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State environmental regulators surprised an Oakland metal recycling facility with a 97-page “Enforcement Order for Corrective Action,” directing its owner to prepare a plan to clean up hazardous waste produced in its operations.

Tuesday’s action by the California Department of Toxic Substances Control follows on the heels of a Feb. 2 settlement agreement among Schnitzer Steel Industries, Inc., the owner of the facility, the Attorney General of California and the District Attorney of Alameda County. Under the agreement, Schnitzer agreed to pay $4.1 million on account of prior polluting activity at the site.

Schnitzer issued a statement saying the company was “deeply disappointed” to learn of DTSC’s “unilateral and unwarranted” issuance of the order.

According to a company spokesperson, “we strongly refute the allegations contained in the Order, DTSC’s authority for unilateral issuance of the Order, and the alleged necessity of additional corrective actions.”

Schnitzer is one of North America’s largest manufacturers and exporters of recycled metal products. Based in Portland, Oregon, Schnitzer reported 2020 revenues in excess of $1.7 billion from recycling operations in 23 states, as well as Puerto Rico and Canada. In 2020, it sold recycled metal to customers in 29 countries.

Schnitzer is a public company and its stock is listed on NASDAQ.

In a news release, Schnitzer noted that for the seventh year in a row it was named as one of the “World’s Most Ethical Companies” by Ethisphere, an organization that describes itself as “a global leader in defining and advancing the standards of ethical business practices.”

Much of Schnitzer’s revenue comes from running junked vehicles through industrial shredders to separate out the recyclable metal for resale.

The processing process

In a recent securities filing, Schnitzer explains in that it processes large pieces of scrap metal into smaller pieces “by crushing, torching, shearing, shredding and sorting.”

In the end, “the shredding process reduces auto bodies and other scrap metal into fist-size pieces of shredded recycled scrap metal.”

The largest source of Schnitzer’s supply of “end-of-life” car bodies is “our own network of retail auto parts stores, which operate under the commercial brand-name Pick-n-Pull.”

To prepare a salvaged vehicle for final processing: “we remove catalytic converters, aluminum wheels and batteries for separate processing and sale prior to placing the vehicle in our retail lot.”

Then “after retail customers have removed desired parts from a vehicle…, the remaining auto bodies are crushed and shipped to our metals recycling facilities to be shredded or sold to third parties.”

Schnitzer’s Oakland facility is one of six deep water port locations where it operates, and one of only three where it operates a “mega-shredder,” according to its filings.

Environmental regulation is a major business issue for Schnitzer. In its SEC filings, it says that while “our objective is to maintain compliance with applicable environmental laws and regulations, we have, in the past, been found to be not in compliance with certain environmental laws and regulations and have incurred liabilities, expenditures, fines and penalties associated with such violations.”

According to the enforcement action, Schnitzer has operated a metal recycling business at 1101 Embarcadero West in Oakland since 1961. The business includes the shredder that processes cars, appliances and other types of scrap metal so the recyclable components can be sorted from non-recyclable waste.

Hazardous waste is generated by the shredding process, according to the DTSC, particularly LFM or “light fibrous material.”

LFM, sometimes called “fluff,” typically consists of “residues from metal shredding operations such as glass, rubber, automobile fluids, dirt, and plastics from shredded dashboards, car seats, and other non-metallic car parts and household appliances.”

The hazardous waste from LFM can be released into the air as well as leeching and migrating “to soil, surface water, storm water and groundwater,” according to the DTSC.

Heavy metals found in samples

During various sampling events between 2012 and 2014, DTSC alleges that samples of LFM around the facility found copper, lead, zinc, cadmium and chromium in excess of permitted concentrations. Additional sampling of LFM in 2015 and 2016 from inside the facility found similar issues, according to the filing.

A survey and sampling of the neighborhood around the facility in 2018 and 2020 also found LFM with chemicals in excess of maximum values, including in a parking lot that “may be used by children.”

Schnitzer’s Oakland facility is located near residential and industrial/commercial properties.

According to the enforcement action, “there are approximately 18 daycare centers, 10 parks, eight schools, four senior centers, and two hospitals located within a mile of the Facility.”

According to DTSC, “releases from the Facility have or may have migrated towards soil, groundwater, air, neighboring properties, and the Oakland Inner Harbor, causing potential risk to nearby residents, children, offsite workers, and ecological receptors.”

The enforcement order requires Schnitzer to prepare a detailed “conditions report” and create immediate and long term plans to remediate the environmental risks.

A spokesperson for Schnitzer sharply disagreed with DTSC’s assessment.

According to the spokesperson, LFM “does not pose a human health hazard to workers or nearby residents. This unilateral action by DTSC on the heels of the settlement they recently signed is unwarranted.”

Gamaliel C. Ortiz, a spokesperson for DTSC, challenged the idea that the prior settlement prevented the enforcement action.

“The settlement made clear that DTSC reserved its ability to issue corrective action on Schnitzer and that moving forward, DTSC will take action when it deems necessary in order to protect West Oakland’s residents and the environment.”

Environmental groups react

Ortiz stated that DTSC is ordering Schnitzer to “clean up health-endangering pollution and substantially modify its business practices that have been a root cause of pollution plaguing West Oakland for years.”

Sejal Choksi-Chugh, executive director of Baykeeper, an organization that works to eliminate pollution of the San Francisco Bay, said “We’re pleased to see the state finally holding this polluter accountable for illegally spewing toxins into the air and water of West Oakland.”

However, according to Choksi-Chugh, the DTSC order did not go far enough. While the order “requires Schnitzer to come up with a plan to stop releasing pollution into the surrounding community, it does not mandate any specific remedies. We are beyond the point where Schnitzer should be allowed to set its own course.”

Baykeeper and other environmental advocates recently filed a “friend of the court brief” in a different piece of litigation, this one brought against DTSC by the Oakland Athletics baseball organization.

Baykeeper sided with the Athletics in urging the court to force DTSC to eliminate an exemption that allows six California metal shredding facilities, including Schnitzer’s Oakland facility, to avoid obtaining hazardous waste discharge permits.