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Recycling Today: Level the playing field

Automotive recyclers who abide by the numerous regulations and permits required of them say recyclers who ignore the rules cause increased costs, unfair competition and frustration. Actions speak louder than words, and for automotive recyclers this sentiment is certainly true when it comes to complying with permitting and licensing requirements.While many professionals in the automotive recycling industry do adhere to environmental regulations, permits and state licenses they are expected to obtain, recyclers who ignore these requirements disrupt the playing field, causing unfair competition and frustration for those abiding by the numerous mandatory statutes, often at a cost, says Michael Wilson, CEO of the Automotive Recyclers Association (ARA), Manassas, Virginia.

Since 1943, the ARA has represented an industry dedicated to the efficient removal and reuse of “green” automotive parts and the proper recycling of inoperable motor vehicles, the group says. The association serves the interests of more than 4,500 auto recycling facilities in the United States and in 14 other countries worldwide.

Wilson says nearly 8,400 automotive recyclers operate in the nation—up from the more than 7,000 auto recycling facilities the U.S. Census Bureau reported more than a decade ago—some of which are going above and beyond in terms of compliance at an additional cost.

Regulations required
Everything from zoning and permitting requirements to safety compliance and workers’ compensation factor into what a legitimate auto recycling business has to comply with, Wilson notes. “And, unfortunately, there are many entities out there selling recycled parts without the necessary state or federal permits or licenses,” he says.

Compliant recyclers go to “great extents” to ensure they are following the rules, says Atlanta-based Pull-A-Part’s Executive Vice President Steve Levetan. With the recent addition of its Pennsylvania location, Pull-A-Part now operates 29 used auto parts stores in 13 states. Levetan says each of the company’s 15- to 20-acre yards have from 1,200 to 2,000 cars in inventory at one time. All of the end-of-life vehicles (ELVs) in Pull-A-Part’s yards are sold to auto shredding operations after 60 to 90 days, he explains.

Though the types of and guidelines for permits and licenses vary from state to state, Levetan addresses several of the regulations that apply to U.S. companies such as Pull-A-Part, including the National Pollutant Discharge Elimination System (NPDES) permit program, “a fancy name for a stormwater permit,” he says; permits related to the handling of some materials, such as one in Alabama that requires a separate permit for storing used oil, as well as the U.S. Environmental Protection Agency’s (EPA’s) Spill Prevention, Control and Countermeasure Plans (SPCC) that help to prevent the discharge of oil into navigable waters or adjoining shorelines with storage regulations; state safety regulations where they may exist; U.S. Occupational Safety and Health Administration (OSHA) standards; and several environmental permits.

These licenses and permits have varying renewal timelines—for example, stormwater permits are renewed every five years and many state licenses are annual—but they are without a doubt a part of everyday business, Levetan proclaims.

“All of those can come into play,” Levetan says of the individual regulations. “Some of them are multiple-year licenses, but we deal with compliance issues literally every day of the week in one form in one state or another.”

While employing licensed workers is required in some instances, integrating EPA-approved equipment is necessary at times as well, Levetan explains.

He adds, “We’re required to remove refrigerants from the vehicles, and that has to be done with certain EPA-approved equipment; we’re not required to have a licensed person doing that, but the equipment has to have met qualifications by the EPA.”

He continues, “If someone is taking their car apart in their backyard, they don’t have the equipment to do this. This is going to release the Freon refrigeration into the atmosphere, which is a violation of the Clean Air Act.”

Proper process
Removing refrigerants from vehicles is one of the first steps Pull-A-Part and other regulated facilities carry out for incoming ELVs. “We remove everything that could be a potential contaminant,” Levetan says.

This includes removing batteries and mercury switches as well as draining fluids, including oils, brake fluids, antifreeze and fuel.

In 2006, a coalition of federal, state, industry and environmental nonprofit partners created the National Vehicle Mercury Switch Recovery Program (NVMSRP), a voluntary effort to promote safe removal of mercury switches from ELVs before they are shredded for recycling, according to the EPA. Steel and auto manufacturers had established a $4 million fund to provide incentives for the voluntary removal of switches returned through the NVMSRP, the agency says. However, this fund was depleted in 2009. Nonetheless, incentive payments continue in states that require the removal of mercury switches by law (Arkansas, Illinois, Iowa, Massachusetts, New Jersey, Rhode Island, Utah and Maryland) or have a state-funded program (North Carolina, South Carolina and Washington).

Levetan says compliant automotive recyclers properly drain and capture those potential waste streams in tanks and follow SPCC Plans. Pull-A-Part recycles the batteries, mercury switches and antifreeze.

Brian Shell, co-owner of “do-it-yourself” Go Pull-It, Jacksonville, Florida, says most recyclers use the recovered fuel, and in colder climates the oil, for heating in the winter.

Go Pull-It is the second automotive recycling facility opened by Shell and Jason Finley, both former employees of the David J. Joseph Co., Cincinnati. Four years ago, the two formed Go Auto Recycling, also in Jacksonville, a wholesale operation that sells parts to companies in the repair and collision businesses.

While the owners are actively seeking to open a third location, Finley says, “as of right now we’re leaning toward a hybrid model where we have the ability to do both [wholesale and self-service] on site.”

He says a range of 2,000 to 3,000 ELVs can be located between the family of companies at any time, stationed for up to 90 days on a Go Pull-It lot. The self-service facility brings in from 400 to 600 ELVs each month and sends hulks to shredders in the Southeast, among other regions, Finley says.

Legitimate competition
While Go Pull-It has seen a consistent flow of incoming ELVs—the average vehicle year on the company’s lots is 2001—Finley says the auto recycler is actively seeking automobiles on a daily basis. “We want to buy as many cars as possible that make sense to us given the scrap metal prices.”

He says the industry is and continues to be more competitive in terms of sourcing vehicles. Shell refers to individuals who do not fulfill regulatory requirements when he says, “It creates an unfair playing field. If one recycler invests the time, money, equipment and people to comply with regulations, and another does not, the one in noncompliance has less cost/overhead. That is not fair.”

With fewer expenses and overhead, noncompliant recyclers are able to outbid compliant recyclers in some instances, creating unfair competition, sources say.

Levetan says the situation surpasses fairness, adding that the industry is “plagued” by individuals who do not abide by the rules. “We think that anyone out there that is in one of these auto recycling businesses should be complying, and we should be on a level playing field,” he says.

From a competitive standpoint, the auto recycler says his company spends millions of dollars to comply with various regulations while “buying cars in competition with someone who pays nothing to ensure they are in compliance. It’s a common frustration,” Levetan says.

Auto shredder operators themselves say the business of buying ELVs has become competitive, to the point where auto shredder operators and parts harvesters are competing for the same vehicles.

Andrew Slesnick, president of Slesnick Iron & Metal, Canton, Ohio, operates an auto shredder and says he is in contact with auto parts recyclers daily. He says with more self-service auto recycling facilities popping up around the nation, competition for auto bodies has increased, especially as auto parts recyclers are selling more parts off of their ELVs before selling them to shredders for processing.

“We have a pick-a-part right down the road from us. Where we might pay $300 for a vehicle, they will pay $500 because they are hoping to get the money for the parts and throw the steel body to the shredder,” Slesnick says.

However, he adds that shredder operators and parts harvesters “will always have a need for each other because the shredders want the scrap, and the auto recyclers need to get rid of their car bodies.”

Compliance contradiction
Levetan says, “We want to see responsible businesses, we want to see compliance with the laws, we want to make sure we’re doing things the right way.”

And many auto recycling companies are going the extra mile to ensure their compliance. For instance, Shell says Go Pull-It hires consultants to oversee stormwater permits as well as SPCC Plans.

Pull-A-Part also relies on consultants, Levetan says. While Pull-A-Part officials complete in-house inspections, the company also has outside consultants and compliance firms carry out audits of the company’s perations, “to make sure that we are complying properly,” he says.

While Levetan says there is not an easy answer to get competitors within the industry to comply with applicable regulations, he points to a common practice among regulators that acts as a contradiction: Regulators seem to target companies that are registered for enforcement, while those that do not adhere to permitting requirements and regulations fail to make the regulators’ radar.

ARA’s Wilson refers to this situation as a “Catch 22.”

He says, “Once you do the right thing, especially with stormwater permits, once you get on that list, then they come out and they do an inspection of that facility. If you never sign up and get on that list, then you never get inspected.”

Wilson says regulators should focus on leveling the playing field by enforcing basic business requirements, such as assuring that a business is legally operating in the first place. He adds, “If you’re going to have these laws, then enforce them; and, if not, then open it up, because you’re putting small businesses at a competitive disadvantage in the marketplace.”

Tracking titles
Automotive recyclers are required to adhere to various environmental regulations, permits and licenses to legally and safely handle vehicles. Of the number of regulations auto recyclers are expected to follow, one area could use much more enforcement, says Steve Levetan, executive vice president of Atlanta-based Pull-A-Part.

The National Motor Vehicle Title Information System (NMVTIS), under the direction of the U.S. Department of Justice (DOJ) and operated by the American Association of Motor Vehicle Administrators (AAMVA), requires auto recyclers, junk yards, salvage yards and insurance carriers that purchase five or more vehicles in one year to upload all of the information available on their vehicle titles, Levetan explains. The system allows the titling agency to instantly and reliably verify the information on the paper title with the electronic data from the state that issued the title, the AAMVA says.

Levetan notes that anyone who fails to report specific information to NMVTIS can be charged $1,000 per violation.

Levetan says he and other industry professionals have been working to shift the enforcement responsibility for this federal law to the state and local levels to improve enforceability. He says in Georgia, for example, auto recyclers are required to report the necessary information (VIN, date of purchase, name of seller and disposition of vehicle) to the state, which then reports to NMVTIS.

“We’ve got one single system for the state of Georgia that all of us are required to report to so that there’s no cost to us to do that, and the cost is no longer an excuse for noncompliance,” Levetan says.

Recycling Today