[Congressional Record Volume 155, Number 28 (Wednesday, February 11, 2009)]
[Senate]
[Pages S2159-S2160]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. KLOBUCHAR (for herself and Mr. Hatch):
  S. 418. A bill to require secondary metal recycling agents to keep 
records of their transactions in order to deter individuals and 
enterprises engaged in the theft and interstate sale of stolen 
secondary metal, and for other purposes; to the Committee on Commerce, 
Science, and Transportation.
  Mr. HATCH. Mr. President, I rise today to introduce with my friend 
from Minnesota, Senator Amy Klobuchar, the Secondary Metal Theft 
Prevention Act of 2009.
  Once again, I am partnering with Senator Klobuchar to combat metal 
theft in our country. Last Congress we introduced the Copper Theft 
Prevention Act of 2008, S. 3666, which focused solely on copper theft. 
Since then, after a series of meetings with industry stakeholders, we 
concluded that the bill would be more effective if it were expanded to 
address secondary metal thefts, including those involving copper.
  There is no doubt that we are living in difficult economic times. As 
we witness the unfortunate job losses spreading across the country, I 
am mindful of those who are struggling to make ends meet. Unfortunately 
some, motivated by quick profits and a variety of vulnerable targets, 
are engaging in the fast-growing crime of metal theft.
  On the surface, stealing precious metal, like copper, appears to be a 
relatively small theft. However, metal thieves compromise U.S. critical 
infrastructure by targeting electrical sub-stations, cellular towers, 
telephone land lines, railroads, water wells, construction sites, and 
vacant homes--all for fast cash.
  Some argue that there is no need for this legislation because metal 
is being traded at low prices. I disagree. As we know, the market 
shifts and prices will eventually increase as demand surges. Moreover, 
law enforcement officials confirm that thieves are only stealing more 
metal to offset current metal prices.
  On September 15, 2008, the Federal Bureau of Investigation released 
an unclassified intelligence assessment entitled, Copper Thefts 
Threaten U.S. Critical Infrastructure.
  This assessment states that ``thieves are typically individuals or 
organized groups who operate independently or in loose association with 
each other and commit thefts in conjunction with fencing activities and 
the sale of contraband. Organized groups of drug addicts, gang members, 
and metal thieves are conducting large scale thefts from electric 
utilities, warehouses, foreclosed and vacant properties, and oil well 
sites for tens of thousands of dollars in illicit proceeds per month.''
  I am mindful of the hardworking scrap metal dealers in my home state. 
Recycling secondary metal not only generates revenue but is 
environmentally friendly and saves energy, it takes a lot less energy 
to melt down secondary metal and recycle it than it does to produce new 
metal.
  Take for example the City Creek project in downtown Salt Lake City, 
Utah. It is my understanding that when the construction contractors 
tore down the downtown malls to make way for the 20-acre retail-office-
residential complex, more than half of what came down was reused either 
in the City Creek development or somewhere else. Steel frames were sold 
as scrap metal, which was recycled and used for other purposes.
  Utah metal recyclers deal with hundreds of people and thousands of 
pounds of metal on a regular basis. I imagine in some cases it is 
difficult to tell if the scrap metal is stolen, especially if a 
customer has, what appears to be, a legitimate story. I know that many 
of Utah's scrap metal dealers are not turning a blind eye to this 
problem. In fact, several metal recycling companies have partnered with 
local law enforcement and use a theft alert system to warn and watch 
for reported stolen items. I commend them for their efforts and hope 
that police, prosecutors, and members of the metal recycling industry 
continue to communicate and work together to combat metal theft along 
the Wasatch Front.
  Yet on the Federal level, we need a baseline from which all states 
must operate. This is important because many states in the Union do not 
have metal theft laws and lure thieves across State lines. It should be 
noted that the proposed bill does not preempt states from enacting 
their own laws.
  I believe the proposed legislation will help tighten-up how secondary 
metal transactions are performed across the country and, in return, 
send a clear message that metal theft will be met with serious 
consequences. The bill calls for enforcement by the Federal Trade 
Commission and gives state attorneys general the ability to bring a 
civil action to enforce the provisions of the legislation.
  This bill also contains a ``Do Not Buy'' provision wherein specific 
items listed cannot be purchased by scrap metal dealers unless sellers 
establish, by written documentation, that they are authorized to sell 
the secondary metal in question.
  Additionally, the bill requires scrap metal dealers to keep records 
of secondary metal purchases, including the name and address of the 
seller, the date of the transaction, the quantity and description of 
the secondary metal being purchased, an identifying number from a 
driver's license or other government-issued identification and, where 
possible, the make, model and tag number of the vehicle used to deliver 
the metal to the dealer.
  Secondary metal dealers must maintain these records for a minimum of 
two years from the date of the transaction and make them available to 
law enforcement agencies for use in tracking down and prosecuting 
secondary metal theft crimes.
  There is real concern about how easy it is to access cash in scrap 
metal transactions. For this reason, the bill requires that checks will 
be the method of payment for transactions over $75. While that may 
sound low for some, it is important to recognize that it takes a lot of 
secondary metal to obtain even $75 in return.
  To discourage multiple cash transactions from one seller, the bill 
limits metal dealers from paying cash to the same seller within a 48-
hour period. The intent of this provision is not to be a hardship on 
the honest seller. The purpose is to dissuade some sellers from going 
around the bill's check payment requirement by making multiple cash 
transactions. Again, we must remove the incentives for thieves to 
access fast cash.
  I am aware that some scrap metal dealers do not want to issue checks 
for fear of check fraud or additional transactional costs. Senator 
Klobuchar and I have given careful consideration to these concerns and 
have consulted law enforcement officials to determine how best to 
proceed. We believe that checks are a valuable benefit to law 
enforcement because they provide trace evidence by creating a paper 
trail, a signature, and possibly even a fingerprint.
  Let me conclude my remarks by saying that considering our country's 
serious economic situation, I believe we need to ensure that our 
critical infrastructure is not viewed as a treasure trove for desperate 
metal thieves.
  I am committed to moving this bill forward and hope that my 
colleagues will join me in perfecting this bill as it moves through the 
legislative process.
  Mr. President, I ask unanimous consent that the support material be 
printed in the Record.
  There being no objection, the material was ordered to be placed in 
the Record, as follows:

           Copper Thefts Threaten US Critical Infrastructure


                               Scope Note

       The assessment highlights copper theft and its impact on US 
     critical infrastructure. Copper thefts are occurring 
     throughout the United States and are perpetrated by 
     individuals and organized groups motivated by

[[Page S2160]]

     quick profits and a variety of vulnerable targets. 
     Information for the assessment was developed through May 2008 
     from the following sources: FBI and Open sources.


                    Source and Confidence Statement

       Reporting relative to the impact of copper thefts on US 
     critical infrastructure was derived from the FBI and open 
     sources. The FBI has high confidence that the FBI source 
     reporting used to prepare the assessment is reliable. The FBI 
     also has high confidence in the reliability of information 
     derived from open-source reporting.


                             Key Judgments

       Copper thieves are threatening US critical infrastructure 
     by targeting electrical substations, cellular towers, 
     telephone land lines, railroads, water wells, construction 
     sites, and vacant homes for lucrative profits. The theft of 
     copper from these targets disrupts the flow of electricity, 
     telecommunications, transportation, water supply, heating, 
     and security and emergency services and presents a risk to 
     both public safety and national security.
       Copper thieves are typically individuals or organized 
     groups who operate independently or in loose association with 
     each other and commit thefts in conjunction with fencing 
     activities and the sale of contraband. Organized groups of 
     drug addicts, gang members, and metal thieves are conducting 
     large scale thefts from electric utilities. warehouses, 
     foreclosed or vacant properties, and oil well sites for tens 
     of thousands of dollars in illicit proceeds per month.
       The demand for copper from developing nations such as China 
     and India is creating a robust international copper trade. 
     Copper thieves are exploiting this demand and the resulting 
     price surge by stealing and selling the metal for high 
     profits to recyclers across the United States. As the global 
     supply of copper continues to tighten, the market for illicit 
     copper will likely increase.


           Copper Thefts Threaten US Critical Infrastructure

       Copper thieves are threatening US critical infrastructure 
     by targeting electrical substations, cellular towers, 
     telephone land lines, railroads, water wells, construction 
     sites, and vacant homes for lucrative profits. Copper thefts 
     from these targets have increased since 2006; and they are 
     currently disrupting the flow of electricity, 
     telecommunications, transportation, water supply, heating, 
     and security and emergency services, and present a risk to 
     both public safety and national security.
       According to open-source reporting, on 4 April 2008, five 
     tornado warning sirens in the Jackson, Mississippi, area did 
     not warn residents of an approaching tornado because copper 
     thieves had stripped the sirens of copper wiring, thus 
     rendering them inoperable.
       According to open-source reporting, on 20 March 2008, 
     nearly 4,000 residents in Polk County, Florida, were left 
     without power after copper wire was stripped from an active 
     transformer at a Tampa Electric Company (TECO) power 
     facility. Monetary losses to TECO were approximately 
     $500,000.
       According to agricultural industry reporting, as of March 
     2007, farmers in Pinal County, Arizona, were experiencing a 
     copper theft epidemic as perpetrators stripped copper from 
     their water irrigation wells and pumps resulting in the loss 
     of crops and high replacement costs. Pinal County's 
     infrastructure loss due to copper theft was $10 million.


               Criminal Groups Involved in Copper Thefts

       Copper thieves are typically individuals or organized 
     groups who operate independently or in loose association with 
     each other and commit thefts in conjunction with fencing 
     activities and the sale of contraband. Organized groups of 
     drug addicts, gang members, and metal thieves are conducting 
     large scale thefts from electric utilities, warehouses, 
     foreclosed and vacant properties, and oil well sites for tens 
     of thousands of dollars in illicit proceeds per month.
       According to open sources, as recently as April 2008, 
     highly organized theft rings specializing in copper theft 
     from houses and warehouses were operating in Minneapolis, 
     Minnesota. These rings or gangs hit several houses per day, 
     yielding more than $20,000 in profits per month. The targets 
     were most often foreclosed homes.
       Open-source reporting from March 2008 indicates that an 
     organized copper theft ring used the Cuyahoga County 
     Sheriff's foreclosure lists to pinpoint targets in Cleveland, 
     Ohio. Perpetrators had 200 pounds of stolen copper in their 
     van, road maps, and tools. Three additional perpetrators were 
     found to be using the US Department of Housing and Urban 
     Development's list of mortgage and bank foreclosures to 
     target residences in Cleveland, South Euclid, Cleveland 
     Heights, and other cities in Ohio.


                        Global Demand Increasing

       China, India, and other developing nations are driving the 
     demand for raw materials such as copper and creating a robust 
     international trade. Copper thieves are receiving cash from 
     recyclers who often fill orders for commercial scrap dealers. 
     Recycled copper flows from these dealers to smelters, mills, 
     foundries, ingot makers, powder plants, and other industries 
     to be re-used in the United States or for supplying the 
     international raw materials demand. As the global supply of 
     copper continues to tighten, the market for illicit copper 
     will likely increase.
       Open-source reporting from February 2007 indicates that the 
     global copper supply tightened due to a landslide at the 
     Freeport-McMoran Copper and Gold mine in Grasberg, Indonesia 
     in October 2003 and a worker's strike at the El Abra copper 
     mine in Clama, Chile in November 2004. These events 
     contributed to copper production shortfalls and led to an 
     increase in recycling, which in turn created a market for 
     copper.
       Open-source reporting from October 2006 indicated that the 
     demand for copper from China increased substantially due to 
     the construction of facilities for the 2008 Olympics.
       Open-source reporting indicated that from January 2001 to 
     March 2008, the price of copper increased more than 500 
     percent. This has prompted unscrupulous and sometimes 
     unwitting independent and commercial scrap metal dealers to 
     pay record prices for copper, regardless of its origin, 
     making the material a more attractive target for theft.


                                Outlook

       The global demand for copper, combined with the economic 
     and home foreclosure crisis, is creating numerous 
     opportunities for copper-theft perpetrators to exploit 
     copper-rich targets. Organized copper theft rings may 
     increasingly target vacant or foreclosed homes as they are a 
     lucrative source of unattended copper inventory. Current 
     economic conditions, such as the rising cost of gasoline, 
     food, and consumer goods, the declining housing market, the 
     ease through which copper is exchanged for cash, and the lack 
     of a significant deterrent effect, make it likely that copper 
     thefts will remain a lucrative financial resource for 
     criminals.
       Industry officials have taken some countermeasures to 
     address the copper theft problem. These include the 
     installment of physical and technological security measures, 
     increased collaboration among the various industry sectors, 
     and the development of law enforcement partnerships. Many 
     states are also taking countermeasures by enacting or 
     enhancing legislation regulating the scrap industry--to 
     include increased recordkeeping and penalties for copper 
     theft and noncompliant scrap dealers However, there are 
     limited resources available to enforce these laws, and a very 
     small percentage of perpetrators are arrested and convicted. 
     Additionally, as copper thefts are typically addressed as 
     misdemeanors, those individuals convicted pay relatively low 
     fines and serve short prison terms

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