THE NEED FOR A NATIONAL MATERIALS POLICY WEDNESDAY, JULY 17, 1974 U.S. SENATE, COMMITTEE ON PUBLIC WORKS, SUBCOMMITTEE ON ENVIRONMENTAL POLLUTION, PANEL ON MATERIALS POLICY, The Panel met at 9:50 a.m., pursuant to recess, in room 4200, Dirksen Senate Office Building, Hon. Jennings Randolph (chairman of the full committee) presiding. Present: Senators Randolph and Bentsen. Senator RANDOLPH. A pleasant good morning to all of you as we begin our hearing. As we begin the sixth day of these hearings I make the suggestion that perhaps Dr. Cutler and Mr. Klaff and Dr. Lesher and Mr. Mighdoll and Mr. Merrigan, might form themselves into a panel-if that is agreeable. Whatever you desire. Some of you have a problem of departure from the city; so we will begin rather quickly, if you will come to the witness stand. Dr. Cutler, if you will identify yourself and give us a brief explanation of the organization that you represent. I will be asking this of all witnesses. STATEMENT OF HERSCHEL CUTLER, EXECUTIVE DIRECTOR, INSTITUTE OF SCRAP IRON & STEEL, INC., ACCOMPANIED BY: THOMAS H. BOGGS, JR., WASHINGTON COUNSEL TO THE INSTITUTE; JAMES ANDERTON, SIMON IRON & STEEL CORP., LANSING, MICH.; LOUIS KAPLAN, H. S. KAPLAN SCRAP IRON & METAL CO., ST. PAUL, MINN., JOEL SCHIAVONE, MICHAEL SCHIAVONE & SONS, INC., NEW HAVEN, CONN. Mr. CUTLER. My name is Herschel Cutler. I am executive director of the Institute of Scrap Iron & Steel, Inc., the National Trade Association representing more than 1,300 member companies involved in the metallic scrap processing industry. Institute members process, ship or otherwise handle approximately 90 percent to 95 percent of the iron and steel scrap purchased in the United States and handle equally impressive percentages of other metallics which are recycled in our economy. I am accompanied this morning by Mr. Thomas H. Boggs, Jr., Washington counsel to the institute and Mr. James Anderton, Simon Iron and Steel Corp., Lansing, Mich.; Mr. Louis Kaplan, H. S. Kaplan Scrap Iron & Metal Co., St. Paul, Minn. and Mr. Joel Schiavone, Michael Schiavone & Sons, Inc., New Haven, Conn. The iron and steel scrap processing industry firmly believes that viable and continuing markets for ferrous scrap do not exist. For example, the reservoir of obsolete unprocessed ferrous scrap today is far in excess of 750 million tons. This reservoir cannot be marketed at a rate which will substantially reduce this backlog. Because of this lack of markets, the scrap processing industry naturally is concerned with the implications of adding to the available processed supply of metallic scrap the millions of tons that could emanate from the systems that might be implemented under the bills being considered. To be very direct, the industry I represent certainly supports increased recycling. Recycling is our business and we have been doing it for a living for hundreds of years. We support the basic goal of recycling the desire to maximize the reuse of valuable materials with the concomitant saving of limited natural resources. We also support the many other environmental gains more fully described in my written statement with respect to increased recycling. Since we support the concept and goal of increased recycling, the thrust of our presentation this morning is to direct your attention to what the private recycling industry does, particularly the metallic scrap processing industry, and what we believe the proper role of publicly supported waste management systems to be. In essence, we ask that you permit us to continue doing what we have been doing for years and that the proper concern with solid waste not be turned into a program that seriously impairs an existing industry and replaces it with a Government subsidized program yielding less in public benefits at higher costs than the present system. Senator RANDOLPH. I hesitate to break the continuity of tation. We have had witnesses in the field of recycling municipal wastes who indicated that they can't make it work. Now, you have indicated that in the recycling of your products, unprocessed ferrous scrap Mr. CUTLER. Our product is the processed scrap iron. The unprocessed is the raw material. We process it and sell it. Senator RANDOLPH. You say it is working? Mr. CUTLER. It is functioning, but at the same time, as I have noted, there are 750 million tons or more of our raw materials that are not being recycled because of inadequate markets. Senator RANDOLPH. For a moment, let us forget that. You say that recycling does work? Mr. CUTLER. It can work and it does work to a limited extent at the moment. Senator RANDOLPH. All right, can these persons who say that the recycling of municipal wastes won't work learn from you? Mr. CUTLER. Yes, sir; we are prepared to help, and we have offered to share our expertise about how to recycle this material. We have offered our expertise to local and State and Federal governments about how to do this. In the end, however, we get back to the market. Senator RANDOLPH. Thank you. I wanted to clarify that point. It is a point that I will have to continue to raise. Thank you. Mr. CUTLER. The scrap processor provides a threefold service to his community and Nation: 1. RECLAMATION Taking the castoffs and leftovers of modern society, the scrap processor manufactures an essential raw material that can be used again and again by steel mills, foundries, and refiners. 2. CONSERVATION Scrap processors have been conservationists since the development of melting furnaces. By preparing metallic waste for reuse and recycling, the scrap processing industry helps extend the Nation's and world's finite supply of natural resources. One ton of scrap iron used conserves 111⁄2 tons of iron ore, plus onethird ton of coal or coke needed in the steel-making process. The Environmental Protection Agency has reported that scrap iron and steel used in place of iron ore in the manufacture of new steel requires 74 percent less energy, reduces air pollution, by 86 percent, water use by 40 percent, and water pollution by 76 percent. It also reduces mining wastes and virgin materials use by 97 and 90 percent, respectively. 3. BEAUTIFICATION The scrap industry, by reclaiming metallics, reduces land pollution and helps restore the natural beauty of the land. Because it has generally been our experience that the role of the scrap processor is not widely understood, I have in my statement a detailed description of the industry for the committee's benefit. The scrap industry today is highly mechanized using sophisticated, expensive equipment, and embracing every kind of activity from simple weighing to exotic applications of space age technology in metal analysis; from the alligator shear, which was the first piece of mechanical preparation equipment used in a scrap processing plant, and so named for its movable upper jaw and stationary lower jaw, to the automatic hydraulic guillotine shear to the shredder, which does just what its name implies, it rips apart, or shreds, large pieces of scrap, and even to the adaptation of cryogenics to the scrap processing industry. This encompasses dipping metals in a bath of liquid nitrogen and freezing them at extremely low temperatures-around minus 300° F. New and different means and methods to process metal scrap are constantly being considered, tested and adopted. Basic to the discussion is the matter of scrap availability and the capacity of existing and foreseeable markets to absorb process scrap. Thus, an analysis is in order of the existing supply/demand condition. The leading study in the area of scrap iron supply is one conducted by the Battelle Columbus Laboratories for the Environmental Protection Agency-identified as National Technical Information Service, U.S. Department of Commerce, "Identification of Opportunities for Increased Recycling of Ferrous Solid Waste" 1972. As shown in appendix B to my prepared statement, Battelle found that the 1969 backlog of scrap iron and steel, obsolete metal whose useful life had passed, amounted to 750 million tons. This figure included only that metal which was obsolete; it did not count the iron and steel still usable in the form of buildings, railroad tracks, and the Brooklyn Bridge. If these figures are added-since eventually they, too, will become available scrap iron-the total exceeds 2.1 billion tons. Certainly, this material backlog is major and poses the question of why, in times of extremely high steel demand, do the accumulations continue at such high levels? Moreover, the Battelle study found that only about 60 percent of the ferrous material becoming obsolete in 1969 was recycled with the obvious result that the 750-million-ton backlog is increasing and, with the ever-increasing disposal nature of the economy, the figure of available obsolete scrap iron could be approaching 1 billion tons at this time. Since a profit making industry exists to recover the metallic value from this backlog, and process both the old and current discards into a raw material for steelmaking, there must be impediments to the recycling which preclude a rate of consumption that would at least utilize the current obsolete material and eventually reduce the mammoth backlog. The fact that many firms are ready to process the material into usable form; the fact that the processing investment exists; and the fact that unused capacity in the processing industry is very high, all lead to the conclusion that something is wrong, not with supply, but rather with demand. A concomitant conclusion also follows that increasing the supply of processed scrap iron will not be addressing the problem, and the bills under consideration before the committee address primarily reclamation and, thus, the supply side of the equation, when really the question is demand. The scrap industry also encounters impediments in its tack of preparing and shipping metallics for recycling. It is particularly ironic because some of these impediments are policies of the Federal Government, even at a time when there is official recognition and awareness of the need to conserve natural resources and energy and to reduce pollution and solid waste. Rail freight rates average approximately two and one-half times higher for ferrous scrap than for iron ore. Given the iron unit value of each commodity, the quitable rate would be closer to one and one-half to one, scrap iron paying the higher rate. At this time, the Interstate Commerce Commission has not accepted the fact that serious negative environmental effects arise because of inequitable freight rates on ferrous scrap vis-a-vis iron ore, the alternative source of iron units. Another transportation problem that seriously impedes the scrap processors' ability to ship recyclable metallics is a critical shortage of gondola freight cars the type of freight car provided by the railroads for scrap service. The scrap shipper's inability to expeditiously get his product to consumers severely restricts the industry's and the Nation's ability to recycle metallics and conserve irreplaceable natural resources. Still another impediment originating from the Federal Government is tax incentives, such as the ore depletion allowance available to the producers of iron ore, with no offsetting tax benefit to encour |