House Metal Theft Ad Hoc Study Committee

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Chairman Forese stated that the purpose of this meeting is to review serious solutions to metal theft.

Chairman Forese announced that the next meeting of the Metal Theft Ad Hoc Study Committee will be held on October 24, 2012 at 10:00 a.m. The topic of the meeting will be metal theft public safety.

PRESENTATIONS:

Theresa Clark, Sergeant, Metal Theft Squad, Phoenix Police Department, advised that historically, the City of Phoenix has had various city ordinances regulating scrap yards within the City. One of the laws passed was to require scrap yards to gather documentation from various sellers and to require that they provide that documentation to the City; however, it became apparent that sellers could cross City boundaries to sell items that were restricted within Phoenix, so efforts were made to expand those efforts through the Legislature to make the same regulations apply statewide. In 2007, information was made available in a database to electronically capture the seller’s photograph, fingerprints, name, address, vehicle information, and other identifying information to assist law enforcement in their investigations. In 2009, the crime rate of various items of metal theft increased because of the economic downtrend. The City worked with a coalition of scrap yards and their representatives, and an additional law was passed prohibiting items to be purchased by scrap yards unless it was by an industrial account; this resulted in a drastic decrease in those crimes. Since the beginning of the year, a database called "LeadsOnline" requires every scrap yard in the state to record transactions of $25. This information is electronically shared with other law enforcement agencies to help them in their investigations. The City is working with the company that maintains the database to try to determine the success of the "LeadsOnline" program in solving cases.

Jodie Martinez, Sergeant, Recover Property Unit, Mesa Police Department, testified that metal theft affects everyone, including scrap metal yards. Last year, the City of Mesa reported just under $2.9 million worth of metal theft, both ferrous and nonferrous metals. She acknowledged that there are some great recyclers who follow the rules but there are still many within the industry that are not following the law. She reported that during the last detail, 13 scrap yards were checked and over half purchased illegal items. She played an audio clip of a scrap metal employee telling a person that what the person was trying to sell was illegal and instructing that person on how to get around the law. She said the metal theft issue continues to increase in her community and across the state. The Mesa Police Department is committed to finding a solution to this problem. A variety of ideas have been proposed including sanctions and eliminating all cash transactions.

Nick Simonetta, representing Arizona Scrap Recyclers Association, advised that a core tenant of being successful in the scrap metal industry is looking at who is a legitimate scrap metal recycler. Members of the Association are stable business operations that provide jobs and economic development, and provide one of the most environmentally important as well as resource- conservation functions of any industry. He stated that these operations are well-established, often international in scope, and are heavily invested in complying with the most comprehensive regulatory framework in the nation.

Mr. Gallego queried whether there are different licenses or permits for the established shops versus the "pop-up, side-of-the-road" operators. Mr. Simonetta answered that there are statewide regulations; however, different jurisdictions have different requirements. He stated the need for more resources, education and coordination among the different law enforcement agencies to get more uniform enforcement.

Scott Horne, Vice President, Government Relations and General Counsel, Institute of Scrap Recycling Industries, Inc. (ISRI) (on behalf of Danielle Waterfield), reviewed his written comments (Attachment 1). He testified that the Institute represents the for-profit, private sector scrap recycling industry that contributes significantly to the U.S. economy. The Institute has approximately 700 member companies and operates about 7,000 facilities worldwide, of which 5,000 are in the U.S. The industry is critical to this country's economic and environmental well-being. It supplies approximately 136,000 direct jobs in the country and about 40 percent of the global raw material needs of manufacturers. He submitted that although Arizona has one of the strictest and most comprehensive scrap metal laws in the country, it has not stopped thieves from stealing metal and rogue operators from buying that metal. These strict and restrictive laws have imposed burdensome requirements on the legitimate businesses. The Institute believes that new laws are not needed in Arizona and believes that a clear message sent by the Legislature, law enforcement and the state courts, that the crime of metal theft is a serious danger to society and worthy of a zero tolerance policy, will accomplish the goal of preventing theft. Enforcing the existing laws in Arizona will help achieve this goal if the thieves are arrested, prosecuted and receive significant jail time, regardless of the materials stolen. To help combat theft, the Institute has created a website called ScrapTheftAlert.com, an automatic program where law enforcement officers throughout the country can input details of a theft. The program automatically disseminates the information to all registered scrap dealers who want the information at no cost to government or taxpayers. The program has been adopted by three states and has a proven success record; however, law enforcement does not make use of this system. Another legislative trend is statewide registration and stricter penalties for theft.

Chairman Forese asked whether other states have stricter penalties than Arizona. Mr. Horne replied that he believes Arizona has the strictest penalties; however, metal theft does not have a quick response by law enforcement and the courts do not impose penalties, so there is little prosecution. He submitted that a zero tolerance approach for rogue operators is needed as well as stronger enforcement. He related that industry supports efforts that are proven to deter metal theft. In addition, industry is working with the Council of State Governments on a nationwide statistical study that will identify legislative tools that work and that identify metal theft crimes from other property crimes. He stated that the industry remains committed to working with law enforcement and other stakeholders.

Steve Olgin, Executive Vice President, General Counsel and Secretary, Liberty Iron & Metal Holdings, LLC, submitted his testimony in writing (Attachment 2). He testified that Liberty is a Phoenix-based scrap metal recycling company with 28 locations, with operations in Ohio, Pennsylvania, New York, Arizona and Mexico. Liberty's Arizona operations are conducted through Liberty Southwest Holdings and work collaboratively with other scrap metal recyclers, the Arizona Legislature and other interested stakeholders to address issues of concern to the industry. He provided information on the ISRI's economic impact to the nation, and pointed out that the industry generated $1.7 billion in economic benefit to Arizona and $80.7 million in tax revenues for Arizona and its local governments. He acknowledged that scrap metal theft is a critically important issue to the industry, other stakeholders and the general public. Increase in metal prices over the past five years and the economic environment have contributed to an increase in metal theft, and noted that scrap metal dealers are among the most significant victims of theft. A recent ISRI survey found that 56 percent of its members have been victims and over half of those members have been victimized more than once. He concurred with Mr. Horne's testimony that Arizona has the most comprehensive regulations in the nation and does not believe additional regulation, without careful study and analysis, will address the problem. He submitted that the only way to effectively address the scrap metal theft issue is through cooperation and collaboration among the affected stakeholders, utilities, railroads, power and communication companies, law enforcement, property owners and other victims, and the community at large. He recommended adopting of a uniform statewide registration requirement, establishing a zero-tolerance practice in handling and sentencing metal thieves, enhancing law enforcement data collection and reporting, creating a centralized and dedicated law enforcement metal theft unit, securing at-risk property and encouraging the insurance industry to incentivize action through premium reductions. In addition, he said another effort to deter metal theft may be for law enforcement and the courts to temporarily confiscate the vehicle used in the theft. He mentioned that Ohio amended its scrap metal laws this year, adding a statewide registration scheme and adopted a framework similar to Arizona's requiring dealers to report daily transactions to law enforcement. In addition, Ohio now provides that if a motor vehicle was used in the commission of a metal theft crime, that motor vehicle can be impounded for a period of time, depending on the severity of the crime. He said that both industry and Liberty support these approaches to giving law enforcement other tools to reduce the frequency of these crimes.

A presentation delivered at a recent Institute of Scrap Recycling Industries, Inc. training event entitled "Identifying Suspicious Materials" is included (Attachment 3).

In response to Chairman Forese, Mr. Olgin said he would be happy to supply the link to the Ohio legislation.

Mr. Vogt asked about penalties in the different states. Mr. Olgin said he will get that information. The trend is to recognize the damage to the victim is more than just the value of the stolen metal.

Cindy Flowers, Southern Arizona National Electrical Contractors Association (NECA), related that she is representing a task force that was organized in southern Arizona to look at metal theft issues. The task force began in May 2012 and continues to grow. The task force identified three goals: legislative, enforcement and education. She distributed three flyers that the task force put together for community events it has been participating in to get community involvement (Attachments 4, 5 and 6). She mentioned the 88 Crime Program, a Pima County Attorney's program which gives citizens an opportunity to report crimes.

In answer to Chairman Forese about the program, Ms. Flowers said that the calls are anonymous and the Pima County Attorney's Office determines whether a reward is given if there is a prosecution.

Chairman Forese said he would like more information about the group. He asked whether there is an incentive for reporting a crime, whether there is advertising, who is involved and where the group is headed. Ms. Flowers explained the three goals of the group: continue to work with what needs to be done legislatively to deter crime, continue to work with law enforcement and the sharing of information, and educate the public and law enforcement on what to watch for and disseminate that information to the community. Ms. Flowers expressed hope that federal laws will be instituted so there will be nationwide deterrents.

Meyer Turken, President, Turken Industrial Properties, Inc., related that he is the head of a coalition that has about 75 member organizations consisting of commercial real estate owners, developers and contractors. He reviewed the three handouts he prepared: metal theft deterrents, kinds of metal theft and a metal theft primer (Attachments 7, 8 and 9). In addition to explaining the need for more legislation to deter theft, he spoke about deterrents he developed that are relatively inexpensive: a spray to make copper pipes or wires less marketable as well as installing fasteners and U-channels welded to air conditioning units.

Chairman Forese commented that the spray is an innovative idea. He asked about the recommendation to safeguard equipment with braces. Mr. Turken said that installing metal bars safeguards equipment and costs about $225. He offered to make the instructions available to anyone who is interested in safeguarding their equipment. Since installing these bars, he has not had any theft of units.

Michael A. Pollack, Michael A. Pollack Real Estate Investments, testified that his company has lost about $500,000 worth of stripped air conditioners. The coils are being stolen for the scrap value and rogue dealers, not legitimate dealers, are buying the stolen property. He maintained that this is a major problem that needs to be solved. Referring to the statement that all property owners need to be responsible for securing their own property, he said that it may not be cost effective if multiple properties are owned. He said his company owns about 100 properties and the following steps have been taken to deter theft: installing cameras and monitoring 24 hours a day, and welding units and coils in place. He advised that these steps have deterred but not completely stopped theft. He believes both large and small owners need to be protected because they cannot protect themselves. He maintained that this is a very serious problem. More education is needed by law enforcement personnel to recognize stolen metals as well as more media and community education relating to the prosecution of thieves. He asked for legislative assistance and help in solving the problem, and said that property owners deserve and need laws to deter this crime.

Chairman Forese thanked Mr. Turken and Mr. Pollock for their efforts in securing their property to prevent theft.

Without objection, the meeting adjourned at 11:50 a.m.

______________________________

Joanne Bell, Committee Secretary

October 18, 2012

(Original minutes, attachments and audio on file in the Chief Clerk’s Office; video archives available at http://www.azleg.gov)

Members Present

Members Absent