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Full of Scrap: Regulators have right idea, but the wrong target

Keywords: Tags  Full of Scrap, scrap theft, Lisa Gordon

Regulations aimed at curbing scrap metal thefts are being enacted almost weekly at state and local levels, in many cases making recyclers the scapegoat for a problem that has reached almost epidemic proportions. While it is appropriate to set parameters and guidelines for industry players to some degree, the core problem will remain as long as the wrong group is targeted.

The laws added to the books from coast to coast encompass everything from 30-day tag-and-hold rules to bans on cash payments, but it is recyclers that pay the price. Elected officials instead should target the thieves, imposing punishments that will truly act as a deterrent. In North Platte, Neb., a thief convicted of stealing more than 4 tons of metal was ordered to serve 30 days in jail; in Milwaukee, a man convicted of stealing a tractor-trailer full of metal received probation; and a Virginia worker who scrapped $30,000 of equipment was given probation, community service, a $50 fine and ordered to write an apology to his former boss. Sending a message that little will happen if you’re caught stealing scrap will only encourage more of the same.

While law enforcement has stepped up its efforts to nab thieves, the punishment simply doesn’t fit the crime. It isn’t uncommon for a scrap thief to earn $500 a week, or $26,000 a year, tax free, with the only downside risk apparently little more than a slap on the wrist.

The scope of the thefts are becoming more brazen, with crooks donning utility worker uniforms to strip miles of wiring to one instance that garnered national attention when an entire bridge went missing.

The premise that recyclers profit from buying stolen metal is erroneous; metal thefts actually come at a big cost to scrapyards as the new laws raise operating costs and lower profits. Some local lawmakers have banned cash payments, requiring checks to be mailed to each customer regardless of the size of the transaction. Scrapyards who may buy from as many as 300 customers per day are faced with hiring additional office personnel to issue the checks, not to mention the postageÑas much as $34,000 per yearÑand the cost of printed business checks and envelopes. And the cash-ban rules implemented by some jurisdictions essentially create a two-tier market for metals; scrap peddlers who don’t want to wait for a payment can still sell their materials in adjacent areas with more relaxed requirements.

The tag-and-hold rule is another effort hurting smaller cash-strapped operations that need to move material on a daily basis. If a yard buys $20,000 in material each day, a three-day tag and hold equates to keeping $60,000 of nonconvertible cash on the ground at all times. And while larger facilities flush with cash might be able to afford hold material, they simply have no place to store it.

The law enforcement efforts appear to be making examples out of reputable scrap companies through a series of undercover stings that do nothing to help stop the real problem. For example, one novice scrapyard employee in New Jersey was sent to jail for buying a single cemetery urn that was mixed in with a load of scrap. The scale worker had never seen an urn and didn’t recognize that it was a restricted item.

It would serve law enforcement better if local government officials actually spent a day at a scrapyard to see the volume of customers and material coming through the gatesÑa day in the life of a scrap operation can be a truly eye-opening experience.

Negative publicity concerning recyclers is quick to grab attention, but there’s an apparent blind eye when it comes to scrapyards turning away suspect loads and helping police solve thefts by reporting unusual sales. It’s actually a common practice for recyclers to pay their employees for time lost at work so they can go to court and testify against scrap thieves.

Until the spotlight comes off the recyclers and stiff jail terms are given to convicted metal thieves, the problem will persist.

The court system has failed repeatedly to adequately penalize criminals, but all efforts are not hopeless. In Georgia, the U.S. Justice Department successfully convicted a man for releasing Freon into the air after taking industrial-sized air conditioners to steal the copper and aluminum parts to sell for scrap metal. The convicted 26-year-old thief is facing a maximum of 65 years in prison and a $3.25-million fine for violating the federal Clean Air Act.

But if the court system isn’t up to the task of effectively dealing with offenders, perhaps the Internal Revenue Service could step into the role. It might be more effective to have recyclers issue 1099 tax forms to customers. After all, as rare as it is for a thief to actually serve time for a metals-related theft, it is even rarer for the IRS to not collect money owed.

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