The scrap metal recycling industry in California faces an uphill battle with the California Department of Toxic Substances Control (DTSC), as well as several bills introduced in the state’s legislature that could pose significant threats to the state’s metal recycling industry.
From a legislative standpoint, AB 2851 is on the Governor’s desk, and industry experts believe it will severely harm California’s metal shredding industry and economy. Here’s why: AB 2851 imposes a hazardous waste fee on metal shredding facilities, which will place an unsustainable financial burden on these operations. It is expected that this will lead to facility closures, disrupt California’s recycling efforts, and dismantle the state’s circular economy.
The Valley Industry & Commerce Association in Van Nuys, California stated, “Metal shredding facilities are essential to processing recyclable materials and reducing waste. By imposing this fee, AB 2851 will undermine environmental sustainability, increase scrap metal accumulation, and create new environmental hazards. This bill sets a damaging precedent for overregulation, threatening sectors critical to California’s environmental and economic stability.”
Mitch Kramar, vice president at Kramar’s Iron and Metal, pointed to key information that was recently sent to California legislators regarding AB 2851. In this correspondence, it was clearly stated that “the bill was amended at the last minute to subject these facilities to the hazardous waste generation and handling fee, which will impose a huge fee on every ton of material that DTSC classifies as hazardous waste. There was no notice of these last-minute amendments and no opportunity to comment on or discuss the crushing economic impact of this fee on the metal shredding industry.”
Quite simply, the statement made to legislators stressed that metal shredding facilities simply cannot absorb this fee. It will cost more to dispose of the waste than these facilities can make from the sale of their finished metal products.
In addition, another bill – SB 1234 – will give DTSC comprehensive permitting authority over scrap metal facilities – the type of permitting that had applied to hazardous waste treatment facilities (e.g., barrels of toxic chemicals, workers in hazmat suits).
“This may make sense for the five to six very large scrap metal facilities that produce such huge volumes of waste that they ‘chemically’ treat that waste so it can be sent to a regular solid waste landfill,” said Steven Slater, EHS Regulatory Compliance Manager at Universal Service Recycling, Inc. “In fact, that is all that was supposed to happen when the Legislature passed SB 1249 ten years ago. But DTSC got greedy and wants authority over small scrap metal facilities that only do physical separation, sorting and sifting of scrap metals. There is hope that the Legislature will modify SB 1234 to ensure the focus of any new DTSC authorities are on the chemical treatment of waste – and not the physical processing of scrap metal.”
As California also introduces SB253, a law mandating stricter Scope 3 emissions reporting requirements set to take effect in 2027, the scrap metal industry is facing significant challenges, particularly due to thermal events caused by the improper disposal of lithium-ion batteries. These batteries, increasingly found in consumer electronics and electric vehicles, pose substantial risks when mishandled, making their way into recycling facilities undetected and creating severe safety and financial challenges.
“Although SB253’s requirements won’t take effect until 2027, scrap recyclers need to start preparing now. The data infrastructure needed to accurately track and report Scope 3 emissions will require a significant upfront investment in new systems and technologies to monitor emissions across the entire supply chain,” said Stan Chen, who serves as both chief executive officer of RecycleGO Inc., a Web3 and AI powered sustainability tech company, and president of United Metal Recycling, a full-service, Class-A permitted recycling facility that handles all grades of ferrous and nonferrous material, source-separated plastics, and fibers using state-of-the-art processing equipment. “Preparing for compliance with SB253 will add financial strain to an industry already grappling with the operational risks of thermal events. Companies will need to allocate resources to ensure they can meet the upcoming regulatory demands, placing further pressure on profit margins.”
DTSC Role
Slater stated that DTSC is now causing a lot of investments in scrap metal recycling and job creation in Nevada and Arizona, rather than California.
“This movement of investments, capitol and jobs has been ongoing since the 2012–2015 time frame, when DTSC started its quest to attempt to regulate scrap metal recycling as a ‘hazardous waste treatment’ under the Resource Conservation and Recovery Act (RCRA),” Slater said.
According to Slater, “DTSC has also been trying to impose its regulatory oversight on scrap metal processing (a product purchased and sold) via other means – first by enforcement orders (NOVs) (then asking those business owners to toll their rights to sue them under those orders – this is still ongoing), then by seeking ̒voluntaryʼ agreements to bring in their oversight; then by adopting an illegal ̒emergencyʼ regulation over a three-day holiday weekend (a court tossed those out and ruled against DTSC); then by illegally repealing their long-standing policy consistent with federal EPA and the other 49 states that scrap metal is a valuable product and processing it is a valuable recycling activity and should not be regulated as a waste. A court reversed DTSC on that and then ordered DTSC to pay that business owner $475k for their costs in defending themselves from DTSC’s illegal actions.”
The California Metal Recyclers Coalition recently pointed out in a suit filed against DTSC for classifying scrap metal as ̒hazardous waste,ʼ that the “metal-shredding industry is already extensively regulated by a wide array of federal, state, regional and local authorities, including federal and state air and water quality laws, regional water control boards, regional air quality districts, and local fire departments, as well as other government entities that deal with land use and local permitting.”
“Now, state government, through DTSC, is about to worsen the recycling crisis by threatening to put the largest, most successful, and most viable remaining recycling operations out of business by making it infeasible to recycle scrap metals like junk cars, used refrigerators, and thousands of other end-of-life metal products,” the CA Metal Recyclers Coalition stated. “DTSC’s action is unlawful and threatens to undermine the scrap-metal recycling industry in California. Instead of being recycled into new products and reducing waste, this ̒hazardous wasteʼ designation by DTSC will result in such materials accumulating in huge quantities, increasing urban blight, creating eyesores, and causing potential threats to health and safety by being abandoned in back alleys, yards, neighborhood streets, vacant lots – and through a geometric increase in ̒midnight dumpingʼ along roadsides or in empty fields.”
As a result of these DTSC actions, Slater said small recyclers and peddlers will have to travel farther to the bigger scrap metal facilities that will be able to withstand the added DTSC costs.
“The costs of doing business in California will be passed along to both suppliers and consumers of scrap metal. DTSC will force oligopoly conditions in the state. And states like Nevada, Arizona and Utah will get most new investments and jobs,” Slater says.
Another area of concern facing California’s metal recycling industry is the chemical treatment of waste residue.
As Slater explained, DTSC has historically regulated this activity by F letters. If DTSC now desires to regulate by permit, then facilities with F letters are the only ones that should be subject to the new permit.
“For anyone else, it would be superfluous, duplicative and prohibitively costly,” Slater said.
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In California, scrap metal recycling facilities are currently subject to extensive regulations. These include:Industrial stormwater permitting by local water districts
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- Underground storage tank permitting by local water districts
- Fugitive dust control by local air quality management districts
- Portable equipment air permitting by Air Resources Board
- Occupational Safety & Health requirements by CUPA, Fire Marshall,
Cal/OHSA - Land use and zoning restrictions by local municipalities
- Spill response and release requirements by EPA, DTSC, CUPA, Dept. of
Transportation - Universal Waste management requirements by DTSC, CUPA
- Hazardous waste controls for metal shredder residue
- Certified Appliance Recycler program requirements by DTSC, CUPA for the
handling and removal of “materials that require special handling” (e.g., PCBs,
CFCs) - Chemical management and release reporting requirements by EPA, DTSC,
CUPA