Shread Ahead

With growing concern about identity theft, medical confidentiality, corporate espionage, terrorism, and other hazards linked to the unsecured transmission of information, document destruction has become an almost obligatory step in the disposal of paper produced by most businesses and organizations in the United States. And that is opening up new service opportunities for firms that collect solid waste and recyclables. The firms, however, are finding themselves in competition with those dedicated solely to document destruction.

Over the years, businesses have had “to start taking [document destruction] a lot more seriously, so the recycling companies had to start taking it a lot more seriously,” says Robert Johnson, executive director of the Phoenix-based National Association for Information Destruction (NAID), who began his 30-year career working in the recycling industry.

Membership in NAID has grown from 60 companies in 2002 to 750 today. Members are evenly divided between three groups: firms that collect paper for recycling, document storage companies and dedicated document destruction companies, Johnson says.

A range of federal legislation such as the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Financial Modernization Act (Gramm-Leach-Bliley Act) has fostered demand for document destruction. But it was the federal Fair and Accurate Credit Transaction Act of 2003 (FACTA) that had the most significant impact on both the information destruction and recycling industries, Johnson says.

Though it dealt only with the information contained on credit reports, the law was the first piece of federal legislation to specifically mandate that paper records must be shredded. Of particular concern to recyclers and waste handlers, FACTA also extended liability for destruction of those records to the companies tasked with their transport, storage and disposal, regardless of whether the generator of the documents informs the companies of the material's sensitive nature.

As a result of the spate of legislation, many straight recycling firms have found themselves partnering with shredding companies or getting into the business themselves. Recycling operations that used to buy discarded paper from generators now often charge the generators to pay for security measures and cover liability, Johnson says.

That can be an uncomfortable transition, he adds. At first, “they really don't understand that there's a whole different value proposition in offering document destruction services that has to do with compliance and taking on liability.”

As part of its certification program, NAID requires companies to adopt a range of security measures, including screening employees; carrying the proper errors and omissions insurance; and instituting access control measures like ID badges, uniforms and security cameras.

Demand for even more rigorous security measures is increasing, says Mark Johnson, co-owner of Big Shred, a mobile shredding company based near Philadelphia that has shredded documents for the U.S. Department of Defense and the National Security Administration. The company offers barcode tracking of the shredded material after it is baled. The particles produced by Big Shred's three VecoPlan trucks top out at 1.5 inches, and the company can reduce paper to “dust,” though Mark Johnson concedes the need for this grade is rare.

Like Big Shred, many of the companies tackling document shredding are small, mobile operations and often feature only one to three trucks. Because of their size, these operators are able to subsist on a series of very small jobs, economically shredding 100- or 200-pound stacks of paper.

Robert Johnson says those little jobs involve collecting paper that was not entering the recycling stream before because it was not economically worthwhile for larger recycling companies. “That's paper that before I would never think of paying to recycle, and no recycler could ever come and get,” he says. “As far as the paper mills and the recycling industry and even the environmental people were concerned, that paper was pretty much unrecoverable. It was going to go in the waste bin.”

Confetti Conundrum

Shredded paper, or “shred,” is not without its drawbacks. For recyclers, perhaps the biggest sticking point with shred is that it can be difficult to handle. Smaller shreds can be tricky to bale and transport. And shred is difficult, if not impossible, to sort. Single-stream material recovery facilities (MRFs) are ill equipped to handle shred, especially in its smaller particle sizes.

The material can clog sorting sensors and even larger particles fall through the systems' lower screens, dramatically compromising its value. For this reason, most small shred must be sent directly to mills. At the residential level, many recyclers are tackling the problem by offering to accept shredded paper in curbside bins if customers will bag it so that it does not become mixed with other recyclables.

Shredding paper also accelerates the degradation of cellulose fibers, decreasing the number of times those fibers can be recycled. Nevertheless, shred is making significant inroads in recycling. In early July, the Paper Stock Industries (PSI) chapter of the Washington-based Institute of Scrap Recycling Industries (ISRI) established a new grade of scrap paper called #36 File Stock. As defined by ISRI, this grade is primarily comprised of shredded documents and allows for 4 percent prohibited materials (metal paper clips, staples and plastic binders or report covers) and 10 percent out-throws (carbon paper, photographs and adhesive labels).

Once it is pulped, shred can be used in the usual array of recycled paper products, including tissue paper, de-inked writing paper and office pack. Craig Stuart-Paul founded Fairfax Recycling in 1996 and helped grow it into the largest residential recycling company in the Baltimore/Washington area before selling it to Waste Management in 2004. Now he consults on pulping technology for the manufacture of recycled insulation products. In that application, he is able to use highly contaminated office waste paper and frequently makes use of shred. “It sure as hell pulps well if you've got it shredded,” he says.

The Art of the Shred Event

Educating the public about the benefits of document destruction is one big challenge in establishing a successful shredding service.

A popular way to connect with the public is the “shred event,” often offered in partnership with another company. Shred events, held during a single day, invite the public to bring documents from home to be shredded for free in mobile shredding units. Concessions and entertainment help create a carnival-like atmosphere.

For larger companies, like Boston-based document storage and destruction company Iron Mountain and Toronto-based Shred-It, which hold events as often as once a month, it is a way to generate goodwill with the public while collecting a large amount of scrap with minimal effort. As many as eight trucks are used at the events, servicing between 3,000 and 5,000 people in a single day.

Mark Johnson says Big Shred hosts a series of smaller shred events in conjunction with a Philadelphia-based banking chain. Big Shred gets a fee from the bank, free advertising and easy access to scrap, while the bank uses the opportunity to promote its services with current and future customers. Both hand out materials about the importance of properly destroying sensitive documents.

Looking Ahead

In many ways, document destruction and recycling are still clearly distinct industries with different priorities. For shredding companies, the focus is squarely on security, while recyclers strive to maximize the value and utility of the resulting scrap. As state and federal regulations tighten and industry and environmental pressures change, these two interests will, by necessity, move closer together.

This confluence is demonstrated by Mark Johnson's increased focus on the purity of the scrap he collects. “What I want to do is keep up the quality of the paper,” he says. “We have the capability of shredding plastics, CDs and microfiche in a separate shredding operation. And we supply containers for that. But for general shredding, the idea is to educate everybody from the mailroom all the way up to the top CFO so that the only thing that goes into that bin is shredable paper and not contaminates.”

Similarly, the onus is on recycling companies to offer a greater degree of security to their customers. As it stands, dedicated shredding companies, especially those certified by NAID, hold a distinct advantage when it comes to reassuring customers.

“If you've got someone who's just trying to get HIPAA certification for low sensitivity stuff, then yes, recyclers are probably going to handle it just as well,” surmises Stuart-Paul. “But if you're a law firm or a hospital and you've got highly sensitive material that you want to be absolutely sure is destroyed properly, then that's the type of customer looking for the shredding and security well ahead of anything else.”

PRIVACY PRIMER

Health Insurance Portability and Accountability Act (HIPAA)

Passed in 1996, HIPAA was the first federal guarantee of privacy of health information. Though initially it regulated only electronic medical records, these protections were broadened and strengthened by the Clinton administration in 1999.

Financial Modernization Act

Better known as the Gramm-Leach-Bliley Act, this piece of legislation passed in1999 regulates the sharing of personal information by financial institutions. It consists of three parts: a financial privacy rule governing the collection and disclosure of personal financial information, a safeguards rule requiring financial institutions to design and implement procedures to protect that information, and “pretexting” provisions limiting the practice of collecting personal financial information under false pretenses.

Fair and Accurate Credit Transactions Act (FACTA)

Enacted in 2004, FACTA oversees the accuracy, fairness and security of credit reporting. It was designed to help prevent identity theft and minimize its damaging effects.