
afford to regularly perform the tests necessary to determine quality,
consideration should be given to establishing a national program
for periodic and random testing of those petroleum products, e.g.,
lubricating oils, whose deviation from standards would potentially
cause serious private or public damage. Such a program could be
financed from excise taxes imposed on oil products and could be con-
ducted by the existing independent laboratories or a group of speci-
ally created public or private laboratories. It could also help
reduce and spread the costs of quality control in addition to filling
53
-------
a national need to assure that oils meet the requisite standards
of quality.
Conclusion
While the FTC ostensibly did not take product quality and environ-
mental impact into consideration at the time it promulgated its
trade regulation ruling, law and reason require that future rulings
consider both. First, sections 101 and 103 of the National Environ-
mental Policy Act of 1969 require FTC to re-examine its action and
to take its environmental impact into account.^-^ Second, since
under both the EPA and Vanik. proposals product quality would have to be
assessed, and since there is considerable variation among virgin
lubricating sources, it would seem that any proposal for new labeling
action should be predicated on the establishment of quality specifi-
cations. If quality specifications and simple testing procedures
can be established, and products can be compared on the basis of
their lab and performance specifications, it would seem that, in
the absence of both intra-industry concern with feedstock source
and rational consumer preferences regarding feedstock source, there
would be little purpose served by distinguishing virgin oils from
reprocessed oils.
Even though the FTC may act to change its labeling requirements so
that a previous use disclosure is no longer required, there is no
assurance that the states having previous use disclosure require-
ments will alter their laws to make them conform with the revised
FTC guidelines.
Furthermore, there is no assurance that, because the FTC will no
longer require previous use disclosure, that state statutes that
require a "reprocessed" or "reclaimed" label will be ruled as in-
valid because they are in conflict with the FTC rules.
As the district court found in Double Eagle Lubricants v. Texas
(described in the section on state labeling laws) federal law is
115Pub. L. No. 91-190, 42 U.S.C. §§4321-4347. Section 101(b)(6)
of the law declares that the federal government should improve its
plans and programs to "enhance the quality of renewable resources
and approach the maximum attainable recycling of depletable re-
sources." Section 103 requires federal agencies to review their
policies and procedures as a first step in bringing them into
conformance with the national environmental policy embodied in
section 101.
54
-------
paramount if Congress has clearly indicated an intention to pre-
empt the field. No such clear statement of congressional intent
is found in the FTC Act. Therefore state laws providing for regu-
lation of unfair or deceptive practices in commerce are valid un-
less they conflict so much in the same area with federal law that
both cannot stand. No conflict was found to exist between the phrase-
ology and intent of the FTC guidelines and the Texas law
in existence when the Double Eagle case was decided in 1965.
If FTC revises its guidelines requiring previous use disclosure,
we cannot be sure that state labeling laws will definitely be
ruled in conflict with the revisions. If FTC labeling rules are
to be revised, Congress simultaneously should rule that it is
congressional intent that in the area of previous use disclosure
for recycled petroleum products, federal action shall pre-empt the
field. The goal of giving the rerefiners a fairer shake in the lube
oil market (if their products are of good quality) can only be
served if the state previous use disclosure requirements are
pre-empted through congressional action.
STATE USED OIL DISPOSAL CONTROLS
This section reports the results of an Environmental Law Institute
survey of state programs that have been designed or may be used
for elimination of used oil as an environmental pollutant. The
survey revealed that only three states have initiated used oil manage-
ment programs. A few additional states advised that they either are
encouraging the reclaiming of used oil or that they are studying the
problem. A large number of states have developed procedures for
regulating some element of the used oil stream — storage, trans- ,
portation, or disposal on land — but these procedures are generally
applied to all hazardous or industrial wastes or to all petroleum
products, and have not been designed with used oil specifically in
mind. A large number of states have also enacted highly detailed
oil pollution .control statutes, but all these are coastal states
whose primary concern appears to be spills of oil from ships and from
harbor facilities.
Many of the programs which have been specifically designed for used
oil management are of recent origin. So too are many of the regu-
latory mechanisms which may be directed at one element of the used
oil stream. While operating experience with them may therefore
be limited, they nevertheless represent regulatory initiatives
which might be copied by other states.
55
-------
State Concern with Used Oil
For analytical purposes, states have been grouped into the following
categories:
1. States having "used oil management programs;11
2. States expressing concern for used oil management;
3. States having legal mechanisms which may be used to
monitor or control used oil streams;
4. States having comprehensive oil pollution control statutes
which provide evidence of state concern with oil pollution
but which may or may not be useful in regulating used oil;
5. States whose statutes contain few provisions explicitly
concerned with, oil pollution.
States with Used Oil Management Programs
Maryland, Massachusetts and Vermont have begun planning used oil
management programs. The three states differ in the legal basis
they provide for their efforts. The Maryland and Massachusetts
programs have an elaborate statutory and regulatory basis. Vermont,
in contrast, has not elaborated an extensive set of either statutes or
regulations for the control of oil pollution or used oil, but it
has begun planning a used oil collection system. Efforts to provide
for the collection and disposal of used oil are common to the three
state programs, but they differ from one another in the extent to which
they monitor sources of used oil. The states also differ in their
reporting requirements. Maryland, for example, though it licenses
sources of used oil and used oil transportation, does not provide
for detailed record-keeping in its regulations. Massachusetts,
in contrast, does not license service stations, but it does require
used oil haulers to maintain detailed records of their pick-ups and
discharges. Vermont, as noted, has not elaborated a regulatory basis
for controlling used oil.
Maryland — Maryland has enacted laws and promulgated regulations
governing a broad range of oil handling activities, including storage,
transportation and disposal. Areas covered include shipping, trucking,
port facilities, transfer facilities and facilities generating used
oils. The oil pollution control laws are found in Article 96A,
section 26A est seq. of the Annotated Code of Maryland.
Article 96A, section 26A. permits the Department of Natural Resources
to prescribe regulations for transfer, storage, separation, removal,
treatment and disposal of oil and other unctuous substances. No person
engaged in any commercial or industrial operation may conduct
such activities without a Department of Natural Resources permit.
56
-------
The remaining sections of Article 96A make it unlawful, with few
exceptions, to discharge oil from ships into state waters. Discharges
must be immediately reported. Ships unloading oil cargoes in Maryland
must be bonded, with the bond to be forfeited to cover oil cleanup
costs. The state may recover cleanup costs from any discharger with
collected receipts credited to a state oil cleanup contingency fund.
Water Resources Administration Regulations 08.05.04.07 et seq.
govern oil pollution control. These implement the statutory
requirements for oil handling permits, for oil storage facilities,
delivery vehicle operators, facilities for handling used oil, and
service stations and vehicle maintenance shops. The regulations also
provide, pursuant to statute, for the licensing of marine oil transfer
facilities.
Maryland has been concerned with pollution attibutable to used oil
for at least two years, and in conjunction with the United States
Environmental Protection Agency has sponsored a study by Environ-
mental Quality Systems, Inc. to produce a comprehensive used oil
management program for the state. The recently completed report
suggests that the regulations described above be rewritten to
include provisions for used oil collectors1 reporting to the state
and maintaining detailed collection records. The report also suggests
reworking the application for oil handling permits so as to more
effectively meet state used oil data needs. Also recommended are
controls on out-of-state shipments of used oils and development of
a series of financial incentives for funding the proposed program.
Administration of Maryland's used oil management program began on
October 20, 1972. As of December 31, 1973, 333 oil handler permits
had been issued and 848 oil tanker drivers had been certified.
In addition, 126 licenses for oil transfer facilities had been
issued pursuant to the oil storage licensing provisions of the Annotated
Code of Maryland.
No fee is attached to permits for oil handlers or certificates for
tank drivers, but statutorily established fees are collected for
oil terminal facility licenses.
The regulatory program is administered by the Department of Natural
Resources' Water Quality Permit Programs office. Three individuals
Edward J. Martin and Garth Gumtz, "State of Maryland Waste Oil
Recovery and Reuse Program," (Environmental Protection Agency Office
of Research and Development, Environmental Protection Technology
Series, Report No. #PA-67012-74-013, January 1974) at 81.
57
-------
assisted by one secretary process applications and conduct inspec-
tions prior to the issuance of permits. The budget for FY74 for
this regulatory program is $200,000. Enforcement of permit and
license requirements is one of the responsibilities of the twenty
members of the Department of Natural Resources1 enforcement divi-
sion.
To date, Maryland1s regulatory effort has focused on oil terminals
and distributors, the major potential sources of polluting oil. Six
hundred applications for permits are presently pending. It is
estimated that 2000-3000 permits should suffice for the 4000-5000
service station operations within the state (since only one permit
is required of a single party owning many stations), but the state
has not yet formally notified service stations of the permit require-
ment.117
Massachusetts — Massachusetts1 oil pollution control laws are codi-
fied in Chapter 21 of the General Laws of the Commonwealth of Massa-
chusetts, section 26 et seq. Section 27(10) generally provides for
state cleanup of oil spills and provides for recovery of cleanup
and environmental restoration costs from those responsible for
discharges. Discharges must be reported immediately to the state.
Section 50 et seq. provides for marine oil terminal licensing, posting
of bonds by vessels discharging oil cargoes, licensing of used oil
collectors and of hazardous waste disposal, and recovery of double
damages by individuals suffering damage from negligent discharges of
petroleum.
Section 52 of the Massachusetts Clean Water Act provides for the
licensing of waste oil haulers. Section 52A, added to the Massa-
chusetts General Laws on December 7, 1973, requires service stations,
marinas and retail outlets selling automotive lubricating oil to
install used oil retention facilities and to accept at no charge
used oil in quantities not exceeding two gallons per day from any
individual showing proof of purchase from the retailer.
Control of used oil is vested within the state Water Resources
Commission and Hazardous Waste Board. In early 1973, hazardous
waste regulations were adopted which explicitly include within their
scope the collection and disposal of used oil. The regulations
declare that the recovery or recycling of wastes to useful products,
with minimum production of by-product wastes, is the preferred
method of disposal.
117
Conversation with representative of Water Resources Administration,
Maryland Department of Natural Resources, January 1974.
-------
The regulations are intended to cover handling and disposal methods
involving conveyance of hazardous wastes by truck, rail or vessel
from their point of origin to an offsite disposal area. Permits for
on-site accumulation of hazardous wastes by originators of such
wastes (i.e., service stations, industrial companies, etc.) are not
required.118
Regulation 1.0 states that collection and disposal of used oil
is deemed to fall within the hazardous waste regulation provisions.
Regulation 3.1 provides that collection, conveyance and disposal
of hazardous wastes may only be conducted under state license.
Regulation 3.4 forbids the dumping of used oil and other specified
hazardous wastes into offshore state waters without state permission.
Regulation 3.5 requires segregation of wastes by classes and requires
that they be stored and maintained in such a manner so that container
ruptures will not cause or contribute to a condition in contravention
of state water quality standards.
Regulation 4.0 identifies the several classes of hazardous materials,
one of which is used oil.
Regulation 5.1 declares that insofar as feasible or practible,
used oils should be reprocessed for use, or used directly in original
or secondary markets where such use meets all applicable environmental
standards. Alternative disposal methods such as incineration or
land spreading will be permitted only if it is shown by an applicant
that reprocessing or direct use is not feasible or practical and
if such methods meet all applicable environmental standards. Collec-
tion of used oil intended for disposal outside the state is prohibited
unless the ultimate disposal facility is approved by the U. S.
Environmental Protection Agency or the appropriate state pollution
control agency.
Regulation 6.0 details licensing requirements. Section 6.2 declares
that licenses must be renewed annually. Section 6.3 indicates the
types of information which must be provided on the license appli-
cation form, including classes and approximate quantities of wastes
handled, disposal methods used or to be used, and location and plan
of disposal sites. Section 6.6 provides that state representatives
may enter premises at reasonable times and on reasonable notice to
inspect facilities, inventory, and records.
11°Massachusetts Water Resources Commission Division of Water Pollu-
tion Control and Hazardous Waste Board , Hazardous Waste Regulations
at 1 (7 pp. mimeographed, 1973).
59
-------
Section 6,9 provides that operators of vessels, trucks or other vehicles
transporting hazardous wastes shall keep records of materials handled,
origin, quantity and destination. Detailed logs are to be retained
for one year, and monthly summaries which are not of public record
are to be submitted to the state.
Regulation 7.0 provides for fines and jail terms for violators of the
rules and regulations.
Massachusetts1 concern with waste oil dates at least to 1968, when
it funded an A. D. Little study of used oil in Massachusetts.-^
It has since contracted for additional studies, one of biological
degradation of used oil sludge, and one of used oil reprocess ing. 120
The state legislature denied the Water Resources Commission's FY74
request for funds for administration of the hazardous waste management
program. The request was for one full-?time person for administration
of the hazardous waste program and for nine additional regional
engineers to conduct inspections in conjunction with this and other
licensing programs. The nine additional engineers would have
devoted approximately two person-years to hazardous waste-related
inspections. A funding request has been made for the FY75 budget.
At present, the program is administered on a quarter-time basis
by one person in the Water Resources Commission. Field inspections
are conducted by fifteen regional Commission engineers who devote
an estimated two person-years to hazardous waste-related inspections.
Massachusetts issues permits on an annual basis. Forty-five permits
were issued last year and 35 were issued or renewed this year. A
majority of these were to collectors but several were also issued to
landfill operators. Massachusetts estimates that it has licensed
approximately 90 per cent of the major collectors operating in the
state. However, it believes that perhaps 25 septic tank pumpers having
incidental industrial waste hauling operations are not yet being
regulated.
119
"Study of Waste Oil Disposal Practices in Massachusetts — Report
to Commonwealth of Massachusetts Division of Water Pollution Control,"
A. D. Little Company, Report #C-70698 (January 1969).
120"Biological Degradation of Waste Oil Sludge," Tyco Laboratories
for Massachusetts Water Resources Commission (1971); Gilford A.
Chappell, "Waste Oil Reprocessing," (Esso Research and Engineering
Company for Division of Water Pollution Control, Massachusetts
Water Resources Commission, Project No. 72-5, January 1973).
60
-------
At one time the commonwealth had hoped to establish a storage facility
and laboratory at the site of an old lubricating oil plant in Brain-
tree, Massachusetts with state and federal funds. It had been hoped
that some of the necessary funds could be derived from proceeds from
state motor vehicle excise taxes, but attempts to obtain such funds
were defeated in the legislature.
Senate Bill No. 1659 was introduced into the Massachusetts Senate
1 91
in 1973. It was not enacted.J"^i It would have allocated one-
fifth of one per cent of the state's motor vehicle related excise
tax receipts for waste oil disposal programs. The funds would be
used to pay administrative costs, including inspectors1 salaries,
costs of construction and operation of waste oil collection and dis-
posal facilities, and payments for collection and transportation
costs to licensed used oil collectors.
Vermont — Vermont has begun planning a used oil program which it
hopes to have operating by Spring, 1974. The program entails the
establishment of collection points around the state to which used oil
would be brought. The oil would then be trucked from these regional
collection centers to larger, central collection facilities. The oil
would then be shipped to a company in Palmer, Massachusetts for
reprocessing into fuel oil. Vermont industries would be given the
first opportunity to purchase the reprocessed oil.
The state has purchased ten 20,000 gallon collection tanks at a cost
of one dollar per tank from the Mobil Oil Company. The tanks are
in temporary storage at a Vermont National Guard camp. The state
estimates that with transportation furnished by the Vermont National
Guard, it will cost approximately $20,000 to set up the tanks around
the state. It hopes to obtain an outside grant for the funding of
this portion of the project.122
States Expressing Concern for Used Oil
Four states have indicated through correspondence or reports that
they have some concern for used oil. This section briefly relates
the information received to date.
121
Conversation and correspondence with representative, Water Pollu-
tion Control Division, Massachusetts Water Resources Commission,
September 1973, February 1974.
122
Telephone conversation and correspondence with representative,
Vermont Agency of Environmental Conservation, December 21, 1973.
61
-------
Colorado — The Health Department's Division of Water Quality Con-
trol has a policy of encouraging reclamation of used oil, and claims
this is working fairly well in metropolitan areas where quantities
of used oil are sufficient to encourage economic rerefining of used
oils. In rural areas, the state encourages sewage treatment plant
operators to monitor possible sources of used oil, to prevent dis-
charges to the sewer system. Disposal of small quantities of used
oil in sanitary landfills is encouraged when there is no danger to
ground water. Colorado has no specific regulations regarding disposal
of residual oils or hazardous or toxic wastes, except in the case
of subsurface disposal.123
Minnesota — Minnesota encourages recycling wherever possible. A
Minneapolis rerefiner accepts used crankcase oil. Disposal of used
oils is accomplished also by incineration, with a state-permitted
incinerator functioning in the Twin Cities area.12*
New Jersey — New Jersey is currently engaged in programs to determine
efficient methods of used oil recovery and recycling. For this pur-
pose, it has a member on the steering committee of a used oil study
being conducted by the Council on the Environment of the City of New
York.125
Wisconsin — In 1971, petroleum inspectors of the Wisconsin Department
of Revenue surveyed service stations' used oil disposal practices.
The survey did not describe the disposal of oil sold over-the-counter,
nor did it describe industrial lubricating oil disposal practices.
The study revealed that one-third of lubricating oil drained is
rerefined to lubricating oil, one-third is reused as fuel oil, one-
fifth is used on farms for lubricating barn cleaners and controlling
dust and weeds, and the remainder is used for road oiling or is dumped
onto the ground on places other than sanitary landfills. Used oil
use patterns were shown to be different for high population density
and low population density areas. The study did not clearly describe
the percentage of the used oil reprocessed prior to its use as fuel.
to Environmental Law Institute from Colorado Department
of Health, September 14, 1973.
12*Letter to Environmental Law Institute from Minnesota Pollution
Control Agency, October 19, 1973.
12^Letter to Environmental Law Institute from New Jersey Department
of Environmental Protection, November 2, 1973.
12^Ronald 0. Ostrander and Stanton J. Kleinert, "Drain Oil Disposal
in Wisconsin," (Madison, Wisconsin Department of Natural Resources,
Technical Bulletin No. 63, 1973).
62
-------
States Having Legal Mechanisms for Used Oil Management
Several states have legal mechanisms which can be used to regulate
one portion of the used oil stream. These procedures include scaven-
ger licensing systems, hazardous waste or solid waste disposal regul-
ations, and surface storage regulations.
Scavenger Licensing Systems — Eight states, in addition to Maryland
and Massachusetts, have some form of liquid waste scavenger licensing
system proposed or in existence.127 The licensing systems vary
considerably in their component parts. For example, Massachusetts
requires monthly and Connecticut quarterly reporting of hauling
data, while Maryland has no such reporting requirements. Furthermore,
while California, Michigan and Massachusetts require maintenance
of individual trip logs, New York and Maryland do not. Permit periods
and fees also vary among the states; $25 provides a permit of indefinite
length in Oklahoma, while $100 plus a per-truck fee provides a license
of only one year's duration in Michigan. While many of the states
require used oil generators to consign their shipments only to licensed
haulers, no such requirement exists in New York. Finally, of all
the states examined in detail, only California has a double signature
record and only Michigan requires performance bonds of liquid waste
haulers. The details of six state programs are provided below.
For comparative purposes, their principal provisions, along with those
of the Maryland and Massachusetts programs, are summarized in Table
2.
Michigan — In the provisions of Act 136, Public Acts of 1969,
Michigan has one of the most statuterily well-defined scavenger
licensing systems.
Section 5 requires posting of a $15,000 to $30,000 surety bond with
all license applications, the bond serving to indemnify the state
for elimination of pollution resulting from improper disposal of
industrial waste by the licensee.
Section 7(1) provides for inspection of all trucks engaged in liquid
waste hauling.
127
Several states have the authority to establish licensing systems
should they so desire. For example, Rule 200.4 of the Texas Water
Quality Board indicates that the Board, from time to time and as
circumstances may dictate, will establish regulations to govern
the collection, handling, transportation, storage, treatment and
disposal of particular types of wastes.
63
-------
Table 2. SUMMARY OF STATE SCAVENGER LICENSING LAWS
State
California
Connecticut
Delaware
Maryland
Massachusetts
Michigan
New York
Oklahoma
Pee
$10 plus
truck fees
$5
no
no
$50
(renewal
$10)
$100 plus
truck fees
$25
$25
Cumulative
Reporting
records subject
to inspection
quarterly
no
no
monthly
yes —
intervals ,
not specified
annual
monthly
Trip Records
yes
n.a.*
no
no
yes
yes
no
n.a.
Double
Signature
yes
n.a.
no
no
no
no
no
n.a.
Performance
Bond
no
no
n.a.
no
no
yes
no
no
Disposal
to Licensed
Haulers Only
yes
yes
n.a.
no
yes
n.a.
no
yes
Permit
Length
1 year
1 year
1 year
5 year
1 year
1 year
1 year
indefinite
0%
* n.a. denotes that information could not be ascertained from material provided by state.
-------
Section 8(4) states that licensees are not to dispose of wastes onto
the ground except at state approved sites, though used oil may be
used for dust control. No waste is to be placed in a location where
it could enter any surface or ground water.
Section 10 provides that violations of the Act's provisions are
punishable by fine, jail and license revocation.
Enactment of Act 136 was prompted by approximately a dozen serious
industrial waste dumping incidents in Detroit in a short period in
1969. Most of the industrial waste dumped was oil.
Industrial waste haulers must apply for annual licenses. The annual
licensing fee is $100 and their waste hauling vehicles must be licen-
sed annually at a fee of $10 apiece.
Approximately 100 industrial waste haulers and 350 vehicles have
been licensed to date. Approximately 15-20 per cent of those licensed
haul used oil exclusively and 50-60 per cent haul used oil along with
other industrial wastes.
To date, one hauling license has been revoked. It is expected that
the bond of the licensee whose license has been revoked will be
forfeited to cover the costs to the state of disposing of the 100,000
gallons of industrial waste gathered by the collector. It is anticipa-
ted that the collector's $15,000 bond will not be sufficient to cover
the entire cost to the state. Otherwise, the state has not claimed
any performance bonds, though it has threatened to do so on "a
couple of occasions." The threat of seizure has usually been sufficient
to convince waste haulers to abate their pollution.
The licensing program is the responsibility of the Oil and Hazar-
dous Materials Control Section of the Michigan Department of Natural
Resources. The industrial waste program is one of several programs
administered by the section. In the program's first year, oversight
was by one individual on a part-time basis. One person had a full-
time responsibility during the program's second year. At the present
time, oversight is divided among the nine members of the section on
a geographic basis. The staff commitment is equivalent approxi-
mately to two full-time administrative positions (at $15,000 each)
and one secretarial position.
Record-keeping is required on the part of both industrial waste
generators and industrial waste collectors. To date, review of
records has been on a "spot-check" basis, though this year each of
the nine staff members will begin to tabulate the records for
his district as part of a comprehensive record review program.
65
-------
Road oiling is one of the permitted uses of used oil. There have
been about a half-dozen complaints received each summer of excessive
road oiling (reports of oil in ditches and watercourses), but these
are not regarded as significant. Plans are apparently underway to
initiate new rerefining operations. There apparently is a trend
away from road oiling towards other uses of used oil. Service stations
have begun to sell their used oil.
t
The program is felt to be successful. Since its inception, random
dumping has "totally ceased."128
California — Division 7.5, Chapter 1 of the State Water Code
governs transportation and disposal of liquid waste. This section was
added to Californiafs statutes in 1970 and regulations implementing it
were issued in March 1972.
Liquid waste haulers must register with the state Water Resources
Control Board and must provide information on planned disposal
sites. The state board passes the application on to regional water
quality control boards, which assure that the wastes being hauled
are acceptable at the disposal sites sought for use. When the regional
board approves the disposal sites, the forms are returned to the state
board, which then issues stickers for applicants' vehicles. Regis-
trants are subject to conditions, directions and orders established
by the state board. Haulers must dispose of liquid waste in accor-
dance with regional water quality control board regulations and at
board-approved sites.
Registration is annual. The basic registration fee is $10, and a
fee is assessed for each vehicle — $15 for the first vehicle,
$10 for the second through sixth vehicles and $5 for each remaining
vehicle.
Liquid waste producers may only consign waste to registered liquid
waste haulers. Hauling by non-registrants does not appear to be a
problem. Registered haulers will usually report activity by non-
registrants, and the non-registrants, who are generally just ignorant
of the registration requirement, are then provided registration
information by the state.
Haulers are required to keep trip records for each load of waste
hauled, starting July 1, 1973. These forms are to be retained for
one year and are "to be available for state inspection. When a load
is picked up at an industrial waste source, the trip record must
be signed by both the generator and hauler of the waste, and when
the waste is disposed, the disposal site operator must also sign
the form. The state spot-checks these records.
128
Conversation and correspondence with representative, Oil and Hazar-
dous Materials Control Section, Michigan Department of Natural Re-
sources, September 1973, February 1974.
66
-------
The state could not provide exact cost figures for administration
of this program. At the state level, one-quarter of a professional
person-year is required to administer this program, with secretarial
assistance. Because the administrative burden for this program
varies among regional boards, some boards may devote more time to
it than others. For example, Los Angeles has over one-half of all
the registered waste haulers. There are nine regional boards, and
if we assume one professional administers the program in each on
a quarter-time basis, assisted by a quarter-time secretary, then the
total cost to the state for the program (assuming engineers' salaries
of $18,000 and secretarial salaries of $8,000) is $65,000. Those
responsible for administering the program also conduct inspections
incident to it.
375 companies and over 1000 vehicles have been registered to date.
No permits have as yet been revoked, though the state has threatened
revocation on several occasions to assure compliance with registra-
tion conditions. The state could not provide any information on the
proportion of the 375 registrants hauling used oil.
The state reports that it receives few reports of illegal dumping.
Since the licensing program functions to inform individuals of
legal disposal sites, it is felt that dumping has likely decreased
because of a wider knowledge of legal disposal site availability.
These provisions do not apply to persons hauling used oil from
service stations to industrial facilities for reuse. Liquid waste
haulers are only required to obtain registration if liquid waste
is hauled by a vehicle and is to be discarded.-*-2^
New York — Section 27-0301 of New York's Environmental Conservation
Law, effective January 1, 1972, provides for the registration of septic
tank cleaners and industrial waste scavengers. Subpart 75-5 of the
Department of Environmental Conservation's rules and regulations has
been promulgated pursuant to rule-making authority granted in section
27-0301.
Permit applications must be submitted to regional departmental offices
having jurisdiction over waste disposal areas to be used by
applicants. Applicants must pay a $25 registration fee and must
furnish information on their equipment and selected disposal sites.
Each vehicle must carry a copy of the registration certificate,
129
Conversation and correspondence with representative, California
State Water Resources Control Board, September 1973, February,
1974.
67
-------
which must be presented to a state law enforcement officer upon
demand. Registration numbers must be displayed on vehicle exteriors.
Registration duties at the nine regional offices are estimated to
require one-quarter professional person-year and one-eighth secre-
tarial person-year per office. Using a salary base of $17,000 (plus
25 per cent benefits) for professional staff and $8,000 for secre-
tarial assistance, the total administrative cost of the program is
approximately $57,000.
The program was established principally to control septic tank
pumpers. Industrial waste management was only a secondary concern.
Approximately 700 permits have been issued — 600 to septic tank
pumpers and 100 to industrial waste haulers. The state has been
very successful in licensing septic tank pumpers and somewhat less
successful in assuring that all industrial waste haulers are licensed.
The state has found it easier to identify unlicensed septic tank
pumpers than to identify unlicensed industrial waste haulers. The
state believes, however, that it has succeeeded in licensing the
larger industrial waste haulers, those accounting for perhaps 90
per cent of all industrial waste hauled.
Registrants are required to report annually indicating the number
and types of installations emptied, the volume and nature of waste
products disposed of, the place and manner in which waste was disposed,
and any other information the state may require. Individual trip
records are not required and the state generally does not audit the
annual reports to assure their veracity.
Companies hauling their own waste for off-site disposal are not
required to register under New York law, and industrial waste gener-
ators are not required to give their wastes only to licensed haulers.
Enforcement of the regulations is the responsibility of the Depart-
ment *s approximately 500 conservation officers, who have full police
powers. The enforcement process is felt to be effective. The state
has obtained "substantial" fines against unregistered septic tank
cleaners and it is presently in the process of rescinding two regis-
trations because of noncompliance with registration conditions.
Governor Malcolm Wilson, in his recent "State of the State" message,
made mention of used oil management. The Department of Environmen-
tal Conservation is presently examining alternative management formulas
which will be submitted for legislative consideration.^"
130
Conversation with representative, Solid Waste Division, New York
Department of Environmental Conservation, February 1974.
68
-------
Connecticut — Section 25-54th of Connecticut General Statutes Annotated
requires those engaged in the used oil collection business to obtain
permits from the state. Permits are issued annually and a fee of
$5 is payable. The Commissioner of Environmental Protection must
consult with those in the used oil disposal business concerning the
most appropriate and best method of disposal. He must also conduct
a research program relating to new and improved methods of used oil
disposal.
Section 25-54th was enacted in 1969 following development of serious
leaching problems from landfills where used oils had been disposed.
At the present time, no landfilling of used oil is permitted. If
used oil generated cannot be recycled in state, then it is shipped
out of state for disposal.
Permit applicants must indicate the firms from which they plan to
collect wastes, indicate the process generating the waste, the antici-
pated volume of waste, and the anticipated disposal method. Permittees
are required to report similar information to the state on a quarterly
basis.
At present, 35 waste haulers are licensed. The state could not
provide administrative cost figures, but it does not appear to
devote much effort to this program. The state nevertheless believes
that the landfill leaching problem has been reduced in scope by over
50 per cent.
Consignment of industrial wastes to unlicensed waste haulers is
forbidden. Department of Environmental Protection field personnel
periodically monitor landfill records to assure that oily waste
is not being landfilled. Road oiling is permitted under certain
circums tances.
Connecticut has not devoted any special effort to used oil disposal
research and development. However, used oils are mentioned in the
General Electric study for the state that provides the basis for a
statewide refuse recycling program. In its report entitled "A
Proposed Plan of Solid Waste Management for Connecticut," GE
comments:
Technology exists for reprocessing many waste oil types.
131
Conversation with representative, Water Compliance and Hazardous
Substances Division, Connecticut Department of Environemtal
Protection.
69
-------
License collectors and force generators to use licensed
collectors through permit regulations. Collectors would
be required to account for all collections and disposals
identifying type and location of disposal utilized. ^2
In effect, GE recommends continuation of the existing program.
i
Oklahoma — Section 505.l(b) of the Rules and Regulations of the
Oklahoma Water Resources Board provides that any person hauling indus-
trial waste for disposal purposes must secure a permit from the Board
prior to undertaking such activity. Oklahoma law also makes it
illegal for an industry to consign wastes to non-permitted waste
haulers.
The permit program has been functioning for eighteen months. Seven
haulers have been licensed to date and two applications are pending.
The state was unable to provide cost figures for administration
of this very small program.
A $25 filing fee must accompany permit applications. Permits are
provided for an indefinite period. Licensees are required to report
monthlv-sources of waste, amounts of waste collected, and disposal
sites.1JJ
Delaware — Section 6023(d) of the Delaware code provides that no
person may transport solid or liquid waste without a permit.
The Delaware waste oil hauler licensing program began about six
years ago, in response to numerous occurrences of used oil dumping.
The upsurge of dumping coincided approximately with IRS's promul-
gation of Revenue Ruling 68-108. Regulations for used oil hauler
licensing were promulgated as water pollution control regulation No.
12 of 1968.
There is no fee charged for the annual permits. Fewer than ten are
issued each year. Applicants for them must specify the number and
size of their trucks and the location of their disposal site. Since
there are no such disposal sites in Delaware, haulers must present
a letter with their application from the out-of-state agency overseeing
the disposal of their oil in other states.
132
General Electric Company Corporate Research and Development,
"A Proposed Plan of Solid Waste Management for Connecticut,"
(1973) at 65.
133
Conversation and correspondence with representative, Oklahoma
Water Resources Board, September 1973, February 1974.
70
-------
At the present time, Delaware imposes no recordkeeping requirements
on haulers. In May 1973, public hearings were held on proposed
amendments to the used oil regulation. These would have required
oil distributors to maintain records of oil sales and to assume
responsibility for the ultimate disposal of the used oil.
The state is presently in the process of attempting to cancel the
license of one waste hauler operating in the state. Originally
operating without a license, the hauler in question apparently did not
paint his license number on the trucks he has operating in the state,
a violation of the waste oil hauler regulations.
The present program is administered by the Water Resources section,
Division of Environmental Control, Delaware Department of Natural
Resources and Environmental Control. The administrative costs of
this program are unknown, but as noted, the scope of the program is
quite small.
The Water Resources section believes the program to be ineffective.
In a survey of used oil generators 7-8 months ago, they found many
unlicensed haulers operating. Many septic tank pumpers are believed
to be hauling used oil. They have found considerable oil, origin
unknown, in surface waters, they believe that much oil is illegally
dumped on farmland, and they have learned that oil storage tanks
in the state have been used as collection sites for used oil. The
Division of Environmental Control has only five environmental
protection officers to enforce air, water and solid waste laws,
so little enforcement of the used oil hauler regulations is possible.
The state believes that an effective program could be funded for
$30,000-$40,000 annually.134
Other states1 licensing systems — Section 34A10-1.106 of South
Dakota's solid waste regulations provides that hazardous and toxic
wastes (those wastes that require special handling to avoid illness
or injury to persons or damage to property) shall not be placed in
any container for collection, transport, processing or disposal
until the Department has approved the method of storage, transport,
processing or disposal. Used oil is defined as a hazardous substance
and toxic wastes are presently being developed.1"
Conversation with representative, Water Resources section,
Division of Environmental Control, Delaware Department of Natural
Resources, July 1, 1974.
13->Letter to Environmental Law Institute from South Dakota Department
of Environmental Protection* September 21, 1973.
71
-------
The Indiana Stream Pollution Control Board proposes to draft a regula-
tion in the near future which will deal with waste haulers within
the state. The regulations will include a permit program.136
Surface Storage Regulations — Used oil is stored in both tanks
and open settling lagoons. Any person seeking to conduct a used
oil reprocessing operation in eleven states would have to receive
state approval for its lagoon or tank operations. Among the states
requiring permits for the operation of surface storage facilities
are Idaho, Kansas, Maine, Massachusetts, Michigan, Minnesota, Missouri,
Nebraska, New Jersey, Oklahoma, and Rhode Island.137
Solid Waste Disposal Regulations — Twenty-four states have developed
solid waste disposal laws and regulations. These are quite diverse
but usually provide that liquid or hazardous wastes may not be dis-
posed of in solid waste landfills except when special permission
is granted by the state. Among the states having such requirements
are Alabama, Arkansas, Connecticut, Georgia, Idaho, Illinois, Kentucky,
Louisiana, Maryland, Massachusetts, Michigan, Nevada, North Carolina,
North Dakota, Ohio, Oklahoma, Oregon, South Carolina, South Dakota,
Letter to Environmental Law Institute from Indiana State Board
of Health, October 16, 1973.
137
Idaho: Rule X, section F, Idaho Rules and Regulations for the Es-
tablishment of ... Wastewater Treatment Requirements...(adopted by
Board of Environmental Community Services, June 28, 1973); Kansas;
Section 65-171d, Kansas Revised Statutes; Maine: Section 545, jet
seq., Maine Revised Statutes Annotated; Massachusetts; Regulation 3.5
of Massachusetts Water Pollution Control and Hazardous Waste Board
Hazardous Waste Regulation; Michigan; Section 323.1151 et seq.,
Michigan Administrative Code; Minnesota; Water Pollution Control
Commission Regulation WPC Y, Relating to Storage or Keeping of Oil
and Other Liquid Substances (adopted June 26, 1964); Missouri;
Section 2.01 of Hazardous Materials Storage Regulations adopted by
the Missouri Clean Water Commission; Nebraska; Water Quality Stan-
dards Applicable to Nebraska Waters at 3 (adopted by Nebraska Depart-
ment of Environmental Control, effective June 11, 1973); New Jersey;
The state review projects connected with the storage of petroleum
and hazardous materials, letter to Environmental Law Institute from
New Jersey Department of Environmental Protection, November 2, 1973;
Oklahoma; Section 6 of Water Resources Board's Technical Release
100-1 (adopted July 25, 1972); Rhode Island: Section 4, Rhode Island
Department of Health Oil Pollution Control Rules and Regulations
(adopted August 12, 1957).
72
-------
138
Tennessee, Texas, Virginia, West Virginia, and Wisconsin.
138
Alabama: Section III, Alabama Rules and Regulations for Solid
Waste Management (adopted by State Board of Health, July 19, 1972);
Arkansas; Section 6(f)(cc)(8), Arkansas Solid Waste Disposal Code;
Connecticut; Title 19, section 19-524(n), Connecticut General
Statutes Annotated (1973 supp.); Georgia; Chapter 391-1-1, section 391-
1-1-.04, Rules of the Department of Natural Resources , Environmental
Protection Division (effective December 12, 1972); Idaho: Part II,
section 2.19, Idaho State Board of Environmental and Community Sex-
vices, Solid Waste Management Regulations and Standards (adopted
June 28, 1973); Illinois; Chapter 7, part III, Rule 310(6), Illin-
ois Pollution Control Board Solid Waste Rules and Regulations (effec-
tive July 27, 1973); Kentucky; Department of Health Regulation SW 2,
part 7(8) (effective July 1, 1968); Louisiana; Chapter X, section
1052.1, 10.53.1, Louisiana State Board of Health Sanitary Code (adopted
January 26, 1963); Maryland; See description in text above; Massa-
chusetts ; see description in text above; Michigan; See description
in text above; also see 325.1105, section 10, Michigan Administrative
Code; Nevada; Article 2, section 2.6.3. Nevada Board of Health
Regulations Governing Solid Waste Management (adopted January 17, 1973);
North Carolina; Section XI-H, North Carolina State Board of Health
Rules and Regulations Providing Standards for Solid Waste Disposal
(adopted March 11, 1971); North Dakota; Section 5.2.3, North Dakota
State Department of Health Regulation No. 86; Ohio; Chapter HE-24,
section HE-24-09(H), Ohio Sanitary Code; Oklahoma; Regulation
4, section 4.1.15, Rules and Regulations for the Collection and
Disposal of Solid Waste and Setting Standards for Sanitary Landfills
(adopted by State Board of Health, June 13, 1971) and Regulation 5.0,
section 5.2 (adopted May 1973); Oregon; Chapter 340, section 62-
015, Oregon Administrative Rules Compilation; South Carolina;
PC-SW Regulation 2, section VIII, Department of Health and Environmental
Control (adopted March 8, 1972); South Dakota; Chapter 34A10-1,
section 34A10.1.115, State Department of Environmental Protection Solid
Waste Rules (proposed); Tennessee; Regulation 6, section 6(c)(l)(j),
Department of Public Health Regulations Governing...Solid Waste
Processing and Disposal...(filed with Secretary of State, January
20, 1971); Texas; Section #-24, Department of Health Municipal
Solid Waste Rules, Standards and Regulations (effective November 5,
1970); Virginia; Chapter XXVIII, part VI, Rules and Regulations of
the Virginia Department of Health (effective April 1, 1971) ; Wisconsin;
Chapter 51, section 51.07, section 51-10(3), Wisconsin Solid Waste
Disposal Standards (adopted by the Wisconsin Natural Resources Board
March 12, 1969).
73
-------
States Having Comprehensive Oil Pollution Control Statutes
Nine states (in addition to Maryland and Massachusetts) have developed
wide-ranging oil pollution control programs: Alaska, Connecticut,
Florida, Maine, North Carolina, Oregon, Rhode Island, Virginia,
Washington.139 All are coastal states and the prime motivation for
the development of oil pollution control laws is the prevention of
oil pollution from ships and port facilities. The principal components
of many laws include prohibition of oil discharges on land or in
water except where such discharges have been approved by the state,
controls on marine port facilities, the immediate reporting of spills,
and the assessment of strict liability in the event of discharges.
The laws described here are not directed specifically at used oil,
but are aimed at the twin problems of accidental spillage of petroleum
and the intentional dumping of oily bilge waters.
States with Few Statutory Provisions Concerned Explicitly with Oil
Pollution
The states whose laws were just outlined are those which have devoted
the greatest statutory concern to oil pollution. Other states have
brief statutes or regulations pertaining to oil pollution, but they
are not of sufficient detail to merit extended summary. Also omitted
from the preceding section were state laws governing pollution control
in oil fields.
1 *3Q
Alaska; Section 46.03.740 et seq., Laws of Alaska; Connecticut;
Section 25-44bb et seq., Connecticut General Statutes Annotated;
Florida; Chapter 376 and section 403.088, Florida Statutes; Maine;
Title 38, Sub chapter 11-A, Maine Revised Statutes Annotated; North
Carolina; Chapter 143, Article 53, General Statutes of North Carolina;
Oregon; Sections 449.155-449.175 and section 449.993, Oregon Revised
Statutes; Rhode Island; Title 46, sections 46-12-15, Rhode Island
General Laws; Virginia; Article 8, sections 62.1-44.34;! and 62.1-
44.34;2 of the 1973 Amendments to the State Water Control Law; also
Chapter 20, section 62.1-195 of the Code of Virginia; Washington;
Sections 90.48.315 et seq., Revised Code of Washington.
74
-------
All states have general prohibitions within their statutes against
the discharge of polluting wastes into state waters, and all make
mention of oil in their water quality standards. Many have developed
oil spill contingency plans. These actions are not of sufficient
importance in the used oil context to merit discussion.
STATE OIL CONTAINER LABELING LAWS
State labeling laws governing reprocessed oil can be divided into
two categories:
1. Statutes specifying that purchasers of lubricating oil and
other petroleum products shall not be deceived as to the
nature, quality or identity of their petroleum product
purchases;
2. Statutes stating that reprocessed lubricating oil must be
labeled so as to disclose its previous use.
General Deception Statutes
Seventeen..states presently have general petroleum product misbranding
statutes. As column 1 of Table 3 shows, most were enacted in the
140
Arkansas; Title 41, section 41-1918 Arkansas Statutes 1964;
Colorado! Chapter 100, section 100-2-16 Colorado Revised Statutes
1963; Connecticut: Title 14, chapter 250, section 14-342 (a), Connec-
ticut General Statutes 1958; Florida; Title 31, chapter 526, section
526.01(1), Florida Statutes Annotated 1972; Georgia; Title 73, section
73.222(A)(3) Code of Georgia; Maine: Title 10, chapter 307, section
1654 Maine Revised Statutes 1964; Maryland; Article 27, section 231(a)
Annotated Code of Public General Laws of Maryland 1971; Michigan;
Section 75.251(1), Michigan Compiled Laws Annotated 1968; Missouri:
Title 26, chapter 414, section 414.150 Annotated Missouri Statutes;
Nebraska; Chapter 66, section 66-318, Revised Statutes of Nebraska;
New Jersey; Title 51, article 1, section 51:4-1, New Jersey Statutes
1970; New York: Article 26, section 391-a(l), McKinneyfs Consolidated
Laws of New York Annotated 1968; Oklahoma; Title 52, chapter 7,
section 391, Oklahoma Statutes 1969; Ohio; Title 37, section 3741.17
Ohio Revised Code annotated; South Carolina; Chapter 6, article 4,
section 66-461, Code of Laws of South Carolina 1962; West Virginia;
Chapter 47, article 10, section 47-10-1 West Virginia Code Annotated
1966.
Illinois once had a general deception law (chapter 104, section 15,
Illinois Annotated Statutes 1935), but this was repealed in 1969.
75
-------
1920fs and 19 30*8. The provisions are fairly uniform and the Florida
statute is typical:
No person shall store, sell, offer, or expose for sale any
liquid fuels, lubricating oils, greases, or other similar pro-
ducts in any manner whatsoever which may deceive or tend to
deceive, or which has the effect of deceiving, the purchaser
of said products as to the nature, quality, or guantity of the
products so sold, exposed, or offered for sale.
Such statutes arguably forbid sale of reprocessed oils not labeled
as such; absent disclosure, purchasers of such products would likely
mistake them for virgin lubricating oil.1*2
Disclosure Provisions Specific to Reprocessed Oil
Disclosure provisions specific to reprocessed oil are found in the
laws of twenty states:1*3 in seven states they supplement the general
141Title 31, chapter 526, section 526.01(1), Florida Statutes
Annotated 1972.
I42gee discussion,supra, note 68 in the text accompanying the Mohawk
case.
143Alabama; Title 2, section 437(l)-(4), Code of Alabama (recompiled
1958); California! Division 8, chapter 7, article 4, section 20800
*~t seq., California Business and Professional Code; Coloradot Chap-
ter 100, section 100-2-13, Colorado Revised Statutes 1963; Connecti-
cut; Title 14, chapter 250, section 14-342(c), Connecticut General
"Statutes Annotated 1958; Florida; Title 31, chapter 526, section
526.01(2)(a)-(3), Florida Statutes Annotated 1972; Georgia; Title
73, section 73-222(4), Code of Georgia of 1933; IdancT;Title 37,
section 37-2514 et seg>, General Laws of Idaho Annotated 1964; Illin-
ois: Chapter 104, section 101 et seq.. Illinois Statutes Annotated
719*73 pocket part); Indiana; Title 35, section 35-4016, Annotated
Indiana Statutes 1969; Louisiana; Chapter 2, section 51-901, Louisi-
ana Revised Statutes Annotated 1965; Maryland; Article 27, section
231(a), Annotated Code of Public General Laws of Maryland 1972;
Massachusetts: Chapter 94, section 295F, Massachusetts General Laws
Annotated 1972; Mississippi; Title 75, chapter 55, section 75-55-13
of Mississippi Code Annotated 1972; Missouri; Title 26, chapter 414,
section 414.150(2), Annotated Missouri Statutes; Nevada; Section
590.060(4), Nevada Revised Statutes 1971; New Mexico: Chapter 65,
section 65-6-12 et^sefl.; New York; Article 26, section 391-2(5),
McKinney's Consolidated Laws of New York 1968; North Carolina;
Chapter 1137, article 2A, section 119-13.1-13.3, General Statutes
of North Carolina; Texas; Article 1106(b), Vernon's Annotated Public
Code; Wisconsin; Title 16, chapter 168, section 168.14(l)-(2),
Wisconsin Statutes Annotated 1957.
76
-------
misbranding provisions described above while in thirteen others they
stand alone.144
Column 2 of Table 3 traces the chronology of state labeling statutes
specific to reprocessed oil. Most were enacted in the 1950fs, at
about the same time that the Federal Trade Commission was initiating
much of its reprocessed oil regulatory action.
The state statutes are quite diverse. Table 4 (and its explanatory
footnotes) summarizes their provisions. Sixteen states specify the
language and lettering in which previous use disclosure must be made.
Three states require previous use disclosure on containers* front
panels. These latter state laws were enacted after promulgation of
an FTC trade regulation ruling requiring front panel disclosure on
all reprocessed oil sold in interstate commerce.
State Labeling Laws; Legal Challenges
State labeling laws have twice been challenged by oil reprocessors
and have been upheld on both occasions.
In Paraco, Inc. et al v« Department of Agriculture, 145 an 0±j_ rere-
finer challenged the application of California's reclaimed oil label-
ing requirements^-^ £O its product. In its complaint, Paraco argued
that the California law was unconstitutional, because it was vague,
uncertain and deprived the company of equal protection under the
144
Colorado, Connecticut, Florida, Georgia, Maryland, Missouri, New
York. j>ee notes 140 and 143 supra.
145257 F.2d 981 (3rd Ct. of Appeal, Cal. 1953).
146
Division 8, chapter 7, article 4, section 20800 et seq., California
Business and Professional Code Annotated. These sections declare
that:
crankcase drainings, lube distillate or any other petroleum
product shall not be sold for use as lubricating oil in an inter-
nal combustion engine unless free from water or suspended matter
and possessing certain flash point ratings; that if lubricating
oil sold has been previously used for lubrication of such
engines, or gears or shafts attached thereto or for any lubri-
cating use or has been rerun or filtered, redistilled or claimed
the container shall be labeled "reclaimed motor oil" or "lubri-
cating oil reclaimed" in red letters of specified type and size;
that anyone who buys, sells or stores lubricating oil required
to be so labeled shall keep records of purchases, sales and
storage.
77
-------
Table 3. CHRONOLOGY OF GENERAL AND SPECIFIC STATE
OIL LABELING LEGISLATION
Period
General laws enacte<
Specific
laws enacted?
1925-1929
1930-1934
1935-1939
1940-1944
1945-1949
1950-1954
1955-1959
1960-1964
1965-1969
Date uncertain
5
6
3
0
2
1
1
2
3
6
2
1
In instances where states have amended their specific
labeling laws to incorporate new requirements, only the
earliest enactments are included in the above chart.
78
-------
law.' Paraco contended that because in the public mind "reclaimed"
was synonomous with "inferior," the labeling requirement would unfairly
demean its rerefined product that was equivalent or superior in
quality to virgin lubricating oils. Paraco maintained also that
the labeling law, by adversely affecting its sales, "would result in
the waste of a valuable asset and prevent conservation of limited
underground petroleum stocks."1^
The California Third District Court of Appeals upheld both the legal-
ity of the labeling statute and its applicability to rerefined pro-
ducts. The court stated that the public has a right to know what it
is buying. The public's preference for virgin products might be
"founded entirely upon prejudice, which, in turn is founded on ig-
norance;" nevertheless, because the public should not be led through
the absence of labeling into buying something it does not desire,
reprocessed lubricating products must be distinguished by labeling
from virgin lubricating products.15 The court, in its unanimous
decision, did not address Paraco's resource conservation claims.
In Double Eagle Lubricants v. Texas, the Double Eagle Refining
Company sought an injunction against enforcement of Texas' labeling
statute. Double Eagle contended that the federal government had
Paraco, supra .note 145.
In this regard, it should be noted that the state
could only enforce the labeling statute by checking Paraco1s records,
because it was impossible to determine by any test whether an oil
was virgin stock or rerefined.
M»jLd.
15°Id., at 985.
151248 F. Supp. 515 (N.D. Texas, 1965).
152Article 1106(b) Vernon's Annotated Public Code:
(b) No person, firm, association of persons or corporation
shall sell or offer for sale as lubricating oil, any oil that
has been theretofore used for purposes of lubrication, unless
the said oil is sold as and labeled "Reconditioned Motor Oil."
The words "Reconditioned Motor Oil" shall be plainly and legibly
printed on each container, which said lettering shall be im-
printed in two (2) places on the container or label in a manner
that said lettering will appear both on the front and back sur-
face of the—container when displayed to the public in sale dis-
plays, and which said lettering shall be in letters of not less
than three-sixteenth (3/16) of an inch in height and not less
than one-sixteenth (1/16) of an inch in the width of each line
used to form said letters.
Also see discussion in text accompanying notes 90-99.
79
-------
Table 4. PROVISIONS OF STATE REPROCESSED OIL LABELING LAWS
State .
Alabama
California
Colorado
Connecticut
Florida
Georgia
Idaho
Illinois
Indiana
Louisiana
Maryland
Massachusetts
Mississippi
Missouri
New Mexico
New York
Nevada
North Carolina
Texas
Wisconsin
A
X
X
X
B
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
c
X
X
X
D
X
X
X
X
X
X
X
X
E
X
X
F
X
X
3
G
X
X
X
Code:
A Previous use disclosure required on containers. Specific
words and letters not indicated.
B Previous use disclosure required on containers. Specific
words and letters indicated.
C Previous use disclosure required on front panel containers,
D Previous use disclosure required in advertising.
E Record-keeping or invoice requirements.
F Minimum specification for reprocessed oil established.
G Bottle segregation required.
80
-------
pre-empted the regulation of used oil labeling, so that state regu-
lation could not be allowed to stand. Double Eagle also maintained
that the Texas statute placed an undue burden on interstate commerce.
In upholding the legality of the Texas labeling law, the court
reasoned as follows: in the area of federal-state jurisdiction
covering the same subject matter, federal law is paramount_if Congress
had clearly indicated an intention to pre-empt the field. No
such clear statement of congressional intent is found in the Federal
Trade Commission Act. Therefore, state laws providing for regulation
of unfair or deceptive practices in commerce are valid unless they
conflict so much in the same area with federal law that both cannot
stand. 154 jjo conflict exists between the phraseology and intent of
the Federal Trade Commission order and Texas law at issue in this case.l"
The Texas law, a valid exercise of the state's police power, is
reasonable in its requirements. It incidentally affects but does not
discriminate against interstate commerce.156
STATE PETROLEUM PRODUCT INSPECTION LAWS
Some states have extensive petroleum product inspection laws which
are well-enforced, while others have good laws and slack enforcement,
or no such laws at all. Approximately 25 of the 40 states having
general petroleum product laws also have inspection statutes with
references to lube oil quality control standards. The other 15
of the 40 have petroleum product laws with no provisions for lube
oil or no provisions for product quality inspection. This legislation
is sometimes found in penal codes, commerce statutes and public
service commission mandates.
The lube oil inspection laws concern themselves with SAE viscosity
classifications; testing generally conforms to ASTM methods. Per-
formance tests are not conducted because of the considerable expense
involved.
Alabama, California and Florida seem to have the best inspection
systems. A description of their operations follows.
Alabama
Regulations providing quality control specifications for lube oils
153
Double Eagle, supra, note 151 at 517.
154
Id. at 518.
155Id".
156
Id. at 519.
81
-------
were promulgated in 1973 by the State Board of Agriculture and In-
dustries pursuant to statutory authority granted under Act No. 1403,
Legislature of Alabama of 1971.
Each petroleum product brand marketed in Alabama must be registered
annually with the state for a fee of $1. Registered products must
conform to state quality specifications. In the case of lubrica-
ting oils, these standards relate solely to viscosity and sediment.
To cover inspection and testing costs, fees are levied on
petroleum products subject to inspection. For lubricating oils,
the fee is 15 cents per gallon.
At the present time, the sampling program is not extensive; random
sampling is undertaken however and complaints are investigated. The
state is presently attempting to improve its inspection mechanism
using the Florida system described below as a model.
As in all states conducting inspections, only bench tests are per-
formed. Tests are conducted in accordance with ASTM methods to
check conformance to SAE viscosity specifications.
California
The Petroleum Product Program lies within the jurisdiction of the
Division of Measurement Standards of the Department of Agriculture.
Laws relating to petroleum products date to the 1930fs but quality
control statutes were not enacted until 1962.
Standards for lube oils include viscosity, flash point, and water
and suspended contaminants content.
The program, whose 1973 budget was $470,000, is self-financed'. Each
retailer of petroleum products must register annually at a cost of
$2.50. Fees are also levied for the registration and testing of
various petroleum products, though no registration is required of
lube oil. These fees range from $50 to $100 for initial registration
renewal. Samples are submitted with the registration fee.
California conducts extensive field investigations. Daily samples
of virgin and rerefined lube oil, along with other petroleum products,
are obtained from retail establishments throughout California and are
tested in labs in Sacramento and Downey. Preliminary analyses are
conducted in mobile labs.
Last year 16,000 establishments were inspected and 2,500 motor oil
samples analyzed. 8,000 labeling corrections were ordered (for all
products), 342 complaints investigated (15 regarding lube oil) and
188,000 gallons of petroleum products were removed from sale (of
which only 12,000 were lube oil). These statistics indicate that
82
-------
lube oil infractions were but a small proportion of all the viola-
tions reported, a finding consistent with information received from
other states.
34 persons staff the program; 15 administrative personnel, 14 field
investigators and 5 chemists. Initial equipment costs for the labs,
established in 1930, were $50,000 per lab. Perhaps an additional
$10,000 has been invested in new lube oil testing equipment in each
lab.
Florida
A petroleum product inspection program is administered by the Florida
Department of Agriculture and Consumer Services. Inspection fees
and registration fees levied on certain petroleum products are paid
into the general inspection trust fund in the state treasury, from
which expenses incurred in administering the petroleum product inspec-
tion laws are paid. Registration and payment of an inspection fee
for lube oil is not required. A recent budget for the program was
$5.2 million dollars.
Limited gasoline and kerosene quality control laws have existed since
1919; the statutes were attended in 1959 to include antifreeze,
brake fluid and lubricating oils. An improved inspection testing
system was instituted in 1968 with computerization of the operation.
When the improved inspection procedure was initiated a large proportion of
the lube oils tested were found to be below SAE viscosity standards.
However less than 5 per cent of the lube oil products on the market
in Florida today are found to be substandard.
Routine inspection includes daily collection of field samples through-
out the state. Authorized inspectors have access to all wholesale
and retail petroleum product businesses. When a product is found
to be mislabeled, i.e. not up to standard, a letter is sent to the
offending distributor informing him of the violation and a 30 day
period of stopped sale is imposed. If violations are not corrected
within this period the product is confiscated and disposed of by
the department. In fiscal year 1973, 2,157 different quarts of lubri-
cants were tested; 2,062 were found to conform with inspection stan-
dards. 95 samples were found to be mislabeled and 95 lots were stop-
saled.
The Division of Standards presently employs 143 persons, 41 in the
lab and 102 in the field. Initial cost of the lube oil testing equip-
ment was $30,000. A new lab is presently under construction.
The estimated cost of the facility, a portion of which will be used
for lube oil testing is $70,000.
83
-------
SECTION IV
USED OIL DISPOSAL IN EUROPEAN NATIONS AND CANADA
INTRODUCTION
European nations, also faced with problems from the Improper disposal
of used oils, are developing a variety of approaches for addressing
them. France and Italy encourage rerefining of waste oils by granting
tax preferences for rerefined products. Two other countries, Germany
and Denmark, have laws governing the collection and disposal of used
oils. The Commission of the European Economic Community has proposed
to the Council of Ministers of the E.E.C. a directive concerning dis-
posal of used oils which, if adopted, would apply to all member nations
of the Community. Bills are pending in France and the Netherlands
to Eegulate the disposal of used oils.
This section describes the situations in these and other countries and
the approaches for dealing with them. The policies which have
emerged from these various approaches may be summarized as follows:
1. Autarchy (national self-sufficiency) in natural resource
supplies: ability to satisfy at least part of demand for
lubricating oils during periods of crisis in the Mideast
(war, embargo, etc.).
2. Protection of the rerefining industry for social and economic
reasons: job opportunities, wish not to lose capital invested
in equipment.
3. Prevention of water and soil pollution from improper
disposal of used oils, and of air pollution from improper
burning of it.
4. Saving of foreign exchange otherwise spent for importation
of foreign oil.
5. Ability of rerefineries to produce small amounts of special
oils (white oils, for example) more readily than the large
firms.
The section describes how these policies have been incorporated into
provisions of law and how these laws have been implemented. The
purpose of these descriptions is to provide points of departure for
jurisdictions in the United States which choose to follow one approach
or another or a combination of approaches. Those which seek to encourage
rerefining of used oils by providing relief from the taxes on rerefined
84
-------
products may refer to Italy and France. Those which would like a
national or statewide system of collection and disposal,funded
by those who use oil, may refer to the discussions of the 1968
German law, the Dutch bill and the proposed E.E.C. directive.
Those which would prefer municipalities to assume the principal
responsibility for used oil disposal may refer to the discussion of
the Danish law and implementing regulations. In Belgium and Denmark
the oil companies have made private agreements providing for used
oil pick-up and disposal. Thus, the various existing ends of used
oil policy and the means for attempting to reach them are outlined
in this section as a basis for others to use in formulating policies
(and laws to carry them out) appropriate to their circumstances.
THE FEDERAL REPUBLIC OF GERMANY
Introductory Summary
The history of used oil regulation in Germany shows that the countryfs
policy has evolved through the following stages:
1935-1945 mandatory collection in support of a policy of
autarchy
1945-1963 tax preferences and protective tariffs in order to
conserve foreign exchange, support the small re-
refining industry, and preserve a range of prices
of certain goods
1963-1968 subsidies to the rerefining industry for the same
reasons as granting tax preferences to rerefined
products (above), and in order to help prevent
water pollution
1968-present industry-financed support of disposal by rerefining
and incineration in order to achieve comprehensive
environmental protection.
In 1964 the change from tax preferences and protective tariffs for
rerefined products to a direct subsidy to rerefiners was one of form,
not of substance. However, revenues spent for a direct subsidy are
more apparent than revenues foregone for an indirect one, and by
1966 the attitude of the German Parliament became that the costs
for disposing of used oils safely ought to be borne by those who cause
the problem in the first place — those who produce oil and those who
use it.
The motive behind the 1968 Used Oil Statute was chiefly to protect
water supplies from the improper disposal of used oils. But the policies
of the past — support of the rerefining industry, interest in encouraging
a range of prices for petroleum goods, preference for conserving
valuable resources and the money it takes to import them — all
these policies are continued by the system created by the 1968 law.
85
-------
That system is fairly easy to summarize. All who import or produce
certain lubricating oils (including rerefiners) in Germany pay a
compensation fee of 7.50 Deutsche Mark (about $2.25) per 100 kilograms
of product to the federal government in addition to the tax on mineral
oils. This money goes into a special fund reserved for the support
of the disposal of used oils by controlled incineration or rerefining,
the two ways deemed safe by environmental and public health viewpoints
in Germany.
Rerefining and incinerating enterprises under contract with the
Federal Office for Trade and Industry are entitled to apply for
payments to cover the costs of disposal not otherwise covered, e.g.,
by selling the rerefined products. Payments are made at standard
rates, 12 DM for each 100 kilograms of waste oil which is rerefined,
10 DM for each 100 kilograms incinerated. It is assumed that rere-
fining yields 70 per cent of the used oil by weight, so the rerefiners1
payments are made on the basis of figures for the weight of a month's
rerefined products in the application. Incinerators are paid on the
basis of how much of what they burn is oil. The Federal Office's
lab analyzes the contents of special drip devices on a monthly
basis and the proportion of the sample which is oil is the basis for
figuring the weight of oil burned, for which payments can be made.
The obligations imposed on the disposal firms by their contracts are
many. They must: 1) pick up all amounts of used oils over 200
liters in the district assigned to them; 2) do so at no charge to the
user unless the oils contain more than 10 per cent foreign matter;
3) provide suitable containers for lesser amounts so they can be
collected later; 4) keep records of their costs and make their books
and other relevant information available to the Federal Office,
or the auditors it appoints; 5) file their application for payments
monthly; 6) maintain equipment specified by the Federal Office for,
purposes of checking their their output, the special drip devices
mentioned above); 7) give notice of any rerefined products shipped
to other member nations of the European Economic Community and repay
any payments received for producing these products (this require-
ment was imposed by the E.E.C. to avoid favoring German rerefiners in
violation of the Treaty of Rome); 8) give receipts for used oils
collected which contain more than 10 per cent foreign matter.
Those who generate more than 500 liters of used oils containing
more than 10 per cent of foreign matter (which is not picked up for
free) must also keep records on how they dispose of the oil, so that
it is possible to trace the chain of disposal from a source through
collection to final disposition. The collectors, too, must keep
similar records.
Since only lubricating oils subject to the mineral oil tax are also
subject to the disposal fund compensation fee, the paperwork,
86
-------
procedures and personnel for levying the fee are integrated almost
completely with the payment of the mineral oil tax. This results
in substantial savings of administrative costs.
The remainder of this subsection on the Federal Republic of Germany
is divided into two parts: (1) explanations of some of the provisions
of the 1968 Used Oil Statute and a discussion of their implementation
which supplements that in Irwin & Burhenne, "A Model Waste Oil
Disposal Program in the Federal Republic of Germany," 1 Ecology
Law Quarterly 471 at 480-484; and (2) a history of used oil regulation
and research in Germany from 1935-1968, including a legislative history
of the 1968 law. Appendix D provides translations of the 1968
law and the regulations implementing it. Appendix E is a trans-
lation of the regulations implementing the 1963 law providing subsidies
to rerefining enterprises. Appendix F is a pair of graphs showing
motor oil sales and used oils.
Explanations of the 1968 Law and Its Implementation
The Definition of Used Oils in the 1968 Law — It is important to
understand that not everything which might fit within the general
concept of "waste oil" is covered by the definition of "used oil"
which may be disposed of with the assistance of the Reserve Fund
in Germany. Although the terminology of petroleum products is not
uniform throughout the world, either in technical literature or in
commerce, it is possible to elaborate what the definition includes.
This elaboration may help clarify the meaning of "used engine,
machine, cooling and similar waste oil" contained in section 104(m)(l)
of the Federal Water Pollution Control Act Amendment of 1972.
Section 3(2) of the Used Oil Statute provides that "used oils within
the meaning of subsection 1 (which provides that those having more
than 200 liters of used oils may demand their pick-up) are used
mineral oils and used fluid mineral oil products [and] further[,]
mineral oil-containing wastes from storage, business and transport
receptacles."
Legislative History — This definition received considerable attention
in the Parliament's deliberations on the various used oil bills under
consideration in 1968. The bill submitted by the government was
phrased in terms of "wastes" and was designed to establish a record-
keeping system to supervise the disposal of "used mineral oils and
mineral oil products, further mineral oil-containing wastes from stor-
age, business and transportation receptacles." The bill also provided
that "other fluid or sludgy inflammable wastes" (e.g., solvents,
ether, alcohol, benzene, lacquers, dyes) could be brought within the
scope of the provisions by regulations "to the extent required for
the protection of waterways." In its explanation of the bill, the
government stated the definition encompassed the fluid substances
87
-------
named in a 1965 report by the Battelle Institute — oil wastes from
motors, transmissions, machines, cylinders, axles, turbines, spindles,
transformers, switches and cable insulation; dark oil and white oil;
wastes from special gasolines and test gasolines; and from kerosene;
oily bilge water; and mineral oil-containing wastes from containers,
including oil and gas separators.
The government's bill was introduced in the Bundesrat. In accordance
with its procedures, the Bundesrat responded with several suggestions
for modifying the bill. Among the suggestions was one that the word
"fluid" be inserted before the term "mineral oil products" in order
to clarify what was meant (e.g., to make clear that road asphalt was
not included). The government accepted this suggestion and added
that the word "used" should be repeated before "fluid," so that the
revised definition would read "used mineral oils and used, fluid
mineral oil products, further mineral oil-containing wastes..."
In the Bundestag a bill had been introduced which defined "used oils
and used oil-containing wastes" as all "lubricating oils and fluid
as well as sludgy lubricating oil wastes containing a proportion of
mineral oil of more than 40 per cent by weight." This definition
was intended to exclude emulsions, for exampler (in which the percen-
tage of oil is usually about 10 per cent) as well as oil mixtures
with large amounts of foreign substances which might be dangerous
or difficult to remove. This bill provided for free pick-up of used
oils and its drafters were concerned that a broader definition would
unduly burden the disposal enterprises. They argued that free pick-up
of mixtures containing less than 40 per cent oil was not necessary
to prevent water pollution, since the water law prohibition against
unauthorized discharges imposed a duty to dispose of such mixtures
harmlessly, and that it would still be possible for persons having
them to pay the disposal firms to pick them up. They argued fur-
ther that those having a high proportion of non-oily wastes would
derive an unjustified advantage (from free pick-up) over those who
did not, even though all paid the same fee. (This bill provided for
a fund supported by fees from those who acquire or possess lubricating
oils and with whom used oils might collect.)
Later in 1968 a used oil bill drafted by the Association of German
Industries was introduced which sought to define used oils as only
those lubricating oils subject to the mineral oil tax (by no means
all lubricating oils) and lubricating substance waste with more than
40 per cent lubricating oil by weight. Gas oil used as lubricants
would have been excluded by this definition, for example.
88
-------
On the recommendation of the Health Committee of the Bundestag, to
which the used oils bills were referred for purposes of advising the
Committee on Industry, the Committee on Industry recommended to the
Bundestag that the bill be passed with the definition in the revised
form in which it had come from the Bundesrat, i.e., in the form present-
ly in the Used Oil Statute.
Definition of Mineral Oil — An essay by K. K. Rumpf in the handbook
Mineraloele und verwandte Produkte (Mineral Oils and Related Products)
(1952) by Professor Dr. Carl Zerbe explains that the general concept
"mineral oil" encompasses primarily petroleum, liquid condensations
from natural gas, liquid or salve-like distillates or sediments of
petroleum, and natural asphalt, and secondarily, distillates from
lignite, bituminous slate, peat or hard coal. This description
has been used by German officials to give content to the broad
definition of used oils contained in section 3(2).
The definition in the law was intentionally drafted broadly in order
that the law's purpose to protect water, soil and air could be realized
as comprehensively as required and as economically as possible.
The obvious but crucial qualifications to add to this description is
"as far as they have been used." This qualification means that petroleum,
i.e., unrefined oil, is not covered by the definition since it is
rarely the source of used oils. As a general rule it is products
made from petroleum which are intended for use. Thus the oil from
cleaning oil tankers is not covered by that part of the definition
which reads "mineral oil-containing wastes from storage, business
or transport receptacles," since the oil from which these wastes
came was not used or intended for use. Nor does the definition
cover oil wastes resulting from refining petroleum or cleaning drill
rigs, drill holes, pipelines or raw oil transport containers.
Not entirely clear under this definition is when an oil is deemed ready
for use. The oils used in the process of producing some lubricants
could be seen as a raw material or as an end product ready for use
in the production process.
The section 3(2) definition also emphasizes that mineral oil
products must be fluid to be used oils. The line between fluid and
solid mineral oil products was drawn to make the law practicable.
Had this distinction not been made the entire range of solid bituminous
substances would have been included, for example. Likewise, greases
are excluded by this element of the definition.
89
-------
In summary, the German law covers mineral oils, mineral oil products
and wastes containing mineral oils which (1) have been used and (2)
are fluid.
The Pick-Up of Amounts Less Than 200 Liters — The Used Oil Statute
provides that contractors must prepare for the later pick-up of
amounts of used oils less than 200 liters, for example by leaving
receptacles for persons in their districts who request them. This
was provided in the law because the Parliament agreed with the exper-
ience of those who had disposed of used oil that it was inefficient
to collect amounts less than 200 liters. The provision has not
altogether answered the question of what those people who change
their own motor oils should do with their used lube oils. Estimates
in Germany vary on the number of people who actually do this: a
survey conducted by the Esso Company reportedly showed that 15
per cent of all drivers changed their own oil, but officials of
the Ministry of Economics estimate that only 1 per cent of all used
motor oils generated in Germany results from these do-it-yourself
changes.
Several cities in Germany have taken an initiative which offers one
solution to the problem of preventing improper disposal in small
quantities of used oil by self-changers. The City of Bonn, for
example, has established four places where persons with small amounts
of used oil may take it and dispose of it for free. Three of these
four are open Monday through Friday from 7 a.m. to 5 p.m., and one
operates during these hours on Mondays, Tuesdays, Wednesdays, and
Fridays. One of them is open from Saturday morning at 8 a.m.
until noon. The city has published and distributed posters informing
its citizens as follows:
To all users of oil and owners of cars: "A better quality of
life" and "environmental protection" are requirements under wide
discussion nowadays. They are, however, also the responsibility
of the entire population.
The harmless disposal of used oil belongs among the most important
tasks of environmental protection. The infiltration of used
oil into the sewer system endangers in the extreme our water
supplies even though public opinion considers discharges of
small amounts insignificant.
Therefore you, too, can and must contribute to this special
environmental protection. Give your used oil to the following
small collection stations established by the city of Bonn:
(The four locations and the times they are open are then
listed).
90
-------
Your used oil will be accepted without charge to you.
Your contributions to environmental protection and to your own
safety costs you only a relatively small detour. It will be
worth it to you for your good conscience.
One of Bonnfs collection centers is near the municipal garbage
incinerator. Between May and November 1971 approximately 40,000
liters of used oil was delivered here, both by private persons
and commercial enterprises, in amounts up to 50 liters at one time,
the maximum authorized by the city. At two of the other then-
existing three facilities during the same period 400 and 500 liters
respectively were delivered by private persons.
Several other German cities have developed similar programs: Kiel,
Braunschweig, Augsburg, Wiesbaden, Muelheim an der Ruhr, Viersen,
Witten, Wurzburg, Bremerhaven.
The subject of what to do to control improper disposal by do-it-
yourselfers was raised by several representatives in Parliament
in written questions to the government. The representatives asked
whether it might not be a good idea to amend the Used Oil Statute
to provide that changes of oil could only be undertaken in gasoline
stations and repair shops. The government responded that such a
provision would be very difficult to enforce even with a thorough
and expensive administrative effort. It would furthermore lead
to the virtual elimination of less expensive lubricating oils from
the market. This, the government pointed out, would chiefly affect
car owners with less buying power.
The representatives also asked whether better control over improper
disposal of used oil might not be achieved by limiting the sale of
motor oils to only those firms designed to deal in oil and capable
of handling used oils returned to them. In its answer the govern-
ment pointed out that it had suggested this to representatives of
the mineral oil industry in the preliminary discussion of how the
Used Oil Statute should be drafted. The oil representatives indicated
reluctance to accept a requirement that their dealers accept used
oils other than their own. Nevertheless, the government stated, it
would pursue again the possibility* of persuading each gasoline
station and repair shop to accept used oil whether or not in connec-
tion with the change of oils. It would also encourage other cities
to adopt programs similar to Bonn's. Finally, it would talk to
representatives of the department stores and discount stores which
sell less expensive lubricating oils with the goal of achieving
arrangements whereby these stores would make available to their
customers for free the opportunity to have their oil changed at
91
-------
Die Unverbesseriichen
''Whaddya mean, environmental pollution??
That little bit of oil. . ."
92
-------
certain places. Such stores in Germany already sell tires tinder an
arrangement that a purchaser of them may have them installed at no
cost by various service stations. One exemplary department store
chain, Kaufhaus Karstadt, already enables its customers to give their
used oils to its tire services.
Quality of Rerefined Petroleum Products — In Germany there is no
requirement that products made from used oils be so labeled. Except
for about five to seven per cent of their products, rerefiners
sell their base stocks to large wholesalers who add additives to
them, package them, and market them. They are marketed by brand.
These brands are tested by the auto companies who publish lists of
the brands which will meet the requirements of their various
engines.
Government officials in Germany are confident that the brands of
rerefined oil are of the same quality as those of virgin oil and that
a labeling requirement is unnecessary. They believe that such a
requirement would be very damaging to the demand for such products,
for psychological reasons. They point out that the large oil firms
buy considerable quantities of rerefined base stocks and mix them with
their virgin stocks before marketing the resulting lubricating oils.
A recently published comparison of the prices and classifications of
lubricating oils by brand is reproduced below as Table 5.
Environmental Controls Governing Disposal Firms — Environmental
controls over rerefining and incinerating enterprises are imposed
by state officials in Germany, either in permits to operate the business
or in permits for the business to use waters. There are no national
emission or effluent standards which the officials granting these
permits must apply. There is also a June 1972 federal solid waste
disposal law in Germany, administered, as are all such federal statutes,
by state officials, which affects the firms' disposal of the end
products from rerefining and incineration.
Various state officials have required almost all of the incinerating
enterprises to install some kind of device to cool and clean the
emissions from the burning of waste oils and other substances. Only
two or three incinerating enterprises, however, have demonstrated
to the Federal Office for Trade and Industry that they incur addi-
tional costs from these devices sufficient to warrant increased pay-
ments which are authorized for air pollution control measures by the
payments guidelines. The Federal Office has no authority to ensure
compliance with the conditions imposed by state officials in the
operating permits of the disposing enterprises. If a state official
93
-------
Table 5. PRICES AND CLASSIFICATIONS OF LUBRICATING OIL IN THE
FEDERAL REPUBLIC OF GERMANY
Brand
AGIP
AMOCO
ARAL
BP
CASTROL
ESSO
HERTIE*
JET
KARSTADT*
KAUFHALLE*
KAUFHOF*
MOBILOIL
NECKERMANN*
QUELLE*
SHELL
TEXACO
TOTAL
VEEDOL
Name of Oil
WOOMF. 1
SUPER PERMALUBE
SUPER ELASTIC
SUPER ELASTIC
SUPER
SPEZIAL
SUPER VISCO-STATIC
SUPER VISCO-STATIC
ENERGOL HD
ENERGOL HD
GTX
GT
UNIFLOW
EXTRA
EXTRA
GLOBUS
LTX 2050
PREMIUM
HD-SPEZIAL*
HD-SUPER
HD-MOTOR-OL
SUPER
SUPER
HD-SUPER
HD-SUPER
LANGZEIT MOTOROL
SPEZIAL MOTORfJL
SUPER
X-100
ULTRA
URSA OIL E.D.
GTS
SUPER
SUPER
SUPER
API
Viscosity Classification
10W-40
20W-50
10W-50
20W-50
10W-30
20, 30
10W-40
20W-50
20W-20
30
10W-50
20, 30
10W-50
10W-30
20W-20, 30
20W-50
10W-50
20W-20, 30
20W-50
20, 30
20, 30
20W-50
10W-50
20W-50
30
10W-30
10W-30
10W-50
20, 30
20W-50
20, 30
20W-50
20, 30
10W-40
20W-50
SD
SD
SE
SE
SE
SC
SE
SE
SE
SE
SE
SE
SE '
SE
SD
SD
SE
SC
SE
SE
SC
SD
SE
SD
SD
SC
SC
SE
SD
SE
SC
SD
SC
SE
SE
DM/
Liter
7.00
6.90
7.00
7.00
6.1*0
If. 90
6.60
6.60
4.60
4.60
7.50
5.60
6.95
6.55
4.85
2.50
6.1*0
4.70
3.75
2.50
2.25
3.75
7.40
3.00
2.00
4.25
3.25
6.95
4.95
6.90
4.50
6.90
4.85
7.20
7.20
* These brands are sold by department stores or discount stores. All the
brands on this table meet the military specification MIL-L-2104B
(equivalent to API Service Classification CC).
94
-------
complains to the Federal Office that it cannot achieve compliance
however, the Federal Office must cease making payments to the enterprise
in accordance with section 2(1) of the Used Oil Statute. So far
state officials have closed only two disposal facilities, one in the,
City of Stuttgart and one in the Land of Hesse, for failure to
comply with their environmental restrictions. Another enterprise,
whose poor quality effluents came to the attention of the Federal
Office, was given an extension of time by state officials with juris-
diction over it.
The rerefiners* solid wastes have come under increasingly strict
controls for disposal. These wastes can be burned and neutralized
and then disposed of in approved sanitary landfills. The wastes
are then mixed with other wastes there. Some rerefiners have ovens
which can burn their acid-clay wastes. Effective implementation
of the June 1972 federal solid waste law in Germany, however, has not
been achieved. Several instances of improper disposal of toxic
wastes have come to public attention in the last year, culminating in
a national scandal in the state of Hesse in the summer of 1973.
A list of illegally disposed of substances discovered at 38 dumps
in the Land of Hesse that simmer, included not only oil wastes
(e.g., sludges) which should have been collected for a fee under
the Used Oil Statute.but also wastes from some rerefiners. The public
outcry at this scandal has made several state officials much stricter
in controlling where rerefiners put their solid wastes, and many
rerefiners are having difficulty finding acceptable disposal sites
now. The federal office cooperates with state officials in this
respect by requiring those enterprises suspected of improperly
dumping their waste products to present along with their application
for payments for disposal proof of where they have deposited their
wastes, which proofs are then checked with the appropriate state
officials.
Results of Implementing the Record-Keeping Requirements — The record-
keeping books required by section 6 and 7 of the Used Oil Statute
should have been kept beginning January 1, 1972. No specific in-
vestigation has yet been made by the Ministry for Economic Affairs
or the Federal Office for Trade and Industry of the effectiveness
of these record-keeping requirements in controlling improper dis-
posal of used oils which need not be picked up for free. But Ministry
and Federal Office officials infer from the increasing amounts of
used oil disposed of (while sales of lubricants remain about constant)
that the record books plus increased environmental awareness are
causing more non-rerefinable used oils to be burned.
Indeed, there is reason to believe that the capacity for incinerating
non-rerefinable used oils is still not sufficient. As of the end of
1972 there were 19 incinerating enterprises, four of which also
95
-------
performed rerefining. Their total capacity was approximately 184,000
tons. Usually an incinerating enterprise seeks a nrf-* of used oils
and other not so highly flammable wastes to burn, in a proportion of
approximately 50-50, in order to keep burning temperatures and stack gas
temperatures lower. Now that the incinerators have enough used oils
there have not been repeated occurrences, as there were in the early
days of the law's effectiveness, of large oil firms persuading their
dealers to deliver their used oils to incinerating firms rather than
to rerefining firms.
There is some feeling among German officials responsible for administering
the Used Oil Statute that the provisions of section 6 of the law
should be amended so that all persons having more than 200 liters of
used oil be subject to the requirements to keep records and submit
to government supervision. The provision is of course less necessary
to assure proper disposal of good quality used oils than of difficult-
to-dispose of waste oils, e.g., emulsions and sludges.
Not surprisingly, some states in Germany have been more conscientious
in exercising their supervisory duties under sections 6 and 7 than
other states. Likewise some states say they do more than they actually
do. The state of Northrhine Westphalia, which includes one of Germany's
most heavily industrialized areas, has been quite energetic in following
the chain of disposal in accordance with the second implementing
regulation (Appendix 3 of the 1972 report to the German Parliament
which is Appendix D of this report.) Likewise Bavaria's efficient
administrative system has performed the supervisory responsibilities
of the law effectively. Rural states, in which used oil disposal
is less of a problem, have not been as concerned with careful super-
vision in accordance with the Used Oil Statute.
The Ministry of Economics has no present plans to suggest to the
Parliament that amendments be made to sections 6 and 7 of the
statute concerning supervisory duties. The official chiefly respon-
sible in the ministry feels that both state administrative capacity
and the economy affected by the statute itself can be overloaded
by being too perfectionist in prescribing supervisory requirements.
He points out that the regulations provide that wastes with more than
5 per cent oil count toward the maximum of 500 kilograms of oil
wastes which may be disposed of without keeping the records required.
Practically all firms which use oil at all will arrive at that figure
quickly. Experience will indicate whether it is advisable to lower
the 500 kilogram figure or otherwise increase the supervisory provisions
after control over the disposal of the large quantities of the emul-
sions and sludges works well.
Administrative Expenses of the Reserve Fund — The administrative
costs of implementing the Used Oil Statute are 1.95 per cent of the
income to the reserve fund, that is, between 650,000 and 700,000
DM annually. Currently 19 persons are employed whose salaries
96
-------
are paid from this fund. Many of them are involved with collecting the
specimens of materials burned by the incinerators and checking them
in the Federal Office's laboratory for the percentage of oil in
order to determine how much oil was burned which is eligible to
receive payments.
Legal challenges to the administration of the Used Oil Statute have
been few. There have been some proceedings to determine whether
certain goods are subject to the compensation fee or not. Recently
the procedure for determining amounts of oil incinerated eligible
to receive payments established by the contract between the federal
office and the incinerating enterprises was upheld by a court. This
was important since the contract fills many of the gaps in administra-
tion not made clear by the Used Oil Statute.
Disposal Firms1 Districts, Competition and Costs — It is important
to observe that used oil disposal enterprises are distributed fairly
evenly across Germany. This makes it possible for the Federal
Office, in assigning enterprises mandatory collection districts,
to divide the country into regions which include both metropolitan
and rural areas. The Federal Office has arranged it so that every
place in the country is included in the mandatory pick-up districts of
at least two enterprises, in order to promote competition among the
enterprises. The competition is reflected in the frequency of service
which an enterprise can give to the persons possessing used oil and
also in the prices it charges for picking up waste substances which
are not entitled to free pick-up under the Used Oil Statute. Com-
petition is also reflected in the amounts rerefiners are willing to
pay to obtain good quality used oil in some instances. The collection
of used oil itself is divided about equally between that performed
by disposal firms themselves and that performed as a service for
these firms by collection firms. Many rerefiners, for example,
believe that it costs them less to pay for this service than it
would to support a fleet of trucks and the personnel to operate them
on their own.
It is difficult to compare the costs of collection and disposal among
the various enterprises because they are not limited to picking up
oil in their assigned mandatory pick-up districts. There are also
trade-offs in costs: firms assigned large metropolitan areas, for
example,,find they must pay for good quality used oil, thereby off-
setting their lower transportation costs due to shorter distances.
There is vigorous competition among rerefiners to get relatively
clean used oil. This results in their willingness to pay for good used
oil or to forego charging for the pick-up of used oil which contains
more than 10 per cent foreign matter, the limit provided in the regu-
lations above which they need not pick up without charging a fee. A
practical difficulty with the 10 per cent limitation on foreign
matter is that there is no simple, portable testing procedure which
97
-------
collectors of used oil can use at the point of collection to determine
the percentage of foreign matter.
Disposal Firms1 "Uncovered Costs" for which They Receive Payments —
Section 2(1) of the Used Oil Statute states that firms amy receive
continual payments for those costs not otherwise covered if they dispose
of used oils without harm to water or soil and without causing air
pollution. Section 2(2) No. 4 of the statute provides that the pay-
ments may not exceed the uncovered costs which arise on the average
for the same kind of disposal enterprise.
There are two kinds of disposal methods which may receive payments:
rerefining and incinerating. The uncovered costs of rerefining are
figured as follows: the actual expenses of the business (including
the costs of collection and transportation of the used oil) plus a
salary for the owner of the enterprise plus 6 per cent as a return on
the use of the owner's capital plus a "reasonable" profit minus revenues
from the sale of the rerefined products. For incinerating enterprises
uncovered costs are calculated in the same manner except there is
no deduction for sales of products since there are no such products.
There is no fixed percentage which is deemed a "reasonable" profit
margin for these enterprises. Discussions in Germany are currently
in progress about what constitutes a reasonable profit margin in
public works contracts let by the government. Somewhere between
4 and 6 per cent of costs seems to be appropriate. The Federal Office
for Trade and Industry may or may not follow this guideline when it is
finally arrived at.
In order to determine the costs of the enterprises receiving payments the
Ministry of Economics has annual audits, done by independent firms, of
the books of the enterprises which perform 60 per cent of the rerefining
and of the incinerating work. The results of these audits are weighted
in order to arrive at average costs for each kind of disposal method.
These costs obviously depend on the sizes of the mandatory collection
districts assigned to the enterprises. During the audit the firms'
collection costs are compared to their operating costs in order to
determine whether the size of the districts are appropriate. That is,
if a firm has high collection costs because its mandatory district is
large but does not show reduced operating expenses as a result of econ-
omies of scale from obtaining more used oil to rerefine or burn, then
the Federal Office for Trade and Industry will redefine the boundaries
of its collection district to make it smaller in order that average
costs for that kind of disposal method not be inflated by unnecessarily
high collection costs.
Section 2(2) No. 3 states that the payment rates for individual dis-r
posal methods shall take into account and specially compensate costs
caused by collection conditions of above average difficulty. This
provision was intended to authorize extra payments for collection
from islands and for collection by boat of oil bilge water from inland
shipping.
98
-------
The Compensation Fee - The goods it applies to — Section k of the
statute provides that the resources of the reserve fund shall be raised
by a compensation fee of 7«50 DM per 100 kilograms of certain oils
which are also subject to an oil tax. The following are goods for
which the compensation fee must be paid: l) lubricating oils and
other heavy oils from section 27.10-C-III of the customs tariff
schedule, that is, lubricating oils and other heavy oils
a) for processing by a supplementary procedure (e.g., vacuum
distillation, redistillation, cracking, reforming, refining with
selective solvents, polymerization, alkylization, isomerization,
desulphurizing, deparafination, treating with concentrated
sulphuric acid);
b) for chemical conversion by processes other than specified above;
c) for mixing by the importer with other oils or substances
to make them thicker; and
d) for other uses.
Lubricating oils are defined in the customs tariff under heavy oils
as oil or other preparations which, when distilled in accordance with
ASTM D 86 up to 250° C, do not exceed 65 hundredths including distillation
losses or with which the per centage of distillation at 250° cannot
be determined by this method.
2) Gas oils for the functions described in l)a), b) and d) above, to
the extent used as lubricating oils. Gas oils are defined as those
which when distilled in accordance with ASTM D 86 up to 350° C.
exceed at least 85 hundredths including distillation losses.
3) Greases with their heavy oil components.
Legal characteristics of the compensation fee — German officials
emphasize that the money paid by producers or importers of lubricating
oils which goes to the Used Oil Reserve Fund is neither a tax nor a user
charge nor an assessment. In German law, user charges and assessments are
only levied on those who benefit from the public facility or service
(e.g., sewage treatment plant, waste removal) to which they must
contribute. The producer of oil has no economic benefit from the resources
of the Reserve Fund since payments are made to those who dispose of
used oils, not to him.
The amounts paid by the oil producers are designated as a compensation
fee to support a system of economic regulation. The characteristics
of the fee are: that it is not intended for the revenues needed for
covering the State's financial requirements, but .rather for a definite
purpose of economic management; that the receipts are not administered
by finance officials but rather are collected in a special fund;
that the collected receipts are all spent in the granting of assistance
and are thus, except for the administrative expenses incurred, promptly
disbursed. This last mentioned characteristic is the so-called
equalization principle, i.e., the correlation between imposing burdens
and granting benefits. This principle is the crucial distinguishing
99
-------
factor separating these fees from taxes.
Thus, the fee is a form of self-help compelled from the industry for the
benefit of the industry. The state levies the fee not for itself but
only as an intermediary. It makes payments within the same circumscribed
industrial sector as is subject to the fee (in this case the oil
industry, in which the refineries are those burdened and the used oil
disposers are those benefitted).
Such fees are based on the article of the German constitution which
authorizes laws which intervene in economic life to order and manage
it. They are an instrument of state control of the economy designed
to equalize the market situation to the burden of a temporarily
advantaged sector and to the benefit of a temporarily disadvantaged
sector which function by imposing fees on the one side and granting
assistance to the other side. They are most common in the agriculture
and food sectors of the economy. For example, the German grain law
provides for a fee which may be levied in order to generate funds to
equalize freight costs (and thus grain prices) for producers distant
from shipping centers.
How the level of the compensation fee was determined — During con-
sideration of the bill which became the 1968 law the Ministry of
Economics suggested to the Parliament that it be allowed to set the
level of the compensation fee by regulation. This suggestion was not
acceptable, however, so Ministerialrat F. Kruse proceeded to prepare a
chart predicting the resources needed for the Reserve Fund and the level
of compensation fee which would be required to generate these resources.
Based on his experience in administering the subsidy paid for rerefining
used oils, Kruse projected for three years the amount of consumption
of lubricants, the amount of used oil which would be eligible for
payments for disposal under the bill (including a 15 per cent tolerance
for foreign substances and excluding the wastes from tanks and separators
and the amounts of used oil reused prior to disposal). He predicted
approximately 40 per cent of the lubricants consumed would become used
oils and of this amount he forecast that 65 per cent would be suitable
for rerefining. These percentages were based on extrapolations from
data accumulated during the 1960*8.
Next Kruse calculated the costs of disposal, including collection and
transportation. He estimated 9 DM per 100 kilograms for the incineration
and 12 DM per 100 kilograms for rerefining. He included the costs of
land disposal and burning it oneself in the predicted costs for
incineration since there was no way to predict how much used oil
would be disposed in these ways. Costs of administration were also
included. Total costs were predicted to be 39,000,000 DM in 1969, the
first year of operation, 40 million DM in 1970 and 41 million DM in 1971.
To figure the basis for the proposed compensation fee it was simply
necessary to take the figure for total import and production of the
100
-------
lubricating oils proposed to be subject to the fee and deduct from that
amount lubricating fats (5 per cent) and the oils used as raw materials
(for which the fees paid would be reimbursed)(15 per cent).
It then was simply necessary to multiply this remainder by a DM amount
per 100 kilograms which would result in the DM amount for total
projected expenses. An original suggestion of 5 DM was seen to be too
little as a result of the later decision not to subject oil used as
raw materials to the fee. 5.50 DM multiplied by the estimated remainder
produced figures that were only about a million DM short per year.
This shortage might not actually occur, Kruse suggested, since the costs
for disposal would be reduced by 1.7 million annually if payments
were made for disposal of used oil with only 10 per cent foreign
matter, as was planned, rather than the 15 per cent contained in the
prediction. And since figures weren't available on how much greases
were produced or imported, no amounts were figured as subject to the
fees; in fact the actual amounts might produce as much as another
1 million DM.
Contravening these possibilities which supported a suggested fee level
of 5-50 DM per 100 kilograms lubricating oils were two unknowns. One,
it was not clear as of the time Kruse prepared his prediction
(September 6, Ip68) whether it would be possible to collect the fees
for the products in inventory on January 1, 19&9, the first day of
the proposed bill's projected effectiveness. The other unknown was
whether the reuse of used oils by those who generate them for lower
lubricating functions would decline below the projected levels, as
it had tended to do in the late 1960's. If so, then there would be
more used oils to dispose of than predicted without corresponding
resources in-the Fund.
In the course of legislative deliberations, it was decided that it would
be administratively much easier and less expensive if only those
lubricating oils already subject to the tax on mineral oils would be
subject to the used oil compensation fee. The result of this decision
was that the amount of oil subject to the fee was reduced, necessitating
an increase in the amount of fee per 100 kilograms. This change
coupled with the one suggested by the Ministry of Health — namely,
that not only used oils from lubricating oils be disposed of with the
aid of the Reserve Fund, but all wastes containing mineral oils
(e.g., including heating oil sludges) — which increased the amount
of oils to be disposed of, resulted in elevating the compensation fee
rate to 7.50 DM per 100 kilograms. It was later decided that this
could also be applied to inventory existing on January 1, 19&9» a
decision which assured the result that the Reserve Fund would have a
sufficient extra amount in it at the beginning of its life to enable
it to operate for several years without the need to request*: the
Parliament to increase the rate of the compensation fee.
101
-------
The Interpretation of "Business" for Purposes of Record-Keeping —
Section 6 provides that commercial and other economic enterprises
must keep a record book for each "business in which at least 500
kilograms of used oils not entitled to free pick-up accumulate
for a year. Business is interpreted not to mean the legal entity,
for example, a corporation or a partnership, but rather a business unit
in the sense of having its own equipment and personnel. For example,
a drilling unit of a company with its own equipment and operating
personnel would be a business for purposes of Section 6(l). That
unit would have to keep records of used oil generated if more than
500 kilograms were not entitled to free pick-up.
Officials Responsible Under State Law for Helping Administer the 1968
Law — Section 6 and section 7 of the statute provide respectively
that an "official responsible under a state law" may either approve
centralized maintenance of records or exempt one from duty to keep
records and that the official responsible under state law must be
furnished with certain information. These officials named are quite
uniform: for enterprises under the jurisdiction of a mining official,
that mining official is the official responsible under state law for
purposes of the Used Oil Statute; for other businesses the official
responsible under state law is the local official authorized to grant
permits for the use of state waters. Occasionally these latter
enterprises have building officials or county supervisors as their
named responsible state officials.
These same officials responsible under state law are charged with
administering fines which result from the violations of regulations
which are enumerated in section 10 of the statute.
Regulations Under the 1968 Law Applicable to Inland Shipping —
Section 8(2) of the Used Oil Statute authorizes the Federal Minister
for Traffic to issue regulations in agreement with the Federal Minister
for Health Affairs with provisions for inland waterway transportation
concerning the collection of used oil from water craft, barges, etc.
There are three sets of such regulations, one for the Rhine, one for
the Mosel, and one for other inland waterways, issued on August 5» 1970,
June 8, 1971, and March 3, 1971, respectively. These regulations
are part of amendments to general regulations implementing federal
laws governing inland waterways. With respect to used oil disposal
they provide that authorized collection places are those listed in
an appendix as duty—bound to collect as well as those authorized
to collect by state officials with jurisdiction over the waterways.
The regulations also provide that it is a violation of section 10(l)
No. 5 of the Used Oil Statute to intentionally or negligently keep
an oil record book improperly, fail to keep the oil record book on
board, or fail to deliver oil wastes or liquid inflammables including
waste waters containing oil.
102
-------
Legislative History of Used Oil Provisions
— In 1935 a law vas passed obligating all rerefineries
to file reports. In conjunction with this, a duty was imposed that
all used motor oils be delivered to the rerefiners . The rerefiners
picked up from all gas stations and repair shops, though not from
self-changers or users of small amounts or from industry (which
either "burned its used oils or otherwise disposed of them) . This
system, which was instituted as part of a policy of autarchy, also
had a beneficial effect in limiting water pollution - approximately
1*0 per cent of the used lubricating oils generated at that time were
collected and rerefined. (The Germans imposed the same requirements
in Poland, Norway and the areas which are now part of the German Demo-
cratic Republic. Reportedly it still exists in these countries.)
Post World War II Until 1963 ~ After World War II, the support of
collecting and rerefining used oils was continued. Lubricating oils
made from used oils received a mineral tax preference of 13 DM per
100 kilograms. In addition rerefined lubricating oils were protected
by provisions of the customs law: imported petroleum was subject
to a duty of 12.50 DM per 100 kilograms, while the duties on imported
virgin lubricating oils ranged from 12.90-22.50 DM per 100 kilograms.
The duty on imported rerefined products was 25.90 DM per 100 kilograms.
This latter provision was justified as necessary "to keep domestic
rerefining of used oils profitable." With the support of these
provisions the rerefiners - which were all small - were able to increase
their collection of used oils from 37,000 to 123,000 tons between
1953 and 1963. That represented an increase of from 20 per cent to
3^ per cent of the used motor oils.
Germany was obligated to dismantle these tax advantages and customs
protections in accordance with an agreement to alter the provisions
governing the taxation of oil which all the signatory nations of the
European Economic Community accepted.
December 1963 Law Enacting Subsidies for Rerefining — This alteration was
accomplished as part of a law passed by the Parliament in December
1963 reforming several provisions concerning taxes and customs. However,
on the initiative of the Finance Committee of the Bundestag, the following
compensatory provision was added as an amendment to the bill prepared
by the executive branch: "Enterprises located in the Federal Republic
which paid taxes for lubricating oils in accordance with section 2(l)
No. 1 of the Mineral Oil Tax Law in 1966, may receive, upon application,
a temporary subsidy for lubricating oils (rerefined products) which
they produce from used oils generated and collected in the Federal
Republic and ship from their firm. ..The temporary subsidy for lubricating
oils [which were defined as the heavy oils enumerated in the customs
tariff] which are shipped from the firms in the years 196^ and 1965
is 22.90 DM per 100 kilograms." The new section provided that no subsidy
103
-------
be paid for lubricating oils not subject to the Mineral Oil Tax as
a result of other sections of the revised Mineral Oil Tax Law and
authorized the Minister of Finance to adopt regulations governing
the procedures for implementing the new section. (See Appendix E .)
In explaining the new section the Finance Committee stated that it
had thoroughly discussed the business and political economy issues
raised by the bill for the small enterprises currently rerefining
used oils. "The existence of these firms would be threatened if
their products, which are more expensive to produce, are subject to
the same tax as fresh oils. If these enterprises close, a possibility
is lost for the disposal of used oils which is important to our
political economy."
The Finance Committee also called on the executive branch to "investigate
the situation and cost structure of the field of collecting and
rerefining used oil and to suggest to the Parliament by June 30, 1965
new provisions which promote the collection, rerefining or disposal of
such oils in the interest of protecting waterways, ground water and
soil."
Amendment of the 1963 Law in Response to E.E.C. Objections, April 1964 —
This subsidy provision provoked objections from the Commission of the
European Economic Community and from the other member nations. They
argued that the payment of such a subsidy for rerefined products
exported from Germany was a kind of export subsidy which contravened
the Treaty of Rome that is the basis for the :E.E.G. The Parliament
reacted promptly, in March 1964, by considering a bill which would
have prohibited the export of rerefined products to member nations
of the E.E.C. The Finance Committee decided, however, that rather
than such a prohibition it would be consonant with the Treaty of Rome
and consistent with the Committee's goals in adopting the subsidy
if payments made for rerefined products which were exported to the
E.E.C. nations were repaid by the rerefiner. Such a bill became
law in April 196U.
The regulations adopted to implement the December 1963 subsidy
provisions, as amended, are included as Appendix E of this subsection.
The first report to the Parliament by the.Ministry of Economics,
June 1965 — The report called for by June 1965 was submitted punctually.
Since the Parliament had already extended the subsidy provisions for
another year, however, the report provided considerable information
about the country's used oil situation (although not about the cost
structure of collection and rerefining) but postponed any specific
recommendations to the Parliament. The apparent reason for the
extension and postponement was the expectation that the Commission
of the European Economic Community would propose used oil regulations
for all the Common Market nations.
104
-------
The 1965 report was based on one prepared by the Battelle Institute
in Frankfurt under contract with the Ministry of Economics. It
stated that of the 750,000 tons of lubricants sold in 1963, 55 per cent
was consumed so the consistency and distribution of any wastes offered
were no practical threat of water or soil pollution. Of the remaining
3^5,000 tons, 30 per cent was re-used for other lubricating purposes
without generating significant wastes, 30 per cent was burned and 33-35
per cent was collected and rerefined.
Thus, only 8-10 per cent of the lubricants not fully consumed in their
first use presented - to the extent not properly disposed of on land -
a continual threat to water and soil. Nevertheless,
this amounted to approximately 35,000 tons a year. How much of this
actually ended up in the nation's waterways could not be definitely
determined, the report stated. But some indications were given by the
results of an investigation conducted by the state of Northrhine-
Westphalia of the pollution of the Rhine in that state. Within the
boundaries of that state alone 10,000 tons of oil ended up in the
Rhine. Almost all of it flowed in via the tributaries. In addition
shipping on the Rhine itself contributed approximately 8,000 tons
annually of used oils, comprised of up to TO per cent fuels. This
latter figure would be 3,000 tons higher but for the work of a state-
supported public corporation which collected oils from the ships
and took them to rerefiners. "These figures show," the report stated,
"to what extent the Rhine has become a kind of collection sewer for
the used oils from many individual disposal sites and to what extent
the surface waters which are being increasingly used for water supply
are endangered."
The Battelle report had concluded that an altogether satisfactory
disposal of all used oils not heretofore collected would be practically
no problem in a few years. The Ministry of Economics considered this
a reasonable view, given that the rerefiners were expanding their
collecting capacity with the support of the federal subsidies, that
oil users were delivering more used oils or disposing of them them-
selves and that the states' water pollution control officials were
having more success in preventing danger from used oils. The Ministry
nevertheless concluded that the 35,000 tons of used oil improperly
disposed of should be brought under control as quickly and completely
as possible "to prevent a danger to soil and water." It also suggested
a long-range goal that the federal budget should not be burdened with
the costs of harmless disposal of used oil; rather, users of oil
should be. In order to avoid sudden changes in the business conditions
of the rerefiners, this conversion should occur gradually, beginning
with a reduction in the subsidy effective January 1, 1967, the report
concluded.
105
-------
(The following is a summary of some of the technical information
contained in the Battelle Institute's report to the Ministry).
In Germany, according to the Battelle Institute's 1965 report,
somewhat more than one-half of the wastes generated by the use of
lubricants and mineral oil solvents or cleaning agents collects at
gas stations and repair shops. The rest is distributed among count-
less sources. In consistency - the most important factor in their
disposal - 80-90 per cent of these used oils (including foreign
matter) were liquid, 5-15 per cent were in the form of sludge, and
5-10 per cent were more or less solid. The amount of foreign
matter (also important to disposal possibilities and consisting of
water, metal rubbings, dust, sand, etc.) in each of these categories
varied greatly. The report foresaw only a slight increase in the
amount of liquid waste oils in the coming years, but more liquid/
sludge wastes from cleaning oil and gas separators and tanks. There
were, the report's summary concluded, no technical limits preventing
harmless disposal of used oils: there are several means of disposal
for each waste product. But in some cases disposal entailed high
costs. .Thus the most economic solution can only be determined for
individual situations.
The section of the report dealing with kinds of wastes and possibilities
for their disposal pointed out that only general values can be given
for the characteristics (per centage of oil, water, foreign matter,
additives) of each general form of waste and that in practice the
wastes are mixed in countless ways in the process of collection.
Therefore the choice of which of six possible disposal methods to use
must depend on the circumstances of the particular case. As possible
disposal methods the report listed:
1. re-use for the same or inferior purposes
a. without prior treatment [i.e., filtering or centrifuging],
or
b. after prior treatment;
2. regenerating [i.e., distilling, refining];
3. burning
a. without prior treatment
b. after prior treatment, or
c. mixed with mineral oil-containing or other wastes or
products or with the help of supporting fire;
k. depositing in places where danger to water and soil is not
present and where it can be done' in accord with legal provisions;
5. chemical binding;
6. biological degradation in relatively short time.
The first three of these — reuse, regeneration and burning — without
expensive pretreatment were described as technically the least
problematic and economically the most promising methods. 80-90 per cent
106
-------
of all mineral oil-containing wastes could be taken care of in these
ways. Pretreatment "before "burning was also technically possible,
although it did increase costs and result in small amounts of a new
waste — sludge.
Depositing was seldom seen as practical due to lack of suitable
land. Chemical binding involves transforming the oily wastes into
products harmless to water by means of the so-called irreversible
oil binders introduced in the mid-I960's for use in controlling oil
spills. This means of disposal was seen as economic under special
conditions: the treated wastes could be deposited in specially
prepared ditches. The possibility of employing biological degradation
was described as not yet sufficiently clear from a scientific viewpoint.
In principle, mixtures containing small amounts of oil are rapidly
degraded where the living conditions for micro-organisms are favorable,
i.e., plenty of movement of water and oxygen.
The forms of oil wastes most difficult to dispose of are sludges and
unseparated emulsions from metal-working. For the former the method
used chiefly is burning in special ovens, although this method has
problems with charging the ovens and detoxifying the emissions. Large
garbage incinerators can also accommodate oil sludges. Unseparated
emulsions normally have too much water content to make burning possible
without an expensive supporting fire. Separation followed by burning
the oil portion is more economic.
The second report to Parliament by the Ministry of Economics, 1966 —
Further investigation by the government revealed more information,
some of which modified the thrust of the 1965 report. This information
was brought out in answers to several questions put by representatives
in the Bundestag in August 1966 and in a supplementary report to the
Parliament dated October 27, 1966.
"Is the government aware," began the representatives' series of
questions, "that the collection of used oils for regeneration or
disposal has not kept pace with the increased amount of oils used thus
increasing the danger to soil and water?" Yes, the government answered,
it was aware. Lubricants sold had increased by 106,000 tons from 1963
to 1965 to a total of 844,000 tons, while in the same period the
collection of used oils increased by 34,000 tons to 157,000
tons. To the extent used oils are not properly disposed of they
are a continuous danger to water and land, the government responded.
"How much are the annual amounts of used oils disposed of in uncontrolled
ways," was the second question. The answer: by statistical extension
of the 1963 figure of 35,000 tons, in 1964, 46,000 tons and in 1965,
51,000 tons were disposed of by unknown means.
107
-------
Three days after these answers were published a bill sponsored by
Rep. Dr. Schmidt and 31 fellow members of the Bundestag was intro-
duced to extend the subsidy for two more years (until December 31,
1968) and reduce it from 22.90 DM per 100 kilograms to 19.50 DM per
100 kilograms. In their justification of the bill the sponsors
stated that only by means of the subsidy to private firms was the
collection and regeneration of used oils - "a task of the highest
significance to our health and political economic policies" - made
possible. Since the E.E.C.'s efforts to harmonize member nations1
provisions had not yet been successful, it was necessary to extend
the temporary provisions in order not to interrupt the firmfs work
the sponsors stated. The reduction in the amount of the subsidy
was, based on a check of the industry's economic development, acceptable
as well as desirable for budgetary reasons.
Since this bill also reflected the views of the government, the
Federal Minister of Economics stated at the conclusion of his October
1966 report that detailed recommendations from the government would
be superfluous. The report did provide, however, the results of the
investigation into the cost structure of collecting and regenerating
used oil. By way of introduction, the report reiterated the amount
of used oil collected (pointing out that 38$ of the motor oils sold
were collected, equivalent to the per centage collected by the system
established in 1935)- There was also a cautionary note in the intro-
duction. An increase in the amount of used oils used for heating
was problematic for several reasons. Insurance companies would not
provide protection for enterprises heating with used oil because of
the increased risks of fire and explosion. Further, the Federal
Minister of Labor and Social Affairs and the local building and
commerce officials (who are responsible for granting permits for
many new enterprises to operate) raised objections to the use of used
oils for heating instead of heating oils, on similar grounds, especially
if proper burning facilities were not employed.
The investigation of costs for 2.96k and 1965 was complicated by the
fact that the tax preference was not replaced by the subsidy until
May 1, 196^, and frequently the rerefineries did not keep records in
a way that distinguished between these two aspects of 1.96k. Never-
theless, it was evident that without the 22.90 DM subsidy there would
have been losses amounting to 17.75 DM per 100 kilograms for the
rerefineries in the period in 196^ after the subsidy became effective.
The weighted average prices for rerefined products declined steadily
during 196U-65. In 1962 the price was 60.9k DM per 100 kilograms;
in 1963, 59.U3 DM; and in 1$6k9 between May and December, 58.61* DM.
A comparison of the 1963 and 196k prices shows a possible effect of
the subsidy: a sinking of the average price of .79 DM per 100 kilo-
grams, or 1.3$. This development in prices contrasted with the
contrary tendencies of the fresh oil market. While the oil firms
lowered the prices of goods which were in direct competition with
108
-------
rerefined products, the prices of lubricating oils in the firms'
own gas stations were raised significantly.
Average net receipts for rerefined products rose 1.86 DM per 100
kilograms "between May 1 and December 31, 196^. Coupled with
costs reduced by .03 DM the average profit from producing rerefined
products was 1.89 DM per 100 kilograms. This development meant that
if the subsidy were reduced "by 1.90 DM to 21 DM per 100 kilograms the
domestic market would be in the same situation as when tax preferences
were granted (until April 30 196*0 without on the average weakening
the rerefiners' capacity to compete with the large oil firms. Such
a reduced subsidy would still compensate on the average for the
losses which the rerefiners would experience without it: in the best
situation normal expenses would result in losses of 11.60 DM per
100 kilograms; in the worst, all expenses would result in a loss of
21.25 DM per 100 kilograms. The average loss would be 17.75 DM per
100 kilograms.
The government's October 1965 report also observed that collectors
of used oils, e.g., gas stations, were receiving approximately 2.20
DM per 100 kilograms in payment for their waste oils. This subsidy
of collection, the report said, was not tolerable for the federal
budget in the long run and offered the possibility of a further
reduction of the subsidy by 1.10 DM per 100 kilograms. Too rapid
a removal of the "collection premium," however, would mean that
used oils would no longer be separated by kinds for collection or feept
free of avoidable wastes and water and that more users would dispose
of their oils in uncontrolled ways leading to enhanced water pollution.
The report recommended more efforts to increase public understanding
of the dangers of oil pollution for land and water as a means of
promoting care in sorting and storing of oils and eventually of giving
up oil without expecting to be paid for it.
The report pointed out that the answers provided by the governments
of several Lander to questions from their representatives indicated
that not only was the disposal of used oils not systematically
supervised but also that burning them in proper facilities was not
even to a starting point. On the positive side, some rerefiners
had committed themselves to picking up used oils whenever possible.
The report recommended publicizing these pick-up points.
An appendix to the government's report of two graphs depicting amounts
of oil sold and their ultimate fate is included in appendix E to
this report.
The Two-Year Extension of Subsidies for Rerefining — The controversy
over the bill — Rep. Dr. Schmidt's bill to extend the subsidy to rerefiners
for two years and reduce its amount from 22.90 to 19.50 DM per 100
kilograms was referred to the Finance Committee, (of which Schmidt
109
-------
•was chairman) with the Budget Committee in an advisory role. These
two committees disagreed, however. The Finance Committee reported
the bill favorably as drafted. The Budget Committee, on the other
hand, pointed out that the proposed 196j "budget contained no provision
to cover the 26 million DM in expenditures which the bill would occasion.
Further, the committee thought the amount was too much to be justified
by keeping in business 20 middling firms with a total of 1,000 employees.
As for the argument that the bill would contribute to water pollution
control, that field was under the Jurisdiction of the Lander and it
was improper to burden the federal budget with expenditures for that
purpose. The Budget Committee recommended to the Finance Committee
that the bill be rejected and reported thus to the full Bundestag.
These contradictory reports caused the Bundestag to refer the bill
back to the two committees for further deliberations.
The Finance Committee informed the Budget Committee that it was.in
sympathy with the tendency to eliminate subsidies, but that here an
exception was in order. The subsidy only became necessary because
the change in the tax preference for rerefined products and the
customs duty on fresh oils had been required. It was also important
for reasons of water pollution control. The Budget Committee was
requested to support the bill in spite of some difficulties with where
in the budget the expenditures would be covered.
The Budget Committee responded that the bill violated the principle
that each person -who caused water pollution was responsible to undertake
control at his own expense. The Budget Committee wanted a phasing
out of the subsidy, to be replaced by increasing the price of fresh
oil to cover the costs of used oil collection and disposal. It
voted to recommend to the Finance Committee that the subsidy be reduced
from 22.90 DM per 100 kilograms to IT DM per 100 kilograms for 196?
and lU DM per 100 kilograms in 1968 (instead of to 19.50 for both
years as the bill provided). For this amount the budget could cover
the bill's expenses.
Reluctantly, but in order not to lose the whole bill, the Finance
Committee decided to follow the Budget Committee's recommendations
and to urge expeditious study of the problems involved, including
the E.E.C.'s harmonizing efforts, so that a permanent approach could
be adopted as soon as possible.
The debate on the bill in the Bundestag, which runs nine printed
pages, was not without rancor. It was essentially a debate between
the two committees. Finance argued that Budget's suggestion would
save a mere three million DM. Budget said that many rerefiners
operated efficiently enough that they didn't need more subsidy than
would cover the average losses of 17.75 DM per 100 kilograms. Finance
replied that some needed more, some needed less and the end result
would be the same if one wished to make subsidy payments based on the
110
-------
individual situations of each of twenty-odd rerefiners. It appeared
that the government's proposed budget had not contained an entry to
cover the extension of the subsidy its report supported because the
Budget Division of the Ministry of Finance disagreed with the govern-
ment position and had left the entry out intentionally. (The Division
had likewise approached the Budget Committee in opposition to the
Finance Committee's bill). Throughout the debate it was clear that
all parties agreed that a permanent solution was urgently needed. One
of the reasons it had proposed a reduction to ik DM per 100 kilograms
in 1968, Budget said, was to add an element of financial pressure
toward achieving a solution. To this Finance answered that there
was a strong risk several rerefineries would close, thereby reducing
the amount of used oil collected and increasing the danger to public
health.
The upshot was that the bill passed the Bundestag in the form suggested
by the Budget Committee. The upper house, however, the Bundesrat,
shared the views of the Finance Committee and requested a conference
committee. The conference committee recommended the subsidy be extended
for two years but reduced to 19.50 DM per 100 kilograms rerefined
product, i.e., the original bill. The conference committee's recommen-
dation was approved in both the Bundestag and the Bundesrat. The bill
was signed into law in May 1967, effective retroactively to January 1,
1967.
The Third Report to the Parliament by the Ministry of Economics, April
1968 — One of the August 1966 questions to the government posed by Rep.
Dr. Schmidt and his colleagues requested it to update the February
1965 Battelle Institute report on the causes, sources and whereabouts
of mineral oil-containing wastes "with the goal of reviewing and more
closely determining for what reasons, in what kinds of uses, and how
much used oils are not collected or properly disposed of." This
question also requested the government to present the Parliament with
suggestions for improving the situation when the results of the renewed
investigation were available.
The Ministry of Economics, in concert with the Ministry of Health,
presented this third report on April 5, 1968. The government's
covering memorandum to the Parliament highlighted three conclusions
to be drawn from the second round of research:
l) the frequently-suggested supposition that as a result of technical
developments and sinking demand for lubricants the amounts of used oils
would steadily decline was false: from 1963 to 1966 the amounts of
used oils generated had increased by 359000 tons to a total of
approximately 370,000 tons and by 1970, U00,000 tons was anticipated;
HI
-------
2) by 1966 50,000 tons less used oil were burned or reused by industry
than in 1963, perhaps because of stricter application of air pollution
provisions. On the other hand, rerefining of collected used-oils
increased by 60,000 tons;
3) the amounts of used oils disposed of in uncontrolled ways increased
by 6,000 tons to 39,000 tons. The question "why do these amounts
exist and from what kinds of uses do they come" couldn't be answered,
the report stated, despite specific questioning in more than 150
interviews, although for the most part they seemed attributable to
oil emulsions (discharged into sewers) whose proper disposal was
freighted with heavy costs, especially for small and medium si zed
businesses. The reasons for dumping used oils on land or discharging
them into water ways were a) avoidance of the costs of collection and
proper disposal, b) negligence and c) inadequate knowledge of proper
procedures.
Fifty per cent of the 369,000 tons of used oils in 1966 were generated
by traffic (k5% from automobiles, 1% from trains and k% from inland
shipping). Thirty-five per cent came from industrial, commercial
and craft industry sources, another 12% from the agricultural sector.
Wastes from cleaning oil tanks and oil or gas separators amounted to
2% and 1% respectively. While, in 1963, Battelle estimated that 30%
of the used oils were reused , 35$ rerefined and 30% incinerated or
burned for heat, these percentages for 1966 were 20%, ^9% and 20%
respectively. The dumping or discharging of the 39»000 tons constituted
approximately 11% of the disposal, up 1% from 1963.
As mentioned, most of this 39*000 tons of used oil (4.6 per cent of all
lubricants consumed) was in the form of water-soluble oil emulsions dis-
charged to sewers by small and medium sized metal working plants without
proper facilities. Improper disposal by do-it-yourself automobile oil
changers, at construction sites and from inland ships could not be determined.
Oily sludges and solid wastes normally found their way to public
garbage dumps along with other industrial wastes. It was clear,
according to the 1968 Battelle report, that primarily those oil
wastes whose proper disposal is expensive or difficult or both are
dumped on land or in water. Only large firms could afford to
separate the oil from their used emulsions, for example, or centrifuge
the oil from metal shavings.
The report included the results of a questionnaire requested by the
Ministry. Gas stations and automotive repair shops were asked whether,
if they had to pay to have their used oils collected from them, they
could charge drivers ,10 DM per liter of drained oil at the time of
changing their oil. Industrial and commercial plants were asked if
they would dispose of used oil themselves or continue to give it to
collectors if it would cost .10 DM to dispose of each liter of oily
112
-------
wastes. The gas stations and repair shops replied that to directly
pass the costs of used oil disposal on to drivers was out of the
question. They feared the loss of customers. Approximately 5 Per cent.
stated that if such a regulation were adopted they would absorb
the costs themselves. Even those who said they would continue to
deliver their used oils for disposal assumed that a system which
charged the user of oil for its pick up would lead to an increase
in uncontrolled disposal of used oils. The breakdown of industrial
and commercial response to what they would do if it cost .10 DM
per liter to dispose of used oils:
-continue to deliver- 1*5$
-burn in an incinerator- 25$
-heat with it-
-burn it in open-
-re-use it until consumed- 5$
-dispose of it themselves by
undefined means- 5%
The 1968 report concluded with a few predictions of trends in used
oil generation and disposal. Consumption of lubricants had increased
from 700,000 tons in 1963 to 8^5,000 in 1966. This rate of increase
was not expected to continue, however, because of improvements in the
quality of oil (longer intervals between changes), improved sealing
(reducing leaks) and machine construction, and closer supervision of
the use of lubricants by businesses. By 1970, Battelle estimated,
900,000 tons of lubricants would be sold. Taking the same per centage
as 1966 of oil totally consumed in use (58$), approximately 380,000
tons of used oils would be generated in 1970, excluding the wastes
from cleaning tanks and separators. Battelle foresaw an increase
of these latter wastes since its questionnaire indicated that 25 per cent
of all industrial and commercial plants had never cleaned their tanks
or separators. Municipalities, furthermore, were making efforts
to provide for more cleaning and for the disposal of the resulting
wastes.
Developments in disposal would depend on the factors influencing
each of the disposal methods. As of the time of the 1968 report,
82. per cent of the businesses polled said they had no problem disposing of
their oily wastes. Whether this figure could continue depended on
developments. Eeuse of oils, for example, was hindered by the fact
that tax-favored transformer oils could not be used where other higher-
taxed oils would be. On the other hand reuse would increase as the
difference between the price of new oils and the costs of collecting
and pretreating used oils increased. Rerefining had increased 1*6 per cent
between 1963 and 1966 (during a period when oil sales had increased
14 per cent) » but predictions about whether this trend would continue were
not possible due to the uncertainty of whether the subsidy payments
113
-------
would be continued. Incineration or burning of used oils for heat
was still too expensive (60-180 DM per ton) for most firms to consider
this disposal method. More garbage incinerators were being constructed
although even present capacity to burn used oils was not being utilized.
The number of firms burning used oils for heat had declined since
1963, even though they had to pay no heating oil tax. Disposal of
emulsions remained a problem, particularly for the small firms which
couldn't afford devices to separate the oil from the water.
Three Bills Prepared in 1968 Concerning Used Oil Disposal — In
anticipation of the December 1968 expiration of the subsidy payment
provisions, representatives of the federal ministries of economics
and health began to collaborate with a special committee of the
Landerarbeitsgemeinschaft Wasser, an "interstate" working group for
water matters, late in 1967. Concurrently Representative Dr. Schmidt
and his colleagues in the Interparlamentarische Arbeitsgeme.1nsch.aft,
a kind of legislative council made up of representatives from all
parties elected to state and federal parliaments, were working on a
bill. The government sent its draft bill to the Bundesrat in June
1968 for its advisory comments prior to introducing it in the
Bundestag. Rep. Dr. Schmidt's bill was introduced directly into the
Bundestag in the same month and referred to the Committee for Economics
and Commercial Affairs. The government's bill was forwarded to the
Bundestag in September along with the BundesratTs comments and the
response of the government to the comments. In October, a bill
prepared by the Association of German Industries was introduced by
several representatives. The government's bill and the Association's
bill were referred to the same committee in late October.
The government's bill — This bill provided that all industrial and com-
mercial enterprises where 500 kilograms or more of uaed mineral oils or
mineral oil products or wastes would be generated annually and enterprises
collecting such wastes would keep record books indicating kind, amoung
and whereabouts of such wastes. It also provided that enterprises
collecting oily wastes from others would not be licensed. A license
was to be denied if the applicant could not demonstrate that he or
someone to whom he would transfer the wastes could reuse, regenerate
or dispose of them in a way that would cause no concern for water
pollution. It was also to be denied if the applicant's proposed
facilities or means of collection posed a threat of water pollution
ot if facts supported the assumption that the applicant or the
manager of the personnel of the business was not sufficiently reliable.
Conditions designed to protect waterways' could be attached to a license
and, once granted, the license could be revoked if these conditions
were broken or if any of the reasons for denying the application
subsequently appeared. The bill also provided that any person holding
114
-------
a license or keeping a record book was required to provide to authorized
officials all information needed to implement the law, especially
concerning the supervision of the ultimate disposal of the wastes.
The officials responsible for implementing the law would be named
by the lender. A special provision was included in the bill exempting
shipping from the foregoing and authorizing regulations to be prom-
ulgated governing collection of oily wastes from ships at certain
intervals and places. The bill concluded with provisions declaring
penalties for revealing trade secrets learned in implementing the
bill and for violating any of the duties set forth in it.
The explanation accompanying the government's bill promptly conceded
that the bill contained no provision for financial support of harmless
disposal by regeneration, incineration or otherwise, since there
were no resources in the federal budget after 1968. Without these
subsidies the government could not say how the problem of proper
disposal was to be solved economically. The explanation stated
that the purpose of the bill was to protect the waterways from pollution,
since even a small amount of oil could make a surface or underground
water supply unusable. The existing legal regime - the municipalities'
sewer ordinances prescribing the disposal of oil; the industrial code
authorizing conditions in the operating permits of businesses to
prevent discharges of used oils; the water law's provisions authorizing
officials to take action to halt discharges which are or may be
polluting - offered recourse only against individual cases of pollution
by businesses which generate them and no possibility to prevent
collection techniques which threaten water pollution. The bill was
designed to remedy these deficiencies.
The Bundesrat's first comment to the government on its draft bill
was that it should investigate whether and to what extent its bill
should be changed in light of Rep. Dr. Schmidt's bill or perhaps
^simply combined with it. "The commercial regulation foreseen
in the draft bill should be supplemented by a financial regulation
which provides payments for the harmless disposal of mineral oil-
containing wastes and these provisions should take effect, if possible,
at the same time." The Bundesrat suggested that businesses with
small branches be allowed to apply for permission to keep the record
books centrally so long as the necessary supervision of disposal
was not hindered. The Bundesrat also suggested that it was not
necessary to require enterprises collecting used oils from others
to be licensed. Collectors had been in business without being licensed
since 1935 and no difficulties were known which would justify the
requirement of a personal license. The licensing requirement would
involve an administrative burden and was contrary to the government's
announced policy, enacted into law in the industrial code, that as
few businesses as possible be regulated by licensing. The combination
of record-keeping and the government's power to obtain information
from those keeping records should be sufficient means to the bill's
end of assuring that used oils be properly disposed of so as not to
pose a threat of water pollution. Instead, suggested the Bundesrat,
115
-------
one should simply be required to give notice that he collects and the
government be authorized to order him to take measures to prevent
•water pollution or to prohibit him from collecting if he proves
unreliable.
The government's response to the Bundesrat readily accepted the
suggestion that it investigate aligning its bill with Rep. Dr. Schmidt's
but disagreed with the suggestion that licensing collectors was
unnecessary, particularly in light of the forthcoming expiration
of the subsidy payments to rerefiners. A final decision would be
made after the suggested investigation, the government concluded.
Representative Dr. Schmidt's bill — Rep, Dr. Schmidt's
bill was essentially what is now contained in the first four sections
of the Law Concerning Measures to Assure the Disposal of Used Oils,
a title taken from his bill. It provided for the creation of a
reserve fund for the purpose of enabling payments to compensate
the uncovered costs of firms disposing of used oils by harmless
means. The fund was to be supported by an assessment on producers
of 5 DM per 100 kilograms of lubricating oils. Pick-up of oil in
amounts more than 200 liters was to be free. The bill provided that
if used oils could be rerefined, that means of disposal should be
preferred.
Since this bill - along with the committee's report - shows the most
about what the Parliament had in mind in establishing this new system,
it is important to relate its legislative history in some detail.
The explanation accompanying Rep. Dr. Schmidt's bill stated
in its introduction that the subsidies in force until the end of
December 1968 had been enacted for the threefold purpose of protecting
waterways, encouraging a supply of lower-priced oil and supporting the
rerefining industry. Since without these subsidies the rerefining
firms couldn't exist, a new law was required so that the approximately
180,000 tons of used oils collected from nearly 280,000 sources would
not be disposed of in an uncontrolled manner.
The premise [of the bill] is that the lubricating oil producing
and using sector should'solve the problem of waste oil disposal itself.
Because of the strongly divergent interests of the parties an approach
based on voluntary cooperation would not assure the required protection
of the general public. Therefore a public arrangement should be
created to intercede between those having used oils and the firms
which dispose of them. The costs of used oil disposal should be borne
by those who cause them by paying an assessment. This assessment
constitutes no additional financial burden; rather it only reflects
the costs which in any event occur from the use of lubricating oil.
The assessments would support a capable network of firms who would
have to pick up used oils subject to the assessment.
116
-------
The "bill's first section is identical to section l(l)-(2) of the
present lav. The purpose was to create a special fund solely for the
purposes of the lav. Administration of the fund vas assigned to an
existing federal agency to avoid the costs of creating a nev admin-
istrative organization. The costs of administration vere specifically
to be dravn from the fund in order not to burden the general budget.
Section 2 provided that payments could be made to commercial enter-
prises for costs they could not cover in disposing of used oils vithout
damage to vater, soil or air. In vhich cases firms disposed of oil
vithout damage vould be determined by regulations promulgated by the
Minister of Economics. The bill's section 2 also provided that
payments vould be made in accordance vith guidelines vhich vere to
fulfill certain legislative requirements. Most of the enumerated
requirements vere eventually incorporated in section 2(2), vith the
exception of the one providing that "rerefinable used oils shall be
rerefined to the extent economically and technically reasonable."
The present lav's section 2(3) is verbatim vhat vas in the bill's
section 2(3).
The bill's explanation pointed out that the provisions of section 2
extended financial support of used oil disposal to other methods
than'rerefining. The regulations vere designed to establish "binding
standards" for vhat constituted harmless disposal. Of special signif-
icance vas the explanation of the payments: The payments should not
compensate the individual costs, not covered by profits, of collecting
and harmlessly disposing of used oil, but rather the costs determined
to be average for a kind of disposal method. If individual losses
vere compensated there vould be no incentive for a firm using a certain
disposal method to improve its efficiency. Furthermore, the admin-
istration of the fund vould be overburdened if it could not vork
vith .generally applicable payment rates instead of concerning itself
vith the situations of individual firms. Thus, firms vorking at
unfavorable above-average costs vill not receive payments vhich assure
their existence. Likevise only uncovered costs specifically from
collecting and disposing of used oils vere to be compensated, not
costs from other branches of a firm. The bill's sponsors recognized
that the payments vould compensate to varying degrees the costs
arising from varying collection and disposal circumstances, but
suggested this could be equalized by considering carefully the distances
assigned for mandatory free pick-up.
Section 3 of the Schmidt bill provided that pick-up of more than
200 liters vould be free and preparation for pick-up of lesser amounts
vas required. But it defined the used oils to be picked-up as all
lubricating oils and fluid or sludgy vastes vith more than kO per cent
oil by weight. (See the discussion of this suggested definition
under the section entitled "Definition of Used Oils" (p. 87 above.)
117
-------
provided that only used oils subject to the assessment would be
picked up for free. The pick-up of other substances would be in
accordance with fee schedules filed with the federal agency
administering the fund.
Section k was the funding provision for the fund created by section 1.
It provided that those who produced or possessed lubricating oils or
substances containing them and with whom used oils would be generated
would pay a charge of 5 DM per 100 kilograms of the lubricating
oils enumerated in section 27.10 C-III of the customs tariff
schedule. This suggestion was based on the analogous and familiar
concept in German water law that those benefitted by a public service
should pay the assessments which support it. Since only those oils
assessed would be collected : gratuitously under section 3 of the bill,
assessing only lubricating oils meant that heating oil, wastes or
bilge oils would not be included. The rate of 5 DM per 100 kilograms
was estimated "based on experience to date."
According to section 5 the assessment was to become due when oil
was shipped from the firm or cleared customs after import. Levying
the assessment on those who had used oil not only would cost more
administratively but would give them reason to dispose of used oils
improperly in order to avoid the assessment. The bill's sponsors
pointed out that from the standpoint of the fund it made no
difference who bore the weight of the assessment, but that "in accor-
dance with experience it would follow the laws of the market and be passed on
to the last user; The extent to which producers and importers were
called on to make payments was based on a benefit to them from the
fund which existed even if not mentioned explicitly, namely that the
fund solves the problem of used oil disposal which is in fact caused
by putting a dangerous good on the market. In addition reasonable
considerations of the public interest indicate that any additional
burden is neither inappropriate or intolerable."
Representative Stein1s bill (Association of German Industries) —
The bill introduced in October 1968 by Hep, Stein and colleagues on
behalf of the Association of German Industries paralleled Rep.
Dr. Schmidt's bill in many respects and also incorporated
sections of the government's bill. This bill offered three principal
differences from the others: l) it suggested that used oii be defined
as only the lubricating oils from section 2T.10-C-III of the customs
tariff which have been used; 2) it suggested that payment rates be
equal according to kind of used oil disposed of rather than kind of
disposal method used; and 3) it suggested levying the assessment
for used oils on gas stations and other enterprises required (by
the bill) to keep records of the amounts of used oil generated if more
than 500 kilograms annually, rather than on the producers or importers
of fresh oil.
118
-------
The Committee's Report on the 1968 Used Oil Statute — The report of
Rep. Opitz on behalf of the committee for Economics and Commercial
Affairs refers to the reservations with which Parliament enacted
the existing subsidy provisions and reports that the Budget Committee
did not even respond to an inquiry whether the subsidy could be
extended for a short time in order to avoid incurring the additional
administrative expenses of converting to a new system which was
likely to be replaced soon by one adopted by the European Economic
Community.
The report indicated that the government had conferred with Rep.
Dr. Schmidt and his colleagues and that all agreed, as did the
Committee, that merely requiring possessors of used oils to keep
records of their disposal would not be sufficient.
What must be achieved is to assure that the disposal of used
oils is accomplished without additional water and air pollution.
If one possessor were burdened alone and directly with the cost
of disposal a greater part of the used oils collected until now
would be disposed of uncontrolled. Therefore the Committee has
followed...[Rep. Dr. Schmidt's] bill to the extent that at the
point of bringing fresh oil on the market there should be a fee
for the harmless disposal of used oil.
The report stated it had decided in favor or fee at this level rather
than the level suggested by the Association for reasons of administra-
tive ease and efficiency, of having a procedure which would assure
maximum protection of water quality, and of having a system which
would not be difficult to coordinate with the forthcoming European
Economic Community regulation.
The report enumerated other decisions the Committee made on the
alternatives before it. Since the principal goal of the act was to
assure disposal of used oil in order to protect water, chiefly ground
water, the Committee could not agree with Rep. Dr. Schmidt and his
colleagues that rerefining used oil should be treated preferentially.
"On the contrary, the Committee believes that over the long run a
strong price competition must develop between the individual methods
of disposal in order that the payments and the compensation fee may be
kept low." The Committee decided to limit the compensation fee to the
lubricating oils subject to the mineral oil tax, in order that the
administration of the fee could be based on the already existing tax
procedures. But the definition of the used oils to be collected
free of charge was not limited to the oils subject to the fee. In-
stead, a provision was added that used oils with more than a certain
amount of wastes would not have to be gratuitously picked up.
As general observations the Committee noted that the payments should
encourage the trend to disposal facilities with larger capacities in
order to make possible continued observation of the air pollution from the
disposal firms. It also stated that means for disposal of other wastes
should not be prejudged in the light of the used oil statute. This
law provides special measures to deal with the special dangers posed
for water by used oil.
119
-------
In its discussion of the individual provisions of the bill it reported,
the Committee explained some of the other changes it made in the "bills
it considered. In section 2 the Committee added language authorizing
public corporations and other non—commercial enterprises as a means
of enabling facilities set up by municipal cooperatives, for example,
to qualify if they disposed of oil properly. Although it dropped the
language in Rep. Dr. Schmidt's bill specifically providing it, the Committee
indicated in its discussion of section 2 that payments would be made
to those -who held contracts -with the Federal Office for Trade and
Industry obligating them to fulfill conditions derived from the
Minister of Economics1 guidelines in order to receive payments. Not
included in a contractor's obligations, however, would be pumping
out tanks, separators or ship bilges.
In its discussion of section 3 the Committee explained why it had
followed the government's characterization of the means for funding
the reserve fund rather than the suggestions contained in the bills
proposed by Rep. Dr. Schmidt or Rep. Stein. Assessments implied
a benefit to those assessed, it pointed out, and there is not a. com-
plete identity between those liable and those gaining the benefits
from pick-up. (For a more complete description of the nature of the
funding system, see the discussion of the Legal Characteristics of the
Compensation Fee). The government's characterization of a "compen-
sation fee" makes it clear that what is involved is a self-help mechanism
operating within the oil producing and using sector of the economy.
The bills introduced by the representatives had included provisions
authorizing payments to industrial firms which disposed of used oil
harmlessly itself. The Committee decided not to follow this suggestion
because: l) the Committee on Health had argued persuasively that it
was important to concentrate used oil disposal in large facilities, for
health reasons; 2) the overall effectiveness of the system would not
be able to be evaluated; and 3) the compensation fee would have to
be raised significantly.
The Committee limited the record-keeping called for by section 6 to
those persons having more than 500 kilograms Of used oils which would
not have to picked up for free in the belief that free pick up would
remove any reason for people to dispose of their oils improperly.
This would also limit the burden of keeping and checking records to
about 20 per cent of all used oils generated, e.g., emulsions.
The Committee on Industry and Commercial Affairs received two of the
three bills concerning used oil disposal, on October 23, 1968. It
gave them priority review "in recognition of the special urgency of
establishing a system for used oils, above all for reasons of public
health" and filed its report on November 29, 1968. The bill, as
reported by the Committee was passed by the Bundestag and forwarded
to the Bundesrat on December 6, 1968. The Bundesrat passed the bill
in the same form and it became law December 23, 1968.
120
-------
DENMAEK
Approximately 27,000 tons of used oils are generated annually in Denmark.
The major part of them are burned for heating, by greenhouses. Dis-
posal of used oils has been by private entities, without governmental sub-
sidy, and the Danish government has no desire to change this nor to favor
one means of disposal over another.
In May 1972, however, the Folketing enacted a law designed to promote
more thorough collection of used oils (and of the 20,000 tons of chemical
wastes generated annually). The previously existing water and health law
prohibitions on the disposal of used oils in a manner causing water, air
or soil pollution proved difficult to apply.
The basic scheme adopted by Denmark1 s May 1972 law for the control of
waste oil pollution consists of establishing waste oil delivery points,
arranged on a local level, to which waste oil can be delivered for final
disposal. Local governments are required by law to provide such facili-
ties either individually or in common with neighboring localities. Waste
oil as defined by the law is any oil which is intended for a use other than
a use for which it is suited and, conversely, disposal is the use of the
oil for a purpose other than one for which it is suited. In testing for
suitability, consideration is given to whether the use is more polluting
than the normal use of the original product.
Although the law requires all persons to store, transport and
dispose of waste oil in a safe and non-polluting manner, commercial en-
terprises which generate less than 300 liters of used lubricating oil
per year are exempt from the duty to deliver to the public disposal fa-
cility. Enterprises which do deliver are required to give reports to
the locality giving the nature, composition and volume of the used oils.
Persons required by law to deliver used oil to the public collection
points may be charged a fee set by the locality based on the cost of the
collection and disposal program. Persons not required to deliver (indi-
viduals, non-commercial sources and businesses producing less than 300
liters of waste lubricating oils annually) have the right to deliver
their used oils for free.
As an alternative to the basic disposal program offered by the locality,
an enterprise subject to the reporting and deliwry requirements may be ex-
empted from the delivery obligation if it can estabish that its
oil is being disposed of in a safe manner, which is usually delivery to
facilities having the capability to reprocess or destroy the used oil.
Fines and imprisonment are authorized for violations of the law or regu-
lations. The law does not currently apply to Greenland or the Faertf Is-
lands but can be put into effect by the Minister for Greenland or by
royal decree, respectively. It is anticipated that the law will soon be
extended to other waste products, especially chemicals, as technology
for disposal improves.
121
-------
The notification and delivery obligation enters into force only when
the municipal authorities have established a station for the receipt
of used oil; this is still not the case in a number of municipalities.
In Copenhagen, for example, persons and garages must bring their used
oils to collection sites. It is accepted free of charge if it contains
less than five per cent water. Oils with higher proportions of
water are picked up for fees which cover the costs of transportation
and treatment. These wastes are shipped by train to a plant in Nyborg
where they are heated to evaporate some of the water and then burnt.
The plant belongs to a company formed cooperatively by municipalities
and its costs are paid by the municipalities using its services.
Municipalities are obligated to provide incinerating and disposal facili-
ties, and most take advantage of the cooperative facility.
In at least one case the exemption provisions have been utilized by
an industry trade association. Two trade groups of the petroleum
industry have made an arrangement for the pick-up of used lubricating
oil at gas stations and work shops operated by customers of their
members. When a station has a full storage tank it notifies its
supplier, who in turn arranges for a tank truck to pick up the used
oil and deliver it to one of two refineries, depending on the part
of the country. The service is free and apparently is financed by
the value of the rerefinable lubricating oils.
The provision exempting enterprises which use less than 300 liters
of fresh oil annually from the notification duty was chiefly designed
for small agricultural enterprises and a number of haulage contractors,
and results in less administration in the municipalities in connec-
tion with a number of minor pollution sources. The government is
examining its effect to determine whether too many small amounts of
used oils are outside the scope of the act. There is less risk of
this in Denmark than in some countries since it is quite unusual for
people to service their own automobiles.
The Danish scheme carefully keeps the government out' of the specific
technology of disposal, limiting its role rather to enforcement of
the duty to dispose of the used oil in a safe, non-polluting manner,
and to provide for facilities so that everyone has a simple and con-
venient method available for disposal of the oil.
EUROPEAN ECONOMIC COMMUNITY
The Commission of the European Economic Community has been promoting
a harmonization of the member nations* laws on the taxation of oil
and the disposal of used oil since 1963. The department concerned
with dismantling impediments to free and equal competitive conditions
among the member nations has sought to coordinate the various kinds
of legal provisions affecting used oil disposal in E.E.C. countries:
122
-------
tax preferences for products from rerefined oil in Italy and France;
tax preferences, then subsidies, now specially-funded compensation
for rerefineries in the Federal Republic of Germany (compensation
for incineration in the FRG now too); prohibitions; or simply no
regulations at all, in several countries.
The Commission became involved when the Netherlands objected after
the Federal Republic of Germany enacted a law, effective January 1,
1964, granting a subsidy of 22.90 DM per 100 kilograms ($5.725/
100 kg.) of rerefined oils. This subsidy, which replaced a tax
preference of DM 15/100 kg. rerefined products, would distort compe-
tition and discourage trade between the member nations of the E.E.C.
argued the Netherlands. The Conanission^ initial investigation revealed
that France and Italy granted tax preferences for rerefined products
(with the same effect as the German subsidy) and that the Netherlands
itself did not in practice collect the oil tax applicable to the pro-
ducts of rerefineries. The discussions and information generated
by the Commission over the next few years indicated that a satis-
factory solution would be difficult without more technical data.
As a result, in October 1966 the representatives of the member nations
agreeed that a technical person should be asked to prepare a report.
J. J. Hopmans, former director of the Netherlands National Institute
of Wastewater Treatment, was granted a contract to report on the current
technical possibilities of disposing of used oil without water pol-
lution, the costs, advantages and disadvantages of these possibilities,
and their effect on the competition in the lubricating oils market.
The report was presented in April 1968 and contained recommendations
for a Common Market-wide means of regulating the collection and dis-
posal of used oil.
Hopmans suggested that all forms of direct state support for rerefininng
and burning enterprises (whether via tax preferences or subsidies) be
abolished, that regional organizations be created with the task of
collecting and supervising the harmless disposal of used oil and the
by-products resulting from its rerefinement, and that the costs of
these organizations be covered by the introduction of an assessment
on lubricating substances which become used oil (an "oil penny").
Hopmans recognized that this suggested framework would have to be
worked out in light of the existing legal, technical, administrative
and geographical situations. He suggested that levying the assessment
on lubricating substances in conjunction with the taxes on these
oil products would be the easiest and cheapest.
He considered that the collection organizations should be public
corporations, like the West German Bilgenentwaesserungsverband,
with bylaws setting forth duties, powers, organization and procedures.
Their boards of directors should include, in addition to government
officials from the responsible departments, representatives of all
123
-------
interests concerned with used oil — rerefiners, those who burn used
oils, the large oil firms, used oil collectors, industries that pro-
duce significant amounts of used oils — as a means of promoting
cooperation. Their staffs should include mechanics and chemists
experienced in oil production who could advise possessors and col-
lectors of used oils when questions or problems arose. So that the
organizations and their advice would be trusted, they should not,
Hopmans suggested, be given any powers to enforce or punish. Rather
they should help solve problems peacefully and refer recalcitrant
persons to the proper state authorities.
For some reason the Commission did not forward any recommendations on
used oil to the Council after the report was submitted, perhaps
because its chief executives decided that the distortion of competition
in the market wasn't so serious, perhaps in part because the staff
person who had been chiefly concerned about waste oil left the
Commission shortly after the Hopmans report was submitted. The Com-
mission wrote that "discussions were held with national experts in
the light of this report in 1968, but unfortunately failed to open
the way towards this Community solution because the Member States
did not all attach the same importance to waste oil disposal and
difference fairly widely on the appropriate arrangements."
Several inquiries were sent to the Commission by members of the
European Parliament in 1970, '71 and '73 concerning the announced
harmonization of member nations' regulation of used oil disposal and
the alleged inequities resulting from the delay in its realization.
As a result of these promptings and the initiatives taken recently
by several of the member nations, the Commission in 1973 once again
retained Mr. Hopmans to prepare a report which would include the countries
not members of the Common Market in 1968 and which would be more
from the perspective of environmental protection than relieving market
distortions. The Commission also convened a committee of experts
on used oils from each of the member nations to advise it during the
process of preparing a proposed market-wide regulation of the area.
The committee of experts met first in May 1973 and again in November
1973. At its first meeting the members agreed upon an exhaustive
questionnaire (see Appendix H) to be answered by each of the member
nations and agreed to discuss the answers to it at the next meeting
as a basis for developing a market-wide policy.
The Commission submitted its proposal for a directive on the disposal
of used oils to the Council of the European Communities in March,
1974. It did so because, according to a'March 5, 1973 decision of
the Council, a nember nation may proceed with its own legislative
or administrative environmental initiatives if the Commission has
not produced a proposed Community measure on the subject within
seven months of being notified of the initiative by a member nation
124
-------
and the Council has not acted on the Commission's proposal within
five months of receiving it. In September 1973, France notified the
Commission of a proposed decree governing the disposal of used oil,
and the Netherlands notified the Commission of its bill shortly
thereafter.
The Commissions March 1974 proposed directive (see Appendix I for
the text of the provisions and an accompanying explanation) would
require member states to "take all possible measures to ensure that
the disposal of waste oils shall be carried out by recycling (re-
generation and/or combustion).11 They would have to take all necessary
measures to prohibit (1) discharge of used oils into surface or
ground waters, canals and coastal waters; (2) depositing of used
oils — or residues from reprocessing them — on soil; and (3)
any used oil processing which results in emissions of air pollutants
in excess of the minimum achievable under the state of the art.
E.E.C. memebers would have to ensure the collection and safe disposal
of used oils. Where these activities are not possible at a profit,
the member nations would have to assign zones to collection and
disposal enterprises in which they would be required to pick up the
used oils. All collection and/or disposal enterprises would have to
obtain permits to conduct business after an inspection of their
facilities and would have to conduct their operations to avoid avoidable
air, water and soil pollution. Persons unable to dispose of their
used oil by recycling or without violating the prohibitions enumer-
ated above would have to store them for pick-up by licensed disposal
firms; used oils with more than a specified amount of impurities
would have to be stored separately. Anyone storing more than 200
liters of used oils a year, as well as all collection and disposal
firms, would have to keep records of the quantity, quality, origin
and location of the used oils and also of the dates of their delivery
and receipt. Collection and disposal firms would have to submit
information concerning their operations to government officials and
these officials in turn would be obligated to inspect the firms for
compliance with the conditions of their permits.
Firms assigned by officials to pick up and dispose of used oils under
unprofitable circumstances would be paid a "nonfiscal indemnity" for
services rendered which would offset the annual costs to each firm
not covered but in fact incurred and thus assure the firms a reasonable
margin of profit. The amount of costs to be considered in calculating
the indemnity would not exceed the average costs of all firms engaged
in the same activities under similar conditions in the member nation
involved. To implement the 'polluter pays principle,* the indemni-
ties would be financed by a charge levied on products which become
used oil at the time of delivery of these products for consumption.
125
-------
Member states would have eighteen months after the adoption of the
directive to enact the necessary laws and regulation. Collection and
disposal firms existing at the time of the directive's adoption would
have three years from that date of adoption to comply with the laws
of its nation.
•
According to the terms of the E.E.C.'s March 5, 1973 Information agree-
ment, the Council had until August 5, 1974 (five months after receiving
the Commission's proposed directive) to act on the directive. After
this France may proceed to adopt its draft decree and Holland may
enact its bill (both described in subsequent sections). Other member
nations, e.g. Ireland, are deferring work on establishing used oil
disposal control programs until the outcome of the- Commission's
proposed directive is clear.
THE NETHERLANDS
The Second House of the Netherlands' Parliament is currently considering
a bill concerning chemical wastes and containing several special
provisions on the collection and disposal of used oil. The bill was
prepared by the Ministry of Social Affairs and Public Health after
considering the report of a specially appointed used oil study group.
Description of Used Oil Disposal Situation
The study group was created in 1970 with J.J. Hopmans as chairman.
Its report, issued in 1971, suggested that an organization be established
which would collect, transport and treat used oil and would be supported
by revenues from a tax on fresh lubricating oil. This report was
followed in mid-1972 by a report of the chemical wastes study group.
These reports, combined with an intensifying concern over the noxious
effects of uncontrolled disposal of chemical and oil wastes, caused
Minister Kruisinga to decide to introduce a separate bill governing
this subject. The previously introduced bill designed to prevent
soil pollution, which addressed both waste disposal and soil, would
better be divided, since waste disposal presents primarily organi-
zational questions while protection of the soil depends on prohi-
bitions based on decisions concerning local land use.
The used oil study group found that an estimated 204,000 tons of lubri-
cating, transformer and hydraulic oils were consumed annually in the
Netherlands, of which approximately one-half became used oil wastes.
They found that approximately 80 per cent of the used oils were
collected by the one rerefiner and ten private freight firms with a
total of about 40 tank trucks. These firms cover a large part of the
country and pay about .02 Guilder ($.006) per liter of used lubricating
or hydraulic oil. Normally they sell the oil to horticultural firms
in the Westland, brick manufacturers and grass-drying firms for heating
oil; rerefiners also are purchasers. Before selling it they usually
filter it into tanks and let the sediment settle. If the price of
126
-------
fuel oil is low or storage capacity is full, less than the normal
80 per cent of the used oils is collected.
On the large rivers the oil companies have established a certain
number of collection and separation facilities to handle the used
oil generated by river boats. After the water is separated the oil
is sold to the collecting firms.
Provisions of the Bill
Used oils are defined as lubricating mineral oils or mineral oils for
hydraulic systems which are rendered unfit for the use for which they
were originally designed, either as a result of mixing with other
substances or otherwise. The definition does not include oil emul-
sions or oil from cleaning tankers.
The bill prohibits disposing of used oils in or on the ground with or
without containers. (Discharge into surface waters is proscribed by
the country's water law.)
The bill also prohibits transferring used oils to other than a person
holding a license to collect used oils or a license to collect and
then keep, treat, transform or destroy them. The government attempts
to keep a balance between the number of collectors and reprocessors
and to limit the number of persons who may collect. Effectiveness
is the main criterion for deciding whether or not to grant a license.
Effectiveness will be strictly adhered to, since commerce in used
oil fluctuates according to prices of fresh lubricating and fuel
oils, quality and quantity of supply, transportation distances,
etc. A potential new market exists for used oil which has been
heated to 60° C to vaporize water and lighter petroleum elements,
power generating plants.
One who transfers used oil to an approved person must notify the
Minister of Health and Environmental Protection and other desig-
nated agencies of the date of the transaction, the name and address
of the recipient, the nature, composition and quantity of the oils
transferred, the means and place of delivery, and the name and address
of any third party employed to convey the oil to the recipient.
The approved license-holding recipient is likewise required to convey
reciprocal information about each transaction.
Collection of used oils may only be done by one holding a license
and the license is only valid for the zone described in it. (Approx-
imately 15 such zones are envisioned in the Netherlands. Some may
overlap to encourage competition between collection enterprises.)
A collector must pick up the oils from the area designated in his
license (which may be coextensive with his zone) without charge.
127
-------
The pick-up requirement is necessary because collectors may not wish
to pick up small amounts or oils that are poor quality or too
distant. The collection licenses would be written so that together
the entire country would be covered by areas of required pick-up.
Less than a specified minimum would not have to be picked up. The
collector's license may require him to deliver the used oil to a
designated place for treatment, transformation, destruction, etc.,
in order to assure a source of supply of used oils to a destination.
The license may also stipulate that an approved fee may be charged
for oil pick-up under certain circumstances.
Keeping, treating, transforming or destroying used oils transferred
by another person likewise may not be done without a license. This
license, too, is valid only for oils originating in a defined zone
or coming from designated collectors, and the license holder must
accept these oils. The main idea of the system for collection and
reprocessing is to harmonize supply and demand of used oil on a
national basis.
The bill contains several provisions governing the procedures for
applying for, granting and losing a license. The bill also prohibits
importing used oil into the Netherlands except to an authorized
collector or reprocesser.
An Advisory Commission for Used Oil is foreseen to advise the Minister
of Health and Environment on the implementation of the law. There
may be as many as eleven members of the commission, whoi- serve at the
pleasure of the minister, and they must be chosen from people whose
activities consist of producing, selling or using mineral lubricating
oils or oils for hydraulic systems or of eliminating used oils.
The members serve three year renewable terms and are aided by an
executive secretary appointed by the minister. The minister may also
establish an office for the commission and the commission may have
the assistance of experts. The commission is to be consulted on the
granting of licenses, formation of zones, and other policy matters.
The bill provides that the Minister may grant an equitable indemnity
to a license holder who suffers expenses it would be unreasonable
to let him bear alone and for which he cannot be otherwise reasonably
compensated, e.g., the imposition of much stricter conditions than in
the original license, or the withdrawal of a license for reasons —
e.g., organizational efficiency — not attributable to its holder.
Indemnities would also be paid to one currently in business whose
application for a license to collect or reprocess were denied
not because he was operating improperly or without a permit required
by other laws, but because there would be too many license holders
for an effective organization if the application were granted.
128
-------
So far as used oil is concerned, implementation of the bill —
including compensation of license holders when, due to fluctuations in
the price of fuel, the costs of collection and transportation
exceed the receipts for the used oils — will be financed by an "oil
penny" levied on all lubricating oils and oils for hydraulic systems
placed on the market in the Netherlands. This means of financing
was chosen because it was believed that if those having used oils had
to pay for pick-up they would be discouraged from saving them and
thorough collection would correspondingly be hampered. Likewise
it was judged unfair to charge users of oil a fee based on the amount
of used oil generated or to charge a fee to collectors or reprocessors
having financial difficulties. Since it seemed impossible to calculate
directly how much the price of new lubricating and hydraulic oils
would have to be increased to cover the future costs, it was decided
to impose an assessment comparable to Germany. Such an assessment
will have the result that those who generate the used oil bear the
extra costs of their adequate collection and disposal, since the
assessment will be included in establishing the prices of these pro-
ducts. The law will be administered by officials appointed by the
Minister of Health and Environment. In addition, local officials
may exercise some supervisory functions. These officials will be
authorized to inspect and copy books, inspect transport vehicles and
their cargo, enter places where there is a reasonable likelihood of finding
used oils, take samples of these oils and run tests on them. Persons
dealing with used oils are required to cooperate with the officials
responsible for administering the law and officials are obligated
to keep trade secrets secret.
The bill concludes with provisions prescribing offenses and penalties
and allows a period of transition for those already engaged in the
activities requiring a license to apply for one.
Evaluation of Policy Alternatives
The explanation accompanying the government's bill discusses two
alternative means for disposal of used oil — incinerating and rere-
fining — from both an environmental and an economic standpoint. The
environmental discussion points out that, when used as a fuel, used
oil produces less sulphur dioxide than regular fuel oil but currently
produces traces of gasoline additives, including up to .3 per cent
lead. Rerefining, on thei other hand, "produces wastes that are extremely
difficult to treat, especially acid sludge." The Dutch government
concluded that although both disposal methods entail certain amounts
of environmental pollution, on balance incineration had fewer dis-
advantages "provided that the fire is properly controlled (and smoke-
stacks are sufficiently high) or that the used oils are blended with
normal fuel in large installations." While "at the present moment,
incineration enjoys a slight preference," the explanation pointed out,
129
-------
"nevertheless both methods of disposal permit the attainment of the
main objective, which is to avoid water and soil pollution by the
direct pouring of lubricating oils and oils for hydraulic systems
on the ground, into sewers, or into surface waters."
The economic analysis was quite straight-forward. For many years 80-
85 per cent of the used oils collected in the Netherlands has been
burned as fuel. The amount of water and impurities which must be
removed depends entirely on the kind of incinerating device used,
but in general fuel from used oil is considered practically equal
in quality to normal fuel oil. Unlike Germany, Italy and France,
which support the rerefining of used oils in one way or the other,
the Netherlands has never subsidized the collection or disposal of
used oil. Indeed, effective January 1, 1973, the exemption for
rerefined oil products from the oil tax of 14 Guilders ($4.34)
per ton was abolished, thereby adding to the cost of rerefined pro-
ducts. "The increase in costs that has resulted has hurt the rere-
fining industry to such a degree that it is not Impossible that it
will have to cease its activities," the bill's explanation states.
Since buyers prefer new products, rerefined lubricating oils bring
lower prices, and most rerefining enterprises are not profitable and
require either subsidy or tax preferences to stay in business. With-
out some form of support, the explanation states, "it is impossible
to regenerate lubricating oil in a way consistent with environmental
protection." In Germany rerefiners are paid the equivalent of 120
Guilders ($37.20) per ton of used oil rerefined. Assuming the need
to create a rerefining industry with a capacity of 20,000 tons of
rerefined products in the Netherlands, the subsidy would have to
amount to 3.5 million Guilders ($108.5 million). (The one remaining
rerefiner in the Netherlands has estimated that about half this
amount would be required to support a profitable service.)
"In comparing the cost of the incineration method with that of the
regeneration method, we conclude that it is not justifiable from an
economic standpoint to alter the present situation by putting the
accent on regeneration as in other European Economic Community
countries. An additional argument supporting incineration is that,
according to a recent survey, the present and future demand for lubri-
cating and hydraulic oils intended for use as a fuel is greater than
supply (on the condition that the price of this fuel is lower by
several points that the price of normal fuel oil)."
FRANCE
Used Oil Disposal Situation
In France the Societe pour le Remassage et la Regeneration des Huiles
Usage'es (SRRHU) — the Company for the Collection and Rerefining of
130
-------
Used Oils — is a private company (with headquarters in Asnieres
near Paris and with close ties to the Fuel Department of the Ministry
for Trade and Industry) which carries out most of the collection and
disposal of used oils. The oil firms and the rerefineries each hold
half the company's shares. These firms and the rerefineries have an
agreement that SRRHU will not deliver to rerefiners more than 50,000
tons of the used oils it collects. The rest is to be delivered to
the firms for burning. This agreement was designed to check the growth
of rerefining by limiting the amount of rerefined oil. Since it was
reached, however, other rerefiners not associated with SKRHU have
come into existence and established their own systems of collection,
so that the country is now served by three or four systems. SRRHU
reportedly collects 70 per cent of the total collected and disposed
of. It has depots at eight locations in France.
In 1971 approximately 800,000 tons of oil were used. Of the used oils
resulting, 104,000 tons were rerefined, 23,000 tons were burned by
rerefineries, and 60,000 tons were reused by their users. The total
rerefining capacity for that year was 288,000 tons, the capacity for
incinerating (without heat recovery) was 32,000 tons.
Possessors of used oils are not legally required to give them to dis-
posal companies nor are companies required to accept whatever is
offered them. Rerefining of used oils is encouraged by exempting
rerefined oils from the 270 FF ($54.50) tax per ton of oil. This
exemption is tantamount to a subsidy of 195 FF ($39.30) per ton of
used oil. Altogether (collection costs, etc.) it costs 150-200 FF
($30.30-$40.30) to produce a ton of rerefined oil in France. (Com-
parative costs for other disposal methods are 60 FF ($12.12) per ton
burned with heat recovery, 40 FF ($8.90) per ton burned by a refinery,
and 150-180 FF ($30.30-$36.35) per ton incinerated without heat
recovery.,) This tax preference benefits the purchasers of rerefined
oils. They pay 400-450 FF ($131.30-$141.40) per ton of new oil
sold by the refineries.
The tax preference is based on a combination of policies: protection
of rerefining businesses; prevention of pollution and possible explo-
sions or fire from improper disposal; and providing at least partially
for the demand for lubricating oils during times of crisis by regenerating
used oils. In addition, it is argued in France (as it is in Italy)
that since products made from new oil are taxed, it is unfair to
tax those made from rerefined oil; taxing rerefined products would
logically violate the legal principle of non bis in idem. This point
of view, however, is rejected by others on the basis of tax principles.
131
-------
Existing Legal Controls Applicable to Used Oil Disposal
In France there is a law, passed November 22, 1956, requiring that all
used oils be regenerated and that all rerefiners be approved by the Oil
Department. Although this law has never been repealed, French officials
declared in May 1973 that it was null and of no practical effect.
There is also an administrative decree No. 73-278 of February 23,
1973, requiring permits to discharge wastes directly or indirectly
into surface, ground or marine waters. The exemption for wastes of
"negligible toxicity" in this decree would not apply to discharges
of used oils. It is unclear, as a matter of French administrative
law, whether this decree supersedes Article 80 of the Departmental
Sanitary Regulations as amended November 9, 1972, by the Ministry
of Public Health. Article 80 prohibits the disposal into the sea,
watercourses, lakes, canals or into river banks or alluvial planes
of all used materials, all putrescible wastes (animal or vegetable)
and all liquid or solid substances (toxic or inflammable) which may
constitute a source of disease, impart a poor taste or odor to the
water, or cause a fire or explosion.
In addition to these administrative regulations there are criminal
provisions scattered in various laws which are broadly interpreted
both by judges and by administrators. These are:
1. Article 434-1 of the Code Rural, which restricts the dis-
charge into watercourses of substances which kill fish or
reduce their food supply, their ability to reproduce, or
their value as food;
2. Article 28 of the Code du Domaine Publique Fluvial (Public
Inland River and Canal System Code), which prohibits
discharging unhealthy substances into rivers or their
beds or banks;
3. Article 12 of the Reglement de Police des Cours D*eau
Non Domainiaux (Non-inland Waterway Enforcement Regulations),
which prohibits discharging, disposing or allowing the
discharge, directly or indirectly, onto riverbeds of mater-
ials, wastes Or liquids (1) which could cause disruptions
to the free flow of the water, (2) which are infected
or deleterious,or could compromise public health;
4. Article L.47 of the Code de la Sante Publique (Public
Health Code), which provides for the punishment of anyone
who, by negligence or carelessness, allows the introduction
of any material into wells, fountains, cisterns, conduits,
132
-------
or reservoirs of water supplies which could harm health;
5. Article 40 of Law No. 64-1245 of December 16, 1964,
which prohibits all discharges of wastes or wastewaters
into wells.
Disposing of used oils on land, especially dumps, requires a prior
permit from the mayor of the town in which the disposal is foreseen.
This is required by a regulation of April 25, 1963 applying
Article 3 of decree No. 52461 of April 13, 1962 which governs various
means of using land. In some cases such disposal also requires a
permit or authorization from the prefect of the department involved.
Discharges of used oils into public sewers is clearly prohibited by
departmental health regulations, e.g., Article 30-3 of the Reglement
Sanitaire Departmental et de la Region de Paris and by Article 3-3 of
Appendix A of the July 7, 1980 Circulaire Relative a lfAssainissement
des Agglomerations et a la Protection Sanitaire des Milieuac
Recepteurs (Circular Regarding the Purification of Dumps and the
Maintenance of Sanitary Landfills).
Proposed Decree Specific to Used Oil Disposal
In December 1972 a committee consisting of representatives of the
ministries of industry, finance and environment was formed to pro-
pose a plan for reforming the collection and disposal of used oils
in France. Several plans were discussed, all of them based on rere—
fining; but the committee ceased its work without adopting any
proposal. It did, however, agree that any future law should pro-
hibit the discharge of used oils, establish the responsibilities
of possessers, users and disposers, and create a system of subsidies
differentiated according to the kind of disposal, as in Germany.
In July 1973, however, the Ministry for the Protection of Nature
and Environment issued a draft decree which simply prohibits the
discharge of new or used oils or lubricants into surface, ground or
marine waters and lists the 15 kinds of oil which are included in
the prohibition. The decree is based on Articles 2 and 6 of the
French water law of December 16, 1964 (which authorize decrees deter-
mining the conditions for regulating or prohibiting direct and indirect
discharges, drainage, disposal and deposit of water or matter and,
in general, of anything capable of impairing the quality of surface
waters, ground waters or territorial maritime waters), and on decrees
No. 67-1094 and No. 70-871 supplementing that act. The draft decree
authorizes exceptions to the prohibition for used oils or lubricants
in emulsions or solutions and provides that joint orders of the inter-
ested ministries would fix the limits not to be exceeded by each type
of discharge. Such orders may determine what measures users must
133
-------
take for storing used oils or lubricants. The decree would be effec-
tive six months after its publication.
The draft decree has been submitted to the Commission of the European
Economic Community in accordance with the Information Agreement
procedures agreed upon in accepting the Communityfs environmental
program.
ITALY
Large refineries in Italy are subject to a system of permits governing
their operations. Some of them are authorized to regenerate used
oils. There are about twenty firms which rerefine (with a total
capacity of 350,000 tons), all but two of which are located in the
northern industrial provinces. In 1972 approximately 146,000 tons
of used oils were generated, as compared to 90,000 in 1966. Of
this amount, 107,000 tons were rerefined. Some large companies are
authorized to rerefine their own used oils, too.
Italian law does not provide an obligation to collect or burn used
oils, but there is a law promoting the regeneration of used oils
(No. 1852, of December 31, 1962). Originally dictated by industrial
and economic considerations, the law now also supports environmental
goals. Italy wished to protect the rerefining industry and the employ-
ment opportunities it provides (620 in 1972) and to have freedom from
dependence on supplies of oil from the middle eastern countries in
times of crisis. The tax on products made from used oils is only 25
per cent of that levied on products made from new oils. The preference
amounts to 8,300-11,750 Lire per kilogram ($153.40-$ 194.00 per ton),
depending on the quality of the rerefined product. This is the same
kind of subsidy that is granted in France although the protection of
products made from used oils in relation to new oils is 2.5 times as
great as in France or Germany. Companies authorized to rerefine their
own oils (e.g. power plants for transformer oils) are exempt from even
the 25 per cent tax on oil products if the rerefining meets legal
specifications dealing with decantation, filtration and dessication
If the process doesn't meet specifications the products are taxable.
The cost of obtaining the equipment to make the treatment adequate
may discourage some plants from embarking on rerefining with the result
that their oils may be improperly disposed of.
Used oil is delivered to the rerefineries by jobbers who collect it
at depots. These depots purchase the.used oil from two sources: from
industrial concerns (e.g. from steel and iron mills, railroads) in
large quantities and from small collecting companies who pick it
up from garages, repair shops, etc.
134
-------
The cost to rerefiners of delivered used oils is about 50-55 Lire
per kilogram ($8.30-9.10 per 1,000*kg.) due to the high cost of trans-
portation and about 40 Lire per kilogram ($6.60 per 1,000 kg.) at
service stations and garages. (These expenses also help explain the
concentration of rerefining firms in the industrial portions of the
country.) The cost of additives is about 12 Lire per kilogram
($1.98 per 1,000 kg.); of the tax, 31 Lire per kilogram ($5.12
per 1,000 kg.); and of labor and administration, 40 Lire per kilogram
($6.60 per 1,000 kg.). The total cost of rerefining used oils is
thus about 162-169 Lire per kilogram ($26.75 - $27.88 per 1,000
kg.).
There is in Italy no administrative structure charged with checking
the disposal of used oils. Control falls within the jurisdiction of
local administrative and health officials responsible for enforcing
anti-?pollution laws, which statutes provide an emission limit of
.15 ppm of sulfur dioxide calculated on an average over a 24 hour period.
In special zones (Milan and Torino) burning of matter with more than
1.1 per cent sulfur is prohibited. The bill concerning pollution
of domestic waterways contains the following water quality stan-
dards: 2 milligrams per liter of mechanically separable hydrocarbons;
.2 milligrams per liter of phenols; 25 BOD5; and pH from 6-8. No
more than 10 ppm of hydrocarbons are allowed in marine waters.
The high price of rerefinable oils means that little used oil is burned.
Although Italian officials believe burning is more expensive and has negative
fiscal consequences, this means in turn that facilities for burning
nonrefinable used oils (oil sludges, for example) do not exist.
Some companies which produced emulsions (e.g. auto manufacturers)
used to burn them in their power stations but are now installing
separators. Approximately 20 per cent of the total lubricating oil
market in Italy is occupied by rerefined oils. Wholesale prices for
rerefined oils are about 35 per cent less than new oils (for SAE 30,
for example).
Within the Ministry of Industry, there is a permanent Industry-
Ecology Commission studying the problem of waste disposal in general
and the possibilities of restructuring the system of used oil disposal
in particular.
UNITED KINGDOM
There are approximately thirty private waste collection firms in
the United Kingdom and about nine disposal firms. These firms operate
independently or in collaboration and either (1) reprocess used
lube oils into base stocks, marketable lubricants, fuels for energy
or incineration supplements, or (2) eliminate them by incineration, or
(3) deposit them on controlled dumps. There are six major rerefiners
135
-------
in the United Kingdom, five in England and Wales and one in Scotland.
Rerefined oils receive a tax exemption of t 2.46 ($5.90) per ton
on the grounds that the tax has already been paid on Virgin lube oil.
Including special rerefining (i.e., of segregated used oils for return
to their source) the rerefineri.es handle approximately 10 to 12
per cent of available used oil.
The other main disposers of used oils are large commercial firms which
consume oil (as well as transportation and electric power generating
firms); they either reprocess, burn as fuel, or incinerate the used
lube oil on site. Finally, local authorities provide a limited
number of collection points for non-recoverable materials as well as
controlled dumps, established under the Civic Amenities Act of 1967.
The balance of used oils — approximately 15 per cent of the total —
is unaccounted for and largely originates from do-it-yourself
(DIY) motor oil changers who have purchased lubricating oil from
supermarkets. The figure for DIY waste oil disposal is thought to
be roughly 10 million gallons annually and likely to increase.
There are no laws specifically dealing with used oil disposal in
the United Kingdom but there are several which are applicable to the
control of improper disposal. Section 27 (1)(a) of the Public Health
Act of 1936 proscribes the discharge of oil and petroleum products
into public sewers or drains leading to them, and section 27(3)(c) of
that Act authorizes local authorities to make by-laws prohibiting the
deposit of liquid matter (including used oils) in containers for
household refuse. The Public Health (Drainage of Trade Premises) Act
of 1937 as amended by the Public Health Act of 1961 (Part V> authorizes
the discharge of effluents from trade premises into public sewers
under conditions imposed by local authorities. Section 59 of the
Public Health Act of 1961 (Part V), for example, authorizes conditions
calling for the elimination of any constituent of an effluent which
would injure sewers or make treatment of sewage difficult. The Water
Act of 1945, section 18, authorizes statutory water suppliers to make
bylaws to protect surface or ground water from pollution by proscribing
certain behavior in defined geographical areas. Section 2(a) of
the Rivers (Prevention of Pollution) Act of 1951 makes criminal
causing or knowingly permitting any poisonous, noxious or polluting
matter to enter a stream. Section 7 of that act requires the consent
of a river board for any new or altered discharge of sewage or
trade effluent to a stream; section 1 of the Rivers (Prevention of
Pollution) Act of 1961 requires consent .of a river board for pre-
1951 discharges; and section 1 of the Clean Rivers (Estuaries and
Tidal Waters) Act of 1960 extends section 7 of the 1951 act
to all estuaries and tidal waters. Section 2 of the Prevention of
Oil Pollution Act of 1971 proscribes the discharge of oil or mixtures
containing oil from vessels or places on land into the territorial
136
-------
sea surrounding the United Kingdom and into all other waters, including
inland waters, which are within the seaward limits of the territorial
waters and are navigable by sea-going ships. Section 68 of the Water
Resources Act of 1963 authorizes river authorities to construct public
works to prevent pollution of reservoirs owned by the authority or
aquifers from which it may abstract water.
The disposal of used oils on land is governed by the new Deposit of
Poisonous Wastes Act of 1972. This law requires a person planning to
deposit poisonous wastes to give at least three days* prior notice
of intention to municipal and river authority officials in the juris-
diction(s) where the waste originates and will be deposited. It is
an offense under this statute, punishable by a fine of £400 and
imprisonment for six months, to deposit any waste in such a way that
it would subject people or animals to material risk of death, injury
or impairment of health or threaten the pollution or contamination
of a surface or underground water supply. A set of regulations exempts
certain substances from the notification requirement, although these
regulations do not excuse a violation. Waste produced in the course
of cleaning an intercepting device designed to prevent the release
of oil or grease is exempt.
The Department of the Environment formed a Working Group on the
Disposal of Awkward Household Wastes, whose report has just been
published. Chapter 5 deals with "sump oil", and suggests, "Disposal
into surface water drains invariably results in some pollution of local
ditch or stream and disposal into sewers could interfere with sewage
processes. Disposal via the dustbin is unacceptable and on to land
undesirable. None of these methods should be used." Instead, it
urged that, "used sump oil can be reclaimed for re-use as a lubricant
or fuel or as a fuel; any remainder should be incinerated. The reclam-
ation industry require minimum pickup loads of 500/600 gallons at
central collection points. Such collection facilities should be set
up at civic amenity sites and at some local garages. Suitable containers
are needed to encourage motorists to return the used sump oil to these
collection points." To ease the motorists* task, prototype cans have been
produced which are designed not only to contain new oil but to
accept the oil drained from the sump. Further, the Working Group
reported the design of an automatic sump plug aimed at simplifying
the process of draining the oil.
CANADA
Up to 80 million gallons of used oil are generated annually in Canada,
of which only about 5-6 million gallons are being rerefined into
useful products with an economic value. Rather, most contaminated
oils are applied to road surfaces as a dust suppressant, blended
with fuel for burning, or discharged as waste into sewers. A serious
137
-------
impediment to widespread and profitable rerefining is a Canadian
federal tax which causes recycled oil to be uncompetitive with virgin
oils.
Legal provisions governing collection, storage, use and disposal of
used oil are few and nowhere comprehensive. Only six of the ten
provinces have laws which even impliedly touch upon the disposal or
reuse of contaminated oils, and many of these are more aimed at
reducing fire hazards from the storage of volatile, flammable liquids
than they are to abating the environmental threats posed by dumping
of oily wastes.
Federal authority to regulate the dumping of deleterious substances
into Canadian waters arises under the Fisheries Act of 1970,
sections 33 and 34 of which make it an offense to:
cause or knowingly permit to pass into, or put or knowingly
permit to put chemical substances or any other deleterious
substance of kind in any water frequented by fish or that flows
into such water.
Oily bilge wastes from commercial shipping are regulated through the
Oil Pollution Prevention Regulations (71-495) under the Canada Shipping
Act of 1970. Record-keeping is mandated, so that the ships' logs
will reflect each instance that a tanker cleans its cargo tanks,
discharges water ballast from uncleaned cargo tanks, discharges oily
bilge waters in port or on the high seas, or accidentally spills an
oil cargo.
Provincial Legislation and Regulation
The Province of Alberta requires the use of gasoline, oil, grease
and grit interceptors on the waste outlets of all public garages,
under the Department of Labour Act, Regulation 127-71. These inter-
ceptors must be able to handle "all grease or oil likely to flow into
the outlets under normal conditions."
British Columbia regulates from a fire prevention viewpoint, under
its Fire Marshal Act. "No person shall supply for use or use any
crankcase oil as oil fuel in any oil burner;" "crankcase oil means
any waste oil used in the engine or crankcase of any motor-vehicle."
Further, no service station operator may permit any inflammable liquids
or crankcase oil to flow into a public sewer, septic tank or cesspool.
Where used oils are kept on service station premises they must be
stored in steel drums with screwplugs kept closed, and not more than
two fifty gallon drums are permitted on premises at any one time.
The regulations also contain specifications, not yet mandatory, for
underground outside storage tanks.
Regulations are being drafted in Newfoundland under the Waste Material
138
-------
(Disposal) Act of 1973 (S.N. 1973, No. 82), which would require prior
approval for all phases of a waste management system via licensing,
submission of plans, specifications and payment of fees by the
occupier of premises whose wastes are collected. Dumping or disposing
of wastes other than in the approved manner is forbidden. The
regulations distinguish between "handled liquid industrial waste,"
and a subset called, "handling waste," which requires special pre-
cautions because of its toxicity, radioactivity, volatility, flamma-
bility, explosiveness, or disease-carrier characteristics.
The Province of Ontario regulates used oil by the Gasoline Handling
Act of 1969 and its Gasoline Handling Code, which cover gasoline,
allied petroleum products, wax and asphalt. Annual license fees and
approval of all equipment used in handling the substances are required.
Handling includes storing, transporting, distributing, and transferring
the products into the fuel tank of a motor vehicle, motor boat, or
other water craft, or into a container. By Regulation 824 (August
1973) under the Waste Management Act, the Province employs a system
of standards and certificates to control hauled liquid industrial
wastes Other than sewage, and their collection. Therefore, all road
oilers and other collectors of used oil must be separately licensed
under both Ontario statutes.
Quebec's Regulation of the Disposal of Chemical and Combustible
Materials was promulgated under the Public Health Act, and remains
in force under the Public Health Protection Act (S.Q. 1972, Chap. 42).
Chemical waste is defined to include "oils, hydrocarbons, solvents..."
and the treatment works covered are those which incinerate, recyle,
destroy, convert or transform chemical waste. Authority extends to
site approval, storage tank specifications, treatment works speci-
fications, and record-keeping for all wastes received. There are
presently six licensed collectors in the Province, and about "sixteen
firms dealing with waste oil pick-up and road oiling in the Montreal
area." Superseding regulations are envisioned under the Environmental
Quality Act of 1972 (S.Q. 1972, Chap. 49) which would specifically
include used lubricants in the Act's ban on the deposit of waste in
any place other than a site for the storage or elimination or an
approved waste treatment plant. There is also the Petroleum Products
Trade Act, covering the storage, handling, and transport of petroleum
products other than liquified gas. It requires that used petroleum
wastes be gathered in a vented tank or closed container buried out-
side the building involved. Where closed containers are employed,
statutes govern their specifications. A hydrocarbon separator shall
be used in draining outside service bays, and petroleum wastes shall
be regularly removed to tanks or closed containers to avoid overflow
into a sewer.
139
-------
Saskatchewan has no specific laws or regulations governing used oil
treatment, but relevant regulations could be promulgated under both
the Public Health Act (R.S.S. 1965, Chap. 251) and the Water Resources
Management Act of 1972 (S.S. 1972, Chap. 146). Dumping of oil in a
sanitary landfill other than the two specific sites in Saskatoon
and Regina approved by the Minister of the Environment is prohibited.
Municipal Controls
Four municipalities have specific by-laws limiting the dumping of used
oil in municipal treatment systems. Corner Brook, NF protects its
storm and sanitary sewers against all waste hydrocarbons. Ottowa,
ONT, the national capital, sets an upper limit on fat, oil or grease
to be put into its sewers, and requires the use of grease, oil and
sand interceptors. Edmonton, ALB sets a less stringent limit for
its sewers but requires interceptors on private property for garages,
service stations and carwashes, at the property owners* expense.
Toronto, ONT has a dual-level standard, allowing ten times the level
of fat, oil and grease in its sanitary sewers that is permitted in
its storm sewers. Storm sewers are further protected by a require-
ment that interceptors be used, and by an upper limit of biochemical
oxygen demand (BOD).
While there are regulatory actions on behalf of all three levels of
Canadian government, it is apparent that there is no uniform national
program to collect and reprocess waste or used oil. A recent report
of Environment Canada recommends six objectives for such legislation
and regulation: a) waste oil be stored in properly designed containers,
b) collection only by authorized collectors who keep detailed records,
c) strict licensing of ultimate disposers, end-users, and reprocessors,
d) maytpum discharge levels for disposal by sanitary sewers, e)
a flat ban on disposal by storm sewer, and f) strict control over dis-
posal on land.
BELGIUM
There are no special provisions governing the collection and disposal
of used oils nor any subsidies for rerefining. The problem is dealt
with under the existing laws controlling air and water pollution.
The 1950 law concerning the protection of surface waters requires
plants to apply to the minister of public health for authorization
to discharge waste water and to specify the characteristics of the
waste water they propose to discharge.. The discharge of oil matter
is not authorized.
There ace no rerefineries in Belgium. The disposal of used oils has
been accomplished by private entities approved by public autorities,
but in a scattered fashion according to local economics.
140
-------
A working group consisting of representatives of the government and
the Belgian Petroleum Federation was formed to discuss how to arrange
for disposal of used oils. The Federation proposed the creation of
an autonomous non-profit organization charged with collecting and dis-
posal of used oils. The government has accepted this proposal.
Beginning in 1974 the organization is to collect oils from large
users (e.g., garages and industries); it may be that oil distributors
will be required to offer their clients facilities for returning
their used oils so they can be collected regularly. The organization
would probably dispose of the used oils by incineration in special
furnaces enabling energy recovery or by reprocessing them, subject to
government health requirements, and existing laws concerning air and
water pollution. A duty would be imposed on users to furnish their
oils to the collection organization. The organization's budget would
mainly be financed by user charges; and as well by revenues generated
from the sales of the collected used oils and contributions from partici-
pating oil companies.
141
-------
SECTION V
ALTEKNATIVE INSTITUTIONAL APPROACHES
TO USED OIL DISPOSAL CONTROL
INTRODUCTION
Defining alternative legal approaches to used oil control requires
identifying the attendant problems .and the effective technically, legally,
administratively and economically feasible means for addressing them.
This section will state these potential problems generally; discuss
what means could address them effectively; suggest several alternative
approaches which could employ these means; analyze the federal-
state-local relations, the advantages and disadvantages of, and the
possible legislative vehicles for each alternative approach; and
propose possibilities for funding the alternatives.
THE PRINCIPAL PROBLEMS
There are two principal difficulties in controlling disposal of used oil.
First, unknown amounts of lubricating oil are being used once and then discarded,
Second, many means of disposing of used oils may be causing unneces-
sary air, water and soil pollution. The amount of oil wasted is not
insignificant. For example, although it might not be economically
efficient to collect and reuse it all, the estimated 9-12 million
gallons of used lubricating oils generated but not collected in Maryland
in 1972 is more than half of the total amount of lubricating oils
used annually in Switzerland, a country with approximately one and
one-half times the area and population of Maryland. The environ-
mental and public health effects of present disposal methods have
not been quantified yet, but especially in metropolitan areas it is
widely assumed that used oils are an important component of the un-
treated and potentially harmful waste stream. This assumption is
accepted for purposes of the following discussion, in the absence
of more definitive information on the fate of used oils.
ADDRESSING THE PROBLEMS: ELEMENTS OF CONTROL
A review of existing programs to control collection and disposal of
used oils in the U.S. and abroad indicates that the following elements
offer effective means for achieving comprehensive control.
1. Discharging used oils into surface, ground or marine waters
should be prohibited. Depositing used oils on land should be
carefully controlled: some may be biologically degraded by
proper distribution, others may be deposited in suitably
142
-------
designed and equipped landfills. Where soil conditions are appro-
priate and other disposal methods uneconomical, use of used
oils as road oils may be permissible, but such use should be
carefully monitored to avoid contamination of surface and ground
waters. Burning of used oils in a manner which limits particulate
emissions is acceptable, but burning automotive crankcase oils
should only be permitted where emission of heavy metal or
other particulates does not pose a threat to human health.
For administrative simplicity, this might require a prohibition
on burning automotive crankcase oils except when they have been
pretreated to remove lead and other contaminants.
Ideally, used oils should be reused. Whether they are reused only
once, by burning for recovery of their heat value, or many
times by reprocessing for reuse as lube oil, will in the absence
of health concerns largely be a matter of economics. Local
economic circumstances may dictate, in the absence of health
concerns, that they merely be discarded in landfills, if their
collection is uneconomical.
Prohibitions against dumping are necessary to discourage such
wasteful and potentially harmful practices as dumping of used
oils down household drains, into sewers and onto empty lots.
2. Persons or companies having more than specified minimum amounts
(e.g., 50 gallons) of "clean" used oils should either be able
to give them to authorized collection centers or have an approved
collector pick them up without charge.
Disposing of severely contaminated used oils is costly — an
alternative in such cases is to charge for picking up or accepting
such wastes. Likewise it is usually uneconomical to collect
less than certain minimum amounts. What the minimum is depends
upon the costs of collection and the cost/revenue resulting
from alternative waste oil uses. Approximately fifty gallons
is the minimum amount in Germany.
If a person or company has to pay to have his used oils picked
up he is tempted to dispose of them "for free" by dumping them
somewhere. Likewise, if it is much less convenient to have them
picked up or to give them to a proper collector, the same
temptation will exist. For persons having less than the speci-
fied minimum of used oils, either municipalities should establish
collection centers where they can be deposited for free or sales
outlets for oil products should be required to accept them with-
out charge.
3, If persons are to be able to give their used oils away or have
them picked up, then there needs to be a corresponding capacity
143
-------
to either accept or collect them on a regular basis. These
collectors or collection stations should be reliable. That is,
they must have enough safe facilities to perform their functions
and enough at stake to prevent them from disposing of the used
oils improperly once collected. In many jurisdictions they must
obtain a permit to do business based on a demonstration that their
facilities are adequate. In some jurisdictions one may only
give his used oils to a licensed collector.
4. Just as it is important that collection methods and facilities
be approved, so it is important that the means of "ultimate" dis-
posal of used oils be carefully controlled.
There are many possibilities for disposal: incineration,
burning for heat, rerefining, reprocessing prior to reuse,
among others; which of these possibilities is preferred or acceptable
varies from place to place with varying circumstances. Which-
ever ones are acceptable must be carried out properly, however.
For this reason, these operations should also be subject to
supervision.
5. The best means for assuring compliance by collectors and dis-
posers with the conditions of their doing business is that they
maintain records of the transactions involved — date, name,
amount and kind of oil collected or transferred to a disposer,
means of disposal, etc.
6. Compliance must also be checked by government officials and those
subject to this supervision must make available the information
the officials need to perform their functions. Proprietary
information must be kept secret by these officials.
7. Those who violate the requirements outlined above must be liable
to criminal sanctions and equitable relief must be available
to remedy the violations. Some jurisdictions have provisions
that holders of licenses will lose them for serious or repeated
violations.
8. Many people do not know how to dispose of their used oils pro-
perly, nor why it is important to do so. A public information
program to explain the reasons and means for proper disposal
is vital.
ALTERNATIVE INSTITUTIONAL APPROACHES FOR IMPLEMENTATION
There are several alternative approaches which could implement the
means discussed above for assuring comprehensive waste oil collection
and disposal.
144
-------
A. Interstate compacts
B. Public corporations
C. Grants-in-aid for government programs
D. Permits to sell, collect and dispose of oil products
E. Regulations requiring the oil industry to collect and
dispose of their used products
F. Positive economic incentives for private entrepreneurs
Interstate Compacts
Article I, section 10 of the U.S. Constitution provides that no state
may enter into any agreement or compact with another state without
the consent of Congress. With such consent, of course, states can
and have entered into agreements designed to facilitate regional
solutions to various kinds of problems. These agreements may also
include the federal government as a party: the compact creating the
Delaware River Basin Commission does this.
Bills containing the language of the proposed agreement and authorizing
the governor to enter into the agreement must be enacted by each
prospective state party. If the agreement also affects the political
balance of the federal system, as many do, then it must likewise
gain the formal consent of Congress before becoming effective.
Examples of well-known and relatively effective agencies created
by interstate compacts, in addition to the Delaware River Basin
Commission, are the Port Authority of New York and New Jersey and
the Ohio River Valley Sanitary Commission (ORSANCO).
There are several issues which must be considered in working out an
effective compact. Should the powers of the agency created be
research and advisory only, or should they include rule-making and
enforcement powers? Should the federal government be represented
as a party, an observer, or not at all? What should be the membership
of the agency and what kind of political constituency should it
have? Should it be the agency staff or state personnel who imple-
ment decisions? How are jurisdictional conflicts to be resolved?
How can adequate financing of the agency's programs be assured?
To what extent can the agency modify existing legal obligations?
The advantages and disadvantages of interstate compacts depend in
large measure on the decisions reached on these issues in the process
of negotiating the terms of the compact. One obvious advantage of
compacts is that they allow for regional approaches to regional
problems. Since the generation of waste oils is heaviest in conur-
bations like those along the eastern coast of the United States,
compacts creating waste oil collection and disposal agencies to carry
out the functions discussed above might be effective approaches in
145
-------
those areas. A disadvantage of compacts Is that they normally take
several years to enact: first there are elaborate preparations and
negotiations of a draft compact, then as many state legislatures
as there are prospective state parties must enact bills authorizing
the state to participate, then the Congress, too, must approve the
compact.
Public Corporations
States have inherent power to create corporations which may operate
within their territories. The Congress has the power to create
corporations when they are necessary to carry out any of the powers
of the federal government enumerated in the Constitution, e.g.,
the power to regulate commerce among the states.
A public corporation is one created by and subject to the control
of a legislature to carry out purposes connected with the public good
in the administration of government. Public support or revenues and
properties,and public control are the distinguishing marks of a
public corporation. The whole interest must belong to the government.
Towns, cities and counties are familiar public corporations on the
state level. The Federal Deposit Insurance Corporation, the U.S.
Postal Service, and the Tennessee Valley Authority are well-known
federal corporations. So are AMTRAK and Comsat.
Public corporations may be organized to accomplish much more limited
tasks, however. In Germany, for example, the "bilge water drainage
association11 (Bilgenentwaesserungs verb and) has more than half a
dozen boats equipped to pump out Shine-going vessels, separate the
water from the oils and store the oils on board until they are pumped
out to a rerefinery in Duisburg, Germany. Ninety per cent of the
difference between the revenues for the products the rerefinery makes
from these bilge water oils and the. expenses of collection and reiE-
fining is borne by the German states riparian to the Rhine in pro-
portion to their population, and ten per cent is borne by the associ-
ation of Rhine shippers, the water works on the Rhine and the govern-
ment of the Netherlands (since Dutch boats are also serviced).
Public corporations could be created to carry out the collection and
disposal purposes described above by either state legislatures or
by the Congress. Public corporations created by Congress could be
made responsible for regions which cross state boundaries. The ad-
vantages of creating new institutions to carry out specific missions
are the enthusiasm and energy which may characterize the beginnings
of a new project. But this zealousness can lead after a time to
the institution becoming more interested in empire-building or defend-
ing its prerogatives. Public corporations also tend to limit the
entrance of private entrepreneurs into the activity for which the
corporation is responsible. There are potential jurisdietional
146
-------
conflicts between federal public corporations and related state pro-
grams in the area, and vice versa.
Grants-in-Aid
Grants-in-aid from one level of government to another in support
of national or state programs are quite common. Title II of the
Federal Water Pollution Control Act Amendments of 1972 provides for
federal grants to any state, municipality, or intermunicipal or
interstate agency for the construction of publicly owned sewage
treatment works, and there are state laws providing for grants to
municipalities which supplement the federal share (75 per cent).
Similarly, section 105 (a) (1) (A) of the Clean Air Act authorizes
grants to air pollution control agencies of up to two-thirds of the
cost of developing (or of up to one-half of the cost of maintaining)
programs for the prevention and control of air pollution. Higher
fractions of cost support are authorized for programs to control
air pollution in areas containing two or more municipalities (section
These examples indicate the choices to be made in designing a pro-
ject grant program: (1) what levels of government the granting
government should deal with (federal, state, local, regional, inter-
state) ; (2) whether and to what extent the grants should be matching;
(3) how the resources should be allocated among potential recipients;
and (4) what the administrative relationships should be between
grantor and grantee governments. Grants from one level or government
to support programs of another level are also often conditioned on
the fulfillment of specified criteria. Whether grants supporting
waste oil collection and disposal programs should be conditioned
upon compliance with criteria would be decided on the basis of
the relationship between the governments involved and the scope of
the program proposed.
Grants-in-aid can encourage grantee governments to undertake programs
they would not have felt able to do alone. On the other hand they
can seduce a government into choosing to spend money for something
for which a supplementary grant is available rather than for something
more needed. Grants often have conditions which cause difficulties
for the organization of state governments (e.g., the requirement
that a single state agency control the program) . On the other hand,
these conditions often make the difference between effective and in-
efficient use of the grant money. Indeed, it may be said that the
more conditions are imposed to assure the grant money is properly
used, the less attractive the grant becomes. The intergovernmental
relations between grantor and grantee depend almost entirely on the
conditions which are specified and the means agreed upon for measuring
performances under the grants. Too often the goals of grants are
147
-------
lost sight of in the process of building up administrative structures
for obtaining and distributing them.
Permit Programs
A common way of regulating business is to require those wishing to
engage in it to obtain permits and to impose conditions requiring
desired behavior. Maryland, for example, has instituted a system of
permits which must be obtained by drivers of oil tanker trucks, owners
of oil terminal facilities, and service station operators. A bill
recently introduced into the Parliament in Holland would require
that used oils only be collected and disposed of by licensed persons.
In this way the government hopes to weed out unreliable operators.
Record-keeping requirements could be imposed as conditions to permits,
as could requirements for providing facilities for the collection
and storage of used oils.
Permit programs could be established by state or federal legislation.
Strictly federal permits are normally limited to fields pre-empted
by the federal government, e.g., regulation of nuclear power plants,
or placing materials in navigable waters. A recent trend, evident
in the Federal Water Pollution Control Amendments of 1972, is to
establish federal permit programs which can be administered by states
which comply with the substantive and procedural aspects of the program.
Such a system has been proposed for the regulation of hazardous
wastes in S.3954 and could be applied to used oils. Since disposal
of used oils is largely a problem in urban areas, however, permit
programs would seem more appropriately enacted by the states affected.
Permit programs offer great flexibility, but this flexibility itself
has been criticized as leaving too much discretion with functionaries
often willing to compromise in order to avoid conflict. This dis"-
cretion can be limited by careful drafting of the statute dele-
gating authority to administer permits, but legislative supervision
of the administration of the program is advisable. One possible means
of exercising this supervision is to require submission of periodic
reports to the legislature by those responsible for administering
the program.
Another difficulty with permit programs is that permit provision
preparation is usually separated from permit enforcement. In Maryland,
for example, the oil handlers permits are granted by the water quality
permit office but are enforced by the general enforcement personnel.
This procedure in general, presents several potential difficulties.
Permits are often prepared by persons ignorant of the requisites
of a readily enforceable document. The enforcement staff is often
ignorant of the background of the provisions of the permit's conditions
and may not appreciate the rationale supporting the particular pro-
visions .
148
-------
A comprehensive permit program for all those who generate, collect
and dispose of used oils would involve a substantial investment of
time and personnel to administer and enforce. A permit program
merely for collectors and disposers of waste oil would be less adminis-
tratively burdensome, though perhaps less effective. For such a pro-
gram, random checks might be made of known used oil sources to assure
that collections had been made by licensed haulers. For such pur-
poses, used oil sources would have to keep records of used oil gener-
ated and delivered to haulers. Known sources might also be checked
by review of oil hauler records.
Oil Industry's Internal Collection and Disposal
Since the oil industry has the means for distributing its products,
by pipeline, rail, and tanker trucks, the industry could supplement
these means with equipment to collect used oil products and return
them to facilities at their refineries for reprocessing.
The oil industry itself takes care of collecting and disposing of
used oils in several European countries. In France the large oil
firms and the rerefiners have created a private company to collect
waste oils countrywide. 50,000 tons collected by this company are
delivered to the reref iners, the rest is delivered to the firms' own
refineries where it is burned. The Belgian petroleum association,
too, has created an autonomous organization to collect used oils from
garages, industries and other large users. This organization is
also responsible for disposing of these oils, either by incineration
or rerefining, in installations approved by government health officials,
In Denmark the rerefineries and the association of oil companies
have entered into an agreement whereby the companies' contractors
collect used oils from garages and deliver them to the refineries.
Each of these arrangements has been worked out in conjunction with
government officials to coordinate with their programs and policies.
Comparable arrangements in the United States would likewise have to
take into account local circumstances and local, state and federal
waste disposal programs. The feasibility of cooperative arrangements
between governments and the oil industry needs consideration such
as establishing municipal collection points from which companies
could collect.
An advantage of requiring the oil industry to manage the collection
and disposal of its used products is that it would permit use of an
existing system of distribution. Since this system is not by any
means entirely integrated, however, there would have to be substan-
tial adjustments made to "reverse" the flow of oil products. A dis-
advantage of such a requirement is that it would conflict with the
system of collecting used oils as it presently exists, unless arrange-
149
-------
ments could be made for collaboration, perhaps on a contract
basis. It would reduce the used oils available to rerefiners.
Oil industry representatives have raised the serious possibility
that such a requirement would have to be accompanied by legislation
providing a special exception to the antitrust laws for these acti-
vities. If so, this, and the structure of the industry itself indicate
that this alternative would most appropriately be accomplished By special
federal legislation. In considering this legislation Congress
could determine whether or not federal pre-emption was advisable to
avoid potential conflicts with subsequent state enactments.
Positive EconomicIncentives to Private Entrepreneurs
The catalogue of positive incentive mechanisms adopted by the federal
government to encourage private enterprise to engage in desired
activity includes favorable tax treatement, preferential procurement
treatment, and credit subsidies. These are discussed below.
Federal Taxation Policies — The Excise Tax Reduction Act of 1965 —
A return to the pre-1965 lube oil excise tax structure would restore
the tax differential rerefiners enjoyed in the off-highway market
prior to enactment of ETHA. Excise taxes are repressive in nature.
In recent years they have been reduced or eliminated except when
their receipts have been earmarked for special purposes. In these
latter cases they have come to be considered user fees. Excise
taxes functioning as user fees include those taxes whose receipts
are funneled into the Highway Trust Fund, Land and Water Conservation
Fund, and the Airport and Airways Development Fund. Here, the excise
tax would cease to be a highway user fee, but instead a device to
encourage rerefining.
Return to the pre-ETRA lube oil excise tax structure and payment of
the proceeds of the tax into the general fund,would thus be contrary
to the policy trend toward dedicated funds. However, such a return
might be justified if it would be an effective means of assisting
the rerefiners.
Restoration of the pre-ETRA tax system would hopefully draw new
capital into the waste oil reprocessing market and provide existing
rerefiners with sufficient profits to invest in new equipment and
processes. Uncertainties in the petroleum marketplace make it diffi-
cult, however, to predict with any assurance that return to the pre-
ETRA tax structure would achieve these goals. However, since the
administrative adjustments required would not be of great magnitude,
entailing principally a minor change in exemption procedures, and
since there would be a net revenue benefit to the United States
treasury, EPA may wish to recommend reversion to the pre-1965 lube
oil excise tax structure. Such a recommendation would be consonant
150
-------
with the Senate's 1965 position in defense of this system; as noted
previously, the Senate abandoned its opposition to revision of the
lube oil excise tax system not so much becasue it believed ETRA*s
provisions to be superior, but because it was willing to accede
to them in exchange for the House's acceding to tax provisions of
the Senate version of ETRA.
Congressional proposals for lube oil excise tax reform — Several
bills introduced into the 93rd Congress seek to modify the existing
lubricating oil excise tax system as a means of providing assistance
to the rerefinlng industry.
H.R. 5902, the National Oil Recycling Act, was introduced by Congress-
man Vanik on March 20, 1973. Identical to H.R. 5902 and with a total
of 31 co-sponsors are Congressman Vanik's H.R. 9338 and H.R. 9339
(both introduced July 17, 1973), and H.R. 9860 (introduced August
2, 1973). Taxation provisions are only a small portion of the bills.
They amend sections 4091 and 4093 of the Internal Revenue Code and
repeal section 6424 and cross-references to it. (See the section on
taxation of lube oil for discussion of these sections.) The lubricating
oil excise tax is extended to cutting and hydraulic oils and the off-
highway use credit is eliminated. Recycled oils may be sold tax-free.
H.R. 10888, introduced by Congressman Fulton on October 12, 1973,
and Senator Thurmond's S. 409, introduced January 16, 1973, contain
provisions similar to those of Congressman Vanik's H.R. 5902.
H.R. 4421, introduced by Congressman Vigorito on February 20, 1973,
revises section 4091 so as to exclude rerefined oils from the defi-
nition of the lubricating oils subject to taxation. This provision,
as similar provisions in the bills described above, would make statu-
tory the existing regulatory provisions providing for the tax-free
sale of reprocessed oil or blends of reprocessed and virgin oil.
H.R. 4421 also amends section 6424 to override IRS's decision in
Revenue Ruling 68-108; it provides that the use of virgin oil in
rerefined oil is to be considered as a use of oil otherwise than in
a highway motor vehicle, thereby providing for rebate of the tax paid
on the oil.
Federal Procurement Action — An additional means of assisting the
rerefining industry might be mandated government procurement of its
products. While government lubricating oil purchases comprise but
a very small percentage of the lubricating oil market, establishment
of closed loop rerefining systems could provide a boost to the rere-
fining industry and might provide an incentive for entry into the
market of new entrepreneurs with new technologies. The mechanics
of developing a closed loop system for procurement of rerefined oil
151
-------
products have been described in the Teknekron report to EPA.
Ample precedent exists for government procurement action to assist
technologies that promote environmental protection goals. Section
212 of the Clean Air Act of 1970 provides for government procurement
of low-emission vehicles, even if they cost up to 200 per cent more
than higher emission vehicles for which they have been substituted.
A federal Low-Emission Vehicle Certification Board certifies low-
emission vehicles including among its certification criteria safety,
performance, reliability, serviceability, noise level, maintenance
costs, and fuel availability. For the purpose of permitting agencies
to pay premium prices for low-emission vehicles, $5 million is authorized
for the extra payments for fiscal year 1971 and $25 million for each
of the two suceeding fiscal years.
Similar procurement provisions are found in section 15 of the Noise
Control Act of 1972. A Low-Noise Emission Product Advisory Committee
can be established by the EPA Administrator to assist him in the
certification of low-noise-emission products. Low-noise emission
products are to be given preference in procurement. To fund the
premium price procurement policy, $1 million is authorized for
expenditure in fiscal year 1973 and $2 million for each of the succeeding
fiscal years.
If the federal government were to participate in closed loop systems,
it might realize a net savings in both reduced lube oil purchases
and lower waste oil disposal costs. Of course, the federal govern-
ment would want to guarantee that it was obtaining oil that met its
chemical and performance specifications. Chemical and engine tests
would be required to assure that specifications are met, and it is
desirable to conduct such tests in any case so that oils can be labeled
as to quality in conformance with new ETC guidelines regarding the
labeling of reycled goods.
Credit — Government assistance to the rerefining industry could also
take the form of extensions of credit. Low interest loans, by means
of which existing or prospective rerefiners could obtain capital
at an interest rate below prevailing market interest rates would
provide one type of subsidy. A second would be a government loan
guarantee, in which the federal government guarantees a private
A Technical and Economic Study of Waste Oil Recovery — Part III:
Economic. Technical and Institutional Barriers to Waste Oil
Recovery. EPA Contract No. 68-01-1806, October 1973.
152
-------
sector creditor that if a rerefiner should default on payments of
interest or principal, the government will pay the loan as surety.
Federal credit subsidies can be found in many sectors of the economy.
In the area of commerce and economic development, one can identify
small business loans, small business investment company loans and
economic opportunity loans. Rerefiners or those seeking entry to
the rerefiriing business could be encouraged to seek loans through
existing programs, or the federal government could establish a special
loan fund to encourage rerefining. Capital for the fund could be
derived from the lubricating oil excise tax.
The principal problem associated with such credit subsidies is that
there is no assurance that they will be effective. One cannot predict
whether private entrepreneurs will respond to the loan opportunity,
and there is no way of knowing what the default rate on such loans
might be.
FEDERAL FUNDING OPTIONS FOR USED OIL PROGRAMS — SOURCES OF REVENUE
Revenue for funding collection and disposal of waste oil may be
derived from existing federal or state or local tax revenue or from
the collection of special disposal fees. A funding system should be
easy to administer and require users of oil to pay the cost of its
disposal. Among the possible funding options are the following:
Disbursements from General Revenues
Under this option, the federal government could devote a share of
general revenues to a waste oil program. The principal argument
against this particular option is that it imposes the cost of waste
oil collection and disposal on all taxpayers, rather than on the user
of lubricating oil. Since it is more fair to impose these costs on
those who cause .them and there are feasible means to do so, these
means will be the focus of this discussion.
Impose a Disposal Fee at the Point of Final Purchase or Disposal
Under this option, a disposal charge would be imposed at the point
of ultimate purchase or at the point of ultimate disposal. Imposing
a charge at the point of ultimate disposal would tend to encourage
clandestine means of disposal in order to avoid the charge and would
necessitate a highly developed regulatory system in which all
disposal is controlled and in which all or most oil transactions are
recorded. Imposing a charge at the point of ultimate purchase might
be a preferable alternative, but because so many outlets sell lubri-
cating oils, the administrative requirements of such a system would
be considerable. While on the basis of equity these options are
superior to the funding of a waste oil program through general revenues,
153
-------
their attendant administrative problems do not recommend them.
Devote Proceeds from the Existing Excise Tax or a Variant of it to a
Used Oil Disposal Fund
It could be argued that proceeds from the existing lubricating oil
excise tax or from a pre-ETRA lube oil excise tax system or some
variant thereof should be credited to a waste oil disposal fund
instead of the Highway Trust Fund. This would convert the excise
tax from a highway user fee to a lubricating oil user fee. While the
fee would be assessed on the manufacturer or producer, it is assumed
that the cost of the fee would be passed on to the ultimate user of the
oil. One objection to this proposal might be that a constellation
of interests might develop about a waste oil fund seeking to perpetuate
it after it is no longer needed. This is one criticism that has been
made of the Highway Trust Fund, although one usually does not hear
it made of other trust funds.
Table 6 summarizes key lubricating oil excise tax data for the last
five fiscal years. The data indicate that while gross receipts from
the lubricating oil excise tax are now 25 per cent higher than they
were five years ago, receipts for each y.ear have constantly represented
less than 2 per cent of the gross revenues provided the Highway
Trust Fund by automotive excise taxes. Cash refunds of the lubri-
cating oil tax have remained at a constant $2 million while income
tax credits granted have ranged from $15 million to $19 million.
The refunds and credits granted each year have represented from 16 per
cent to 23 per cent of the gross lubricating oil excise tax receipts.
Should it be decided that the approximately $80 million in net receipts
is too large a sum to devote to abating the problems associated with
existing waste oil collection and disposal practices, then it might
be desirable to earmark only a portion of these receipts for a waste
oil disposal fund.
Appendix A of this report outlines the procedures for administering
the lubricating oil excise tax and describes the large numbers of
exemptions and credits that are available under the existing lubri-
cating oil excise tax system. Using the existing system for waste
oil disposal purposes would be a simple administrative matter invol-
ving a minor bookkeeping change. However, because of the various
exemptions and credits the present system provides, some generators
of waste oil would bear an undue share of the waste oil disposal cost
while others would not bear their fair .share of the costs of disposal.
For example, a business enterprise purchasing lubricating 6il and
using it in highway vehicles would pay the lubricating oil tax
while a state purchasing oil for its own use in highway vehicles
would be exempt from it. However, the state, like the business
enterprise, would be generating waste oils having disposal costs.
154
-------
Table 6. LUBRICATING OIL EXCISE TAX RECEIPTS AND REBATES AND THEIR RELATIONSHIP TO THE HIGHWAY TRUST FUND
FISCAL
YEAR
1973
1972
1971
1970
1969
(1)
GROSS LUBE
OIL EXCISE
TAX RECEIPTS
$103,000,094
: 95,474,000
88,185,000
94,521,000
82,842,000
(2)
#
CASH REFUNDS
OF LUBE OIL
EXCISE TAX.
$2.000,000
2,000,000
2,000.000
2,000,000
2,000,000
(3)
INCOME TAX
REFUNDS FOR
LUBE OIL
EXCISE TAX
$17,000,000
16.000.000
19,000,000
13,000,000
13,000,000
(4)
TOTAL LUBE
OIL EXCISE
TAX REFUNDS
AND CREDITS
$19.000,000
18,000,000
20,ooo,oooi
15,000,000
15,000,000
(5)
REFUNDS & CREDITS: •
GROSS LUBE TAX
RECEIPTS
(%)c
: 18
19
23
16
18
(6)
GROSS RECEIPTS
TO HTF FROM
AUTOMOTIVE EXCISE
TAXES
$5, 695, 000,000s
5,635,000,000
5,664,000,000
5,353,627,000
4,637,176,000
(7)
GROSS LUBE TAX
RECEIPTS : GROSS
HTF RECEIPTS
(%)d
1.8
1.7
1.6
1.8
1.8
Ul
Ui
Notes:
a. Figure for 1973 Highway Trust Fund receipts Is a net sum.
b. Sum represents total of original figures added and rounded to nearest million dollars.
c. Represents total in column 4 divided by total in column 1, multiplied by 100.
d. Represents total in column 1 divided by total in column 6, multiplied by 100.
Sources: Annual Report of Commissioner of Internal Revenue for 1972, 1971; Internal Revenue
Service, "Internal Revenue Collections of Excise Taxes." Telephone conversations
with personnel of Treasury Department, Public Affairs Office and IRS Excise Tax
Branch. Highway Trust Fund figures for Fiscal Years 1973, 1972, and 1971 were
furnished by the Highway Users Federation Public Affairs Office.
-------
If some waste oil disposal program funded by the excise tax was
established which provided free pick-up of waste oils, the excise
taxes paid by the business enterprise would be used to provide
free pick-up for the state's waste oils. Similarly, since cutting
oils are exempt from the present lubricating oil tax, the business
enterprise would also be subsidizing the collection of waste cutting
oils from industrial operations of others.
One might reduce the inequities somewhat by modifying the existing
system of exemptions and credits thereby providing a closer relation-
ship between generation of waste oils and payment of disposal fees.
One means of doing this would be by eliminating the distinction between
on and off-highway uses and basing exemptions on whether particular
uses of lubricating oils result in generation of waste oils. This would
require a moderate overhaul of the existing lubricating oil excise
tax system and would be achieved in large measure by those congression-
al proposals which in effect call for a return, in somewhat modified
form, to the pre-ETRA excise tax system. These proposals, however,
do not assign the tax proceeds to a special waste oil fund, but merely
extend the tax's application and eliminate the credit for off-high-
way use.
It does not seem that it would be especially burdensome to make
administrative judgements on the "waste-potential" of lubricating
oils. Revenue Ruling 70-55, lists four categories of oils which are
seldom used as lubricants (within the meaning of section 48.4091-
6 of the IRS regulations) and which may therefore be sold tax-free.
Category 1 consists of 32 "non-recovered process aids." These
oils do not become part of finished products, are not reused and are
lost or discarded as a function of the process. Category 2 consists
of 13 surface coating oils that are applied to the surface of other
substances, are not reused or recovered, but remain on the surface
of the substances to which they are applied. Category 3 consists of
45 oils that become an integral part of finished products that are
not lubricants and are not used for lubricating purposes. Category
4 consists of 17 oils performing physical or mechanical functions
other than lubrication that are not included in any of the preceding
groups.
Under a revised tax system in which general revenue taxation (or
assessment of an oil disposal user fee) was based on waste generation,
the oils in categories 2 and 3 would clearly remain tax-exempt,
while administrative decisions would have to be made concerning con-
tinuation of the exemptions for oils in categories 1 and 4.
21970 Int. Rev. Bull. No 5 at 17.
156
-------
An alternative proposal would be to tax all sales of lubricating
oils providing no exemptions whatsoever. This would simplify adminis-
tration of the excise tax, for IRS auditors would no longer have to
check exemption certificates and rebate claims. This would also mean
imposing a fee on state government purchases, to which constitutional
objections could be raised. However, the courts might well be willing
to hold that an imposition of a user fee on a state by the federal
government does not constitute federal taxation of a state. States
presently pay aviation-related excise taxes into the Airport and Airway
Development Fund and their obligation to make such payments has thus
far been upheld in the courts.3
The Airport and Airway Revenue Act of 1970 is Title II of Public
Law No. 91-258, the Airport and Airway Development Act of 1970.
The Development Act establishes an airport and airway development
fund, analogous to the Highway Trust Fund, whose revenues would be
devoted to airport and airway development. The Airport and Airway
Revenue Act amends the Internal Revenue Code so as to earmark revenue
from airline transportation and fuel excise taxes for the newly
established trust fund. Simultaneously, the Revenue Act eliminates
a wide range of excise tax exemptions. Among these are the exemptions
which the federal government and state and local governments had enjoy-
ed pursuant to sections 4292 and 4293 of the Internal Revenue Code.
The Committee on Ways and Means, in its report on the Revenue Act,
stated:
Present law provides a series of exemptions from the tax
on transportation of persons by air. These include exemptions:
...(5) for transportation furnished to the United States (at the
discretion of the Secretary of the Treasury) and to State
and local governments;...
The exemptions for transportation furnished to State and local
governments, the United States, and nonprofit organizations
are terminated...It did not seem appropriate to continue special
exemptions to those governmental and educational organizations
since this tax is now generally viewed as a user charge. In
this situation there would appear to be no reason why these
governmental and educational organizations should not pay for
their share of the use of the airway facilities. (H.R. Rep. No.
91-601 at 45-46. See also S. Rep. No. 91-706 at 18.)
The Committee had noted earlier:
Under this legislation a better future is promised because
a trust fund will be established and there will be a direct
157
-------
A principal objection to removing all exemptions would be that users
of oil which do not create disposal problems would be paying a user
fee to underwrite disposal of other oil users1 waste oil. For example,
certain oils (such as those used in paper processing) are consumed
in use. These are presently exempt from taxation because they are
lubricating oils seldom used for lubricating purposes. Under a
lubricating oil disposal fee system allowing no exemptions, users
of paper processing oils would begin to pay a fee which they formerly
did not pay, and the proceeds would be used to dispose of waste oils
from operations other than their own.
relationship between the use of the system and the money
generated to meet the needs required by the users. It is fitting
that the primary financial burden will be assumed by the direct
users. [H.R. Rep. No. 91-601 at 3.]
The State of Texas challenged the new law on constitutional grounds,
alleging that it should continue to be exempt from the airport
transportation excise tax. However, the federal government's right
to levy this user charge on Texas was upheld by the U.S. District
Court for the Western District of Texas and by the 5th Circuit
Court of Appeals (State of Texas v. U.S.. 73 USTC A16, 085, 30
AFTR 2d 72-5930). The pertinent portions of the district court
decision follow:
The airway user charge is not a tax in the traditional sense,
but instead is a charge for services rendered and represents a
quid pro quo, and as such, is outside the scope of the doctrine
of implied intergovernmental tax immunity. New York v. United
States, 326 U.S. 572 (1946); Head Money Cases 112 U.S. 581
(1884); Packet v. Keokuk, 95 U.S. 80 (1877).
Nothing in the historical basis of dual sovereignty underlying
the principle of State immunity from federal taxation requires
that the States continue to receive the benefit of airway
facilities and services actually used by the States but furnished
by the federal government without bearing their equitable share
of the costs incurred in providing those particular benefits.
Even employees of the federal government must pay the air trans-
portation charge. No logical reason exists why all users of the
air transportation system should not pay their fair share of
such costs.
158
-------
Discard the Existing Excise Tax and Establish a Disposal Fee
Under this option, the existing excise tax system would be repealed
and a disposal fee would be established. The principal difference
between this proposal and some of the proposals described above is
that under this option, the disposal fee would be set at a level
where the proceeds from it would suffice to "solve" the waste oil
collection and disposal "problem," whereas under the preceding pro-
posals, the disposal fee would be at the level of the existing .excise
tax, 6 cents per gallon.
Establishment of an oil disposal fee in lieu of the existing lubricating
oil excise tax system shares many of tbe administrative problems of
some of the options previously discussed. But more importantly,
it requires an estimate of the appropriate fee level. The precedent
for establishing a lubricating oil disposal fee comes from West
Germany, but there, because of previous experience with rerefining
industry subsidies, the West German government had some idea at the
outset what the approximate level of the disposal fee should be.
In the United States, we have no such subsidy experience and no
one really knows at what level a disposal fee should be set.
Summary — Funding Options
A variety of funding options have been reviewed and none is found to
be simultaneously simple to administer and completely equitable.
It would appear though that minimal administrative costs would be
incurred and the greatest equity would be achieved by devoting all or
part of the proceeds of a revised lubricating oil excise tax to a dis-
posal fund while at the same time eliminating certain of the existing
rebate and exemption provisions (e.g. credits and rebates for off-
highway use and exemptions for sales to state and local government for
their own use and sales to certain nonprofit educational organizations).
AN ANALYSIS OF CONGRESSIONAL PROPOSALS FOR USED OIL MANAGEMENT
H.R. 5902
Congressman Vanik's "National Oil Recycling Act,", H.R. 5902, was
introduced on March 20, 1973, and was referred to the Ways and Means
Committee. It restores the Internal Revenue Code lubricating oil
tax provisions, with slight changes, to their pre-1965 form. The princi-
pal differences between the H.R. 5902 tax provisions and those pre-
dating ETRA are provisions in the bill doubling the tax on cutting
oils from 3 cents to 6 cents per gallon and extending the excise
tax to hydraulic oils. H.R. 5902 furthermore makes statutory the
exemption from excise taxes of reprocessed oils (but not their
159
-------
virgin components), which is the scheme devised in T.D. 6197.4
The National Oil Recycling Act would require federal officials to
encourage the use of recycled oil by: (a) procuring recycled rather
than new oils when the former are available at a price competitive
with the latter; (b) requiring federal contractors to use recycled
oils in performing contracts when such oils are available at competitive
price; (c) assisting and encouraging development of performance
standards, specifications and testing procedures to facilitate the
comparison of new and recycled oil; and (d) educating the public
as to the merits of recycled oil.
State regulation of recycled oil or used oil disposal would be
pre-empted if it were stricter than federal regulations. States are
urged to encourage the use of recycled oil and they become eligible
for federal grants if: (a) they adopt laws, regulations and adminis-
trative machinery which provide for a permit program for used oil
collectors and reprocessors; (b) they use competitively priced
recycled oil in lieu of new oil for state functions and require its
use for contract work; (c) they regulate retail sales of automotive
oils not covered by the retail sales provisions described below;
(d) they prohibit the use of used oils as fuel oil and for road
oiling unless it has been processed to meet minimum standards for
such uses established by federal and state pollution laws; and (3)
they educate the public as to the merits of recycled oil.
The Vanik bill would require all recycled oil to be labeled as "recycled"
and all new and recycled oil to bear the inscription that "it is
in the national interest to recycle this product after use." The
bill orders the EPA Administrator to promulgate regulations requiring
all oil containers to bear labels relating to the proper disposal of
their contents.
H.R. 5902 provides in addition that automotive oil packaged for
self-service retail sale be sold in reusable containers for which
a 10 cent deposit is collected, refundable upon return of the container,
either empty or full of used oil. All persons engaged in the sale
of automotive oils would have to maintain used oil collection facili-
ties on their premises to be serviced by used oil collectors.
Further, no person could enter into a restrictive contract, the purpose
of which is to discourage the recycling of.used oil.
Users of more than 100 gallons of industrial oil per year would have
discussion of T.D. 6197, see section III of this report, above
footnote 38.
160
-------
records of the quantities and types of oil purchased, consumed and
disposed of. Records must also be maintained by used oil collectors
and used oil recyclers.
Criminal penalties and civil fines are provided for violation of the
law. The EPA Administrator would have to report to Congress each year
on oil sales, oil recycling, the environmental impact of used oil,
and problems of the oil recycling industry. The bill would authorize
him to seek required licensing of any patent right which is necessary
to achieve the Actfs purposes.
Finally, the bill authorizes $25 million per year for grants to state
waste oil programs, and $.10 million per year for the four fiscal
years beginning with FY74 for development of new processes and tech-
nology for the recycling of used oil. EPA is to administer these
funds. $5 million is also authorized for each of these four fiscal
years for development of standards and testing methods to facilitate
the comparison of recycled with new oil, to be administered by the
Commerce Department. The technology development and testing funds
could also be used by EPA and the Commerce Department for work by
their own personnel.
Evaluation of the Vanik Bill
The Vanik bill provisions pertaining to container labeling and lube
oil taxation were mentioned in previous sections of this report.
It is by no means certain that requiring a "recycled" label will
benefit reprocessed oil sales, nor is it certain that federal mandating
of such labeling will automatically preempt state labeling require-
ments. Elimination of the arbitrary Revenue Ruling 68-108 is desirable;
because of present reprocessable used oil scarcities, however, it
is uncertain whether restoration of pre-ETRA tax advantages enjoyed
in the off-highway lube oil market will have a significantly beneficial
economic impact on the rerefining industry.
The requirement that federal contractors use recycled oil when per-
forming contracts might bolster the reprocessed oil market, but on
the other hand, it may not be seriously enforced by federal agencies.
Support of state programs is a good idea, but no justification has
been provided for the $35 million annual authorization. Furthermore,
to ensure that states do not establish such programs merely as a means
of obtaining additional federal financial aid, grants ought to be
provided only on a much larger conditional basis.
It may be desirable to add to the state program requirements a pro-
vision that states demonstrate that they have the resources to en-
force their used oil regulations. It may also be wise to modify the
oil reprocessing requirements so that unprocessed waste oil may be
used as a fuel where stationary sources have installed efficient
161
-------
emission control technology.
Finally, the provision outlawing contracts which restrict oil recycling
may make unlawful major oil company franchise agreements according
to which dealers may market only the oil companies1 products. If
the companies do not market recycled oil, such contracts might be
construed to be in violation of the restrictive contracts provision
of H.R. 5902.
Revision of the Vanik Bill
Congressman Vanik1 s staff expects to work on revisions to his bill
with the hope of introducing a new version prior to adjournment of
the 93rd Congress. It is uncertain what changes will be made at
the present time. The staff is likely to concur with the labeling
provisions of S. 3625 described below and will reconsider H.R. 5902fs
resealable container and grant provisions. The staff expects the
new version to be somewhat less directed towards rerefining.
S. 3625
S. 3625 was introduced on June 11, 1974 and referred to the Committee
on Public Works for later referral to the Senate Finance Committee.
It was introduced by Senator Domenici for himself, Senators Stafford,
McClure, Randolph and Baker. Like the Vanik Bill, it is titled the
"National Oil Recycling Act". It does not contain the Vanik bill
provisions governing returnable deposit containers for oil, nor those
requiring oil retailers to maintain used oil collection facilities.
It also differs from the Vanik bill in that it does not specify that
reprocessed oil must be labeled as "recycled." Rather, it vests
broad labeling authority in the EPA Administrator, and once this
authority is exercised, FTC regulations and state and local laws
requiring "previously used" or "reprocessed" labeling are no longer
to have effect. Further, the Vanik proposal envisages private citi-
zens, not necessarily having damage claims, being able to sue to
compel the authorities to enforce the law. In the later Senate
version, this provision for private attorneys general is dropped.
In other respects, S. 3625 and H.R. 5902 are similar. While the labeling
provisions of the Senate bill are arguably superior, it un fortunately
does not contain H.R. 5902fs requirement that oil retailers provide
used oil deposit facilities.
CONCLUSION
The Vanik and Domenici bills reflect Congressional belief that
federal and state action on the used oil issues is desirable. In.
evaluating these bills, as well as the other suggestions in this
section it should be remembered that problems associated with used
oil disposal vary in their magnitude. What may be an appropriate
response for one state may not be appropriate for another, and even
162
-------
within states, approaches for one region may not be appropriate
for another. Choice of the appropriate response will be a function
of health and economic considerations. While there is the danger of
states doing too little to manage used oil flow, there may also be
a problem of states doing too much - dictating end uses for used oil -
or means for controlling its disposal - whose economic costs are not
justified by the health or environmental risks avoided and the resources
conserved.
163
-------
APPENDIX A
A SUMMARY OF, TAX .CODE PROVISIONS PERTAINING TO
PAYMENT OF MANUFACTURERS' EXCISE TAXES ON LUBRICATING OILS
Provisions of the Internal Revenue Code provide for payment of an
excise tax of 6 cents per gallon "by manufacturers or producers of
lubricating oil. No such tax is payable on imports of lubricating
oil.
Lubricating oils are exempt from taxation if they are cutting oils,
reclaimed oils, or oils seldom used for lubricating purposes. Also
exempt from the tax are certain sales from one manufacturer to another,
sales to state and local governments, sales for export, sales for
use on some vessels and aircraft, and sales to certain educational
organizations. Tax-exempt sales can usually be made •when exemption
certificates are provided to a manufacturer by a lubricating oil purchaser.
These certificates may be printed by the concerned parties following
a format provided by the Internal Revenue Service in its regulations.
Refunds of taxes paid may be obtained by purchasers of lubricating
oils used otherwise than in a highway vehicle. Refunds may take the
form either of direct payments or credits against income taxes owed.
A summary of the principal sections of the Internal Revenue Code and
regulations pertaining to lubricating oils follows:
Section U091 of the Code imposes a 6 cents per gallon tax on lubricating
oils to be paid by the manufacturer or the producer-
Under section U8.U091-6 of the IRS regulations, sale of lubricating
oil seldom used for lube purposes, or sale of lube oil for resale
for non-lube oil purposes, may be tax-free. For a sale to be tax-
free, a manufacturer must obtain an exemption certificate from the
purchaser, and. a purchaser purchasing lube oil for resale must obtain
such a certificate from the second purchaser of the oil.
The exemption certificates which are filed are retained by the man-
ufacturers. When sales are frequent of lube oil seldom used for lube
purposes, one certificate covering an entire year's orders will be
acceptable. Otherwise, one must be completed for each order. Manufacturers
have a duty to ascertain the validity of a certificate.
Oils sold tax-free under the provisions of regulation ^8.^091-6 do
not qualify for tax refunds or credits against income tax available
under sections 39(a)(3) and 6h2k of the Internal Revenue Code. How-
164
-------
ever, if oil on which tax has been paid is used for non-lube purposes,
the ultimate purchaser may file a claim for credit under section 39(a)(3)
or refund under section 6h2h.
Cutting oils may be sold tax-free. This may be done following any
of the three procedures described in T.I.R. 781* (December 8, 1965)
and Revenue Procedure 66-52, 1966-2 Cum. Bull. 1263. First, when oil
is sold in containers smaller than five gallons which bear labels
indicating that their contents are for use only in cutting and machining
operations, when advertising for the oil indicates this, and when
the oil is sold for such use or for resale for such use. Second, oil
may be sold in bulk tax-free when the IRS Commissioner has determined
that an oil is suitable only for cutting uses. Third, a purchaser
may obtain a cutting oil exemption certificate, specifying that his
oil purchase is to be used for cutting purposes. The cutting oil
certification procedure is similar to the certification procedure
of section 1*8.1*091-6 for sales of lubricants seldom used for lubricating
purposes.
Section 1*8.1*093-1 of the regulations provides that sales of lubricating
oil by one manufacturer to another manufacturer for resale may be
on a tax-free basis, provided that both manufacturer and purchaser
have registered with the District Director of Internal Revenue. For
subsequent tax-collection purposes, the purchaser of oil made tax-
free under the provisions of this section is considered to be the
manufacturer of the oil so purchased.
Section 61*2l* of the Internal Revenue Code provides that the ultimate
purchaser of lubricating oil (other than cutting or previously used
oils) used otherwise than in a highway vehicle, may obtain a 6 cents
per gallon payment from the government. Under the provisions of section
39(a)(3) of the Code, this ultimate purchaser may claim this as a
credit against his income tax. Alternatively, if the amount claimed
exceeds $1000 for the first, second or third quarter of the year,
he may file a claim for the amount prior to the last day of the quarter
following the quarter in which the claimed refund exceeds $1000.
IRS form 81*3 is used to make a quarterly claim. For a yearly claim,
IRS form 1*136 is attached to the income tax form filed by the clai-
mant — form 101*0, 1120, 1120-S or 1065. The individual seeking a
refund indicates the number of gallons of lube oil purchased, and
multiplies this by 6 cents to obtain the total for the credit sought.
The taxpayer must also list the general purposes for which the oil
has been used. Section 61*2Md)(2) of the Code provides that witnesses
and books may be examined to determine the validity of credit claims.
Those exempt from income tax do not claim a credit against their income
tax, but obtain direct refunds. No amount is payable under section
61*21* for oils which have been used off the highway but which have
been sold tax-free.
165
-------
Section ^218 of the Code provides that if an individual manufacturer
produces lubricating oil and uses it otherwise than in a taxable item,
then he pays tax on it equivalent to the tax payable were he to sell
it. However, if sale of the oil to another purchaser for a particu-
lar (e.g., non-lubricating) use would be tax-exempt, when the manu-
facturer uses the oil in such a non-taxable manner himself, he is
not liable for tax.
Section U221 of the Code provides that sales of lube oil are tax-exempt
if the lube oil:
1. is for use by a purchaser for further manufacture, or for resale
by the purchaser to a second purchaser for use by the second purchaser
in manufacture;
2. is for export, or for resale by a purchaser to a second purchaser
for export;
3. is for use by a purchaser as a supply for vessels or aircraft (though
the definition of vessels and aircraft is restrictive);
k. is to a state or local government for its exclusive use;
5. is to a non-profit educational organization holding a Code section
501(a) exemption.
Generally speaking, exemption certificates are required for tax-ex-
empt sales in categories 1, 3 and k above. For export sales, proof
of export must be shown to obtain exemption. For sales to section
501(a) tax exempt education organizations, the organizations and
the manufacturers must be registered with the Internal Revenue Ser-
vice.
166
-------
WSA-OP-OI Appendix B
u/'>2 State of Maryland
Water Resources Administration
Annapolis, Md. 21401
APPLICATION
FOR OIL HANDLER'S PERMIT
(As required by Water Resources Regulation 4.02)
INSTRUCTIONS TO APPLICANT:
Fill out this application form completely, providing all information
requested; insert "not applicable" or "not available", with explanation
as necessary, where such comment is appropriate. Attach maps, additional
information sheets, as necessary.
1. Name of Company or Facility:
2. Mailing Address:
3. Location of Oil Handling Operations (Map must be attached):
Municipality, or Nearest Town:
County:
Nearest Body of Water:
I| Body of Water - Name
| ] Storm Drain (s) - Location (s)
5. Type of Facility:
[""I Marine Oil Transfer Facility
Oil Storage Facility
Oil Delivery By Truck Tank or
By Transport
Oil Transfer Facility
6. Method (s) of Product Transfer:
Q Boat Q Barge Q Ship
| [ Other; specify: __
Facility for the Handling of
Used Oil
| j Garage | | Service Station
| | Other Oil Handling Facility;
Specify _
Truck
Pipeline
Rail
167
-------
Product/Waste Oil Storage (* 1 Barrel = 42.0 U.S. gal. liquid rccasuro)
PRODUCT
Gasoline
Kerosene
Jet Fuel
Diesel Oil
#2 Oil
#4 Oil
#5 Oil
#6 Oil
Total (for
products )
tfaste Oil
fTotal (for
{Waste oil)
ABOVE-GROUND
5 Tanks
Total capacity
in barrels*
BELOW-GROUND
t Tanks
Total capacity
in barrels*
Plan for Containment & Cleanup of Spills or Leaks :
Q Included in Facility's Containment and Clean-up Plan
[""I Included in Operations Manual (for marine oil transfer facilities)
Such plan: [~] Previously submitted; date: _
Submitted herewith
[~~[ In preparation; to be submitted by
(Date)
Identification of all drains from building, facility or property
that contain or may contain oil:
[~| Sketch or plan attached
Sketch or plan previously submitted with application for
Discharge Permit; Application I _ ; date: _
| j Sketch or plan is in preparation; will be submitted by _
(Date)
168
-------
U/72
10. Complete Description of Method for Disposal of Waste Oil;
11. Company/Facility Owned By: Operated By:
Application is hereby made to the State of Maryland, Water Resources
Administration for an Oil Handler's Permit for the operations and activ-
ities described above. I certify that I am familiar with the information
contained in this application, and that to the best of my knowledge and
belief, this information is true, complete, and accurate. I understand
that the inclusion of any false or misleading information or the ex-
clusion of required information in this application, may cause the
Administration after due notice and hearing to revoke or suspend any li-
cense or permit issued. Failure to notify the Administration of oil
spills or leaks regardless of size shall also be cause for revocation or
suspension.
Name of Company or Facility
Signature of Applicant or Agent
Date Name of Applicant or Agent
(Print or Type)
Title of Applicant or Agent
169
-------
Attachment I COMMONWEALTH OF MASSACHUSETTS
HAZARDOUS WASTE BOARD
DIVISION OF WATER POLLUTION CONTROL
100 CAMBRIDGE STREET .
BOSTON, MASSACHUSETTS 02202 bxpires_
Permit No.
License Application - Hazardous Waste Collection and Disposal (G.L.. C. 21. s. 57-58)
(Submit application in duplicate and signed by owner or authorized official.)
1. Name of Firm
2. Address of Firm
3. Person to Contact in Emergencies Tel._
4. Type of Hazardous Waste Operation (Check applicable spaces)
Conveyance of Hazardous Wastes
Operation of Storage Facility
_0peration of Disposal Facility
5. Classes of Hazardous Wastes Handled (Check applicable spaces)
Waste Oils Toxic Metal & Plating Wastes
Solvents & Chlor. Oils Explosives, Reactive Metals
Hazardous, Chemical, Biological and Radioactive Wastes
Attach a tabulation of the class(es) of wastes and approximate annual
quantities handled or disposed of in the usual course of your business.
Attach a description of the disposal method(s) being used or to be used
for each class of waste.
State the location and capacity of all storage and/or disposal facilities
owned, operated or controlled by your firm. State the location of specific
disposal sites proposed to be utilized, (attach sheets as required)
Attach a list of trucks, vessels or other vehicles owned, operated or con-
trolled by your firm for the handling and conveyance of hazardous wastes.
(description/license or ident. no.)
Type Name of Applicant Signature & Title of Applicant
Address of Applicant
(For Issuing Office Use Only)
Approved subject to current rules and regulations and to conditions listed
below.
Conditions:
Director, Division of Water
Pollution Control
170
-------
Attachment II COMMONWEALTH OF MASSACHUSETTS
HAZARDOUS WASTE BOARD
DIVISION OF WATER POLLUTION CONTROL
MONTHLY OPERATION REPORT - LICENSED HAZARDOUS WASTE COLLECTOR
Name of Company
Address
Permit No.
Month-Year
CLASS
A - Waste Oil
B - Solvents & Chlor. Oil
C - Toxic Metal etc.
D - Explosives etc.
E - Hazardous, Chemical,
Biological and Radioactive
Wastes
PICK-UP MATERIAL DESCRIPTION
1) Class (See Legend) Quantity
Units
DELIVERY MATERIAL DESCRIPTION
2) Class Quantity
Units
NOTE: 1) Include class subdivision (crankcase oil, fuel oil, trichlor, MEK, etc.) if significant and appropriate.
2) Account for any shrinkage of Materials delivered (i.e., non-hazardous aqueous waste or sludge separated
from hazardous waste).
Return Completed Form To: Massachusetts Division of Water Pollution Control, Room 1901
100 Cambridge Street, Boston, Massachusetts 02202
-------
STATE OF MICHIGAN
DEPARTMENT OF NATURAL RESOURCES
LIQUID INDUSTRIAL WASTE
REMOVAL RECORD
LICENSED
HAULER
NAME
DATE
*
SOURCE OF WASTE
{TYPE OF PROCESS)
DESCRIPTION
OF
WASTE
QUANTITY
(LIST BY TYPES)
COMPANY NAME
ADDRESS
CITY, STATE 8 ZIP
LOCATION 8 METHOD
OF DISPOSAL
DETAILS OF SPILLS
(AMOUNT , PERSON
NOTIFIED, ETC)
SEPARATE RECORD REQUIRED FOR EACH LOAD
R-4564
-------
LIQUID INDUSTRIAL WASTE
REMOVAL RECORD
19
..•„ .'.CANY NAME
DRIVERS
NAME
DATE
SOURCE OF WASTE
COMPANY
LOCATION
W.R.C. LICENSE NO. VEHICLE LICENSE NO.
DESCRIPTION
OF
WASTE
QUANTITY
(LIST BY TYPES)
DISPOSAL
METHOD
LOCATION
DETAILS OF SPILLS
(AMOUNT,
PERSON NOTIFIED, ETC.)
R-4520
MAIL TO: BUREAU OF WATER MANAGEMENT WHITE COPY - -WATER RESOURCES COMMISSION REV.4/73
CO
8th FLOOR - MASON BLD6.
LANSING, MICHIGAN - 489Z6
PINK COPY -
YELUWOOPY —
HAULERS
TRUCK COPY
-------
CALIFORNIA LIQUID ft AS IE .muLtt.
STATE WATER RESOURCES CONTROL BOARD
PRODUCER OF LIQUID WASTE
Name (print or type):
Pick up Addrtss
(Number)
(Street)
(City)
Date
Pickup Time.
_AM
_PM
Type ol process
which produced wastes:
CHECK TYPE OF UQUIO WASTE:
Quantity
(Circle one)
, gallons or barrels
(Examples: metal plating, equipment cleaning, chemical formulation, etc.)
I certify that the described waste was delivered to the licensed hauler named below for legal disposal at the site indicated
Signature of Producer or Authorized Agent and Title
1. Acid Solution
2. Alkaline Solution
3. Pesticides
4. Etching Solution
S. Spent Plating Solution
6. Catalyst
7. Brine
1. Emulsion
9. Telia Ethyl Lead Sludge
10, Toxic Tank Bottom
Sediment
11. Other Toxic Solutions:
(Name):
12. Chemical Fertlllier
13. Chemical Toilet Wastes
14. CanneiyWaite
15. Oil
16. Grease
17. Non-toxic Rotary Drilling
Mud
IB. Acetylene Sludge
19. Paint Sludge
20. Asphalt Sludge
21. Latex Waste
22. Tile Glaze Waste
23. Lime Soda Water
24. Solvent
25. Non-to«lc Mud and Water
26. Other Non-toxic
Solutions: (Name)i
D
D
n
n
n —
n —
n
a
n
D
D
D
D
n
D
a
aZZ
HAULER
Name (orint or Noel _
— Business Udress ...
(Number) (Street) (City)
1 certify that the described waste was hauled by me in.a vehicle with a valid liquid waste hauler registration certificate
to the disposal facility named below and was accepted
— State W«le Hauler's Registration No.: , ,
Local Business License Truck Tag No. (If applicable):
Signature of Hauler or Authorized Agent and Title
DISPOSAL FACILITY
Bane (print or type)
— Site Address
1 certify that the hauler above delivered the described liquid waste to (his disposal facility and it was an acceptable
material under the terms of the RWQCB Discharge Requirements and local regulations
— Site Operator shall indicate identification code for the manner and location of Group 1 Waste Disposal at the Facility: (The listing ol
identification code is only required for Group 1 Waste Disposal. Instructions on how to specify this code have been forwarded to each
— Class 1 and Class ll-l disposal site in California.)
Treatment or , PonH Snreadinj Landfill nther
Recovery Process Area Area
IF WASTE IS HELD FOR DISPOSAL ELSEWHERE,
SPECIFY FINAL LOCATION
Signature of Waste Disposal Facility Operator or
— Authorized Agent and Title
-FAILURE TO MAINTAIN RECORDS AS REQUIRED BY SECTION 2440 OF CHAPTER 3, TITLE 23
OF THE CALIFORNIA ADMINISTRATIVE CODE. MAY RESULT IN REVOCATION OF REGISTRATION.
IN APPLICABLE AREAS OF LOS ANGELES COUNTY, THE ORIGINAL OF THIS CERTIFICATE
it"
-------
A.
B.
REGISTRATION NO.
State of California
The Resources Agency
STATE WATER RESOURCES CONTROL BOARD
APPLICATION FOR REGISTRATION AS A
LIQUID WASTE HAULER
(This application must be tynewritten or legibly
written in ink and all sections must be completed)
Full name of applicant
Principal business address_
(Record form location)
Telephone
F.
C. Mailing Address_
D. Other Addresses from which liquid waste hauling business is conducted:
E. Residence address of applicant.
If a partnership, names and addresses of all partners:
Names of Partners
1.
2.
3.
. Business Address
Residence Address
Name of person signing application
Position or authority (senior partner/ corporate officer, etc.):
I certify that the statements on all pages of this application are
true and correct to the best of my knowledge and belief.
Date signed_
Signature,
DO NOT USE THIS SPACE
WRCB 202(12/lV76J
Fees enclosed:
Registration fee
Vehicle fees
(from page 3)
Total
175
$ 10.00
-------
PROPOSED OPERATIONS AS A LIQUID WASTE HAULER
G. If regulated by the California Public Utilities Commission, state
whether regulated as a contract carrier or otherwise, and give
general description of area Where authorized to operate.
H. Proposed disposal sites:
I.
Code
No.
1.
2.
3.
4.
Describe Location of Site
Owner
Address
Check types of liquid waste which are expected to be hauled and identify
by code number the sites where the wastes will be disposed.
i.
2.
3.
4.
Acid Solution .
Alkaline Solution
Pesticides
Etching Solution ____
5. Spent Plating Solution ____
6. Catalyst
7. Brine
8. Emulsion
9. Tetra Ethyl Lead Sludge _
10. Toxic Tank Bottom Sediment.
Other Toxic Solutions:
(Name):
12. Chemical Fertilizer
13. Chemical Toilet Wastes
14, Cannery Waste ____
15. Oil
16. Grease „
17. Non-toxic Rotary Drilling Mud
18. Acetylene Sludge
19. Paint Sludge
20. Asphalt Sludge
21. Latex Waste _____
22. Tile Glaze Waste
23. Lime Soda Water
24. Solvent -
25. Non-toxic Mud and Water —
26. Other Non-toxic Solutions:
(Name):
11.
J.
Proposed delivery by hauler to another person for disposal (including
delivery to a community sewer system):
Name of Other Person
1.
2.
3. ••*
4.
Address
176
-------
VEHICLES TO BE REGISTERED FOR
HAULING LIQUID WASTE
K.
Each vehicle used, or to be used, to haul liquid waste. Fill in all
columns..
Type of Vehicle
(Specify: Truck,
Tank Truck,
Tank Trailer,
Trailer, Other)
Motor Vehicle
License
Number
Earliest
Month Vehicle
Is To Be
Used in
Current Year
Fee (see
table in
Instructions)
Do Not
Use This
Column
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
DO NOT USE THIS SPACE
Total $
(forward to page 1,
bottom, right-hand
corner)
177
-------
NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION
SEPTIC TANK CLEANER & INDUSTRIAL WASTE COLLECTOR
CERTIFICATE OF REGISTRATION
Registration No.
Vehicle License No.
THIS IS TO CERTIFY THAT:
Name of Registrant
Name of Business
Address City State Zip Code
having complied with the provisions of Conservation Law, §9-0101, is hereby authorized to en-
gage in or carry on the business of septic tank cleaning or waste collecting within the State of
New-York in the manner described on the application.
This certificate of registration will expire on the last day of , 19 ,
and is subject to revocation. Certificates are not transferable.
In witness whereof, the Department of Environmental Conservation has caused the certificate
of registration to be executed on this day of , , 19__.
By.
New York State Department of Environmental Conservation Representative
LANDS AND RECEIVING STATIONS APPROVED FOR DISPOSAL ~~
CONDITIONS:
178
-------
Appendix C
Instructions
(References an to the Internal Revenue Code)
1. General rule.—Tax-free sales under
sections 4063(a)(6), 4063(a)(7), 4063(b),
40S3, 4093, and 4221 may be made only if
the manufacturer, first purchaser, and sec-
ond purchaser have registered. Persons
subject to tax under sections 4081 (Gaso-
line) and 4091 (Lubricating Oil) are re-
quired to register before incurring any
excise tax liability.
2. Who may register.—Any person who
qualifies as a:
a. Manufacturer of articles,
b. Vendee purchasing articles (other
than tires or inner tubes) for his use in fur-
ther manufacture or for resale to a vendee
who will so use the articles,
c. Vendee purchasing tires or inner
tubes for his use on or in connection with
the sale of another article he manufactures
provided he is to sell the other article (tax-
able or nontaxable) for any of the tax-free
purposes indicated in section 4221 except
for use, or for resale for use, in further
manufacture,
d. Vendee with a place of business in
the United States purchasing articles for
export or for resale to a second purchaser
for export,
e. Vendee purchasing articles for use as
supplies for vessels or aircraft,
f. Nonprofit educational organization,
g. Vendee purchasing bicycle tires or
tubes for use in his manufacture of new
bicycles,
Page 2
h. Vendee purchasing gasoline for non-
fuel purposes as a material to be used by
him in the manufacture of another article,
i. Vendea purchasing buses for use ex-
clusively in transporting students and em-
ployees of schools operated by State or
local governments or by nonprofit educa-
tional organizations,
]. Producer of gasoline (including a
wholesale distributor) who purchases gas-
oline, or a manufacturer or producer of lu-
bricating oil who purchases lubricating oil
for resale,
k. State or local government,
I. Vendee purchasing trash containers,
or
m. Vendee purchasing local transit
buses.
3. Prior registration.—If a District Di-
rector has issued you a Certificate of Reg-
istry that is still in effect, you need not reg-
ister again unless notified to do so.
4. Exceptions to the requirements for
registration.—
a. The District of Columbia, a State, or
its political subdivision purchasing articles
directly from the manufacturer for its ex-
clusive use may, but is not required to,
register.*
b. In the case of sales for export or for
resale for export where the first purchaser
or the second purchaser is located in a for-
eign country or a possession of the United
States, such purchaser is not required to
register.*
c. In the case of sales for use as
supplies for vessels or aircraft where
prescribed exemption certificates are
furnished to the manufacturer by the
purchaser, registration is not required.*
d. The registration requirements do not
apply to purchases and sales by the United
States.
5. How to register.—Obtain Form 637
from any Internal Revenue Service office
and file it in duplicate. If the app'xation
is accepted, the original will be validated
by the District Director and returned as
your Certificate of Registry.
6. Where to register.—File Form 637
with the District Director of Internal Rev-
enue for the district in which your principal
place of business is located. If you have no
principal place of business in the United
States, file with the Director of Interna-
tional Operations, Internal Revenue Serv-
ice, Washington, D.C. 20225.
7. Additional Information to be sub-
mitted by vendees.—In addition to the in-
formation on the application, vendees
should submit information showing the
types of tax-free purchases they intend to
make. This information should include:
a. Types of products involved in the case
of a vendee purchasing for resale and the
reason for resale,
b. If a vendee is a nonprofit educational
organization (other than a school activity
of a church), the date of the determination
letter holding it to be exempt from Federal
Income tax,
c. In the case of a vendee purchasing
supplies for vessels or aircraft, state:
(1) Mama of vassal or make, modal, and serial
number of aircraft,
•TM-fm nles In weh cam mint ba mitt In ectord-
•nc> with Uu pronoun provided under eppllcifale rtf-
"l*Uon*- (Continued on page 4)
Form 637
(Rav. July 1973)
DiMrtmmt of the Treasury
Internal Revenue Service
Registration for Tax-Free Transactions
Under Chapter 32 of the Internal Revenue Code
This Application Should Also Be Used by Producers and Importers
of Gasoline and Manufacturers of Lubricating Oil
For District Director's Use Only
No.
Name of individual, corporation, partnership, association, etc.
Social Security or Employer Identification Number
Name under wMch business is operated
Will you be required
to file Form 720? . fj Yes fj No
Business address (Number and street)
City, State, and ZIP code
File this application in duplicate
with your District Director of Internal
Revenue. See the instructions on
pages 2 and 4.
Application Is hereby made for a Certificate of Registry in the name(s) indicated above. The applicant Is a:
rj Manufacturer
fj Retailer
Producer fj Importer
fj Other (specify)
fj Wholesaler
Jobber
fj Selling or FJ Purchasing (specify type of
product) ^
The applicant affirms that use of articles purchased or sold tax-free is to be for the exempt purposes specified in the applicable provi-
sions of the law and regulations and understands that misuse of this certificate will lead to its revocation and/or the penalties provided by
law.
See Item 2 on page 2 and check applicable letter(s). I qualify as a:
D a. fj b. D c. fj d. fj e. D f. D 9. D h. n I. D j. p k, fj I. p m. and/or fj n (other—specify) »•
Under the pin iltiat ol perjury, I declira thet I lint eiimined Oils epplicition end to the but af my anowtedfe end belief it ie true, correct, and complete.
Signature .
Title
Data.
District Director's Validation
A certificate of registry for the above applicant Is approved and Issuad under tha number shown.
179'
-------
Instructions (Continued)
GJ Type of but Inns engaged In wtth the vtsstl
(3) Name of country In which civil aircraft li
registered.
d. In the case of a vendee purchasing
(or further manufacture, the articles pur-
chased for this purpose and the end
product
8. Producers or Importers of gasoline
and manufacturers of lubricating oil.—
Every producer or importer of gasoline and
every manufacturer of lubricating oil sub-
ject to tax under sections 4081 or 4091
must make application for registry on Form
637 as required by section 4101.
The application must contain in addition
to the information required on Form 637
the following information:
a. A statement as to whether the appli-
cant is a refiner, compounder, blender, or
actual producer of gasoline; whether he is
an importer of gasoline; whether he is a
dealer selling exclusively to producers of
gasoline; whether he is a wholesale distrib-
utor of gasoline; and whether he is a man-
ufacturer of lubricating oil,
b. A description of the equipment and
facilities maintained for the production of
gasoline or lubricating oil,
c. A description of the equipment and
methods actually employed in such produc-
tion,
d. The ingredients or materials used,
• e. In the case of a refiner, compounder,
blender, or actual producer of gasoline, the
Page 4
percentage which his sales, if any, of gaso-
line produced by him is expected to bear
to his total sales of gasoline,
f. In the case of a wholesale distributor
of gasoline, a description of the storage
facilities maintained by the distributor, and
the percentage which his bulk sales of gas-
oline is expected to bear to his total sales
of gasoline, and
g. In the case of a manufacturer of lu-
bricating oil, the percentage which his sales
of lubricating oil produced by him is ex-
pected to bear to his total sales of lubricat-
ing oil.
9. Definitions.—
a. Articles.—All references to "articles"
are to those taxable under Chapter 32 of
the Code unless otherwise indicated.
b. Manufacturer.—This term includes a
producer or importer of an article, but not
an importer of lubricating oil.
c. Export.—Includes shipment to a pos-
session of the United States.
d. Supplies for vessels or aircraft.—
Means fuel supplies, ships' stores, sea
stores, or legitimate equipment on vessels
of war of the United States or of any for-
eign nation; vessels employed in the fish-
eries or in the whaling business: or vessels
actually engaged in foreign trade or trade
between the Atlantic and Pacific ports of
the United States or between the United
States and any of its possessions. The term
"vessels" includes civil aircraft employed
in foreign trade or trade between the United
States and any of its possessions. The term
"vessels of war of the United States or of
any foreign nation" includes aircraft owned
by the United States or by any foreign na-
U5. COVEMMENT PRDCnNG OFT1CE: Urt—O-47B-151
tlon and constituting a part of the armed
forces. In the case of civil aircraft registered
in a foreign country, that country must
allow a substantially similar exemption for
civil aircraft registered in the United States.
e. Nonprofit educational organization.—
This term means an organization exempt
from income tax under section 501 (a) of
the Code, whose primary function is the
presentation of formal instruction, and
which normally maintains a regularly en-
rolled body of pupils or students in attend-
ance at the place where its educational ac-
tivities are regularly carried on. The term
also includes a school operated as' an ac-
tivity of a church or other organization de-
scribed in section 501(c)(3) of the Code ,
which normally maintains a regular faculty
and curriculum and normally has a reg-
ularly enrolled body of pupils or students
in attendance at the place where its educa-
tional activities are regularly carried on.
f. Use in further manufacture.—An ar-
ticle shall b'e treated as sold for use in
further manufacture if:
(1) The a-ticla (other than an article referred
to In (2) below) is sold for the purchaser's use as
material In the manufacture or production of, or
as a component part of, another article (taxable
under Chapter 32) he is to manufacture or pro-
duce, or
(2) In the case of a part or accessory taxable
under section 4061(b), the article Is sold for the
purchaser's use as material In the manufacture or
production of. or as a component part of, another
article (taxable or nontaxable) he Is to manufac-
ture or produce.
10. Use of registration.—Use of the
registry number and the evidence and rec-
ords required to substantiate tax-free sales
and purchases must be in accordance with
applicable regulations.
Form 637
(Rev. July 1973)
Department of the Treasury
Intenul Rennue Semite
Registration for Tax-Free Transactions
Under Chapter 32 of the Internal Revenue Code
This Application Should Also Be Used by Producers and Importers
of Gasoline and Manufacturers of Lubricating Oil
For District Director's Use Only
No.
Name of Individual, corporation, partnership, association, etc.
Social Security or Employer Identification Number
Name under which business Is operated
Will you be required
to file Form 720? .
Yes fj No
Business address (Number and street)
City, State, and ZIP code
File this application in duplicate
with your District Director of Internal
Revenue. See the instructions on
pages 2 and 4.
Application Is hereby made fora Certificate of Registry in the name(s) indicated above. The applicant Is a:
fj Manufacturer Q Producer fj Importer f~] Wholesaler Q Jobber I Q Selling or Q Purchasing (specify type of
fj Retailer fj Other (specify) ^ | product) »> ~.
The applicant affirms that use of articles purchased or sold tax-free is to be for the exempt purposes specified in the applicable provi-
sions of the law and regulations and understands that misuse of this certificate will lead to its revocation and/or the penalties provided by
law.
See item 2 on page 2 and check applicable letter(s). I qualify as a:
fj a, n b. p c. n d, [J e. fj f. [j 9. fj h. fj I. D I. D k. fj I, fj m. and/or fj n (other—specify) JV
Under Ike penilUn of periuiy, I declere thit I hive euminod this eppllcttion end to the best of my knowledge end belief It l> true, correct, end complete.
Signature ,
Tiile
Date.
District Director's Validation
A certificate of registry for the above applicant I* approved and Issued under the number shown.
By
Date.
" Oiitffct Olrecibr ofTniern'ef RevVnui"
180
-------
Form
4136
Deptrtmtnt of the Treuury
Intarnil Rmnue Service
Computation of Credit for Federal Tax on
Gasoline, Special Fuels, and Lubricating Oil
Attach this form to your income tax return for calendar year 1973
or other taxable year beginning 1973, ending , 19
Name (as shown on page 1 of your Income tax return)
Identifying number
Type of Use
1 Nonhighway:
a. Farm (for farming pur-
poses)
b- Motorboat. . .
c. Other (specify)
2 Local transit system. (See in-
struction E.3.)
3 Aircraft
4 Totals
Gasoline, Diesel Fuel
and Special Motor Fuels
Number of
Gallons
Used
(A)
Rate of
Tax
(B)
.02
.04
.02
.021
.04 r
.02
Column (A)
Multiplier' by
Column (B)
Lubricating Oil
Number of
Gallons
Used
(D)
Rate of
Tax
.06
.06
.06
.06
Aviation Fuels
Column (D)
Multiplied by
Column (E)
(F)
Type of Use
Fuels Other Than Gasoline
(Example, Jet Fuel)
Number of Gallons Used
Column (A) or (B)
Multiplied by
Column (C)
5 a. Farm (for farming pur-
poses)
b. Aviation (only applicable to
commercial use as defined
in instruction F.4.(c))
6 Total
7 Total income tax credit claimed (sum of line 4, columns (C) and (F) and line 6, column (D)) .
*Rate of Tax (per gallon used)
Diesel Fuel and Special Motor Fuel
Aviation (only applicable to commercial use as
defined in instruction F.4.(c))
40 or 70 whatever paid
Instructions
A. Who May Hie.—Any individual, estate,
trust, or corporation, including a small
business corporation and domestic in-
ternational sales corporation, claiming
credit for Federal excise tax on the num-
ber of gallons of gasoline, special fuels,
and lubricating oil used must file this
form. It should be attached to the in-
come tax return.
Partnerships are not required to file
this form because the credit for Federal
excise tax on gasoline, special fuels, and
lubricating oil used is claimed by the
partners. However, partnerships must at-
tach a statement to their returns, Form
1065, showing the allocation to the
partners of the number of gallons of
gasoline, special fuels, and lubricating
oil used by type of use as shown above.
Special refund provisions are available
if the credit for any of the first three
quarters of your taxable year amounts
to $1,000 or more. (See Instruction C.)
B. Time for Filing a Claim for Credit—
An income tax credit will be allowed if
claimed within the time prescribed by
law for filing a claim for credit or refund
of overpayment of income tax fpr such
taxable years.
C. Quarterly Tax Refund of $1,000 or
More.—For any of the first three quarters
of your taxable year, a claim, Form 843,
may be filed for refund of tax of $1,000
or more for: (a) gasoline used (except,
on the farm for farming purposes), (b)
lubricating oil used, or (c) special fuels
used (except, on the farm for farming
purposes) during a calendar quarter.
However, no claim will be allowed unless
filed on or before the last day of the
following quarter. A claim for gasoline,
special fuels, and lubricating oil should
provide separate computations as in the
format shown above. (If you prefer, you
may use the above schedule instead of
your own statement to show the separate
computations.)
D. What Lubricating Oil to Include.—An
income tax credit may be claimed for
lubricating oil (other than cutting oils
and used oil) that is used otherwise than
in a highway motor vehicle. Cutting oils
are those oils sold for use on metals in
cutting and machining operations (in-
cluding forging, drawing, rolling, shear-
ing, punching, and stamping). Examples
of uses of lubricating oil otherwise than
in a highway motor vehicle are oiling
plant machinery and lubricating vehicles
other than highway motor vehicles, such
as aircraft, bulldozers, power shovels,
farm tractors, etc.
(Continued on back)
181
-------
Instructions (Continued)
Do not include oil ,(a) used in a high-
way motor vehicle, such as a truck, even
if it is operated off the highway, (b) sold
free of the Federal excise tax on lubri-
cating oil, such as transformer or insulat-
ing oil. certain motor fuel additives,
crude neatsfoot oil, castor oil, or oils
purchased excise-tax-free by use of an
exemption certificate, or (c) for which a
refund has been claimed on a timely
filed Form 843 for any of the first three
quarters of your taxable year. (See In-
struction C.)
E. What Gasoline to Include.
1. Farm for Farming Purposes.—An
income tax credit may be claimed for
Federal excise tax on gasoline used for
farming purposes on a farm that must be
a trade or business located in the United
States.
The term "farm" includes stock, dairy.
poultry, fruit, fur-bearing animal, and
truck farm, plantations, ranches, nurs-
eries, ranges, greenhouses, or other
similar structures used primarily for the
raising of agricultural or horticultural
commodities; and orchards.
Gasoline shall be treated as used for
farming purposes only if used by the
owner, tenant, or operator of a farm in
connection with—
(a) cultivating the soil, or raising or
harvesting any agricultural or horticul-
tural commodity, including the raising,
shearing, feeding, caring for, training
and management of livestock, bees,
poultry, fur-bearing animals and wildlife.
If the gasoline usage is by other than the
owner, tenant, or operator of the farm
(for example, a custom operator), the
owner, tenant, or operator shall be
treated as the user and ultimate pur-
chaser of the gasoline;
(b) handling, drying, packing, grading,
or storing any agricultural or horticultural
commodity in its unmanufactured state;
but only if the owner, tenant, or operator
produced more than half the commodity
he so treated during the period for which
the claim is filed;
(c) planting, cultivating, caring for,
or cutting of trees, or the preparation
(other than milling) of trees for market,
incidental to farming operations; or
(d) operating, managing, conserving,
improving, or maintaining the farm and
its tools and equipment.
Do not include gasoline used (1) off
the farm, such as on the highway to trans-
port livestock, feed, crops, or equipment;
(2) in processing, packaging, freezing,
or canning operations: (3) for personal
or other nonfarming purposes; or (4) on
the farm of another person, even though
used for farming purposes.
In many instances a vehicle will be
used both on the farm for farming pur-
poses and for nonfarming purposes. In
such cases an allocation of the gasoline
used must be made in arriving at the
total gallons of gasoline used on the
farm for farming purposes.
2. Nonhighway Uses.—Gasoline is re-
garded as having been used for a non-
highway purpose if used otherwise than
as fuel In a highway vehicle which, (1)
at the time of such use, is registered or
required to be registered for highway use
under the laws of any State or foreign
country, or (2) in the case of a highway
vehicle owned by the United States, is
used on the highway".
Do not include gasoline used for which
a refund has been claimed on a timely
filed Form 843 for any of the first three
quarters of your taxable year. (See In-
struction C.)
3. Local Transit Systems.—This re-
lates to gasoline used during any calen-
dar quarter in vehicles while engaged in
furnishing scheduled common carrier
public passenger land transportation
service along regular routes. The ulti-
mate purchaser of the gasoline may
claim a credit of 2 cents for each gallon
of gasoline so used. The amount to be
entered as "Number of Gallons Used"
on line 2, column A is determined by
multiplying—
(a) the total number of gallons used
in connection with the total passenger
fare revenue from scheduled service dur-
ing the quarter by;
(b) the percentage the ultimate pur-
chaser's commuter fare revenue was of
his total passenger fare revenue, both
kinds of revenue being from scheduled
service during the quarter. (Note—To
justify a claim for credit this percentage
must be at least 60 percent.)
Commuter fare revenue means reve-
nue attributable to fares from the trans-
portation of persons and attributable
to—(a) amounts not exceeding 60 cents
paid for transportation, (b) amounts paid
for commutation or season tickets for
single trips of less than 30 miles, or (c)
amounts paid for commutation tickets for
1 month or less.
Local transit systems must attach a
statement with the information required
under section 6421 of the Internal Rev-
enue Code and its Regulations in making
claim for refund or cred t
Do not include gasoline used for which
a refund has been claimed on a timely
filed Form 843 for any of the first three
quarters of your taxable year. (See In-
struction C.)
F. What Special Fuels to Include.
1. Farm for Farming Purposes.—An
income tax credit may be claimed for
Federal excise tax imposed on those
fuels defined under paragraphs 4(a),
(b), and (c), and which are used on a
farm >for farming purposes within the
meaning of Instruction E.I.
2. Locaf Transit Systems.—This ap-
plies to those fuels deimed under para-
graphs 4(3) and (b), and which are used
by the purchaser during any calendar
quarter in vehicles whi'e engaged in fur-
nishing scheduled comrton carrier public
passenger land transportation service
along regular routes. (See Instruction
E.3., above, to figure the "Number of
gallons used.")
Do not include spec al fuels used for
which a refund has been claimed on a
timely filed Form 843 for any of the first
three quarters of your taxable year. (See
Instruction C.)
3. Nontaxab/e Uses.—This relates to
those fuels defined under paragraphs
4(a), (b), and (c), which the purchaser
uses for a purpose taxable at a lower
rate than the purpose for which it was
*Ui GOVDKKEHT IWXT1HC OfHCIMITJ-O-MO-ZM
sold, uses for a nontaxable purpose, or
resells. The purchaser may claim a credit
for the tax on the sale of the fuel to turn.
but if he uses the fuel he must reduce that
amount by the tax applicable for such
use under section 4041 of the Code.
Do not include special fuels used for
which a refund has been claimed on a
timely filed Form 843 for any of the first
three quarters of your taxable year. (See
Instruction C.)
4. Definitions.
(a) Diesel Fuel.—Any liquid (other
than any product taxable as gasoline
under section 4081 of the Code) that is:
(i) sold by any person to an owner,
lessee, or other operator of a diesel-
powered highway vehicle, for use as a fuel
in such vehicle; or
(ii) used by any person as a fuel in
a diesel-powered highway vehicle unless
there was a taxable sale of such liquid
under (i) above.
(b) Special Motor Fuels.—These fuels
are benzol, benzene, naphtha, liquefied
petroleum gas, casinghead and natural
gasoline, or any other liquid (other than
kerosene, gas oil, or fuel oil, or any
product taxable under section 4081 of
the Code or paragraph 4(a) above} that
is:
(I) sold by any person to an owner,
lessee, or other operator of a motor ve-
hicle or motorboat, for use as a fuel In
such motor vehicle or motorboat; or
(ii) used by any person as a fuel in
a motor vehicle or motorboat, unless
there was a taxable sale of such liquid
under (i) above.
(c) Aviation Fuel.—Any liquid (for
example, jet fuel) other than any product
taxable under section 4081 of the-Code,
on which there is imposed a tax of 7
cents a gallon, and gasoline taxable under
section 4081 of the Code on which there
is imposed a tax of 3 cents a gallon
that is:
(i) sold by any person to an owner,
lessee, or other operator of an aircraft,
for use as a fuel in such aircraft in other
than commercial aviation; or
(ii) used by any person as a fuel In
an aircraft in other than commercial avia-
tion, unless there was a taxable sale of
such liquid under (i) above.
Commercial aviation means any use of
an aircraft in a business of transporting
persons or property for compensation or
hire by air. This term does not include
any use of an aircraft, in a business de-
scribed in the previous sentence, which is
properly allocable to any transportation
exempt from the taxes imposed on the
transportation of persons or property by
air by reason of: (a) the aircraft having a
maximum certified takeoff weight of 6,000
pounds or less and not operated on an
established line, or (b) a member of an
affiliated group is the owner or lessee of
an aircraft which is not available for hire
by persons who are not members of such
group.
G. Additional Information.—Internal Rev-
enue Service Publications 225, Farmer's
Tax Guide, and 378, Federal Fuel Tax
Credit or Refund for Nonhighway and
Transit Users, are available free at your
Internal Revenue Service office.
E.I.K2VIZ11452
182
-------
Form 720
(Rev. Feb. 1973)
DiMilmtnl of (He Titisuiy
Intern*! Revrnue Service
Quarterly Federal Excise Tax Return
1. Total tax. (Before making entries in items J to 9. compute your total tax in Part (I below.)
2. Adjustments. (See instructions. Attach statement explaining adjustments.;
3. Tax as adjusted. (Item '1 plus or minus item 2.)
4. (a) Record ot Tax Liability. (See instructions on page 4.)
(b) Record of Federal Tax Deposits
8? ;_^--!a^da-y i
Total for month
lst-15th day
Third '
Month l_il".'
Total for month
(e) Total Liability for Quarter
(d) Final deposit made for quarter (see note under item 7)
(e) Total deposits for quarter (including final deposit made for quarter)
5. Overpayment from previous quarter
6. Total deposits (item 4(e) plus item 5)
7. Undeposited taxes due (item 3 less item 6; this should be $100 or less). Pay to Internal Revenue Service
Note: If undeposited taxes due at the end of the quarter are more than $100. the entire balance
must be deposited. This deposit must be entered in the deposit schedule above in item 4(d).
8. If item 6 is more than item 3, enter excess here ^ $ and check if you want it: Q applied to your next return, or [j refunded to you.
9. If not liable for returns in succeeding quarters, write "FINAL" here |^ and return this form to your Internal Revenue Service Center.
Under penilNeforperjun'. I tleclire thit I luveVainiiied thii return, intludFnj iccompinjmj ichedulet ind stitementi, ind to the belt of my kno«ied£t ind belief it ii true, correct ind complete.
Siinitj'e Title (Owner, etc.) Dele _
Facilities and Services
Transportation of persons by air . . .
Use of international air travel facilities .
Transportation of property by air . . .
Policies issued by foreign insurers . . .
ii
Truck, bus, and trailer chassis and bodies;
tractors
Parts or accessories for trucks, etc. . .
Fishing rods. etc.. and artificial lures, etc.
Firearms
Shells and cartridges
Your name,
address,
employer |
identification
number, and
calendar v
quarter ot ^
return. r
R.U
9%
8%
$3.00
per
ptnon
5%
C)
10%
8%
10%
10%
11%
11%
Tax
IRS
Ho.
22
26
27
28
30
33
4ft
41
32
46
49
Products and Commodities
Sugar
Gasoline (manufacturers tax) ....
Fuel used i ^~ uuie
. «*. ........ . y^gp sasotine
in nonconv J
mercial |
aviation ^ Gasoline (retailers tax)
Lubricating oil
(highway vehicle type ....
other
Tread rubber (camelback)
TOTAL TAX (Enter in Item 1 above)
•See instructions on page 2.
Employer .denudation number
Hit.
(*)
<*)
4* gal.
7t gal.
3* gal.
6( gal.
10* lb.|
IOC Ib
5flb.
Tax
*•"""-»•« •»-"——----
T i
FF i
FD i
FP i
i ;
T i
IRS
Ho.
60
61
62
69
14
63
66
68
correctly
printed,
please
change.)
|_
J
Please return this form to your Internal Revenue Service Center
(See last item of instructions, "Where to Fife") , „'«
720
(Rev. 2-73)
-------
Instructions
Additional information on excise taxes is
contained in IRS Publication 510 available
free from any Internal Revenue office.
Name, address, and employer Identification
numt er.—After you first file Form 720, a pre-
addressed return will be mailed to you every
three months. Please use the preaddressed
form. If it is lost, request another. Unless al-
ready shown on the preaddressed form, enter
at the right of the space provided for the tax-
payer's name, the ending month and year of
the calendar quarter for which the return is
filed. If you must use a non-preaddressed
form, type or print your name, address, and
employer identification number exactly as
shown on previous returns. Do not use an
employer identification number assigned to a
prior owner.
You must file • return for each quarter
whether or not you Incurred any liability. If you
have no tax to report, enter "None" in item 3.
Adjustments,—Generally, an adjustment
may be allowed for all the taxes reported
on Form 720 to correct mathematical errors
or to adjust payments of tax on transactions,
charges, or processing that are entitled to be
made tax free.
Enter in item 2 the total of any adjust-
ments claimed. If you claim an adjustment,
attach a statement explaining the basis for it
and state that you have the required support-
ing evidence. You must identify the IRS Num-
bers being adjusted, and the amount of
adjustment claimed for each.
You may claim a refund on Form 843 (but
adjustment may not be allowed on Form 720)
to recover tax paid with respect to sugar ex-
ported, or any manufactured sugar or article
manufactured therefrom, used as or In the
production of livestock feed, for the distilla-
tion of alcohol, or for the production of alco-
hol (other than alcohol produced for human
food consumption).
Exemptions.—Some transactions Involving
sales of taxable articles, payment for services
and facilities, and the sale, processing, or use
of products or commodities are exempt from
tax. As an illustration, certain exemptions are
provided for export transactions and for
transactions involving States, political subdi-
visions, and certain nonprofit educational
organizations.
Records.—Keep on file at your principal
place of business or some other convenient
location, duplicate copies of your return and
accurate records and accounts of all trans-
actions. They must contain sufficient informa-
tion to indicate whether the correct amount of
tax has been computed and paid. Also, keep
records and information in support of all ad-
justments claimed and all exemptions. In the
case of most taxes reportable on Form 720,
keep your records at least four years from the
date: (1) the tax becomes due, (2) the tax is
paid, (3) an adjustment is claimed, or (4) a
claim for refund is filed, whichever is later. If
required, your records must be available for
inspection b" the Internal Revenue Service.
Penalties and Interest
Avoid pena'ties and interest by correctly
filing, depositing and paying tax when due.
Pag* 2
The law provides a penalty of from 5 percent
to 25 percent of the tax for late filing unless
reasonable cause is shown for the delay. If
you are late filing a return or depositing tax,
send a full explanation with the return. Penal-
ties are provided for willful failure to col-
lect and pay tax, keep records, file returns,
and for filing false or fraudulent returns.
Penalties are also provided for late pay-
ment of tax and for not depositing the proper
amount of tax when due. Neither penalty ap-
plies if you can show reasonable cause for
failure to pay or deposit when due.
Taxes not deposited when due.—The pen-
alty for failure to make deposits when due is
5 percent of the amount of the underpayment,
without regard to how long the underpayment
continues.
Taxes not paid when due.—The penalty for
failure to pay taxes when due is V& of 1 per-
cent of the unpaid amount for each month
or part of a month it remains unpaid—up to
25 percent of the unpaid amount. The penalty
applies to any unpaid tax shown on a return.
It also applies to any portion of additional tax
shown on a bill if it is not paid within 10 days
from the date of the bill. This penalty is in
addition to the 6 percent interest charge on
late payments.
Facilities and Services
Policies Issued by foreign insurers.—The
rates of tax not shown on the face of the
form are:
(I) Casualty insurance and indemnity
bonds.—Four cents on each dollar, or frac-
tional part thereof, of the premium paid on
the policy of casualty insurance or the
Indemnity bond.
(2) Life insurance, sickness and accident
policies, and annuity contracts.—One cent
on each dollar or fractional part thereof, of the
premium paid on the policy of life, sickness
or accident insurance, or annuity contract.
(3) Reinsurance.—One cent on each dol-
lar, or fractional part thereof, of the premium
paid on the policy of reinsurance covering any
of the contracts taxable under (1) or (2).
Manufacturers
These taxes apply to the sale or use by the
manufacturer, producer, or importer of the
articles listed.
Basis for tax and adjustments.—Generally,
the tax is computed on the price for which the
taxable article is sold or leased. If a taxable
article is sold or leased under a conditional
sales contract, installment payment contract
or chattel mortgage arrangement, compute
and pay tax on each payment received during
the quarter covered by the return. For ex-
clusion from the sale price of finance charges,
and local advertising charges, consult your
District Director. Consult him also on special
rules that apply to the lease of any article.
If charges for transportation, delivery, in-
surance, and installation are included in the
manufacturer's sale price, you may adjust
the price by deducting the actual amount paid
or incurred for such expenses. For the cir-
cumstances under which adjustments may be
made and about the evidence required to sup-
port such adjustments, consult your District
Director or the applicable regulations. Adjust-
ment of the manufacturer's sale price may
also be made for discounts, rebates, and other
similar allowances granted to the purchaser.
But such discounts, etc., nay not be antici-
pated. Adjustments may only be made if the
purchaser has taken advantage of the dis-
count, etc., before the returr is required to be
filed.
If the adjustments are made or the re-
quired evidence is obtained after the return is
filed, the amount of tax involved may be
considered an overpayment and you may then
take a credit for that amount on a later
return, or file a refund claim.
Tax shall be computed on a price estab-
lished by the Commissioner of Internal Rev-
enue if an article is sold by the manufacturer
or producer at retail, on consignment, or
otherwise than through an arm's-Iength trans-
action at less than the fair market price, or if
the article is used by the manufacturer or pro-
ducer In a manner subject to tax.
Products and Commodities
These taxes apply to the manufacture of
manufactured sugar; the retail sale or use of
diesel fuel, special motor fuels and fuel used
in noncommercial aviation; the sale of gaso-
line, tread rubber, or the sale or lease of tires
or inner tubes, by their manufacturer, pro-
ducer, or importer; and the sale of lubricating
oils by their manufacturer or producer.
The rates of tax not shown on the face of
the form are as follows:
Manufactured sugar.—On all manufactured
sugar, 0.53 cent per pound of the total sugars
therein.
Diesel fuel and special motor fuels:
(a) Four cents a gallon if sold for use or
used as a fuel in a highway vehicle, except
that the tax is 2 cents a gallon if sold for use
or used in a highway vehicle (A) which, at the
time of sale or use, is not registered and is
not required to be registered for highway use
under the laws of any State or foreign country,
or (B) which, in the case of a highway vehicle
owned by the United States, is not used on
the highway.
(b) If fuel is sold subject to tax at the 2
cents a gallon rate, an additional tax of 2
cents a gallon is imposed on the user if the
fuel is used in a highway vehicle (A) which,
at the time of use, is registered or is required
to be registered for highway use under the
laws of any State or foreign country, or (B)
which, in the case of a highway vehicle owned
by the United States, is used on the highway.
(c) Two cents a gallon on special motor
fuels sold for use or used as a fuel in a motor
boat or other vehicle that is not a highway
vehicle.
A tax is imposed on aviation fuel sold for
use or used in noncommercial aviation. The
retailers tax on aviation gasoline is in addi-
tion to the manufacturers tax. If fuel was
taxed on its sale as a special motor .fuel but
subsequently it is used as aviation fuel, the
tax on the user would be the difference be-
tween the 7( rate and the At or 2f rate
previously paid on the sale of the fuel fa. the
user.
(instructions continued on page 4.)
184
-------
Depositary Method of Payment
If you are liable in any calendar quarter
for more than 5*00 of excise taxes, you are
required to maVe semimonthly, monthly or
quarterly deposits with an authorized com-
-mercial bank depositary or a Federal Reserve
bank, in accordance with specific instructions
below.
If you are liable for $100 or less of taxes
for a calendar quarter (or your total liability
for a calendar quarter, less any deposits for
the quarter, is $100 or less), you must either
pay the taxes with your quarterly return or
deposit them vs.th an authorized commercial
bank or Federal Reserve bank.
Deposit Requirements
Record of deposits and liabilities.—If you
are required to make semimonthly deposits,
as discussed below, you must also record your
semimonthly tax liabilities in item 4, unless
you come within the exceptions discussed in
the section below headed "Important Notes."
If you come within these exceptions, or are
liable only for monthly deposits, you may
record your liabilities in the monthly totals.
Monthly deposits.—If you are liable in any
month (except tne last month of a calendar
quarter), for more than $100 of taxes re-
portable on Form 720 and you are not re-
quired to make semimonthly deposits, you
must deposit the amount on or before the
last day of the next month. In the case of
transportation and communications taxes, the
tax computed en the basis of amounts billed
(communications) or tickets sold (transporta-
tion) for a monthly period is considered as
collected during the succeeding monthly
period.
Semimonthly deposits.—If you had more
than $2.000 in excise tax liability for any
month of a calendar quarter, you must deposit
taxes for the following calendar quarter
(regardless of amount) on a semimonthly
basis as fallows:
(A) If the amount is for transportation or
communications taxes and the tax is com-
puted on the basis of amounts billed (com-
munications) cr tickets sold (transportation),
the tax computed for a semimonthly period is
considered as collected during the second
succeeding semimonthly period. Deposit such
amount within three banking days after the
close of the semimonthly period for which it
was collected. A "semimonthly period" means
the first 15 days of a calendar month or
that part of the month after the 15th day.
(B) If the amount is for tax on sugar manu-
factured in the United States or on policies
issued by foreign insurers, deposit it:
a. On or before the first day of the next
month if the tax is for the first semi-
month'y period of a month, or
b. On or before the 15th day of the next
month if the tax is for the second
semimonthly period of a month.
(C) If the amount is for taxes other than
those described above in (A) or (B), deposit
it on or before the ninth day following the
semimonthly period for which it is reportable.
You meat ths semimonthly deposit require-
ments if tne amount you deposit for the semi-
monthly period is:
Page 4
Instructions (Continued)
1. Not less than 90% of the total tax col-
lected during (or reportable for) the
semimonthly period,
2. Not less than 45% of the total tax col-
lected during (or- reportable for) the
month.
3. Not less than 50% of the total tax col-
lected during (or reportable for) the
second preceding month (first preceding
month for transportation and communi-
cations taxes), or
4. For manufacturer's and retailer's taxes
only—in the case of an amount you de-
posit for the second semimonthly period
in the month, when added to the de-
posit for the first semimonthly period,
not less than 90% of the total taxes
reportable for the month.
In addition, if the semimonthly period is in
either of the first two months of the quarter,
you must deposit the underpayment for the
month by the following date:
(a) The first day of the second month fol-
lowing such month in the case of tax
on sugar and foreign insurance
policies;
(b) The ninth day of the second month
following such month in the case of
manufacturer's and retailer's taxes,
and
(c) The last day of the following month
in the case of transportation or com-
munications taxes.
Important Notes:
(1) If you use options 2, 3, or 4 to meet
semimonthly deposit requirements, you may
not be required to keep books and records
(except as to deposits) on a semimonthly
basis or record your tax liability on a semi-
monthly basis in item 4. (See Sec. 48.6302
(c)-l and Sec. 49.6302(c)-l of the Regula-
tions.)
(2) You may not use options 2 or 3 if you
collect more than 75 percent of the trans-
portation or communications taxes or if you
incur more than 75 percent of the monthly
liability for other taxes in the first semi-
monthly period in each month.
Quarterly deposits.—If your excise tax lia-
bility for a quarter (reduced by any monthly
or semimonthly deposits for the quarter) is
more than $100, you must deposit the un-
paid balance on or before the last day of the
first month following the quarter. If however,
the unpaid balance is for communications or
transportation taxes only, deposit the unpaid
balance on or before the last day of the
second month following the quarter. You may
make deposits of $100 or less, but are not
required to do so.
This provision does not extend the time for
depositing the taxes for the last semimonthly
period of the quarter, nor relieve you of pen-
alties for failure to make other required timely
deposits.
Federal Tax Deposit Form 504.—You must
deposit all excise taxes reportable on Form
720, in an authorized commercial bank or a
Federal Reserve Bank, with Federal Tax De-
posit Form 504, unless the total liability for
any calendar quarter less the amount of
taxes previously deposited, is $100 or less.
If you are paying a tax for the first time or
need additional forms, contact the District
Director or the Director of a Service Center
(see "Where to-File" below) in time to make
required deposits. Any tax due and not de-
posited must accompany the return.
Overpayment—If you deposited more than
the correct amount of taxes for a quarter, you
may elect to have the overpayment applied to
your next return or refunded to you. Show the
appropriate amount in the space provided in
item 8. Any amount you elect to have applied
to your next return should be entered in item
5 of your next return.
When to Hie
A return must be filed for each quarter of
the calendar year as follows:
QuarUr covered
Jinuaiy. February,
March
April. Mar. June
Julj. August,
September
October, November.
December
AH eiclta tana
other than tram.
•nd eornm. dye ea
or before
April 30
July 31
October 31
January 31 —
comm. due
en or before
May 31
Autuit 31
November 30
February 28
For all excise taxes other than those on
transportation and communications, you are
allowed an additional 10 days for filing your
return if it shows timely deposits in full pay-
ment of the taxes due for the quarter.
Where to File
II your principal buslntn.
offic* or agtnqr. or l*(il
rtsidtnct) In th* CJM of in
al. Is lociUd In Us* thli «ddr*«
New Jersey.
New York City and counties
ol Nassau. Rockland,
Suffolk, and Westchtster
New York (all other counties).
Connecticut. Maine.
MassachuuttB. New Hamp-
shire. Rhode Island. Vermont
District of Columbia.
Delaware, Maryland.
Pennsylvania
Alabama, Florida.
Georgia, Mississippi,
South Carolina
Michigan. Ohio
Arkansas. Kansas.
Louisiana, New Mexico,
Oklahoma, Teus
Alaska. Arizona. Colorado,
Idaho, Minnesota. Montana.
Nebraska. Nevada. North
Dakota. Oregon. South
Dakota, Utah, Washington,
Wyoming
Illinois. Iowa.
Missouri. Wisconsin
California, Hawaii
Indiana, Kentucky.
North Carolina. Tennessee.
Virginia. Vtest Virginia
Internal Revenue Service
Center
1040 Waverty Avenue
Holtsville. N.Y. 11799
Internal Revenue Service
Center
310 Lowell Street
Andner. Mass. 01812
Internal Revenue Service
Center
11601 Roosevelt Boulevard
Philadelphia. Pa. 19155
Internal Revenue Service
Center
4800 Buford Highway
Chamblae. Georgia 30006
Internal Revenue Service
Center
Cincinnati. Ohio 45298
Internal Revenue Service
Center
3651 S. Interregional Hwy.
Austin. Teus 78740
Internal Revenue Service
Center
1160 West 1200 South St.
Ogden, Utah 84405
Internal Revenue Service
Center
2306 E. Bannister Road
Kansas City. Mo. 64170
Internal Revenue Service
Center
5045 East Butler Annue
Fresno. California 93730
Internal Revenue Service
Center
3131 Democrat Road
Memphis. Tennessee 38110
If you have no legal residence, principal
place of business or principal office or agency
in any Internal Revenue district, file your re-
turn with the Internal Revenue Service Center,
11601 Roosevelt Boulevard. Philadelphia,
Pennsylvania 19155.
•ft VS. COVmiMEHT raiNTmC CFFICC: im-O-50O-?97 48-0627165
185
-------
Font, 843
(Rev. July 1973)
Dcptrtmmt of On Tmwiy
Iflttmtt Revenue Service
Claim
Director's Stamp
(Data received)
For Internal Revenue Service Use Only
Q Refund of Taxes Illegally, Erroneously, or Excessively Collected.
Q Refund of Amount Paid for Stamps Unused, or Used in Error or Excess.
Q Abatement of Tax Assessed (not applicable to income, estate or gift taxes).
Name of taxpayer or purchaser of stamps
Number and street
City or town. State, and ZIP code
Fill in applicable items—Use attachments if necessary
a. Your social security number Spouse's number, H joint return b. Employer identification number (if any)
c. Internal Revenue Service office where return (if any) was filed
d. Name and address shown on return, if different from above
e. Period — if for tax reported on annual basis, prepare separate form for each taxable year
From _. , 19 to 19....
g. Amount of assessment
$
h. Date stamps were purchased from Gov-
ernment
f. Kind of
tax
Dates of payment
I. Amount to be refunded (If income tax,
complete computation below)
$
j. Amount to be abated
estate, or gift taxes)
$
(not applicable to income.
k. The claimant believes that this claim should be allowed for the following reasons:
Computation of Income Tax Refund
Income Tax
9 Net overpayment (enter in item i above)
V
Under penalties of perjury, I declare that I have examined this claim, including accompanying schedules and statements, and to
the best of my knowledge and belief it is true, correct, and complete.
Signed.
Dated 19-
See instructions on reverse.
Form 843 (Rev. 7-73)
1*6
-------
Insti uctions
1. Form 1040X or Form 1120X may
be used to amend an individual or cor-
poration income tax return. The Internal
Revenue Service prefers that they be used
rather than Form 843, since these forms
are designed to expedite processing.
2. The reasons for filing this claim
must be set forth in detail under item k.
3. If a joint income tax return was filed
for the year for which this claim is filed,
social security numbers of both husband
and wife should be entered and each must
sign this claim even though only one had
income. If the taxpayer has been assigned
an employer identification number, it also
must be entered.
4. The claim may be made by an agent
of the taxpayer, but the original or a true
copy of a power of attorney must accom-
pany the claim.
5. If a return is filed by an individual
and a refund claim is therea'ter fi'ed by a
legal representative of the deceased, certi-
fied copies of the letters testamentary.
letters of administration, or Similar evi-
dence must be attached to the claim, to
show the authority of the executor, ad-
ministrator, or other fiduciary by whom
the claim is filed. If an executor, admin-
istrator, guardian, trustee, receiver, or
other fiduciary f.les a return and there-
after a refund claim is filed by the same
fiduciary, documentary evidence to estab-
lish the legal authority of the fiduciary
need not accompany the claim, provided
a statement is made on the claim showing
that the return was filed by the fiduciary
and that the latter is still acting.
6. Where the taxpayer is a corporation,
the officer having authority to sign for the
corporation should place his signature
and title on this claim.
7. If a claim is for excess social se-
curity (HCA) tax withheld as a result of
having more than one f-mployer during a
calendar year, include the names and
addresses of your employers, and the
amount of wages received and FICA em-
ployee tax withheld by each, as part of
your explanation in item k. Do not claim
tax withheld if you have claimed the ex-
cess withholding on your individual in-
come tax return.
Where to File
Certain claims relating to alcohol and
tobacco taxes should be filed with the
Regional Director, Bureau of Alcohol, To-
bacco and Firearms. See the regulations
pertaining to the particular alcohol or to-
bacco tax. Otherwise, file your claim with
the Internal Revenue Service Center
where you filed your return.
FOR INTERNAL REVENUE SERVICE USE ONLY
Transcript of Claimant's Account
(Complete only as to miscellaneous excise taxes and alcohol, tobacco, and certain
other excise taxes imposed under subtitles D and E, Internal Revenue Code.)
The following is a transcript of the record of this office covering the liability that is the subject of this claim.
A—Assessed Taxes
Taxable Period
and Class
of Tax
(a)
Document
Locator No.
(b)
Reference
and Date
(0
Amount
Assessed
(d)
Paid, Abated, or Credited
Date or
Scried. No.
If Special Tax Stamp. State:
Document
Locator No.
(0)
Period
Commencing
(P)
Office
E.I. • 25-1 23145 2
ftUS. GOVERNMENT HUNTING OFFICE : 1*73—O-50O-259
187
-------
Appendix D
Report of the Federal Government
on the
Activity of the Reserve Fund In Accordance with the Used Oil Statute
and especially on the
Possibilities of a Reduction in the
Continual Payments and the Compensation Fee
Submitted April 5, 1972, by the
Federal Minister for Economics & Finance
to the Presidents of the Houses of the German Parliament
German Parliament
6th Session
Printed Item VI/3312
188
-------
Table of Contents
Page
A. Assignment of the Statute 191
B. Activity of the Reserve Fund 191
1. The Development of Quantities in the Used Oil Field 191
a. Use of Lubricating Materials and Used Oil Generation 192
b. Generation and Disposal of Used Oils (without
Foreign Matter) 193
c. Development of Amounts in the Future 195
2. Development of Receipts and Expenditures 196
C. Possibilities of a Reduction of the Continual Payments 196
1. Kinds of Used Oil Disposal and Rates of Payments 196
2. Reprocessing Enterprises 197
a. Expenses 198
b. Revenues 199
1.) Revenues from Reprocessed Products (without
Payments) 199
2.) Revenues from Transport and Burning Uses (with-
out payments) 199
3.) Uncovered Costs (without Payments) 200
4.) Revenues from Payments 200
c. The Profit Situation 200
3. Incinerating Enterprises 201
a. Costs 202
b. Revenues 202
c. The Profit Situation 203
4. Conclusion 203
D. Possibilities of a Reduction of the Compensation Fee 204
E. Overall Conclusion 204
Appendix 1 - Text of the Used Oil Statute 205
Appendix 2 - Regulation to Implement the Used Oil Statute 214
Appendix 3 - Second Regulation to Implement the Used Oil
Statute 217
Appendices 4-7 - Guidelines for Making Payments in Accor-
dance with the Used Oil Statute and Amend-
ments 1-3 of the Guidelines 221
Appendix 8 - Statement of the Federal Minister for Economics
on Levying the Compensation Fee 225
Appendix 9 - Statement Concerning the Collaboration of
Customs Offices in the Implementation of the
Used Oil Statute 229
Appendix 10 - Notice Concerning Applications for Continual
Payments in Accordance with the Used Oil
Statute 232
Appendix 11 - Notice Concerning the Establishment of Mandatory
Pick-up Districts and Attached Price Lists in
Accordance with, the Used Oil Statute 234
(Appendix 12 is omitted.)
189
-------
Appendix 13 - Contract
(Appendix 14 is omitted.)
Appendix 15 - Locations of Used Oil Disposal Facilities in
the Federal Republic of Germany 240
Appendix 16 - Mandatory Pick-up Districts for Rerefining
Firms 241
Appendix 17 - Mandatory Pick-up Districts for Incinerating
Firms 242
190
-------
A. Assignment of the Statute
Section 2(4) of the Law Concerning Measures for Assuring the
Disposal of Used Oil (Used Oil Statute) of 23 December 1968 (Appendix
1) contains the following assignments: "The federal government is to
report to the Parliament by the 31st of March of every third year, for
the first time prior to 31 March 1972, on the activity of the Reserve
Fund, [and] especially on the possibilities of a reduction in the con-
tinual payments (Section 1) and in the compensation fee (Section 4
(2) ).
JB. Activity of the Reserve Fund
The legal bases for the activity of the Reserve Fund are, in
addition to the statute:
The First Regulation and the Second Regulation for Im-
plementing the Used Oil Statute, dated 21 January 1969
and 2 December 1971 (Appendices 2 and 3);
The Guidelines concerning Granting of Continual Payments
in accordance with the Used Oil Statute, dated 21
January 1969 (Appendix 4);
The First Revision, the Second Revision and the Third
Revision of the Guidelines, dated 10 February 1969,
5 August 1970 and 14 October 1971 (Appendices 5, 6
and 7); and
The Statement concerning the Levying of the Compensation
Fee, dated 30 December, 1968, and the Statement concerning
the Collaboration of the Customs Offices in the Implemen-
tation of the Used Oil Statute, dated 13 January 1969
(Appendices 8 and 9).
In addition, the Federal Office for Trade and Industry (BAW) ,
which is responsible for administering the Reserve Fund, has issued
the following notices:
Notice concerning Applications for Continual Payments
in accordance with the Used Oil Statute, dated 24
February 1969 (Appendix 10); and
Notice concerning the Establishment of the Mandatory
Pick-up Districts and the attached price lists in accordance
with the Used Oil Statute, dated 25 November 1969 and
7 June 1971 (Appendices 11 and 12).
The contractual relations between the Federal Office and the
individual recipients of payments are based on a model contract
(Appendix 13).
1. The Development of Quantities in the Used Oil Field
In connection with evaluating the general situation in
the used oil field, the federal government has already provided
the Parliament the following reports concerning the quantitative
developments:
The Investigation concerning the Kind, Amount and
Whereabouts of mineral oil- containing wastes in
191
-------
the Federal Republid of Germany (printed item
IV/3724, dated 30 June 1965); and
Investigation concerning the Cause, Scope,
Origin and Whereabouts of mineral oil-containing
wastes in the Federal Republic of Germany (printed
item V/2830, dated 5 April 1968).
These investigations have proven worthwhile. Therefore,
the federal government has likewise in this case provided for
an "Investigation concerning the Cause, Scope, Origin and
Whereabouts of Mineral Oil-Containing Wastes in the Federal
Republic of Germany" (Appendix 14). It relates to the year 1969,
the first year in which the Used Oil Statute was in effect.
In considering already known facts and in refining the methods
of investigation, the report includes kinds of sources of used
oil which could not be taken into account in the earlier reports.
These include above all used oils with high proportions of
foreign matter, such as oil-water mixtures and emulsions from
the commercial sector as well as oil sludges from storage
tanks and oil separators. For these reasons, a direct com-
parison of the attached investigation with the earlier works is
hardly possible. A comparison would also provide little evi-
dence because prior to 1969 other systems of financial support
of used oil disposal existed which influenced the resulting
amounts of used oil differently.
Considering the results established for 1969 and extra-
polating them to 1970 and 1971, the following statements and
conclusions are possible:
a. Use of Lubricating Materials and IJsed Oil Generation
The use of lubricating materials and the generation
of used oil have developed as follows in the years
1969-1971 (in thousands of tons):
TABLE 1
Generation of Used Oils2
Mineral Oil
Domestic Use of Without Foreign
Year Lubricating Materials Foreign Matter Matter Total
1969 976 560 1,640 2,200
1970 1,087, 620 1,810 2,430
1971 l.OSl1 650 1,910 2,560
(1) (2) (3) (4) (5)
1 preliminary
2 for 1970 and 1971, based on extrapolation from 1969
192
-------
The 1971 total of used oil of approximately 2.5
million tons consists to a great extent — namely about
1.9 million tons — of water, sand and sludge. This
is typical for a great many industrial used oils and
residues from tanks and oil separators.
b. Generation and Disposal of Used Oils (Without
Foreign Matter)
The disposal of used oil has developed with the
support of the Reserve Fund as follows (in thousands
of tons):
TABLE 2
Year
1
1969
1970
1971
Reprocessed
2
172 (1911)
203
220
Incinerated
3
6
30
63
Change
4
+ 31%
+ 21%
This number from the accompanying report (Appendix 14) inadver-
tently includes foreign matter.
This overview shows the considerable increase in
the amounts of used oil harmlessly disposed of and there-
by underlines the significance of the Reserve Fund.
The increase in the amounts of used oil disposed of
with the support of the Reserve Fund indicates that
the enterprises which dispose of used oil are continually
expanding. This is necessary as well — also for the
fields of collecting and transporting used oil — in
order that the technical situation can effectively
accommodate the demands depicted in Section B.I.a.
[of this report].
The following table shows the amounts of used oil
disposed of with the support of the Reserve Fund as
well as by industry for heating, burning, depositing
or reusing as lubricants. The contrast between the
amount of used oil generated and the amount of used
oil whose whereabouts are unknown (Column 5) is
especially interesting (in hundreds of tons):
193
-------
TABLE 3
Used Oil Disposed Of
With Support
Used Oil of Whereabouts
Year Generated Reserve Fund By Industry Unknown
12 3 4 5
1969 560 178(19I1) 270 921
1970 6202, 233 3002 87
1971 650Z 283 3102 57
1 See the note to Table 2; the "mystery number" in Column 5
taken from the report (Appendix 14) remains intact.
2 Extrapolated for 1970 and 1971 on the basis of 1969.
Since used oil disposal is increasing more rapidly
than the generation of used oil, a remarkable decrease is
evident for 1971 in comparison to 1969 in the amounts of
used oil which are disposed of in unknown ways. Neverthe-
less, a problematical point remains: the 57,000 tons
given for 1971 as the "mystery number" represent, when one
considers the typically high proportions of water, sludge
and other foreign matter, a total amount of 400,000 to
600,000 tons of used oil/foreign matter mixtures.
It will require substantially more effort, especially
by thorough checking on the part of state officials of
the used oil record books (Appendix 3) which must be
kept as of 1 January.1972, to improve the effectiveness
of the Used Oil Statute.
If one fixes the figures given in the previous
tables for 1969 at 100, the following results:
TABLE 4
Used Oil Disposed Of
With Support
Used Oil of Whereabouts
Year Generated Reserve Fund By Industry Unknown
12 3 45
1969 100 100 ' 100 100
1970 111 131 111 95
1971 116 159 115 62
194
-------
This overview brings together the important results
of Tables 1 and 3. The rows of numbers show especially
clearly that:
Used oil disposal is increasing more
rapidly than used oil generation; and
Accordingly less used oil than before is
disposed of in unknown ways.
It should be noted that Tables 1 and 3 give in part
calculated results for the years 1970 and 1971. The
figures for used oil generated and for the "mystery
number" (Column 5 in Tables 3 and 4) take into consideration
only incompletely the time lags between the sale of
lubricating oil, its use, the generation of used oil,
and its disposal. Just between the time of domestic
sale of lubricating oil from the refinery and the time
of the oil change in cars a span of six months is quite
possible; this postponement of phases is taken into
account in the extrapolations. This ia no way under-
mines the discernible basic trend - namely, that the rate
of increase of used oil disposal intended by support from
the Reserve Fund is far higher than the rate of increase
in the use of lubricating oils even given very favorable
market conditions.
c« Development of Amounts in the Future
The amounts of used oils generated in the future
will depend not least on:
What degree of competition obtains between
the disposal enterprises within their
assigned mandatory districts and outside
of them;
The ability of the disposal enterprises to
adjust their locations to existing conditions;
and
How the duty existing since 1 January
1972 to keep used oil record books operates
on the spread of used oil with h£gh proportions
of foreign matter.
Appendix 15 contains an overview of the current
locations of the disposal enterprises.
Appendix 16 and 17 show the mandatory districts
assigned to the disposal enterprises. The overlapping
of many of the districts is clear. This increases the
competition among the disposal enterprises, causes
continual adjustment of costs and reflects thereby the
requirement of the Used Oil Statute to keep the resources
of the Reserve Fund "as low as possible".
195
-------
2. Development of Receipts and Expenditures
The receipts, expenditures and resources of the Reserve
Fund have developed as follows, from 1969 to 1971:
(Figures in Million DM)
Year 1969 1970 1971
1. Status of the Reserve
Fund on January 1 - 19.5 26.3
2. Receipts [from the
Compensation Fee] 39.2 42.0 41.7
3. Available Amount 39.2 61.5 68.0
4. Expenditures [in the form
of payments] 19.7 35.2 43.7
5. Status of the Reserve
Fund on December 31 19.5 26.3 24.4
This overview shows that the receipts to the Reserve
Fund have on the average of the three years increased only
slightly while the expenditures have increased markedly and
indeed exceeded receipts in 1971. The increase in expenditures
was the highest for payments to incinerating enterprises. The
balance of the Reserve Fund at year's end at approximately one-
half of the year's receipts made a smooth arrangement of the
Fund's functions possible and permitted the establishment of
the [continual] payment rates independently from a yearly
balance between receipts and expenditures.
£. Possibilities of a Reduction of the Continual Payments
'JL» Kinds of Used Oil Disposal and Rates of Payments
In accordance with Section 2(1) and (2) of the Used
Oil Statute, the kinds of disposal of used oil were determined
by regulation (see section 1(1) of the Implementing Regulation,
Appendix 2) and the rates of the [continual] payments were
fixed by guidelines (see Part IV A of the Guidelines, Appen-
dix 4, and the Third Revision of the Guidelines, Appendix 7).
Accordingly, the following resulted:
196
-------
Amount of Number
Payment Per 100 of Active j
Kind of Used Oil Disposal Kilograms Used Oil Enterprises. 6/71
1. Reprocessing Used Oil into
a) Lubricating Oil 12 DM 16
b) Other Reprocessed Products Maximum
12 DM 9
2. Incinerating Used Oil
a) Without economic use 10 DM 15
b) With economic use Maximum
10 DM 3
Supplement for abatement
of emissions Maximum
2.60 DM
TOTAL 282
1 See Notice of 7 June 1971, Appendix 12.
2 Some duplication, since several enterprises perform multiple
functions.
The rates of the [continual] payments were established
on the basis of cost analyses. In 1971, further thorough
analyses of the expenses and net proceeds of a series of pay-
ment recipients in the years 1969 and 1970 were carried out.
The results are reported on below, separated according to
reprocessing enterprises and incinerating enterprises.
J2. Reprocessing Enterprises
The examination of the expenses and proceeds for
1969 and 1970 covered seven reprocessing enterprises. Two
of the enterprises investigated suffered significant losses
during the period, in part due to unusual circumstances
outside their businesses. The following statements therefore
are limited to the five remaining enterprises who represent
the following proportion of the amounts of used oil reprocessed
with the support of the Reserve Fund:
197
-------
1969 — 55 per cent
1970 — 59 per cent
This constitutes a sufficient degree of representativeness.
The analyses were in part difficult because the existing
documents were not always sufficient to enable the necessary
discriminating investigation. The analysts used the firms1
gains and losses figures as a point of departure. Non-
business and irregular entries were separated from expenses
and revenues. Further, it was necessary to distinguish, both
for expenses and proceeds, the payments area from the non-
payments area.
a. Expenses
In order to obtain comparable costs, depreciation,
interest and salaries calculated according to uniform
criteria were considered. Special depreciation allowances
were discounted and the shorter periods of depreciation
were extended for periods which were deemed appropriate.
Calculated interest rates were figured only from the
firms; owned capital at 6.5 per cent because of the diffi-
culty of determining the capital needed for the business;
outside capital interest rates were considered at
their actual levels. Of the taxes dependent on profits,
the commercial income tax was included in the compu-
tation of expenses.
The investigation shows that expenses per unit
(of used oil) varied among the recipients of payments.
If the lowest rate of expenses in each year is fixed
as 100, then the highest rate was about 190. This
difference, however, is closely related to the extent
of the refinement of the reprocessed products. It should,
therefore, only be judged in connection with the differing
revenues from the sale of these products.
A comparison of costs per unit for 1969 with
those of 1970 shows, (with averages weighted for the
five enterprises) practically no change. By contrast,
the picture of the expenses per unit — taken indivi-
dually — for their procurement of used oil (collection
and transport) is unfavorable: these rose approximately
10 per cent.
These results enable no clear statement about how
the costs per unit have developed since 1970 or how
they will develop further in the near future. The
rise in the costs of personnel and investments is well-
known. On the other hand, there are indications that
by better use of the facilities and in part by converting
to larger capacities for reprocessing economics of
scale can be realized.
198
-------
1.) Revenues from Reprocessed Products (With-
out Payments)
The average revenues from the sale of re-
processed products varied widely among the five
enterprises: if the lowest value for 1970 was
100, then the highest value for that year was
almost 300. Mostly this reflects, similar to the
costs, the varying degree of refinement of the
reprocessed products. The higher costs attribut-
able to further reprocessing show a fairly close
correlation with the respective higher revenues.
It follows that for the period of the investigation
both an improved and a simpler reprocessing were
economically justified.
The weighted average revenues from repro-
cessed products dropped approximately 8 per cent
from 1969 to 1970. The index for the prices of
industrial producers' lubricating oil (reprocessors
produce lubricating oils for the most part)
rose 1 per cent in the same time. These contrasting
developments indicate that the drop in prices and
revenues is largely due to changes in kinds of
products. The further development of revenues
from reprocessed products will be influenced
both by future improvements in reprocessing and
by the development of prices in the lubricating
oil market.
2.) Revenues from Transport and Burning Uses
(Without Payments)
Used oil disposal enterprises may charge a
fee for the amounts of foreign matter in excess
of the permissible 10 per cent, in accordance
with a price list filed with the Federal Office
for Trade and Industry (see Section 3(4) of the
statute and the 25 November 1969 Notice, Appendix
11, applicable during the period of the investi-
gation) . Since this foreign matter limit is
often exceeded in the used oils to be picked up,
this source of revenues could become quite
significant. Until now, however, there were
no means to determine and measure the foreign
matter reliably, quickly and inexpensively at the
site of the used oil.
On the average, for the reprocessing
enterprises checked, fees for the disposal of
the foreign matter in excess of 10 per cent and for
199
-------
the corresponding transportation were only occasion-
ally charged.
In the future, the reprocessing firms and
the incinerating firms will have to concern them-
selves intensively to open this source of income.
It is hoped that the record books due to be kept
since 1 January 1972 on the generation and the
transfer or disposal of used oils will contribute
to this. Finally, it remains to be observed
that used oils with high proportions of foreign
matter can often only be reprocessed at dispro-
portionate cost and are many times cheaper to
burn.
3.) Uncovered Costs (Without Payments)
The "uncovered costs" arising from the
difference between the expenses and the revenues
of reprocessed products and from the transportation
and burning uses (see section 2(2)(4) of the
statute) rose in absolute terms for all five
firms between 1969 and 1970. This is primarly
attributable to the increased amounts of used
oil regenerated. In addition, the increase of
uncovered costs per unit cost worked out to average
10 per cent. If one takes the lowest value of
uncovered costs per unit cost in each year as
100, the highest value in both years was less
than 150. The range is thus not usuaually wide.
4.) Revenues from Payments
The amount of payment for used oil reprocessed
into lubricating oil was fixed at 12 DM per 100
kilograms of used oil, as mentioned above. The
same rate was also paid to enterprises which pro-
duced reprocessed products other than lubricating
oil, since the special cost investigation for
this area in no case revealed lower uncovered
costs.
c. The Profit Situation
The balance of these expenses and revenues
(including continual payments) resulted in a profit
for all five firms in each of the years checked: it
sank, by weighted average, approximately 1 DM per 100
kilogram used oil from 1969 to 1970. In retrospect,
the question arises whether the returns on investment
realized lay in the realm of the reasonable. In this
context one should consider:
The 6.5 per cent interest on owned capital
figured in the costs is for the period of
200
-------
the investigation less than the return which
could have been obtained from the capital
market without any risk. The risk based
on the capital invested is not to be equated
with zero, in spite of the payment provisions,
as is made clear by the losses of the two
reprocessing firms not included in the check.
This risk must, therefore be figured in with
the profits.
---- The producer compensation figured in the
cost is based only on the salary for the
labor of a leading employee, but does not
incorporate the entrepreneurial efforts
which go beyond this. In this connection,
it should be mentioned that during the course
of the investigation three enterprises
ceased their reprocessing activities.
With a view to these considerations, the profits
revealed by the investigation are not unreasonably high.
No clear statement can be made concerning the
future development of the profit situation for the
reprocessing firms. A reduction of payment rates for
the reprocessing firms can thus not be recommended yet.
Incinerating Enterpr is es
While reprocessing firms have been in operation for
several decades, incinerating enterprises are a young sector
with only a few years' business experience. The number of
enterprises in this field has developed as follows:
Increase Decrease Number on 12/31
1969 9 9
1970 3 12
1971 83 17
Four enterprises were checked. Since incinerating
enterprises for the most part started up in 1969, data for a
full year were not available until the business year 1970. In
1970, the four firms checked handled 62 per cent of the used
oil harmlessly incinerated with support of payments. The
check is thus representative according to quantities.
A well broken down cost analysis was available from
only one incinerating enterprise. Otherwise, largely the same
problems existed as with the reprocessing firms and they were
resolved in the same way. The distinction between the payment
and non-payment aspects (of the businesses) was more significant
since the enterprises checked burn considerable quantities of
substances other than used oil.
201
-------
a» Costs
Calculated costs and commercial taxes — with one
exception — were figured in the cost analysis in the
same way as for the reprocessing firms. The division
of costs between payments and non-payments aspects led
for one business only to a determination of an upper
and a lower limit. Besides, the differences in the
technical construction of the incinerating enterprises
checked allow a comparison only with reservations.
Therefore, this report does not give comparative
figures for the range of costs. Since the investi-
gation only applies to 1970, no statement is possible
concerning the development of costs. It is hoped that
the strong increase in incinerating used oil will
contribute to a better use of the capacity of the in-
cinerating enterprises, and thus to a reduction of the
costs per unit.
b. Revenues
Only one of the enterprises checked gained bene-
fits from the productive use of used oil incineration.
The amounts of these benefits can so far only be de-
scribed by a highest and lowest amount. Further
developments should be judged with caution because of
the special technical problems associated with pro-
ductive incineration.
Revenues from transportation and burning uses for
the foreign material exceeding the 10 per cent limit
have come in varying degrees, but altogether to a small
extent. The problems here are similar to those of the
reprocessing firms. (See section C.2.b.2.).above.
If one takes the amount of uncovered costs in
relation to the amounts of used oil eligible for pay-
ments in the most effective firm as 100, the highest
amount is 220. This wide range of uncovered costs
per unit results in part from the upper and lower
limits of the one firm mentioned above (section
3.a.). A comparison with the significantly smaller
range of the uncovered costs of the reprocessors
shows in addition that the results of the investigation
to determine the average values for the incinerating
enterprises are of only limited use.
The revenues from payments amounted to 8.50 to
10 DM per 100 kilograms of used oil. The additional
payment for abatement of emissions of up to 2.60 DM
per 100 kilograms did not exist during the period of
the investigation (see the Third Revision to the Guide-
lines , Appendix 7).
202
-------
c. The Profit Situation
The balance of the expenses and revenues for
the two enterprises to which no alternative calculation
applied resulted in a profit. For one of the firms
for which an alternative calculation was used, the
figures always showed a loss; for the other, in good con-
ditions a profit, in unfavorable conditions a loss.
On the average all four firms always had a profit. In
the most effective alternatives, the profit was not
far removed from that achieved by the reprocessing firms
in 1970. The profit for the unfavorable alternatives
was indeed very slight. Considerations in evaluating
these profits similar to those discussed above for the
reprocessing enterprises are relevant. (See section
C.2.c.) The payments to date can therefore in no way
be described as too high; rather in individual cases
they were in relation to costs somewhat low.
A prediction about future profit developments
encounters severe difficulties at the outset because
of the sharply differing results of the year 1970.
Further, it must be considered that the incinerating
enterprises cannot cover cost increases in the
payments-eligible aspect of their activities by increasing
the prices of their products as the reprocessing firms
can. Based on this situation, a reduction of the payment
rates is at this time out of the question.
t±. Conclusion
Investigations of the reprocessing and incinerating
firms have shown that the existing payment tates are not
too high. But they also show that the costs and revenues were
not always sufficiently analysed and that the division between
payments and non-payments aspects had to be estimated to a
greater extent than technically proper. Wishes likewise
remained unfulfilled in obtaining accurate quantitative data.
As yet it cannot be clearly predicted whether in the
foreseeable future a reduction or continuation of the payment
rates — or indeed an increase — is required. Contrary
trends exist in the development of costs, namely, on the one
hand increases in personnel and investment costs and on the
other hand, possible reduction of specific costs by improving
processes and fuller use of facilities. Besides, there are
uncertainties in the development of revenues, both from the
sale of reprocessed products and from burning. The federal
government will, therefore, undertake further investigations
and hold the recipients of payments to differentiated accounting
and quantitative record-keeping.
203
-------
I). Possibilities of a Reduction of the Compensation Fee
The overview of the development of the receipts and disbursements
of the Reserve Fund (see B. 2.) showed that already by 1971 the re-
ceipts were insufficient to cover the disbursements for that year.
Even considering only the current situation, a reduction of the
compensation fee is therefore not possible.
Regarding the amount of the fund as approximately one-half the
yearly receipts, it could be thought that the compensation fee
could be at least temporarily reduced. It must be observed in this
connection that according to experience so far, only a slow increase
in receipts can be anticipated given an unchanged compensation fee
rate. But disbursements, not only in this year, but also in future
years, will increase to a greater degree. The generally enhanced
environmental awareness will presumably give rise to more possessors
of used oil requesting the pick-up of their oil. Further, the federal
government intends to enhance the environmental awareness of oil
users in cooperation with the mineral oil industry. In addition,
the environmental restrictions on used oil enterprises will increase
and lead to an increased burden of costs (see Appendix 7). To this
must be added the expectation based on the introduction of the record
books on 1 January 1972 (Appendix 3) that increasing amounts of
used oil, particularly with high foreign matter content, will be
disposed of harmlessly. Finally, it cannot be assumed that the further
cost and revenue investigations mentioned in section c.4. will not
indicate that an increase in payment rates is unavoidable. In
consideration of all this, the balance in the Reserve Fund is by no
means too high, but rather simply required to assure a continuing
development of the harmless disposal of used oil. Thus, even a
temporary reduction of the compensation fee cannot be considered.
JE. Overall Conclusion
The investigation has shown:
1. The Used Oil Statute has proved itself splendidly. The
amount of used oil disposed of in environmentally harmless manners
has risen steadily since the law went-into effect.
2. The excess of income over against expenditures from
the Reserve Fund, which arose in the initial period of the law's
effectiveness, has not increased. Rather, for the year 1971 a
reduction in the Fund's reserves is apparent already. The reasons
are:
a. decreases in income;
b. higher expenditures as a result of significant
increases in the amount of used oil disposed of.
3. A reduction of the continual payments is not possible.
On the contrary, to the extent that used oils are burned the pay-
ment rate should be increased. Otherwise a disposal of used oil
consistent with the air quality standards cannot be achieved.
4. For these reasons it is not possible to suggest a reduction
in the compensation fee of 7.50 DM per 100 kilograms of lubricating
oil.
204
-------
Appendix 1
(The notes in the margins by some sections
of the law refer to appendices containing
regulations implementing those sections.)
205
-------
Law Concerning Measures
Jto
Assure the Disposal of Used Oil
(Used Oil Statute)
23 December 1968 (Bundesgesetzblatt I, page 1419)
The Federal Parliament has passed the following law:
Part One: The Economical Assurance of Used Oil
Disposal
§ 1 Reserve Fund
(1) To assure the economical disposal of
used oil, a special federal fund is created with
the name "Reserve Fund for Assuring Disposal of
Used Oil" (Reserve Fund).
(2) The Federal Office for Trade and In-
dustry (Federal Office) is responsible for adminis-
tering the Reserve Fund. The costs of administration
are to be paid from the fund.
(3) The fund may otherwise only be used for
payments according to §2(1) of this law.
See Apps. 4-7, § 2 Purpose
p7"~221-223' (1) Trade and other economic enterprises as
well as public-law juristic persons located within
the jurisdiction of the law which dispose of waste
See App. 2, oils collected from others according to § 3(3)
p. 214 — m#y receive continual payments for those costs not
See App. 10, otherwise covered, if the waste oils are disposed
pp. 232-34 of without harm to waters or soil and if air
pollution, from which the general public and the
neighborhood should be protected, does not arise.
The Federal Minister for Economic Affairs, with
the agreement of the Federal Minister for Health
Affairs and in consideration of economic factors,
shall determine by regulations what disposal methods,
including regeneration, and what minimum level of
See Apps. 4-7, continual payments may be used.
p. 221 (2) The payments will be made by the Federal
Office according to guidelines established by the
Federal Minister for Economic Affairs. These
See App. 11, guidelines should especially insure that:
p. 234 !• the recipients of the payments obligate
themselves to collect the used oils
according to §3 in districts determined
by the Federal Office or to prepare for
later pick-up;
206
-------
2. collection and transportation costs are
part of the disposal costs;
3. in the payment rates for the individual
disposal methods, the costs caused
by collection conditions of above-
average difficulty shall be specially
compensated;
4. the payments at most correspond to the
unincluded costs which on the average
arise for an enterprise of the same kind;
5. payments for regenerated oil products
made from used oils (re-refined products)
are to be paid back insofar as the products
are exported to other member nations of
the European Economic Community;
v 6. the requirements of the Reserve Fund are
to be kept as low as possible under the
previous principles.
(3) The payment rates established by the
guidelines shall remain unchanged for the first two
years after this law becomes effective; thereafter
they may be changed yearly at the beginning of a
calendar month after six months prior notice.
(4) The Federal Government shall report to
the Federal Parliament on the activity of the Reserve
Fund by the 31st of March of every third year, for
the first time on Marbh 31, 1972, especially on
the possibilities of a reduction of the continual
payments (§ 2(1)) and the compensation fee (§4
(2)).
§ 3 Collection of Used Oil
(1) Those within the area of validity of this
law who posess used oils may require of the Federal
Office that:
1. their used oils be collected in quantities
over 200 liters, insofar as the necessary.
facilities for the collection and harmless
See Apps. 4-7, disposal of used oil exist:
p. 221 2. for amounts less than 200 liters,
later collection will be provided for.
(2) Used Oils within the meaning of § 3
(1) are used mineral oils and used liquid mineral
Oil products as well as wastes from storage
business and transporting receptacles containing
See App. 2, mineral oil.
pp. 214-216 (3) Used oils shall be collected free of charge
according to § 3 (1). The Federal Minister for
Economic Affairs is empowered to issue regulations
concerning:
207
-------
See App. 11,
pp. 234-236 —
See Apps. 4-7,
p. 223 ~-
See App. 8,
p. 225
See App. 2,
p. 216
See App. 2,
pp. 216-218
1. the identification and measurement of
the collected materials;
2. the permissible proportion of foreign
substances, which may not exceed fifteen
per cent.
— (4) Quantities of foreign substances in excess
of the permissible proportion (§ 3 (3) Number 2)
shall be picked up for a fee. The fee shall
—correspond to the price list filed with the Federal
Office by enterprises obligated to collect used
oils.
(5) Those possessing used oils remain liable
for harm caused by failure to notify others of
foreign substances in the waste oils.
—§ 4 The Compensation Fee
(1) The Reserve Fund shall be supported by
a compensation fee.
(2) The following dutiable goods:
1. lubricating oils from Number 27.10 -
C - III of the customs tariff schedule;
2. gas oils from Number 27.10 - C - I
of the customs tariff schedule, to the
extent they are used as lubricating
oils;
3. greases with their heavy oil components;
are all subject to the compensation fee insofar as
they are subject to the oil tax according to the
Oil Tax Law and other Laws of 10 August 1967 (I Bun-
desgesetzblatt 877). The compensation fees amounts to
7.50 Deutsche Mark per 100 kilograms of dutiable
goods. The Federal Minister for Economic Affairs
is empowered to reduce the compensation fee rate by
regulation to the extent that the requirements of
the Reserve Fund allow.
(3) The liability for the compensation fee
arises when the oil tax liability for the dutiable
goods becomes unconditional.
(4) The compensation fee is payable by the
person liable for the oil tax.
(5) If dutiable goods are witheld or with-
drawn from customs supervision the compensation
fee is due immediately. Otherwise the person
liable for the compensation fee must pay the amount
which has accrued during the course of a calendar
month no later than the 10th of the second month
following without being requested to do so.
— (6) The compensation fee is collected by the
Federal Office. The Federal Minister for Economic
208
-------
Affairs is empowered to issue by regulation the
required provisions concerning the levying and
See App. 9, collection of the compensation fee. Customs
pp. 229-32 officials shall provide the Federal Office with
the information necessary for the administration
of the compensation fee and shall make the required
documents available to the Federal Office.
§ 5 Information
(1) The person liable for the compensation
fee must furnish the Federal Office the information
and documents needed for the implementation of
this law and the regulations issued under it.
(2) Employees and agents of the Federal Office
and employees of the customs administration are
authorized within the scope of § 5(1) to check
dutiable goods, to enter property, business in-
stallations and offices, the living quarters of
the person required to furnish information, to
make inspections and tests there and examine business
records of the person required to furnish information.
The basic right of Article 13 of the Constitution
concerning the inviolability of a residence is
to this extent limited.
(3) The person required to furnish information
may refuse to do so for questions whose answers
would expose himself or one of the relatives listed
in § 383 (1) Numbers 1-3 of the Civil Procedure
Law to the danger of criminal prosecution or a
proceeding under the Law Concerning Violations of
See App. 2, Regulations.
p. 217 (4) If a person required to provide information
refuses to furnish information or relevant docu-
ments according to § 5 (1), the Federal Office
may establish the conclusions necessary for deter-
mining the compensation tax by way of estimates.
Part Two: Supervising the Location of Used Oil
§ 6 The Duty to Keep Records
(1) Trade and other economic enterprises
must keep a record book for each business in which
at least 500 kilograms of used oils within the
meaning of § 6(2) accumulate or in which a yearly
accumulation of waste oils of this amount may be
reckoned with. The same applies to trade and other
economic enterprises which accept at least this
amount yearly of used oils of this kind. The
official responsible under state law may upon
application
209
-------
1. approve centralized maintenance of records
in a main office if the supervision of
the whereabouts of the used oils will
See App. 11, not be thereby disadvantaged;
pp. 234-35 2. relieve one of the duty to keep a record
book if, because of its nature and
management, the enterprise can be ade-
quately supervised without a record book.
(2) Used oils within the meaning of this
provision are those substances named in § 3(2), in-
sofar as
1. their collection is not required under
§ 3(1);
2. they are mixed with foreign substances
whose amounts exceed the permissible
See App. 3, ' proportion under § 3(3) Number 2.
pp. 217-21 (3) The kind, amount and whereabouts of
the used oils are to be continually entered in
the record book. The details concerning the set-
up and keeping of the record book, the retaining
of receipts and the periods of safekeeping of the
records shall be governed by regulations issued
by the Federal Minister for Health Affairs in
cooperation with the Federal Minister of Economic
Affairs.
§ 7 Supervision
(1) Trade and other economic enterprises
as well as public law juristic persons which accumu-
late used oils within the meaning of § 3(2) or
accept waste oils of this kind must upon request
furnish the official responsible under state law
the information required to supervise the where-
abouts of the used oils. § 5 (3) applies accordingly,
(2) The persons commissioned by the respon-
sible official with gathering information are
authorized within the scope of § 7 (1) to enter
property, installations, and business offices
and, for the prevention of imminent danger to
public safety and order, also the living quarters
of the person required to furnish information,
to make tests and inspections there, to take
samples, and to examine the business records of the
person required to furnish information. The basic
right of Article 13 of the Constitution concerning
the inviolability of a residence is to this extent
See App. 3, limited.
p. 218 (3) Record books and receipts under § 6
must be presented or delivered upon request to
responsible officials for examination.
210
-------
(4) The information and documents obtained
under § 7 (1), (2), and (3) may not be used in
a tax proceeding, a criminal proceeding involving
a tax offense or a fine proceeding involving a
tax violation. The provisions of §§ 175, 179,
188(1) and 189 of the Federal Tax Law concerning
the duties to assist and give notice to the financial
authorities do not apply to this extent.
§ 8 Exceptions
(1) §§ 6 and 7 of this law do not apply
1. to lake and river transport businesses;
2. to the Federal Railways and the Fed-
eral Post Office;
3. to federal installations which serve
sovereign purposes and do not fall
within § 8(1) Number 2.
(2) The Federal Minister for Traffic is
empowered, in agreement with the Federal Minister
for Health Affairs, to issue regulations with
provisions for lake and river transport concerning
the collection of the used oils named in § 3 (2)
from watercraft and floating installations, in
particular concerning
1. the duty to deliver used oils at specific
intervals to an enterprise obligated to
collect (§3) or to a collection place
approved by a responsible official;
2. the record of delivery and the safekeeping
of these records; and
3. the supervision of the collection and
delivery of the used oils.
(3) The International Treaty on the Prevention
of the Pollution of the Sea by Oil of 1954 as
well as the legal provisions promulgated in accor-
dance with the Law Concerning the International
Treaty on the Prevention of the Pollution of the
Sea by Oil of 1954 of 21 March 1954 (II Bundesgesetz-
blatt 379) remain undisturbed.
Part Three: Penalty and Fine Provisions
§ 9 Breach of Professional Secrecy
(1) Anyone who reveals without authorization
another's secret, especially a trade or business
secret, which became known to him in his capacity
as employee or agent of one of the officials
assigned a duty on the basis of this law will be
punished by imprisonment up to one year or a fine
or both.
211
-------
(2) If the perpetrator acts for money or
with the intention to enrich himself or another
or to injure another, the penalty may be up to
two years1 imprisonment; in addition a fine may
be imposed. These punishments also apply to one
who converts another's secret, especially a trade
or business secret, which became known to him under
the conditions of § 9 (1), into money without
authorization.
(3) The crime will only be prosecuted
upon application of the party injured.
§ 10 Imposition of Fines
(1) It is a violation of a regulation inten-
tionally or negligently to
1. fail to keep a record book, contrary
to § 6(1);
2. fail to furnish information or fail to
furnish it correctly, completely or
timely, contrary to § 7(1);
3. refuse to permit tests, inspections,
the examination of business records or
the taking of samples, contrary to
§ 7(2);
4. fail to present or deliver record books.
See App. 3, or receipts, contrary to § 7 (3); or
p. 218 —— 5. contravene a regulation issued on the
basis of § 6(3) or § 8(2), if it
imposes a fine governed by this section
on particular acts or omissions.
(2) A violation of regulations may be punished
with a fine of up to 10,000 Deutsche Mark.
Fart Four: Transition and Concluding Provisions
See App. 8,
p. 226 § 11 Transition Provisions
(1) Dutiable goods (§ 4(2)) for which the oil
tax became unconditional before this law became
effective are subject to the compensation fee with
the exception of those which are in the hands of
consumers, service stations or auto repair shops.
The fee liability arises when the law becomes
effective. The person who is liable for the fee
is the possessor of the goods. For goods en route
the liability transfers to the recipient with the
transfer of ownership.
(2) The person liable for the fee must declare
the dutiable goods to the Federal Office in writing
within four weeks after this law becomes effective.
Payment of the fee is due without request four weeks
212
-------
after the declaration; for goods not properly
See App. 2, declared it is due at the expiration of the declar-
p. 216 ation period.
See App. 3,
p. 218 § 12 Validity in the State of Berlin
This law is valid according to § 13(1) of
the Third Transition Law of 4 January 1952 (I Bundes-
gesetzblatt 1) in the State of Berlin also.
Regulations issued on the basis of this law are
valid in the State of Berlin according to § 14
of the Third Transition Law.
§ 13 Effectiveness of the Law
(1) § 3(1), (2), (3) Sentence 1, and
(4) become effective 1 July 1969. § 6(1) becomes
effective on the first day of the calendar year
following the publication of the regulations
based on § 6(3) .
(2) Otherwise this law becomes effective on
1 January 1969.
213
-------
Appendix 2
Regulation to Implement the Used Oil Statute
21 January 1969 (Bundesgesetzblatt I, page 89)
On the basis of Section 3(3) and Section 4(6) of the Statute
to Assure the Disposal of Used Oil (Used Oil Statute) of 23 December
1968 (Bundesgesetzblatt I, page 1419) the Federal Minister for Economics,
and on the basis of Section 2(1) of the Statute the Federal Minister
for Economics with the agreement of the Federal Minister of Health
Affairs, promulgates the following:
Part 1
Means of Disposal & Minimum Amounts
Section 1.
(1) Disposal methods for which [continual] payments may be paid are
1. reprocessing used oil into
a) lubricating oils or
b) other reprocessed products, [and]
2. incinerating used oil
a) without productive use or
b) with productive use
of the energy resulting from the burning if officially approved
facilities for this exist or it is otherwise assured that the used
oil is disposed of in accordance with the conditions of Section 2(1),
sentence 1 of the Used Oil Statute. Officially approved facilities
are equivalent to those indicated in accordance with Section 16(4)
of the Industrial Code.
(2) For a temporary period until 31 December 1970 payments may be
made in individual cases for depositing used oil, if the conditions
of sentence 1 of Section 1 (1) are fulfilled.
Section 2.
The minimum amount for which payments may be paid is 2,000
tons of used oil disposed of per calendar year. This does not apply
if the minimum amount is not achieved due to special circumstances
which the operator of the business could not avoid.
Part 2
Determining and Measuring Materials Picked Up
Section 3.
(1) For used oil reprocessing the amount of used oil picked up
will be figured on the basis of the amount of reprocessed products
on the basis of a 70 per cent yield.
(2) For used oil incinerating the amount of used oil picked up
214
-------
including the allowable proportion of foreign matter (section 4)
will be determined by continual determinations by the Federal
Office. The incinerating facilities must be equipped with the necessary
technical devices for this. The Federal Office may authorize repre-
sentatives to determine the amounts of used oil.
(3) So long as payments are made for depositing used oil (section
1(2)), section 3(2) applies analogously. The Federal Office will
cooperate with the appropriate official.
Section 4.
Used oil may not contain more than 10 per cent foreign matter
(non-mineral oil substances). The amount of the permissible pro-
portion of foreign matter will be reconsidered annually. The non-
mineral oil substances existing when mineral oil is produced [e.g.,
additives] are not foreign matter.
Part 3
Levying and Collecting the Compensation Fee
Section 5.
Those who are liable to pay the compensation fee must keep
special records of the goods described in section 4(2) of the Used
Oil Statute. This does not apply when the amount of goods subject to
the fee can be determined without difficulty from the records
kept for purposes of the mineral oil tax law.
Section 6.
(1) Those liable to pay the compensation fee must inform the federal
office of the amount of goods for which a fee liability has accrued
each month on prescribed forms by the 15th of the following month.
The notice is to be sent with the notice for purposes of determining
the mineral oil tax to the customs office responsible for the
latter.
(2) The deadline in section 6(1) does not apply when the liability
for the compensation fee arises from the importation of tax-liable
goods subject to the fee.
(3) The Federal Office determines the amount of the compensation
fee due.
(4) If a check reveals that one liable to pay the fee has not
correctly reported the amount of tax-liable goods subject to the fee,
the Federal Office will issue a correction order.
Section 7.
If one liable to pay the fee is in arrears with his payment, the
balance is to be charged interest at the rate of three per cent
more than the rate for federal loans of the German Federal Bank.
Accumulated credit interests are to be paid specially.
215
-------
Section 8.
(1) The provisions of the federal execution statute are applicable
to the collection of the fee.
(2) For estimating the bases of determining the compensation fee
(Section 5(4) of the Used Oil Statute) the provisions of the
Reich Taxation Ordinance on estimating tax bases apply analogously.
Section 9.
The fee will not be collected for goods subject to the fee
for which the mineral oil tax liability has been excused,
refunded or compensated. If the mineral oil tax liability is de-
ferred, the same applies to the compensation fee liability.
Part 4
Concluding Provisions
Section 10.
This regulation is effective in the Land of Berlin in accordance
with Section 14 of the Third Transition Law of 4 January 1952
in connection with Section 12 of the Used Oil Statute.
Section 11.
This regulation is effective on the day after its publication.
216
-------
Appendix 3
Second Regulation to Implement the Used Oil Statute
2 December 1971 (Bundesgesetzblatt I, page 1939)
Based on section 6(3) sentence 2 of the Used Oil Statute
of 23 December 1968 (Bundesgesetzblatt I, page 1419) the following
is promulgated in agreement with the Federal Minister of Economics
and Finance:
Section 1. Establishment of a Record Book; Person Responsible
(1) Industrial and other commercial enterprises shall, for each
business in which used mineral oils, used fluid mineral oil products
or mineral oil-containing substances with a mineral oil content of
more than four per cent (used oils) are generated from storage,
operating or transportation sources in an amount more than 500
kilograms per year or in which an annual accumulation of this amount
is anticipated, appoint a person responsible to keep the record book
in the event the owner of the enterprise does not keep it himself.
This does not apply for used oils with which less than 10 per cent
foreign matter are mixed and whose pick-up is required in accordance
with section 3(1) of the Used Oil Statute.
(2) Section 1(1) sentence 1 applies also to industrial and other
commercial enterprises which accept used oils in an amount of at
least 500 kilograms a year; however, it applies to enterprises
required to pick up in accordance with section 3 of the Used Oil
Statute only to the extent that used oils with more than 10 per cent
foreign matter are picked up.
Section 2. Form of the Record Book and Entries
(1) The record book must be such that it can be presented or
turned over to an authorized official in accordance with section
7(3) of the Used Oil Statute.
(2) All entries must be permanent and in the German language and
script* An original entry may not be made illegible nor may any
changes be made which leave uncertain whether they were made by the
original entry or later.
(3) The entries may also be made in the form of an organized
storage on data equipment. If data is stored it must be possible
to print it out at any time, in order to fulfill the requirement of
Section 2(1). Section 2(2) applies analogously.
Section 3. Time and contents of Entries
(1) In cases under section 1(1), the required information according
to Appendix 1 [of this regulation] must be entered in the record
book immediately after the generation, transfer or disposal of the
used oils.
(2) In cases under section 1(2), the required information according
to Appendix 2 [of this regulation] must be entered immediately after
217
-------
the acceptance, transfer or disposal of the used oils.
Section 4. Safekeeping of the Record Books
The record books must be kept safe for three years after the day
of the last entry in them. .
Section 5. Retention and Safekeeping of Documents
(1) Documents concerning the transfer of used oil are to be kept
by the accepting and the transferring enterprises insofar as they
must keep record books.
(2) The documents are to be kept safe as long as the record books
in which the data called for by section 3 must be kept.
Section 6. Violations of Regulations
One violates a regulation, in the sense of section 10(1) No. 5 of
the Used Oil Statute, if he intentionally or negligently:
1. does not appoint a person responsible for keeping the
record book, contrary to section 1;
2. makes an entry not in the prescribed form, contrary to
section 2(2)-(4);
3. does not immediately enter the required information in the
record book, contrary to section 3;
4. does not keep a record safe, contrary to section 4; [and]
5. does not retain or keep safe documents, contrary to section
5.
Section7. Berlin Clause
This regulation is effective in the Land of Berlin in accordance
with Section 14 of the Third Transition Law of 4 January 1952
(Bundesgesetzblatt I, page 1) in connection with section 12 of the
Used Oil Statute.
Section 8. Effective Date
This regulation is effective January 1, 1972.
218
-------
Sample for Record Book for Possessors of Used Oils
(in accordance with section 3(l) of the Second
Regulation to Implement the Used Oil Statute)
Muster
fur
Nachweisbuch der Altolbesitzer
(§ 3 Abs. 1 der Zweiten Verordnung zur Durchfuhrung des Altdlgesetzes)
Appendix
1 of the
regulation
Anfalldor AU61eused
generation of oils
Menge
In
Litera
1
amounts
in liter:
Davon
Fremd-
In
Lltem
3
Of
; col .
1,
amt .
of
for-
eign
matte
in
liter
Datum
mlt Be-
statigung
dcs
Vcront-
wortlichcn
3
date ,
with
conf ir
mation
of the
person
respons
r ible
3
Weltergabe der Altolo
transfer of used oils
an abnahme- .
pniditlgcs
Unternehmen
Mcnqc
in'
Lltcrn
4
to en
requi
pick
amts
in
liter
Flrma
s
terprise
red to
it> .
firm
name
3
an nicfat
abnahmcpfliditlges
Unternehmen
Menqe
In
Litera
t
to en
not r
to pi
amts
in
liter
Flnna
7
terprise
equired
ck up
firm
name
s
Ifd. Mr.
des An-
nahme-
sdieinsi
Beleg
l
no . of
slip
show-
ing
accep
tance
docu-
ment
Datum
mil Be-
sta'tigung
dcs
Verant-
wortlicfaen
•
date ,
with
confir-
mation
of the
person
respons
ible
Eigenbeseitlqung
disposal by own means
Ver-
bren-
nung
Mcnge
in
Litcm
to
burn
ing
amts
in
liter
Sonstige Beseitlgung
other disposal
Menqe
in
Litcm
u
arats
in
Itrs
s
Art
12
kind
on
13
place
Datum
mlt Bc-
statiiung
dcs
Verjr.t-
wortl:cbcn
14
date
with
confirm!
tion of
the
person
respons-
ible
\o
-------
Sample for Record Book for Person Picking Up Used Oils
(in accordance with section 3(2) of the Second
Regulation to Implement the Used Oil Statute)
Muster
Kir
Nachweisbuch der Altdlabholer
(§ 3 Abs. 2 der Zweiten Verordnung zur Durdifuhrung des Altolgesetzes)
Appendix 2
of the Regula-
tion
n/s~n^4-«~ Phornanrae dor Altole
acceptance of use^ oils
Ifd. Nr.
des An-
no time-
sdirin^i
Bclcq
1
mber
the
ip
owing
cept-
ce
Mewje
In
Litcrn
2
amt
in
liter!
von
Finns
?
from firm
name
•
Datum
mil Do-
statigung
dcs
Vcrant-
wortlichcn
4
date ,
with
conf ir
mation
of the
person
respons
ible
Wettcrgabc der Altole
transfer of used oils
Menqe
. »n
) Li tern
5
amt
in
Itrs.
an
Flrma
«
to firm
name
Datum
mil Be-
stoligung
dcs
Verant-
wortlichcn
7
date
with
confir-
mation
of the
person
respons
ible
, . . _ Bpscttigung der AHdle
disposal of used of Is
Auf-
arbcl-
tung
Mcnqe
in
Litcrn
8
re-
proc
ess
ing
amt
in
Itrs
Vor-
brcn-
nunq
Mcnqo
in
Litcrn
• 8
burn-
ing
amt
in
Itrs
Sonstiqc Bcscltlgung
other disposal
Mcngo
in
Litcrn
10
amt
in
Itrs
-
Art
ll
kind
on
12
place
Ddtura
mil Ec-
sttiti'jung
-------
Appendices 4-7
Guidelines Concerning Granting of Continual Payments in Accordance
with the Used Oil Statute and Revisions 1-3 of the Guidelines
21 January 1969 (Bundesanzeiger No. 22, 1 February 1969, page 1)
I. Basic Principles
In making continual payments the goals named in section 2 of the Law
Concerning Measures to Assure the Disposal of Used Oil (the Used
Oil Statute) are to be observed. A frugal and correct use of the
resources of the reserve fund is especially to be attended to.
II. Conditions
(1) Payments may be made upon application of industrial and
other commercial enterprises as well as juristic persons if they
fulfill the conditions of section 2(1) sentence 1 of the Used Oil
Statute in connection with the Regulation to Implement the Used
Oil Statute of 21 January 1969 (Bundesgesetzblatt I, page 89).
This includes the requirement that they guarantee the proper collec-
tion and transport of used oils. Further, those who file applications
must obligate themselves in writing with the Federal Office for trade
and industry (Federal Office) to
(a) pick up all used oil generated in a region designated by the
Federal Office (section 3(2) of the Used Oil Statute) or prepare
for a later pick up as well as to make available the necessary
collection, transportation and disposal facilities within a time
specified by the Federal Office, [and]
(b) grant the Federal Minister for Economics and the Federal
Office or its authorized representative a right to information
about and investigation into (which may be exercised on the spot
or at the place of the person conducting the investigation) facts
and papers which are related to making payments and further to
provide the necessary information and to permit the examination
of papers, which are to be kept ready in the proper condition.
(2) Payments may only be made for the disposal of used oil generated
within the Federal Republic. Used oils which originate from German
and foreign ships in German harbors as well as from ships of the
German Navy, from German free ports, and from foreign forces stationed
inland are generated within the Federal Republic.
(3) Payments may not be made if and to the extent rerefined pro-
ducts from used oils are exported into a member nation of the
European Economic Community. Payments already made are to be paid
back to the Federal Office immediately.
The applicant must obligate himself to the Federal Office to give
notice of the export of rerefined products to a member nation of
the European Economic Community immediately and to include the fol-
lowing notice in the bill or delivery slip for the sale of rerefined
products: "For the production of this product a payment was made
221
-------
in accordance with section 2(1) of the Law Concerning Measures to
Assure the Disposal of Used Oil (Used Oil Statute) of 23 December
1968. In the case of export to a member state of the European
Economic Community the payment is to be repaid to the Federal Office
for Trade and Industry, Frankfurt am Main."
III. Procedure for Application
(1) Applications for continual payments are to be submitted in
duplicate to the Federal Office by the fifteenth of each month for
the amounts of used oil disposed of in the preceding calendar
month, using the prescribed form.
(2) The following documents must accompany the first application:
(a) a copy or photocopy of the official authorization (approval,
permit, concession) for the facility for disposal of used oil as
well as changes in the authorization and a description of the
collection and transport facilities as well as of the disposal faci-
lities insofar as this is not contained in the official authori-
zation. If an official approval has not been granted then a
certificate of the official responsible for the approval must be
presented that disposal of used oils is assured in accordance
with section 2(1), sentence 1 of the Used Oil Statute and sec-
tion 1, sentence 1 of the implementation regulations [of 21 Jan-
uary 1969]. The Federal Office may establish a deadline for this
presentation. The Federal Office will deal with the responsible
official in this matter. If notice of the facility was to be
given in accordance with section 16(4) of the Industrial Code a
confirmation of the official responsible for the filing of this
notice must be presented.
(b) the price list in effect on 30 June 1969 in accordance with
section 3(4), sentence 2 of the Used Oil Statute; the list is to
be corrected for changes in price.
(c) a written declaration that the applicant undertakes the obli-
gations prescribed in section II and submits to the conditions of
section V.
IV. Establishing the Payments
A.
The amount of the payment is determined by the Federal Office in a
grant decision to compensate uncovered costs of disposal, including
the costs of collection and transportation.
(1) The payment for 100 kilograms of used oils is
(a) for lubricating oil from No. 27.10-C-III of the customs
tariff including not more than five per cent by weight of other
added substance (for example, additives) which is rerefined.
is shipped from the producing business and is not intended for
222
-------
purposes of heating: 12 DM*
(b) for incineration, 10 DM.
If additional public assistance, especially lost payments and tax
relief for other than trade cycle and structural policy reasons,
is made, these payment amounts are to be reduced accordingly.
(2) To the extent that used oil is rerefined into products other
than lubricating oil the demonstrated uncovered costs will be com-
pensated, at not more than 12 DM for 100 kilograms used oil, until
the completion of the necessary cost investigations.
(3) Number 2 applies analogously for
(a) used oils whose burning produces energy which is used
productively,
(b) the depositing of used oil.
The payment amounts at most to 10 DM per 100 kilograms, used oil.
(4) The costs of air pollution abatement for the incineration of
used oil will to 'the extent the abatement facilities reflects current
technology, be compensated to the extent proved at not more than 2.60
DM per 100 kilograms of used oil, until the conclusion of the necessary
cost investigations.**
(5) (a) The record is to be kept by a comparison of costs and
receipts which can be confirmed by suitable auditing offices. The
Federal Office may reserve the right to audit.
(b) If the records are delayed by special circumstances not explained
by the applicant the Federal Office may reduce by up to 85 per cent
the highest payment rates per 100 kilograms used oil specified in
numbers 2 and 3.
B.
(1) Additional costs which arise due to collection conditions of
above average difficulty in the districts designated by the Federal
Office will be compensated to the extent proved. A.5(a) applies accor-
dingly.
(2) To the extent that no fee was charged for the pick-up of used
oil before 1 January 1969 it may be assumed that no collection con-
ditions of above average difficulty existed.
* [This formulation was substituted retroactively for the previous
one by the First Amendment of the guidelines on February 10, 1969.
The previous formulation read: "for lubricating oil from No. 27.10-
C-III of the customs tariff, rerefined containing not more than five
per cent by weight of other added substances (for example, additives),
shipped from the producing business and not intended for heating: 12 DM"]
** [This .paragraph 4 was add
-------
c.
The turnover tax paid by the recipient of payments for payments
received will be repaid to the extent proved.*
D.
If the recipient of payments is also obligated to pay the compen-
sation fee the Federal Office will set off the payments to be made
against the compensation fee owed.
V. Revocation
The Federal Office may revoke grant decisions when and to the extent
(1) they were made on the basis of incorrect figures,
(2) one of the conditions for making payments did not exist or
later expired,
(3) the payments recipient did not fulfill obligations in accor-
dance with the Used Oil Statute or in accordance with those undertaken
with the Federal Office.
To the extent grant decisions are revoked the amounts [of payments]
are to be repaid. The amount to be repaid is charged annual interest
from the time of payment to the time of repayment at a rate two per
cent higher than that of the German Federal Bank for loans.
If the recipient of payments falls behind in his repayments the re-
maining amount is charged annual interest at a rate three per cent
higher than the rate of the German Federal Bank for loans. Accumu-
lated credit costs are to be paid specially.
* [This sentence was introduced by the Second Amendment to the Guide-
lines on August 5, 1970 and was retroactive to January 1, 1969.]
224
-------
Appendix 8
Statement of the Federal Minister for Economics to the Federal
Office for Trade and Industry Concerning Levying the COmpenSation
Fee under the Used Oil Statute
30 December 1969 (Bundesanzeiger No. 12, 18 January 1969, page 2)
The Law Concerning Measures to Assure the Disposal of Used Oil
(Used Oil Statute) of 23 December 1968 has been published in the
Bundesgesetzblatt 1, on page 1419. The implementing regulations
required by sections 2, 3 and 4 of the statute are being prepared.
For the timely information of those liable to pay the compensation
fee I am transmitting the accompanying model for payment of the
compensation fee in accordance with section 4 of the Used Oil
Statute. After discussion with those liable to pay the fee it will
be decided whether central publication of this notification form
would be advisable.
By way of elaboration I refer to the following:
I. IN RE: SECTION 4 OF THE STATUTE
(a) The person liable shall give notice on the accompanying form by
the fifteenth of the following month of all goods for which fee
liability has arisen in a calendar month. This notice is to be
transmitted to the customs office responsible for the business
along with the notice for determining mineral oil tax liability.
If the firm is permitted to file and pay its mineral oil tax at a
central office this also applies for the compensation fee.
(b) The Federal Office for Trade and Industry can, in agreement with
the central customs office for the business of the person liable for
the compensation fees, permit those enterprises which fulfill the
conditions for filing notice of tax liability centrally (central
compilation of amounts and bookkeeping with data processing facilities)
to give notice only for goods subject to the fee, if auditing is
not made more difficult thereby, until approval of central tax
notification.
The Federal Office may for a transition period extend the deadline for
notification until the twenty-fifth of the month. In all cases
the fee liability is to be paid to the Federal Office for Trade
and Industry by the tenth of the second month following the month
in which it arises.
II. IN RE: SECTION 11 OF THE STATUTE
(a) The model form is likewise applicable for the notification of
goods existing on the 31st of December 1968 at midnight for which the
225
-------
compensation fee is to be paid. The notification is, however, to be
sent directly to the Federal Office for Trade and Industry.
(b) A person liable for the fee may summarize in one notification
all goods which he possesses at the time the law became effective
and for which a compensation fee is to be paid if the situation can
later be checked with the assistance of documents existing at his
place of business. This notification is to be accompanied by a
list of all places of storage to which this single notification
applies.
(c) To simplify the determination of the proportion of taxable
heavy oil in lubricating oils I agree that the heavy oil proportion
for all existing lubricating substances be assumed to be 90 per cent
of its own weight; the compensation fee in these cases amounts to
6.75 DM per 100 kilograms of the actual weight of the lubricating
substances.
(d) For materials in containers whose contents is given in liters it
may be assumed in figuring the actual weight that there is a ratio
of mass to weight of .9.
(e) The deadline for notifying and paying the compensation fee
may be determined from section 11(2) of the law.
III.
I have sent a copy of this statement with its appendix to the Federal
Minister of Finance with the request that he inform customs authorities
accordingly. The statement with its appendix will be published in
one of the next issues of the Federal Customs Gazette as well as in
the Ministerial Notices of the Federal Ministry for Economics.
The concerned business associations have been informed.
226
-------
To
The Federal Office for Trade and Industry
6 Frankfurt
via Customs Office
Stamp for Receipt of the
Customs Office
_Section and Number of Notice
Entry Book
Name, Date and Signature of Official
Notice for Payment of Compensation Fee
I/we give notice of the goods liable for a compensation fee which
are listed in the following excerpt from the Notice of Goods for
the Determination of Mineral Oil Tax, for which the mineral oil
tax became unconditional during the month of ,
19 , for the fixing of that compensation fee in accordance
with section 4 of the Law Concerning Measures to Assure the Disposal
of Used Oil, I/we apply simultaneously for
the refund of compensation fees paid
for goods I/we have taken back in my/
our firm
the refund of compensation fees paid
for the portion of heavy oils in lubri-
cants which have been exported or sold
to an exporter.
Kind of goods Amount in kg. The compensation fee is to be
paid for (kg.)
Gas oils for lubri-
cating purposes;
taken back in firm
Lubricating oils;
taken back in firm
Heavy oil portion in
lubricants
exported or sold
to exporter
Sum kg,
227
-------
The compensation fee amounts to DM;
in words ' ' ' DM.
I/We know that this amount is to be sent unsolicited by the 10th
of , 19 , to the Federal Office for Trade and Industry,
Account Deutsche Bank, Frankfurt, No. 91/5900, "Waste Oil Reserve
Fund."
Place and Date Firm and Signature
Checked by the Customs Office for
Correspondence with Tax Notice
Date, Name and Signature of Official
The compensation fee is determined to be DM.
Book No.
228
-------
Appendix 9
Statement of the Federal Minister of Finance
Concerning the Collaboration of Customs Offices
in the Implementation of the Used Oil Statute
13 January 1969 (Bundesanzeiger No. 12, 19 January 1969, page 1)
I.
The temporary subsidy for the production of lubricating oils from
used oils in accordance with Article 8 of the Law Concerning the
Amendment of Taxes on Mineral Oil of 20 December 1963 (Bundesgesetz-
blatt I, page 995) expired on 31 December 1968. Assistance will
only be granted still for those amounts of lubricating oils which
left their place of production before 31 December 1968.
II.
On 1 January 1969, the Law Concerning Measures to Assure the
Disposal of Used Oil (Used Oil Statute) of 23 December 1968 (Bundesgesetz-
blatt I, page 1419) became effective. In accordance with section
4(2) No. 1-3 the following are subject to a special compensation
fee of 7.50 DM per 100 kilograms:
(1) lubricating oils from No. 27.10-C-III of the customs tariff;
(2) gas oils from No. 27.10-C-I of the customs tariffs which are
used as lubricating substances; and
(3) the heavy oil portion of lubricating oils.
This compensation fee goes to a Reserve Fund which is adminis-
tered by the Federal Office for Trade and Industry. The resources
of this fund are earmarked for financing the disposal measures fore-
seen in the law. Sections 4 and 5 of the law provide for cooperation
of the customs administration. The law requires the customs ad-
ministration to provide the Federal Office for Trade and Industry
with the information necessary for the levying of the compensation
fee and to place the necessary documents at its disposal.
With respect to the law and its implementation I make the following
observations:
1. Coordinating the Assessment Procedure with the Procedure of the
Mineral Oil Tax
The provisions on the incidence of the compensation fee
liability, the person liable and the notification of the fee liability
are conformed to the respective provisions for the mineral oil tax.
The compensation fee arises whenever the mineral oil tax liability
is unconditional for goods subject to the fee. This simplifies the
levying of the compensation fee, especially in the area in which the
customs office is cooperating.
2. Notification for Levying the Compensation Fee
One liable to pay the compensation fee, who is also liable to pay
229
-------
mineral oil tax, must submit a special notification form for payment
of the compensation fee to the customs office responsible for him.
The new form for giving notice of [mineral oil] tax liability contains
an information section in which the mineral oils are to be notified
by kind and amount which are subject to the compensation fee. This
section will be useful for later checking. Firms for which central
notifying and payment of mineral oil tax is approved should also
notify the central customs office responsible for the area in which
their place of business is located of the liable goods subject to
the compensation fee.
3. Handling of the Notification by Customs Offices
The customs office responsible for receiving notification of
[mineral oil] tax takes the form entitled Notice for Payment
of Compensation Fee with the tax notification, stamps the receipt
of this notice in the tax notification and checks the corres-
pondence with the information of the tax notification. It certifies
on the form for notifying the liability for the compensation fee
the correspondence of the notified amounts, notes on it the place
in the books of the mineral oil tax of the tax notification, collects
the notices for liability to pay compensation fee with the mineral
oil tax notification book and sends them at the end of the month
to the Federal Office for Trade and Industry. The dispatch of these
forms is to be noted on the tax notification forms or in the comments
column of the mineral oil tax notification book.
The procedure is similar when notification is given of the import
of mineral oils for taxation. In agreement with the Minister of
Economics no notice need be given for payment of the compensation
fee,for imports for which the fees are levied, according to the group
rates according to Section 148 of the General Customs Ordinance.
4. Establishment and Payment of the Compensation Fee
The Federal Office for Trade and Industry establishes the compen-
sation fee after receipt of the notices. The one liable shall send
the amount due to the Federal Office for Trade and Industry by the
tenth of the second month following the month in which the liability
arose.
5. Checking the Notices
The official responsible for checking the mineral oil tax
notifications will also check whether the one liable for the compen-
sation fee has entered all mineral oils in the information section
of the tax notice for which he is also liable for compensation fee.
A special check is not necessary if the amounts notified for tax
liability correspond with the amounts notified for the compensation
fee. If the check reveals that the notified amounts for compensation
fee are not correct and the one liable agrees with the amounts estab-
lished by the check, the mistake may be corrected in the next notice.
If the person liable has not yet paid the fee he may correct the
current notice. In other cases, especially the discovery of a
negligent or intentional shortage of the compensation fee or an
intended percentage profit, the results of the check are to be sent
230
-------
to the Federal Office for Trade and Industry for a supplemental
assessment of the compensation fee. Penal measures by the customs
administration are not appropriate because the compensation fee is not
a tax in the sense of the tax ordinances.
6. Levying the Compensation Fee Outside the Notice Procedure
If a decision of liability to pay mineral oil tax is reached
outside the normal procedures which covers oils also subject to the
compensation fee a copy of this decision is to be sent to the Federal
Office for Trade and Industry for purposes of levying the compen-
sation fee. The transmittal shall be concurrent with the decision. I,
however, agree with the Federal Minister for Economics that the sending
of a copy of the tax decision is not necessary when a double taxation
is involved or when mineral oil is exported or is not used for lubri-
cating purposes under the Used Oil Statute.
7. Excuse, Refund, and Compensation of the Compensation Fee
The regulations for implementing the Used Oil Statute will
provide that the compensation fee shall not be levied on goods
for which the mineral oil tax is excused, refunded or compensated.
The amount of goods subject to the fee for which repayment in
accordance with Section 10, sentence 1 of the mineral oil tax law,
perhaps in conjunction with section 37(3) of the Mineral Oil Tax
Implementation Ordinance, is involved can be deducted in the notice
for payment of the compensation fee just as in the tax notification.
The same procedure is to be followed when the compensation of the
mineral oil tax in accordance with section 11 of the Mineral Oil
Tax Law (in conjunction with Section 39 of the Mineral Oil Tax
Implementation Ordinance) is applied for.
8. Later Levying of the Compensation Fee in Accordance with Section
11 of the Used Oil Statute
The notice for payment of the compensation fee on goods liable
for the fee at the time when the law became effective is to be sent
to the Federal Office for Trade and Industry. This office will send
these notifications to the responsible customs offices if a check
is deemed necessary.
III.
Some difficulties in implementation are to be expected.
In consideration of the goals of the statute, I request in these
early days that compliance not be grudging.
In the event that there is no reason to do so before hand I
request that you inform me of your experience by 1 September 1969.
Specifically I request that you state what costs the customs
administration has incurred from the responsibilities assigned it
by this statute.
231
-------
Appendix 10
Notice Concerning Applications for Continual Payments in Accordance
With the Used Oil Statute
24 February 1969 (Bundesanzeiger No. 39, 26 February 1969, page 2)
The Federal Office for Trade and Industry gives notice that
application for continual payments in accordance with the Used
Oil Statute of 23 December 1968 (Bundesgesetzblatt I, page 1419)
are to be submitted in duplicate on the following printed form:
To the
Federal Office for Trade and Industry
6000 Frankfurt am Main
Post Office Box 3931
Application
for the Grant of a Payment in accordance with section 2(2)
of the Used Oil Statute of 23 December 1968 (Bundesgesetz-
blatt I, page 1419) for Rerefining
1. Name (legal form) and Address of the Firm
2. For which month is this application made?
3. Total used oils rerefined (actual weight in kilograms)
4. Amount of total used oils (in 3) not generated in the Federal
Republic
5. a) Amount of lubricating oils from Number 27.10-C-III of the
customs tariff rerefined, including the actual added other sub-
stances up to five per cent by weight (for example, additives),
which were shipped from the place of their production and which
are not intended for heating purposes. kg.
Of which % weight other substances kg.
b) Other kinds of rerefined products (e.g., lubricants) shipped
from the place of production (if different sorts, show separately)
kg.
kg-
6. Amount of total rerefined products (in 5) exported to member
nations of the European Economic Community
kg.
7. Amount of used oils eligible for payments (divide the amount
from 5a by .7)
kg. kg.
kg. kg.
8. Less payments applied for for the same month at 7.50/100 kg.
kg. DM
232
-------
9. Amount of payment DM
10. Are additional means of public assistance granted (e.g.,
payments, tax relief)?
Yea No
If yes, please explain.
11. How much are the uncovered monthly costs for rerefining to other
mineral oil products than lubricating oils?
12. Attached as appendices are:
a) Proof of the official authorization for the facility,
(if not already submitted);
b) Description of the collection and transport facilities as
well as the disposal facilities, (to the extent not contained
in the official authorization or not already presented);
c) Price lists in accordance with section IIIt2.b of the
Guidelines (or price alterations);
d) Comparison of costs and receipts under questions 10 and 11,
certified by a suitable auditing firm (publicly certified
business analyst, or bonded auditor);
e) Declaration of obligations in accordance with section II
and V of the Guidelines
I certify the completeness and accuracy of the information in
this application and its appendices, especially in the corres-
pondence of the figures in 5a and 5b with those given the customs
office for purposes of the mineral oil tax.
I am aware of the consequences of any conduct to the contrary.
, the of 19
(place)
Signature
Bank
Account Number
Appendices:
233
-------
Appendix 11
Notice Concerning the Establishment of Mandatory Pick-up Districts
and Attached Price Lists in Accordance With the Used Oil Statute
25 November 1969 (Bundesanzeiger No. 223, 2 December 1969, page 1)
The mandatory districts in accordance with section 2(2) No.
1 of the Used Oil Statute of 23 December 1968 in conjunction with
section II, No. 1 (a) of the Guidelines Concerning the Granting of
Continual Payments in Accordance with the Used Oil Statute of 21
January 1969 are established as set forth in Appendix 1.
The firms named are obligated to pick up all used oils. They
may fulfill this obligation by employing a reliable collection firm.
Used oils within the meaning of section 3(2) of the Used Oil
Statute are used fluid substances derived from mineral oils which
may only contain those foreign substances which are generated by
normal use.
In accordance with section 3(5) of the Used Oil Statute a
person possessing used oil is liable for damages caused by foreign
substances which are not revealed.
Pick-up and disposal of used oils with a permissible maximum
limit of ten per cent foreign substances is free. For foreign
substances in excess of ten per cent the disposal firm may require
a fee in accordance with its price list filed with the Federal
Office for Trade and Industry (section 3(4) of the Used Oil Statute).
In Appendix 2 the current price lists are published. These
prices are net prices.
The disposal firms must when picking up used oils use a receipt
certificate (section 6(2) of the Used Oil Statute) on which kind,
amount, and, if appropriate, fee for the used oils picked up is
certified by the person possessing the used oil, the collector and
the disposal firm. A copy of the receipt certificate remains with
the possessor of used oils.
If an agreement concerning the amount of foreign matter to be
picked up for a fee cannot be reached by the collector and the possessor
of used oils a determination can be made by the Federal Office for
Trade and Industry on the basis of samples mailed in. The costs for
this are to be borne by the person whose estimate deviated more from
the result of the test.
Reference is made to the conditions of acceptance of the disposal
enterprises. These are to be observed insofar as they do not restrict
their undertaken obligations.
[Appendix 1 of this Notice contains .a list in two columns of the
firm, with address and telephone number, in the left-hand column
and the area of its mandatory pick-up region described in the right-
hand column, sometimes by naming a state, sometimes by naming areas
bounded by highways or governmental jurisdictions or both.]
234
-------
[Appendix 2 is in two parts. Part A is fees of each firm for the
collection of foreign substances in excess of ten per cent to be
burned. This price list names the firms followed by entries for
each firm in five columns. The columns list the DM fee per unit (either
tons or cubic meters) of water, solvents, solid substances, or other
foreign matter. No price figures are given in the column for other
foreign matter, presumably because the price would be set by agree-
ment according to what substance was involved. Part B of Appendix
2 contains fees for transportation for each of the firms. The fees
are normally given in DM per ton or ton per kilometer. Different
fees are charged for regular and rapid service pick-up and, under
each of these columns, for pick-up from within fifty kilometers
and from over fifty kilometers. The firms also charge a fee
for containers in some cases.]
[This notice has been amended and re-issued three times: on
7 June 1971, on 15 June 1972 and on 27 August 1973. The purpose
of these amendments is to give notice of changed mandatory district
boundary lines, additions or deletions from the list of firms, and
changes in the firms' price lists.
The June 7, 1971 version of the Notice was published as Appendix
12 to this report but is not included in this translation because
it is not different in substance from the above. ]
235
-------
Appendix 13
Contract
between the
Federal Office for Trade and Industry, Frankfurt am Main,
Bockenheimer Landstrasse 38/40 (hereafter "BAW")
as Administrator of the Reserve Fund in accordance with section 1
of the Law Concerning Measures to Assure the Disposal of Waste
Oil of 23 December 1968
and the
Firm
PICK-UP; PREPARATION FOR PICK-UP
Section 1.
(1) The firm is obligated to pick up, in amounts of more than 200
liters, and to dispose of harmlessly, used oils, namely used mineral
oils, used fluid mineral oil products, and mineral oil-containing
wastes from storage, business and transport receptacles, which are
generated in places which lie within the region established in sec-
tion 3 of this contract.
(2) The \firm is obligated to prepare for the later pick-up of
amounts of, used oils less than 200 liters by setting up suitable
containers.
(3) The firm may employ third persons to pick up the used oils.
It must answer for their activities as well as for its own.
Section 2.
(1) The firm is obligated to pick up the used oils for free
insofar as they do not exceed the permissible proportion of foreign
matter set forth in the current version of section 4 of the Imple-
mentating Regulations of 21 January 1969.
(2) The firm is obligated to pick up the foreign matter in excess
of the permissible proportion in accordance with the current con-
ditions of the price list on file with BAW.
(3) If the firm neglects any of the obligations undertaken in sec-
tions 1 and 2, it declares itself ready to indemnify the resulting
damages. In addition the BAW is authorized to exclude the firm from
continual payments if repeated neglect of the obligations undertaken
threatens the goal of the law's provisions.
Section 3.
(1) The region in which the firm undertakes the duty to pick up the
substances described in section 1 of this contract is established
as follows:
236
-------
(2) The firm is aware that the BAW does not guarantee the firm
exclusive rights within this region.
Section 4 .
The firm is obligated, to the extent BAW deems it required,
to set up or change equipment for purposes of technical control of
the disposal facilities. The records of technical measurement
results are to be retained by the firm and to be made available to
BAW upon request.
PAYMENTS: APPLICATIONS, NOTICES
Section 5.
(1) Applications for payments are to be presented by the firm by
the 15th of each month in duplicate on the form provided by BAW for
the amounts of used oils disposed of in the preceeding calendar
month.
(2) The firm is obligated to immediately give notice to BAW of
the export of rerefined products to member nations of the European
Economic Community.
(3) If payments have already been made for rerefined products
which have been exported to an E.E.C. member nation they are to be
immediately repaid to BAW by the firm. The requirement to repay
may not be avoided by aet-off.
(4) The firm is obligated to give BAW notice of additional public
assistance, especially lost payments from federal, state or local
funds and tax exemptions granted for other than trade cycle or
structural policy reasons.
DECISIONS TO GRANT
Section 6.
(1) BAW establishes the amount of payments, in accordance with
section 4 of the current Guidelines and in consideration of this
contract, in a Decision to Grant, insofar as resources exist.
BAW will inform the firm when it is clear the resources of the fund
will be exhausted.
(2) „ If a grant decision corresponds to an application it is effec-
tive immediately. If it varies from the contents of the application
it is effective upon receipt by BAW of the firmfs written declaration
of acceptance. Disputes over the amount of the payments do not affect
the obligations undertaken.
(3) The parties are agreed that the costs of collection, transport
and disposal of the used oils are satisfied by the rates of payment.
PROCEDURE FOR INCINERATION
Section 7.
(1) The parties are agreed that the procedure for determining the
proportion of mineral oil in the samples taken from incinerated
used oils is established by BAW. BAW is authorized, after hearing
237
-------
those interested in the implementation of the law, to change the
procedure in the light of new discoveries.
(2) The firm will install suitable measuring and sampling devices,
approved by BAW, for purposes of determining the amounts of disposed
of used oils at places in its facilities established by BAW.
(3) The parties are agreed that the amount of used oils incinerated
is determined on the basis of the amount of oil in the liquid samples.
(4) The parties are further agreed that no claims against BAW
for compensation arise if measuring or sampling devices fail. BAW will,
however, take measures so that the firm may, under the supervision of
BAW, repair the disruption on the first working day after informing
BAW of it.
(5) If seals are broken or other circumstances are established
which render the accuracy of measurements dubious to BAW, the right
to receive payments is lost without regard to fault.
DELIVERY CERTIFICATES
Section 8.
(1) The firm is obligated to use delivery certificates when picking
up used oils (section 6(2) of the law) on which kind, amount and,
if appropriate, fee of the oils picked up are certified by the pos-
sessor, the collector and the firm.
(2) The firm is further obligated to have these delivery certificates
available for BAW for the appropriate control period.
GENERAL CONDITIONS
Section 9.
(1) The Federal Minister for Economics, the BAW and their rep-
resentatives have, in accordance with the general principles of
administrative and budgetary law, an unrestricted right to information
about and inspection of facts and papers relevant to the granting
and payment of payments. The firm is obligated to provide the
required information and to submit to the inspection of papers. The
right to information and inspection may be exercised at the place
of the firm or at the place of the investigating office.
(2) The firm is obligated to keep orderly books which enable the
determination of costs, especially uncovered costs.
(3) The firm is obligated, in reprocessing used oils into rere-
fined products, to keep comprehensible records which show the
amounts of "other substances" added to the rerefined products
(section IV(A)(1)(a) of the Guidelines, Bundesanzeiger No. 39,
26 February 1969, in the current edition).
(4) The firm agrees that the BAW or its representatives may make
unexpected checks of its facilities at any time.
Section 10.
(1) The grant decision may be revoked when and to the extent that
(a) the payment was authorized or paid on the basis of incorrect
information;
(b) the applicant does not allow an investigation or infor-
238
-------
mation is withheld, delayed,, incomplete or incorrect;
(c) the preconditions for the granting of a° payment, did not
exist or later expired
(2) Payments made are to be repaid to the extent that the grant
decision is revoked.
Section 11.
(1) The amount to be repaid is charged annual interest from the
time of payment to the time of repayment at a rate two per cent
higher than that of the German Federal Bank for loans.
(2) If the recipient of payments falls behind in his repayments
the remaining amount is charged annual interest at a rate three per
cent higher than that of the German Federal Bank for loans.
Section 12.
(1) Alterations of this contract must be in writing to be effective.
(2) In disputes over the amounts of used oils, the results of an
arbitration analysis by is binding. The resulting
costs are borne by the party whose figure was the further from the
results of the arbitration analysis.
Done at Frankfurt am Main the
239
-------
Appendix 15
Locations o£ Used Oil Disposal Facilities in the Federal Republic of Germany
A Vntnnnufig
• Aunmtyag oat VMtramung
240
-------
Appendix 16
Mandatory Pick-up Districts for Rerefining Firms
FBCl Hitwrlind & Co.
OOR-Mmeralol
Hlrponor AC
WestUluoie MmeraUl
FVieinisctie Motorendl
241
-------
Appendix 17
Mandatory Pick-up Districts for Incinerating Firms
DOR-Mln.,.181
RhMiMM Motorentl
W.1H4IH*. MlfMrtltl
ASCALIA-OmbH
oo
OOOO^QJIOO
OOOOOOOOOOAO
OOOOOOOOOio
ooooooo
ooooooo
0000
242
-------
Appendix E
Regulations Concerning the Granting of Temporary Subsidies for the
Production of Lubricating Oils from Used Oils
(Rerefined Products)
23 April 1964 (Bundesgesetzblatt I, page 293)
On the basis of Article 8, section 6 of the Law Concerning the
Amendment of Taxes on Mineral Oil of 20 December 1963, amended by
the Law to Amend the Law Concerning the Amendment of Taxes on Mineral
Oil of 16 April 1964, the following regulations are promulgated.
Section It Certification of Right to Subsidy
(1) The temporary subsidy in accordance with Article 8 of the Law
Concerning the Amendment of Taxes on Mineral Oil may only be approved
when the right to the subsidy has been certified.
(2) Certification is to be applied for in duplicate within two months
of the effective date of this regulation.
(3) The central customs office responsible for the location of the
enterprise is responsible for the certification.
(4) The application shall include (1) name and purpose of the
enterprise, (2) owner of the enterprise, (3) name of the person res-
ponsible for the management of the enterprise, (4) weight of the lubri-
cating oil taxed in 1962 in accordance with Section 2(1) No. l(g)
of the Mineral Oil Tax Law, (5) weight of rerefined products produced
in 1962 and sold in 1962 and (6) capacity of the enterprise for pro-
ducing rerefined products.
(5) The information required in paragraph (4) (4)-(6) shall be sub-
stantiated at the request of the central customs office.
(6) If the deadline named in subsection (2) is missed without fault
an extension may be granted.
(7) The certification is to be given in writing. Thereupon the one
entitled to receive the subsidy shall acknowledge that (1) he must
keep the records described in section 3, (2) he must label rerefined
products in accordance with section 5, and (3) he must repay subsidies
improperly paid out.
243
-------
Section 2; Revocation of the Recognition
The certification shall be revoked if the conditions for its granting
did not exist or later expired.
Section 3; Record Books
(1) The one entitled to subsidies must keep records of (1) the amounts
of used oil processed, separated according to used oils generated and
collected in the Federal Republic and other used oils, (2) the weight
of the lubricating oils produced from used oils generated and collected
in the Federal Republic, (3) the weight of lubricating oils produced
from other used oils, (4) kind and weight of the substances added to
the lubricating oils designated under (2) by the producing firm and
(5) the day of shipment from the producing firm of the lubricating
oils designated in (2).
(2) If the information required in subsection (1) is apparent entirely
or in part from records already kept on the basis of other legal pro-
visions then the records required by subsection (1) are to that extent
not required.
Section 4; Granting of the Temporary Subsidy
(1) The temporary subsidy will be granted upon application for the
amount of lubricating oils shipped from the producing firm in a month.
The application is to be submitted in duplicate by the fifteenth of
the month following to the central customs office specified by section
1, subsection 3. The application shall certify that the lubricating
oils shipped from the producing firm were produced in that firm from
used oils generated and collected in the Federal Republic.
(2) The central customs office determines the amount of the temporary
subsidy on the basis of the extent to which it is justified and the
proof required in section 3 is furnished.
(3) The central customs office sets off the temporary subsidy against
the mineral oil tax to be paid by the applicant by the twenty-
fifth of the second month following the shipment. In the case of
section 6(1), sentence 2 of the Mineral Oil Tax Law of 1964 the subsidy
is to be set off against the mineral oil tax due by the fifteenth of
the second month following the shipment and, to the extent that it
exceeds the tax liability, with the mineral oil tax due on the fifth
of the third month following the shipment.'
(4) If the mineral oil tax liability is not sufficient in accordance
with subsection (3) the amount of subsidy in excess of the tax liability
is to be paid.
(5) If the deadline named in subsection (1) is missed without fault
an extension may be granted.
244
-------
Section 5; Duty to Label
The labeling required by Article 8, section 4, sentence 1 of the Law
Concerning the Amendment of Taxes on Mineral Oil must be by printing
on the bill or delivery slip. The printing must read as follows:
"For this product a subsidy was paid in accordance with Article 8
of the Law Concerning amendment of the Taxes on Mineral Oil of 21
December 1963, amended by the Law to Amend the Law Concerning Amendment
of Taxes on Mineral Oil of April 16, 1964. Upon export to member
nations of the European Economic Community the amount of 22.90 DM per
100 kilograms is to be repaid to the federal government in accordance
with Article 8, section 3 of the law."
Section 6; Investigations
(1) The central customs office specified by section 1(3) may undertake
investigations of the enterprise in order to determine whether the
conditions for receiving a subsidy exist or have existed. For these
investigations the one entitled to the subsidy is required to present
documents relevant to the temporary subsidy; he is further obligated
upon request to provide information. The federal auditing office is
entitled to the same rights of investigation.
(2) If rerefined products are exported to the member nations of the
European Economic Community the customs administration may undertake
investigation of the exporter to determine whether temporary subsidies
were paid for the exported rerefined products. For this investigation
the exporter must present documents related to the rerefined products
and must provide information upon request. The federal auditing office
is entitled to the same rights of investigation.
(3) For public entities and personal corporations the individuals
accorded representative status by law, contract or bylaws are to fulfill
the duties of subsections (1) or (2).
(4) A person obligated to provide information may refuse to provide in-
formation to those questions whose answers would subject he himself or
one of the employees listed in section 383(1) No. 1-3 of the Civil
Procedure Law to the risk of criminal prosecution or a proceeding in
accordance with the Law Concerning Violations of Regulations.
Section 7; Validity in Berlin
This regulation is also effective in the state of Berlin in accordance
with Section 14 of the Third Transition Law of 4 January 1952 in conjunc-
tion with Article 14 of the Law Concerning Amendment of Taxes on Mineral
Oil.
Section 8; Effective Date
This ordinance is effective on the day after its publication.
245
-------
First Statement of the Minister of Finance to Supplement the Regulations
Concerning the Granting of Temporary Subsidies for the Production of
Lubricating Oils from Used Oils (Rerefiried Products) of 23 April 1964
29 April 1964 (Bundeszollblatt, page 328)
I offer the following comments on the implementation of the above-
named regulations:
(1) Article 8 of the Law Concerning Amendment of the Taxes on Mineral
Oil of 20 December 1963 was amended by the Law to Amend the Law
Concerning the Amendment of Taxes on Mineral Oil of April 16, 1964.
In accordance with these amendments no temporary subsidies are paid for
exports of rerefined products to member nations of the European Economic
Community and temporary subsidies paid are to be repaid in these cases.
The recipient of temporary subsidies — that is, the producer —
is subject to the notification requirement of section 5 of the Regulations.
(2) "Taxed" within the meaning of Article 8, subsection 1, sentence
1 of the Law Concerning the Amendment of Taxes on Mineral Oils includes
those lubricating oils which were subject only to a conditional tax
liability in the year 1962. That is, an enterprise which for example
in 1962 only shipped rerefined products from its firm upon order is
likewise entitled to receive subsidy payments.
(3) Used oils which originated from German and foreign ships in,
German harbors as well as from ships from free ports and from the
occupying forces count as generated within the Federal Republic.
(4) Use of rerefined products by a producer himself or the use of
rerefined products to produce other products in that same firm is not
entitled to subsidies. The temporary subsidy is expressly linked
with shipment from the producing firm. As is for example evident
from section 3 of the Mineral Oil Tax Law of 1964 this factual situation
[shipment] does not include use within a firm.
(5) Untaxed rerefined products or those shipped from the producing
firm upon order are likewise eligible for the subsidy.
(6) Lubricating oils in accordance with Article 8, section 1, sentence
2 of the Law Concerning the Amendment of Taxes on Mineral Oils are
only eligible for subsidy if they are rerefined products, as is evident
from Article 8, section 1, sentence 1 of the law. A product is still
as a whole a rerefined product if in addition to rerefined substances
per se other substances (for example, additives) up to a maximum
of five per cent by weight are included. If a product has more than five
per cent by weight of other substances it is as a whole no longer a
rerefined product and is therefore as a whole not entitled to subsidy
246
-------
payments. Mixing of other substances outside the producing firm does
not influence the eligibility for subsidy since only the condition
and amount of the product at the moment of shipment from the producing
firm are controlling.
(7) Because of the small number of enterprises eligible for payment
and the provisional limitation to two years of the temporary subsidy
I am providing for a central printing of the forms for applying for
certification of subsidy rights and for grants, as well as for the
record books.
(8) The central customs office shall request an investigation of
applications for payments by the auditing official responsible for
the firm of the applicant.
(9) The official of the auditing service certifies the result of his
investigation on the application and returns it to the central customs
office.
(10) The central customs office determines the amount of the temporary
subsidy and requests the financial officer to pay the applicant by way
of his customs account. If the tax notices of the person entitled to
subsidy are submitted to a customs office the central customs office
shall send the payment request to the cashier's office of the customs
office which establishes the set-off.
(11) The temporary subsidy is to be booked under Chapter 6002,
Title 994. The budget funds are deemed to have been appropriated.
(12) Legal disputes are subject to the provisions of the Administrative
Court Regulations of January 21, 1960. The form giving information
about legal procedures is printed in the Federal Customs Gazette of
1960 at page 658.
(13) For the execution of repayments the provisions of the Administra-
tive Execution Law of April 27, 1953 apply.
(14) I request to be informed concerning issues of controversy of
larger significance. By November 1 of each year the central customs
offices inform the upper financial administration, and by December 1
of each year the upper financial administration informs me about issues
of controversy, special expenses, difficulties, and the experience
with investigations. I request that the number of firms entitled to
receive subsidy also be given. In the report filed on December 1,
1964, the amount of payments paid between May 1 and September 30,
1964 are to be indicated and in the report for December 1, 1965
the amount of payments between October 1, 1964 to September 30, 1965
are to be given.
247
-------
Appendix F
t
500-
400-
300-
200-
100-
Motor Oil Sales and Used Oils Generated, 1953-1965
Motorenoiobsmz und AliSloufkoir.mctt 1953 bis 1965
in 1000 tons.
Motorsnolabsatz (Erstraffinote) Motor Oil Sales (Virgin Oils)
zuzuglich Zweitraffinateabsatz Plus Rerefined Product Sales
(2) 'Altdlaufkommen
Used Oils Generated
2S2 ,«-. _^J
*£*****(
2'i** •""I
V ***>**
t*s*^
r/. 2
2V. 2.
*;
i _,_„._ ,L, -
'* i
•"-=— S,
yf- \
0 t
»^
ft-*1^
*., • gey, 2('/'
*1_JS— -5^-
i
'153 54 55 55 $7 58 ' SB
6-0 57
62 63 54 65
Sales and Uses of Lubricating Oils and Used Oil Disposal, 1963-1967
Schmferstoffabsatz <), -verbroucli und Altolbcseitigung 1963 bis 1967
in 1000 tons
used oils disposed
of without control
ps;
['.-• ''l
<^--collected used oils
re-used or burned used oil
Vzrbrauch bsim
Schmierprozef) '*'
used in the lubricating
process
7563 1SS4 7555
11 nodi Anooben
-------
Appendix G
Danish Waste Oil Law and Accompanying Materials
Act No. 178 of 24 May 1972 on Removal, etc., of Waste Oils and Chemicals
Section 1 — To prevent pollution the Minister for Environmental Protec-
tion or his designated representative may issue regulations on the stor-
age, transport, and removal of waste products, which result from commer-
cial or other use of petroleum or chemicals (waste of oils or chemicals).
Subsection 2 — In rules made pursuant to section 1 a duty can be imposed
on a person producing waste oil and chemicals to give notice to the
municipal council and to deliver the waste in a way approved by the
municipal council. In such rules the municipal council can be required
to make arrangements to ensure that waste oils can be delivered according
to specified guidelines. The authorities can be required to assure
compliance with the rules.
Subsection 3 — In rules made pursuant to section 1 a person who
delivers the waste products can be required to give further information
about the nature, the amount, and the composition of the waste delivered.
The authorities may be given authority to make spot checks of the accur-
acy of the information given. Such information is to be treated confi-
dentially.
Subsection 4 — The municipal council may impose fees for the receipt of
waste oils. The Minister for Environmental Protection may establish
detailed rules concerning fees.
Subsection 5 — In the case of Greenland, the minister for Greeland or
his authorized representative may make rules as set forth in subsections
1-4, in order to prevent pollution.
Section 2 — Rules issued pursuant to section 1 may specify punishment by
fine or imprisonment.
Subsection 2 — Violations by corporations or commercial companies, etc.,
can result in fines imposed on the associations themselves.
Section 3 — This law does not apply to the Faer^ Islands but can be
applied to them by royal proclamation.
249
-------
General Explanation of the Bill on Removal, etc., of Waste Oils and Chemicals
1. The disposal of waste oil occurs to certain extent by being emptied
Into a drain, or by being mixed in with ordinary waste which is placed
in a dump. The Environmental council's review of waste water conditions
and the handling of waste in Denmark shows that many municipalities have
no knowledge of what is involved with such substances.
Emptying of such substances, either in sewers or directly into the ground
can cause pollution of both ground and surface waters and similarly their
introduction into a treatment facility can hamper its functioning, even-
tually bringing it to a standstill. The burning of oil or chemical waste
will often add particulate pollutants to the atmosphere with consequent
air pollution which can then reach land or water.
2. The reason that oil and chemical wastes are handled as described
above is, in particular, that there exist only to a limited extent faci-
lities which can safely dispose of these substances, and that the exist-
ing regulations for handling these substances are not particularly
effective.
As a step in the solution of these problems, the League of municipalities,
Copenhagen and Fredriksberg municipalities, and Danske Gasvaerkers Tjaere-
kompagni created a company "Kommunekemi" to receive and dispose in a
safe manner first waste oil and later chemical wastes. Also, initiatives
for the establishment of disposal facilities can be expected. In connec-
tion with the creation of "Kommunekemi" receiving stations will be estab-
lished. It is also intended that individuals will have access to deliver
different forms of oil and chemical waste to these receiving stations.
Such delivery will be free, on the assumption that the individual cases
involve modest quantities.
Since there now exist, or can be anticipated, safe handling facilities
for a number of the described substances, revision of the regulations
to make them effective has become timely, and hence the preparation of
the preceding draft legislation.
The proposal's central provisions are that it allows the Minister of En-
vironmental Protection to require that every person, whether commercial
enterprise or individual, who produces waste oil, to take care that it
is disposed in a safe manner, and that the municipal councils can be
required to take care of the establishing of ordinances regarding such
disposal. The minister's authority to adopt regulations encompasses
the storage, transport and disposal of waste products.
The proposed law will first be used for waste oil (see the attached
draft Notice Concerning the Disposal of Waste Oil) but, as technology
is available, and with appropriate modifications, it will also be used
for chemical wastes. It can be anticipated that a Notice will be put
250
-------
out within a year concerning the disposal of solvents.
As far as waste oil is concerned, the Notice distinguishes between
commercial operations, and others.
Section 2 of the Notice lays down that everyone, private person or
businessman, who stores, transports or disposes of waste oil is respon-
sible for ensuring that pollution does not occur thereby, and the muni-
cipal council can establish regulations to secure safe storage and
collection of waste oil (section 2(2)).
The Notice1s principal provisions, however, sections 3, 4 and 5(2),
deal only with commercial operations.
For these the following apply:
Each commercial enterprise producing waste oil must notify the municipal
council of that fact.
A person or enterprise which comes under the duty to notify must deliver
the waste in conformance with an ordinance adopted by the municipal
council.
The municipal council can grant an exemption from these rules if it is
proved that the waste oil is being disposed of in another, safe manner.
Moreover, operations which use less than 300 liters per year of lubri-
cating oil are exempt from the notification and delivery obligations.
This exempts the smaller agricultural and trucking enterprises, as well
as equivalent enterprises. The exemption does not exempt these enter-
prises from the duty to ensure that they do not cause pollution of air
or land, etc., and the municipal council can establish more detailed
regulations applicable to the exempted categories.
The municipal council must (section 5(1)) see to it that an ordinance
is established but the particular ordinance to be adopted is left to
the council, so long as it is a proper ordinance, and as mentioned,
individual enterprises are not required to use the system established
by the council if in the particular case it is proved that the waste is
disposed of in another safe manner.
The notification mentioned in section 3 will in many cases consist of
notification that the enterprise concerned uses oil of a certain type
and that it is disposed of in a certain manner. On the basis of such
information the council can relatively easily tell whether the disposal
is safe.
As set forth in section 1(1) of the Notice every use of oil other than
that for which oil of that sort is suited, is disposal within the meaning
251
-------
of the law, and therefore is subject to the provisions of the Notice.
In judging whether products of a particular sort are suited for a par-
ticular use, special weight will be placed on whether the use results
in more pollution of the surroundings than when the product is used for
purposes for which it is normally intended, e.g., lube oil for lubrica-
tion, gas for motor fuel, etc. Thus used lube oil will not be suited
for burning in open pits, or in furnaces which are not specially equipped
for that purpose, while delivery of such oil to an enterprise which rere-
fines the oil will normally be a "suited" use, and the notification and
associated delivery duty do not apply to such cases.
As mentioned, the draft law encompasses both individuals, and public
and private enterprises which produce waste of the type dealth with.
The proposal does not apply to ships, since that area is already covered
by other regulations, and since a number of Danish ships only visit
Danish harbors annually or less frequently. On the other hand, such
receiving stations as are established in Danish harbors will come under
the law.
The proposed law does not imply a monopoly for any facility since the
only requirement is that the disposal occur in a safe manner.
It is expected that the draft Notice which has been referred to will be
put into effect in the second half of 1972, but the rules on the duty
to notify and to deliver waste oil only go into effect at a time estab-
lished by the municipality. Thus these rules can be put into effect
when the municipality has prepared a disposal arrangement. Since it
may be desirable for the municipality to find out about the quantities
of oil involved before the disposal arrangements are made obligatory,
sections 3 and 4 can be put into effect by the council independently
of each other. Thus the disclosure arrangements of section 3 can serve
both planning functions and control functions.
The question of which authority shall exercise supervision under section
1(2) of the law and section 7(1) of the Notice has not yet been deter-
mined since the answer to this question will depend on the structure of
future anti-pollution efforts. These considerations will be decided
before the Notice goes into effect. It is established by section 7(2)
of the Notice that all decisions by the municipal council pursuant to
the Notice can be brought before the Ministry of Environmental Protection,
3. The proposal does not entail expense directly from the state. The
direct expenses for society — as long as the fees for the handling
of the different types and quantities of waste are not in effect — can
not be calculated.
4. The proposal has been discussed with the industrial council, the
agriculture council, the petroleum trade organization, the league of
municipalities, the county council association, and Copenhagen and
252
-------
Fredriksberg, who have expressed a positive position towards coopera-
tion in the solution of oil and chemical waste problems.
253
-------
Notice No. 455 of 17 October 1972 on Removal, etc.. of Waste Oils
Pursuant to sections 1 and 2 of Act No. 178 of 24 May 1972, on removal,
etc., of waste oils and chemicals the following rules are established:
Section 1 — "Waste oil" means, in this notice, supplies of petroleum
products such as petrol, diesel oil, kerosene, fuel oil, and lubrica-
ting oil which are not intended to be used for a purpose for which the
products of their type are suited.
Subsection 2 — "Removal" in this notice means treatment, destruction,
including combustion, or final depositing of waste oils.
Section 2 — Any person who stores, transports or removes waste oils is
responsible for ensuring that no pollution of the air, the earth, the
ground water or the surface water, including the sea will thusly occur.
Subsection 2 — The municipal council may establish rules to ensure the
safe storage and collection of waste oils.
Section 3 — Any person producing waste oil due to marketing or any
other commercial activity, must so notify the municipal council.
Subsection 2 — Exempt from the obligation to give notice according to
section 3(1) are firms whose annual consumption of lubricating oil does
not exceed 300 litres, unless waste oils are produced by the firm due
to processing or commercial use of other petroleum products.
Subsection 3 — Notification pursuant to section 3(1) shall contain
information as to the nature and quantity of the waste oils.
Section 4 — It is incumbent upon the person subject to the duty of
notifying according to section 3 to deliver waste oils for removal
through an arrangement made by the municipal council pursuant to
section 5.
Subsection 2 — On application the municipal council shall grant an
exemption from the obligation to deliver according to section 1, where
it has been proved by the person producing the waste oil that this is
being removed in a proper way on the initiative of the person concerned,
cf. section 2.
Section 5 — The municipal council must see to it that an arrangement
is made by which the receipt, the storage and removal of waste oils
will take place in a safe manner, cf. section 2.
Subsection 2 — The municipal council may set fees for the receipt of
waste oil, delivered according to section 4(1), to cover the expenses
of the municipal council for storage, transport, and removal of the
waste.
254
-------
Section 6 — The municipal council shall monitor compliance with the
provisions of sections 2, 3 and 4, and is authorized to spot check the
correctness of the information given.
Subsection 2 — Any person who delivers waste oils for disposal is, upon
request, to give such additional information as might be necessary to
ensure their safe disposal, including information on the composition
of the waste delivered.
Subsection 3 — Information which public authorities receive in pursu-
ance of this notice is to be treated confidentially.
Section 7 — Supervision of the administration of the local authority
according to this notice is being attended to by the Agency of Environ-
mental Protection in the case of the Copenhagen and Frederiksberg muni-
cipalities, and by the county council in the case of the remaining
municipalities.
Subsection 2 — The decisions of the local authority pursuant to this
notice can be appealed to the Agency of Environmental Protection within
4 weeks after notice of the decision has been given to the person
concerned.
Subsection 3 — Decisions of the environmental management pursuant to
subsection 2 can be presented to the Minister for Environmental Protec-
tion within 4 weeks after decision has been given to the person concerned,
Section j? — Breach of sections 3, 4(1) and 6(2) or of the rules laid
down pursuant to section 2(2) can result in punishment by fine or impri-
sonment.
Subsection 2 — For breaches committed by corporations, commercial
companies, etc., the company will be subject to a fine.
Section 9 — The rules of this notice will not apply to waste oils on
board vessels.
Section 10 — This notice will come into force on 1 November 1972.
Subsection 2 — The duty to give notice according to section 3 will
not be effective until a date to be set by the local authority by
public notice. This also applies to the obligation to deliver accord-
ing to section 4.
The Ministry of Environmental Protection, 17 October 1972.
255
-------
Bulletin Concerning the Notice on the Disposal, etc.. of Waste Oil
(To all county councils, town councils, health commissioners, police
chiefs and medical officers.)
Included herewith are a number of copies of the announcement by the
Ministry for Environmental Protection dated 17 October 1972 on the
disposal of waste oil.
The aim of the Notice is to ensure that waste oil is not disposed in
such a manner that pollution of air, land, ground waters or surface
waters occurs. It is not intended to get involved in the processes
which accomplish the safe disposal of such wastes, but merely to assure
that such waste does not reach waters or the earth, with resulting pollu-
tion, or is not burnt in such a manner that unacceptable air pollution
results.
What is Waste Oil? — "Oil waste" as used in section 1 of the Notice
means stocks of petroleum products which are not intended to be used for
purposes for which products of their sort are suited. Since the Notice
deals only with waste products, petroleum products which have some sales
value, and which in practice amount to a step in normal processing or
use are not affected by the Notice. That the product shall be suited
for use for a particular purpose means, nevertheless, that the use must
be able to occur without resulting in unacceptable pollution.
Oil waste, in the meaning of the Notice, therefore exists when an opera-
tion has on hand a stock of petroleum which it cannot exchange in the
normal course of business, and for which the operation itself cannot
find any proper use within its own activities.
How Shall Waste Oil be Disposed? — As a step in the efforts to prevent
pollution by waste oil, it has been found necessary to provide those
who have waste oil with the opportunity to rid themselves of waste oil
in a safe manner. The municipalities are therefore required to put
into effect an ordinance which gives those who have waste oil the right
to deliver this according to the rules outline below.
The obligation to inform and deliver — While everyone shall have the
right to deliver waste oil, the duty so to do is only imposed on those
who by processing or other commercial activity produce waste oil. Be-
sides the duty to deliver waste oil stands a duty on these commercial
activities to inform the localities that their activities produce waste
oil. This last mentioned duty is intended to aid the localities in the
preparation of and control by systems for the disposal of waste oil.
Exempted from the informational and delivery duties, however, are those
commercial enterprises which only use lubricating oil, and only in quan-
tities not exceeding 300 liters per year.
256
-------
Exemption from the duty to deliver — By section 4(2) of the Notice,
the town council shall grant an exception to the duty to deliver if
the possessor of the waste oil certifies that such oil is disposed of
at his own facilities in a proper manner.
As provided by section 1(2), disposal can take place by treatment, des-
truction, including burning, or final depositing of the waste oil. For
disposal to be considered proper, it is a prerequisite that the methods
involved can be used without the occurrence, or chance of later occur-
rence, of unacceptable air, ground, ground water, or surface water pollution,
including the ocean. Final depositing of waste oil, because of its
very nature, can only be regarded as a proper disposal in exceptional
cases. In order to grant an exemption from the duty to deliver, it
must be generally required that the waste oil be delivered to establish-
ments which are made for and possess special equipment for the processing
or destruction of waste oil. •
In order that an exemption from the duty to deliver can be granted it
must similarly be certified that the transportation of the waste oil
can also take place in all foreseeable circumstances without pollution.
The Practical Implementation of the Ordinance — The National Communi-
ties Association, in cooperation with Copenhagen and Fredriksberg Com-
munes, will develop a form for the use of firms giving notice in confor-
mance with section 3(1) of the Notice, as well as a form which can be
used to request exemption from the duty to deliver with respect to sec-
tion 4(2) of the Notice.
The problems surrounding the disposal of waste oil can to a certain
extent be compared to other waste problems, for instance the disposal
of refuse. It has therefore been found appropriate to leave to the
municipalities themselves to prepare a disposal arrangement. As a help
to the municipalities, a proposed ordinance has been attached to this
cirkulaereskrivelse. A regulation of this sort can be adopted by the
municipal council to be effective in the community. The contents must
be adapted to local conditions. Such a regulation must contain the
rules which the municipal council will require enterprises to follow.
It is the duty of the municipal council to ensure the safe handling and
transport of collected waste oil, as well as the safe further processing
of waste oil, for example, by contracts with enterprises which can under-
take and accomplish the final disposal of waste oil. The arrangement
implies that the municipalities themselves must ensure the establishment
of receiving stations, either within their own territory, or in common
with other communes. In establishing such stations, attention must be
given to the possibility of the further transport and delivery of the
waste products to enterprises which can take care of disposal.
Fees — Section 5(2) of the Notice allows the municipal council to es-
tablish fees for the receiving of waste oil delivered according to
257
-------
section 4(1), to cover the community's expenses in storage, transport
and disposal of the waste. The reference to .section 4(1) implies that
fees can be required only for waste which is subject to the duty to
deliver, and that other waste is to be received by the community without
fee.
Supervision and Prosecution — Pursuant to section 7(1), except for Copen-
hagen and Fredriksberg, the county council will supervise the municipal
council's administration. In this connection, the county council must
ensure that each municipality adopts a satisfactory arrangement which,
to the extent practical, is coordinated with arrangements in other com-
munities, for example, by the setting up of common receiving stations,
or through common transport arrangements.
The municipal council's decisions pursuant to the Notice can be brought
before the environmental council within four weeks of receipt of notice
of decision by the concerned party.
Implementation — With reference to implementation, it should be noted
that the Notice itself, by its coming into effect, creates a duty on
all who store, transport or dispose of waste oil to ensure that they do
not thereby cause pollution of the air, ground, ground or surface waters,
including the sea, and the municipal council is required immediately to
oversee the compliance with this duty. The duty to report stocks and
production of waste oil as well as to deliver such oil as a step in an
arrangement adopted by the municipality takes effect when the council,
by public announcement, has set a time for its effectiveness. The minis-
try of environmental quality emphasizes that the establishment of munici-
pal collection ordinances must be hastened, and the environmental council
expects later to receive information, through the county councils, as
to when the arrangements established by the municipalities are put into
operation.
The Environmental Council, 17 October 1972.
258
-------
Suggested Regulation for the Disposal, etc., of Waste Oil in
Municipality
Pursuant to section 2(2) and section 5 of the Notice of the Ministry of
Environmental Protection dated 17 October 1972, it is hereby established:
Section 1 — Waste oil, by which is meant stocks of petroleum products
such as gas, diesel oil, heating oil and lubricating oil which are not
intended to be used in a way for which products of that sort are suited,
(see section 1 of the Notice) must not be poured into sewers or other
waste water facilities, nor may they be placed on the ground or buried
in it, but shall be stored in tight containers which are so placed that
leaks in the container can be readily observed. The containers shall be
placed a safe distance from drinking water wells and sources. Placement
in buried containers may only take place in conformity with the guidelines
in Notice No. 67 of 29 February 1970 on the supervision of oil storage.
Subsection 2 — The containers referred to in section 1(1) shall be
placed in such a location, and in such a manner that emptying for dis-
posal can easily take place.
Section 2 — It is incumbent on each person having waste oil to ensure
the disposal of waste oil in such a manner that pollution of air, earth,
ground waters or surface waters, including the ocean, does not occur.
Section 3 — Each person who is included in the duty to report estab-
lished by section 3 of the Notice shall participate in the disposal
arrangements established by a more detailed regulation, unless the muni-
cipal council has granted an exemption pursuant to section 4(2) of the
Notice. Those affected are required to pay the fee set by the municipal
council for participation each time.
Section 4 — Each person who is not affected by the duty to notify has
the right to deliver waste oil to the receiving station established
by the municipality, without fee.
Section 5 — (First Alternative) Waste oil which is required to be
delivered shall be delivered to a place designated by the municipality.
(Second Alternative) The municipality shall pick up waste oil which is
required to be delivered at the enterprise, unless the enterprise, with
the approval of the municipal council, itself takes care of its delivery
to a receiving station designated by the municiaplity.
Section 6 — It is incumbent on everyone who delivers waste oil to the
municipality to inform, on specially prepared forms or in some other
manner, about the composition of the waste oil and anything else which
is necessary to ensure the safe disposal of the oil.
259
-------
Section 7 — The municipal council will establish by separate regulation
the fees for receiving oil which is required to be delivered. The fee
will be set per unit of waste oil, and will be set taking into account
the costs of final disposal of oil of that particular sort and composition.
Section 8 — The disclosure and delivery duties under sections 3 and 4
of the Notice will take effect respectively the and the
Section 9 — This regulation shall take effect the
260
-------
Copenhagen, 15 May 1973
Agreement of the Oil Trade Associations for Free Pick-up of Used
Lubricating Oils
To: Member Firms:
Subject: Disposal of waste automobile lubricating oil arranged by the
trade
The answers which we have received from member firms to our communica-
tion of 29 March 1973 shows full support for the above mentioned arrange-
ment, and the quantity of waste auto lubricating oil which members have
reported is sufficient for the program to be put into effect.
Therefore the collection of waste auto lubricating oil will begin on 1
June 1973 from gas stations and auto repair shops on Sjaelland, Jylland,
Fyn and islands having bridge connections with the named areas.
The following trucking firms will undertake the pick up of the waste oil:
East of Storebaelt West of Storebaelt
Larsen & Jakobsen Truckers Knud Nyborg, Trucker
Kastrup Give
They will deliver the waste oil to, respectively, the Esso Refinery in
Kalundborg, and the Shell Refinery in Fredericia.
Orders for pick up shall be given by your customers at the place where
they normally order the lubricating oil, and from there be passed on,
including the volume involved, to the above named truckers by mail or
phone. The trucker will accomplish the pick up within a maximum of 14
days from receipt of the order. We ask that you please send us a list,
with address and telephone numbers, of the places where lubricating oil
can be ordered from your firm.
With a view to introducing your customers to the pick up arrangement,
we include a sample letter, together with a list of the practical condi-
tions which must be observed. We ask that you have each of your customers
who take part in the arrangement indicate their consent to the conditions
by signing the conditions and returning them.
We urge that you have your salesmen, in the course of their daily busi-
ness, see to it that as many of your customers, within the named categor-
ies, as possible participate in the arrangement so that we can attain a
result from this project of the Trade which is satisfactory to all parties,
Yours truly,
Mineralolie Brancheforeningen Oliebranchens Faellesrepraesentation
261
-------
To: Our Customers:
Subject: Disposal of waste automobile lubricating oil arranged by the
Trade
As you undoubtedly know, the Ministry for Environmental Protection has
ordered that all waste oil shall be disposed of in a safe manner. The
local authorities shall designate collection points where waste oil
shall be delivered. Use of waste oil as fuel in oil burners will pro-
bably be foreclosed as a result of new regulations dealing with the
maximum allowable emissions of particulate matter from chimneys which
the Housing Ministry will issue in the near future.
As a convenience for you, the Oliebrachens Faellesprepresentation and
the Mineralolie Brancheforeningen have organised a free nationwide
waste oil pick up service which can solve your waste oil problems in
the safest and simplest manner.
This collection system takes effect on 1 June of this year and provides
that waste oil will be picked up at your premises when you make a request
to our office. The pick up will be accomplished by tank trucks which are
equipped to pump oil from your waste oil tanks, or from drums. East of
Storebaelt, pick up will be managed by the trucking firm of Larsen &
Jakobsen; west of Storebaelt, by the trucking firm of Knud Nyborg.
The collected waste oil will be delivered respectively to the Esso Re-
finery in Kalundborg and the Shell Refinery in Fredericia. The safest
disposal method is thereby assured, and at the same time the oil is
placed in the resource cycle in a safe manner.
The detailed conditions to enable the system to operate safely and
satisfactorily for all parties are set forth in the accompanying en-
closure. These conditions must be observed exactly, and as an affirma-
tion that this will happen, you are requested to return a signed copy
of the conditions.
We hope that this offer interests you, and we ask that you send in your
notice of participation as soon as possible.
262
-------
Conditions for the free pick up of waste automobile lubricating oil
arranged by the Trade:
1. Waste oil must contain only used automotive lubricating oils and
not other waste products such as chemicals, solvents, emulsifying
cleaners, antifreeze, particulate matter (gravel, sand or cotton
waste) or gasoline from gasoline separators.
2. Industrial lubricating oils will not be picked up.
3. There will be spot testing of the waste oil which is received.
4. The waste oil will be picked up in tank trucks by pumping from
tanks or 1/1 lube oil drums. The drums themselves are not taken
back, and the same drums must be used from one time to the next.
5. The waste oil container or drums must be easily accessible to the
truck and placed as near as possible to an established road or yard,
6. The minimum quantity of waste oil which will be picked up at any
place at any one time is 1000 liters.
7. The waste oil will be picked up without charge to you, but nothing
will be paid you for the oil.
8. Orders for the pick up of waste oil will be given to your usual
supplier of lubricating oil. Pick up will occur within 14 days.
The undersigned wishes to participate in the arrangement on the fore-
going conditions.
263
-------
Appendix H
COMMISSION
OF THE
EUROPEAN COMMUNITIES Brussels, 22 June 1973
Environment and Consumer
Protection Service
Directorate-General for
Internal Market
QUESTIONNAIRE
on the disposal of waste oils in the Member
States of the European Communities
Please fill in and return this questionnaire,if possible,before
10 September 1973-
264
-------
ENV/69/7U-E
I. INTRODUCTION
This questionnaire has been drawn up by the Commission for two pur-
poses. Firstly, as a means of obtaining the fullest possible information
regarding quantities of waste oil and their pollution effect and secondly
to take stock of current and contemplated laws in the Member States;
this information is required in order to try to find more efficient
means of waste-oil disposal in the Community. The Member States are
requested to reply as fully as possible, even if are estimates given.
265
-------
ENV/69/73-E
II. TECHNICAL AND ECONOMIC ASPECTS
1. Total consumption of lubrificants, per category (tonnes)
Engine and
compressor
oils
Other lubrica-
ting oils
Spindle and
textile oils
Metal
treatment
oils
(1)
Transfor-
mer and
hydraulic
transmis-
sion oils
Others
(to be
speci-
fied)
1969
1970
1971
1972
2. Production of_l«brificants£__ger_category_(tonnes2
59
1970
1971
1972
J5. !5Ports_and_exports._of lubrificants and_reclaimed_oil_per_country_(tonnes)
Within the Community Outside the Community
Lubrificants Reclaimed oils Lubrificant Reclaimed oils
IMP EXP • IMP EXP IMP EXP IMP EXP
1969
1970
1971
1972
k. Total quantity_of_waste_oils_(tonnes2
_19§9 1970 1971 1972__'
Put into final storage_(2) i ^- • !
Collected ^
Reclaimed_by_the_trade
Reused bjr industrial consumers
Incinerated
Burnt with utilisation_of_energy_
Disposed of without_supervision__
266
-------
ENV/69/73-E
disposal
- firms engaged in collecting
waste oil
- firms engaged in reclaiming
waste oil
- firms engaged in incinerating
waste oil
» firms engaged in burning waste
oil (using additional energy)
Numb
1970
er of
1971
firms
1972
capacity
(tonnes)
1970 j 1971 ! 1972
T — •
!
!
1 1
1
i
Manp
1970
ower
L97X
(. j.
i
i
6. Estimate of user firms disposing of their own waste oi?. (by incineration
or reclaiming or burning)
1970
1971
1972
7. Average cost of collection
(per tonne)
of reclaiming
of incineration
of burning
Number of firms
Capacity (tonnes)
Manpower
1969
1970
1971 .
1972
(1) Waste oils should include emulsions
(2) i.e. stored under supervision; if possible, show seperately liquid waste
oil and solid residues left after reclaiming operation.
267
-------
ENV/69/73-E
8. Organisation of waste-oil disposal as regards collection, reclaiming,
incineration and burning
- public, private or mixed systems ....
- direct subsidy and/or tax concession
degree of organisation (comprehensive, or collection only, and/or incine-
ration, and/or reclaiming and/or burning)
9- Assessment of different technical processes for waste-oil disposal
- from the economic point of view
- from the point of view of improved environmental protection
1O. Technical methods of waste-oil disposal other than reclaiming, incineration
or burning:
- in use
- under study (specify research and study contracts)
11. Probable trend of waste-oil supplies
12. Possible openings for growth in the oil reclaiming industry and of a poten-
tial market for these reclaimed products (specify the categories of customer
concerned)
268
-------
ENV/69/73-E
13- Average prices paid by reclaimers to collectors for waste oils
1971
1972
Average prices paid to petrol pump attendants and garage owners for waste
oils
1971
1972
15. Average selling price to the consumer per tonne of lubricating oil
New oils
reclaimed oils
1969
1970
1971
1972
269
-------
ENV/69/73-E
III. LEGAL DATA
•*" Summary of laws, regulations and adainietrative provisions relating _to_
the disposal ofvaate oils, including the nature, date, purpose and^teyri-
torial scope thereof
(All generally and directly applicable provisions should be included, e.g.
constitutional provisions, international conventions and law derived there-
from, laws, orders, decrees and local regulations. Explanatory memoranda or
official commentaries thereon should be mentioned where possible, ae should
any zd.evant, important judicial decisions.)
BJ List of regulations on the following subjects;
Definition and scope
16. Concept of
a) waste oils '. *
b) eafe disposal (e.g., without harmful effects on water, air or the soil)
17. Aims of provisions relating to waste-oil disposal as part of the control of
water, air and soil pollution; degree of protection (e.g, preventive or re-
parative measures relating to a dangers, damage pollution, etc.)
a) protection of the environment
b) economic aims
••••••••••••••*••»•*••••»****'
c.) other goals ••
18. Product categories covered (e.g. engine oils, lubrificating oils, textile
oils, metal treatment oils, transformer oils, emulsions, etc.)
270
-------
ENV/69/73-E
2£ intervention in waste-oil disposal, as part of context
of water, air and soil pollution
19. Production of lubricants
20. Collection of waste oils
a) Procurement
b) Transport
c) Storage ..
21. Treatment of waste oils
a) Destruction (incinerationt burning)
b) Recycling (regeneration)
c) Dispersion (in water, air and soil)
Machinery for intervention
22. Depending on the nature of the body intervening
a) Private ^ •
b) Public
c) Mixed .
23. Depending on the extent of the intervention
a) Information
b) Incentives
271
-------
ENV/69/73-E
Authorization procedures
2k. Establishment or modification of lubricant production plants
25. Establishment or modification of waste oil collecting undertakings
26. Establishment or modification of waste oil treatment undertakings
•Supervision and control procedures agplicable^to holders or users^of
waste oils
27* Obligations in request of information, declarations, etc.
a) to the authorities (central and/or local)
b) to the interventing bodies (public, private)
28. Supervision of holders, users, etc.
(e.g. periodic checking of records, inspection of depots)
Financing arrangements
29; Special provisions governing the defrayment of:costs in connection with the
disposal of waste oils:
a) Defrayment of expenses by the polluter (principle•of "making'the polluter
pay"):
- levies ....."
- taxes « • • ••
272
-------
ENV/69/73-S
b) State intervention
- granting of funds ,
- granting of credits
- granting of loans
- granting of other forms of aid (subsidies)
c) Intervention through a Fund
- direct costs ,
- overhead costs (research, inspection)
30. Systems of charges and levies
a) reference values for determining charges or levies
b) collection procedures
31. Objectives of and procedures for the use of funds
32. Special provisions concerning other economic or financial aspects in connec-
tion with the waste-oil disposal
Price regulations
33.a) Bules relating to the prices of services required under the various systems
of waste-oil disposal
3f».b) Rules relating to the prices of products
273
-------
ENV/69/73-E
from
down in the regulations on waste-oil disposal
35. Obligation to make good (irrespective of whether- the party concerned is
directly responsible or not) financial damage or loss suffered as a result
of water, air.and soil pollution
a) On the part of the undertaking holdung waste oil
b) 6h the part of the undertaking (-"body") responsible for collecting or
treating waste oils
c) On the part of the State or other organization (Fund, etc.) ..
36. Bights of third parties or associations to institute proceedings
Infringements and penalties for failure to comply with the regulations
37. Cases of infringement
a) water,air and soil pollution producing noxious effects
b) other acts related to provisions on anti-pollution measures in respect of
water, air and the soil (failure to comply witfo. the regulations on the
manufacture or holdung of lubricants or, alternatively, failure to comply
with the regulations on-the collection and treatment of waste oil)
38. Santions
a) Pecuniary (fines; withholding of subsidies)
b) Penal .(prison sentences)
c) administrative (compulsory closure of the plant or enforcement without
court order; compulsory restoration of sites)
274
-------
ENV/69/73-E
.^ion'Ol considerations
39. Non-application, of the law generally, to products intended for export
*************•••*»••»•••••••»••••»••»•••#•••»•••»•••»•••*
^0. Specific regulations governing frontier areas
Miscellaneous
*H» Official digests, periodic reports on data relating to waste-oil disposal
Connection between the provisions on waste oil disposal and the provisions
relating to anti-pollution measures in respect of water, air and the soil
C. Practical implementation of the regulations at national level
With a view to ensuring that the regulations which you were asked to
in subsection III/B may be more readily understandable, please state what
has been learnt from the practical inplementation of the aforesaid regula-
tions. In addition, particulars should be provided on the results obtained
and their political and legal implications, by reference - if appropriate
to the official publications covering the area concerned ............. ......
Sunniary_pf draft reculaticns relating to waste-oil disposal including
explanatory memoranda, official commentaries, etc.
It would be desirable if, in listing these regulations, the national autho-
rities could adhere as closely as possible to the sane subject breakdown
as that employed in subsection III/B.
275
-------
Appendix I
COMMISSION OF THE EUROPEAN COMMUNITIES
COM(74) 334 Final
Brussels, 20 March 1974
PROPOSAL FOR A
DIRECTIVE ON THE DISPOSAL OF WASTE OILS
(submitted to the Council by the Commission)
COM(74) 334 Final
276
-------
EXPLANATORY MEMORANDUM
I. Introduction
This draft directive forms part of the Communities' action programme
for the protection of the environment of November 22nd, 1973 (c.f.
O..J. No. C 112, December 20th, 1973). This programme stresses the priority
attached to the disposal of waste oils. In accordance with the Informa-
tion Agreement of 5th March, 1973 concerning the possible harmonization
of urgent measures related to the protection of the environment throughout
the Community*),moreover, the French and Dutch governments sent the Com-
mission legislative proposals relating, inter alia, to the disposal
of waste oils. The Commission informed the French and Dutch governments
of its intention to submit a draft directive on this subject to Council
within the timetable fixed by the Information Agreement.
The pollution of soil and water by waste oils poses a problem which has
.become acute due to growing industrialization, urbanization, and the
continued development of transport facilities. In addition, certain treat-
ments of waste oils create new sources of pollution, especially air pollu-
tion.
There has been a steady increase in,the quantity of waste oils and in
particular of emulsions, a large part of which are disposed of without
controls (c.f. annex).
The extent and urgency of the problem is underlined by the fact that
sometimes as much as 20 - 60% of all waste oils are disposed of without
any control in some Member States; the resulting water pollution would
account for approximately 20# of all industrial pollution according to
some estimates.
Thus one of the main objectives of this draft directive is t6 ensure
effective protection of water, air and soil against the harmful effects
caused by the discharge, deposit and treatment of these oils.
*) O.J. C 9, March 15th, 1973-
277
-------
ENV/XI/657/7'f-B
It should also be noted that recycling of waste oils whether as lubri-
ficants or as a source of energy is very worthwhile economically. Thus
Article 2 of the directive is in favour of it and against their destruc-
tion.
Moreover, the national legislation and regulations in force throughout
the Community relating to this matter leave certain lacunae which ere
harmful to the environment.
Finally, there are basic differences to be found amongst the existing or pro
posed national provisions relating to the field of covered by this proposal.
In Germany and Denmark, there is very detailed and complete legislation
which provides for a system of collection and finance, thus ensuring the
safe disposal of waste oils. In the Federal Republic of Germany, by the
law of December 23rd, 1968, laying down the measures to ensure the disposal
of waste oils (Gesetz Uber Mafinahmen zur Sicherung der Altolbeseitigung)
a fund has been created, intended to cover the costs which are cot covered,
during the waste oil disposal operations. This fund is financed by a charge
levied when lubricants are delivered for consumption. In the Netherlands
a draft law on chemical wastes and waste oils would set up a comprehensive
comparable to that which already exists in the Federal Republic of Germany
(a system of collection and disposal with charges and indemnities to cover
uncovered wastes). In Great Britain,.legislation controls disposal of pollu-
ting wastes, and in particular of waste oils. In France there is a draft
decree which would regulate the discharge of lubricants cr oil. In France
and in Italy, recycled oils are taxed at a lower rate in order to ensure
the safe.disposal of waste oils and to encourage their reuse. In the other
countries there is neither legislation nor proposed legislation specifically
concerned with waste'oils, but in certain cases, general lepislation pro-
tects water and air against pollution.
278
-------
These differences may lead to financial charges differing from one Member
State, from one sector, from one firm,to another within the Community,
and thus could create barriers to the proper functionning gf the common
market and distort competition.
The draft directive which follows, based on article 100 of the Treaty of
the EEC, is intendedto harmonize legislation, and to thus create a coherent
system of legal provisions applicable in all Member States.
The Commission has also consulted, before drafting the present proposal, a
working group of national experts whose task was to study the problems
posed by the disposal of waste oils. This group met four times.
279 .
-------
II. CCMME!.TS Or SPECIFIC ARTICLES
Article 1
The definition selected for waste oils is intended to make the directive's
field of application as wide as possible, but also to avoid too large
differences of interpretation. Emulsions and certain residues are expressly
mentioned because their disposal poses special technical end economic
problems.
Article 2
Regeneration and combustion of waste oils are the- methods of disposal
least harmful to the environment. Thus their use should be encouraged as
much as possible. The simple destruction of waste oils no longer seems
to be allowed.
Article 3
In order to achieve the disposal of waste oils without damage to the environ-
ment, considerable restrictions must be created up to and including the -prohi-
bition of any discharge and deposit, in order to protect internal and costal
waters, soil and air.
Article *f
It is essential that the Member States ensure,, by appropriate means, the
collection and disposal of waste oils.
Article 5
In order to guarantee that the collection and disposal of waste oils is
in fact made, one or several firms, properly authorized, can under certain
conditions be required to carry out these operation* It is, in fact, one
result of the particular technical and economic problems associated with
the collection and/or the disposal of waste oils, that these operations
are not always economically viable. To deal wi^th these cases, a duty to
collect is provided.
The actual form which the compulsory collection and disposal of waste oils
taKee shall be left to the competent authorities to determine; if need be,
they can set up zones within which a duty to collect comes into effect.
Since the duty to collect is needed only to solve certain special cases
280
-------
it is not necessary to create a corresponding right for the holders to
have their products collected.
Article 6
The granting of an authorization shall certify that the firms which are
involved in the collection and/or elimination of waste oils have the appro-
priate facilities.
Articles 7. 8. 9, 10
These articles complete the set of provisions concerning the acts prohibited
in law and the disposal system.
Articles 11,12
The control mechanisms provided are necessary in order to give effect
to the prohibitions and the disposal system.
Article 13
The collection and disposal of waste oils can in general be done without
the intervention of the State.
This-hypothesis is-valid only when the firms which collect or dispose of
waste oils can make a profit or at least cover their costs. Since in parti-
cular circumstances this is not possible and since certain firms may be
required to carry out these operations, compensation for services rendered
is provided.
In order to avoid too wide a discretionary margin in granting these indem-
nities to the firms, sufficiently precise and flexible criteria have been
set up, which can respond to particular circumstances. The compensation will
be determined according to costs which are not covered,but in fact occuring
allowing for a reasonable profit margin.Measures of fiscal nature (eg. tax
exemptions) would not allow for variations in compensation according to the
region or firm and are therefore excluded.
281
-------
Article l*f
Only the creation of a charge imposed on the delivery foxj consumption of
new or re-refined products allov/s for application of- the polluter pays
principle.in this matter.
Delivery for consumption can be defined es, when the product in question
leaves the producing firm in order to be sold or used,when it is used
within such an establishment, or when it is imported..
III. CONSULTATION WITH THE EUROPEAN PARLIAMENT AND THE ECONOMIC ATIP SOCIAL
COMMITTEE
The opinion of these two institutions, pursuant to article 100 paragraph 2,
is required.
282
-------
ENV/XI/657/74-E
ANNEX
TABLE
An approximate estimate of quantities of lubricating oils consumed, total
amd per capita, of quantities of used and waste oils which are disposed
without controls, in total and in percentages for each Member State. The
figures are for 1972 and measured in 1000 tons.
1
- -
1. Germany
2. France
3. Italy
4. United Kinsdon
5. Ireland
6 . Denmark
7- Belgium
8 . Luxemburg
9. Netherlands
10. Total:
Consumption
of lubricating
oils
2
i -
1081
Number of
inhabitants
in
millions
3
58.6
--834 1 if 8. 9
548
1295
51.6
52.3 '
35 ! 4.4
i
90 j 4.8
? 9.5
11.3 0.3
209 12.3
4103.3
======
The percentage of recovery is therefore
Consump-
tion by
inhabitant
in I/a
18.5
17
10.5
25
8
19
| 7
'• 37-5
! 16.5
Quantity
of waste
oil
5
520
458
275
650
17-5
45
0.6
105
2071.1
Cd. as a •
sropor* •
•Aon of
the total
6
48
55
50
50
50
50
50
50
i
Quantity
dispose!
without
controls
7
57+
120
134
85
?
?
?
0.6
45
441.6
i
Id,
8
6.2
26
^18.5
13
?
?
?
100
13
= =====
about 50 #; according to information
received, only about 1 million tons of waste oils is actually recycled j thus
1 million tons is lost as energy or
as lubricants, with obvious consequen-
ces for the environment and for a comprehensive fuel supply policy.
+) These figures are only valid for 1971.
283
-------
DRAFT COUNCIL DIRECTIVE
OH THE DISPOSAL OF WASTE OILS
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
HAVING REGARD to the Treaty establishing the European Economic Community,
and in particular article 100 thereof,
HAVING REGARD to the proposal' from the Commission,
HAVING REGARD to the Opinion of the European Parliament,
HAVING REGARD to the Opinion of the Economic and Social Committee,
WHEREAS national legislation concerning the treatment, discharge, deposit
and collection of waste oils differs from one Member State to another,.
and that these differences constitute barriers to trade within the Commu-
nity and thereby directly affect the functicnning of the Comraun Market}
WHEREAS all provisions relating to the disposal of waste oils should have
as one of their essential objectives, the protection of the 'environment
against the harmful effects caused by the discharge, deposit and treat-
ment of these oils;
WHEREAS the reuse of waste oils can make a .large contribution to energy
supply policy;
WHEREAS the Community's action programme for the protection of the environ-
ment approved jointly by the Council of the European, Communities and the
representatives of the governments of the Member States meeting in the
Council in the declaration of November 22nd, 1973 underlines the im-
portance of the problem of the disposal of waste oils without harmful
effects upon the environment;
O.J, C 112, 20/12/1973.
284
-------
WHEREAS the quantity of waste oils and in particular of emulsions has
continued to grow rapidly in all Member States;
WHEREAS a efficient and coherent system of treatment for waste oils,
which will neither create barriers to intercommunity trade nor affect
competition, should apply to all products, even those which are composed
only in part of oil and should provide for their safe treatment under
economically feasible conditions;
WHEREAS such system should regulate the treatment, discharge, deposit
and collection of waste oils and provide a procedure for the authorization
of firms which collect or dispose of these oils and also under cer-
tain circumstances set up a compulsory system for collection and dis«-
posal .of these oils and create accordingly suitable inspection procedures;
WHEREAS in those cases where certain firms will be required to collect
and dispose of these oils, that part of their cost's arising from these
activities not covered by their revenues, should be compensated for by
indemnities, the latter being financed by a. charge on new or re-refined
oils;
HAS ADOPTED THIS DIRECTIVE:
285
-------
Article 1
For the purpose of the application of this directive, the tern "waste
oils" shall be taken to mean any semi-solid or liquid used product to-
tally or partially composed of mineral or synthetic oils, including the
oily residues from cisterns and emulsions.
Article 2
The Member States shallt take all possible measures to ensure that the
disposal of waste oils shall be carried out by recycling (regeneration
and/or combustion).
Article 5
The Member States shall take all necessary measures to ensure the prohi-
bition of
1. the discharge of waste oils into internal surface waters, underground
water, coastal waters and canals;
2. the deposit and discharge of waste oils which has harmful effects on
the soil, and any uncontrolled discharge of residues which result from
the processing of waste oils;
3. any processing of waste oils causing air pollution which exceeds the
minimum compatible with the state of the art.
Article
The Member States shall take all necessary measures to ensure the collection
and safe disposal of waste : oils.
Article 5
The Member States shall take all necessary measures to ensure that, in
the case where these operations are not profitable, one or several enter-
prises referred to in the following article shall carry out the collection
r..d/or disposal of the products offered to thorn by the holders in the zone vh*c?
i ., assigned to them by the competent authorities.
286
-------
Article 6
Any firm which collects and/or disposes of waste oils must obtain a per-
mit to do so; this will be granted after examination of installations and
\dlll impose conditions required by the existing level of the state of the
art*
Article 7
Whosoever has a supply of waste oils which he cannot eliminate himself
pursuant to the provisions laid down according to articles 2 and 3 must
keep it at the disposal of the firm or firms referred to in article 5.
Article 8
The holders of waste oils containing impurities, which are in excess of a
certain percentage fixed by the competent authorities according to the
category and volume of the product, must stock them seperately.
Article 9
The firms which collect and/or dispose of waste oils must do so in such a
way that there will be no avoidable risk to water, air ar soil.
Article 10
Any firm which holds, collects and/or disposes of a quantity of more than
200 litres of waste oils a year must keep a record of their quantity,
quality, origin and location, and also of their assignment end receipt,
recording the dates of the last two transactions.
Article 11
Any firm which disposes of waste oils must forward to the competent autho-
rities, on request, any information concerning such disposals or on the
deposit of waste oils or residues thereof.
287
-------
ENV/XI/657/?^ B
Article 12
The firms referred to in article 6 which hold or dispose of waste oils
shall be regularly inspected by the competent authorities, particularly
as regards their compliance with the conditions of their authorization.
Article 13
The Member States will grant to all firms which, pursuant to article 5,
have an obligation to collect and/or dispose of waste oils, a nonfiscal
indemnity, which shall represent a payment for services rendered.
This indennity should not exceed what is necessary to offset the annual
costs to each firm which are not covered and are incurred in fact, and
to assure them a reasonable profit margin.
The amount of costs to be considered in the calculation of the indemnity
should not exceed the average costs of all firms engaged in the e^.rre acti-
vities, under similar conditions, in the Member State under consideration.
Article Ik
%
The indemnities will be financed by a charge, imposed at the time of the
delivery for consumption of products which after use are transformed into
waste oils.
Article 15
The Member States will regularly convey to the Commission information con-
cerning their technical expertise and the results deriving from the appli-
cation of the provisions pursuant to this directive.
The Commission shall send a summary of all information received to the
other Member States.
Article 16
Every three years the Member States shall draw up a report on the situation
relating to the disposal of waste oils .in their respective countries, these
r-jorts will be sent to the Commission.
288
-------
Article 17
Member States shall put into force the measures needed in order to comply
with this directive within eighteen months of its notification, and shall
forthwith inform the Commission thereof.
Article 18
The provisions adopted by the Member States pursuant to this directive can
be progressively applied to the firms referred to in article 6, existing
at the time of the directive's adoption, within three years of the noti-
fication referred to in article 17.
Article 19
Member States shall ensure that the texts of the national laws and provi-
sions which they adopt in relation to this directive shall be communicated
to the Commission.
Article 20
This directive is addressed to the Member States.
D<»j» at
289
-------
4. 1 hie and Subtitle
Used Oil Law in the United States and Europe
5- Report Date
July 1974
6.
7. Author(s)
William A. Irwin and Richard A. Liroff
Performing Organization Kept.
No.
9. Performing Organization Name and Address
Environmental Law Institute
13U6 Connecticut Avenue, N.W.
Washington, DC 20036
10.
mrj"'
BiP
11. Contract/Grant No.
68-01-2203
lit No.
12. Sponsoring Organization Name and Address
Washington Environmental Research Center
'Office of Research and Development
Environmental Protection Agency
Washington, D.C. 20460
13. Type of Report It Period
Covered
14.
15. Supplementary Notes
Environmental Protection Agency report no. EPA-600/5-7U-025, July 197U
16. Abstracts
This report briefly reviews existing information on the collection and
disposal of used automotive and industrial oils and-dH the potential health
risks of improper disposal of such oils. Provisions of federal law governing
disposal of used oils are analyzed. The history of federal taxation of lubricating
oils is recounted, as is that of federal requirements'for labeling products made
from used oils. State laws regulating used oil disposal and reprocessed oil labeling
are analyzed and the laws (and/or proposed laws) of several other Industrialized
nations governing used oil collection and disposal are described. The elements of
a comprehensive program for regulating used oil collection and disposal and alternative
means for implementing and funding such a program are discussed. Recent Congressional
bills relating to used oils are examined.
17. Key Word* and Document Analysis. I/a. Descriptors
* Environment, air environment, aquatic environment
* Oil, oil pollution, oil wastes
* Legal aspects, jurisdiction, vegetation
17b. Identifiers /Open-Ended Terms
17e. COSATI Field/Group
18. Availability Statement
Unlimited
19.. Security Class (This
Report)
UNCLASSIFIED
20. Security Class (This
Pitftr
UNCLASSIIMUD
21. No. of Pages
302
22. Price
NTIS-II IMKV. i-rai
U1COMM-DC UtM-PTl
------- |