Don't talk to Bob Sunderland about the evils of federal regulations -- he loves them. It seems that Sunderland and others like him in the paper shredding business are experiencing boom years as a result of the outburst of federal regulations during the 1970s.

Take the Clean Air Act and then add to it the Privacy Act of 1975 and you suddenly have more paper to destroy and fewer environmentally accepted ways to do it than either business or the government itself can handle.

And that makes Sunderland, dealer manager for Shredmaster, very happy. As a result the nation's shredder is booming with an annual growth rate between 20 and 30 percent. "We can't make them fast enough," says Sunderland.

Shredmaster, Electric Wastebasket Corp., and Datatech Business Machines Inc. are riding high on the increased fear of IRS audits, industrial espionage, and the disgruntled salesmen who makes off with company secrets because he didn't get a raise.

Financial institutions are becoming particularly heavy users of shredders, which can chomp a ton of paper an hour and cost several thousand dollars.

Banks already have helped change the mix in sales and marketing by the shredding companies. The private sector which was once a minor in the market now accounts for 80 percent of the sales.

But the industry still faces two major obstacles before shredders are as ubiquitous as wastebasket -- price and image. Chrome and fake wood are becoming commonplace as the companies aim for the individual businessman. (Electric Wastebasket is just introducing a "designer" line). However the cost is still prohibitive. Most small floor models sell for $500 while a couple of desk-top units are priced as low as $250.

And the image problem. . . well.

"People are funny about that. They don't want people to know they're useing shredders," says Willie Mooyman of Datatech.

The industry takes care not to stress that it is destroying documents. Record management security and insurance are the operative words.

The list of well-known customers doesn't exactly help make friends in the public.

The shah of Iran and General Somoza's government in Nicaragua put in big orders for shredders before they were overthrown.