Oil Recycling Incentives Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Oil Recycling Incentives Act''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) The generation of solid and hazardous waste has grown 
        to alarming proportions in the United States. Each person in 
        the United States throws away 3.6 pounds of garbage every day--
        enough annually to fill a convoy of 10-ton garbage trucks 
        145,000 miles long, which is the equivalent of half-way to the 
        moon or roughly 7 times around the equator.
            (2) Frequently economic incentives are not sufficient to 
        encourage waste minimization and responsible environmental 
        behavior, and such incentives actually may favor increased 
        waste generation and improper behavior.
            (3) A system of economic incentives targeted at waste 
        reduction and recycling together with responsible regulation of 
        recycling activity can reduce both the amount and toxicity of 
        materials entering the environment.
            (4) In particular, there is a need to encourage greater 
        recycling of used oils. Americans are improperly pouring on the 
        ground or into sewers, placing in landfills, or improperly 
        burning over 400 million gallons of such oil per year. This is 
        equivalent to more than 35 Exxon Valdez spills. In addition to 
        fouling the environment, this depletes oil resources and 
        increases the Nation's reliance on foreign oil.
            (5) The Administrator of the Environmental Protection 
        Agency requires additional statutory authority to address 
        situations in which economic incentives to encourage waste 
        reduction and responsible environmental behavior are not 
        adequate.

SEC. 3. USED OIL RECYCLING REQUIREMENTS.

    (a) In General.--Subtitle C of the Solid Waste Disposal Act (42 
U.S.C. 6921 et seq.) is amended by redesignating sections 3015 through 
3023 as sections 3016 through 3024, respectively, and by inserting 
after section 3014 the following new section:

``SEC. 3015. RECYCLING REQUIREMENTS FOR USED OIL.

    ``(a) General Requirement.--(1) During the period beginning not 
later than 24 months after the date of the enactment of the Oil 
Recycling Incentives Act and ending 10 years after such date, a 
producer or importer of lubricating oil each year shall recycle, using 
a method described in paragraph (2), an amount of used oil equal to at 
least that amount of oil determined by--
            ``(A) multiplying the lubricating oil produced for domestic 
        use or consumption or imported that year by such person, by
            ``(B) the recycling percentage established by the 
        Administrator under subsection (b).
    ``(2) A producer or importer of lubricating oil may comply with 
this subsection--
            ``(A) by recycling used oil (in compliance with the 
        requirements of section 3014 and regulations promulgated 
        pursuant to such section) through reintroducing the used oil 
        into refinery production for purposes of producing petroleum 
        products;
            ``(B) by purchasing re-refined oil or re-refined lubricant 
        base stock from a facility having a permit under section 3005 
        for purposes of producing lubricating oil; or
            ``(C) by purchasing recycling credits under the recycling 
        credit system established pursuant to subsection (c).
    ``(3) A producer or importer of lubricating oil shall submit to the 
Administrator, under regulations promulgated by the Administrator, a 
report on the amount of lubricating oil produced or imported in each 
calendar year by such person. The report shall be submitted at least 
once a year, but the Administrator also may require such interim 
reports under this paragraph as the Administrator considers necessary.
    ``(4) For purposes of paragraph (1), a producer or importer shall 
be treated as recycling 2 units of used oil for each unit of re-refined 
oil or re-refined lubricant base stock purchased as provided in 
paragraph (2)(B).
    ``(5) Nothing in this section shall prohibit a producer or importer 
from entering into an agreement with a subsidiary or division of such 
producer or importer--
            ``(A) for purposes of treating oil recycled by such 
        subsidiary or division as being recycled by the producer or 
        importer for purposes of meeting the recycling requirement of 
        this section; or
            ``(B) for purposes of obtaining recycling credits created 
        by such subsidiary or division.
    ``(6) For purposes of paragraph (2)(A), the amount of used oil that 
is recycled as provided in that paragraph shall be determined on the 
basis of the records of the amount of used oil received by the producer 
or importer.
    ``(b) Recycling Percentage.--The Administrator each year shall 
establish a recycling percentage for use under subsection (a). The 
percentage applicable during the first year that the requirement 
established by subsection (a) is in effect shall be a percentage that 
is 2 percentage points higher than the recycling rate for lubricating 
oil that exists on the date of the enactment of this section. Such 
recycling rate shall be determined by using data for 1990 or the most 
recent year for which data are available. For each of the 10 years 
thereafter, the recycling percentage shall be an additional 2 
percentage points higher than the recycling percentage of the previous 
year. Such recycling percentage shall go into effect automatically and 
shall be published in the Federal Register.
    ``(c) Credit System for Recycling Used Oil.--(1) Not later than 18 
months after the date of the enactment of the Oil Recycling Incentives 
Act, the Administrator shall promulgate regulations to establish a 
system under which (A) recyclers may create credits for used oil 
recycling, and (B) producers or importers of lubricating oil may 
purchase such recycling credits from such recyclers, for purposes of 
complying with subsection (a). No person may create such credits, and 
no producer or importer of lubricating oil may purchase such credits, 
except in accordance with this subsection and the regulations 
promulgated under this subsection. In developing the regulations, the 
Administrator shall, to the maximum extent feasible, allow for the use 
of records kept in the ordinary course of business or other approaches 
that facilitate the simple, rapid generation and exchange of credits 
without a case-by-case approval.
    ``(2) At a minimum, the regulations under paragraph (1) shall 
include the following requirements:
            ``(A) The following records shall be kept by a recycler for 
        at least 3 years:
                    ``(i) A record of the quantities of used oil 
                received for recycling, together with the prices paid 
                to transporters or owners or operators of collection 
                centers.
                    ``(ii) A record of the quantities of recycled oil 
                sold or otherwise distributed in commerce, and the 
                destinations of such recycled oil. Part of such record 
                shall be a record of the quantities and price of re-
                refined oil sold to producers or importers of 
                lubricating oil for the purpose of complying with 
                subsection (a).
                    ``(iii) A record of the sale or other disposition 
                of recycling credits, including the name and address of 
                the producers and importers the credits were sold to, 
                the price charged, and the amount of credits sold.
            ``(B) The recycler shall sell or otherwise distribute in 
        commerce the recycled oil as specification used oil, off-
        specification or industrial specification used oil, or re-
        refined oil (as defined by the Administrator). The recycler 
        shall maintain records of the tests certifying that the oil 
        meets the standards for one of those categories of oil or fuel, 
        along with records of the destination of the oil or fuel by 
        category.
            ``(C) Each year a producer or importer of lubricating oil 
        shall keep records of the quantity of lubricating oil produced 
        or imported, the recycling of used oil carried out to comply 
        with subsection (a), the amount of re-refined oil or lubricant 
        base stock purchased to comply with subsection (a), the amount 
        of recycling credits purchased (including the names of 
        recyclers from whom the credits were purchased and the dates of 
        the purchases), the price paid for the credits, and the amount 
        (if any) of recycling credits sold or carried over from 
        previous years. The regulations shall allow for a 2-year 
        carryover of credits.
    ``(3) The Administrator may include such other requirements in the 
regulations under paragraph (1) with respect to qualifications for 
recyclers, importers, and producers; methods for auditing compliance 
with the system; and enforcement of the system; as the Administrator 
considers necessary or appropriate for administering the recycling 
credit system established under this subsection.
    ``(4) The Administrator shall include in the regulations under 
paragraph (1) a procedure by which an interested party may petition the 
Administrator for credits to be created under the credit system for 
recycling of used oil using new technology. The Administrator shall 
determine, after public notice and opportunity for comment, the amount 
of credit that may be created by new technologies for which petitions 
are granted under this paragraph.
    ``(d) Reports.--(1) Not later than 6 years after the date of the 
enactment of the Oil Recycling Incentives Act, the Administrator shall 
submit to Congress an interim report on the implementation of this 
section. The report shall include, at a minimum--
            ``(A) a discussion of the effects of the requirements of 
        this section on the lubricating oil industry, the used oil 
        recycling industry, and on the environment; and
            ``(B) an evaluation of the level of the recycling 
        percentage under subsection (b) and recommendations on whether, 
        and at what rate, the percentage should be increased in future 
        years above the percentage applicable under subsection (b).
    ``(2) Not later than 10 years after such date, the Administrator 
shall submit to Congress a final report on the implementation of this 
section. The report shall include an updated version of the discussion 
and evaluation required in the interim report, as well as such other 
findings and recommendations with respect to the implementation of this 
section as the Administrator considers appropriate.
    ``(e) Definitions.--For purposes of this section:
            ``(1) The term `producer' with respect to lubricating oil 
        means any person who produces a lubricant base stock from crude 
        oil. Such production does not include the re-refining of used 
        oil.
            ``(2) The term `importer' with respect to lubricating oil 
        means any person who imports a lubricant base stock.
            ``(3) The term `lubricant base stock' means oil from which 
        lubricating oil is made after introduction of additives.
            ``(4) The terms `used oil collection center', `collection 
        center', and `generator' mean any facility or entity that 
        collects, stores, accumulates, or otherwise generates used oil, 
        including a service station dealer (as defined in section 
        101(37) of the Comprehensive Environmental Response, 
        Compensation, and Liability Act of 1980 (42 U.S.C. 9601(37)), 
        an auto parts retailer, or municipality. Such term does not 
        include an individual who generates used oil by removing such 
        oil from the engine of a light duty motor vehicle or household 
        appliance owned or operated by such individual and used only 
        for personal purposes.
            ``(5) The term `recycler' means an owner or operator of a 
        used oil recycling facility.
            ``(6) The term `recycling credit' means a legal record of a 
        recycling activity undertaken in accordance with subsection (c) 
        that represents an amount of used oil recycled for purposes of 
        complying with subsection (a).
            ``(7) The terms `used oil recycling facility' and 
        `recycling facility' mean a facility with a permit under 
        section 3005 that re-refines or reprocesses used oil.
    ``(f) Applicability.--This section applies to any person who 
produces or imports more than 100,000 gallons of lubricating oil a 
year.
    ``(g) Regulations.--The Administrator shall promulgate regulations 
to implement this section not later than 18 months after the date of 
the enactment of the Oil Recycling Incentives Act. If the Administrator 
fails to promulgate such regulations by that date, the recycling 
percentage under subsection (b) shall be 40 percent until such time as 
the regulations are promulgated.''.
    (b) Table of Contents Amendment.--The table of contents for 
subtitle C of the Solid Waste Disposal Act (contained in section 1001) 
is amended--
            (1) by redesignating the items relating to sections 3015 
        through 3023 as sections 3016 through 3024, respectively; and
            (2) by inserting after the item relating to section 3014 
        the following new item:

``Sec. 3015. Recycling requirements for used oil.''.

Summary: Oil Recycling Incentives Act - Requires producers or importers of lubricating oil to recycle for a period of ten years an amount of used oil equal to at least the amount determined by multiplying the amount of lubricating oil produced or imported that year by such persons by the recycling percentage established by the Administrator of the Environmental Protection Agency. Authorizes such individuals to comply with this Act by: (1) recycling used oil or purchasing re-refined oil for purposes of producing lubricating oil. Or (2) purchasing recycling credits under this Act. Requires producers and importers to report annually to the Administrator on the amount of oil produced or imported by such persons. Requires a producer or importer to be treated as having recycled two units of used oil for each unit of re-refined oil or lubricant base stock purchased. Directs the Administrator to establish a recycling percentage that is two points higher than the existing recycling rate for lubricating oil. Provides for increases in such percentage of two points annually for ten years. Requires the Administrator to promulgate regulations allowing recyclers to create credits for used oil recycling and producers or importers of lubricating oil to purchase such credits. Provides that such regulations shall require: (1) specified records to be kept by recyclers and by importers or producers. And (2) recyclers to sell or distribute in commerce such oil as specification used oil, off-specification used oil, industrial specification used oil, or re-refined oil. Applies recycling requirements to persons who import or produce more than 100,000 gallons of lubricating oil annually. Sets the recycling percentage at 40 percent if the Administrator fails to promulgate such regulations.