Metal Theft Can Threaten U.S. Energy Security: A Hot Issue in 2012

Oct. 31, 2012

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

Copper wireBy Jacquelyn Pless

As the prices of base metals such as copper continue to rise, thieves are risking their lives to strip wiring and piping from homes, electrical infrastructure and utility properties. Stealing metals from utilities can result in power disruptions and revenue losses, threatening critical infrastructure and impacting ratepayers—as demonstrated by a recent incident at the Modesto (Calif.) City-County Airport in which theft of copper wiring blacked out runway approach lights.
 
Metal theft claims increased 81 percent from Jan. 1, 2009 to Dec. 31, 2011, according to a National Insurance Crime Bureau report. The study finds a high correlation between the number of metal theft claims per month and average monthly copper prices. States are taking action to get tougher on metal theft by requiring more thorough record keeping of scrap metal purchases, increasing penalties, creating stricter licensing requirements, and enhancing seller identification requirements.
 
Of the 26 states that considered legislation to address metal theft in 2012, 20 states enacted 28 bills (see table below). Eighteen bills are still pending in seven states.
 

Record Keeping

Forty-eight states already have laws requiring scrap metal dealers to document sales, but many legislatures are aiming to foster more thorough record keeping. For example, Alabama enacted H.B. 278, which requires secondary metals recyclers to maintain additional records and requires recyclers to register with the State Criminal Justice Information Center. The legislation also provides a safe harbor for recyclers that comply with the provisions by noting that violations can only be prosecuted for knowledgeable and intentional violation.
 
Kentucky enacted H.B. 390, which establishes a registration system for secondary metal recyclers to be administered by the Public Protection Cabinet. House Bill 390 also requires payments for certain metal items to be paid only by check and requires secondary metal recyclers to keep records of restricted metal item purchases.
 
New Jersey’s A.B. 2490 (pending) would require purchasers of certain metals to maintain photographs of the items. Also pending in New Jersey, A.B. 3222 and S.B. 2162 would require scrap metal businesses to maintain records and receipts of all scrap metal purchases instead of only those exceeding 100 pounds or $50.
 

Seller Identification

Some states are proposing that sellers provide certain forms of identification. For instance, Iowa enacted H.B. 2399 which prohibits scrap metal sales to a dealer without identification and without other identifying information such as a permanent address. In Maine, H.B. 1260 (enacted) requires photocopies of photo identification to be recorded along with the ID number and license plate of the vehicle delivering scrap metal. Ohio enacted S.B. 193 to require scrap metal dealers to maintain photographs of the sellers with sales records.
 

Proof of Ownership

Many states requires to prove rightful ownership of the metal they are selling. Georgia, for example, enacted H.B. 872 to require coil and copper wire purchases be from a qualified person, defining sellers as the rightful owners of the property or the individual authorized by the rightful owner. Similarly, Ohio’s pending H.B. 390 would prohibit scrap metal dealers from purchasing or receiving copper plumbing pipe from anyone besides a plumber and from purchasing or receiving an air conditioning unit from anyone other than a heating, ventilating and air conditioning contractor.
 
Mississippi enacted H.B. 1094, which makes it unlawful for scrap metal dealers to purchase any manhole cover or similar type of utility access cover, or any metal belonging to a political subdivision, unless it is purchased from that subdivision, utility or manufacturer.
 

Licensing

Licensing for secondhand metal dealers varies across the states, and some legislatures are considering new requirements. For example, Louisiana enacted H.B. 1187 to require an occupational license for secondhand dealers. New Mexico’s H.B. 118 and S.B. 67 (enacted) provide that secondhand metal dealers must register with the Regulation and Licensing Department, and they must register and use ScrapTheftAlert.com, a metal theft alert system.
 
Pending legislation in Rhode Island (S.B. 2805 and H.B. 8055) would create the Copper Theft Prevention Act, requiring secondary metals recyclers to obtain a license. It would also create penalties for failure to comply with license requirements.
 
West Virginia enacted S.B. 528, which requires scrap metal dealers to obtain business licenses. It also indicates that dealers must register sales with the Division of Labor, provide a notice of recycling, and register with the Secretary of State.
 

Penalties

Some state legislative efforts would impose more stringent penalties in an attempt to deter metal theft. California’s A.B. 1971 (enacted) increases the maximum fine for dealers collecting metals and secondhand materials for receiving stolen property. Similarly, Florida’s H.B. 1323 (enacted) increases criminal penalties for certain violations related to secondary metals recycling, including for third and subsequent criminal violations.
 
Please see the table below for a comprehensive list of 2012 state legislation addressing metal theft.

2012 Metal Theft Legislation as of Oct. 22, 2012

Alabama | Arizona | California | Florida | Georgia | Iowa | Illinois | Kansas | Kentucky | Louisiana | Massachusetts | Maine | Michigan | Mississippi | Nebraska | New Jersey | New Mexico | New York | North Carolina | Ohio | Pennsylvania | Rhode Island | South Carolina | Tennessee | Vermont | West Virginia

 

State

Bill Number

Status

Summary

Alabama

H.B. 278

Enacted

Requires secondary metals recyclers to maintain additional records of ferrous and nonferrous metal purchases and requires recyclers to register with the State Criminal Justice Information Center. Provides criminal penalties for possession of stolen metal property and for damaging or destroying metal property. Sets purchasing restrictions on recyclers. Provides a safe harbor for secondary metals recyclers who comply with the record-keeping provisions. Violations by secondary metals recyclers can only be prosecuted for knowing and intentional violation.

Arizona H.B. 2396

Enacted

Imposes more stringent penalties for metal theft.

California

A.B. 1971

Enacted

Increases the maximum fine for dealers collecting metals and secondhand materials for receiving stolen property.

  S.B. 1045 & S.B. 1387 Enacted

Prohibits junk dealers or recyclers from possessing certain items and materials that were owned by public entities or private utilities without written certification.

  A.B. 1508 Enacted

Amends existing law related to recordkeeping of purchases and sales and the payment for nonferrous material by junk dealers and recyclers. Would exempt the redemption of nonferrous materials in connection with the redemption of beverage containers from the payment by cash or check requirement, but would exclude the purchase of copper materials from this exemption.

Florida H.B. 1323 Enacted

Increases criminal penalties for certain violations related to secondary metals recycling, including for third and subsequent criminal violations. Prohibits removing (or assisting to remove) copper and other nonferrous metals from electrical substation sites without authorization of a utility.

  H.B. 885

Enacted

Requires secondary metals recyclers to maintain and transmit daily electronic records of transactions to law enforcement. Modifies the form of acceptable payment for such purchases. Increases penalties and provides that a person who unlawfully removes copper from an electrical substation commits a felony of the first degree.

Georgia H.B. 872 Enacted

Requires coil and copper wire purchases be from a qualified person. Requires secondary metals recyclers to maintain digital photographs of the purchased item and that purchases must be made by check, electronic funds transfer or a voucher for regulated metal property.   Relates to a statewide electronic database and penalties.

Iowa H.B. 2399 Enacted

Prohibits scrap metal sales to a dealer without providing identification and other identifying information such as permanent address during the initial sale. Exempts certain small transactions and transactions from commercial operations that produce scrap metal. Requires payment by check or electronic transfer for transactions greater than $50. Preempts local rules and regulations.

Illinois H.B. 2912 Pending

Relates to furnishing proof of ownership to a scrap processor and record-keeping.

  H.B. 4448 Pending

Would create the offense of copper theft and provide for incremental increases in penalties from a Class 4 felony to a Class 1 felony.

  H.B. 4452 Pending

Would create an offense for possessing or transporting stolen ferrous or nonferrous metal. Would provide penalties and require scrap processors to not pay for certain metal with cash.

  H.B. 3825 Enacted

Made changes to the Recyclable Metal Purchase Registration Law related to record-keeping. Prohibited the sale or purchase of materials that are clearly marked as belonging to a business or someone other than the seller, property associated with use by governments and utilities, and more. Required reporting of possibly stolen metals.

  H.B. 4013 Enacted

Amended the Recyclable Metal Purchase Registration Law providing that recyclable metal dealers must maintain forms of identifying information provided by the Department of State Policy for a specified amount of time. Required a valid state identification or motor vehicle license number and description of the metal purchase.

Kansas H.B. 2470 Enacted

Deleted references to scrap metal or wire that has sheathing removed, making ownership identification impossible, from the law related to unlawful sales of certain scrap metal. Removed provisions that mentioned that the scrap metal dealer registration renewable fee is in addition to another related fee found in existing law.

Kentucky H.B. 390 Enacted

Established a registration system for secondary metal recyclers to be administered by the Public Protection Cabinet. Requires background checks for each secondary metal recycler, limits payment for certain metal items to check-only, requires secondary metal recyclers to keep records of restricted metal item purchases and be able to receive notifications of stolen metals, and provides criminal penalties for stealing metal.

Louisiana H.B. 48 Enacted

Creates a crime for metal theft and provides for the calculation of the value of the metal taken for determining the appropriate penalty.

  H.B. 1187 Enacted

Prohibits cash payment for copper purchases and requires an occupational license for secondhand dealers. Requires photographic records upon request of law enforcement and requires a permit for transportation of recycled materials. This applies to pawn shops and secondhand dealers, but not scrap recycling operations.

  H.B. 1188 Enacted

Provides for the Scrap Metal Recycler Law. Prohibits cash payments for copper with a 5-day delay of payment to be mailed to the address on the identification only. Payment for all other metals may be made in cash up to $300. Purchases over $300 must be paid by check at the time of purchase. Requires purchase records to be kept for three years and made available for inspection by law enforcement. Prohibits scrap metal purchases not owned by the seller or by those under 18. Requires use of a database and daily reports.

Massachusetts S.B. 2076 Pending

Would provide for a secondary metals registry and a Secondary Metals Registry Trust Fund.

Maine H.B. 1260 Enacted

Removes a limitation so that the law applies to all scrap metal transactions and requires sellers to be paid by a check. Requires photocopies of photo identification to be recorded along with the distinct identifying number of that ID and the license plate of the vehicle delivering scrap metal.

Michigan H.B. 5490 & H.B. 5491 Pending

Would extend the nonferrous metal regulatory act to include other scrap metal and scrap metal dealers.

  H.B. 5492 Pending

Would expand stealing nonferrous metals to other scrap metals.

  H.B. 5493 Pending

Would establish state licensing of scrap metal dealers.

  H.B. 5494 Pending

Would modify the requirement for local business licenses for scrap metal dealers.

Mississippi H.B. 1094 Enacted

Adds new items to the definition of metal property and provides that it is unlawful for scrap metal dealers to purchase any manhole cover or similar type of utility access covers, or any metal belonging to a political subdivision, unless it is purchased from that subdivision, utility or manufacturer. Sets a specified time period requirement for reporting to law enforcement.

Nebraska L. 1049 Enacted

Provide that payment for stamped or engraved manhole covers and sewer grates shall be authorized entities, made out by draft or check, and sent to the official address of the political subdivision or third party seller. Further, this bill required that payment for copper and catalytic converters shall be by check and if the total for copper is more than $100, the check shall be sent by U.S. mail, postage prepaid.

New Jersey A.B. 336 7 S.B. 1773 Pending

Would authorize the Office of Weights and Measures in the Department of Law and Public Safety to regulate scrap metal businesses. Would require businesses to make records available to law enforcement upon request, and would require businesses to keep records of all scrap metal purchases rather than just purchases that are in excess of 100 pounds or $50 (current law). Would require businesses to maintain photographic records of all purchased or received scrap metal for at least five years and to retain scrap metal in the form in which it was received for at least 5 business days (a minimum of 120 hours).

  A.B. 2940 Pending

Would require purchasers of certain metals to maintain photographs of the items.

  A.B. 3222 & S.B. 2162 Pending

Would require scrap metal businesses to maintain records for at least five years of all purchases and receipts of scrap metal instead of only those for purchases exceeding 100 pounds or $50. Would require scrap metal businesses to make payments only by non-transferable check to be mailed to an address provided by the seller.

  S.B. 1951 & A.B. 796 Pending

Would require a person selling or delivering a cemetery grave, monument, or historical marker as scrap metal to provide the scrap metal dealer, at the time of the transfer or sale, with a written affidavit made under penalty of perjury from the owner or manager of the cemetery grave, monument or historical building, object, or place from which the marker was taken. Would require the operator of the scrap metal business to maintain the affidavit for five years.

New Mexico H.B. 118 & S.B. 67 Enacted

Requires secondhand metal dealers to register with the Regulation and Licensing Dept. and to register and use ScrapTheftAlert.com, a metal theft alert system. Reduces waiting period for resale of regulated material and reduces the time required for records to be preserved. Requires uploads to an electronic database and additional documentation for certain transactions.

New York S.B. 6971 Pending

Would prohibit the sale or purchase of certain items as scrap, such as street signs, utility items, and railroad and government entity items. Would preempt local laws.

  S.B. 7321 Pending

Would require scrap processors to record the license plate numbers of the vehicles driven by scrap material sellers.

North Carolina H.B. 199 Enacted

Requires permitting of nonferrous metals purchasers and makes it a crime to cut, mutilate, deface or otherwise injure the property of another to obtain nonferrous metal. Requires purchasers to maintain records of transactions.

Ohio H.B. 390 Pending

Would prohibit scrap metal dealers from purchasing or receiving copper plumbing pipe from anyone besides a plumber and purchasing or receiving an air conditioning unit from anyone other than a heating, ventilating and air conditioning contractor. This bill would not proceed following enactment of S.B. 193.

  S.B. 193 Enacted

Requires scrap metal dealers to keep a photograph of each person selling an article with the sales record.

Pennsylvania H.B. 2032 Pending

Would define secondary metal theft and define secondary metal as wire or cable commonly used by communications and electric utilities, copper, aluminum, or other metal that is valuable for recycling or reuse as raw material.

  H.B. 2358 Pending Would amend the Scrap Material Prevention Act to apply identification requirements for all purchases rather than just when the value of the purchase exceeds $100.
Rhode Island S.B. 2805 & H.B. 8055 Pending

Would create the Copper Theft Prevention Act, requiring secondary metals recyclers to obtain a license in order to purchase certain types of ferrous and non-ferrous metals. Would create reporting requirements and penalties for failure to comply with license requirements.

South Carolina H.B. 1031 Enacted

Clarifies licensing and permitting requirements for fixed and non-fixed locations. Requires payment for copper and catalytic converters to be made by check only. Makes it illegal to transport nonferrous metals in a vehicle on state roads without proper permits. Prohibits the purchase of manhole covers and drainage grates except from a government entity. Exempts transactions between a secondary metals recycler and another secondary metals recycler.

Tennessee S.B. 2825 & H.B. 3371 Enacted

Decreases the amount of time that a metal dealer must hold items after the purchase date from 30 days to 20 days.

  S.B. 2895 & H.B. 3246 Enacted

Provides that any person attempting to sell metal to a scrap metal dealer or a dealer purchasing scrap metal in violation of existing law is subject to misdemeanor penalties. Notes that it is an offense to engage in such business without being registered and it is an offense to purchase scrap metal that is known to be stolen.

Vermont H.B. 699 Enacted

Expands governing requirements for scrap metal sales to include salvage yards. Requires scrap metal processors to file a uniform report with local law enforcement and to segregate items purchased from sellers who are not authorized scrap sellers.

West Virginia H.B. 4345 Enacted

Requires written authorization for sale of company railroad scrap metal and sets a minimum weight for railroad scrap metal sold. Requires purchasers to attempt to verify ownership and provides that the purchaser claiming ownership of the metal in controversy may rebut the presumption.

  S.B. 528 Enacted

Requires scrap metal dealers to obtain business licenses. Requires dealers to register sales with the Division of Labor, to provide a notice of recycling and to register with the Secretary of State. Requires documentation of catalytic converter transitions and prohibits possession of stolen scrap metal.