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August 1, 2018

Volume 3 Issue 4

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FTC Rejects Recycled Oil Rule Changes

The Federal Trade Commission rejected recycled oil rule changes suggested by rerefiner Avista Oil – to specify that base oil produced through rerefining is of equal or better quality than virgin base oil – and by the American Petroleum Institute, which sought more precise definitions for recycled oil and related manufacturing and marketing terms.

The FTC compiled its regulatory review of the Test Procedures and Labeling Standards for Recycled Oil as part of the commission’s systematic review of all current commission regulations and guides. The commission said in a Federal Register item dated July 24 that it chose to update the rule’s reference to API document 1509 to reflect the most recent reversion of the document – otherwise, the commission retained the rule in its current form.

Technology improvements in the rerefining industry during the last decade have rendered rerefined base oil of equal or better quality than base oil refined from crude, and this fact “must be reflected in the new rule,” Avista said in its comments submitted to the FTC. The company suggested that the rule allow recycled oil marketers to label their products as “equal in quality” to new oil.

Avista Oil operates a rerefinery in Peachtree City, Georgia, with 1,200 barrels per day of API Group II and 400 b/d of Group III base oil production capacity, and also collects used oil. Juan Fritschy, CEO of Avista Oil Refining and Trading USA, submitted the company’s comments to the FTC.

“It is a well-known fact in the industry that base oils from rerefineries have the same quality as virgin base oils,” Fritschy told Lube Report in an emailed statement. “I was asking the commission to reflect this fact. This would be recognition to the used oil collection and rerefining community that not only produce excellent products but also do a significant service in channeling millions of gallons of used finished lubricants – that come from virgin and rerefined sources – to proper recycling outlets,” he elaborated. “I am disappointed that the commission missed this opportunity to reflect this well-known fact.”

The commission said it declined to amend the rule to address whether recycled oil marketers can label their products as “equal in quality” to new oil. “The record does not clearly establish the basis and need for additional affirmative labeling provisions beyond the statutory requirement that representations of substantial equivalency be based on the [National Institute of Standards and Technology],” the commission stated.

“Furthermore, the FTC Act (15 U.S.C. 45(a)) does not restrict the scope of truthful advertising claims sellers may make for recycled oil,” the commission added. “Indeed, marketers may make recycled oil claims beyond those covered by the rule, as long as such representations are supported by competent and reliable evidence and do not otherwise violate the FTC Act.”

API recommended amending the rule to clearly distinguish base stock “manufacturers” from “oil marketers” (i.e., organizations responsible for identifying the standard met by an engine oil). It urged the commission to use the term “oil marketer” instead of “manufacturer” wherever the rule addresses entities responsible for oil branding.

API also suggested that the commission amend the definition of “manufacturer” to exclude entities that blend processed used oil with new oil or additives by limiting the definition to entities that rerefine or otherwise process “used oil to remove physical or chemical impurities acquired through use.”

It also urged the commission to change the definition of “recycled oil” to refer to oil deposited, collected and managed in accordance with the United States Environmental Protection Agency’s used oil management standards, instead of oil determined to be “substantially equivalent to new oil for use as engine oil” under API 1509, as currently required by the rule. API explained the change would clarify oil disposition once it has been introduced into a vehicle engine.

FTC questioned the need for API’s recommended changes, saying there appeared to be no need to add a definition for “oil marketer” or to change the scope of “manufacturer.” “The rule’s core provisions already apply broadly to ‘any manufacturer or other seller,’ thus negating the need to expand the rule’s existing terms,” the commission stated in its ruling.

The commission also said a change in the definition of “recycled oil” to tie the term to EPA’s used oil management regulations would be inconsistent with the statute, “which specifically defines the term ‘recycled oil’ as used oil the manufacturer has determined to be substantially equivalent to new oil under the procedures set out in the rule.”

The Federal Register final rule document is available online at this FTC link.