Local oil recycling businesses are expecting a big boost from a new law that increases a fee on major oil producers and also provides more incentives to people who recycle motor oil.

The law, SB 546 by Sen. Alan Lowenthal, D-Long Beach, is seen as providing a boost to business while reducing environmental harm.

“SB 546 will help save millions of gallons of oil, encourage the re-refining of used oil, and help create green jobs in California – all with no cost to taxpayers or the general fund,” said Gary Colbert, president of Irvine-based oil re-refining company Evergreen Oil Inc., which plans to use incentives in the bill to open at least one oil re-refining plant in the region in addition to its Northern California plant.

Some environmentalists also applauded the law.

“This bill promotes the highest and best use for used lubricating oil,” said Bill Magavern, director of Sierra Club California.

Locally, Compton-based DeMenno/Kerdoon, one of the largest oil recycling companies in the Western United States, stands to be one of the biggest beneficiaries. The company, a subsidiary of South Gate-based World Oil Corp., currently turns used motor oil into products such as asphalt and marine diesel oil. It will be eligible for financial incentives if it adds capacity at its Compton plant to re-refine used motor oil for reuse in vehicles.

DeMenno/Kerdoon declined to comment for this story.

But there are some concerns among waste haulers about testing requirements and among out-of-state oil recyclers who believe the incentives unfairly favor California recycling companies.

Recycling shortfall

Under current law, oil producers in the state – mostly major oil companies such as Chevron Corp. and Exxon-Mobil Corp. – pay a state fee of 16 cents per gallon of motor oil they produce. That money is then used to pay people who change their own oil and turn in the used oil to be recycled. (A typical oil change generates less than 1 gallon of used motor oil.)

According to the California Integrated Waste Management Board, which administers the program, the state collected $16 million in fees from oil manufacturers last year.

About 88 million gallons of used motor oil were collected through recycling last year. That’s about 60 percent of total used motor oil. (Oil-change companies are required to recycle their used oil or show proof it’s been disposed of legally.)

“There’s a tremendous amount of oil that we still need to reuse and re-refine,” Lowenthal said last week.

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