GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1995

S	1 

SENATE BILL 151

Short Title:  Motor Oil Tax/Used Oil Prog.	(Public)

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Sponsors: Senators Jordan; and Carpenter.

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Referred to:  Finance.

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February 7, 1995

A BILL TO BE ENTITLED
AN ACT TO IMPOSE A TAX UPON MOTOR OIL AT THE POINT OF FIRST SALE AND TO ESTABLISH THE USED OIL COLLECTION PROGRAM TO ENCOURAGE THE PROPER MANAGEMENT OF USED OIL GENERATED BY PRIVATE CITIZENS WHO CHANGE THEIR OWN OIL.
The General Assembly of North Carolina enacts:
Section 1.  Chapter 105 of the General Statutes is amended by adding a new Article to read:
"ARTICLE 2E.
"Schedule B-E.
"Motor Oil Tax.
"§ 105-113.120.  Definitions.
The following definitions apply to this Article:
(1)	Distributor. – A person who does any of the following:
a.	Manufactures or produces motor oil.
b.	Acquires motor oil for sale to a wholesale dealer or a retail dealer.
c.	Imports motor oil into this State for use by that person.
(2)	Motor oil. – Any oil or similar lubricant classified for use in an internal combustion engine, crankcase, transmission, gearbox, or differential.
(3)	Retail dealer. – A person who sells motor oil to the ultimate consumer of the motor oil.
(4)	Sale. – A transfer, a trade, an exchange, or a barter, in any manner or by any means, with or without consideration.
(5)	Wholesale dealer. – A person who sells motor oil to another for resale.
"§ 105-113.121.  Tax imposed.
An excise tax is imposed on motor oil at the rate of two cents (2¢) per quart.
"§ 105-113.122.  Motor oil license required.
(a)	Distributors and Wholesale Dealers. – Distributors and wholesale dealers shall obtain a continuing motor oil license for each place of business for which a tax of twenty-five dollars ($25.00) shall be paid. For the purpose of this section, 'place of business' means any place where a distributor manufactures or produces motor oil or any place where a distributor or a wholesale dealer receives or stores non-tax-paid motor oil.
(b)	Retail Dealers. – Retail dealers shall obtain for each place of business a continuing motor oil license for which a tax of five dollars ($5.00) shall be paid.  For the purpose of this subsection, 'place of business' means any place where a retail dealer receives non-tax-paid motor oil or manufactures or produces motor oil.
"§ 105-113.123.  Liability for tax and payment of excise taxes.
(a)	Primary Liability. – The distributor, wholesale dealer, or retail dealer who first distributes, sells, or otherwise handles motor oil in this State is liable for the tax imposed by this Article.  A distributor, wholesale dealer, or retail dealer who brings into this State motor oil made outside the State is the first person to handle the motor oil in this State.  A distributor, wholesale dealer, or retail dealer who is the original consignee of motor oil that is made outside the State and is shipped into the State is the first person to handle the motor oil in this State.
(b)	Secondary Liability. – A retail dealer who acquires non-tax-paid motor oil from a distributor or a wholesale dealer is liable for any tax due on the motor oil.
(c)	Reporting Periods. – Except for tax on a designated sale under G.S. 105-113.126, the taxes levied by this Article are payable when a report is required to be filed.  A report is due on a monthly or a quarterly basis. A monthly report covers sales and other activities occurring in a calendar month and is due within 15 days after the end of the month covered by the report.  A quarterly report covers sales and other activities occurring in a calendar quarter and is due within 15 days after the end of the quarter covered by the report. A report shall be filed on a form provided by the Secretary and shall contain the information required by the Secretary.
A person who is consistently liable for less than fifty dollars ($50.00) of tax a month may, with the approval of the Secretary, file a report on a quarterly basis.  All others who are liable for the tax imposed by this Article must file a report on a monthly basis.  The amount of tax payable by a person for a reporting period is the amount payable by all places of business owned or operated by that person.
"§ 105-113.124.  Tax discount.
A distributor, a wholesale dealer, or a retail dealer who is liable for the excise tax on motor oil and who files a timely report under G.S. 105-113.123 may deduct from the amount due with the report a discount of two percent (2%).
"§ 105-113.125.  Exemptions.
The tax imposed by G.S. 105-113.121 on motor oil does not apply to the following:
(1)	Motor oil sold outside the State.
(2)	Motor oil required to operate industrial machinery and sold for that purpose.
"§ 105-113.126.  Designation of exempt sale.
(a)	A distributor or a wholesale dealer who sells motor oil to a person who has notified the distributor or wholesale dealer in writing that the person intends to resell the item in a transaction that is exempt from tax under G.S. 105-113.125 may, when filing a report under G.S. 105-113.123, designate the quantity of motor oil sold to the person for resale.  A distributor or a wholesale dealer shall report a designated sale on a form provided by the Secretary.
(b)	A distributor or a wholesale dealer is not required to pay tax on a designated sale when filing a report. The distributor or the wholesale dealer shall pay the tax due on all other sales in accordance with this section.  A distributor, a wholesale dealer, or a customer of a distributor shall not delay payment of the tax due on motor oil by failing to pay tax on a sale that is not a designated sale or by overstating the quantity of motor oil that will be resold in a transaction exempt under G.S. 105-113.125.
(c)	A person who does not sell motor oil in a transaction exempt under G.S. 105-113.125 after a distributor or a wholesale dealer has failed to pay the tax due on the sale of the item to the person in reliance on the person's written notification of intent is liable for the tax and any penalties and interest due on the designated sale.  If the Secretary determines that motor oil reported as a designated sale is not sold as reported, the Secretary shall assess the person who notified the distributor or the wholesale dealer of an intention to resell the item in an exempt transaction for the tax due on the sale and any applicable penalties and interest.  A distributor or a wholesale dealer who does not pay tax on motor oil in reliance on a person's written notification of intent to resell the item in an exempt transaction is not liable for any tax assessed on the item.
"§ 105-113.127.  Use of tax proceeds.
The Secretary shall credit five percent (5%) of the tax collected under this Article to the Solid Waste Management Trust Fund.  The Secretary shall credit the remaining ninety-five percent (95%) of the tax collected under this Article to the Used Oil Collection Fund to be used in accordance with the provisions of Part 2E of Article 9 of Chapter 130A of the General Statutes."
Sec. 2.  Article 9 of Chapter 130A of the General Statutes is amended by adding a new Part to read:
"Part 2E.  Used Oil Collection Program.
"§ 130A-309.90.  Findings; intent.
(a)	The General Assembly finds that used oil is a valuable resource that can be used as an environmentally acceptable source of energy or as a clean rerefined product.  Despite its potential value, a significant amount of used motor oil is improperly disposed of, resulting in a significant environmental problem and a waste of a valuable energy resource.
(b)	The General Assembly finds that, although there is an existing system for the collection and recycling of used oil generated by business and industry, private citizens who change their own motor oil have only limited access to that system and often dispose of their used oil on land or in landfills, sewers, drainage systems, septic tanks, surface or ground waters, and elsewhere.
(c)	It is the intent of the General Assembly to reduce the amount of improperly disposed used oil by providing incentives to encourage the establishment of more certified used oil collection centers and to expand curbside collection programs to receive used oil from Do-It-Yourselfers.
"§ 130A-309.91.  Definitions.
As used in this Part, unless the context requires otherwise:
(1)	'Do-It-Yourselfer (DIYer)' means an individual who removes used oil from any of the following engines owned or operated by that individual:
a.	A light-duty motor vehicle.
b.	A small utility engine.
c.	A noncommercial motor vehicle.
d.	Farm equipment.
(2)	'Motor oil' has the same meaning as in G.S. 105-113.120.
(3)	'Reclaiming' means the use of methods, other than those used in rerefining, to purify used oil primarily to remove insoluble contaminants, making the oil suitable for further use.  The methods used may include settling, heating, dehydration, filtration, or centrifuging.
(4)	'Recycle oil' means to prepare, in a safe, legal, and environmentally sound manner, used oil for reuse as a petroleum product by reclaiming, reprocesssing, energy recovery, rerefining, or another means.
(5)	'Rerefining' means the use of refining processes on used oil to produce high-quality base stocks for lubricants or other petroleum products.  Rerefining may include distillation, hydrotreating, or treatments employing acid, caustic, solvent, clay, or other chemicals, or other physical treatments other than those used in reclaiming.
(6)	'Retailer' means a person who sells motor oil to the consumer.
(7)	'Used oil' means any oil which has been refined from crude oil or synthetic oil and, as a result of use, storage, or handling, has become unsuitable for its original purpose due to the presence of impurities or loss of original properties, but which may be suitable for further use and is economically recyclable.  As used in this Article, used oil does not include an oil filter that has been drained of free-flowing used oil or an oil-contaminated material.
(8)	'Used oil collection center' means a facility, including a fixed location, tank, truck, or container, that serves as a centralized collection center that accepts used motor oil from DIYers.
"§ 130A-309.92.  Used Oil Collection Fund.
(a)	The Used Oil Collection Fund is created as a nonreverting fund within the Department.  The Used Oil Collection Fund consists of:
(1)	The proceeds of the motor oil tax imposed under Article 2E of Chapter 105 of the General Statutes.
(2)	Any contributions and grants from public or private sources.
(b)	The Used Oil Collection Fund may be used for:
(1)	Grants to public or private entities to establish certified used oil collection centers.
(2)	Grants to units of local government or private collectors that offer or include, as part of municipal solid waste collection services, curbside collection of used oil from households, including grants for the reasonable costs of household containers, truck retrofitting, tanks, and similar costs associated with the curbside collection of used oil.
(3)	Grants for advertising, training, and other programs to promote the collection and recycling of used oil from the public.
(4)	Grants for public education programs concerning the proper handling and recycling of used oil.
(5)	Incentives pursuant to G.S. 130A-309.99 to encourage individuals who change their own oil to return the oil to used oil collection centers.
(6)	Grants to indemnify a used oil collection center for the costs arising out of used oil collected from the public that is unsuitable for reuse or recycling, results from spills or contamination, or results from the additional liability associated with the operation of the used oil collection center.
(7)	The costs that the Department directly incurs in developing and administering the Used Oil Collection Program under this Part, not to exceed seven percent (7%) of the Fund.
"§ 130A-309.93.  Used Oil Collection Program; duties of the Department.
(a)	The Department shall develop and administer a used oil collection program to encourage the proper disposal of used oil generated by DIYers and shall adopt rules to implement this program.  The Used Oil Collection Program shall include provisions regarding:
(1)	All grants that may be paid from the Used Oil Collection Fund under G.S. 130A-309.92.
(2)	Technical assistance to persons who develop the used oil collection center programs or the curbside collection of used oil as part of municipal solid waste collection.
(3)	Management standards and certification requirements for used oil collection centers, transporters of used oil, and used oil recyclers consistent with the provisions of this Part and applicable federal laws and regulations.
(b)	The Department shall develop criteria for selecting the recipients of the grants that may be paid from the Used Oil Collection Fund under G.S. 130A-309.92 and shall select the recipients of these grants.
(c)	The Department shall establish and maintain a toll-free telephone number for the purpose of disseminating information regarding:
(1)	The locations and phone numbers of used oil collection centers within the State.
(2)	The availability, dates, and requirements for curbside collection where available.
(3)	Alternate locations that accept commercial used oil.
(d)	The Department may adopt rules to implement this Part.
"§ 130A-309.94.  Report requirement.
No later than 1 March of each year, the Department shall submit a report to the Environmental Review Commission on the Used Oil Collection Program.  The report shall include:
(1)	The total motor oil tax proceeds collected pursuant to Article 2E of Chapter 105 of the General Statutes during the preceding tax year, the total motor oil tax proceeds credited to the Used Oil Collection Fund during the preceding tax year, and the total motor oil tax proceeds credited to the Solid Waste Management Trust Fund during the preceding tax year.
(2)	The total amount expended from the Used Oil Collection Fund during the preceding calendar year.
(3)	Information identifying each grant recipient, the amount of each grant received, and the proposed use of the grant moneys.
(4)	The number of gallons of used oil collected under the Used Oil Collection Program.
(5)	The cost of developing and administering the Used Oil Collection Program.
(6)	A calculation of the per gallon cost of the Used Oil Collection Program, including the administrative cost of the program.
"§ 130A-309.95.  Advisory committee.
The Secretary shall appoint an advisory committee for the Used Oil Collection Program.  The advisory committee shall consist of seven members who shall serve at the pleasure of the Secretary.  In making appointments to the advisory committee, the Secretary shall select persons who represent the various interests affected by the Used Oil Collection Program.  The advisory committee shall recommend criteria for selecting recipients of the grants that may be paid from the Used Oil Collection Fund under G.S. 130A-309.92 and shall recommend recipients of these grants.  Members of the advisory committee shall receive necessary travel and subsistence expenses while on official business of the committee in accordance with G.S. 138-5 and G.S. 138-6.
"§ 130A-309.96.  Used oil collection centers.
(a)	A used oil collection center must be certified by the Department.  To be certified, a center must:
(1)	Participate in the State toll-free telephone used oil information network system.
(2)	Meet the minimum requirements for hours of operation and other standards established by the Department.
(3)	Demonstrate that the center complies with all State rules concerning tank structure and integrity, maintenance, supervision, employee training, and housekeeping.
(b)	Used oil collection centers shall transfer used oil only to certified transporters and shall maintain records of all volumes of material collected, including the identity of the hauler and the name and location of the recycling facility to which the oil is being transported.
"§ 130A-309.97.  Oil releases from collection centers.
Upon detecting a release of used oil to the environment at a used oil collection center, the owner, operator, or lessor of the used collection center shall notify the Department of the release and shall:
(1)	Stop the release.
(2)	Contain the released used oil.
(3)	Clean up and properly manage the released used oil.
(4)	Repair and replace any leaking used oil storage containers or tanks prior to returning them to service, if necessary to prevent future used oil releases.
"§ 130A-309.98.  Limitation of liability.
(a)	A person or the State shall not recover from the owner, operator, or lessor of a certified used oil collection center any costs of response actions resulting from a release of used oil collected at the center or subsequently handled or disposed of by others if:
(1)	The owner, operator, or lessor of the used oil collection center does not mix the used oil collected with any hazardous substance.
(2)	The owner, operator, or lessor of the used oil collection center does not accept used oil that the owner, operator, or lessor knows contains hazardous substances.
(3)	The used oil collection center is in compliance with management standards issued by the Department.
(4)	The used oil is removed from the premises by a transporter certified pursuant to G.S. 130A-309.101.
(b)	For purposes of this section, the owner, operator, or lessor of a used oil collection center may presume that a quantity of less than five gallons of used oil accepted at any one time from any member of the public is not mixed with a hazardous substance, provided that the owner or operator acts in good faith.
(c)	This section applies only to activities directly related to the collection of used oil by a used oil collection center.  This section does not apply to grossly negligent activities related to the operations of a used oil collection center.
"§§ 130A-309.99 through 130A-309.102:  Reserved.
"§ 130A-309.103.  Used oil filters.
Prior to disposal, used oil filters shall be prepared for disposal in one of the following ways:
(1)	Punctured and hot-drained for a minimum of 12 hours.
(2)	Punctured and cold-drained for a minimum of 24 hours.
(3)	Drained and crushed.
(4)	Otherwise prepared for disposal consistent with rules adopted by the Commission.
"§ 130A-309.104.  Retail sales of motor oil.
Any retailer of motor oil that is not a used oil collection center shall post and maintain at or near the point of motor oil display or sale a durable and legible sign (minimum size of eight and one-half by 11 inches) informing the public of the importance of proper collection and disposal of used oil and the State toll-free number for information regarding used oil collection centers.
"§§ 130A-309.105 through 130A-309.107: Reserved."
Sec. 3.  G.S. 130A-290(b), 130A-309.16, 130A-309.20, 130A-309.22, and 130A-309.23 are repealed.
Sec. 4.  G.S. 130A-309.15 is recodified as G.S. 130A-309.105, which is reserved under Section 2 of this act.
Sec. 5.  G.S. 130A-309.15, recodified as G.S. 130A-309.105 in Section 4 of this act, reads as rewritten:
"§ 130A-309.105. Prohibited acts regarding used oil.
(a)	No person may knowingly:
(1)	Collect, transport, store, recycle, use, or dispose of used oil in any manner which endangers the public health or welfare.
(2)	Discharge used oil into sewers, drainage systems, septic tanks, surface waters, groundwaters, watercourses, or marine waters.
(3)	Dispose of used oil in landfills in the State unless such disposal has been approved by the Department.
(4)	Mix used oil with solid waste that is to be disposed of in landfills.
(5)	Mix used oil with hazardous substances that make it unsuitable for recycling or beneficial use.
(b)	A person who violates subsection (a) of this section shall be subject to an administrative penalty not to exceed five thousand dollars ($5,000) per violation.
(c)	A person who disposes of used oil in a landfill where such used oil has been mixed with other solid waste which may be lawfully disposed of in such landfill, and who is without knowledge that such solid waste has been mixed with used oil, is not guilty of a violation under this section.
(d)	Used oil shall not be used for road oiling, dust control, weed abatement, or other similar purposes that have the potential to release used oil into the environment."
Sec. 6.  G.S. 130A-309.17 is recodified as G.S. 130A-309.100, which is reserved under Section 2 of this act.
Sec. 7.  G.S. 130A-309.17, recodified as G.S. 130A-309.100 in Section 6 of this act, reads as rewritten:
"§ 130A-309.100. Registration of persons transporting, collecting, or recycling used oil; fees; reports and records.
(a)	The following persons shall register annually with the Department pursuant to rules of the Department on forms prescribed by it:
(1)	Any person who transports over public highways more than 500 gallons of used oil per week or more than 55 gallons at any time.
(2)	Any person who maintains a collection facility  that accepts more than 6,000 gallons of used oil annually from generators other than DIYers.
(3)	Any facility that recycles used oil.
(b)	An electric utility which generates during its operation used oil that is then reclaimed, recycled, or rerefined by the electric utility for use in its operations is not required to register or report pursuant to this section.
(c)	An on-site burner which only burns a specification used oil generated by the burner is not required to register or report pursuant to this section, provided that the burning is done in compliance with any air permits issued by the Department.
(d)	The Department may prescribe a fee for the registration required by this section in an amount which is sufficient to cover the cost of processing applications but which does not exceed twenty-five dollars ($25.00).
(e)	The Department shall require each registered person to submit, no later than 1 July of each year, a report which specifies the type and quantity of used oil transported, collected, and recycled during the preceding calendar year.
(f)	Each registered person who transports or recycles used oil shall maintain records which identify:
(1)	The source of the materials transported or recycled;
(2)	The quantity of materials received;
(3)	The date of receipt; and
(4)	The destination or end use of the materials.
(g)	The Department shall perform technical studies to sample used oil at facilities of representative used oil transporters and at representative recycling facilities to determine the incidence of contamination of used oil with hazardous, toxic, or other harmful substances.
(h)	Any person who fails to register with the Department as required by this section shall be guilty of a misdemeanor and upon conviction shall be punished as provided by G.S. 130A-25(a) and G.S. 14-3.
(i)	The proceeds from the registration fees imposed by this section shall be deposited into the Solid Waste Management Trust Fund."
Sec. 8.  G.S. 130A-309.23 is recodified as G.S. 130A-309.101, which is reserved under Section 2 of this act.
Sec. 9.  G.S. 130A-309.23, recodified as G.S. 130A-309.101 in Section 8 of this act, reads as rewritten:
"§ 130A-309.101.  Certification of used oil transporters.
(a)	Any person who transports over public highways after 1 January 1992, more than 500 gallons of used oil in any week must be a certified transporter or must be employed by a person who is a certified transporter.
(b)	The Department of Transportation shall develop a certification program for transporters of used oil, and shall issue, deny, or revoke certifications authorizing the holder to transport used oil.  Certification requirements shall require that a used oil transporter is familiar with appropriate rules and used oil management procedures.
(c)	The Department of Transportation shall adopt rules governing certification, which shall include requirements for the following:
(1)	Registration and annual reporting pursuant to G.S. 130A-309.100.
(2)	Evidence of familiarity with applicable State laws and rules governing used oil transportation and proper used oil management.
(3)	Proof of liability insurance or other means of financial responsibility for any liability which may be incurred in the transport of used oil.
(4)	Marking, by the certified transporter of used oil, of all vehicles which transport used oil or all containers of used oil when it is not feasible to mark the vehicle.  The mark must clearly identify the certified used oil transporter and clearly indicate that the vehicle is used to transport used oil.  The marking must be visible to others travelling on the highway.
(5)	Equipment in the transportation vehicle being in good mechanical condition and suitable for the transportation of used oil.
(6)	Documentation, maintained by the transporter, that indicates whether all used oil is delivered to qualified customers or certified recyclers.
(d)	Where used oil is sold directly by the transporter to an end user, the documentation required under subsection (c) of this section shall include test results showing that the used oil meets all applicable standards established by Department rules."
Sec. 10.  G.S. 130A-309.18, 130A-309.19, 130A-309.21 and 130A-309.24 are recodified as G.S. 130A-309.107, 130A-309.106, 130A-309.99, and 130A-309.102 respectively, which sections are reserved under Section 2 of this act.
Sec. 11.  This act becomes effective January 1, 1996.