Number of unlicensed auto salvage yards increased with the price of scrap

PROVIDENCE, R.I. (WPRI) – Unlicensed auto salvage yards have been on the increase in the Rhode Island because of a spike in scrap metal prices, but some legitimate salvage owners say the state has done little to crack down on them.

Auto salvage yards – commonly referred to as junkyards – are regulated by the Rhode Island Department of Business Regulation (DBR). According to an online state database there were 67 licensed salvage yards in Rhode Island as of the end of October.

Salvage yards are any facility that removes parts from a car for resale or to prepare for the recycling of a car, according to state law.

Over the last six years the price of scrap has increased, and state officials have previously acknowledged that fly-by-night unlicensed salvage operations have popped up across the state as a result.

Salvage yard owner Mike Cavanaugh – of J&D Auto Salvage in West Warwick – said he has been complaining to DBR for years about illegal operations.

“What’s going on isn’t right. It isn’t fair to the small business,” Cavanaugh said. “We pay our taxes, pay the insurance. We have rules [and] the other side of the fence doesn’t.”

Cavanaugh said he pays a $750 licensing fee to the state – which went up from $250 in 2009 – for a three-year period. On top of that he has a near-$1,000 a month insurance bill, as well as taxes.

Junk car operations – some that often advertise themselves on telephone poles – aren’t regulated, Cavanaugh said, so they are off the state’s radar screen.

“The [Department of Environmental Management] comes here, at any given time they could walk in the door right now for an inspection,” Cavanaugh said. “The fluids from the cars, where the batteries go, the mercury switches… we have to account for.”

A 2009 letter from DBR to state lawmakers acknowledged the state is “seeing a proliferation of non-licensed salvage yards, and in this regard continue our enforcement efforts to put a stop to this unlicensed activity.”

Cavanaugh said there was a brief period around that time when DBR was facing scrutiny from legislators that they cracked down on a handful of yards – records indicate they cited nine salvage yards for operating without a license that year – but then enforcement became lax.

In 2010 he wrote an email to DBR and received a response from a department attorney that said they had “limited resources to handle all investigations and matters that regulated by the department.”

“This is unfortunate but a reality we must deal with,” the email went on to say.

Records show DBR cited unlicensed yards once each year in 2010, 2011 and 2012. There were no violations until October of 2014 when DBR issued three “cease and desist” orders to what they say are unlicensed yards.

Maria D’Alessandro – the Deputy Director of Securities, Commercial Licensing, and Racing and Athletics at DBR – said there is just one inspector that not only handles salvage yards, but a list of other areas including auto body shops, real estate, upholstery, liquor operations and mobile home parks.

“I understand [Cavanaugh’s] frustration that there’s unlicensed people out there. That’s why, give us more tips,” D’Alessandro said. “We are acting on these tips.”

In 2010, legislation that would have required licensed salvage yard owners to display a special plate on their tow trucks to crack down on unlicensed operators stalled out. D’Alessandro said she hopes the legislation comes up again this year.

She also said she feels DBR has been proactive, meeting with licensed operators over the summer to hear their concerns.

“We encourage people to call us and let us know that this location appears to be an unlicensed salvage yard and I will send the inspector out,” D’Alessandro said. “It’s that simple.”

Cavanaugh said the recent activity is because he has become more vocal and because he went to a reporter for help.

He added the window is closing as scrap prices fall so he expects unlicensed operators will disappear because the money will dry up.

“The playing field is not equal,” Cavanaugh said. “Either give none of us a license, or give us all one.”

Tim White ( twhite@wpri.com ) is the Target 12 investigative reporter for WPRI 12 and Fox Providence. Follow him on Twitter: @white_tim

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