The 10News I-Team learned state regulators have known about the yard for nine years, but it still sits in the middle of National City.At the National City recycling yard, the I-Team found bumpers, seats, windows and other materials reduced to hunks of scrap.The money is in what is pulled out of the recyclable metals, but what is left over is often toxic."This is what they call fluff. You will find lead, zinc and copper," said Gale Filter, executive director of San Diego Coastkeeper.In addition to those hazardous materials, PCBs and used oils can also be found in the recycling yard on 1700 Cleveland Avenue.Filter, a former environmental prosecutor, told 10News the yard is near Kimball Elementary School. What worries Filter is the same thing that worries substitute history teacher Ted Godshalk -- the effect the materials have on children at Kimball Elementary and on nearby Paradise Creek Educational Park."Pacific Steel with their mounds of fluff seeing their soil blow up into the air into the community, across the school yard and deposit on cars and houses, and ultimately the creek itself," said Godshalk.Sky10 footage taken above Pacific Steel showed the absence of its car shredder. Left behind are hills of fluff, mounds of debris covered by blue tarps. On one mound, the cover flaps in the offshore wind.When the I-Team followed the wind's direction off the bay, what worried Godshalk and concerns Filter is evident. Within one-tenth to one-half a mile of Pacific Steel's yard is the heavily traveled Interstate 5. There are also homes, businesses, a church and Kimball Elementary."The harmful materials in the piles contain toxic metals [that] when airborne can be breathed in by children," said Jill Witkowski, who runs San Diego Coastkeeper's legal clinic.What many are wondering is what happened to the state agency that is supposed to protect the environment. The I-Team found that agency knew Pacific Steel was a problem nine years ago.It was in 2002 that the California Department of Toxic Substances Control accused Pacific Steel of "imminent and substantial endangerment."The state wanted the piles of debris covered, and that's when Pacific Steel tossed blue tarps over the fluff.The state then ordered the "hazardous waste" removed, but it is still there."There is absolutely no evidence any of this stuff was moved off the site, and here it sits in the same piles they were talking about in 2002," Filter said.The I-Team walked the property's perimeter and found water running off the property."We think harmful pollutants are coming off this property and harming our environment," said Witkowski.The owner of Pacific Steel can't be found at their National City offices. The I-Team learned the owner is not even in the country.The I-Team learned the parent company of Pacific Steel resides 20 miles south of the U.S.-Mexico border in Mexicali.According to documents signed by their chief financial officer, the company, which makes steel, is thinking about finally moving all of the National City waste to Mexicali, where the hazardous materials will be "directly injected" into the furnaces.In letters to the state of California, the Mexican company rejects claims of wrongdoing and has asked why state inspectors "have been on the site numerous times but never indicated a concern."The I-Team wanted to ask the Department of Toxic Substances Control why nine years after they called the National City yard a hazard it appears to still be one.State officials said no one can talk about the situation because "an active enforcement investigation" prevents it.What the department is investigating remains a mystery.In 2005, the state said "Pacific Steel, Inc had corrected all the violations."However, that is not what the I-Team found."What happened was there was a breakdown in the enforcement system, in the regulatory system; the residents got the short end of the stick," said Filter.An attorney for Pacific Steel said the company has been processing soil for years inside of a building on the property, but admitted tons of toxic material is still in the yard.The I-Team learned as of Nov. 14, the company started moving some of that material out of National City, but it was just one truckload.