Hazardous Waste Cost Recovery Charges on Repair Orders-Regulatory & Legislative Review, April 2013

Download Available: Hazardous Waste Disposal Charges Update 2013

We wrote to you in November 2012 regarding compliance with charging customers for hazardous waste disposal charges on the invoice.  A copy of the Dealer Alert from November 2012 (without the attachments) is enclosed with this letter.  Following the letter, we sought a regulatory and legislative review from experts in this area.

The experts have stated that the hazardous charges to customers must be direct costs related to hazardous waste disposal and these costs must be offset by any money the dealership receives from selling oil.  Depending upon the size of the dealership or dealership group, this amount can be anywhere from $0.75 to $1.00 per gallon of used oil.  For example, if the dealership receives $12,000 per year from the used oil hauler and the net expenses directly related to hazardous waste are $10,000, then the dealership should not charge customers for hazardous waste.  If the net expenses are more than the money received from selling used oil, then the dealership can recover the excess costs.

While there have been no enforcement on this matter, we have always believed that the dealers stay clear of the regulatory, legal mess that some of these things may bring about.  So we summarized our opinion on this matter as follows:

  • Directly Related Costs:  Cost recovery is allowed only for expenses directly related to hazardous waste costs generated on that vehicle.  Rags, shop towels, clarifier cleaning, Zamboni machines may generally be related to hazardous items, but they are not directly related to oil changes (for example). They are related to all shop services and as such, one cannot place these costs in hazardous waste disposal expenses.
  • Only On Services That Generate Hazardous Waste:  Dealers can charge customers for services such as lube oil service, coolant change, etc. where a hazardous waste is generated.  If the customer is getting a lock changed; no hazardous waste, no hazardous waste disposal fee.
  • Get Money For Used Oil:  Market conditions have changed.  Your used oil is worth money.  Negotiate with your used oil hauler!
  • Calculations:  We can update the cost recovery calculations for you.  Please complete the form behind this Alert completely and mail it to us with all the support documents.  If the disposal of used oil nets you more money than you are spending on other hazardous waste disposal, there is no need to do calculations. Just stop charging.
  • Accuracy:  The Business & Professions Code of California (the law) requires that all items on the RO and Invoice be accurate.  Don’t get carried away.  All expenses must be reasonable and necessary and above all, accurate when placed on the RO.
  • Used Oil Recycling Center (UORC):  If you are certified as a UORC, the state of California gives you 16 cents for every gallon of used oil that is collected by the facility.  The 16 cents is a refund on the 26 cents that is paid to the state on new oil purchases and as such, does not impact your hazardous waste disposal fee calculation.   http://www.calrecycle.ca.gov/usedoil/certcenters


Sam has a BE & MS in Chemical Engineering followed by a JD from Southwestern University School of Law.  Sam is the current President-Elect of SCAIHA and volunteers at Honor Flight SD.  Send your comments to sam@cellyservices.com

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