AKRON-G&M Recycling Inc. is at an impasse with the state of Indiana and may have to file for bankruptcy-leaving a 3 million-tire pile in its wake. The state has ordered the Atwood, Ind.-based firm to stop collecting tires until it starts whittling down its current stockpile. G&M owner Garry Baker claims he can't buy shredding equipment or pay employees without the income from tipping fees-or obtain financing or investors without a state permit.
Sound like a Catch 22?
Tire recyclers or wannabees are facing similar frustrations in other states due to state regulations that are less than sympathetic to fledgling scrap tire recycling businesses.
Some states even want to be viewed as cracking down on growing tire piles for fear of being stuck with a costly cleanup or, worse, a toxic tire fire.
In Indiana, the Department of Environmental Management (IDEM) is dealing with the state's largest tire pile, which has been growing for more than 13 years.
While in Pennsylvania, state regulators are apparently trying to nip a perceived problem in the bud by forcing two new processors to clear out a stockpile of shreds before they begin operations.
In other states, processors complain of constantly changing regulations, uncoordinated efforts between state agencies and costly compliance-as well as a lack of government understanding of the scrap tire recycling market.
Some processors claim states' efforts to curb the proliferation of tire stockpiles could only aggravate the scrap tire problem.
``In shutting me down, they (IDEM) haven't solved the problem,'' said Mr. Baker, who operates Indiana's largest tire dump.
The IDEM first cited G&M in 1989 for not having the proper permits. Years of negotiations and legal maneuvers culminated in a consent decree in 1992 allowing G&M to continue to accept and shred tires as long as the firm cleared out 25,000 tires each month and covered a tire-filled quarry site with soil.
But permit processing, equipment breakdowns and bad weather created delays in meeting the deadlines. Mr. Baker said he received verbal permission to continue operating beyond the deadlines. Yet by last December, the IDEM concluded Mr. Baker was not holding up his end of the agreement, so the state fined G*&*M more than $2.8 million.
``We've given him lots of leeway,'' said Rosemary Spalding, IDEM deputy commissioner. ``Our biggest concern is not to have the pile grow any larger.'' She added the IDEM is looking at ways to reduce the tire pile.
Ms. Spalding said the intent is not to put G&M out of business, but the IDEM has ``reached the end of our rope'' in negotiating a solution with the firm.
The 13-year-old company collected tires from dealers in northern Indiana, accumulating an estimated 3 million in an old quarry, a building and rented warehouse in the Atwood area. Mr. Baker said over the years the company has sold about 1 million tires.
Now Mr. Baker is seeking the support of his state representative to fight the IDEM order and is talking with two firms about developing a tire recycling venture. Otherwise, Mr. Baker said the stalemate could force him to file for bankruptcy.
Two Pennsylvania firms that are trying to set up a cryogenic crumbing operation could meet the same fate, although their stockpile is far less formidable.
Last December, the state ordered Recycled Rubber Products Inc. of Schenley and West Penn Tire Recycler Inc. of Kittanning to cease operations until they removed 700 tons of shredded tires collected over the past year and stored inside Recycled Rubber's fire-controlled building.
The two firms each held a ``permit by rule,'' a shortcut through the permitting process based on certain conditions, such as tire inventory limits and requirements for certified equipment on site. But the state Department of Environmental Resources claims the two companies were not honoring the rules when they failed to promptly dispose of the shreds.
Year-old Recycled Rubber contends the shreds are the raw material for its operation, which failed to start up last year due to delays in equipment delivery.
Yet once the shreds are cleared out of the building, the company said it will have to turn around and bring in more shreds in order to start up its operations.
The state said it wants a smaller, more manageable stockpile in the event of closure or fire.
West Penn, which collects and shreds the tires, Recycled Rubber and the DER are currently at a stalemate. Recycled Rubber and West Penn don't want to spend $25,000 to ship the shreds to a landfill and are reluctant to finalize the purchase of their equipment for fear the state might decide to permanently revoke their permits, according to Recycled Rubber owner Jerry Ashworth and West Penn President Joe Siegel.
Recycled Rubber has potential customers for its crumb, but it must first provide quality samples of the product in order to secure contracts, Mr. Ashworth said.
In Smackover, Ark., Mid-South Reclamation Industries Inc. has an established customer base for its tire-derived fuel product, but it must constantly deal with state agencies that, according to CEO Terry Atha, treat tire processors as solid waste disposal facilities.
In his state, regulators put a limit on the number of tires stored at a facility at any given time.
``Like any business, you have to have a certain amount of inventory on site,'' said Mr. Atha, whose company processes tires from 25 counties. In the event of shipment delays, his firm shouldn't have to stop its machines waiting for more tires to come in, he said.
It doesn't help matters, either, when the state alters its regulations periodically, calling for processors to make changes to their operations. Mr. Atha said his company balks at the changes but follows through on compliance ``as the money comes in.''
``This is a business and (the state agencies) have cost us a lot of money,'' he said. ``They don't understand economics.''
And many states don't understand the technical aspects of scrap tire processing, said Michael Blumenthal, executive director of the Scrap Tire Management Council, an arm of the Rubber Manufacturers Association.
At the state level ``in general, there is a high turnover rate and a lack of understanding of the technical issues in the scrap tire industry,'' he said.
He noted that in some states, ``regulators just regulate,'' but on the other hand, the kind of compliance history a particular company has may play a role in how stringently regulators enforce their rules.
The argument that a stockpile of tires is needed to start a recycling business is flawed, according to Mr. Blumenthal.
``Collecting tires before you have a market is an inefficient way to run a system,'' he said. ``You need to identify the markets and customer needs first.''