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Copper Theft Can Cause Major Electric Outages

Copper Theft Can Cause Major Electric Outages and Impact Ratepayers:
A Hot Issue in 2011

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Jocelyn Durkay

copper wireUpdated October 2011

For more up-to-date material please see our 2013 update.

By Jacquelyn Pless

Metals are in increasingly high demand. The price of copper reached above $3.00/lb in 2006,1  leading to an increase in copper recycling, which makes it an attractive commodity for thieves.2  Metal theft is increasing as prices rise again, and many states are experiencing significantly more incidents, which are causing significant losses and damages.

Thieves risk their lives to strip wiring and piping from homes, utility properties, and electrical infrastructure, resulting in power disruptions and revenue losses. Stealing copper and other metals from utilities can cause major electric outages, and expensive repairs impact ratepayers. The Department of Energy estimates that a theft of just $100 in copper wire can cost the utility more than $5,000 to repair.3

Only a small portion of copper thieves are caught, which contributes to continued thefts. State legislative efforts aim to foster stricter penalties and more transparent record-keeping in order to deter metal theft. Since January 2010, at least 34 states considered and 18 states enacted scrap metal bills, all except two of which were enacted in 2011. These bills create offenses and increase penalties for metal theft; address scrap metal dealer licensing; and implement stricter identification and payment requirements. Some states are requiring specific payment methods, such as by check. Many states are requiring more detailed record-keeping or electronic databases containing seller identification information, and some state lawmakers even considered requiring fingerprints, or pictures of the seller to be kept on record.

 

Transaction Record-Keeping

At least 14 states considered and 9 states enacted bills to make transactions more transparent by implementing stricter record-keeping requirements.

For instance, Arkansas enacted HB 2119 to require scrap metal sellers and recyclers to produce and maintain records. Delaware policymakers enacted SB 139, which requires licensed pawnbrokers, secondhand dealers, and scrap metal processors to electronically submit records to the applicable police agency the following business day. Delaware’s SB 144 specifies the information that needs to be recorded. Iowa enacted HB 299, which requires salvage dealers to maintain complete, accurate and legible records and receipts of salvaged material purchases.

A pending bill in Illinois (HB 2825) would amend current law to require all purchases to be recorded instead of just purchases of recyclable metal worth more than $100. It also provides that dealers must retain transactions for three years instead of two. A pending bill in Massachusetts, HB 87, would regulate the record-keeping procedures of scrap metal dealers if it passes. The bill requires dealers to keep daily transaction logs, an account and description of all purchased materials, the quantity purchased, the material grade, and any unique distinguishing characteristics, along with the name and residence of the person selling the metal. In North Carolina, SB 144 (enacted) requires cash converter businesses to keep records of purchases, including pawnbrokers and precious metal dealers.

Stricter Identification Requirements

At least nine states considered and four states enacted legislation to implement stricter identification requirements. Arkansas’  HB 1841 (enacted) requires sellers to identify themselves with a driver’s license or other form of photo ID. Colorado enacted HB 1130 to delete the non-picture ID option. In Virginia, SB 854 (enacted) requires sales documentation of the address from which the property was acquired, and for seller identification to include name and birth date.

Five states considered requiring fingerprints to be recorded, or pictures of the seller and/or object being pawned. For example, a pending bill in Georgia (HB 643) would require that a secondary metals recycler maintain fingerprints of the person delivering the regulated metal property to the recycler.

A bill pending in Ohio, SB 193, would require scrap metal dealers to take and record photographs of each person selling or giving an article to the dealer.

Enhancing or Creating Penalties

State legislators can create or enhance existing penalties for those who violate scrap metal laws. At least nine states considered and five states enacted bills to increase penalties. Most notably, California enacted AB 316 which declares that anyone who steals, takes, or carries away copper materials valued over $950 is guilty of grand theft, punishable by fines and/or jail time. A pending bill (HB 2054) in Illinois would create penalties for copper theft with incremental increases based on the value of the copper stolen, whether the offense was committed in a school or place of worship, or if the copper was government property.

Payment Methods

Cash transactions are much more difficult to trace than those that use other forms of payment, such as a check. Four states considered and two—Colorado and Virginia—enacted bills that require specific forms of payment for scrap metal. Virginia passed HB 2050, requiring any person buying secondhand metal articles used by or belonging to a railroad, telephone, mining, industrial, manufacturing, or public utility company to pay by check if the cost is over $1,000. A pending bill in Illinois, HB 3822, would prohibit a scrap processor to purchase recyclable metals with cash.

Proving Ownership

Five states considered and four states enacted legislation that requires sellers to prove they are the rightful owners of the property they are selling. In Arkansas, HB 1555 (enacted) prohibits scrap metal recyclers from accepting air conditioning parts unless the parts are being sold by an individual who can provide evidence of owning the parts, or can show that the parts were removed by an individual with a current and valid HVAC license.

Similarly, in Kentucky, HB 242 (enacted) requires the purchase of metals by recyclers to have signed proof of ownership or authorization to sell metal which has been smelted, burned or melted. The bill specifically relates to catalytic converters or metal beverage containers marketed as returnable, and railroad rails. In Virginia, SB 491 (enacted) requires dealers to obtain documentation that establishes that the person lawfully posses any article being sold.

Pawnbroker Licensing

Eight states introduced and five enacted bills that address licensing requirements for pawnbrokers. Kansas enacted HB 2312 stating that no business shall purchase regulated scrap metal without registering places of business. Maryland enacted HB 203, which generally relates to state licensing laws on junk dealers and scrap sellers. Maryland also enacted HB 195, increasing application and license renewal fees. A pending bill in Massachusetts (HB 1021) would prohibit scrap metal operations without a license. Virginia enacted SB 854 to authorize the Chief of Police or Sheriff to refuse to issue a scrap metal permit if the applicant has certain convictions within the preceding three years.

Other Utility/Energy-Specific Bills

A few other bills directly address metal theft from energy distribution facilities and utilities. Iowa policymakers enacted HB 299 relating to unlawful possession of or entry upon personal and public property, creating an optional ordinance which a political subdivision experiencing copper theft may adopt.

In New Mexico, SB 240 (failed) would have made damage to or theft from an energy production facility a crime, including vandalizing, destroying or removing any property of value, including scrap metal, without authorization. A pending bill in New York (SB 3497) would prohibit the sale or purchase as scrap of certain metal items bearing markings of any government entity, utility company, or railroad unless offered for sale by an authorized employee.

Notes:

1. U.S. Department of Energy, Office of Electricity Delivery and Energy Reliability, An Updated Assessment of Copper Wire Thefts from Electric Utilities, October 2010; http://www.oe.netl.doe.gov/docs/Updated%20Assessment-Copper-Final-101210%20c.pdf

2. U.S. Department of Energy, Office of Electricity Delivery and Energy Reliability, An Assessment of Copper Wire Thefts from Electric Utilities, April 2007; http://www.oe.netl.doe.gov/docs/copper042707.pdf.

3. U.S. Department of Energy, Office of Electricity Delivery and Energy Reliability, An Assessment of Copper Wire Thefts from Electric Utilities, April 2007; http://www.oe.netl.doe.gov/docs/copper042707.pdf.

 

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