November 22, 2005

Trashed Cash: Coveted Currency Meets an Unceremonious End

By Alison Fromme
Special to the Neighborhood Newswire

You likely get crisp new $20 bills when you withdraw money from an ATM. As you spend your dough, wrinkled smaller denominations take their place. But—assuming there’s money in your account—ATMs continue to spit out new bills, whereas tattered cash seem to vanish. Where do threadbare bills go?

The New Testament says “Thy money will perish with thee,” but in fact paper currency departs much sooner. A new dollar bill in your wallet has only an 18-month lifespan. If you’re lucky enough to have larger denominations, like Ben Franklins, they’ll circulate much longer; about five years.

The Bureau of Engraving and Printing, the Federal agency that produces paper currency, prints about 37 million notes each day. Ninety-five percent of this cash replaces bills that are too tattered to remain in circulation.

The ragged currency is retired by Federal Reserve Banks, including San Francisco’s branch. Local banks throughout northern and central California and northern Nevada send used cash to the San Francisco Fed, where it’s sorted by high speed machines that process 40 notes per second. Bills that are deemed “unfit” because they’re soiled, torn, or worn out are automatically shredded. The bank processes up to seven million notes daily, shredding 20 to 25 percent of the total.

In 2004, the nation’s Federal Reserve Banks destroyed a total of $90.9 billion in paper currency. That’s a lot of loot—about 17 million pounds annually nationwide. Federal Reserve banks across the country take different approaches to dealing with the previously valuable waste. In San Francisco, as in New York and Chicago, the shreds are compressed into briquettes and hauled to landfills. According to the Chicago Fed, their uncompressed cash would fill a basketball court to the height of the basket.

But not all tattered currency ends up embedded in the earth. The US Treasury Department permits recycling, and some Federal Reserve Banks sell shreds to businesses, which use the material in products like roofing shingles and insulation. Other businesses transform used cash into stationery and novelty items, such as pens and jewelry, for souvenirs. According to the New York Fed, alternative disposal reduces trash hauling fees and is part of a larger Federal Reserve recycling program.

The Denver Fed takes recycling to the extreme, by shipping 20 cubic yards of compressed shredded currency to a commercial composting company, A1 Organics. The shreds are just a small part of the 8 million cubic yards of waste that the 30-year old company has diverted from landfills and transformed into mulches and soils. The recycling program began in 1996 when analysts at the Denver Fed reviewed disposal practices and found a better alternative. According to Diane Cook, Denver Fed Manager of Public Relations, recycling is part of the public mindset in Colorado. “We’re just delighted that the money doesn’t go into a landfill,” Cook said.

Over the past two decades there have been various media reports that the San Francisco Fed was investigating recycling options, including selling mulch made from shredded currency or transforming the waste into usable building materials. When asked about past and potential future recycling efforts, the Media Relations Manager of the San Francisco Fed (which overseas the LA branch) said “I’m afraid we simply don’t have the resources to do time consuming historical research to be able to confirm [this information].” She added that “any company wishing to use shreds has to get approval from the Treasury,” and the bank has “very little to say” about money disposal and recycling.

Last year, the San Francisco Fed requested proposals from waste disposal companies to handle their shredded currency. Golden Gate Disposal and Recycling, a subsidiary of NorCal, initially considered pursuing the job. “We elected not to bid on the contract because it was based on a disposal-only model and it seemed that the Federal Reserve Bank was not open to recycling,” said Maurice Quillen, General Manager. “We’re more of a recycling company than a waste company.” Given the opportunity to pursue recycling options, Quillen said that he’d investigate repulping the money for recycled paper, composting the shreds, or using the material to produce methane energy.

When Golden Gate Disposal and Recycling initially approached the San Francisco Fed, they requested documentation that shredded currency isn’t hazardous. Shredded money was once considered dangerous because lead from the ink could potentially leach out under certain landfill conditions. However, a 1994 toxicity test performed by Earth Technology Corporation demonstrated that lead wasn’t a threat because new currency no longer contains lead ink, and old currency printed with lead ink wasn’t a big percentage of the shreds.

The fate of shredded money has changed over the years. Decades ago, some Federal Reserve Banks incinerated money. But due to public health and environmental concerns, the San Francisco Fed stopped that practice in 1977 and the Chicago Fed quit in 1981.

Under California State law, producers of waste must determine if it’s hazardous. When asked if the 1994 toxicity test was the most recent available, the San Francisco Fed declined to answer, stating only that this reporter’s questions may be based on “old information that may or may not be accurate.”

Before potentially hazardous materials can be deposited into landfills, they must be profiled for toxicity, according to Richard Makdisi, founder of Stellar Environmental Solutions and formerly technical director at Earth Technology Corporation. Shredded currencies’ potential toxicity depends in part on the landfill environment it ends up in, said Makdisi, who worked on the 1994 shredded currency toxicity assessment. Theoretically, the ink used to print currency is fixed to the paper, but under acidic landfill conditions, the ink could leach out. Leaching ink is only a problem if it releases toxic materials.

Lead-based ink hasn’t been used to print currency since 1983, but the ink currently in use contains cadmium, mercury, and arsenic, according to Jerry Nelson, Information Officer at the Chicago Fed. “The Bureau of Engraving and Printing has been trying—in the five dollar denomination—more ecologically compatible soy-based ink compositions for decades without yet having achieved the useful lifespan necessary to comprise cost-effective elimination of the durable heavy-metal traditional ink,” Nelson said. This creates a paradox: more toxic ink increases the lifespan of bills and keeps them out of landfills longer. But, toxic ink also makes the eventual disposal of currency trickier.
In 2003 and 2004, the Bureau of Engraving and Printing introduced colorful new $20 and $50 bills, with similar plans for $10 and $100 bills. Peach and blue shades now complement the standard black and green ink. “Color-shifting” ink has been added for enhanced security.

According to an environmental assessment prepared by Potomac Hudson Engineering, Inc, these new inks contain volatile organic compounds (VOCs) that can be highly carcinogenic. It’s unclear whether or not these, or other compounds, would leach out of paper currency or volatilize under landfill conditions.

In 2005, more than 600,000 tons of waste from San Francisco ended up in landfills—the lowest amount since 1982. And the landfill waste generated by shredding currency is just a small fraction of the area’s unrecycled garbage stream. “Still, it’s not a matter of how much or how little,” said Makdisi, of Stellar Environmental Solutions. “In my mind, where you have an entity that can control waste, it should do so.”