PB-237 620
A TECHNICAL AND ECONOMIC STUDY OF WASTE OIL RECOVERY,
PART III:  ECONOMIC, TECHNICAL AND  INSTITUTIONAL
BARRIERS TO WASTE OIL R
TEKNEKRON,  INCORPORATED
PREPARED  FOR
ENVIRONMENTAL  PROTECTION  AGENCY
INSTITUTE  OF PUBLIC  ADMINISTRATION

OCTOBER 1973
                            DISTRIBUTED BY:
                            National Technical HrfanMtim
                            U. S. B1PHI1EIT iF

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BIEUOGRAPHIC DATA
 HHuT
1. Report No.
    EPA/530/SW-90C.3
 . Titie ami Subtitle
  A TECHNICAL AND ECONOMIC  STUDY OF  WASTE OIL RECOVERY
  Part  III:  Economic, Technical and Institutional Barriers
 	to  Waste Oil Recovery
                                                  5. Report Date
                                                     October.  1973
                                                  6.
7. Author(s)
  Peter M. Cukor,  Michael John Keaton, Gregory Wilcox
                                                  8. Performing Organization Kept.
                                                     No.
 . Performing Organization Name and Address
  Teknekron,  Inc.  and The Institute of Public Administration
  2118 Milvia Street
  Berkeley, California    94704
                                                   10. °roject/Task/Worlc Unit No.
                                                  11. Contract/Grant No.
                                                     EPA Contract No:
                                                     68-01-1806	
 2. Sponsoring Organization Name and Address
   Office  ot  Solid Waste Management Programs
   U.S. Environmental  Protection Agency
   Washington,  D. C.    2U460
                                                  13. Type of Report & Period
                                                     Covered

                                                     Final 1 year
                                                  14.
15. Supplementary Note'
16. Abstracts
  A  study of  the waste  oil re-refining  industry,  emphasizing economic,
   technical  and institutional barriers  to  waste oil recovery.
 17. Key Words and Oocumcnt Analysis.  17o. Descriptors


   Secondary Oil Recovery, Economic Analysis
17b. Identifiers/Open-Knded Terms


   Waste  oil re-refining,  recycling,  re-refining Industry analysis
 17c. COSATI Field 'Group
 18. Availability Statement
                                       19..Security Class (This
                                          Report)
                                            UNCLASS1FI
[21. No. of Pages
                                                            20. Security Class (This
                                                               Page
                                                                 UNCLASSIFIED
 FORM NTi»-3B (REV. 10-73)   ENDORSED BY ANSI AND UNESCO. |
                                THIS FORM MAY BE REPRODUCED
                                                              UlCOMM-DC S2BI-P74

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                         A TECHNICAL  AND ECONOMIC STUDY

                             OF WASTE OIL RECOVERY
Part III:   Economic, Technical and Institutional  Barriers to Waste 011  Recovery
                     This report (SH-90c.3) was written by
              PETER CUKOR, MICHAEL JOHN KEATON, and GREGORY WILCOX
          Teknekron, Inc., and The Institute of Public Administration
                         under contract no. 68-01-1806
                      U.S. ENVIRONMENTAL PROTECTION AGENCY

                                      1974

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This report has been reviewed by the U.S. Environmental Protection Agency.
Its publication does not signify that the contents necessarily reflect the
views and policies of the U.S. Environmental Protection Agency, nor does
mention of commercial products constitute endorsement or recommendation
for use by the U.S. Government.

An environmental protection publication  (SW-90c.3) in the solid waste
management series.

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                      Notice
The report A Technical and Economic Study of Waste Oil
Recovery, prepared by Teknekron,  Inc. and the  Institute
of Public Administration under EPA Contract 68-01-ia06,
has been published in three separate volumes under the
following titles:

A Technical and  Economic Study of Waste Oil Recovery  -
ly of Haste 011 Recovery
Waste Oil From Automobll
Part I:  Federal Research on Vfeste Oil  From  Automobiles

A Technical and  Economic Study of Waste Oil  Recovery -
Part II:  An  Investigation  of  Dispersed Sources  of Used
Crankcase Oils

A Technical and  Economic Study of Waste Oil  Recovery -
Part III:   Economic.  Technical and  Institutional'
Barriers to Waste  Oil Recovery
                                       Preceding page  blank
                         111

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                              TABLE OF CONTENTS
SUMMARY	1
CHAPTER 1:  THE RE-REFINING INDUSTRY:  AN ECONOMIC ANALYSIS	9
     1.0  INTRODUCTION	9
     1.1   DESCRIPTION OF THE RE-REFINING INDUSTRY	11
          1.1.1  Composition	11
          1.1.2  Phases of the Industry	11
          1.1.3  Description of Re-Refining	11
          1.1.4  History of the Re-Refining Industry	15
          1.1.5  The Decline of the Re-Refining Industry	16
     1.2  COLLECTION OF WASTE LUBRICATING OILS	21
          1.2.1  Independent Collectors	21
          1.2.2  Charges and Payments for Waste 011 Pickups	21
          1.2.3  Supply of Feedstock	24
          1.2.4  Waste Oil Collection by Re-Refiners	25
          1.2.5  Closed-Cycle or Custom Re-Refining	26
     1.3  RE-REFINING OF WASTE CRANKCASE OILS	27
          1.3.1  Process Description	27
          1.3.2  Process Economics	27
          1.3.3  Breakdown of Production Costs	30
          1.3.4  Blending and Compounding	33
     1.4  MARKETING	37
          1.4.1  Wholesale Markets	37
          1.4.2  Retai 1 Markets	37
          1.4.3  Commercial and Industrial Markets	38
          1.4.4  Comparison of Markets for Re-Refined Oil	40
     1.5  VIRGIN AUTOMOTIVE CRANKCASE OILS	43
          1.5.1  Production of Virgin Lube Oils	43
          1.5.2  Supply of Virgin  Lube Oils	43
          1.5.3  Effect on the Re-Refining Industry	49
                                              Preceding page blank

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     1.6  CRITERIA FOR SUCCESS  IN RE-REFINING	51
          1.6.1   The "On-Highway" Market	51
          1.6.2   The "Off-Highway" Market	51
          1.6.3   Diversified Operations	53
CHAPTER 2:  EVALUATION OF LUBE  OIL QUALITY	...57
     2.0  INTRODUCTION	57
     2.1  SPECIFICATIONS	59
          2.1.1   API/SAE Specifications	59
          2.1.2  Engine Service Classification	60
          2.1.3  Definitions and Explanations of API Engine
                 Service Classifications	62
          2.1.4  Application of API/SAE Specifications	67
          2.1.5  Automobile Manufacturer's Specifications	67
          2.1.6  Military Specifications	69
     2.2  TESTING	71
          2.2.1  Laboratory Bench Scale Tests	71
          2.2.2   Engine Tests	74
     2.3  CONCLUSIONS	81
 CHAPTER 3:   FEDERAL  PARTICIPATION  IN WASTE OIL RECOVERY	85
     3.0  INTRODUCTION	85
     3.1  PROCUREMENT OF  LUBE OIL  BY THE FEDERAL GOVERNMENT	87
          3.1.1   Establishment  of  Lube Oil Specifications	87
          3.1.2   The Coating and Chemical Laboratory	87
          3.1.3   Procurement Procedures	92
          3.1.4   Organizational  Structure	92
      3.2  WASTE  LUBE OIL  DISPOSAL BY MILITARY FACILITIES	95
          3.2.1   Organization	95
          3.2.2   Procedures	95
      3.3   REMOVAL OF FEDERAL BARRIERS  TO WASTE OIL RECOVERY	99
           3.3.1   A Restatement of the  Problem	99
           3.3.2   Establishment of a New Specification	99
           3.3.3   Re-Refining From a Constant Source of Waste Oil	100
           3.3.4   Rationale for Federal Participation	101

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          3.3.5  Implementation Plan—Exceptions to Procurement
                 Procedures	102
          3.3.6  Further Examples of Lube Oil  Procurement	103
     3.4  A PROPOSAL	107
ACKNOWLEDGMENT	Ill
APPENDIX A:  MILITARY SPECIFICATIONS MIL-L-46152 AND MIL-L-2104C FOR
             ENGINE CRANKCASE OILS	113
APPENDIX B:  LETTER TO FTC BY R.G. STREETS, ARMY MATERIEL COMMAND	137
                                     vii

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                                 SUMMARY
     Since 1960, the re-refining of used automotive engine oils, once a
flourishing industry, has continuously contracted, both 1n number of firms
in operation and annual volume of lube oil re-refined.  A plentiful supply
of virgin lube oils, adverse government rulings regarding lube oil taxation
and labelling of recycled oils, and the failure of the re-refining industry
to provide consumers with products of consistently high quality have been
major factors 1n the decline of this business.  For example, in 1960, about
150 firms produced 300 million gallons of re-refined oil.  As of 1972, the
45 firms still operating produced only 100 million gallons of recycled
lubricants.  More recently, sharply reduced availability of waste oil sup-
plies and environmental restrictions on the disposal of toxic wastes pro-
duced as by-products of re-refining have contributed to the contraction
of the industry.

     In order to understand the reasons for the decline of the re-ref1n1ng
industry, a study was made of the economics, structure and competitive as-
pects of the business.  As a part of this analysis, interviews were con-
ducted with thirteen re-refining companies throughout the United States.
Economic and operating data for these firms were collected and analyzed fn
order to determine the key costs and criteria for success at each  stage of
the industry, the types of markets served, the profitability of these mar-
kets, and the ability of re-refiners to compete with producers of  virgin
lubricants.  The analysis revealed the reasons why  a few re-refiners have
been able to prosper while the majority of firms still in existence are
only marginally profitable.

Waste Oil Collection

     The first  stage of the re-refining industry is the collection of waste
oil.  Traditionally, used oils have been  collected  both by small,  indepen-
dent operators, who would sell the oil to re-refiners or anyone willing to
pay the going price, and by re-refiners themselves.  For many years most re-
refiners were able to  obtain adequate waste oil supplies at relatively  low
cost.  However, since  1972 tight supplies of  and rapidly rising prices  for
energy sources  have  served to  divert substantial volumes of waste  oil  to the
fuel market.  Until  recently,  lube  oil  prices had  not advanced  sufficiently
to permit  re-refiners  to compete successfully for waste oil supplies with
persons buying  waste oil for use as  fuel.  However, since late  1973, a  grow-
ing shortage of virgin  lubricants has  resulted  1n  substantial price  in-
creases for both new and re-refined  oils.  As a result,  re-refiners  are
now able  to pass along  the  increased costs of acquiring waste oil  supplies.
In the future,  the  degree to which  these  firms will be able to  secure  ade-
quate  volumes of feedstock will  continue  to depend  on  the relative market
prices of virgin lube  oil and  fuels.   Higher  fuel  prices  in relation to

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those for lube oil  will  direct waste  oils to the fuel market.   Conversely,
higher lube oil  prices in relation to fuel  will  enable  re-refiners  to  cow-
pete successfully for scarce supplies of used lube oils.

Re-Refining of Uaste Oil

     Nearly all  re-refining plants in the United States use the acid-clay
process for treating waste oils.   In  this process water is  removed  by  dis-
tillation.  The water-free feed is extracted with sulfuric  acid to  remove
spent additives and sludge.  The  rafflnate (lube oil  free of additives and
sludge) is distilled to remove low boiling components and mixed with clay
to remove colored bodies and colloidal carbon.  The clay is separated  from
the distilled product by filtration.   The viscosity of the  re-refined  pro-
duct may be increased by blending with appropriate virgin lube oils or syn-
thetic polymers.  Chemical additives  are then blended as required to meet
specifications for various applications.  The add sludge is dumped where-
ever local regulations permit.

     Based on interviews conducted with 13 re-refiners during the summer
of 1973, average cost figures for each step 1n the re-refining of waste
lube oils were obtained.  The most important variable in the cost of re-
refining is the annual production rate.  Excluding the cost of feedstock,
the combined expense of labor, overhead and depredation accounts for sixty
percent of total per gallon production costs for re-refined oil.  Hence
those firms with the largest throughput have the lowest production costs.
Excluding  feedstock, these costs ranged from 1U per gallon for a firm pro-
ducing 7,200,000 gallons per year to  16$ per gallon for a firm producing
540,000 gallons per year.

      Excluding  taxes and administrative costs, the average total production
cost  for  the  firms  interviewed was 17.5$ per gallon.  This figure may be
divided  into  the following  component  parts. *

      The  cost of feedstock  (7$ per gallon  of product) represents the great-
est  cost  in re-refining.  As product  yields are only about sixty percent
of  the waste  oil feed,  a one cent  increase 1n the cost of feedstock in-
creases  production  costs by  1.66  cents.  Labor and materials  (sulfuric acid
and  clay)  costs  are about  equal  1n importance (3< per gallon  for each),
followed  by the  costs of overhead  (2t per  gallon), depredation  (U per
gallon)  and utilities  (U  per  gallon).  The cost  of  disposal  of the acid
sludge  produced as  a by-product  of re-refining  is only a small fraction
 (less than 0.5it per gallon)  of total  processing costs.  However, inability
to  locate  approved  disposal  sites  has forced  some firms to discontinue
operations.

      Depending  on  the  product  specifications, a  variety of addHives will  be
blended  with  the re-refined base stock.   Blending costs for high performance,
 * All  costs are as  of August,  1973.

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top quality lube oils (17.5tf per gallon of product) are as large as the
total cost of re-refining.

Marketing

     Marketing is the phase of re-refining in which the greatest differences
between firms exist.  Analysis of the types of markets served by re-refiners
reveals the reasons why some firms have prospered while others have failed.


     There are two main marketing paths accessible to re-refined lube oils.
High quality oils which have been blended with additives are sold direct-
ly by re-refiners to final users such as industrial and commercial estab-
lishments  (trucking firms, taxi fleets, railroads, etc.).  Conversely,
unblended, nondetergent re-refined oils are sold in bulk to independent
jobbers who do their own packaging and distribution.  Although direct sales
of the high quality oils to final users are highly profitable, only a small
fraction  of the  total production of re-refined oil is marketed in this
fashion.

     Most re-refined lube oil  is sold  in tank truck loads of several thou-
sand gallons to  independent jobbers.  Margins on such sales are quite low,
in some cases as little as  a penny a gallon.  The  jobbers package  the oil  in
55 gallon drums  or  quart cans  under one or several brand names and sell the
packaged  product to  garages, independent service stations and discount
stores.   Re-refined  oil sold in these markets competes with low quality
virgin  lubes and other unblended oils.  The failure of the re-refining indus-
try  to monitor  the  quality  of  its products and a Federal Trade Commission
ruling which requires that  re-refined  oils sold in interstate commerce be
labelled  to  indicate that  they were produced  from  previously used  oils
have definitely contributed to the public's lack of confidence in  the qual-
ity  of  recycled lube oils.  As a result, consumers who knowingly  purchase
such oils do  so on  the basis of  the  low  price at which they are sold.  With
such a  low margin per gallon of  sales, the key to  success  in this  market
is  volume.   Yet the tight  supply of waste  oil has  forced many firms  to re-
duce production levels thereby increasing  marginal costs.  Re-refiners who
serve  primarily the bulk  oil market  have become only marginally profit-
able in recent  years.  However,  all  re-refiners interviewed experienced no
difficulty in  selling all  the  oil they could  produce.

     Due  to  lack of quality assurance  and  consumer confidence,  it is  quite
difficult for  a re-refiner to  market his  product  in  competition with  high
quality virgin  lubricants  produced  by  major  oil companies.  This  is  espe-
 cially true  in the retail  market where consumer purchase habits  have been
 shown  to be  strongly influenced by  identification  with nationally adver-
 tised  brands.   As a result, very little,  if  any,  high  quality  re-refined

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oils are available in the retail market.  If an attempt to market such oils
were to be made, the oil would have to be sold at a much higher price than
the nondetergent inexpensive (and frequently low quality) recycled lubes
now available.  Since the public does not have confidence in the quality
of re-refined oil, few if any of these high quality products would be sold.
Hence only unblended, low cost re-refined oil is available.  This tends to
reinforce the poor public image of recycled oils.

     However, a few firms have been successful in selling high performance
(blended with additives) re-refined oil to commercial and irxlustHal accounts
in competition with top quality oils produced by the large petroleum com-
panies.  Depending on the volumes involved, profit margins on such sales
may run as high as forty cents per gallon.  In some cases a large customer's
waste oil is  delivered to the re-refiner, re-refined separately from other
oils, and returned to the customer.  Such "closed-loop" or "custom" re-
refining is not only financially attractive, but also provides the re-refiner
with a secure supply of feedstock.  Re-refiners who have penetrated the
high quality  market have been able to do so on the basis of long-term "toe
to toe", "belly to belly" relationships with their customers.  Such relation-
ships involve a significant degree of trust on the part of the consumer.
Hence a firm's  success  in this  kind of market rests upon a very high degree
of product quality control as well as a competitive price and prompt atten-
tion to the customer's  needs.   Typically such customers might include truck-
ing companies,  railroads and  taxi fleets, and other companies which have
very large investments  in rolling stock and consume large volumes of lube
oil.  Without exception, re-refiners who have been able to establish such
relationships with commercial and industrial clients have earned an attrac-
tive return on  their  invested capital.

     A major  conclusion  of the  analysis of the re-refining industry is  that
uncertainty as  to the quality of  re-refined  lube oils  is the principal  bar-
rier to  increased recycling  of  used  lubricants.  In order to understand the
nature of  the quality  issue,  existing  specifications for automotive lube
oils and  the  testing  procedures required  by  these  specifications were examined.

Lube Oil  Specifications

     A variety  of specifications  for  lube oils have  been established.   The
most significant  specifications are  those  set  by the automobile manufacturers,
the American  Petroleum  Institute/Society  of  Automotive Engineers  (API/SAE),
and the  United  States military.   In  the case of  lube oils  used  in modern
automobile engines,  each set of specifications  requires  a  number  of  labo-
ratory  tests  of the  physical  and chemical  properties of the  candidate  prod-
uct.   Such tests  are neither prohibitively  expensive nor excessively  time
consuming.   In  fact,  a  number of re-refiners operate their own  quality  con-
trol  laboratories, a few of  which are equipped to  perform  all  specified
tests.

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     In addition to bench scale laboratory tests, each set of specifications
also requires that a series of engine sequence tests be performed.   Unlike
the bench scale tests described above, which examine the physical and chem-
ical characteristics of the lube oil Itself, a major purpose of engine se-
quence tests 1s to evaluate the "additive response" of the lube oil; that
is, the performance properties of the lube o11-add1t1ve blend.  These tests
are performed 1n highly specialized laboratories am) are designed to re-
produce the actual conditions of temperature, vehicle load and weather con-
ditions under which modern motor vehicles operate.  The results of engine
tests are evaluated subjectively by assessing the wear of tey engine parts
and amounts of varnish and other wastes deposited on these parts.  Engine
tests are quite costly.  Expenditures per test typically amount to $10,000.
Since a number of engine tests are required to qualify an oil for a given
class of service, total costs can easily amount to $80,000 to qualify a
single lube oil product.

     Automobile manufacturer's specifications are particularly Important
1n  classifying lube oils, as new car warranties require that only lube oils
meeting certain quality levels may be used.  As a result, th« lubricant
manufacturers, notably the major oil companies, have established their own
specifications based upon performance criteria set by the auto Industry.
These API/SAE specifications are, therefore, always consistent with lube
oil  specifications  established by the Individual automobile firms.  It Is
the responsibility  of the lube oil producer to establish that hfs product
meets  the  specifications for the class of service for which the oil 1s rec-
ommended.  An oil recommended for a given class of service must be capable
of  satisfying all the physical, chemical, and performance requirements
 (engine  tests)  for  the specified class of service.  However, the use of an
API/SAE  service  label designating an oil as suitable for a given use Is wholly
the responsibility  of the marketer  of that  particular brand of oil.  If an  oil
 1s  labelled  as meeting the  requirements  of  a given service classification,  the
oil may  or may  not  have  been subjected to all the tests required for that clas-
 sification.   The use of  the label only means  that  the marketer  1s certain that
 the oil  would pass  all  the  tests specified  if these  teata were actually per-
formed.   There  is no independent organization which monitors  lube oil quality.


      While neither  API/SAE  nor manufacturer's  specifications  exclude re-
 refined  oils from consideration, the  more  stringent  requirements for lube
 oil quality established  by the Department of  Defense do prohibit the use
 of re-refined materials  1n automobile  engine  oils.   This  1s  particularly
 Important as all  lube oil  purchased by agencies  of the  federal  government
 must meet military  specifications.   Further,  the procurement practices  of the
 U.S. government have established a  standard which 1s followed by many other
 organizations,  Including state and  local governments, which  look to Washing-
 ton for leadership 1n establishing  quality  control  over automobile  engine

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lubricants.  According to the Defense Supply Agency, the government body
which procures lube oil for all federal facilities, re-rafined oil is ex-
cluded from consideration on the grounds that reliable information on the
quality of such oils does not exist.  In order to qualify an oil for gov-
ernment purchase, both laboratory bench scale tests and engine tests roust
be performed.  Further, military specifications require that once an oil
is qualified for procurement, no changes may be made in the feedstock from
which the lube oil is manufactured without subsequent requalif1 cation of
the product.  Since the waste oil feed to a re-refining plant Is derived
from a variety of unknown sources, each batch of re-refined oil would have
to be tested.  Yet the cost of the tests required to qualify an oil Is so
high, that it has been economically impossible for any re-refiner to pro-
vide qualified oil for purchase by the federal government.  This situation
tends to reinforce the fear that re-refined oils may be Inherently inferior
to virgin  lubricants and should, therefore, be labelled as made from previous-
ly used oil  in order to protect the consumer.

     Thus  re-refined oils cannot be procured by the Defense Supply Agency
because there  is  no evidence that such oils can meet quality standards.
Yet  the cost of  providing such evidence  is prohibitive, especially in view
of the competitive bidding  arrangements  under which government  facilities
purchase  lube  oil.

Recommendation:   A Closed-Cycle Experiment

      If increased recovery  of  waste oils  is to occur,  then  a different  ap-
proach must  be taken  in  order  to establish the quality of these products.
At the same  time 1t  is evident that regardless of  the  quality of  re-refined
oils,  consumers  will  be  reluctant to  purchase  these products as long as  the
government refuses  to  accept them for use in  its own  vehicles.  Conversely,
 if government  lube  specifications were revised to  permit  the purchase of
 re-refined lube  oils,  then  a more favorable climate for new private  Invest-
ment in waste  oil  recovery  would result.

      In order to resolve the question of the  quality  of re-refined oil,  a
 simple experiment is  proposed.   An  activity with a large  demand for  lube
 oil, such as a military  base,  would agree to  supply used  crankcase oils
 to  a re-refiner.  The oils  would be segregated from other fluids  and dirt
 to  assure constancy of feedstock quality.  The re-refiner would agree  to
 process  this oil separately from other feed streams so that the quality
 of  the lube oil  product  would not  be  affected by feedstocks of unknown
 origin.   The re-refined  oil would  then be returned to the activity which
 provided  the waste lube  stock.  Under such a  "closed-cycle" system it  would
 be  possible to prove or  disprove the  performance of re-refined oil on  the
 basis of  day to day usage under a  variety of service  conditions.   A  success-
 ful  pilot program would  lead to the second phase of the   experiment in which

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the restriction against the use of outside sources of waste oil would be
removed.  Successful completion of this phase would lead to the establish-
ment of new government specifications which would allow the procurement
of recycled oil without the need for costly requalification.  The estab-
lishment of lube oil quality through a closed-cycle/open-cycle experiment
is the first step -in acquiring the data necessary for a change in the
federal labelling law.  This law requires that all oils containing re-
refined products bear a label stating that the oil was manufactured from
previously used materials.  Because the term "used" implies that a product
may be of inferior quality, this law has frequently been cited as a deter-
rent to public acceptance of recycled oils.  The labelling  law has been
justified on the basis of consumer protection.  Yet if a re-refined oil
can be  shown to be of the same quality as equivalent virgin lubes, there  is
no reason to discourage its purchase by identifying the source of the materials
from which  it was manufactured.

     With the government  taking the  lead  in the use of re-refined oil,
other  large lube oil consumers would have an incentive to  follow, as re-
refiners can provide top  quality  lubes at prices competitive with those
of virgin products.

     The recommendations  whose  implementation  can  lead to  increased waste
oil  recovery may be  summarized  as  follows:

      1.  Establish  the  quality  of  re-refined  lube  oil  in a controlled
         closed-cycle experiment.

      2.  Resolve  the variable  feedstock  issue  in  an open-cycle experiment.

      3.  Revise  federal  procurement  and  labelling  policies to  reflect
          the  quality of re-refined oil.   Acceptable  re-refined oils
          should  be  certified as being  of  the  same  quality  as equiva-
          lent  virgin lubes.

 Successful  completion  of this  program  will  aid in establishing public  con-
 fidence in  the quality  of properly re-refined  oils and will therefore  re-
 move the barriers which have prevented re-refined oils from penetrating
 the high quality,  high profit retail and comroerical  markets.

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                                CHAPTER 1


               THE RE-REFINING INDUSTRY:  AN ECONOMIC ANALYSIS


                            1.0  INTRODUCTION
     Since the passage of the National  Environmental  Policy Act,  a  number
of government agencies have sponsored or conducted their own research on the
technical aspects and environmental  impacts of various methods for  the disposal
of used lubricating oils.  More recently, increasing  concern for  the recovery
of scarce resources has prompted additional studies on ways of increasing the
volume of waste oil which is recycled.   These studies have shown  that although
re-refining of used lube oils is both a desirable method of reducing environ-
mental damages due to waste oil disposal and a feasible way of conserving this
valuable resource, the existing re-refining industry has been unable to expand
its operations in order to recycle the steadily increasing volumes  of waste oil
generated each year.  In fact, rather than expanding its operations, the re-
refining industry has experienced an extended period of continuous  contraction.
Thus it  is clear that any federal strategy aimed at reducing the  environmental
impact of waste oil disposal and stimulating efforts to recover the resource
value of these materials must take account of the operations of the companies
which re-refine used lube oils.

     Although reclaiming of waste lube oils has been commercially practiced for
nearly sixty years, re-refining companies now function in a business environ-
ment which has, since about 1960, been most unfavorable for new investment.  Over
the past 13 years, more than two-thirds of the 150 firms formerly engaged in re-
refining have gone out of business.   As a result very large volumes of waste oils
which at one time were re-refined to produce lube stocks are now being disposed
of in other ways,  some of which are environmentally harmful.  In  addition, waste
oil generation has increased roughly in proportion to the 33 percent increase
in lube  oil demand during this period.  Thus while the volume of waste oil avail-
able for disposal  has been  rising, the capability to reprocess these wastes to
useful products has been falling.  Reasons for the decline of the re-refining
industry have thus become a matter of considerable importance in forming govern-
ment waste oil policy.

     This chapter  seeks to  assist in policy  formation by discussing  the  struc-
ture and economics of the re-refining industry as it presently exists and examin-
ing in detail the  criteria  for success and the reasons for failure  in re-refining.
For while in recent years a  large number of  firms have ceased operations, a few
companies have managed to prosper.  Business  strategies for profitable operation
are discussed with respect  to  the three phases of the industry: waste oil collec-
tion, re-refining, and marketing.  Much of the data presented in this chapter
           Preceding page blank

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were collected during interviews conducted with thirteen re-refiners located
in or near major urban areas throughout the United States.   Detailed cost
breakdowns are provided for all important operations relevant to the recycling
of automobile crankcase oils.  Similar calculations are presented for new
crankcase oils produced directly from crude oil.  The results of this analy-
sis provide insight into the business strategies of a profitable re-refinery
and the changes in the business environment which are necessary to improve
the climate for investment in this business.  The effects of certain govern-
ment policies on the re-refining environment are also discussed.  The goal of
this chapter  is, therefore, to provide policy makers with an awareness of the
effects of present and future strategies for recovery of waste oils on the
industry whose viability is of central Importance to this effort.
                                     10

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              1.1   DESCRIPTION OF  THE  RE-REKINING INDUSTRY


1.1.1   Composition
     The oil  re-refining industry is composed of approximately forty-five
companies located throughout the United States,  principally ir or near major
population centers.   The main activity of these  companies is the recovery
of marketable petroleum products from various types of previously used and/or
contaminated  lubricants and fuels.   The largest  re-refiner produced  about
7,200,000 gallons of industrial  and automotive lube oils and had total revenues
of $3,000,000 in 1972.   A typical small re-refiner produced about 500,000  gal-
lons of lube  oils and had total  revenues of between $100,000 and $150,000  in
1972.  Table  1  summarizes economic  and operating data for thirteen re-refining
companies interviewed in this study.

     Due to the high cost of shipping lubricating oils and the relatively  low
market value of re-refined crankcase oils, re-refined oils are normally sold
within a radius of not more than 300 miles from the point of manufacture.   In
most areas of the country the demand for re-refined oils is sufficiently large
compared to the supply that re-refiners experience no difficulty in  finding
markets for all the oil they can produce.  Hence there is little competition
between re-refined lube oils.  On the other hand, supplies of drain  oil from
which re-refined oils are produced are becoming  increasingly scarce  and re-
refiners must now compete with each other and with other businesses  to secure
adequate volumes of feedstock.
 1.1.2  Phases of the  Industry
     While there are vast differences in type, scale and diversity of opera-
tions between the oil re-refining industry and the petroleum industry, the
former business may be divided into three phases similar to the production,
refining, and marketing activities of large oil companies.  These phases are:
collection of waste oil, re-refining of waste oil, and marketing of re-refined
products.  The analysis, which begins on page 21 , is divided in this manner
in order to understand the essentials of the oil re-refining business and to
make comparisons between the firms which form this industry.


1.1.3  Description of Re-Refining


     Previously  used or contaminated oils may be treated  by a number  of methods.
In some  instances, especially  in the case of fuel oils, the reclamation pro-
cess may  involve simply the removal of  insoluble materials and  limited treat-
ment to  reduce chemical contaminants such as water.   If waste lubricating oils
                                     11

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are to be re-refined to produce a quality lube oil, considerably more complex
and thorough processing of the oil  under controlled conditions is required.
Frequently confusion arises as to the type of operation referred to in discuss-
ing the re-refining industry.   This chapter focuses principally on the latter
type of operation in which the objective is to remove all soluble and insoluble
contaminants as well as any additive components from the waste oil feedstock.
The product of such an operation is a clean mineral oil or "base stock" which
is approximately equivalent in composiiton and performance characteristics to
a quality, non-detergent virgin lubricating oil.  From this mineral oil it is
possible by blending with other oils and additives to produce a wide variety
of automotive and industrial lubricants.


 1.1.4   History  of  the Re-Refining  Industry


      Methods  for the  reclamation of waste lubricating  oils were in use as early
 as 1915.   At  that  time only simple processing was used in which the oil  was
 first heated  to remove volatile contaminants.   The addition of a coagulant
 followed by settling  or centrifuging completed the treatment.   Following World
 War I  such simple  reclaiming  procedures were established by the Army Air Corps
 at Air Depots in the  United States.  Although the reclaiming process would  be
 considered rather  primitive by today's standards, the  recovered oil met essen-
 tially all the specifications for aircraft engine lubricating oil against which
 virgin lubricating oils were  then procured.   Prior to  American entry into World
 War II, this program  was operated on a small scale as  the apparently inexhaustible
 petroleum reserves in the United States precluded the  need for an expanded  re-
 cycling program.

      Commercial aviation provided a new market for re-refined lube oils.  In
 1932, American Airlines initiated a "closed-cycle" re-refining system in which
 used lubricating oils from company planes were treated to remove contaminants
 and then returned for use in company aircraft.  This program resulted in a  20
 percent net savings  in lubrication costs and served to stimulate the use of
 re-refined oil in other industries.  By 1939, the re-refining business had  grown
 considerably and was processing more than 11 million gallons of waste oil  per
 year. !_/

      During World War  II use of re-refined lubricating oils increased dramati-
 cally.   In order to  conserve limited  supplies of petroleum, reduce costs, and
 simplify  supply and  distribution operations,  in  1942 the Army Air  Corps in-
 itiated  a  large scale  "closed-cycle"  system  similar to the American Airlines
 program mentioned above.   Previous Army Air Corps experience with  reclaimed
 oil and  the  success  of the product  in  commerical air fleets provided  strong
 incentives for  initiation  of the program.  During World  War  II,  re-refined
 oil was  used without restriction within  the continental  United  States.  Approxi-
 mately 29 million hours of flight  time was  logged using  re-refined oil without
 harmful  effects on engine  wear,  life,  or  cleanliness.   During  this  period
 average  engine  life  increased  by about  50 percent. 2/
             Preceding page blank
15

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     Following World War II, the Air Force approved the use of re-refined
lubricating oils without restriction.  Table 2 shows how Air Force use of re-
refined oil increased steadily in the late 1940's.   Considerable savings were
realized as re-refined lubricating oil  could be purchased for about 40$ per
gallon less than a comparable virgin product.  By 1949 about one-fourth of
all Air Force aircraft oil was re-refined.  However, the advent of jet air-
craft requiring synthetic-based lubricating oils drastically reduced the
volume of oil which was available for re-refining.   As a result waste oil col-
lection costs increased thereby reducing the economic Incentive to use recycled
oil.  Eventually the program was discontinued.


1.1.5  The Decline of the Re-Refining Industry


     As shown in Table 3, following World War  II the re-refining industry grew
steadily.  By 1960 about 300 million gallons  per year of re-refined oils were
produced.  This represented about 18% of total domestic use of lube oils.  Since
then production of re-refined lubricants has  fallen sharply.  In 1971 it 1s
estimated  that only  120 million gallons of re-refined lubricating oils or 5.5
percent of domestic  use were produced.  This  drastic decline in production has
been accompanied by  a parallel decrease in the number of companies engaged in
re-refining.   In 1960 there were  between  125  and 150 re-refiners 1n operation.
At present the number of  firms producing re-refined lube oils is less than 50.
The most recent compilation of commercial re-refiners listed 45 companies in
operation  as  of mid-1972.   A recent  check indicated that at least three of these
firms  have discontinued  operations.  Further, as will be discussed below, most
plants  still  in operation are working at  less than full capacity.

      As shown in Figure  1, a number of factors have contributed to the contrac-
tion of the  re-refining  industry.  At the collection end of the business, the vol-
ume of waste  oil available within a  given geographical area has fallen sharply
thereby necessitating an  increase in the area covered to collect the required vol-
ume of  feedstock.  Longer periods between oil changes, a large increase  in the
number  of  backyard  "do-it-yourself"  oil changes, 3/ and the recent increase  in the
use of  waste  lube oil as  fuel have been major conTributors  to the drop in waste
oil supplies.  This  has  resulted  in  higher costs of drain oil delivered  to the re-
refinery.  Competition  from cheap, low-quality virgin lube  oils has, until very
recently,  not allowed re-refiners to recover  these higher costs through  price in-
creases.   This cost/price squeeze has been  the major reason for the contraction
of the  re-refining  industry.
                                     16

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                             TABLE 2

           USAF Post-War Procurement of Re-refined Oil
Fiscal Year
1947
1948
1949
Gallons of Re-refined Oil
823,727
936,203
1,174,810
Estimated Savings
$338,000
$384,000
$482,000
                             TABLE 3

                Estimated  Industrial  Production of

                Re-refined Oil  in  the United States



Calendar Year                          Volume of Gallons*


   1939                                    11,250,000

   1948                                    45,000,000

   1950                                    50,000,000

   1954                                    75,000,000

   1960                                   300,000,000

   1966                                   225,000,000

   1971                                   120,000,000

   1972                                   100,000,000


*Source: Estimates for 1939 and 1948 were included  in  a  research  paper
         prepared by Major Charles B. Cruikshank  for the Air Command
         and Staff College of the Air University.   Estimates for  1950
         and 1954 were included in the April  26,  1954  issue of the
         Oil and Gas Journal.  Figures for 1960-1971 were provided by
         the Association of Petroleum Re-Refiners,  and the 1972 esti-
         mate was provided by EPA.
                                17

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                                    Figure 1

              REASONS  FOR  CONTRACTION  OF  THE RE-REFINING  INDUSTRY
                            •FEDERAL  LABELLING    LAW
          LOW QUALITY OF SOME
          RE-REFINED OILS
                           RETAIL SALES OF RE-REFINED
                        OIL AT LOW PRICES IN COMPETITION
                       WITH LOW QUALITY VIRGIN LUBE OILS
INABILITY TO INVEST IN
MODERN, POLLUTION-FREE
 PROCESS EQUIPMENT
POLLUTION DUE TO DISPOSAL
  OF ACID SLUDGE
LOW PROFIT MARGINS TO
    RE-REFINERS
         V
                             LACK OF CONSUMER
                             ACCEPTANCE
                                         USER PERFORMED OIL
                                      CHANGES; USE OF WASTE
                                      OIL AS FUELj SMALLER CARS
                                      AND LONGER PERIOD BETWEEN
                         OIL CHANGES
                INADEQUATE SUPPLIES OF
                 WASTE OIL FEEDSTOCK

REDUCED PRODUCTION LEVELS
                                 PLANT CLOSURE

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     At the re-refining end of the business, most plants now in operation
are more than 30 years old, have very high maintenance costs, and cannot be
modernized without large new investments.  Laws concerning air and water pollu-
tion control have required considerable new investment 1n emissions control
equipment which has, in some cases, been beyond the resources of some firms.
These companies are no longer operating.  Further, the re-refining process
most commonly used produces large volumes of acid sludge which has tradi-
tionally been disposed of by dumping.   In some states regulations controlling
or prohibiting the disposal of such untreated hazardous materials have forced
re-refiners out of business.  In addition, the re-refining process has proved
incapable of successfully removing chemical additives from modern automobile
waste oils without the use of increased volumes of acid, thereby compounding
the sludge disposal problem.

     In marketing, the re-refining industry has never enjoyed a reputation
for producing high quality products.  The business has a history of oppor-
tunists and men of questionable integrity whose operations have served to
discredit those firms which do produce  high quality products.  Partially as
a result of this situation, in 1964 the Federal Trade Commission ruled that
oils sold in interstate commerce which  are composed in whole or part of pre-
viously used oils must be  labelled as "manufactured from previously used oils."
Hence, regardless of the quality of re-refined lubricants, the FTC ruling  has
cast a stigma on these oils since to the consumer the word "used" frequently
implies a product of inferior quality. 3/   In  1965, the Excise Tax Reduction Act
removed a 6
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                 1.2  COLLECTION OF WASTE LUBRICATING OILS
     Waste lube oils are collected from a variety of sources either by in-
dependent operators or directly by a re-refiner.   The most Important sources
of used lube oils include service stations, garages, and industrial plants.
Municipal vehicle fleets, private truck and taxi  fleets and railroads also
provide large volumes of drain oil.  While only a small fraction of the waste
oil is collected under contract, for some re-refiners contractual relation-
ships account for the bulk of waste oil supplies.  This 1s especially true
of those firms engaged in "custom" or "closed-cycle" re-refining wherein the
source of waste oil is also the customer for the re-refined product.  In these
arrangements a customer's waste oil is segregated from other oils throughout
the entire re-refining process.  A single tariff is normally charged for waste
oil pickup, re-refining, and product delivery.  An important advantage of cus-
tom re-refining is a firm's ability to control both the quantity and quality
of its supplies of feedstock.  This is especially  Important as competition
for sources of drain oil is becoming Increasingly strong principally due to
the shortage and high cost of fuel oil (see below).


1.2.1  Independent Collectors


      The bulk  of all waste oil  collected  1n the  United  States  1s handled  by
small, independent companies.   The  size of these firms  ranges  from a  "father
and son"  operation  involving a  single  2000 gallon tank  truck to  a  large
scavenger company  engaged  in the  collection of a variety of waste  liquids
including used lube  oil  and  industrial solvents.  In  some  instances large
producers of waste oil  such  as  cities  and military  facilities  will  solicit
bids  from local  collectors for  waste oil  disposal.   However, there are  nor-
mally no contractual agreements between  collectors  and  the companies  whose
oil  they handle.   Both  personal  relationships between collectors and  those
whose oil is  being collected and  the  price charged  or paid for oil  removal
determine who  will  get  the waste  oil.  As recently  as the  mid  1960's col-
 lectors  would  pay  as much  as 3  to 5£  per gallon  for waste  oil.  By 1970
 this  situation had reversed  itself; collectors were now charging up to  5tf
 per gallon to  remove waste oils.   Today  the  trend  is again towards payment
 by collectors  for  waste oil  pickups.


 1.2.2  Charges and Payments  for Waste Oil Pickups


      Changes in the price of waste oils  can  be readily understood  by examining
 the supply of used oils and  the markets available for this resource.  In the
 early 1960's re-refining was a fairly attractive business.  Most automobiles
                                      21      Preceding page blank

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could operate satisfactorily using lube oils containing only a small  per-
centage of additives which were easily removed in re-refining.  The few
existing laws controlling air and water pollution and the disposal  of solid
waste were relatively lax.  Drain oil  could be used for road maintenance
and for dust control.  Further, service stations, car dealers and garages
accounted for more than eighty percent of automobile lube oil sales.   Hence
sources of drain oil were relatively concentrated and collection costs could
be held to a minimum while demand for waste oil was quite strong.  Under
these conditions collectors could afford to pay for waste oil pickups and
could be assured of a good price for their oil.

     In the western part of the United States, two additional factors do-
minated the supply-demand picture for waste oils.  In this region 1t was
formerly common practice for independent producers of crude oil to blend
several percent of crankcase dralnings with their crude 1n order to raise
the gravity of their production.  Crude oil prices vary according to gravity
with a price rise of about 8$ per barrel per degree of gravity Increase.
The gravity of some western crudes may run between 13° and 18° API whereas
the gravity of crankcase dralnings averages 25° to 27° API.  These blended
oils were then sold to major oil companies for refining.

     The second factor in the drain oil supply on the West Coast was the
export market for used lube oils.  For about nine years after World War II
nearly 50 percent of the drain oil on the West Coast was treated to remove
water and/or sludge and then shipped to Japan where It was re-refined to
make a variety of lube oils and fuels.  At this time Japan had little or
no crude oil refinery capacity and had to Import its petroleum requirements
in the form of refined products.  Further, there were strict controls on the
volume of fuel oils which Japan was allowed to import.   Importation of crank-
case drainlngs provided a hidden  supplement to the country's  fuel supply.

     During the mld-1960's the adoption of the federal labelling law and the
repeal of the 6$ per gallon tax on virgin lube oils sold for  off-highway use
drove  some  re-refiners out of  business and forced others to  seek ways to cut
costs  in order to survive.  Of even greater significance was  the buildup of
large  inventories of virgin lube  oils  by the petroleum Industry.  With  in-
creased  lube supplies oil companies found 1t necessary to  seek new markets for
lubricants, thereby  providing more intensive competition for  re-refiners.  At
the  same time, the  flow of lube oils sales away  from service  stations and
garages  to  mass merchandisers  served to diminish the volume  of drain oil avail-
able at  any one source,  thereby  increasing collection costs.   In addition,
state  and  local governments were  beginning  to  monitor waste  disposal.   In  some
instances collectors were required to  obtain  permits authorizing them as accept-
able sources for the disposal  of  waste oils.   By this time a number  of  crude oil
                                      22

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refineries had installed catalytic cracking units whose catalysts would be
rendered inactive by the lead contained in crankcase drainings.   Hence the
practice of blending used lube oils with crude oil came to an abrupt halt.
Further, the Japanese, with the aid of some major oil companies, had built
their own refineries and began to import crude oil from the Middle East.
The export market for drain oil on the West Coast rapidly disappeared causing
a drastic decline in the price paid by collectors for waste oils.  Hence
fewer markets existed for drain oil and those that did exist were under econo-
mic pressure to cut the cost of waste oil supply.  As a result,  service sta-
tion and garage owners were forced to pay as much as 5tf per gallon for waste
oil collection.  This served to decrease the delivered cost of feedstock for
re-refiners.  Further since the value per gallon of drain oil free of water
and other wastes is considerably higher than that of contaminated drainings,
there was an economic incentive for service station and garage owners to re-
duce contamination of their waste oil, thereby minimizing disposal costs.  At
the same time, the number of independent collectors increased as one could be
paid both to collect waste oil and to sell it for use as road oil, re-refinery
feedstock or raw material for  use  in manufacture of products such as asphalt.
Road oiling operations were  especially attractive as collectors could charge
between  10 and 15tf  per gallon  for  spraying oil on highways  in addition  to
the  3-5<£ per gallon charge for waste oil collection.

     This change  in the  waste  oil  market made it  economically possible  for
certain  irresponsible  individuals  to earn  a profit  by collecting  waste  oil
for  which they had  no  customer.   With  little or  no  monitoring of  the disposi-
tion of drain  oil,  it  was  possible to  dispose of 1t by dumping  at some  isolated
 location.   Further, some service  station managers,  faced with having to pay
to have their  drain oil  removed,  decided  to cut  costs by disposing of their
drainings in  environmentally harmful ways  such as dumping  them  into  storm
 sewers.   5/

      Recently there has  been a marked  shift  in the  waste  oil  market  largely
 due to tight  supplies  and  high costs  of fuel  oil.   Untreated crankcase  drain-
 ings can be blended with fuel  oil  and  burned, although  in  some  applications
 there  is a risk  of burner fouling and  in all  instances  large amounts  of oxides
 of lead and other heavy metals will  be emitted.   At current market  conditions
 untreated drainings can sell for as much as  15<£  per gallon.  A  few  large in-
 dustries, especially electric utilities, are  now using  a  blend  containing be-
 tween 1 and 10 percent waste lube oil.  In some  instances, crankcase drainings
 are treated to remove water and  sludge before being sold  for use as fuel.  This
 dehydration process,  which is the first step in  re-refining to  make lube oil,
 costs about 3
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     In fact a trend towards lower prices for waste oil  removal  is now evi-
dent.  Some re-refiners are now picking up crankcase drainings for free.
Others are finding it increasingly difficult to secure supplies  of drain
oil sufficient to operate their plants at capacity.  As shown In Table 1
only one of thirteen re-refiners visited is now operating at full capacity.
All re-refiners interviewed (save this one) complained that the fuel  oil
market was making it impossible to obtain enough feedstock.  Of course, this
is equivalent to saying that the fuel  shortage has served to raise the de-
livered cost of drain oil above what some re-refiners are willing to pay.
If lube oil prices were to rise sufficiently, then an Increase 1n the price
of feedstock could be off-set by an increase in the price of re-refined pro-
ducts.  In the absence of such a price increase, it is likely that a number
of marginal re-refiners may be forced out of business in the near future.


1.2.3  Supply of Feedstock


     Perhaps the most crucial difficulty facing re-refiners today is obtain-
ing volumes of waste oil sufficient to maintain re-refining operations at
or near capacity.  As with petroleum refining, due to relatively high fixed
costs, in  re-refining incremental costs rise as throughput falls.  Formerly,
drain oil  availability fell in summer as large volumes were consumed for road
oiling operations.  Re-refiners having adequate storage capacity would ac-
quire large volumes of feedstock 1n winter to tide them over during the sum-
mer.  This practice has been especially common in the Northeast and Midwest.
However,  since these are the areas of the country most seriously affected  by
the  fuel  oil  shortage, it  is highly likely that some re-refiners in these
regions will  find themselves unable to secure adequate supplies of drain oil
either in  summer or_ in winter.   In the western and southern parts of the
United States, where natural gas has been the principal  industrial fuel, the
current drain oil supply is not nearly so tight as in the  Northwest and Mid-
west.  However,  as  natural gas curtailments continue to  spread, many  industries
in the South  and West will be forced to convert heating  and processing units
to burn fuel  oil.   As fuel oil  supplies are likely to remain  tight for at  least
the  next  three years, large volumes of used crankcase oil  will  be diverted
for  use as fuel.

      An  interesting  comparison  regarding feedstock supply can be made between
 the re-refining industry and the petroleum industry.   Throughout the  his-
tory of  the  petroleum  industry,  a  principal concern of refinery managers  has
been obtaining  supplies  of crude oil  sufficient to operate at or near  capa-
city and  to meet the  requirements  of customers  for refined products  (gasoline,
fuel  oil, etc.).  This  concern  caused many  oil  companies to integrate  back-
wards -  to become involved in  crude  oil  exploration  and  production  -  in  order
to be assured that  adequate  refinery  feedstock  would  always be  available.   The
recent  rash  of closings  of gasoline  stations  supplied  by independent,  non-
integrated refiners is  testimony to  the  need  for  refiners to  nave control  over
sources  of crude oil.
                                      24

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     The re-refining industry is faced with a similar problem.   Shortages of
feedstock are forcing re-refiners to reduce their production of lube oil  and
other products.  However, a re-refiner cannot guarantee an adequate feedstock
supply by backward integration into production of waste oil, for in a given
geographical area the total supply of crankcase drainings is fixed.  Ability
to pay a higher price for used lube oil is the only way to guarantee an ade-
quate supply of this material for re-refining.


1.2.4  Waste Oil Collection by Re-Refiners


     Some re-refiners have, however, attempted to achieve security of feed-
stock supply by operating their own waste oil collection service.  Table 1
summarizes  the degree to which the re-refiners interviewed depend on outside
sources for feedstock.  A correlation between self-sufficiency 1n feedstock
supply and  percent utilization of re-ref1n1ng capacity is, however, difficult
to make as  other considerations, namely frequent forced shutdowns for un-
scheduled maintenance, contribute significantly to reduced production levels.
On the other hand, there can be little doubt that re-refiners who collect
their own waste oil  enjoy a more stable position regarding feedstock supply
than those  who depend entirely on Independent collectors for waste oil de-
liveries.

     Consider  the position of the manager of a service station or garage.  For
him waste oil  Is a  headache.  Generally speaking, the cost of disposal is  less
of a problem than getting  rid of the drainings in a  reliable and legal manner.
This  is especially  true  for  larger  service  stations  and garages which have
greater volumes of  used  crankcase oils to dispose of.  Further, major oil
companies,  under  increasing  environmental pressures, have become quite respon-
sive  to the need  to  dispose  of waste oils  in environmentally sound ways  and
are  encouraging  service  station managers  to dispose  of waste oil in  a manner
not  harmful to the  environment.  The establishment of  personal relationships
between  the waste oil  collector  and the people from  whom  he collects can con-
tribute  significantly  to maintaining  a secure  supply of  feedstock.   While in-
dependent collectors come  and go according  to  the market  for drainings,  a re-
refiner  provides  a  readily available,  legitimate  sink  for waste  oils.

      However,  there are  disadvantages  for re-refiners  who collect  their  own
oil.   Most  important is  the  higher  delivered  cost of feedstock.  Many  re-
 refiners  must  pay union  wages to truck drivers.   Maintenance of  the  vehicles,
depreciation,  and  supervision of the  drivers  result  in additional  costs.  On
 the  other hand,  an  independent  collector  generally drives his  own  truck, fixes
 it himself  and depends on  scavenging  for  a  livelihood.   Hence  an independent
 can  deliver waste oil  to a re-refiner at  a  lower cost  than  if  the  re-refiner
 collected his  own oil.   Further, independent collectors  tend to  be rugged
                                      25

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individualists.   More than one re-refiner interviewed expressed  the opinion
that infringement upon territories of independent collectors could result
in a hostile reaction, especially in those areas where collectors have formed
an association in order to stabilize prices and prevent territorial disputes
amongst themselves.


1.2.5  Closed-Cycle or Custom Re-Refining


     A more attractive route to follow to assure feedstock supply is to enter
into "custom" or "closed-cycle" re-refining arrangements with industrial and/or
commercial accounts which serve both as the source of waste oil  and the cus-
tomer for the re-refined product.  "Closed-cycle" re-refining both guarantees
a supply of feedstock and provides an Incentive for the client to prevent the
waste oil from becoming contaminated with other oils, greases, water, etc.
Further, under closed-cycle arrangements sales of re-refined oil are made di-
rectly to the final user.  "Middlemen," such as jobbers and distributors are
eliminated thereby increasing profit margins to the re-refiner.   Most important-
ly, a customer who has his lube oil custom re-refined is interested 1n securing
a high quality product at a savings over the cost of equivalent virgin oils.
This means that a re-refiner engaged in custom or closed-cycle work is compet-
ing against high quality, major brand virgin oils rather than against cheap
virgin products and can,  therefore, secure a much higher price  (and margin of
profit) for his production than he would otherwise be able to obtain  (see
Figure 3 and discussion  in Section 4.4 Marketing).  From the customer's point
of view, closed-cycle re-refining both eliminates a waste disposal problem and
decreases the cost of lubricating oil supply.
                                      26

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                 1.3  RE-REFINING OF WASTE CRANKCASE OILS
     Re-refining of used automotive crankcase oils 1s a separation process in
which water, sludge, spent additives and decomposition products are removed.
The desired product is a mineral oil or neutral base stock roughly equivalent
in lubricating properties to a virgin non-detergent oil.  The physical  proper-
ties and performance characteristics of properly re-refined base stocks can be
altered to meet essentially any existing specification by the addition of speci-
ally formulated blends of chemical additives.  General or "fat" additive "pack-
ages" are frequently designed for use with a range of base stocks in order to
compensate for variations in the properties of re-refined oil.  In recent years,
due to the wide variety and severity of the conditions under which modern auto-
mobile engines operate, the volume of additives blended with lubricating oils
has increased sharply.  This has served to Increase both the cost of additive
packages used in blending and the cost and difficulty of removing spent additives
during the re-refining process.


 1.3.1   Process  Description


      Nearly  all  of the approximately 45  U.S.  re-refiners  now in operation
 use the so-called  "acid-clay"  process for  removing  spent  additives  and  other
 contaminants from  used crankcase  oils.   Figure 2  shows  a  typical  acid-clay
 processing plant.

      Waste oil  is  stored in large tanks  and  allowed to  settle thereby  ef-
 fecting gravity separation  of some dirt, sludge,  and water.   After  settling,
 waste oil  is fed into an atmospheric dehydration  unit.   The temperature 1s
 raised to about 250°F using closed-cycle steam.   Light  hydrocarbons distilled
 from the waste oil are used as fuel to heat  the steam which is used in de-
 hydration.  The dehydrated oil  is cooled to  120°F and pumped to an acid treat-
 ing tank.   About 4% of concentrated sulfuric acid is added.  Following acid
 treatment the oil  is pumped to an atmospheric distillation unit;  clay is
 added and the mixture is heated to about 600°F and'agitated using open cycle
 steam.  The distillate is condensed and used for fuel.   The oil is then
 cooled and separated from the clay in a plate and frame press, blended with
 additives, packaged, and stored for shipment.  All fuels consumed in re-refining
 are provided by separation of the waste oil  into lube and fuel fractions.


 1.3.2  Procejss_ Economi cs

      Table 1 indicates an average re-refining cost of about 17.5 cents per
 gallon of finished product.  This figure may be further divided into six com-
 ponents as shown  in Figure 3.  These components include cost of feedstock,
 labor, chemicals  and other materials, utilities, waste disposal, depreciation,
                                     27

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                                                              Figure 2
                                        Flow Chart for Acid-Clay Re-refininq Process
                                                                               CONDENSER
                      OIL
                   SEPARATOR
                                        Sump
FLASH
DEHYORATOR
                                                                    BATCH
                                                                    REACTOR
Oil
                                                               Oil slurry
                                   TREATING TANK
                                    (Steam jacketed)
      A
                  Volatile distillates
                  to boiler fuel
                                                                                                      Water to sump
                                                                                    Hot 0*1,
                                                                                    600F
                                                            __DkrtomaoMW
                                                          j I earth

           DIRECT FIRED
           HEATER
                                                                                                 FILTER
                                                              SLURRY
                                                              MIXER
                                                                       Re-refined
                                                                       oil slurry.
Codoidal corbon
and diatomaceous
earth
               dear
               I re-refined
               oil
                                                                                                             Additive*
                                                                                                      ADDITIVE
                                                                                                      BLENDER
                                                                                                                      ADDITIVE
                                                                                                                      STORAGE
                                                                                                                      TANKS
                                             PRODUCT
                                             STORAGE
                                             TANKS

-------
and overhead, but dc not include administrative costs such as officers'  sal-
aries and taxes.  Because most re-refiners produce a variety of products in
addition to unblended lube oil, it is not possible 1n general to determine sep-
arately the total cost of lube oil re-refining.  Further, most re-refiners keep
rather minimal records of financial and operating data and so U is difficult
to perform an exact cost analysis for most firms.  However, several companies
interviewed produce only automotive lube oil which 1s sold unblended in bulk
lots to independent jobbers.  From financial and operating data supplied by
these firms it is possible to estimate that administrative costs and taxes
generally add about 3 to 4<£ per gallon to the stated cost of re-refining.
This means that, on the average, the total cost of producing a gallon of re-
refined but unblended oil is about 22
-------
1.3.3  Breakdown of Production Costs

Feedstock

     Figure 3 is an examination of the important cost factors in the production
of re-refined lube oil.   By far the most Important cost component in re-ref1n1ng
is the delivered cost of the waste oil feedstock.  According to Table 1,  the
average recovery of lube oil product 1s only about 57 percent by volume of
the drain oil feed.  With an average delivered cost of feedstock of four cents
a gallon, this is equivalent to a cost of about seven cents per gallon of re-
refined oil.  It 1s certainly not surprising that re-refiners pay close atten-
tion to the volume of contaminants (especially water) in the waste oil which
they collect and/or purchase from Independent operators.  In some cases the
price charged for pickups or paid for deliveries of drain oil varies sharply
with the level of contaminants in the oil.  An unwary collector would at
times be paying for a resource diluted with water which would have to be
removed (at an additional cost penalty) in the re-ref1n1ng process.

       As  mentioned earlier, access to feedstock 1s now a serious problem
for re-refiners.  Given a yield of 57 percent, a one cent per gallon rise in
the delivered cost of drainings results 1n a cost Increase of 1.75 cents per
gallon of finished product.   If these costs cannot be passed along to con-
sumers, then partial processing of waste lube oils to fuel oil 1n which yields
of more than 80 percer.t are common becomes particularly attractive (see below).


Labor

       Labor costs have risen sharply 1n the past few years making it impera-
tive for re-refiners to keep  production at maximum levels  in order to minimize
unit costs.   For companies  with spare capacity,  this has resulted  1n diversi-
fication of  re-refining activities to produce a  variety of products in addi-
tion to automotive lube oil,  especially fuel oil and Industrial oils, frequently
under  "closed-cycle" arrangements.  Custom re-ref1n1ng of  industrial oils
affords  both greater profit margins per gallon of sales (see Marketing) and
greater  security of supply  of feedstock.  In some Instances  re-refiners have
said that without  increasing  their  industrial business they  would  not have  been
able to  survive.   In the  case of  smaller  firms  increased labor costs  have
 invariably  resulted  in  longer working hours for  the  companys' owners  in order
to cut expenses.   Among the smaller firms interviewed, working days for manage-
ment approximately 15 hours in  length were not uncommon.


Materials

       Materials  costs  have risen sharply in  recent  years  as have  the amounts
 of  sulfuric  acid  and clay required  per  gallon of product produced.  This  in-
crease in material use  has  been necessitated  by  the  increased  volume  of  addi-
 tives  blended  with automotive lubricating oils.   Typical quantities of  sulfuric
 acid (66°  Baume)  and clay used  per  gallon of  oil produced  are  0.04 gallons  of
 acid and 0.25  pounds of clay.   At current prices for add  and  clay this  amounts
 to  a total  materials cost of  about  3tf per gallon of product.
                                     30

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1 FIGURE 3
I SUMMARY OF RE- REFINING ECONOMICS*
(ALL COSTS EXPRESSED IN CENTS PER GALLON OF OIL)
COLLECTION TRANSPORT RE-REFINING BLENDING PACKAGING
57% YIELD
(-2.9O (6.5*)^ FFrnsTnr* <7«)
-2-5* 4-°* LABOR <3«)
MATERIALS (3«!
OVERHEAD (2«)
UTILITIES (l«)
""• 	 DEPRECIATION (M)
LlSHt WASTE DISPOSAL (B«)
1 BALLON OF BLENDED
MULT1- GRADE OH. 4ft2»
i
NUMBERS IN BRACKETS DENOTE COSTS OF EACH OPERATION.
NUMBERS NOT IN BRACKETS DENOTE RUNNING TOTAL COSTS.
*ALL COSTS AND PRICES ARE AS OF MID 1973
SALES PRICE
NON-OETER6ENT OIL
TO JOBBERS __

IN BULK Z3«
TO JOBBERS 3««
OP.UMWNG ?T.9< A
"* (»*) \I TO COMMERCIAL __

CANHHW K.5*
13«#J

DRUMMINe 44.M J
• (tut} ~\.

CANNIM6 «&M
*" IMt)
1 	 1
_ OmMWIrM 50.M /
"" (IO») ' \

*. cfE5!?' T"«
^ liM)
ACCOUNTS 42«
RETAIL SALES IOO« fc
SE WADE SAE SO OIL
TO JOBBERS 6O< ^
1 TO COMMERCIAL
ACCOUNTS «0*
RETAIL SALES IZO* ^
SE 8RAOE SAE IOW-30 OIL
ITO JO88ERS ««« ^
TO COMMERCIAL
ACCOUNTS IOO*
RETAIL SALES M0« fc

A TECHNICAL AND ECONOMIC STUDY OF WASTE OIL RECOVERY
Prhtcipol liwntifotor: Dr. P. M. Cukor
Protect Director : Dr. M. J. Kootoit
EPA Contract No. 68-OI-MO6 Performed for:
Dr. John H. Skinnor, Acting Deputy Diroetor
RMoarco Ro«o*or} Divialoa
Oftic* of SolW Worf» Wanofcmmt Program!
U.S. Enironnwntal Protoctiw Agency

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Waste Disposal

       Although disposal of acid sludge is one of the most serious problems
facing re-refiners today, the cost of sludge disposal is at present only a
minor contribution to the total cost of re-refining.  About 0.1 gallons of
sludge are produced per gallon of re-refined oil.  Most re-refiners pay less
than 0.5
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                            TABLE  4

                Analysis  of Add  Sludge Produced 1n
              Re-Refining Automobile Crankcase Oils

                 pH                   0.1
                 Specific Gravity     1.2
                 Ash as S04*           11.26*
                 Add                 40.8*
                 Sulfur               14.1%
                 Copper, Cu           40 ppm
                 Aluminum, Al          140 ppm
                 Iron, fe             1,100  ppm
                 Silicon, SI           1,400  ppm
                 Lead, Pb             20,000 ppm
                 Z1nc, In             2,100 ppm
                 Barium, Ba            1,300 ppm
                 Chromium, Cr          50 ppm
                 Calcium, Ca           6,400 ppm
                 Sodium, Na            4,000 ppm
                 Phosphorus, P         4,300 ppm
                 Boron,  B              50 ppm
                 Nickel,  N1            30 ppm
                 Tin,  Sn               30 ppm
                 Magnesium, Mg         1,000 ppm
Analysis dated January 12,  1971  based on  sludge produced by one
re-refining company.
                                  34

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for engine oils for use in new cars.  6_/

       One important supplier of engine oil  additives manufactures a general
purpose motor oil performance additive which when blended with a 30 weight
non-detergent base oil produces an oil which meets all the specifications  re-
quired for an API SE rating and meets automobile manufacturers warranty re-
quirements for 1973 model  vehicles.   This performance additive sells for
$2.18 per gallon f.o.b. Los Angeles,  California.  6.8 percent by volume of
this performance additive is required to produce an SE grade oil.   The cost
of this blending is about 14.Bit per gallon of product.  Hence the total  cost
to produce an SE grade oil from crankcase dralnlngs is about 34.5$ per
gallon.  Table 5 gives details of this calculation.


 Multi-Grade Oils

         Multi-grade oils are produced by combining a viscosity index improver
 with a blend of the lube oil base stock and the performance additive.  As  shown
 in  Figure 3, 10W-30 oil  (a  popular multi-viscosity oil) can be made by mixing
 a viscosity index  improver  and a performance additive package with a blend of
 equal volumes of  re-refined base lube stock (viscosity 56 SUS at 210°F) and  re-
 refined  light lube stock  (viscosity  40 SUS at  210°F). (A re-refined light lube
 stock costs more  to produce than a re-refined  base stock because additional
 distillation and  acid/clav  treating  steps are  required.)  The resulting mix-
 ture should have  a viscosity at 0°F  equal to that of a 10 weight oil (6,000-12,000
 SUS) and a viscosity  at  210°F equal  to that of a  30 weight oil (58-70 SUS).
 Thus, multi-grade  lube oils have the advantages of a light weight  (SAE 10W)  oil
 at  low  temperatures  and  a  heavier weight (SAE  30) oil at high temperatures.   Such
 oils are commonly  recommended by automobile manufacturers for use  in modern
 vehicle  engines.   While  the cost of  producing  multi-grade oils is  higher than
 that for single-grade and  non-detergent oils,  profit margins on such sales are
 very attractive (see  Table 6).
                                     35

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                                TABLE   5

                    Blending  Costs for  Re-Refined 011s
                            (Single Viscosity)
Operation
Viscosity Improvement
from 55 SUS to 61 SUS at 210°F
Performance package to meet
SE specifications
Percent Additive
    Blended
      3.0
      6.8
 Cost, 
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                              1.4  MARKETING


1.4.1   Wholesale Markets

       In most instances re-refined automobile crankcase oils are sold un-
blended in bulk lots (more than 2000 gallons) to independent jobbers who
package the oil in 55 gallon drums or quart cans and sell it to cownercial
accounts, garages, independent (as opposed to major brand) gasoline stations,
automotive supply stores and discount houses.  As shown in Figure 3, bulk sales
of unblended re-refined oil are made at rather low prices, generally about
23<£ per gallon.  This leaves a re-refiner with about 6$ per gallon gross mar-
gin.  Administrative expenses and taxes will account for most of the 6
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       These barriers to penetration of the high quality retail market by
re-refined oils can best be illustrated by reference to Figure 4.  This
diagram shows how the considerations discussed above build upon one another
and result in reinforcement of the public's negative attitude towards re-
refined oil.  The failure of the Industry to regulate the quality of its pro-
ducts led to enactment of the federal labelling law.  Both of these actions
have served to foster a poor public  image for recycled lube oil.  Thus re-
refined oil has become acceptable only to customers who are highly price con-
scious.  High quality re-refined oils are not price competitive with low
quality virgin lubes and thus are not available in most retail markets.  As
a result, only relatively low quality, low cost, non-detergent re-refined
oil is marketed.  Under these conditions public confidence in the quality
of recycled oils can never be increased because high quality recycled oils
are not readily available to the public.  Because of these considerations,
some re-refiners will not permit their unblended oil to be sold in the retail
market as  they fear that such a practice would tarnish their hard-won images
as manufacturers of quality oils.

       Paradoxically, some of the low quality virgin lubes with which re-
refined oils compete are actually blends consisting of very low quality,
very  Inexpensive virgin lubes and re-refined oil I  The recycled oil is used
to raise the viscosity and the viscosity index of the virgin products to
minimal  (but still unacceptably low) levels.  Such oils are generally sold
 in retail  markets as virgin oils (1n violation of federal and  state labelling
 laws), even  though they may contain  an appreciable fraction of  re-refined oil.
The  performance characteristics of these low quality blends fall far short
 of specifications for  lube oils  intended for use 1n modern automobile  engines.

       Thus, in the retail trade it  Is the bulk packager who earns an attrac-
tive  return on his investment by canning very large volumes of  cheap oils
 (both  re-refined and virgin).  Large profits 1n the retail sale of re-refined
oil can  be made on a volume basis only.  Hence it is not surprising that
 those  re-refining firms whose principal customers are jobbers  (who buy un-
 blended  oil  in bulk) are among the least profitable (see Table  1).


 1.4.3  Commercial^ and  Industrial Markets

       The most  lucrative markets for re-refiners  involve  sales to commercial
 accounts such  as  truck  and taxi  fleets,  railroads  and other  industrial cus-
 tomers.   The emphasis  In  these markets  is  on  quality  and  hence the competi-
 tion  for re-refined  oils  is major  brands of virgin  lubes.  The critical  fac-
 tors  for success  are thus  a  reputation  for producing  top  quality oil  and,
 of course, a price  below  that of the competitor*.

        A re-refiner  expands  his  commercial and  industrial  business  on  the
 basis of "toe-to-toe"  and  "belly-to-belly" type relationships which  have devel-
 oped over extended  periods of time.   Satisfied customers  generally  provide
 the  only demonstration as  to the quality and  performance  record of  oils  pro-
 duced by a re-refiner.   While years of satisfactory engine performance and
                                       38

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                                           Figure  4
                          Barriers to Public Acceptance of Re-Refined Oil
                                   FEDERAL  LABELLING LAW
LOW QUALITY OF  RE-REFINED
OILS WHICH ARE  AVAILABLE
TO THE PUBLIC
LACK OF CONSUMER  ACCEPTANCE
OF RE-REFINED OIL
                                 RETAIL SALES OF RE-REFINED
                                 OIL AT LOW PRICES  IN COM-
                                 PETITION WITH LOW  QUALITY
                                 VIRGIN LUBRICANTS

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low maintenance costs are not adequate to qualify re-refined oils for procure-
ment by federal agencies, such records should not be lightly dismissed as
railroad, trucking and taxi companies have millions of dollars invested in
rolling stock and certainly would not risk high maintenance costs and out of
service time by using oils of questionable quality.  At the same time, a
re-refiner whose oil is used in such applications will monitor his product
quality carefully.  For if even one customer experienced maintenance problems
due to poor oil performance, the re-refiner's ability to maintain or expand
his sales to commercial and industrial accounts would be severely limited.
A  brief  examination of Table 1 shows that, without exception, the most profit-
able  re-refineries are those whose  principal sales are to the commercial and
industrial market.

       Due to  the high cost of shipping  lubricating oils, a re-refiner's
marketing area  rarely extends beyond a 300 mile radius from the production
location.  A noticeable exception is the case of sales to railroads where
tank  car loads  of re-refined oil are picked up by the customer at the re-
refinery and distributed  to points  of locomotive service across the nation.
 1.4.4  Comparison of Markets for Re-Refined Oil

        Table 6 shows representative prices and production costs  for several
 grades of re-refined oil  sold 1n various markets.   Considerable  variation
 from these price levels occurs for large volume purchases as well  as for
 negotiated "closed-cycle" custom re-refining arrangements.  For  example,
 consider the jobber price of 36$ per gallon for non-detergent 30 weight oil
 delivered in lots of one to five 55 gallon drums.   If bulk deliveries are
 made in tank car loads of approximately 2000 gallons, the price  would be
 much lower, approximately 23$ per gallon.  Similarly, commercial accounts
 which buy oil in large volumes can expect to be granted discounts of between
 5
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                                          Table 6

                     Representative Prices and Production Costs  for

                            Re-Refined 011s as of M1d-l973*
Grade of Oil
Jobber
                       Price
       Cost1
      Sales  by a  Re-Refiner  to:

         Commercial  Account
               
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        Thus, under present conditions, the commercial market is the most
profitable outlet for re-refined oils, because large volumes of high quality
SE grade lubes can be sold here.  As mentioned earlier, penetration of this
market depends on the establishment of long-term working relationships with
commercial and industrial clients.  Word-of-mouth recommendations as to the
quality of a company's lube oil have enabled several of the re-refiners in-
terviewed to sell most of their production to commerical and industrial ac-
counts.  Gaining entry to this market would not be an easy task for a new-
comer to the re-refining industry.  However, since the major demand is for
the high quality oils, a successful effort to gain access to this market
would have a high payoff.
                                        42

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                 1.5  VIRGIN AUTOMOTIVE CRANKCASE OILS


       Figure 5 presents economic data concerning the manufacture of virgin
automobile engine oils and the subsequent blending and packaging operations.
While the refinery gate price per gallon of unblended virgin lubes is higher
than that for re-refined oils, the blending and packaging costs are somewhat
lower.  This is due to the much larger volumes of oil produced by a major
oil company.


1.5.1  Production of Virgin Lube 011s

       Virgin automobile lube oils are produced by blending light vacuum gas
oils  (approximately an SAE 10 oil) and heavy vacuum gas oils (approximately
an SAE 50 oil).  As shown in Table 7, crude oils produced 1n the United States
yield, on average, about 1.7 percent lube oil per barrel.  Pennsylvania crudes
have  the largest "lube cut," around 8 percent, while crudes produced in the
interior of Texas yield only 0.1 percent lube oil per barrel.  Further, lube
oil made from paraffinlc base crudes, such as those produced in Pennsylvania,
has a much higher viscosity index than lube oil made from naphthenic base crudes,
some  of which are produced in California.  However, with solvent refining-to
remove napthenic compounds and suitable blending with additives, naphthenic lubes
can be "built up" to meet any specification, but at a higher cost.


1.5.2 Supply of Virgin Lube Oils

       At present throughout the United States new lube oils are in short supply.
One of the  largest  oil  companies 1n the U.S. has halted expansion of lube oil
sales, temporarily  recalled  its  lube oil salesmen from the field, and placed
all customers on allocation according  to 1972 purchases.  According to an official
of one large oil company, the reason for the tight supply is a  shortage of re-
finery capacity.  The  lube  oil producing capacity of U.S. refineries depends on
a  number of  factors  including the composition of the crude oil  processed and the
economics of producing other  products, such as fuel oil or gasoline, from  those
crude fractions  from which  lube  oil can be made.  As of August,  1973, refinery
prices for  new,  unblended lube oil were about 25-26$ per gallon.  However, by
the middle  of October, 1973,  prices had risen to about 30i  per  gallon.  One oil
company  official  has estimated  that refinery  prices  for  lube oils will rise to
nearly 45
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O1
                                                                         FIGURE 5

                                                   ECONOMICS  OF  VIRGIN LUBE OIL PRODUCTION

                                                      (ALL COSTS EXPRESSED IN CENTS PER GALLON OF OIL)
                                                  REFINING
                                                                             BLENDING
                                                               PACKAGING
                         CRUDE OIL
                           LIGHT
                           LUBE
                           STOCK
                           28.5*
                                                 REFINERY AND
                                                 LUBE OIL PLANT
BASE LUBE STOCK
     30<
i SALES PRICE
I (excluding lax
I  of G* per gallon)
                                                                                 NON DETERGENT
                                                                                 SAE 80 OIL

                                                                                 TO JOBBER 82*
                                                                UNBLENDED LUBE OIL
                                                      0.932 q^M/?*!?
                                                      OF UNBLENOCO
                                                      LUBE OIL    __
                                                                    O.OW •ALUMS Of
                                                           1 GALLON OF SIN€LE
                                                           GRADE BLENDED OH. 3».7»
                                  0.877 GALLONS OF UGHT LUBE STOCK.
                                                                    OOOB GALLONS OF
                                                                            ••» M"»VfR
                                                           1 GALLON OF MULTr-OftAOE
                                                           BLENDED OIL  44.7*
                       NUMBERS IN BRACKETS DENOTE COSTS OF EACH OPERATION.
                       NUMBERS NOT IN BRACKETS DENOTE RUNNING TOTAL COSTS.

                      *ALL COSTS AND PRICES ARE AS OF MID 1973
                                                                    OJMB GALLONS OF
                                                                    PERFORMANCE AOOmVE (IL7O
                                                                                                                            n»*
                                                A  TECHNICAL AND ECONOMIC STUDY  OF WASTE OIL RECOVERY

                                                           Principal tottttifotor :  Dr. P. M. Cuter
                                                           Project Dimeter :  Or. M. J. Moron
                                                           EPA Contra! No. fit-OI-IGO* Performed for:
                                                           Dr. John H. SklMor, Aotwg Deputy Dlractor
                                                           Resource Recovery Divi*ta»
                                                           Office of SolM Waete Management Program*
                                                           US. Environmental Protection Agency

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                      TABLE 7

Percentage Yield of Lubricating 011s per Barrel of
     Crude 011 by Refinery Districts for 1968
East Coast                                  1.4
Appalachian No. 1                           8.1
Appalachian No. 2                           1.1
Indiana,  Illinois, Kentucky                 0.9
Oklahoma, Kansas, Missouri                  1.7
Texas  Inland                                0.1
Texas  Gulf Coast                            3.3
Louisiana Gulf Coast                        1.7
Arkansas, Louisiana  Inland                  3.9
Rocky  Mountain                             0.3
West Coast                                  0.9
               United States Average       1.7
                           47     Preceding page blank

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                                       TABLE 8


                  Representative Costs and Prices for Major Brand
                           Virgin 011s as of Mid-1973*

                     (not Including federal tax of 6t p«r gallon)
Grade of 011
Non-detergent SAE 30

Heavy Duty SAE 30
(SE grade)

Heavy Duty SAE 10W-30
(SE grade)
                            Jobber
114
55.9
                                             Sales  by  an 011 Company to:
                   Commercial Account
                          i/gal .
120
55.9
                                    Service Station
                                        */gal.
price
52
85
cost
41.2
50.9
price
57
100
cost
41.2
50.9
price
87
152
cost
55.5
65.2
175
70.2
          Typical sales volumes required for each class of customer  are:
          Jobber, 100,000 gallons per year; CommeHcal, 2000-4000 gallons
          per year; service station, single delivery of 50 gallons.
                                           48

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re-refined oils in all  market sectors appear to give the re-refiner a signi-
ficant competitive advantage, especially when the federal tax of 6$ per gal-
lon is added to prices  of virgin oil  sold for on-highway use.  Re-refined
oils are tax-exempt save for any virgin stocks blended with the recycled oil.
However, in practice a  large commercial customer, for example, will have
need for petroleum products (principally fuel) other than lube oil.  The
dollar value of a fuel  supply contract is certain to be many times larger
than a lube oil supply agreement.  Hence a large commerical customer will
frequently be willing to pay a higher price per gallon for lube oil in order
to obtain a discount on his fuel supply.  The net savings to the customer
can more than compensate for the higher price paid for lubricating oil.


1.5.3  Effect on the Re-Ref1n1ng Industry


     Shortages of and subsequent price rises for virgin oils will help re-refin-
ers by enabling them to pass along increased costs of production.  If the price
of lubricating oils rises relative to the price of fuel oils, re-refiners will
be able  to compete successfully for needed supplies of waste oil feedstock.  Fur-
ther, if major oil companies are not able to fulfill the lube oil requirements
of their existing customers, some of these clients will turn to re-refiners  for
their lube supply.  This will both provide an opportunity for the re-refining
industry  to  improve the image of its products and result in  higher prices and
higher profits for sales of  re-refined oil.
                                    49

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                1.6  CRITERIA FOR SUCCESS IN RE-REFINING
     In view of the generally unfavorable marketing conditions for re-refined
oils, the low margin which can be realized on bulk scales of unblended re-
refined oil, and the tight supply of feedstock, It 1s apparent that the days
of the single purpose (crankcase oil) re-refiner are numbered.  From Table 1
we can see that re-reflhers serve two basic markets - the "on-highway" market
and the "off-highway" market.  In both markets federal policy has contributed
to making profitable operation very difficult.  The federal labelling law
discussed earlier has contributed to the difficulty of selling high quality
blended re-refined oils 1n the retail "on-h1ghway" market.  The removal of
the federal excise tax on virgin oils sold for "off-highway" use eliminated
a built-in price advantage for re-refined oils of 6$ per gallon.  While other
considerations, notably quality assurance 1n the case of the labelling statute,
may have required the enactment of these laws, 1t must be made clear that these
regulations have been major factors 1n the decline of the re-refining industry.
Yet even with these handicaps, some re-refiners have been able to operate
quite successfully.


1.6.1  The "On-Highway" Market


      In the "on-highway" market re-refiners can make an attractive return
through sales of blended oils to comnverlcal accounts such as trucking com-
panies, agricultural concerns, lumber firms,  taxi fleets, etc.  Such cus-
tomers are very much concerned with the quality of the oils used in their
expensive vehicles.  Re-refiner number 2  1n Table 1 serves this market and
has  built a widespread reputation as a producer of very high quality oils.
This  firm had the  highest average revenue per gallon sold of  the companies
interviewed.  Penetration of  the high quality on-hignway  lube oil market
is,  however,  not an easy task for a  re-ref1ner.  Many years of  close work-
ing  relationships  with customers and close attention to their individual
needs  play  an  Important part  in building  the  very attractive  business which
this  firm now enjoys.


1.6.2  The  "Off-Highway" Market


Industrial Oils


      Success  in the  "off-highway" market  is  based on  the  establishment of
a number of agreements with  Industrial firms  for purchases of a variety of
lubricating,  hydraulic, and  other non-synthetic fluids used  in  manufacturing.
 Industrial  oils include some which are quite  expensive and  some which  present
extremely difficult  disposal  problems.  The  ability  to recycle  these oils,
frequently  under  "closed-cycle" arrangements, not only saves  the company
sizeable amounts of money when compared with  the cost of  virgin oils  but  also
avoids those  economic  and environmental  costs associated  with disposal.
                                     51       Preceding page blank

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     For example, the Saginaw Steering Gear Division of General  Motors Corpora-
tion in Michigan has Implemented a "closed-cycle" system with a  re-refiner for
the recycle of more than 1,000,000 gallons of Industrial oils annually.   Rather
than dispose of the used oils by burning, burial or other environmentally harm-
ful methods, the oil is now recovered, cleaned, r*-ref1ned and fed back into
the division's manufacturing plants for reuse.  General Motors has found the
re-refined oil to be equal to new oil for cutting, broaching and grinding opera-
tions.  It must be emphasized, however, that re-refining of industrial cutting
oils is a much simpler process than re-ref1n1ng of crankcase oils.  Generally,
used cutting oils are processed to remove water and solids but are not treated
with acid followed by clay addition and distillation.  This 1s primarily be-
cause cutting oils do not contain additives.
 Railroad Oils

       The re-refining of railroad dlesel  engine oils Is  a completely differ-
 ent situation.  Here, used oils are completely processed using add treat-
 ment followed by clay addition and distillation.  For many years a number
 of the nations largest railroads, Including the Union Pacific and Southern
 Pacific, have engaged in "closed-cycle" re-ref1n1ng agreements for the re-
 cycle of diesel engine oils.  In fact, at one time the Union Pacific, in
 an attempt to cut costs, operated Its own re-refinery 1n Ogden, Utah.  How-
 ever, this venture was not an economic success and eventually the railroad
 returned to its former policy of dealing with re-refiners.  The Burlington
 Northern Railroad was somewhat more successful 1n re-refining its own oil
 and still operates a small plant in Livingston, Montana.  However, most of
 Burlington Northern's engine oil volume is custom re-refined by an outside
 concern.  One re-refiner interviewed processes a total of about 6,000,000
 gallons annually of used diesel engine oil under closed-cycle arrangements
 with 15 different railroads.  Waste oil is delivered to the plant site in
 tank car loads of approximately 20,000 gallons; re-refined oil is picked up
 by the railroads at the same time.  This company is one of the largest re-
 refineries in the U.S. both 1n terms of volume of oil processed and 1n terms
 of total revenues.

       Other  re-refiners serving Industrial accounts mentioned that without
 this business they would have ceased operations several years ago.  In Table
 1 re-refiners 1 and 11 emphasized the  Importance of industrial customers  in
 their operations.  Re-refiner  13, who  serves only Industrial  clients under
 closed-cycle  arrangements,  has found this  business strategy particularly
 successful.
                                      52

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1.6.3  Diversified Operations

       Re-refiner 11 has managed to diversify his operations  In order to
serve a variety of markets.  This strategy not only allows the company to
change Us product mix 1n order to serve the most profitable  markets, but
also permits the conversion to fuel of large volumes of lube  oil.   Further,
diversification enables a re-refiner to serve a range of recycling require-
ments of industrial customers, a strong selling point in view of restric-
tions on disposal of industrial oily wastes.  Re-refiner 11 stated that
under current market conditions industrial oils are his most  profitable
product, followed by fuel oil and automobile lube oil.
                                      53

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                           FOOTNOTES CHAPTER 1
1.     "Waste Oil  Recycling Study".   Department of Defense,  Defense Supply
      Agency, September, 1972, p.20.


2.     Ibid., p.21.


3.     "A Technical  and Economic Study of Waste 011 Recovery, Part II:   An
      Investigation of Dispersed Sources of Used Crankcase Oils";  Teknekron,
      Inc.; EPA Contract No. 68-01-1806; October, 1973.


4.     "A Technical  and Economic Study of Waste Oil Recovery, Part I:  Federal
      Research on Waste Oil from Automobiles"; Teknekron, Inc.; EPA Contract
      No. 68-01-1806; October, 1973.


5.     Loetterle, Fred.  "Use of Sewers for Oil Dumping Probed", New York Daily
      News, December 26, 1970.


6.     Detailed explanations of the  requirements of various lube oil specifications
      may be found in Chapter 2.


7.    Op. cit.>  "A Technical  and Economic Study of Waste Oil Recovery, Part  II."
                                    55      Preceding page blank

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                                 CHAPTER  2


                      EVALUATION OF LUBE  OIL  QUALITY


                             2.0  INTRODUCTION
     The quality of re-refined lube oil  is a major unresolved issue that has
always stood in the way of federal  efforts to encourage waste oil  recovery.
In 1970, for example, the Council  on Environmental Quality abandoned its
plans to support greater lube oil  recycling largely because the quality of
re-refined oil could not be adequately demonstrated.  V  Product quality is
also a major issue in the Federal  Trade Commission's recent review of re-
cycled lube oil labeling policies.

     A number of issues bear upon the problem of quality.  Particularly
important is the distinction  to be made between the quality of re-refined
oils currently on the commercial market and the quality of re-refined oils
which can be produced with the application of available technology.  The
quality of many re-refined oils produced for today's market does not repre-
sent the best that technology can produce—even economically produce.
Rather, under current marketing conditions high quality re-refined oils are
simply not being produced for the retail customer.  Therefore, to judge re-
refined oil in general by the quality of many re-refined oils now available
to the public  is an error.  For, as has been shown in Chapter 1, market con-
ditions have effectively discouraged the production of high quality re-
refined oils for the retail consumer.  Combined with the failure of the
re-refinery industry to establish and enforce guidelines for maintaining
acceptable levels of product quality, the market  situation has resulted in
public, mistrust of re-refined products.  This mistrust is reflected in the
federal labelling law, in specifications for lube oil purchased by govern-
ment agencies, and in the lube oil  procurement practices of public and pri-
vate organizations which have followed the government's  lead in banning the
use of  re-refined oil.  However, mistrust of the  quality of re-refined lube
oils  is not,  by any means, universal amongst consumers.  As discussed  in
Section 1.4.3, a number of re-refiners currently  produce high quality  lube
oils  for  industrial and commercial  customers, frequently under closed  cycle
conditions.   These re-refined oils  have been used successfully for a number
of years  in such high cost, heavy duty equipment  as railroad diesel engines
and  truck cabs for tandem trailers.

      For  example,  in  a  recent publication,  the  Committee on  Fuel  and  Lube
Oil  of  the  Locomotive Maintenance  Officers  Association  reported  that:
                                      57     Preceding page blank

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     Re-refined  crankcase  draining*,  fortified with an additive system,
     have been used successfully in all  equipment for many years.   Labo-
     ratory tests and road tests indicate that reclaimed oil  is entirely
     equal  to the best new oils, provided that the reclaimed  oil has
     been properly handled by the re-refiner.  ZJ

     Unfortunately, the only hard evidence as to the quality  of these oils
is the satisfaction of the clients who use them.  Complete sets of test  re-
sults required under existing lube oil specifications are not available  for
re-refined oils.  As a result, under  existing government procurement regula-
tions, re-refined oils are excluded from consideration, largely because  of
the lack of evidence as to the absolute quality of and quality variations
in recycled lubricants.

      In order to provide an understanding of the details of the quality
issue, this chapter focuses on the two aspects of lube oil quality evalua-
tion:  specifications and testing.  Specifications establish the physical
and chemical properties required of lube oil for various uses and also indi-
cate  performance criteria for those uses.

      Testing involves both laboratory analyses of the physical and
chemical properties listed in the specifications and engine sequence tests.
Engine sequence  tests are designed to evaluate the performance properties
of the lube oil-additive blend under the operating conditions likely to be
encountered in  those  applications for which the particular set of specifica-
tions has  been  established.  A complete evaluation of lube oil quality re-
quires that both types of tests  be performed.  The following discussion will
deal  with  how specifications and testing apply both to virgin and to re-
refined  lube oils.
                                      58

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                           2.1  SPECIFICATIONS


     Three major sets of specifications apply to motor vehicle lubricating
oil.  These are API/SAE specifications, auto manufacturers'  specifications,
and military specifications.  The API/SAE and manufacturers'  specifications
are closely related, indeed interdependent.  Military lube oil specifica-
tions are similar but establish some additional quality requirements for more
demanding military uses.


2.1.1   API/SAE Specifications

     The first attempts to classify or identify motor oils started with the
first automobiles.  Even then vlscdsity was known to be one of the most
important qualities of an oil so far as lubrication is concerned.  Oils were
then classified as light, medium, heavy and extra heavy, in an attempt to
identify their viscosity.  After instruments were developed to measure vis-
cosity accurately, the Society of Automotive Engineers developed a new classi-
fication based on viscosity,  and the SAE numbering system of motor oils was
born.  This classification  system is used today.  Seven distinct viscosity
classifications are defined by the Society of Automotive Engineers.  SAE 5W,
SAE  10W, SAE 20W, SAE 20, SAE 30, SAE 40 and SAE 50.

     The  "W" (for winter) after the SAE number  indicates an oil suitable for
use  in colder  temperatures  and the viscosity of these  MW" oils must have the
proper value when measured  at 0°F.

     Those  SAE classifications which do not  include the "W" are suitable at
higher temperatures  such as are experienced  1n  the summer months.  The vis-
cosity of  these oils  (SAE 20, 30, 40 and 50) must have the proper value
when measured  at  210°F.

      It  should  be noted that  SAE 20W and SAE  20 are Identified as two sepa-
 rate classifications.   However, with today's  well-refined, high  viscosity
 index oils,  the SAE  20W oil will usually also meet the viscosity  require-
ments of the SAE  20 oil and vice versa.  Such oils are identified as
 SAE 20W-20 and actually are dual viscosity oils.

     With the  development  of  viscosity index  improvers, the manufacture  of
 multi-viscosity oils became possible.   Multi-viscosity oils,  SAE 5W-20,
 5W-30,  10W-30, 10W-40,  and  20W-40,  are or  have been marketed  during  post
 World  War II years  by oil  companies  in the USA. Actually,  5W-50 oils are
 possible through  the use  of VI  (viscosity  Index) improvers.   However,
 American car manufacturers  design  engines  to operate  normally on SAE  20
 and SAE  30 oils at  highest  atmospheric temperatures.   SAE 40 oil  is  used
 in heavy equipment and seldom used by  passenger cars  and  as  a result  there
                                      59

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is no  technical  demand or advantage In SAE 5W-50 oils.

     Multi-viscosity oils are now generally marketed as  SAE 5W-2Q or 5W-30
for extreme cold, SAE 10W-30 or 10W-40 for normal operating temperatures
and SAE 20W-40 for extremely hot conditions.  In general and 1n all but ex-
tremely hot or cold climatic conditions, the SAE 10W-30  and SAE 10W-40 oils
are the most popular and have the greatest versatility for the average
motorist.
                   GUIDE TO SAE VISCOSITIES OF MOTOR OIL

Lowest Atmospheric
Temperature Expected     Single Viscosity 011     Multi-Viscosity 011s

      32° F                    20.20W              10W-30, 10W-40

       0° F                     10U                10H-30, 10M-40

   Below 0° F                    5W *               5W-20,  5U-30

*  SAE 5W single viscosity oils should not be used for sustained high speed
driving  (above 50 mph).

     The SAE classification system only  Identifies viscosity and does not
indicate anything about  the type of the  oil, its quality or the service for
which the oil is intended.


2.1.2   Engine Service  Classification

     Many years ago,  the automotive and  petroleum Industries recognized the
need for a  system by which  crankcase oils could be classified and described.
A first step  in this  direction was the adoption in 1911 of  the SAE Crankcase
Oil  Viscosity Classification  system.  However, this system  classified crank-
case oils  in  terms  of  viscosity only.

      In response  to inter-industry needs for a system which would include
 factors other than  viscosity, the American  Petroleum  Institute 1n 1947 adop-
 ted a  system which  established three  types  of engine oils.   In this  system,
 crankcase  oils were designated as:  Regular Type, Premium Type,  and  Heavy
 Duty Type.   Generally, the  Regular Type  oils were straight  mineral oils;
 Premium Type oils  contained oxidation inhibitors; and Heavy Duty Type oils
 contained  oxidation inhibitors plus detergent-dlspersant  additives.

      This  oil-type  classification system did not  recognize  that  gasoline  and
 diesel  engines  might have different crankcase oil  requirements or that the
                                      60

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engine requirements would be affected by engine operating conditions, com-
position of the fuel and other factors.   In time, both the oil  and engine
manufacturers recognized that oil-type definitions were Inadequate.  As a
result, the Lubrication Subcommlttee of the American Petroleum Institute,
cooperating with the American Society for Testing and Materials,  developed
a new system of Engine Service Classification  in 195? which was 'revised in
1955 and again In 1960.

     This API Engine Service Classification System described and classified,
in general terms, the service conditions tinder which engines were operated,
It provided a basis for selecting and recommend!ng engine crankcase bits.
The system included three service classifications for gasoline engines
(ML, MM and MS) and three for dfesel erto/lnefc (DS; $f? and OS).

     While this system was a great Improvement over the earlier system, it
eventually became apparent that a more effective weans of communicating the
relationship of engine oil performance and engine tiervffee classification
information between the engine manufacturer** the petroleum Industry and
the customer was required.  There was need for a system that would^provide
more  flexibility in order to satisfy the changing warrahty Walrtteinance ser-
vice  lubrication requirements of the automotive  Industry.

      Accordingly,  in  1969 and 1970  the American  Petroleum Institute, the
American  Society for  Testing and Materials, and  the Society of Automotive
Engineers  cooperated  in establishing an entirely new classification.  SAE
determined that  there were eight separate  categories of automotive type
engine oils  of  current substantial  commercial Interest.  ASTM established
 the  test  methods and  performance characteristics and technically  described
each  of the  categories  (ASTM Research Report  02:1002 January 1970).  API
 prepared  a "user"  language, including new  engine service  letter designa-
 tions, for each  of the eight different  operating conditions  for which  the
 eight different  types of  engine oil were suited.  These eight engthe
service classifications were correlated to the  ASTM technical descriptions
 and  primary  performance criteria.   SAE  then published  the entire  project
 result as SAE  Recommended Practice  J  183.

      This entire classification system  enables  engine  oils  to be  more
 precisely defined  and selected  according to their performance character-
 istics than heretofore, and to  be more  easily related to the type of
 service for which  each is intended.

      Late in 1970, a ninth  class of service had been added  to reflect  the
 anticipated service requirements of new model automobiles.   This  addition
 is technically described in the January 1971  revision to ASTM Research
 Report RR 02:1002 and published in  SAE Recommended Practice J 183a.
                                      61

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       The SAE Crankcase Oil  Viscosity Classification System Is  In  no way
affected by the new API Engine Service Classification System and therefore
is used as before to Indicate the SAE v1scos1t1«s of oils.

     The new API Engine Service Classification System continues  to  define
and explain classes of service for both dlesel and gasoline engine  applica-
tions.  It provides a means of Identifying service requirements  with oil
performance from a lubrication standpoint.  These requirements range from
the mildest, requiring minimum protection against deposits, wear or rust,
to the severe requirements Imposed on autoRtttlv*flftsoHfle engines fey:

     -  Short-trip, start-and~stop,;Qperat1ons

     -  High-temperature trailer towing

     -  Sustained high-speed, high-temperature driving-and on super-
        charged dlesel engines operating on high sulfur fuel.

      The  new  system continues  the use of  letter designations for each  service
classification.  This  provides a convenient means for the engine manufactur-
er to  Indicate  the service characteristics of his various designs and  hence
their  lubrication  requirements.  Similarly, petroleum companies use the letter
designation  to  indicate  for which class or classes of service each of  their
brands  of lubricating  oil  is  suitable.


2.1.3  Definitions and Explanations of API Engine Service Classifications

      The  new  API Engine  Service  Classification System presently Includes
nine  classes  of service;  five for servlea stations and four for commercial
applications.

      It is an "open-ended" system which permits  the  addition of new categor-
ies  as  required without changing or  deleting  existing categories.  This means
that  any  user,  petroleum supplier or equipment manufacturer, may petition API,
SAE  or ASTM to establish a new classification, provided  engine  design, opera-
ting  service conditions or a  significant  change  In  lubricant performance
dictates  a new category.

      The API letter designations identifying the nine service classifica-
 tions, with references to the previous API  system,  to related military  and
 industry designations and to service descriptions,  are summarized  in
Table 1.  *
    "Sl1--SERVICE (Service Stations,  Garages,  New Car Dealers,  etc.)
    "C"--COMMERCIAL (Fleet, Contractors,  Farmers, etc.)
                                      62

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                                                   TABLE 1


                                       OIL S°ECIFICATI?!Y REFERENT CHART
 API SERVICE
 CLASSIFICATIONS
New
Old
           ENGINE SERVICE
           DESCRIPTION
                              RELATED
                              DESIGNATIONS
                         AUTOMOBILE
                         MANUFACTURERS
                         SPECIFICATIONS
SA
ML
Utility Gasoline and
Diesel Engine Service

Service typical of engines
operated under such mild
conditions that the pro-
tection afforded by com-
pounded oils 1s not re-
quired.  This classifi-
cation has no performance
requirements.
Straight Mineral Oil
SB
           Minimal Duty Gasoline
           Engine Service
           Service typical  of engines
           operating under  such mild
           conditions that  only nlni-
           BUB protection afforded by
           compounding Is desired.
           Oils designed for this
           service nave been used
           since the 1930's and pro-
           vide only antiscuff capa-
           bility, and resistance  to
           oil  oxidation and bearing
           corrosion.
                             Inhibited 011
sc
           1954  Gasoline  Engine
           Warranty  Service

           Service typical of  gaso-
           line  engines in 1964-
           1967  models of passenger
           cars  and  trucks operat-
           ing under engine manu-
           facturers' warranties 1n
           effect during  those model
           years.  Oils designed for
           this  service provide con-
           trol  of high and low tem-
           perature  deposits,  wear,-
           rust, and corrosion in
           gasoline  engines.
                             1964 MS Warranty Approved  Ford ESE-M2C101-A (1964)
                                                                            "MIL-L-2104C"2

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                                       TABLE 1  Continued
 SO       MS          1968 Gasoline Engine   •
                     Warranty Maintenance Ser-
                     vice (revised)

                     Service typical of gasoline
                     engines in 1968 through
                     1970 models of passenger
                     cars and some trucks opera-
                     ting -inrfer engine manu-
                     facturers' warranties in
                     effect during those model
                     years.  Also nay apply to
                     certain 1971 and/or later
                     models, as specified (or
                     recommended) 1n the owners'
                     manuals.  Oils designed for
                     this service provide more
                     protection against high and
                     low temperature engine de-
                     posits, wear, rust end cor-
                     rosion In gasoline engines
                     ttian oils which arc satis-
                     factory for API Engine Ser-
                     vice Classification SC and
                    ny be used whea this
                    classification Is recom-
                    mended.
                              1968  MS  Warranty  Approved
                            Ford  ESE-M2C101-B  (1968)
                            CM 6041-N (Prior to
                            July.  1970)
SE       None       1972 Gasoline Eng1m War-
                    ranty Maintenance Service
                    Service typical  of gaso-
                    line engines 1a passenger
                    car* and sane trucks bt~
                    ffmtli* with 1W2 and
                    certain 1971 artels operat-
                    ing under engine manufac-
                    turers' warranties.  (His
                    designed for this service
                    provide more protection
                    against oil  oxidation,
                    high twperatur* engine
                    deposits, rust and corro-
                    sion in gasoline engines
                    than oils which  are satis-
                    factory for  API  Gasoline
                    Engine Warranty  Mainte-
                    nance. Classifications
                    when either  of these
                    classifications  are re-
                    cofflnended.
                             1972 Gasoline Engine Mar-  Ford N2C101-C (197?)
                             ranty Maintenance Service
                                                        6H 6136-*.  prtrhxrcly
                                                        9W041-M Revised.

                                                        American Motors AM 4042

                                                        "Mil-l-46152"3
SO or
SE
Same as above.
Same as above.
Chrysler MS4071H
                                                                           Mack Truck EO-6
                                                                           Hack Truck EO-H
                                                                           Caterpillar Series 3

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                                      TABLE 1
 API  SERVICE
 CLASSIFICATIONS
ENGINE SERVICE
DESCRIPTION
Continued

  RELATED
  DESIGNATIONS
 New
         Old
EQUIVALENT
MILITARY
SPECIFICATION
 CA       DG         Light Duty Diesel
                    Engine Service

                    Service typical of diese!
                    engines operated in milt!
                    to moderate duty »ith
                    high qua!ity fuels.
                    Occasionally has included
                    gasoline engine? in mild
                    service.  011s designed
                    for this service were
                    widely used in the late
                    1940's and 1950's.   These
                    o1H provide protection
                    from bearing corrosion
                    and from high teraperature
                    deposits In normally aspi-
                    rated die&el  engines when
                    using fuels of sued quality
                    that they impose no un-
                    uuu)  requirements  for wear
                    and deposit protection.
                             MIL-L-2104A
                                                                            MIL-1-2104A
CB       OH         Moderate Duty Diesel Engine
                    Service
                    Service typtcal  of dlete!
                    engines operated in mild
                    service.  Oils designed for
                    tftfs service Mere intro-
                    duced in 1949.  Such oils
                    provide necessary protec-
                    rWn from bearing corro-
                    sion and from high tempera-
                    tyre deposits in normally
                    espfrated dlesel engines
                    with higher  sulfur fuels.
                             Suppl
           t  1
 U.S. Any Z-104B. Suppl  1
CC       DM         Moderate Duty  Diesel  and
                    Sasoline Engine Service
                    Service typical of lightly
                    supercharged diesel en-
                    glMs  opera tea In  node rate
                    to severe duty and has  in-
                    cluded certain heavy  duty,
                    gasoline engines.   Oils de-
                    signed for this service
                    were introduced in 1961
                    and used in many trucks
                    and in Industrial  and con-
                    struction equipment and
                    farm tractors.   These
                    oils provide protection
                    from high ten?>erature de-
                    posits in lightly  super-
                    charged diesels and also
                    from rust, corrosion, and
                    low temperature deposits
                    in gasoline engines.
                            WU-L-2104B
                            HIL-l-?104B. HIL-L-4615?

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                                        TABLE  1   Continued
CD
DS
Severe Duty Diesel Engine
Service

Service  typical of super-
charged  diesel engines in
high speed, high output
duty requiring highly
effective control of wear
and deposits.  Oils de-
signed for this service
were introduced in 1955,
and provide protection from
bearing  corrosion and from
high temperature deposits
in supercharged diesel en-
gines when using fuels of
a wide quality range.
MH-L-45199B, Series 1
Mk-L-45)99B, M1L-L-2104C'
                   Service  typical of both
                   spark-ignition and com-
                   pressive-ignition (diesel)
                   ^ngines  used  in tactical
                   service, i.e., all types
                   of military ground equip-
                   ment operating under the
                   entire range of service
                   conditions.  Meets API
                   engine service require-
                   ments CD and SC.
                                       Tactical Service
                                       vehicles
                                                        MIL-1-P1C4C
                   Service typical of com-
                   mercial engines used in
                   administrative (post,
                   camp, and station) service
                   Oils are to be appropriate
                   for gasoline engines in
                   passenger cars and light to
                   medium duty trucks operat-
                   ing under manufacturers
                   warranties and also for
                   lightly supercharged
                   diesel engines operated
                   in moderate duty.   Meets
                   API engine service require-
                   ments SE and CC.
                                       Passenger Cars
                                       Light Trucks
                                                        MIL-L-46152

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2.1.4  Application of API/SAE Specifications

     API/SAE ratings are used both by auto manufacturers and lube oil  pro-
ducers.  Auto manufacturers take into account engine design and expected
operating conditions.  It is then their responsibility to indicate the API
service class or classes, SA through SE,  applicable to that desiqn and
use. Further discussion of manufacturers' use of specifications will be
found in the section on manufacturers (see below).

     It is the responsibility of the lube oil producer to establish that
his lube oil has the characteristics essential for the class of service for
which the oil is recommended.  An oil recommended for a given class of ser-
vice should be able to satisfy all physical/chemical and performance re*
quirements for the specified class of service.

     The use of an API/SAE service label  1s totally up to the oil producer
and is self-policed.  There 1s no independent organization which monitors
the quality of lube oils sold 1n the retail market.  The API Motor 011
Guide states:

     The designation of  an oil as suitable for a given API Service,
     such as  "API Service SE", is wholly the responsibility of the
     marketer of  that particular brand of oil.  It  1s expected that
     his knowledge  of the  performance characteristics of his product
     provides the basis  for proper service designation.

     Although many  consumers do, and should, rely on  the API/SAE  rating in
purchasing  lube oil,  there  is some evidence  that the  rating system has been
abused.  A  1962 study by a major  additive manufacturer  showed  that second
and third  line 91'!$  frequently did  not meet  the API/SAE  service, quality
level  with  which  they were labeled.3/However,  lubrication  engineers 1n
major   auto companies believe that API/SAE labels  used  by  major oil pro-
ducers  are  completely  trustworthy.   They feel  that  fraud would soon be dis-
covered during  engir-.e  tests  made  by  additive producers,  auto manufacturers,
or professional  trade organizations.

      It is  particularly important to note for the  purpose  of  this study
that neither the  API/SAE service  classifications  nor the associated ASTM
test methods and  performance limits  exclude  re-refined lube oil.   Re-
 refined oil may  correctly use an  API/SAE grade label  if it is  able to meet
 the performance  tests  applicable to oil  of that grade.


 2.1.5  Automobi 1 e Manufacturer*s  Sped f 1 cations

      Manufacturer's specifications for lube oil are used in three different
 ways.   They are used by the manufacturer to buy factory fill  lube oil and
                                      67

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by automobile dealerships in purchasing lube oil with which  to service
cars.  They are also used by the car purchaser in choosing lube oil  appro-
priate for his car.  This last use 1s particularly Important because quality
choice may affect customer's ability to get his new car warranty enforced.

     Auto manufacturers are the prime movers behind the API/SAE specifica-
tions because it is their cars that have to use the oil.   Automakers'  In-
terests are represented by the SAE in the Joint SAE-ASTM-API decisions  on
lube specifications.

     Ford and General Motors dominate the lube oil specification-setting
process and new API/SAE specifications are written largely at their re-
quest.  Chrysler and American Motors follow the lead of Ford and. GM.
API/SAE specifications are therefore always consistent with the lube oil
specifications established by the individual auto firms.  Ford's new car
lube oil specification, ESE-M2C 101-C, and GM's new car lube oil specifica-
tion, GM 6136-M, are virtually Identical in tests and required performance
to  the API/SAE rating. *

     Both  new car  owners' manuals and warranties  indicate  that vehicle fail-
ure due  to  use of  non-specification  lubricants  are not  covered by the warran-
ty.  Owners' manuals for  new Ford and GM cars  Instruct  the consumer to pur-
chase only  oils  that meet SE service specifications.  The  Ford emnission  con-
trol  system warranty sets up particularly rigorous requirements for mainten-
ance if  its provisions are  to  be  honored.

      Most  oil  companies  identify oils which have  been tested and approved
for warranty  servicing with an Identifying  phrase on  the oil container.
These statements  are frequently printed vertically on the  side of the can:

      "Meets Car  Manufacturers'  Test  Requirements"

      "Passes  ASTM Sequence  Tests"

      "Sequence Tested"

      "Exceeds  (or Surpasses)  Car  Manufacturers' Service Requirements"

      "Meets (or  Exceeds)  Car  Manufacturers' Warranty Requirements", etc.
 *  These specifications are for "service fill", i.e., field servicing by
    dealers and consumers.   Each automaker also has  a "factory fill"  speci-
    fication for lube oil  put in the crankcase at the plant.  The factory
    fill specification is  slightly more demanding than the companies'  service-
    fill, i.e., API/SAE specification, because 1t has special additives for
    breaking in the engine.

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     Like API/SAE specifications,  Ford and GM specifications  nowhere ex-
clude re-refined oils  a priori.   Ford's specifications,  for example, only
require that all suppliers provide a product which 1s "essentially identi-
cal in all characteristics and compensation to the material upon which
qualification was originally based, and shall be suitable  for the Inten-
ded appli cation." 4/

     Although the specifications themselves do not bar manufacturer or con-
sumer warranty purchases of re-refined oil, opinions among lubrication
engineers employed by the major automakers differ on the quality of re-
refined oil.  Ford engineers state that they would not purchase re-refined
oil for company use without complete engine testing of each batch.  Their
opinion is that without such testing feedstock variations make 1t impossi-
ble to be assured of lube oil quality or additive response.  They do agree,
however,  that re-refined lube oil need not be inherently inferior.

     GM  lube engineers have a somewhat more charitable view of the quality
consistency of  re-refined oil.  It is their belief that it is technically
possible  to get a. consistent quality output from a widely varying input
--1f enough funds are available to apply the best re-refining technology
and to withstand the increased costs which may result from lower product
yields.
 2.1.6   Military  Specifications

     Military  specifications for lube oil are crucial in determining whether
 the  military or  other government agencies can purchase  re-refined oil.
 However,  unlike  API/SAE  or  automaker specifications, military specifica-
 tions  specifically  exclude  re-refined lube  oils  from consideration.

     This is particularly important because the  military's oil specifica-
 tions  have a strong influence on all other  federal  agencies  and on much
 of the private market.   The General Services Administration  (GSA), the
 federal unit  that buys  most government  property, has delegated authority
 to the Defense Supply Agency (DSA)  to procure fuels and lubricants for the
 entire federal government.   Further, military lube  oil  specifications are
 followed by many state,  local,  and  commercial fleet maintenance facilities.

      The military lube oil  specifications  at Issue  are  MIL-L-46152 and
 MIL-L-2104C.  5/   Both specifications require in  their sections on materials
 that "no re-refined constituent material  shall be used."  6/   MIL-L-46152
 is the specification for "lubricating oil,  internal combustion engine, ad-
 ministrative  service."  Lube oils  covered  by the specifications are
 "intended for the crankcase lubrication of commercial  type vehicles  used
                                      69

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for administrative (post,  station and camp)  service typical  of:   (1)  gasoline
engines in passenger cars  and light to medium duty trucks  operating under
manufacturers'  warranties; and (2) lightly super-charged diesel  engines
operated in moderate duty." 7/

     M1L-L-2104C is the specification for "lubricating oil,  Internal  com-
bustion engine, tactical service."  Lube oils covered by the specification
are "intended for the crankcase lubrication of reciprocating spark-ignition
and compression-ignition engines used 1n all types of military tactical
ground equipment and for the crankcase lubrication of high speed, high-output,
supercharged compression-ignition engines used 1n all ground equipment."  8/

     MIL-L-46152 oil is, in sum, chiefly for military automobiles and light
trucks.   It is an oil that will meet the performance requirements of API/SAE
grade  b£  and as a moderate duty diesel oil it will meet the performance  re-
quirements of API/SAE grade CC.

     MIL-l-?104C  is chiefly a lube oil for heavy equipment such as trucks.
As such it meets API/SAE grade CD for heavy duty diesel uses.  However,  it
is only a single  viscosity oil and therefore qualifies for only an SC gaso-
line engine rating.  MIL-L-46152 oils can be single or multi-viscosity lu£ri-
cants.

     These  two specifications exclude procurement of re-refined constituents
on the grounds that  there  is  no  reliable  information on the quality of
such oils.  According  to  the  Defense  Supply Agency,  the government agency
which  procures lube  oils  for  all  federal  facilities, the small, independent
firms  which typically  engage  1n  oil re-fining do not have the financial
capability  to  support  the  level  of laboratory and other testing needed to
provide essential  data  on  quality and consistency.

     Aside  from  the  explicit  prohibition  of re-refined constituents, the
military  specifications contain  another  provision which has been  interpreted
to exclude  re-refined  oil.  This provision  states:

      Whenever  there  is  a  change  on  the  base stock,  in  the refining
      treatment or in the  additives used  in  the  formulation,  requalifica-
      tion will be required.   When proposed  changes  are minor  and  may not
      be expected to  significantly affect performance,  the qualifying acti-
      vity may, at its  discretion, waive  complete requalification  in order
      to determine the  significance and  acceptability of  the  proposed
      changes.  JV

      The  varying feedstocks  that go  into re-refining of waste lube oil are
seen as a significant "change in the base stock."  Each batch therefore  1s
 required to undergo prohibitively expensive requalifications.
                                      70

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                               2.2 TESTING
     Lube oil must be tested in order to determine whether or not it meets
the performance standards established by specifications.   Indeed, the speci-
fications themselves indicate which of a standardized set of tests must be
performed in order to qualify lube oils for various classes of service.

     Two kinds of tests are carried out -- laboratory bench scale tests and
engine tests.  The laboratory tests measure the physical  and chemical prop-
erties of lube oil and the results of these tests must meet or exceed pre-
cise criteria established by the specifications.  However, lubrication en-
gineers have found that currently available laboratory tests cannot sub-
stitute for engine tests that approximate the operating conditions under
which lube oil is required to perform.  A sequence of expensive tests Is
therefore always required before a lube oil is found acceptable by major
purchasers.


2.2.1  Laboratory Bench Scale Tests


a.  Virgin Oils


     An example of physical and chemical standards from the military speci-
fication, MIL-L-46152, appears 1n Table 2.

     Several  other characteristics In addition to these are also required,
including high foaming, high stability, and compatibility with other oils
made for similar  uses.

     As  can  be seen  from these criteria, there are specific numerical  stan-
dards  for most, but  not all, physical and chemical properties.  This holds
true also for API/SAE  and manufacturer  specifications.  Those characteristics
for which no precise standards exist must be measured and reported and  the
producer must establish  tolerances for  them.  Evaluation  by the analyst
tends  to be  subjective in these areas.  However,  properties for which  no
minimum  standard  has been established are not generally considered to  be
critical determinants  as to  whether  or  not  a candidate oil  passes  or fails
the entire  qualification test.


b.   Re-Refined Oils
      Re-refined oils  now available  can easily pass  established  laboratory
 tests such as those required under  specification MIL-L-46152.   Table  3
                                    71

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                     Table 2
       Military Specification  MIL-L-46152
Partial List of_ Physical and Chemical Requirements


Property
Viscosity at 210UF (99°C)
kinematic, SUS
min.
max. ,,
Viscosity at 0°F (-I8°CH
apparent, SUS
m1n.
max.
Viscosity index, min
Pour point, °F (max.)
°C (max.) ..
Stable pour point, °F (max.)^
°C (max.)
Flash point, °F (min. )
°C (min.)
Gravity, API^ ,.
Carbon residue^
Phosphorus •*.
Chlorine v.
Sulfur &-.
Sul fated residue-^- -.
Organo-metall ic components-/
Grade tirade
10 30


44.9 58.0
< 50.8 < 70.0


6000
< 12000
75
-25 0
•32 -18
-25
-32
400 425
204 218
X X
X X
X X
X X
X X
X X
X X
I/ Report measured, apparent viscosity at 0°F (-18°C) 1n
10, 10W-30, and 20W-40 oils.
2/ After being cooled below its
on standing at a temperature
3_/ Values shall be reported ("X

pour point, the oil shall
not more than 10°F (6°C)
" indicates report).
Grade
10W- JO


58.0
< 70.0


6000
< 12000 <
--
-25
-32
-25
-32
400
204
X
X
X
X
X
X
X
centipoises

regain its
Grade
20W-40


70.0
< 85.0


12000
48000
--
-10
-23
-10
-23
415
213
X
X
X
X
X
X
X
for grades

homogenei ty
above the pour point.


                          72

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                               TABLE  3


         Physical  and Chemical  Properties of Re-Refined 011 *
                                        Grade      Grade      Grade      Grade
Property	10	30      10W-30     2 OH-40

Viscosity at 210<>F
   kinematic, SUS                        46.5       65.5       63.4       77.5

Viscosity at 100<>F
   kinematic, SUS                       190        540        310        480

Viscosity Index                         110         96        144        134

Pour point, °F                          .35        -10        -45        -35

Flash Point, °F                         385        450        420        435

Fire Point, °F                          440        480        455        465
    These  data  were  supplied  by one of the  13  re-refiners Interviewed.  Data
    supplied  by two  other  re-refiners were  essentially  Identical to the above
    figures.
                                      73

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presents data concerning the physical and chemical properties of some conwer-
cially available re-refined oils.   The data indicate that these oils exceed
the minimum requirements listed in Table 2 for lubricants qualified under
specification MIL-L-46152.  This does not, however, imply that these re-
refined oils will necessarily pass the engine sequence tests required by
specificaiton MlL-L-46152 (see below).

c.  APR Emblem Licensing Agreement

     In 1964, in response to the FTC's proposed rule requiring re-refined
oils to be labelled as made from previously used oils, the Association of
Petroleum Re-Refiners (APR) established an Emblem Licensing Agreement in
order to set minimum quality standards for re-refined oils.  Re-refiners
subscribing to this agreement would certify that the physical and chemical
properties of their oil would meet or exceed the list of specifications
shown in Table 4.  In return for this pledge, the APR would allow the re-
refiner to print an emblem on all  oil containers certifying that the re-
refined oil had met the established quality criteria.  The standards list-
ed in Table 4 applied only to re-refined base stocks (non-detergent oils)
before  the addition of additives.   Hence engine sequence tests were not
a part  of the Emblem Licensing Agreement.

     Unfortunately, most  re-refiners  did not subscribe to  this agreement,
preferring to go their own ways in establishing and maintaining markets
for their oil.  To a degree, 1t is not surprising that few companies sign-
ed the  emblem agreement.  As discussed in Chapter 1, re-refined products
have, in the main, been sold as non-detergent oils in competition with  low
quality virgin  lubes.  Since most re-refiners were not trying to compete
with manufacturers of oils of established quality, there was  little reason
for them to  take steps to have  their  products meet minimum quality  stan-
dards.  However, as was shown 1n  the  previous chapter, this was a bad strat-
egy as  it  is precisely those firms (which have chosen to market unblended
re-refined oils  in bulk quantities)  whose survival is now  threatened.   Of
the 13  re-refiners interviewed, only one  had signed  the  Emblem Licensing
Agreement.   His  company,  which  sells  blended re-refined  oils  to commercial
and industrial  accounts,  is a profitable business and has  a widespread re-
putation for producing quality products.


2.2.2   Engine Tests


      Engine  tests  of  lube oils  have  two major  uses.  Most  obviously they
are used  to  judge  whether or  not  a specific  compounded  (blended with  addi-
 tives)  lube  oil  will be adequate  for  expected field use.   The enqine
                                    74

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                                 TABLE  4


                           CONTROL  SPECIFICATIONS
                    ASSOCIATION OF  PETROLEUM RE-REFIMERS
                                 EMBLEM  OIL

                        S.A.E.  10 to S.A.E,  40 Incl.

               MIN.      MAX.                            MIN.      WAX.
Vis.  9 210     Flash    Color           V1s. 9 210     Flash    Color


    40         365       3.0                60          435       5.0
    41         365       3.0                61          435       5.0
    42         370       3.0                62          435       5.0
    43         375       3.5                63          440       5.5
    44         380       3.5                64          440       5.5
    45         385       3.5                65          440       5.5
    46         390       3.5                66          445       5.5
    47         395       3.5                67          445       5.5
    48         400       4.0                68          445       6.0
    49         405       4.0                69          450       6.0
    50         405       4.0                70          450       6.0
    51         410       4.0                71          450       6.0
    52         415       4.0                72          455       6.0
    53         420       4.5                73          455      6.5
    54         425       4.5                74          455      6.5
    55         425       4.5                75          460      6.5
    56         425       4.5                76          460      6.5
    57         430       4.5                77          460      6.5
    58         430       5.0                78          465      6.5
    59         430       5.0                79-84       465      6.5

 In addition  to the  above,  the  oil  must  wet the  specifications of the S.A.E.
 No. under which  1t  1s  sold.

 Following specifications apply to  all A.P.R.  Emblem oils:
    M1n.  Viscosity  Index of  90
    Difference between Flash Point and  F1re Point must be 40°F.  Min.
    Neutralization  Number  0.075 Max.
    Ash - O.OU  Max.
    Moisture - Trace  Max.
     Precipitation No.  to be  0.0 Max.

 Above specifications  apply to  oil  before addition of  any additive.

 These values shall  be computed by  the American Society of Testing Materials
 Standard Method  of Test as-follows:
                             ASTM Test                                    ASTM Test
                            Designation                                   Designation

 Flash Point                   0-92          Viscosity Index                 0-567
 ASTM Color                    0-1500        Neutralization  No.           0-974 or D-664
 Saybolt Viscosity*            D-88          Ash                             D-482
                                             Precipitation No.               D-91
 *
    It 1s preferable to determine Kinematic Viscosity by ASTM Method D-445 and con-
 vert Kinematic Viscosity to Saybolt Viscosity using ASTM Method n-44fi

 Latest revisions of the a-bove ASTM Test Procedures shall  apply.

                                          75

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tests are set up to duplicate such field use and performance criteria must
be passed if the oil is to qualify for purchase at Its designated grade.

     Engine tests are also performed to determine an appropriate additive
package.  Additive manufacturers will test formulations of the base stock
blended with various combinations of additives until the least-cost package
for the desired grade is determined.  Both the kind and amount of additives
are important.  Oil producers, of course, want to buy from the additive
company that can blend its oil up to specified performance criteria at least
cost.

     It is expected that if neither the crude source nor refining process
change, then the additive package need never change since the "additive re-
sponse" will be the same from batch to batch.  If the crude, i.e. feedstock
source, does change, as it must for re-refined oil, there is always a sus-
picion  that a slightly different additive package may be needed.  But with-
out extensive and costly engine tests it is impossible to tell the precise
additive amounts or changes required to just meet performance standards.

     In order to alleviate such suspicions, it is common practice for ad-
ditive  manufacturers to perform engine tests on a number of basestock-
additive blends  in  order to develop a general purpose additive package for
use with a wide variety of lube oils.  Such general additive formulations
enable  small  firms, which cannot afford costly engine tests, to  specify
that their  lube oils meet specifications required by their customers.  Thus
if a lube oil container bears the designation "For API Service SE,"  it does
not  necessarily mean that the engine sequence tests required for an  SE
rating  were actually performed  on the lube  oil-additive blend which  is In
the  container.  Rather, such  a  designation may mean that an additive manu-
facturer, having  performed engine tests on  a number of base stocks blended
with a  certain  concentration  of a general purpose additive, has  recommended
to the  lube oil  producer  that a certain blend of  the producer's  base stock
and  the additive  would  pass all engine  tests specified for an SE rating if
such teats  were  to  be  carried out.

      In the case  of re-refined  oils,  the general  additive package  is ef-
fective because there  are only  a  few individual  crude  sources that are
used to make  lube oils  for a  specific  geographic  region,  such as the West
Coast.   These same  sources are  used by  both large and  small  lube oil pro-
ducers.  These  oils eventually  find their way  into  the  re-refiner's  waste
oil  feedstock so he,  too, can be  considered to  be using  the  same crude
from regional  sources.  As a  result, the  general  additive package  recom-
mended  to  him is  the same as  that used  by small  virgin  lube  oil  producers.

      The practice of  large virgin oil  producers  and  re-refiners  differs  in
the  area of additives,  but the  difference is  due not  to  their product  but
to  their scale  of operations.  Virgin oil producers  are  frequently corporate
                                      76

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giants while re-refiners, because of the high collection costs associated
with distant waste oil pick-up, are generally small companies.  To the ex-
tent that virgin oil producers are small firms, their behavior is like that
of the re-refiners.

      A large virgin lube oil producer will typically send its refined lube
base stock from a new crude source to an additive firm and request that the
additive producers run engine tests on compounded versions of the oil.  The
oil producer will be willing to pay the $10,000 to $80,000 cost of these
tests because the tests will tell him how lean an additive package he can
use and still meet the desired specification.  Since the oil company re-
quires large volumes of additives, a small savings in the volume of additives
required per gallon of oil represents a major total savings in cost.  The
engine tests are, therefore, usually worth the expense.

      Small virgin lube oil producers and re-refiners do not purchase such
a  large volume of additives.  Consequently, engine tests to reduce the
volume of additives per gallon are not economically practical.  Instead, as
discussed above, small lube oil producers avoid engine test expenses by
purchasing a general additive package.  By blending 1n more additives than
may be required, the small producer can assure his potential customer that
his oil would pass engine tests,  If these tests were performed.  This ap-
proach results in a greater additive cost to small lube oil producers, but
the extra expense  is frequently outweighed by the small firm's lower over-
head costs.

      This procedure of circumventing expensive engine tests was stimulated
in 1967 by an agreement between the Ford Motor Company and the Independent
Oil Compounders Association (IOCA).  At this time Ford was attempting to
establish its own oil quality certification business.  Small, independent
oil companies belonging to  IOCA brought an antitrust suit against Ford,
claiming that engine test requirements for oil certification by Ford were
so expensive that  the small oil companies would be squeezed out of  the
passenger car lube oil market.  This was a particularly difficult problem
for those IOCA companies who followed a practice of buying  lube oil base
stocks from  a number of different sources depending on who  offered  the
lowest price.  Hence  the  lube  oil  blends  produced  by the  independent oil
compounders  would  not satisfy  Ford's  requirements  regarding variation in
base  stock composition.

       In order to  resolve  this problem, Ford engineers  proposed a simple
solution.  Ford  would approve  (without  having  tests performed) oils blended
from  varying base  stocks  for use  in  new automobiles provided  that the vol-
ume of additives blended  with  these  base  stocks was increased  by  ten  percent
above  the  level  recommended  for  non-varying  base  stocks.  A minirrum value
of 85 was established for  the  viscosity Index  of  all base stocks which
qualified under  this  arrangement.
                                       77

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a .   Y_i_rg_i_n_pj 1 s


    There is a prescribed series of engine tests for each lube oil speci-
fication, whether it be API/SAE, manufacturer, or military (see Table 1).
The API/SAE SE oil grade, for example, requires the following four engine
tests:

      Oldsmoblle Sequence 11 B Test.  This test procedure is used to evaluate
the rusting characteristics of motor oils.  Sequence II B is run under low
speed, low load, and cold temperature conditions.  It is designed to relate
to short trip service under typical winter conditions encountered in the
northern United States.

      01dsmobile Sequence III C Test.  This test procedure is designed to
evaluate" "th~e performance of engine oils operating under high temperatures.
The main objective is to produce oil thickening resulting from oxidation.
Sequence III C also evaluates sludge, varnish, and wear characteristics of
motor oils.  The test is meant to represent such high temperature usage
conditions as trailer towing, power consuming accessories, emission control
devices, and extended high speed driving on freeways.

      Sequence V C Test.  This test is used to evaluate sludge and varnish
forming tendencies of motor oils under a variety of operating conditions.
The engine  is cycled through three different stages — high-speed cold,
high-speed  hot, and idle operating conditions — to accelerate deposit
formation.  The test was designed to represent a combination of low-speed,
low temperature "stop and go" city driving and moderate turnpike  operation.

      CRC L-38 Test.  The test is run on a special single cylinder engine
and is used  to evaluate  the oxidation stability and copper-lead bearing
corrosion characteristics of engine crankcase oils.

      The following table gives the primary API/SAE performance criteria
for these tests:
                                      78

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                                 TABLE   5


                          Prlroar  Performance Criteria
Sequence IIB           AVG.  Rust rating,  min.                 8.9

Sequence IIIC          Vise.  Incr.  @ 100°F and 40 hrs.,
                         % max.                              400

                       Piston skirt varnish, min.            9.5
                       Oil ring land varnish, m1n.           6.0
                       Sludge rating, m1n.                   9.0
                       Ring sticking                         None
                       Lifter sticking                       None
                       Cam or lifter scuffing                None
                       Cam + lifter wear. 1n. -Avg.          0.0010
                                              •Max.          0.0020

Sequence V-C           Avg. engine sludge, m1n.              8.5
                       Avg. piston skirt varnish, m1n.       8.2
                       Avg. engine varnish, min.             8.0
                       Oil screen clogging, %, max.          5
                       Oil ring clogging, %, roax.            5
                       Compression ring sticking             None

L-38                   Bearing  Wt. Loss, mg., max.           40


       Some  of  the  evaluation criteria  listed  in  the right  hand column in
the table have no  units.  For  these  criteria  a subjective  evaluation is
made  of the results  of the engine test by  Inspecting  the particular engine
part  involved.  A  rating  of  10 is perfect,  a  rating of zero  is the worst
failure.  For  example, under sequence  V-C  the average engine sludge must
be rated at 8.5 or higher.   In  evaluating  the results of an  engine test,
an experienced engineer will inspect the  engine  and pronounce his judgment.
 If any test is failed, the candidate oil  must be resubmltted for an entire
 new series  of  tests.

       In addition  to these tests,  the  military requires one  extra test  se-
 quence under its  specification for  automobile oil  MIL-L-46152.   This is
 because it  requires this  oil to be  usable in  moderate duty dlesel engines:

       Ca terpi 11 ar I -M Test .  The test  is  designed to  measure diesel engine
 wear  and Accumulation of  deposits  under  high temperature  supercharged con-
 ditions.  The  I-M designation  refers to  small bore,  highly supercharged
 diesel engines.

       The  MIL-L-2104C lube oil specification drops the IIIC  test (high  tem-
 perature)  and replaces the I-M with I-D  and I-G which are similar  tests to
 I-M but are designed for  larger and more highly supercharged engines.


                                       79

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b.  Re-Refined Oils
       Engine tests of re-refined oils have been totally inadequate.  The
military ran a series of tests on recycled lube oils in the mid-1950's and
found that the oils were inferior to virgin oils.  The test results have
since been lost and some of those involved in the tests recollect that the
samples used did not fairly represent the quality of recycled Hube oil then
available.  Moreover, many changes have taken place 1n the additive packages
used to upgrade the performance of both virgin and recycled oils since the
mid-1950's.

       Nevertheless,  these unfavorable test results have often been  cited
by  the military as proof of the  inferior  quality of re-refined  oils.  10/
In  the absence of  contradictory  data, they have also provided a rationale
for excluding  re-refined oil  in  military  specifications.   In addition, the
tests  were influential  in the formation of the current Federal  Trade  Com-
mission  labeling policy which discriminates against re-refined  oil  1J/

       However, even  if  engine tests  of re-ref1ned oils  indicated that these
lubricants could meet  the military performance requirements, under  pxisting
regulations  re-refined  oils could still not be purchased  by any federal
agency because of  the  requirement that once an oil  is  qualified, the  source
of  the feedstock from  which the  oil  is manufactured may not be  changed.
                                       80

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                             2.3  CONCLUSIONS
      Neither API/SAE specifications nor manufacturer specifications pose
any obstacles to the use of re-refined oil.  Neither set of specifications
explicitly excludes re-refined oil  from acceptability or establishes labora-
tory and performance criteria which are beyond the capability of such oil
to meet.  New car warranties from major automakers will  remain legally bind-
ing with re-refined oil, providing the oil meets normal  specification criteria,

       The  case  is  completely  different  with military  specifications.  The
 specifications  for lube  oils  explicitly exclude  re-refined oils from  con-
 sideration even though  the chemical/physical  and engine test  performance
 criteria  are well  within the  capability of recycled  lube oils.  The exclu-
 sion is a  formal  obstacle to  government procurement of  re-refined lube  oil.

       Perhaps the  most  frequently  cited problem  for  re-refined  oils is  the
 question  of repeatability.  Since  the feedstock  used  in most  re-refining
 operations is a mixture of a  large number of  crankcase  oils  produced  from
 a variety of crude oil  sources,  it is argued  that there can  be  no assurance
 that the  re-refined product will  be of consistent quality.   While re-refiners
 have for  years been using "fat"  additive packages to account  for  any possible
 variations in product quality,  no  documentation  in the  form  of  engine se-
 quence tests of re-refined oils  is available  to  confirm the  success of  this
 strategy.   Re-refiners  claim that  since their feedstock is composed of  such
 a large number of lube  oil products, the overall mixture will,  in fact, be
 constant and will  be composed of lube oils in proportion to  the market  shares
 of the major lube marketers in the geographical  area concerned.   Hence  the
 effect on product quality of introducing some poor quality drain  oil  into
 a re-refiner's feedstock storage tanks will  be negligible.   The problem of
 proving the validity of either of  these contentions is,  of course, eliminated
 if the used oil is custom re-refined under closed-cycle conditions.
                                       81

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                             FOOTNOTES CHAPTER 2
1.    A Technical and Economic Study of Waste 011 Recovery—Part I:   Federal
         Research on Waste Oil From"Automobiles, Teknekon, Inc.. EPA Contract
         No. 68-01-1806, October 1973.

2.    "Pre-Convention Presentations," in 1972 Annual Proceedings--1973 Pre-
         Convention Report. Locomotive Officers Maintenance Association,
         Chicago, 111., September 10-12, 1973, p. 184.

3.    Lubrication is a Responsible Job—But Do U6 Know It?. Frank Menton,
         April  21T1965, ASLE Meeing, Buffalo, New York

4.    Ford  Specification ESE-M2C 101-C, revised August 1973.

5.    See Table 1 and Appendix 3A.

6.    MIL-L-2104C and MIL-L-46152,  p.4  in  each.

7.    Language  taken directly from  specification, p. 11.

8.    Language  taken directly from  specification, p. 10.

 9.    Page  3 in MIL-L-2104C  and MIL-L-46152.

10.    See copy  of  letter  to  RTC by  R.G. Streets, Army Material  Command,
          1965,  Appendix 3B.

11.    A Technical  and  Economic  Study  of Waste Oil Recovery—Part I:   Federal
          Research  on Waste Oil  frjom Automobiles, Teknekron,  Inc.. EPA Contract
          No. 68-01-1806,  October  1973.
                                       83
Preceding page blank

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                                 CHAPTER 3


                FEDERAL PARTICIPATION IN WASTE OIL RECOVERY


                             3.0  INTRODUCTION
      Present and future shortages of virgin lubricants and the need to
prevent environmental damage due to uncontrolled disposal of crankcase
drainings require that steps be taken that will stimulate the recovery of
waste lube oils.  Chapters 1 and 2 have shown that the removal of two
barriers, one economic and one Institutional, will greatly stimulate lube
oil recycling.

      The first barrier stems directly from the lack of public acceptance
of re-refined oil.  As discussed in Chapter 1, the poor public image of
recycled oil has been a major factor 1n discouraging re-refiners from pro-
ducing high quality re-refined lubricants for the retail market.  This 1s
a particularly  important problem as the retail market is by far the most
profitable outlet for automotive lube oils.  If high quality re-refined
oils could compete in this market with equivalent virgin lubes, re-refining
would become a  highly profitable business thereby providing an attractive
environment for new  investment In modern, pollution-free facilities for
waste oil recovery.

      However, it is  difficult to imagine that public confidence could be
instilled in the quality of re-refined oil  as long as the government re-
fuses to use recycled oil  in any of its own vehicles and requires that all
re-refined lubes bear a label stating that they are made from "previously
used" oils.   This position is supported by a study of consumer attitudes
toward the purchase of re-refined oil.  This study showed that the public
appears to be willing to buy recycled oils but only if such oils bear a
government certification that they are equal in quality to virgin lubri-
cants. iy  Thus the second barrier to increased waste oil recovery is an
institutional problem.  Removal of this barrier will involve a reassessment
by the appropriate federal agencies of both the specifications for lube oil
procurement and the labelling law which now casts a stigma on all re-refined
oils.

       Hence  the economic  and institutional  barriers  to  increased  waste  oil
 recovery are  not  independent of  one  another.   On  the contrary,  the  former
 barrier  is  due, in large  part,  to  the existence of  the  latter.  Therefore,
 it is  clear  that  one possible strategy for  removal  of the  economic  barrier
 to increased  waste oil  recovery  will  require the  participation  of the
 government  in  a program to demonstrate whether or not properly  re-refined
 oils can be  used  with confidence by  the public.
                                               Preceding page blank

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      in order to understand ways in which government action might effect
removal  of the institutional barrier to waste oil recovery, it is necessary
to be aware of the mechanism by which federal agencies purchase lubricants
and dispose of their waste oils.  Once these procedures are understood it
will be possible to suggest plans which can lead to revision of those federal
policies which now form an institutional barrier to increased use of re-
refined oi 1.
                                       86

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           3.1   PROCUREMENT OF LUBE OIL BY THE FEDERAL GOVERNMENT
      Lubricating oils purchased for use in all  government owned vehicles
are procured by the Defense Fuel Supply Center (OFSC), Cameron Station,
Alexandria, Virginia.  DFSC is an arm of the Defense Supply Agency.   A
voluntary liaison between the General Services Administration (GSA), which
has responsibility for supplying all materials to all civilian government
agencies, and the Defense Supply Agency (DSA), which has responsibility
for supplying all materials for military use, has been established wherein
GSA has delegated authority to DSA for procurement of all petroleum pro-
ducts for use in civilian vehicles owned by the government.  This relation-
ship developed because DSA procures the largest volume of petroleum pro-
ducts of all government agencies.  Hence an investigation of ways in which
the government might take part in an effort to stimulate waste oil recovery
must necessarily involve an analysis of the organization and procedures by
which the military procures lubricating oils.  This section provides such
an analysis and  includes data regarding both the volumes and qualities of
lube oil purchased by various government agencies and the volumes and dis-
tribution of used lube oils which are now discarded.
 3.1.1    Establishment of Lube 011 Specifications

     All  lube oil procured for government agencies by DFSC must be certified
 as  having met one of a number of rather comprehensive specifications estab-
 lished  by the Army Materiel Command's Coating and Chemical Laboratory (CCL)
 located at Aberdeen Proving Ground, Aberdeen, Maryland.  Because the Army
 is  the  branch of the military which uses the largest volume of automotive
 lubricants,  the other military branches have delegated authority for lube
 oil  specifications setting to the Army Materiel Command.  The Army Materiel
 Command,  in  turn, has delegated all authority for the management and direc-
 tion of research and development programs dealing with fuels and lubricants
 to  the  CCL.   The CCL also  serves as consultant  to Army Materiel Command
 Headquarters by providing  the technical input, as to the  specifications and
 standards required of fuels and  lubricants  procured by DFSC.  The CCL is
 responsible  to  the Research and Development Directorate  at Army Materiel
 Command Headquarters.


 3.1.2   The Coating and Chemical -Laboratory

      Figure  1  shows  the  organizational  structure of the  CCL.  Mr. Harry L.
 Ammlung is the  CCL Director and  supervises  the  activities of the five dif-
 ferent  divisions.  The Fuels  and Lubricants Division,  headed by Mr.  Charles
 F.  Schwartz, in  consultation  with  engine manufacturers and  the petroleum
 industry,  sets  specifications for  lube  oil.  Further Mr. Schwartz sits on
                                      87

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                                                      Figure   1


                                             Army Materiel   Command

               Coating and  Chanlcal   Laboratory  -  Organizational   Structure
      Marie R  Breitbart
     	GS 318-7
                                                      TENHO ».  HUXHALA
                                                           COL. CE
                                                     COtVMlIK OFFICE*
         DEPUTY DI HECTOR
        Perry C. Reynold!
                                                           >JAJ  flD
                 SMIKB-CUO
                                             X2226
                      ADH1NISTRATWF OFFICE
                         Hard I   BaUen
                            GS 3* I - 11
                          Budget Officer
                         F  Auvan Santh
                            GS-SoO II
                              Clerk
                         Uelorej R  lePera
                            OS 501 6
                    '•(.•neral Supplv Specialist
                          Nelson Noble
                    	liS- 2UQ1 7	
                         lerk  Stenographer
                          leamtr ^  Rohr
                            GS-301 4
                          Editorial < lerk
                          v met t a Upthurch
                           Supply ClcrV
                         I (wood  >  ttutki
                             IS  JOOS 4
                         l.abor«tor>  Worker
                           Ann te  Vld i 
            GS-1320-U
              Cheaitf
          Martha L
            GS  1320-13
              them u t
           i.eorjte Svarnas
            GS-1320-U
              ChemiHt
          Robert F  Hujner
            OS-1320-12
              rhenu st
            iry  t  Carrol I
            GS-1320-11
              Chemist
           Troy R. Nichols
            GS-1J20-11
     Physical  Science Technician
           C.  Col* Jackson
              US-I3I1-7
         Military  (OffTceri
          Kentun  i   Iravis
iLT
                              7J11
                                                                                                                         11336'
FUELS « UWRIC/kMTS HIVISIOS
           CnieT
    Charles F   Sch«uri
        GS-0830-14
     ReaearcB che»Mt
     Hrurice t   LePera
        GS-1320- 13
     Xanearch thaan»«
   Or.  Marjan Kolobiel
        CS-1120-13
    Pny«ical  sclentm
    Forrest N.  Schaekel
        CS 1301 13
   Thoi
   Che«]»t
as I.  Bowen. -Jr
 03-1520 II
          C5«o»i»t
      James V.  Shi«ek
        CS-1320-S
 Physical Science Technician
    John C. Sonnenburg
	CS-Ull-9	
       John r. Doner
        GS-1320-9
   Hecnnicai tnjine*r
     Gerald J. OeBonc
        GS-08JO  7
                                                       Military
                                                      Michael S
              U.nlistedi
              Gut lerret
                                                                            QIG1C
                                                       Military (tnlistodl
                                                          George Osnald
                                                                                              E4
                                                                                                                          OU120

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the Military Automotive Review Committee which evaluates laboratory and
engine tests performed on lube oils submitted for qualification for govern-
ment procurement.  There are seven other members on the committee 1n ad-
dition to Mr. Schwartz, one representative from each of the following
vehicle manufacturers and testing laboratories:  Caterpillar Tractor Com-
pany, Ford Motor Company, General Motors Company, International Harvester
Company, AutoResearch Laboratories (Chicago), Southwest Research Institute,
and AutoResearch Associates (San Antonio).  This committee meets five times
a year and is the decision-making body concerning the qualification of lube
oils for government purchase.   DFSC will not procure any lube oils which
have not been approved by this committee.  The two specifications under
which most automotive lube oils are procured, MIL-L-46152 and MIL-L-2104C
have already been discussed.  Copies of these specifications are contained
in Appendix A.

     As has been previously discussed, re-refined oils are excluded under
specifications MIL-L-46152 and MIL-L-2104C.  The principal reason cited by
CCL for this policy is that lack of assurance that re-refined oils produced
from waste oil feedstocks of varying composition will be of uniform quality.
Even if one batch of re-refined oil was tested and found to meet a given
specification, CCL feels that there is no assurance that succeeding batches
will also qualify.  Since military specifications require that once a lube
oil has been approved, the manufacturer must agree not to change the crude
oil feedstock, the refining process, or the additive package blended with
the lube oil, re-refined oils produced  from a varying feedstock source are
automatically excluded from consideration.

     CCL is willing to reconsider  approval of re-refined oils  if laboratory
reports can  be provided which show that the oil meets military specifications.
As discussed  in  Chapter  2, no such data are known to exist.

     The Coating and Chemical Laboratory  has already been  involved  in at
least  one  study  of the possible  use of  re-refined oils  by  federal agencies.
 In September, 1972, DSA  published  a report entitled  "Waste Oil Recycling
Study"  which  examined  the  possible development of military specifications
under  which  re-refined lube oils might  be procured.  In consultation with
CCL  the authors  of the report proposed  that:

      1.  Samples of  re-refined  oil be collected  from a  number  of
          re-refiners  over  an  18 month period.  This  would  allow
          variations  due  to weather conditions  and  feedstock  varia-
          tions  to  be  accounted  for.

      2.  Laboratory  tests  be  performed  on these  samples.   CCL  re-
         commended  that  the tests  shown in Table 1  be  performed
          as the  minimum  analysis necessary to insure adequate
          product quality control.
                                       89

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     3.   Multi-cylinder  engine  tests  be  performed  on  a  variety of
         brands  of  re-refined oil  And different  blends  of  re-
         refined and  virgin  stocks each  blended  with  a  selection
         of  additive  components.

     4.   Based  on the results of  the  engine tests  CCL develop
         specifications  for  automotive oil  using re-refined  compon-
         ents.   These specifications  will  contain  limits on  the
         physical and chemical  properties  of re-refined oils es-
         tablished under (2) above.

     5.   A demonstration project  be performed at a military  In-
         stallation over a period of  one year to evaluate  thoroughly
         the performance characteristics of re-refined oils.

     A proposal  was made to the Department of Defense to  carry out these
recommendations.  At present a  decision  to fund  this  proposal  has not
been made.
                                      90

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                          Table 1

Minimum Analysis Required to Insure Lube 011 Quality Control

  Test Method                               ASTM Method Number
  Kinematic Viscosity 9 210°F
  and 100°F                                      D 445
  Ramsbottom Carbon Residue                      D 524
  Total Ash                                      D 482
  Flash Point                                    0 92
  API Gravity                                    D 287
  Aniline Point                                  D 611
  Neutralization No., TAN & TBN                  D 664
  Emission Spectograph for
  Sulfur, Phosphorus, Lead,
  Calcium, Barium, Zinc
                              91

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3.1.3  Procurement Procedures

     As discussed above, all lube oils required by agencies of the federal
government are procured by DFSC.   Nearly all  lube oil  is procured in five
gallon pails, 55 gallon drums or in bulk tank car loads.  An exception is
lube oil ordered by the Defense General Supply Center in Richmond, Virginia,
some of which is procured in containers smaller than five gallons.

     Each year DFSC prepares a list of the previous year's lube oil pur-
chases for each government agency.  Such a list is sent to all ordering
activities who then respond with an estimate of the coining year's require-
ments.  The various military and executive branch agencies then submit to
DFSC their total lube oil requirements.  DFSC then distributes invitations
to submit bids for lube oil supply to all firms listed on a bidder's mailing
list.  Any company may submit a bid provided the firm can prove that:

     1.   It is a qualified  supplier (i.e. its lube oil meets the
         military specification under which the oil is being pro-
          cured); or

     2.   It  is supplying the product of a qualified supplier.

     Bids received are evaluated solely on the basis of price, provided, of
course, that  the lowest bidder is a qualified supplier.  Contracts are then
prepared  and  a bulletin of  successful  bidders is printed and mailed  to the
ordering  activities for all government facilities.  The ordering  activities
place  their order directly  with the contractors listed  in the bulletin.
DFSC does not maintain an  inventory of lube oil products.  All the contracts
are  for indefinite quantities of oil and are unfunded with no prepayment
clauses.  Payment  is made  after delivery by the facility making the  order.
However,  DFSC administers  any problems which may arise  between the ordering
activity  and  the  lube  oil  supplier.

     Lube oil ordered  by  the Defense General Supply Center  in packages
smaller than  five  gallons  is procured  by DFSC on firm quantity, firm funded
contracts.   The Defense General Supply Center maintains  inventories  of
these  packaged  lube oils  at locations  throughout the United  States.


3.1.4   Organizational  Structure

      Figure  2 shows the  organizational  structure of  the Defense  Fuel  Supply
Center.   The  Commander,  Rear Admiral William M. Oiler,  was  himself  in the
1950's in charge  of a  naval facility which successfully used re-refined
cutting oils  and  is,  therefore, well aware of  the  beneficial  aspects of
re-refining.
                                      92

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      The Office of Technical  Operations,  headed by  Dr.  John A.  Krynitsky,
has two divisions.   The Technical  Services Division  monitors all  purchase
requests to insure that the buyers of petroleum products are buying the
right product for the intended use.  This  division also specifies packag-
ing, packing and marking of containers and has the power in the case of
negotiated procurements to waive certain specification requirements In
return for lower prices.  However, this 1s not done for Hens procured on
open bids.

      The Quality Assurance Division acts  to Insure that once a procure-
ment contract is signed, the Items procured meet all the pertinent
specifications.  In the case of lube oil, Inspectors are sent to refiner-
ies and blending plants to monitor the production operations.
                                      93

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                           Figure -

Defense Fuel Supply Center - Organizational  Structure
                                ecv«». -!•
                              or^r. cc~-«~e««    i
                                                      . ft
                                                                           3-71
                4 MAM»CC«»t«-'
f 	 i
DIVISION
1
j wsc-u



B> VlSiCN

CMC 1C
OOMtltlC AVfWU 4
ft*l OWIWOM

OOMllTiC CIOUNO
>U
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           3.2  WASTE LUBE OIL DISPOSAL BY MILITARY FACILITIES
3.2.1  Organization
      The Executive Directorate, Technical and Logistical Services, is the
branch of the Defense Supply Agency responsible for property disposal.  As
shown in Figure 3, property disposal is the responsibility of a number of
local Defense Property Disposal Offices (DPDOs) which report to regional
offices or second level field activities.  Mr. Richard G. Bruner 1s the
Executive Director of Technical and Logistical Services.  The Property
Disposal Division, headed by Mr. Frank Alesl, is directly responsible to
Mr. Bruner's office.  These organizations are located at the Defense Supply
Agency, Cameron Station, Alexandria, Virginia.  Lieutenant General Wallace
H. Robinson is the Director of DSA.  He reports directly to the Secretary
of Defense.
3.2.2  Procedures

       In theory all military activities are supposed to dispose of surplus
and waste materials through one of the 190 DPDO's located throughout the
country.  The DPDO's  in turn dispose of the surplus materials and wastes
in the most economical way available.  However, current practice at nearly
all military facilities Is for the base commander to assume responsibility
for the disposal of waste lube oils.  In most cases bids are solicited
from local scavengers for removing the waste oils.  Once they are removed
from the Installation, no record of the ultimate fate of these materials
is kept.  Since many  military facilities dump all waste oils into a single
storage tank, under current disposal practices much of the used lube oil
1s probably too contaminated to be economically re-refined.  For example,
Table  2 lists the  volume of all waste oils accumulated annually at the
Army facilities in the U.S. having the largest volume of waste oil genera-
tion.  Data concerning the volume of used  lube oils generated at Army
installations are, unfortunately, not available.  It is estimated that  in
1972 approximately 3,600,000 gallons of waste oils were generated and dis-
posed  of at Army facilities in the continental United States.
                                      95

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                                TABLE 2

                   Waste  011  Generation at  Amy  Facilities
                   Having the Largest  Volumes  of Used Oils

                                                    Waste  011  Generated
      Facility                                       (Gallons  per year)
Red River Army Depot, Texas                               271,200
Fort Carson, Colorado                                     216,000
Fort Hood, Texas                                          204,000
Fort Meade, Maryland                                      198,000
Rock Island Arsenal, Illinois                             168,000
Annlston Army Depot, Alabama                              117,000
Fort Bragg, North Carolina                                108,000
Letterkermy Army Depot, Pennsylvania                      104,400
Sharpe Army Depot, California                              84,000
Toelle Army Depot, Utah                                    57,600
                                     97

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          3.3  REMOVAL OF FEDERAL  BARRIERS TO WASTE OIL RECOVERY
3.3.1  A Restatement of the Problem
      The primary barrier to federal  procurement of re-refined oils is the
lack of documentation that such lubricants can consistently meet all  per-
formance requirements established in military specifications.   The
principal reason for the failure of re-refiners to provide such evidence is
the military's requirement that once an oil has been qualified for pur-
chase, no changes may be made in the feedstock from which the oil 1s  pro-
duced.  Thus under existing regulations each batch of re-refined oil  would
have to be qualified separately in order for government agencies to use
recycled engine oils in their vehicles.  Since the cost of qualifying a
lube oil is high, typically $50,000 to $80,000, it has been economically
impossible for refiners to provide lube oil to the government, especially
in view of the fact  that federal agencies purchase lubricants under com-
petitive bid arrangements.  Thus it is clear that 1f the federal ban on
use of re-refined lube oil is to be removed, at least one of the following
steps must be taken:

      1.  A new specification must be established which permits
          changes in the feedstock from which  lube oils are
          manufactured, or

      2.  Re-refined oil that has been produced from a constant
          source of  waste oil must be provided.


3.3.2  Establishment of a New Specification


      As  discussed  in  detail in  Chapter  2,  under  military  specifications
MIL-L-2104C and  MIL-L-46152  re-refined oils  are specifically  excluded
 from  consideration.  Hence  a new specification must  be written  if  federal
 agencies  are  to  use re-refined  oil.   Both these specifications  require a
 series of engine sequence  tests.   The requirements set forth  in
 MIL-L-46152 are  quite  similar  to those established for an  API/SAE  SE
 rating.   Oils procured under this  specification are  generally used in
 passenger cars  and  light  gasoline powered trucks. The requirements  set
 forth in MIL-L-2104C are  more  stringent, as oils procured under this
 specification are  for  use in tactical  military vehicles.

       The new specification must not exclude oils which  are made from a
 varying  feedstock.   The discussion in Chapter 2  presents ample evidence
 that use of general  or "fat" additive packages can compensate for any
 changes  in  additive response due to  variations in base stock  properties.
                                      99
Preceding page blank

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 The fact that additive manufacturers  have  spent considerable sums of money
 in the development of such compounds  specifically for use with a variety
 of base stocks lends further support  to  this  premise.  The success of the
 Independent Oil Compounders Association  in their dispute with the Ford
 Motor Company over the question  of lube  oil  quality assurance provides
 additional evidence  that  variation in the  base stock need not result in
 concern over the  performance characteristics  of a lube oil-additive blend.
 However, if such  a specification 1s to be  established, evidence" of the
 quality of re-refined base stocks and blends  of re-refined base stocks
 with general additive packages will have to be provided.
  3.3.3   Re-Refining From a Constant Source of HasteOil
        The current military specifications for lube oil were established In
  order to  protect government vehicles, especially tactical vehicles, from
  excessive engine wear which might result from the use of lube oils not
  suitable  for the variety of services required of these engines.  Since
  evidence  that, properly re-refined oils are appropriate for such service
  conditions has not been forthcoming, the military, specifically the Army
  Materiel  Command's Coating and Chemical Laboratory, has prohibited the pro-
  curement of recycled lubricants by government agencies.  Thus if this
  federal barrier to the use of re-refined oil is to be removed, evidence
  that such oils are suitable for use in government vehicles must be pro-
  vided.  Implementation of a closed-cycle re-refining system 1s One way of
  providing such evidence.

        As discussed in Chapter 1, a closed-cycle re-refining system  is  an
  arrangement in which lube oil consumers  agree to purchase  re-refined  oil
  which has been produced from waste oils  drained from  their own vehicles.
  The  following materials flow diagram  illustrates the  operation of such a
  system:

                         •aOS€D-CYCU" RE-REFINING SYSTEM
Processing
KaterUU
Additives
                                Re-ftoflned Lube Oil
                 Re-Refiner
Federal Fleet
Uaste Products
               Virgin lube 0(1
                                                                Burning Loss
                                 Ustd Lube Oil
                                       100

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       The most Important advantage of the closed-cycle system Is  that 1t
avoids the dilemma of choosing between prohibitively expensive testing
expenditures and the possibility of a fluctuating "additive response." It
does so by shifting attention from the waste oil  feedstock to the  quality
of the re-refined product.  If the quality of the re-refiners' feedstock
can be held constant, batch-to-batch product variations will disappear as
an issue.  Ordinarily this is not possible because re-refiners collect
waste oil from diverse and varying sources:  service stations, auto dealer-
ships, and so forth.  However, the closed-cycle system would guarantee the
re-refiners a continuing supply of viaste oil of known quality.  If the
recycling process is closely controlled, the user of recycled oil  under
this system is himself responsible for any batch-to-batch variations since
he is also the waste oil supplier.


3.3.4  Rationale for Federal Participation
       Although a closed-cycle project could be Implemented with no govern-
ment  involvement, federal participation is a desirable way to initiate such
a system.  While a number of re-refiners already engage in "custom" re-
refining of  lube oil under closed-cycle conditions, all such operations are
presently  restricted to  industrial lube oils or dlesel engine oil used by
railroads.

       Federal  participation would first take the form of a demonstration
involving  a  federal  installation  or set of Installations and a re-refining
facility.  Once  the  system's feasibility is demonstrated, the system can
be  expanded  to  a  larger  number of federal installations.  What is required
in  each case is  that the federal  installations operate a relatively large
number of  vehicles and are geographically near re-refining facilities.  A
number of  military,  Postal Service, and General Services Administration
motor pools  would meet these criteria.

       The federal government has three major reasons to involve itself
directly  in  this  way.  First, the approach is effective.  Procurement  has
been  demonstrated  to be  one  of  the federal government's most useful tools
for support  of  innovation  in the  private sector.   It  makes immediate and
significant  use of  the market system  while avoiding the problem of enforc-
 ing new  regulations  on private  industry.   It  has  the  capability of demon-
strating  new technology  on an operational scale without burdening the
 federal  government with  actual  production management.  Congress  recently
 recognized these advantages  in  giving GSA  authority to make extra payments
 for equipment it purchases that meet  EPA noise abatement standards.   In
 the case  of  the closed-cycle waste oil  recovery  plan, successful use of
 the recovered lube oils  and  subsequent revision  of government  policies
which discriminate  against re-refined oil would  give  assurance to con-
 sumers that  properly re-refined lube  oils  perform as  well as high quality
                                     101

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virgin lubricants.  This would enable re-refiners to increase sales of high
quality oils.  Profit margins on such sales are much greater than on sales
of the non-detergent oils which presently account for most of the volume
of re-refined oil sold in the United States.  Closed-cycle operations can
thus lend needed support to a troubled Industry but only if those re-
refiners participating in the program maintain the highest standards of
quality control in their production processes.  In this sense a federal
effort to recycle lube oil must be regarded as an opportunity (as opposed
to a subsidy) for re-refiners to remove the stigma of questionable quality
which has prevented wide public acceptance of their products.

       Secondly,  government use of recycled oils will reduce the environ-
mental costs associated with waste oil disposal by federal facilities.
More than 24 million gallons of automotive lube oil are purchased annually
by agencies  of  the federal government.  Perhaps two-thirds of this oil is
not consumed.   Given present practices, it is highly likely that a signi-
ficant fraction of the waste oil is disposed of In ways harmful to the
environment.  While the disposal of acid sludge from conventional re-refin-
ing plants  is  itself a serious environmental problem, the Initiation of
lube oil recycling projects which result In the establishment of consumer
confidence  in  the quality of re-refined oil would create attractive oppor-
tunities for capital investment in new, more efficient  re-refining techno-
logies which do  not produce environmentally hazardous waste products.

       Thirdly,  participation  in an effort  to demonstrate the quality  of
re-refined  oil  is consistent with national  policies for resource recovery
and environmental improvement.  If dislocations  resulting from shortages
of  basic materials are  to be minimized,  it  Is only  logical  that  the govern-
ment,  which  consumes about  two percent of  all automotive  and  industrial
lubricants,  assume a position  of leadership in  the  use  of recycled mater-
ials.   Moreover,  since  federal  agencies  generate very  large  volumes, of
waste  oil,  it  is  imperative that the  government set an  example by disposing
of  its own  waste oil  in  a way  which  is ecologically sound.


 3.3.5   Implementation  Plan—Exceptions to  Procurement  Procedures


        As  discussed  in Section 3.1,  lube oil  purchases  by federal  facili-
 ties  are made  by consulting a  bulletin prepared by  the Defense  Fuel
 Supply Center, which  contains  a  list of  all successful  bidders whose  pro-
 ducts  have been found  to meet  pertinent  specifications.  Thus if a  federal
 activity is to participate  in  a  closed-cycle  waste  oil  recovery  project,
 the participating group will  not  be able to order  its  lube  oil  from the
 firms listed in the bulletin.   Under existing regulations this  bulletin
 must be used for lube oil  purchases by  all activities  of  the military de-
 partments  and  by all  other  activities in the  executive branch of the
 government unless:
                                     102

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       1.   The  maximum  single order  is  less  than  the minimum
           quantity  obtainable  under the  contracts  listed  1n
           the  bulletin;  or

       2.   Container sizes  required  are smaller than those available
           from contracts listed  in  the bulletin; or

       3.   Purchase  without regard to existing Defense  Fuel Supply
           Center contracts is  otherwise  authorized.

       Thus, under present circumstances, in order for  a "closed-cycle"
pilot project involving re-refined oil  to be established at a  federal
facility,  one of these  three conditions must be met.   Given EPA's
authority  to issue guidelines  for disposal  of solid wastes at  federal  in-
stallations, condition  3 might well  provide the most direct method  for
circumventing military  procurement policies which now  exclude  re-refined
oil.  Authorization for a military facility to purchase re-refined  oil
might have to come directly from the Office of the Secretary of Defense.
However, chemists at CCL have stated that if regulations or legislation,
such as that proposed by Representative Vanik 2f were  adopted  which re-
quired the use of re-refined oil, they would urge the  military not  to  use
re-refined oil  in those vehicles (largely tactical vehicles) which
normally use virgin lube oil meeting specification MIL-L-2104C.  On the
other hand, the chemists stated that use of re-refined oil in  vehicles
which normally use virgin  lube oils  procured under specification
MIL-L-46152 (mainly passenger cars and light trucks)  would not be so
strongly discouraged.

       Table 3 shows the very significant volumes of lube oil  procured
for  fiscal year 1974 by  ten important military bases  throughout the
United States.  Any of these facilities could provide the waste oil and
purchase the re-refined  oil in a  closed-cycle pilot program.


3.3.6  Further Examples  of Lube Oil  Procurement


       Some examples of  lube oil  procurement by  federal facilities located
in  California  can serve  to illustrate  how conditions 2  and 3 might be used
to  circumvent  the normal  procurement procedures.  Table 4 lists estimated
lube oil requirements  for  16 California  postal facilities for  the fiscal
year 1974.  The oil  required is a multi-grade  lubricant meeting specifica-
tion MIL-L-46152.   All deliveries are  to be made by tank wagon.  The
largest minimum delivery is 800 gallons  for the  postal  service in San
Diego.  Note that the  delivered price  per gallon is much  lower than those
listed  in  Table 8 of Chapter 1.   The government's  competitive  bidding pro-
gram does,  indeed,  result in considerable savings  for  oil purchases when
compared with  prices paid by large  commercial  accounts  to major oil
companies.   For  this reason most  of the  oil  bought by  government agencies
is  not supplied by  major oil companies but  by  independent oil  firms and
                                    103

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                                 TABLE 3

            Internal Combustion Engine Lube Oil Procurement for
                 Some Military Bases for Fiscal Year 1974

    Base and Location                        Lube Oil Procured (Gallons)

1.  Fort Hood, Texas                                 267,060
2.  Fort Riley, Kansas                               260,000
3.  Camp Lejeune, North Carolina                     173,450
4.  Fort Bragg, North Carolina                       118,500
5.  Fort Lewis, Washington                           104,280
6.  Camp Pend'leton,  California                        95,890
7.  U.S. Marine Corps, Tampa,  Florida                 71,500
8.  Fort Sill, Oklahoma                               64,670
9.  Fort Benning,  Georgia                             48,700
10.  Camp Shelby,  Mississippi                          40,000
                                     104

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                                  TABLE 4
       Lube 011  Requirements  of Some Postal  Facilities 1n California
                            for Fiscal  Year  1974
                                              Total Estimated
Location
 Walnut Creek
 Hay ward
 Van Nuys
 San Diego
 Oxnard
 Los Angeles 1
 Los Angeles 2
 Los Angeles 3
 Los Angeles 4
 Torrance
 Santa  Ana
 Huntington Beach
 La  Puente
 San Jose
 San Rafael
 San Bernardino
Minimum Delivery
(Gallons)
400
400
600
800
400
600
300
300
300
400
500
500
500
500
400
500
Requirements
(Gallons)
1,700
1,000
1,500
4,400
1,500
4,800
1,200
600
900
4,000
1,500
2,000
1,000
3,000
1,800
2,000
Price
(t/Gallon
NA
NA
66
73
75
66
66
66
66
66
68
68
68
NA
NA
71
                                      105

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smaller blending and compounding companies.   These firms  frequently buy
base stocks from the major oil  companies 1n  Urge quantities  and perform
the blending operations themselves.  Lower overhead costs allow smaller
firms to outbid the Majors for lube oil supply to the government.  In fact,
due to the present shortage of lube oils, some large companies are avoiding
sales of lube oil to the government as more profitable markets are now
available.

       If it were decided that one or more of these postal service facili-
ties should be chosen to implement a closed-loop oil recycling project,
conditions 2 or 3 might suffice without the need for "special authoriza-
tion" options. For example, the postal facilities might wish to have the
re-refined oil provided in 55 gallon drums or 5 gallon pails or even quart
cans rather than in tank wagon loads.  In the case of the San Diego
facility a delivery of less than 800 gallons would qualify as an exception
to  DFSC purchase regulations.  In all cases, however, approval from local
Post Office authorities would have to be obtained.  In the absence of
"special authorization" from higher level authorities 1n Washington, O.C.,
this approval would probably be very difficult to obtain.  Note also that
purchases  of re-refined oil in smaller volumes or in smaller containers
would  probably be more costly than existing contracts for virgin lube oils.
                                     106

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                              3.4   A PROPOSAL


      A closed-cycle pilot project at federal  facilities for the use of
re-refined automotive lube oils should be initiated.  A federal  facility
should be selected which is both willing to participate and can provide
adequate volumes of used lube oil  to be "custom" re-refined.  In most
cases the minimum batch of feedstock which can be economically custom
re-refined is about 2000 gallons.   In order to assure Constance of feed-
stock quality, the federal facility must agree to purchase all Its vir-
gin lube oil from the same supplier and to store crankcase dralnlngs
separately from other waste materials.

      The selection of a re-refiner to participate 1n this project should
be based on geographical proximity to the federal facility, recommendations
of long-term customers who have used the firm's products, the willingness
of the company to participate, and the opinions of additive suppliers and
analytical laboratories as to the consistency of the quality and perform-
ance of the products which the firm produces.

      The purpose of the pilot project 1s to establish that properly
re-refined oil can be used in place of high quality virgin lubricants by
providing a performance record for these oils under controlled conditions.
A successful closed-cycle project will provide an Important stimulus to
the review and possible removal of restrictions on the procurement of re-
refined oils by the  Defense Fuel Supply Center.  An extensive program of
analysis of re-refined oils and drain oil feedstocks available throughout
the country, such as that proposed in the DSA Haste 011 Recycling Study,
will  need to be performed before CCL will write a specification under which
re-refined  lube oils can be procured.  However, the studies proposed by DSA,
once  they are  funded, will require three years for completion and offer no
guarantee that even  one pilot recycling project will ever be  implemented.
If no action is taken soon to provide documentation as to the quality of
re-refined  oils and  thus  lend needed  support  to an  industry facing an un-
certain  future, it  is highly  probable that greater  and greater volumes  of
waste lube  oil will  be  absorbed in markets which neither provide for the
recovery of this  now scarce resource  nor offer any  assurance  of reducing
the environmental  impact  of its disposal.

       This  proposal  should, however,  not be interpreted  as  an unrestricted
endorsement of the  re-refining  industry  as it now exists  nor  of lube oil
recycling as  the  universal solution  to  the waste oil problem.  A  number of
re-refiners have  gone  out of  business  for  valid  reasons.   Some have  fol-
lowed poor  business  practices.  Others  have  failed  to  provide adequate
quality  control on their  operations.   Still others  have not been  willing
or able  to  comply with  regulations  regarding  air and water pollution con-
trol.  Further, present re-refining  technology must be  improved to
eliminate  the  problem of  acid sludge  disposal.   In  many  Instances  it may
be grossly  uneconomic  to  transport used  lube  oils  to a  re-refinery  and
                                     107

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return the recycled product to the facility which supplied the used otl.
In these instances at least a part of the resource value of the oil might
be recovered through use of the oil as fuel.  While, 1n the final  analysis,
market forces should dictate the most beneficial means of waste oil dis-
position, the establishment of a closed-cycle re-ref1n1ng project should
be viewed primarily as an opportunity to remove the Institutional  oarrlers
which have prevented the free market from operating.

      Arguments can be raised which challenge the proposition that federal
policy should encourage the recycling of used lube oils.  "Let the market
decide the ultimate disposition of crankcase draining*" 1s a proposition
frequently put forth.  This would be an admirable policy provided a free
market atmosphere in which re-refined lube oils can compete with virgin
products in  fact existed.  However, past federal policies have distorted
the "free market" by discriminating against re-refined products, regardless
of their quality.  The results of a recent consumer survey verify the low
regard held  for re-refined lube oils by those Individuals who know of the
existence of these products. 3/   If the federal government were to reverse
its policies and provide a more supportive atmosphere for recycled lube
oils, then the re-refining industry would have an opportunity to establish
its products as viable competitors 1n the marketplace.  In fact, as dis-
cussed in Chapter 1, some  re-refiners have been able to compete success-
fully with producers of virgin oils despite the effects of government policy
and the  poor reputation of the Industry in general.
                                      108

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                               FOOTNOTES
1.    A Technical  and Economic  Study  of Waste  011  Recovery—Part  II: An
     Tnvestigatlon of Dispersed  Sources of Used CranVcase Oils,  Teknekron,
     Inc., EPA Contract No.  68-01-1806, October 1973.hereafter referred
     to as Waste  Oil Recovery--II.


2.    A Technical  and Economic  Study  of Waste  Oil  Recovery—Part  I; Federal
     Research on  Waste Oil  From  Automobiles,  Teknekron, Inc.,  EPA Contract
     No. 68-01-1806, October 1973.


3.    Waste Oil Recovery—II.
                                    109

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                  ACKNOWLEDGMENT
Teknekron, Inc. and The Institute of Public Adminis-
tration wishes to acknowledge the Resource Recovery
Division, Office of Solid Waste Management Programs,
U.S. Environmental Protection Agency, for support of
this study.  In particular we are grateful to Dr. John
H. Skinner, Acting Deputy Director, Resource Recovery
Division and to the Project Officers, Messrs. Thomas D.
Clark and Laurence B. McEwen for their guidance and
assistance 1n the performance of this research.

We would also like to express of sincere appreciation
to the following Individuals and organizations whose
assistance was vital 1n completing this project:

The thirteen re-refiners Interviewed

Mr. Bel ton R. Williams, President, Association of
   Petroleum Re-refiners

Mr. Curtis Gordon, The Lubrlzol Corporation

Mr. Rick Richardson, The Lubrlzol Corporation

Mr. Joseph Byrne, Vice President, Union 011 Company
   of California

Colonel Ralph J. Walsh, Office of the Assistant  Secretary
   of Defense  for Health and Environment
                          in     Preceding page blank

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                     APPENDIX  A





MILITARY SPECIFICATIONS MIL-I-46152 AND MIL-L-2104C FOR



                ENGINE CRANKCASE OILS
                          ...      Preceding page blank
                          * i j

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                                                            MIL-L-46152
                                                            20 ttovenber  1970
                           MILITARY SPECIFICATION

                LUBRICATING OIL,  INTERNAL COMBUSTION ENGINE,
                           ADMINISTRATIVE SERVICE

         This specification is mandatory for use by all Departments
         and Agencies of thd Department of Defense.


  1.  SCOPE

  1.1  Scope.  This rpeciflcation covers engine oils suitable for lubrication
of commercial-type vehicle reciprocating internal combustion engines of both
spark-ignition and compression-ignition type* used in administrative service
(aee 6.1).

  1.2  Classification.  The engine lubricant* shall be of the following
viscosity grades (see 6.2):

       Viscosity grade

       Grade 10W
       Grade 30
       Grade 10W-30
       Grade 20W-40

  2.  APPLICABLE DOCUMENTS

  2.1  The  following  documents of  the  issue  in  effect  on date of invitation
for  bids  or  request  for proposal,  form a part of the specification  to  the
extent specified herein.

SPECIFICATIONS

  MILITARY
     MIL-L-2104  -  Lubricating Oil,  Internal  Combustion Engine, Tactical
                     Service
     MIL-L-21260 -  Lubricating Oil,  Internal  Combustion Engine, Preservative
                     and Break-In
                                                               /  FSC  9150  /
                                       114

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MIL-L-46152

STANDARDS

  FFDERAL
    Fed. Test Method Std. No. 791 - Lubricants, Liquid Fuels and Related
                                      Products; Methods of Testing

  MILITARY
    MIL-STD-105 - Sampling Procedures and Tables for Inspection by Attributes
    MIL-STD-290 - Packaging, Packing and Marking of Petroleum and Related
                    Products

  (Copies of specifications, standards, drawings and publications required
by  contractors in connection with specific procurement functions should be
obtained  from  the procuring activity or as directed by the contracting
officer.)

  2.2   Other publications.  The  following documents form  a part of this speci-
fication  to  the extent  specified herein.  Unless otherwise indicated  the issue
in  effect on date of  invitation  for bids or  request for proposal shall apply:

  AMERICAN SOCIETY  FOR  TESTING AND MATERIALS (ASTM) TEST  METHODS

    D  92   - Flash  and  Fire Points by Cleveland Open Cup
    D  97   - Pour Point
    D  129  - Sulfur in  Petroleum Products by the Bomb Method
    D  270  - Sampling Petroleum  and Petroleum Products
    D  287  - API Gravity of  Crude  Petroleum  and Petroleum Products
                (Hydrometer Method)
    D  445  - Viscosity  of Transparent and Opaque Liquids  (Kinematic  and
               Dynamic  Viscosities)
    D  524 - Rarasbottom Carbon Residue  of Petroleum Products
    D  808 - Chlorine in New and Used Petroleum Products  (Bomb  Method)
    D  811  - Chemical Analysis  for Metals  in New and  Used Lubricating Oils
    D  874  - Sulfatcd Ash from Lubricating Oils and Additives
    D  892 - Foaming Characteristics  of Lubricating Oils
    D  1091  - Phosphorus in  Lubricating  Oils  and Additives
    D  1317  - Chlorine in New and Used Lubricants  (Sodium Alcoholate  Method)
     D  1552  - Sulfur in  Petroleum Products  (High Temperature  Method)
    D  2270  -  Calculating Viscosity Index from Kinematic  Viscosity
    D  2602  - Apparent Viscosity  of Motor Oils at  Low  Temperature Using  the
                Cold Cranking Simulator

             Engine Test Sequence  IIB
              Engine Test Sequence  IIIC
             Engine Test Sequence  VC
                                       115

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                                                                   MIL-L-46152

  (The ASTM tpst  methods listed above are included in Part 17 or Part 18 of
the Annufil Book of ASTM Standards and arc also available separately, except
for Engine Test Sequences IIB, 111C, and VC.  Engine Test Sequence IIB Is a
part of ASTM Special Technical Publication STP 315-D.  Engine Test Sequences
111C mid VC will  be included in ASTM Special Technical Publication STP 315-E,
scheduled for publication after May 1971, and are currently available only as
preprint s.)

  (Application for copies of all ASTM test methods except Engine Test Sequences
I1IC and VC should be addressed to  the American Society  for Testing and Mate-
rials, 1916 Race Street, Philadelphia, Pennsylvania  19103.)

  (Until  publication of Special Technical Publication STP 315-E by ASTM, infor-
mation concerning Engine Test Sequences  IIIC and VC  may  be obtained from U. S.
Army Aberdeen Rc-senrch  and Development Center, Coating and Chemical Laboratory,
AMXRD-CF, Aberdeen  Proving Ground,  Maryland 21005.)

  Sped f it. at ions  and standards of  technical societies are generally available
 for rpfr.Te
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MIL-L-46152

  3.1.4  Pour-point depressant:  All grade oils.  No changes shall be made in
cither the type or concentration of the pour-point depressant after qualifi-
cation testing and approval unless:

         a.  The oil is retested for conformity to the stable pour point
requirement (see table I).

         b.  The qualifying activity (see 6.4)  is informed of the proposed
change(s) and of the retesting of the stable pour point.

         c.  The qualifying activity approves the proposed change(s) in
writing.

  3.2  Materi als.  The engine  lubricating oils  shall be petroleum products,
synthetically prepared products, or a combination of the two types of product
compounded with such functional additives (detergents, dispersants, oxidation
inhibitors, corrosion inhibitors, etc.) as are  necessary to' CMCt the specified
requirements.  No re-refined constituent materials shall be used.

  3.3  Physical and chemical requirements.  The oils shall conform to the re-
spective requirements specified in  table I and  in 3.3.1 through 3.3.7.
                                        117

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                                                                   MIL-L-46152
                           Table 1.  Requirements
Property
Grade
10
Grade
30
Grade
10W-30
Grade
20W-40
Viscosity at 210°F (99°C)
  kinomatic, centistokes
    min.
5.7
9.6
9.6
12.9
UI«A. .
Viscosity at 0°F (-18°C)-'
apparent, centipoises
min.
max.
Viscosity index, min
Pour point, °F (max.)
°C (max.) .
Stable pour point, °K (max.) —
°C (nax.)
Flash point, " F (min.)
•C (min.)
Gravity, API ?-'
Carbon residue—'
Phosphorus z)
Chlorine!'
Sulfur-3-'
Sulfated residue^'
Organo-metnl 1 ic components—'
•% t . j

1200
< 2400
.-
-25
-32
-25
-32
400
204
X
X
X
X
X
X
X
V It. 7

«.-
.-
75
0
•18
..
--
425
218
X
X
X
X
X
X
X
•N ii« -J

1200
<2400
--
-25
-32
-25
-32
400
204
X
X
X
X
X
X
X
•x 10.0

2400
< 9600
--
-10
-23
-10
-23
415
213
X
X
X
X
X
X
X
—Report measured,  apparent  viscosity  at  0*F  (-18°C)  in  centipoises  for
   grades  10,  10W-30,  and  20W-40  oils.
—  After  being cooled  below its pour point,  the oil  shall regain its  homoge-
   nity on  standing at a temperature not more  than 10°F (6°C)  above  the pour
   point.
^Values  shall be reported ("X"  indicates report).
   3.3.1   Fonmiiia.   All grades of oil shall demonstrate the following foaming
 characteristics when they are tested in accordance with 4.6,  table II
 (ASTM P  892).

          a.   Initial test at 75° ± 1°F (24° ± 0.5"C).   Not more than 25 ml
 of foam  shall  remain immediately following the end of the 5-tninute blowing
 period.   No  foam shall remain at the end of the 10-minute settling period.

          b.   Intermediate test at 200° ± l^F (93.5* ± 0.5°C).  Not more than
 150 ml of foam shall re-main immediately following the end of the 5-minute
 blowing  period.  No foam shall remain at the end of the 10-minute settling
 period.
                                         118

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M1L-L-46152

         c.  Final test at 75° i 1°F (24° ± 0.5'C).  Not more  than  25 ml of
foam shall remain immediately following the end of the 5-minute blowing
period.  No foam shall remain at the end of the 10-minute settling  period.

  3.3.2  Stability and compatibility.

  3.3.2.1  StabiItty.  The oils shall  show no evidence of separation or  color
change when they are  tested in accordance with 4.6,  table II  (Method 3470 of
Fed. Test Method Std. No. 791).

  3.3.2.2  Compatibj1ity.  The oils  shall be compatible with  oils previoucly
qualified under M1L-L-2104, MIL-L-46152 and. MIL-L-21260.  The oils  shall show
no  evidence of  separation when they  are tested against selected reference
oils in  accordance with 4.6,  table II  (Method 3470 of Fed.  Test Method Std.
No. 791).

  3.3.3  Moisture-corrosion characteristics.  The  oils shall  prevent or  mini-
mize corrosion  of ferrous-metal engine components  in the presence of moisture
 induced  by  low-temperature operating conditions.   Satisfactory performance  in
 this respect  shall  be demonstrated when the  oils  are tested in accordance with
 4.6, table  II  (Engine Test Sequence  IIB).

   3.3.4   Low-temperature  deposits.   The oils  shall minimize the  formation of
 undesirable deposits associated with intermittent, light-duty,low-temperature
 operating  conditions.  Satisfactory  performance  in this  respect  shall  be
 demonstrated  when  the oils are  tested in  accordance  with 4.6, table II (Engine
 Test  Sequence VC).

   3.3.5   Oxidation  characteristics.   The  oils shall  resist  thermal  and chemi-
 cal oxidation and  prevent or  minimize thickening and deposits associated with
 high-temperature  operating  conditions.  Satisfactory performance in this re-
 spect  shall be demonstrated when  the oils are tested in  accordance vith 4.6,
 table  II (Engine  Test Sequence  II1C).

   3.3.6  Ring-sticking, wear, and, accumulation of deposits.  The oils shall
 prevent the sticking of piston  rings and the clogging of oil channels, and
 shall  minimize the wear of cylinders, rings and loaded engine components ai>ch
 as cam shaft lobes, cam followers,  valve rocker arms, rocker arm shafts, and
 the oil pump and fuel injection pump drive gears.  Satisfactory performance
 shall  be demonstrated when the oils are tested in accordance with  4.6, table
 II (Method 346 of Fed. Test  Method Std. No. 791).

   3.3.7  Bearing corrosion and shear stability.

   3.3.7.1  Bearing_corrosi_on.  The oils shall be non-corrosive to  alloy bear-
 Ings.   Satisfactory performance in this respect shall be demonstrated when
 the oils are tested  in accordance with 4.6, table II (Method  3405  of Fed.
 Test Method Std. No. 791).
                                      119

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                                                                   MIL-L-46152

  3.3.7.2  Shear stability.  Grade 10W-30 and 20W-40 oils shall demonstrate
shear stability by remaining within the respective viscosity ranges at 210*F
(99*C), when tested in accordance with A.6.3.

  3.A  Other requirements and tolerances for quality conforaance testing.
The following physical and chemical properties shall be tested in accordance
with the appropriate methods listed in 4.6 to Insure that purchased products
are of the same compositions as the respective qualification samples and to
identify the products.  Ho specific values or limits are assigned in quali-
fication testing, except as otherwise specified in table I and in 3.3.1
through 3.3.7, but test results shall be reported for all properties listed.
The qualifying activity (see 6.4) shall establish specific values and toler-
ances for subsequent quality conforaance testing for these properties (see
6.3 and 6.4):

       Viscosity
       Viscosity  index
       Pour point
       Flash point
       Gravity, API
       Carbon residue
       Foaming
       Phosphorus
       Chlorine
       Sulfur
       Sulfated  ash
       Organo-metallIc components

  4.   QUALITY ASSURANCE PROVISIONS

  4.1  Responsibility  for  inspection.   Unless otherwise  specified  in  the con-
 tract  or  purchase order,  the  supplier  is  responsible  for  the performance of
 all inspection  requirements as  specified herein.  Except  as otherwise speci-
 fied  in  the  contract or order,  the  supplier  may use his  own or any other
 facilities  suitable  for  the performance of the inspection  requirements  speci-
 fied  herein, unless  disapproved by  the  Government.  The  Government reserves
 che right to perform any  of  the Inspections  set  forth  in  the specification
 where such  inspections are deemed necessary  to assure supplies and services
 conform  to  prescribed  requirements.

   4.2  Lot.

   4.2.1   Bulk  lot.   An  indefinite quantity of a  homogeneous mixture of  one
 grade ot oil  offered for  acceptance in a single,  isolated container;  or manu-
 factured in a  single plant run  (not exceeding 24  hours),  through the  si
 processing equipment,  with no change in the ingredient materials.
                                       120

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HIL-L-46152

  4.2.2  Packaged lot.  An indefinite number of 55 gallon drums or smaller
unit containers of identical sire and type, offered for acceptance, and
filled with a homogeneous mixture of one grade of oil from a single, isolated
container; or filled with a homogeneous mixture of one grade of oil, manu-
factured in a single plant run (not exceeding 24 hours), through the same
processing equipment, with no change in the ingredient materials.

  4.3  Sampling.

  4.3.1  Sampling for the examination of filled containers.  Take a random
sample of  filled containers from each lot in accordance with MIL-STD-105,
at  inspection level  II and acceptable quality level  (AQL) • 2.5 percent
defective.

  4.3.2  Sampling for tests.  Take samples  from bulk or packaged lots for
tests  in accordance  with ASTM Method D 270.

  4.4  Inspection.   Perform inspection in accordance with Method 9601 of Fed.
Test Method Std. No.  791.

  4.4.1   Examinationof  filled containers.  Examine  samples taken  in accord-
ance with  4.3.1  for  compliance with MIL-STD-290 with regard to  fill, closure,
sealing,  leakage, packaging, packing, and marking  requirements.  Reject any
container  having one or  more defects or under  the  required fill.   If the
number of  defective  or underfilled containers  exceeds  the acceptance number
for the appropriate  sampling plan of MIL-STD-105,  reject, the  lot represented
by  the sample.

  4.5  Classification of tests.

       a.   Qualification tests
       b.   Quality  confomance  tests

  4.5.1   Qualification  tests.   Qualification  tests consist  of tests for all
 of  the requirements specified  in section  3 and may be  conducted in any  plant
 or  laboratory approved  by the  qualifying  activity (see 6.4) unless otherwise
 specified in 4.6.1  through 4.6.3.   Qualification tests shall  be performed on
 each viscosity grade except as specified  in 4.5.1.1 and 4.5.1.2.

   4.5.1.1  The stable pour-point test  (Method 203 of Fed.  Test Method Std.
 No. 791)  shall be required only on grade IOW, IOW-30 and 20W-40 oils.

   4.5.1.2  Shear stability shall be required for only grade IOW-30 and 20W-40
 oils.
                                      121

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                                                                  MIL-L-46152

  4.5.2  Quality conformnnce tests.   Tests for quality conformant of individ-
ual lots shall consist of testa for ill of the requirement* in section 3,
except for the following (see table II):

         Stable pour point
         Stability and compatibility
         Ring-sticking, wear, and accumulation of deposits
         Low-temperature deposits
         Oxidation characteristics
         Moisture-corrosion characteristics
         Bo.aring corrosion and shear stability

  4.6  Test methods.  Perform tests in accordance with table II and with 4.6.1
through 4.6.3 es applicable.

  4.6.1  SfabiHty and compatibility.  Determine the stability and compati-
bility of the oils by the procedures for "Homogeneity" and "Miscibility"
given  in Method 3470 of Fed. Test Method Std. No. 791, as explained in
4.6.1.1 and 4.6.1.2.  The procedures in 4.6.1.1 and 4.6.1.2 should be per-
formed at the same time.  This test shall be conducted only in a laboratory
designated by the qualifying activity  (see 6.4).

  4.6.1.1  Stability.  Determine the stability by subjecting an unmixed  sample
of oil  to the prescribed  cycle of temperature changes, then examine the  sample
for conformonce to the requirements of 3.3.2.1.  Record the test results on •
copy  of the "Homogeneity  and Miscibility Test" form In the column marked "None"

  4.6.1.2  Compatibility.   Determine the  compatibility of  the oil with other
oils  previously qualified under MIL-L-2104, MIL-L-21260, and MIL-L-46152 by
subjecting separate mixtures of the oil with  selected reference oils desig-
nated by  the  qualifying  activity  (see  6.4) to the prescribed  cycle of tempera-
ture  changen,  then examine  the mixtures for conformance to the requirements
of  3.3.2.2.   Record  the  test results on the same copy of  the  "Homogeneity  and
Miscibility  Test"  form  (see 4.6.1.1) in the appropriate colums marked"1-30",
"2-30", etc.

   4.6.2  Stable pour  point.  The  stable pour-point test shall  be conducted
only  in a laboratory  designated  by  the qualifying activity (see 6.4).

   4.6.3  Shear  stability.   Determine the  shear  stability  of grade  10W-30 and
 20W-40 oils  by  the  following method:

          i>.   Weigh  25 grams of used oil,  obtained at  10 hours  of  testing in
 accordance with Method 3405 of Fed.  Test  Method Std.  No.  791,  into a 50-ml
 three-neckod round  bottom flask  equipped  with a thermometer,  gas  inlet  tube,
 stirrer,  and distillation side arm.

          b.   Heat  the sample at  248° ± 9° F  (120° ±  5*C)  in a vacuum of  100  mm
 of mercury with a nitrogen  sparge for  one hour.
                                       122

-------
 M1L-'L-46152

         c.   Kilter the stripped sample through a 0.1 micron Seitz filter pad.

         d.   Determine the kinematic viscosity at 210*F (99°C) of the filtered
sample using ASTM Method D 445 for conformance to the requirements of 3.3.7.2.

                             Table II.  Test methods
Test
Test Method No.
 Fed. Std. 791
Test Method No.
    ASTM
Viscosity, kinematic
Viscosity, apparent
Viscosity index
Pour point
Stable pour point
Flash point
Gravity, API
Carbon residue
Phosphorus
Chlorine
Sulfur
Sulfated residue
Orpano-metallic components
Foaming
Stability and compatibility
Moisture-corrosion  characteristics
Low  temperature deposits
Oxidation characteristics
Ring-sticking, wear,  and accumulation
  of deposits
Bearing corrosion and shear  stability
     203^
         2f
    3470*'
     346

     3405 -1
 D 445
 D 2602 i'
 D 2270
 D 97

 D 92
 D 28?
 D 524
 D 1091
 D 808 or D1317 I'
 D 1552 or D 129-'
 D 874
 D
 D 892
                        ..
                    811-'
                  Sequence IIB/7
                  Sequence VC*'
                  Sequence
-Obtain  the viscosity  at  0°F  <-18*C) by  D  2602  for grade 10W, 10W-30 and 20W-40
..oils.
T'SGC 4.6.2
•^ D 808  is  the  preferred method but  D 1317  may be used  as  an  alternate.
-'D 1552  is  the preferred  method but D  129  may be used  as  an  alternate.
—'x-ray  fluorescence or atomic absorption spectrochemical  analysis methods  that
  have been  previously  approved by the  qualifying activity (see  6.4) may be
  used as alternates to D  811.
^/Homogeneity  and mlscibillty  test (ace 4.6.1  ior clarifying  instructions.
•^Included in  ASTM STP  315-D.
-'Not yet published by  ASTM.   To be  included in  ASTM  STP  315-E,  when published
   (see 2.2).
-XSee  4.6.3
                                        123

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                                                                 MIL-L-46152

  5.   PREPARATION FOR DELIVERY

  5.1  Packaging, packing, and marking.  Unless otherwise specified in the
contract or purchase order (see 6.2), packaging, packing, And marking shall
be In accordance with MIL-STD-290.

  6.   NOTES

  6.1  Intended use.  The lubricating oils covered by this specification art
intended for the crankcase lubrication of commercial-type vehicles used for
administrative  (post, station, and camp) service typical of:  (1) gasoline
engines in passenger cars and light to medium duty trucks operating under
manufacturer' warranties; and (2) lightly supercharged dieael engines operated
in moderate duty.  The lubricating olio covered by this specification are
intended for use, as defined by vehicle manufacturer, when ambient teapera-
tures are abov*  -20°F (~29'C).

  6.2  Ordering, data.  Procurement documents should specify the following
information:

       a.  Title, number, and date of  this specification.
       b.  Grade of  oil  required  (see  1.2).
       c.  Quantity  of oil required.
       d.  Type and  sice of containers required  (tee 5.1).
       e.  Level of  packaging and level of packing required  (see S.I).


  6.3  Other  requirements and tolerances  for quality conformance testing.
Definite numerical  values are not specified  for  certain  of  the physical and
chemical properties  listed  In B.'S and for which corresponding test methods
are  given  in  Section *4.   Values of some properties vary  from  one commercial
brand of oil  to another  for the same  grade.  These values are influenced by
the  source of the  base stock,  the Identities and quantities of additives,  etc.
Definite numerical  values are  not always  functionally  important except, for
some properties, within  specified maximum and/or minimum limits.   It  is not
possible  (or  necessary)  to  assign restrictive  values  in  the  specification
before  the  testing  of qualification  samples.   During qualification,  test values
will be  determined  which are  characteristic  of a particular  product  and which
 can  serve  thereafter to  identify  the product.   Using the results of  qualifi-
 cation  testing, the qualifying  activity  (see 6.k)  can  set values,  including
 permissible  tolerances,  for future quality  conformance testing.
                                       124

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MlL-L-,46152
  6.^4  Qualification.  Witli  respect to products  requiring  qualification,
awards will be made only  for products which  are  at  the  time  set  for opening
of bids, qualified for Inclusion  in the applicable  Qualified Products  List
whether or not such products have actually been  so  listed  by that date.   The
attention of the suppliers  is called to this  requirement,  and manufacturers
are urged to arrange  to have the  products  that they propose  to offer to the
Federal Government tested for qualification  in order that  they may be
eligible to be awarded contracts  or orders  for the  products  covered by this
specification.  The activity tesponsible  for the Qualified Products List is
the U.S. Army Aberdeen Research and Development  Center, Coating and Chemical
Laboratory, Aberdeen  Proving Ground, Maryland 21005 and information pertain-
ing to qualification  of products  may be obtained from that activity.
 Custodians:                                              Preparing activity:
   Army  -  MR                                                  Army - MR
   Navy  -  SH
   Air  Force  -  68                                     (Project No. 9150-0316)

 Review act i vi t ies:
   Army  -  Ml, WC, AT
   Navy -  SH, SA, AS, YD,  MC
   Ai r  Force  -  H, 68
   DSA  - PS

 User act ivi t ies:
   Army -  MS
   Navy -  OS
     U. S. GOVERNMENT PRINTING OFFICCi 1*70 -433-693/3080
                                           125

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                                                            MIL-L-2104C
                                                            2Q Noyember 1970
                                                            SUPERSEDING
                                                            MIL-L-2104B
                                                            1 December 1964
                                                            MIL-L-45199B
                                                            28 June 1968
                            MILITARY SPECIFICATION

         LUBRICATING OIL, INTERNAL COMBUSTION ENGINE, TACTICAL SERVICE

This specification is mandatory for use by all Departments and Agencies of the
                             Department of Defense

  1.  SCOPE

  "• • *  i99J?e-  This specification covers engine oils suitable foi lubrication
of  reciprocating internal combustion engines of both spark-ignition and com-
pression-ignition types  used in tactical service  (see 6.1).

  1<2  £J_aJL?ijy:£.fltiorL:   The lubricating oils shall be of the following
viscosity grades (see 6.2):

      Viscosity Grade             Militaiy Symbol

        Grade  10                    OE/HDO-10
        Grade  30                    OE/HDO-30
        Grade  40                    OE/HDO-40
        Grade  50                    OE/HDO-50

  2.  APPLICABLE DOCUMENTS

  2.1  The  following  documents  of  the  issue  in effect  on  date  of invitation
 for bids  or request  for  proposal,  form a part  of  the specification  to the
 extent  specified herein.

  SPECIFICATIONS

     MILITARY

      MIL-L-21260  -  Lubricating Oil,  Internal  Combustion  Engine, Preservative
                       and Break-In.
      MIL-L-40152  -  Lubricating Oil,  Internal  Combustion  Engine, Administrative
                       Service.

     STANDARDS

       FEDERAL
                                                                 /FSC 91507
                                         126

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MIL-L-2104C

        Fed. Tost Method Std. 791 - Lubricants, Liquid Fuels and Related
                  Products; Methods of Testing.

      MILITARY

        MIL-STD-105  - Sampling Procedures and Tables  for Inspection by
                        Attributes.
        MTL-STD-290  - Packaging,  Packing and Marking  of Petroleum and Related
                        Products.

   (Copies  of  sped fli at ions ,  standards, drawing^ and  publications required
 by contractors  in  connection  with specific  procurement  functions should  be
 obtained  from the  proiuriiig  activity  or as  directed by  the  contracting
 officer.)

   2.2   Other  pub I Lent\ops.   The  following documents  form a  part of  this
 specification to tlie extent  ^poi'ifiud herein.   Unless otherwise indicated,
 tho issue in  effect  on  date  of  invitation for  bids  or request  for proposal
 shall  apply.

   AMERICAN SOCIETY FOR TESTING  AND MATERIALS  (ASTM) TLST METHODS

   D 92      Flash and  Fire Points by  Cleveland Open Cup
   D 97      Pour Point
   D 129     Sulfur in Petroleum Products  by the Bomb  Method
   D 270     Sampling petroleum and Petroleum Products
   D 287     API Giavity of Crude Petroleum  and Petroleum  Products  (Hydrometer
             Method)
   D 445     Viscosity of Transparent  and  Opaque Liquids (Kinematic  and  Dynamic
             Viscosities)
   D 524     Ramsbottom Carbon Residue of  Petroleum Products
   D 808     Chlorin<_ in Now and Used  Petroleum Products (Bomb Method)
   D 811     Chemical Analysis for Metals  in New and Used  Lubricating Oils
   D 874     Sulfated Ash from Lubricating, Oils and Additives
   D 892     Foaming Characteristics of Lubricating Oils
   D 1091    Phosphorus in Lubricating Oils  and Additives
   D 1317    Chlorine in New and Used  Lubricants (Sodium Alcoholate Method)
   D 1552    Sulfur in Petroleum Products (High Temperature Method)
   D 2270    Calculating Viscosity Index from Kinematic Viscosity
   D 2602    Apparent Viscosity of Motor Oils at Low Temperature Using the
              Cold Cranking Simulator

   Engine Test Sequence IIB
   Engine Test Sequence VC
                                         127

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                                                                  MLL-L-2104C

  (The ASTM test methods listed above are included in Part 17 or Part 18 of
the Annual Book of ASTM Standards and are also available separately, except
for Engine Test Sequences IIB and VC.  Engine Test Sequence IIB is a part of
ASTM Special Technical Publication STP 315-D.  Engine Test Sequence VC will
be included in ASTM Special Technical Publication STP 315-B, scheduled for
publication after May 1971, and is currently available only as a preprint.

  (Application for copies of all ASTM test methods except Engine Test Sequence
VC should be addressed to the American Society for Testing and Materials,
1916 Race Street, Philadelphia, Pennsylvania  19103.)

  (Until  publication of Special Technical Publication STP 315-E by ASIM,
information concerning Engine Test Sequence VC may be obtained from U.S.
Army Research and Development Center, Coating and Chemical Laboratory,
AMXKD-CF, Aberdeen Proving Ground, Maryland  21005.)

  Specifications  and  standards  of  technical  societies are generally available
 for  reference  from  libraries.   They  are  also distributed among technical
 groups  and  using  Federal  agencies.

  3.1   Qualification.   Engine  lubricating oils furnished under this specifi-
 cation  shall be products  which  are qualified for  listing on  the applicable
Qualified Products  List at  the  time  set  for  opening  of bids  (s«e 4.5.1 and
 6.4).

  3.1.1  The qualifying activity (see 6.4) may waive complete qualification
 testing or  may  require  only partial  qualification testing  of grade  40  oil  If
 the  supplier  states  in  a  written affidavit that  the  product  has been  formulated
 with base stocks,  refining  treatment, and additives  the  same as those  used  in
 the  formulntion of  grade 30 and grade 50 oils  qualified  under  this  specification.

   3.1.2  Each  viscosity grade  of oil which  satisfies all  the requirements  of
 this specification shall  be qualified for a  period not  exceeding  four years
 from the dnte  of  its original  qualification.   The qualification period for
 each grade 40  oil qualified in accordance with 3.1.1 shall not  exceed that of
 the  grade 30  and  grade  50 oils used  in the  qualification procedure.  When the
 qualification  period has  expired, each product must be  requalified  if the
 supplier wishes to maintain the formulation as a qualified product  and be
 eligible to bid on prospective products.

   3.1.3  Whenever there is a change  in the  base stock,  in the  refining treat-
 ment or in the additives used in the formulation, requalificatton will be
 required.  When proposed changes are minor  and may not  be expected to signi-
 ficantly affect performance, the qualifying activity may,  at its  discretion,
 waive complete requalification or may require only partial requalification
 in order to determine the significance and  acceptability of the proposed changes.
                                         128

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MIL-L-2104C

  3.1.4  The engine lubricating oil supplied under contract shall be identical,
within permissible tolerances assigned by the qualifying activity for the
properties listed in 3.4, to the product receiving qualification.  The values
resulting after the application of tolerances shall not exceed the maximum nor
fall below the minimum limits specified herein (see table I and 3.3.1 through
3.3.6).

  3.1.5  Pour-point depressant.  No changes shall be made in either the type
or concentration of the pour-point depressant after qualification testing and
approval unless:

         (a)  The oil is retested for conformity to the stable pour point
requirement  (sec. table I).

         (b)  The qualifying activity (see 6.4) is informed of the proposed
change(s) and of the retesting of the stable pour point-

         (c)  The qualifying activity approves the proposed change(s) in writing.

  3.2  Material^  Tl-e engine  lubricating oils shall be petroleum products,
 synthetically prepared products  or a combination of the two types of  product
compounded with  such  functional  additives (detergent?-, dispersants, oxidation
 inhibitors,  corrosion  inhibitors, etc.)  as are necessary  to meet  specified  re-
quirements.  No  re-refined  constituent  materials shall be used.

  3.3   Physical  and  chemical requirements.  The oils  shall conform  to the
 respective  requirements  specified  in  table I and 3.3.1 through 3.3.6.
                                      129

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                                                                   MIL-L-2104C
                           Table I.  Requirements
Property
 Grade   Grade   Grade   Grade
	10      30      40      SO
Viscosity at 210°?. (99°C.),
  klnenvatic, centlstokes
    min.
    max.
Viscosity at 0°F.  (-18°C.)2/,
  apparent, centtpoises
    min.
    max.
Viscosity index  (min.)
Pour point, °F.  (max.)
            °C.  (max.)
Stable  pour-point,  °F. (max.).*./
                    °C. (max.)
Flash point,  °F.  (min.)
              °C.  (min.)
Gravity, APII/
  Carbon residue!'
  Phosphorus 2i
  Chlorine I/
  Sulfur!/
  Sulfated  residue^/
  Organo-metalHe  components P./
   5.7
 <7.5
  1200
<2400
   9.6
<12.9
  12.9
<16.8
  16.8
<22.7
-.
-25
-32
-25
-32
400
204
X
X
X
X
X
X
X
75
0
-18
-.
--
425
218
X
X
X
X
X
X
X
80
5
-15
--
--
435
224
X
X
X
X
X
X
X
85
15
- 9
--
--
450
232
X
X
X
X
X
X
X
i/ Report  measured,  apparent  viscosity  at  0°F (-18°C)  in centipoises  for
   grade  10  oil.

2_l After  being cooled below Its pour point,  the  oil  shall regain its  homogeneity
   on standing nt  a  temperature not more than 10C  F  (6°  C)  above the  pour point.

3_/ Values  shall be reported ("x" indictes  report).

   3.3.1   Foaming.   All grades of oil shall demonstrate the  following  foaming
characteristics when they are tested in accordance 'with  4.6,  table II.(ASTM D 892).

          (a)   Initial test at 75° ± 1°  F (24° i  0.5° C).  Not more than 25 ml
of  foam shall  remain immediately following the end of the 5-minute blowing
period.   No fo.im shall remain at the end of the 10-minute settling period.

          (b)   Intermediate test at 200° ±  1° F (93.5  ±  0.5°  C).  Not more than
 150  ml of foam shall remain immediately following  the end of  the 5-minute
blowing period.  No foam shall remain at the end of  the  10-minute settling
period.
                                         130

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MIL-L-2104C

           (c)   Final  test  at  75°  '-  1" F (24° -'  0.5° C).   Not more than 25 ml
of foam shall  remain  immediately  following the end of the 5-minute blowing
period.  No  foam  shall  remain at  the end of the 10-minute settling period.

  3.3.2  Stabil icy  and  conpauibility .

  3.3.2.1  Stabilitv.   The oils shall show no evidence of separation  or color
change when  they  art-  tested in accordance with 4.6, table II  (method  3470,
Fed. Test  Method  Std.  No.  791).

  3.3.1'.2  CiSEUiill j hi ' JJjf •   The oils shall be tonpatible with  oils prcvioi.s'y
ctuali.fi,-I  mul, .  Ml''-I.-2!(H, MIL-I.-461 5?, and MIL-I.-.'J .'60.  The oils shall
show no evident f of  epar.ifion when they ar-> fiat*'! a.u.iinst selected  reforeii, v-
oils i.n aciovdanf.   ith 4.6,  table II (method  
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                                                                  MIL-L-2104C
but test results shall be reported for all properties listed.  The qualifying
activity (see 6.4) shall establish specific values and tolerances for subse-
quent quality conformance testing for these properties (see 6.3 and 6.4):
      Viscosity
      Viscosity index
      Tour point
      Flash point
      Gravity, API
      Carbon residue
      Foaming
      Phosphorus
      Chlorine
      Sulfur
      Sul fated  ash
      Organo-metal lie  components

   4.  QUALITY ASSURANCE PROVISIONS
   4.1   Responsibility for J.nagfictJrQn.   Unless  otherwise specified in the con-
 tract  or purchase order,  the supplier is responsible for the performance of
 all inspection requirements as specified herein.   Except as otherwise specified
 in the contract or order, the supplier may use his own or any other facilities
 suitable for the performance of the inspection requirements specified herein,
 unless disapproved by the Government.   The Government reserves the right to
 perform any of the inspections aet forth in the specification where such in-
 spections are deemed necessary to assure supplies and services conform to
 prescribed requirements.

   4.2   l£t.

   4.2.1  Bu,lk loj:.  An indefinite quantity of a homogeneous mixture of one
 grade of oil offered for acceptance in a single, isolated container; or manu-
 factured in a single plant run (not exceeding 24 hours), through the same
 processing equipment, with no change in the ingredient materials.

   4.2.2  Packaged lot.  An indefinite number of 55 gallon drums or  smaller
 unit containers  of Identical size and type, offer.ed  for acceptance, and  filled
 with a homogeneous mixture of one grade of oil from  a  single, isolated con-
 tainer; or  filled with a homogeneous mixture of one  grade  of  oil manufactured
 in a single plant run (not exceeding 24 hours), through the  same processing
 equipment, with  no change  in the ingredient materials.

    4 • 3  Sampling .

    4.3.1  Sampling of filled containers.   Take a random sample of  filled  con-
 tainers  from  each lot in accordance with MIL-STD-105 at  inspection level II and
 acceptable quality  level (AQL) = 2.5 percent defective.
                                        132

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M1I.-L-2104C

  A. 3.?  S.unnl inn  for  tests.   Take  samples  from bulk or packaged lots for
tests in accordance with  ASTM  Method  D 270.

  4.4  Inspection.  Perform  inspection in accordance with method 9601 of
Fed. Test Method Std.  No.  791.

  A.4.1  j>_xan_''fiiat j.on  of  filled contTiners .   Examine s \mples taken in accordance
with 4.3.1  for compl i.n.r e with M1L-STD-290  with rcp/inl to fill, closure,
selling,  leakage,  ;iuka  in>;,  packing,  and marking requirements.  Reject any
container having DM-  or  more  dcfe.its or under the required fill.  If the nunber
of  defective  or underfilled  containers exceeds the acceptance number for the
appropriate sampling  plan of  MIL-STD-105, reject the lot represented by the
sample.

  4. 5  Clnssific-.il ion of tests.

        GO   Qualification tests.
        (b)   Quality  conformance tests.

  4.5.1   Qua 1 i f ic.-. t i on _. cv-t^s.  Qualification tests consist of test for all of
 the requirements spi <. i f led in section 3 and may be conducted in any  plant or
 laboratory  approved  by the qualifying activity (see 6.4), unless otherwise
 specified in 4.6.) through 4.6.2.  Qualification tests shall be performed on
 each viscosity grade  except as specified in 4.5.1.1 and 4.5.1.2.

  4.5.1.1   The stable pour-point test (method 203, Fed. Test Method  Stc!. 791)
 shall  be required  only on grade  10 oil.

  4.5.1.2  Grade 40  oils may be qualified in accordance with 3.1-1.

  4.5.2   Quality ccnToi n-Hnce tcsjtr.  Tests for quality confonnance of  individual
 lots shall  consist of tests for ail of the requirements  in section 3,  except
 for the following (see table II):

          Stable pour point
          Stability and compatibility
          Ring-sticking, wear, and  accumulation of  deposits
          Low  temperature deposits
          Bearing, corrosion
          Moisture-col ro;;ion characterisitcs

   4.6  Test methods.   Perform  tests in accordance  with table II and  with
 4.6.1 through 4.6.2 as applicable.

   4.6.1  jjLa b 11 i. t >' f\ iK'_ c qijpa t Ifa i 1 i <• v .  Determine  the  stability  and comp/Jt ibil ity
 of  the oils by the pioceduret.  for  "Homogeneity" and  "Ml scibi J ity" given in
 method 3470,  Fed.  Test Method  Std. No.  79L, as explained  in  4.6.1.1  and 4.6.1.2.
 The procedure."  in 4.6.1.1 and  4.6.1.2  should  be performed  at the  same  time.   Thi.-
 test shall  be conducted  only  in  a  laboratory  designated  by the qualifying
 activity (see 6.4).
                                       133

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                                                                HIL-L-2104C
  4.6.1.1  Stability.   Determine the stability by subjecting an unmixed sample
of oil to the prescribed cycle of temperature changes and examining the sample
for conformanee to the requirements of 3.3.2.1.   Record the test results on a
copy of the "Homogeneity and Miscibility Test" form in the column marked "None1.'

  4.6.1.2  Compatibility.  Determine the compatibility of the oil with other
oils previously qualified under MIL-L-2104, MIL-L-21260 and MIL-L-46152, by
subjecting separate mixtures of the oil with selected reference oils designated
by the qualifying activity (see 6.4) to the prescribed cycle of temperature
changes, then examining the mixtures for conformance to the requirements of
3.3.2.2.  Record the test results on the same copy of the "Homogeneity and Mis-
cibility Te.st" form (see 4.6.1.1) in the appropriate columns marked "1-30",
"2-30", t-U .

  4.6.2  Stable pour point.  The stable pour point test (method 203, Fed. Test
Method Std. No. 791) shall be performed only in a laboratory designated by the
qualifying  activity (see 6.4).

             	      	Table II.  Test Methods	
Test
Test Method No.
Fed. Std. 791
Test Method No.
       ASTM
Viscosity,  kinematic
Viscosity,  apparent
Viscosity  index
Pour point
Stable  pour point                             203l/
Flash point
Gravity, API
Carbon  residue
Phosphorus
Chlorine
Sulfur
Sulfated residue
Organo-metal1ic components
Foaming
Stability  and  compatibility                   3470.§/
Moisture-c orrosion  characteristics
Low temperature deposits
Bearing corrosion                             3405
Ring-sticking, wear,  and  accumulation
   of deposits:
    Medium-speed,  supercharged,  high-sulfur
      fuel                                     340
    High-speed,  supercharged                   341
                   D 445
                   D 2602J/
                   D 2270
                   D 97

                   D 92
                   0 287
                   D 524
                   D 1091
                   D 808 or D-13173/
                   D 1552 or D 12937
                   D 874
                   D Sill/
                   D 892

                   Sequence IIBZ/
                   Sequence VC §/
                                      134

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MIL-L-2104C

_!/ Obtain the viscosity at 0°F. (-18°C.) by D 2602  for grade  10 oil.
21 See 4.6.2.
3/ D 808 is the preferred method but D  1317 may be  used as an alternate.
~k_l D 1552 is the preferred method but D  129 may be  used as an alternate.
![/ X-ray fluorescence or atomic absorption spectrochemital analysis  methods
   that have been  previously approved by the qualifying activity  (see  6.4) may
   be used as alternates to D  811.
b_l Homogeneity  and Miscibility Test.  See 4.6.1 for clarifying  instructions.
27 Included  in  ASTM.
8/ Not yet published by ASTM.  To be  included in  ASTM STP  315-E,  when  published  »
    (see 2.2).

  5.  PREPARATION  FOR DELIVERY

  5.1  Packaging,;  packing,  and marking^  Unless otherwise  specified  in the con-
 tract or  purchase  order  (sec  6.2),  packaging, packing,  and marking shall  be  in
accordance with MIL-STD-290.

  6.  NOTES

  6.1  Intended use.  The  lubricating oils  covered  by this specification are
 intended  for the crankcase  lubrication of  reciprocating spark-ignition and
 compression-ignition engines  used  in all types  of military tactical  ground
 equipment and  for the  crankcase  lubrication of  high-speed, high-output,
 supercharged compression-ignition engines  used  in all ground equipment.  The
 lubricants  covered by  this  specification arc intended for all conditions of
 service,  as  defined by  appropriate  Lubrication  Orders, when  ambient temperatures
 are above -20°F.  (-29°C.).

   6.2   Ordering data.   Procurement  documents should specify  the following
 information:

        (a)   Title, number,  and date of this specification.
        (b)   Grade of oil  required (see 1.2).
        (c)   Quantity of oil required.
        (d)   Type and size of containers required  (see 5.1).
        (e)   Level of packaging and  level of packing required (see 5.1).

   6.3  Other requirements and tolerances for quality confornumce testing.  De-
 finite  numerical values are noi  specified for certain of the physical  and
 chemical properties listed in 3.4,  and  for which corresponding test methods are
 given in section 4.  Values of some properties vary  from onr commercial brand
 of oil  to another for the same grnde   These valuer aro influenced by the source
 of the  ba*e stock, the identities anti ouanl it'ics of additives, etc.  Definite
 numerical valves ore not alv/ay.-. functionally important except, for some pro-
 perties, within specified maximum and/o\ minimum limits.  It is not possible
 (or necessary)  to assigr restrictive values in the  specifi'.  >t;ion before the
 testing of qualification sampler,.   During qualification, test values will be
 determined which are characteristic of  a particular  product  and which can serve
                                        135

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                                                               MIL-L-2104C

thereafter to identify the product.  Using the results of qualification testing,
the qualifying Activity (see 6.4) can set values, Including permissible tolerances,
for future quality <. onf ormance testing.

  6.4  Qua! 1 fie at ion   With respect to products requiring qualification, awards
will be made only  for products which are at the time set for opening of bids,
qualified  for inclusion in the applicable qualified products list whether or
not such product*  have actually been so listed by that date.  The attention of
the suppliers is called to this requirement, and manufacturers are urged to
arrange to have the products that  they propose to offer to the Federal Govern-
ment tested for qualification  In order that they may be eligible to be awarded
contracts  or orders for the products covered by this specification.  The
activity responsible  for  the qualified products list is the U.S. Army Aberdeen
Research and Development Center,  Coating and Chemical Laboratory, Aberdeen
Proving Ground, Maryland  21005, and information pertaining to qualification
of  products may be obtained from that activity.

   6.5  Certain  provisions of this  specification are the subject  of international
standardisation agreement (NATO  STANAG 1135).  When amendment, revision or can-
cellation  i. £  this  spot if ication  is  proposed which would affect or violate the
international agreement  concerned,  the preparing activity will take appropriate
reconciliation  action through  international  standardization channels, Including
departmental  standardization offices,  if required.
 Custodians:
   Army -  MR
   Nnvy -  SH
   Air  Force -  68

 Review activities:
   Army -  ME, WC, AT
   Navy -  SA, SH, AS,  YD
   Air  Force -  11,  68
   DSA  - PS

 User activities:
   Navy -  MC
Preparing activity:
  Array - MR

(Project No. 9150-0167)
                                          ft V. «. MVEMNMCNT pfMMTINO WrtCfc W7i-431-«7 6301
                                           136

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          APPENDIX  B








LETTER TO FTC BY R.G. STREETS,



    ARMY MATERIEL COMMAND
              137

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                                     June  5, 1964
Mr.  H.  Paul  Butz, Chief
Division of Trade Regulation Rules
Bureau of Industry Guidance
Federal Trade Commission
Washington 25, D. C.                 Reference:  File 959
Dear Mr. Butz;
     Reference is made to your proposed rule relating to the advertising
and labelling of previously used lubricating oil and to the revised text
of proposed trade regulation rule as submitted by the Association of
Petroleum Re-refiners.
     In my opinion, the proposed rule 1s very desirable from the stand point
of consumer protection.  With the Increasingly severe performance require-
ments being placed on engine crankcase lubricants, automatic transmission
fluids and conventional transmission and axle lubricants by today's auto-
mobiles and trucks, the use of an Inadequate or  Improperly labelled product
can  lead  to costly damage  varying from slow degradation to catastrophic
failure.

      I  feel that the  requirement  for a clearly  visible  and conspicuous
marking  to  indicate the  presence  of previously  used  lubricating  oil  1s
of primary  importance since  it  at least  serves  to  make  the  customer  aware
of what  he  is buying.

      The provision  in Part 3 of the proposed  rule  for the  use  of the term
                                      138

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"re-refined" is more difficult to define since it involves the question of
degree.

     In general, the term "re-refined" 1s understood to mean that the pre-
viously used oil has been subjected to a complete refining process equal
to or exceeding that used to prepare high quality virgin base oils.  In the
case of used oil this might include settling, filtration, vacuum distillation,
sulfuric acid  treatment, and clay treatment.  In some cases selected solvent
refining may be necessary to remove asphaltlc  and resinous materials.
     The selection of the processing details normally depends on the know-
ledge  of the characteristics of  the charge stock.  In the case of used oil
collected  at random  from a  variety of sources, these characteristics are
essentially unknown  since the original  base oil  types can cover a wide range
and  contaminants may include  grease drippings, antifreeze, and extreme
pressure gear  lubricants as well  as all  the physical and  chemical contaminants
produced by previous use of the  products.
      Simple "reclaiming" or "reprocessing" which involves only the  removal
of insoluble  physical  contaminants or at best a  mild treatment to  reduce
chemical contaminants such  as fuel  fractions, water, combustion  products,
and perhaps resinous oxidation  products is  completely  inadequate to assure
 that the base  oil, even when  re-treated with functional  additives, will  be
 satisfactory  for use with  modern engines and transmissions.
      After extensive tests some years ago with re-refined oils which had
 been given very thorough re-refining as discussed above followed by re-
 treating with balanced blends of recognized engine oil additives, the U.S.
 Army found that the performance of these oils in actual  engine tests was
                                      139

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very Inferior to the minimum standards  required  for qualification  under
the then current specification for engine oil.

     Subsequent to this, and realizing  that base stock characteristics would
be constantly changing with used oil  dralnlngs,  the Army prohlbltad  any
consideration of the use of re-refined  components 1n engine oils and gear
lubricants qualified under specifications MIL-L-2104A (Lubricating 011,
Internal Combustion Engine, Heavy-Duty), MIL-L-45199A (Lubricating 011.
Internal Combustion Engine, High Output Diesel), and MIL-L-2105B (Lubricating
011, Gear, Multl-purpose).

     The reasons for this basically relate to the fact that these are all
performance  specifications requiring qualification prior to any procurement.
The qualification requirements Involve a number of expensive and, In some
cases,  lengthy  performance tests  1n actual test engines or gear sets.
Although the composition of the oil submitted for qualification 1s not other-
wise restricted, once  the performance tests have been passed no significant
change  1s  allowed in either the base stock or additive components without
requalif1cat1on.

      From  our years of experience with  products of  this type,  1t  became
apparent  that  changes  1n  base stock  source or treatment even with virgin
base  oils  could greatly alter the performance of a  product.  Since  re-
 refined oils were of unknown  origin, could contain  organic contaminants
which  would degrade performance and  might have  lost all natural  Inhibition
 due to excessive acid  treatment (the result  of  original  refining  plus add
 treatment during re-refining) 1t was obvious that  the use of re-refined  oils
 in products having severe performance  requirements was out of  the question.
                                     140

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     In reviewing the proposed control  specifications submitted by the
Association of Petroleum Re-refiners, 1t 1s my opinion that these standards
represent essentially no quality control from the stand point of assuring
satisfactory performance 1n use.

     For example, the 11st of color and flash standards against viscosities
would do nothing except to assure the removal of volatile fuel fractions.
This 1s desirable, of course, but does not assure satisfactory lubricant
performance.  Color, per se, 1s no assurance of quality since good virgin
base stocks may range from very light to very dark, depending on crude
source and refining  treatment.  In the case of re-refined oils, the color
standards  listed may allow masking of some contaminants, but on the other
hand,  severe  treatment  to produce very  light colored oils may  increase
the  degree of over-refinement and thus  Impair performance even further.
An example of this  is water-white medicinal mineral oil which  has  lost
all  the  natural oxidation  inhibitors and 1s  a very unsatisfactory  lubricant
base stock.
      The standard  for  viscosity index  is an  acceptable number  although  low
 viscosity index virgin  base  stocks  have and  are  being  used  to  formulate some
 very high-grade heavy-duty oils.

      The neutralization number has  some merit when applied  to the base  stock
 alone since it may control  the amount of  undesirable acids  present (both
 organic and Inorganic).  The number suggested by APR 1s too high however,
 and I would suggest a maximum of 0.02.

      The ash value  (sulfated residue) will control  the presence of Inorganic
                                     141

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or metal-organic compounds resulting from previous use or the existence of
metal-containing additives originally placed In the oil.  In order to establish
that the re-ref1n1ng process has been effective 1n removing such
contaminants, the ash determination must be made on the base oil before any
subsequent additions of oxidation Inhibitors, detergents* dlspersants, or
other metal-containing chemicals.  This value should be no higher than
0.005 percent by weight.
      In addition, some control should be placed on the maximum content of
any  single metallic element  since the presence of even a few parts per
million of some metals such  as copper may produce undesirable catalytic
effects 1n the  finished oil.  A maximum of  5 parts per million  (by spectro-
graphlc analysis) of any  metallic element,  phosphorus,  chlorine, or
silicon  1s recommended.
      All  of  the above  controls would apply  to  the re-refined base  stock
 simply  as a  means of assuring that  a thorough  job of re-ref1n1ng  had been
 done with the Intent of  removing essentially all  of  the contaminants
 associated with previous  use.
      This, however, provides no  assurance that this  re-refined base  stock
 will provide satisfactory performance  when subsequently used to blend
 engine oils, gear lubricants, or automatic transmission fluids.
      In the case of both military and Industry standards for such materials,
 it  1s recognized that the only accepted method for determining whether
 performance will be satisfactory Is through the use of full-scale performance
 tests Involving equipment of the type 1n which the fluid will be used.
                                      142

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     To my knowledge, no re-refined products are being subjected to  such
performance tests on a routine basis 1n order to verify the maintenance of
a performance standard.  In the absence of such control, the purchaser of
such a product has no real  guarantee of satisfactory performance regardless
of claims or API service classifications which may be printed on the
container.

     For these reasons, the requirement for a clearly visible and conspicuous
marking on the front panel  of the container to indicate the presence of
previously used  lubricating oil seems to be a minimum requirement to
protect the  consumer.

                                     Sincerely yours,
                                     /s/ R.E. Streets
                                     R. E. STREETS
                                     Chief, Power Sources Section
                                     Chemistry and Materials Branch
                                     Research Division
                                     R&D Directorate
                                     U. S. Army Materiel Command
                                     143

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