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Metal theft laws burden recyclers

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When three employees of Georgia recycling companies were arrested and charged with violating the state’s new metal theft prevention laws last summer, it provided a graphic illustration of what recyclers have feared. Namely, that the proliferation of laws to discourage metal theft is making criminals out of recyclers who fail to follow sometimes burdensome requirements such as taking names, addresses, driver’s license numbers, automobile license tags, photographs and even fingerprints of dealers who offer them recyclable metals.

“They’re essentially deputizing scrap recyclers and holding scrap recyclers responsible, which seems unfair, and certainly does nothing to stop theft,” said Danielle Waterfield, assistant counsel for the Institute of Scrap Recycling Industries (ISRI) in Washington, D.C.

The Georgia arrests suggest that this concern has some foundation, because they did not appear to involve any thieves or stolen metal. Instead, they were undercover operations in which a police officer masquerading as a dealer offered to sell metal and, when the recordkeeping requirements set forth by the new law weren’t met, arrested the recycling employee.


While acknowledging that metal theft laws have a legitimate purpose, Waterfield questions their methods. “Unfortunately, the laws are not going after the thieves,” she said. “With few exceptions, they are focused on administrative restrictions and requirements on scrap metal dealers with the idea that scrap metal dealers take on a law enforcement function.”

Wisely or unwisely, lawmakers have been very active in creating laws targeting metal theft. In 2007, approximately 33 states had such laws. In 2012, 48 states have enacted legislation, mostly establishing recordkeeping and other requirements on dealers, with the goal of preventing metal theft. Today only North Dakota and Alaska lack such laws.

Everyone agrees that what’s propelling the wave of legislation is a wave of theft. As commodity prices rose around 2008, thefts mostly of copper began rising. The National Insurance Crime Bureau (NICB), which tracks insurance claims, said that the number of metal theft claims grew more than 80 percent between the beginning of 2009 and the end of 2011. In 2007, the U.S. Department of Energy estimated that metal theft cost businesses $1 billion per year, which suggests the figure may be much larger now.

Thefts occur from unoccupied buildings, construction sites, utility substations, private homes and almost anywhere there are sizable quantities of lightly guarded metal, especially copper. Air conditioning units are popular targets because of their copper content and have been stolen from businesses, apartment buildings, homes, churches and schools.

Frank Scafidi, spokesman for the NICB, said that the thefts create not only costs and inconvenience, but also safety and environmental issues. One theft involved stripping wiring from an airport’s perimeter lighting system, for instance. “It put the airport in the dark,” Scafidi said. The NICB also reports that unoccupied buildings have exploded after gas lines were stolen, thieves have darkened highways by stripping cables from utility poles, and even tornado warning sirens have been silenced.

One way lawmakers have dealt with these problems is to require recyclers to keep better records. Today, recyclers may need to do anything from checking identification to videotaping transactions. The requirements can be difficult and costly to follow. For instance, one Georgia dealer described spending $35,000 on a new video system to record metal purchases.

Waterfield said the most burdensome rules, which have been enacted by some of the most aggressive legislators, require dealers to inventory purchased metals for days or weeks in case law enforcement needs the material to investigate or prosecute a crime. Similar rules have long governed pawnshops, but Waterfield said the scrap industry can’t do it that way.

“Scrap dealers don’t have the real estate to hold the scrap material,” she said. “And it’s traded on a commodities market and prices change throughout the day. You can’t predict what the price is going to be the next day. You could lose your shirt.”

Aside from posing problems for dealers, metal theft laws can confuse metal dealers, including consumers as well as those who make living collecting scrap metal. Georgia recyclers, for instance, report many calls from consumers wondering whether they can recycle household metals without licenses or other requirements.

Another argument against new laws is that they aren’t likely accomplish much because existing law aren’t enforced and few of the new laws provide for enhanced enforcement. “If you’re going to have enforcement, then you have to have the bodies or enforcers to enforce with,” Scafidi said. However, he said law enforcement agencies are generally experiencing budget crunches that constrict rather than expand their capabilities. “They don’t have the luxury to deal with what might be a new enforcement item in their community,” Scafidi said.

Despite the questions about fairness and effectiveness, more laws are coming. Legislators in New Jersey are considering whether add license plate recording to dealers’ responsibilities and ban the use of transferable checks for purchases. California authorities are developing an online database of metal sales. Waterfield said a federal metal thefts law that came up during the last Congress may resurface as well.

ISRI would like to see a move toward reconsidering how metal thefts are prevented, with the help of taskforces in each state involving all stakeholders, including recyclers, law enforcement and property owners. The organization hasn’t drawn up a model bill, Waterfield said, because circumstances differ too much between jurisdictions. ISRI is, however, planning to conduct a study that will determine effects different types of laws have on metal thefts.

Meanwhile, she said the group will continue to try to educate recyclers about the stakes, the public about the new rules and legislators about recyclers’ view of the issue. She said, however, that restrictions are almost sure to get tighter before they get looser.

“This is not going away,” she said. “And it is vitally important that industry is engaged in the process. Otherwise these laws will be enacted without the industry’s consent and they are extremely burdensome because lawmakers don’t understand the business. If industry members don’t make the effort to educate and inform, then they’re going to be crushed under extremely burdensome regulation.”