Act No. 99

Public Acts of 2014

Approved by the Governor

April 10, 2014

Filed with the Secretary of State

April 10, 2014

EFFECTIVE DATE: July 1, 2014

STATE OF MICHIGAN

97TH LEGISLATURE

REGULAR SESSION OF 2014

Introduced by Reps. Muxlow, Tlaib, Pagel, Victory, Lauwers, Zemke, Faris, Brown, Callton, Price, Zorn, MacGregor, Hobbs, Switalski, Talabi, Kandrevas and Roberts

ENROLLED HOUSE BILL No. 4593

AN ACT to amend 2008 PA 429, entitled “An act to regulate the purchase and sale of certain nonferrous metals; to provide for disclosures by certain persons regarding certain transactions; to require the creation of records for certain purposes and for the use of certain databases by certain persons; and to provide for penalties and remedies,” by amending the title and sections 1, 3, 5, 7, 11, 13, 15, and 17 (MCL 445.421, 445.423, 445.425, 445.427, 445.431, 445.433, 445.435, and 445.437) and by adding sections 6 and 10.

The People of the State of Michigan enact:

TITLE

An act to regulate the purchase and sale of scrap metal and other items that contain ferrous or nonferrous metal to scrap metal dealers; to require sellers to provide and scrap metal dealers to obtain certain information at the time of a purchase transaction; to require that scrap metal dealers implement and maintain records of their purchase transactions and to make those records available for law enforcement purposes; to provide for the powers and duties of certain state and local governmental officers and entities; and to provide for penalties and remedies.

Sec. 1. This act shall be known and may be cited as the “scrap metal regulatory act”.

Sec. 3. As used in this act:

(a) “Ferrous metal” means a metal that contains significant quantities of iron or steel.

(b) “First purchaser” means the first buyer of a manufactured item that contains ferrous or nonferrous metal in a retail or business-to-business transaction. A person that purchases scrap metal, or other property described in section 10, in violation of this act, or an automotive recycler, pawnshop, scrap metal recycler, or scrap processor is not considered a first purchaser.

(c) “Governmental unit” means a subdivision, agency, department, county, parish, municipality, or other unit of the government of the United States, this state, another state, or a foreign country.

(d) “Industrial or commercial customer” means a person that operates from a fixed location and is a seller of scrap metal to a scrap metal dealer under a written agreement that provides for regular or periodic sale, delivery, purchase, or receiving of scrap metal.

(e) “Nonferrous metal” means a metal that does not contain significant quantities of ferrous metal but contains copper, brass, platinum group-based metals, aluminum, bronze, lead, zinc, nickel, or alloys of those metals.

(f) “Person” means an individual, partnership, corporation, limited liability company, joint venture, trust, association, or other legal entity.

(g) “Public fixture” means an item that contains ferrous or nonferrous metal and is owned or under the exclusive control of a governmental unit. The term includes, but is not limited to, a street light pole or fixture, road or bridge guardrail, traffic sign, traffic light signal, or historical marker.

(h) “Purchase transaction” means a purchase of scrap metal, or the purchase of property described in section 10 if the knowing purchase or offer to purchase that property is not prohibited by that section, by a scrap metal dealer. The term does not include any of the following:

(i) The purchase of 1 or more used or secondhand, distressed, or salvage vehicles or vehicle parts by a used or secondhand vehicle dealer or used or secondhand vehicle parts dealer that is licensed as a dealer under section 248 of the Michigan vehicle code, 1949 PA 300, MCL 257.248, and is acting within the scope of that dealer’s license.

(ii) The purchase of 1 or more used or secondhand, distressed, or salvage vehicles, vehicle parts, or vehicle scrap by a vehicle scrap metal processor, vehicle salvage pool operator, or foreign salvage vehicle dealer that is licensed as a dealer under section 248 of the Michigan vehicle code, 1949 PA 300, MCL 257.248, and is acting within the scope of that dealer’s license.

(iii) The purchase of 1 or more used or secondhand, distressed, or salvage vehicles, vehicle parts, or vehicle scrap by an automotive recycler that is licensed as a dealer under section 248 of the Michigan vehicle code, 1949 PA 300, MCL 257.248, if the transaction is authorized under section 217c of the Michigan vehicle code, 1949 PA 300, MCL 257.217c; section 18 of the motor vehicle service and repair act, 1974 PA 300, MCL 257.1318; or section 2 of 1986 PA 119, MCL 257.1352.

(iv) The purchase of scrap metal by a mill, foundry, die caster, or other manufacturing facility that purchases scrap metal from an industrial or commercial customer for its own use in the production of metal articles or materials and does not in the ordinary course of its business purchase scrap metal for resale.

(v) The purchase of scrap metal from a governmental unit.

(i) “Record” means a paper, electronic, or other generally accepted method of storing information in a retrievable form.

(j) “Scale operator” means the employee of a scrap metal dealer who operates or attends a scale that is used to weigh the scrap metal in a purchase transaction.

(k) “Scrap metal” means ferrous or nonferrous metal, or items that contain ferrous or nonferrous metal, that are sold or offered for sale for the value of the ferrous or nonferrous metal they contain rather than their original intended use; ferrous or nonferrous metal removed from or obtained by cutting, demolishing, or disassembling a building, structure, or manufactured item; or other metal that cannot be used for its original intended purpose but can be processed for reuse in a mill, foundry, die caster, or other manufacturing facility.

(l) “Scrap metal dealer” means a person or governmental unit that buys scrap metal and is not a first purchaser. The term includes, but is not limited to, a person, whether or not licensed under state law or local ordinance, that operates a business as a scrap metal recycler, scrap processor, secondhand and junk dealer, or other person that purchases any amount of scrap metal on a regular, sporadic, or 1-time basis.

(m) “Scrap metal recycler” means a person that purchases ferrous or nonferrous metal that is intended for recycling or reuse, whether regarded as a scrap processor, core buyer, or other similar business operation.

(n) “Scrap processor” means that term as defined in section 3 of 1917 PA 350, MCL 445.403.

(o) “Seller” means a person that either regularly, sporadically, or on a 1-time basis receives consideration from any other person from the purchase by a scrap metal dealer of scrap metal offered by that seller.

Sec. 5. (1) All of the following apply to a scrap metal dealer:

(a) Unless section 6 applies, and except as provided in subdivision (b), a scrap metal dealer shall only pay a seller using 1 of the following methods of payment in a purchase transaction and shall not pay the seller in cash or using any other method of payment:

(i) A check or money order. A scrap metal dealer shall make and retain a photograph or digital or electronic image of the delivery of the check or money order to the seller or individual acting on behalf of the seller in the purchase transaction that includes the face of that seller or individual.

(ii) An electronic payment card or encrypted receipt that may only be converted to cash in an automated teller machine that is located on the scrap metal dealer’s premises; is used for the sole purpose of dispensing cash in connection with purchase transactions; and provides a digital or electronic image of the dispensing of the cash to the seller or individual acting on behalf of the seller in the purchase transaction that includes the face of that seller or individual. For purposes of this section and section 6, payment using an electronic payment card or encrypted receipt described in this subparagraph is not considered a payment in cash.

(b) All of the following apply in a purchase transaction with an industrial or commercial customer:

(i) The scrap metal dealer may pay using any of the following methods of payment, as agreed to by the scrap metal dealer and the industrial or commercial customer, and except as provided in subdivision (c), shall not pay the seller in cash or using any other method of payment:

(A) By check, money order, or payment card or receipt described in subdivision (a)(ii). If a payment described in this sub-subparagraph is mailed to the industrial or commercial customer, the scrap metal dealer may mail that payment to the street address or post office box of the industrial or commercial customer or to another person or post office box as directed by the industrial or commercial customer.

(B) By bank wire transfer or other electronic delivery to an account of the industrial or commercial customer.

(ii) The payment requirements described in section 6(1) do not apply to the purchase of any of the items described in section 6(1)(a) to (c) by an industrial or commercial customer.

(c) A scrap metal dealer may accept barter or a trade or exchange of scrap metal or other property in a purchase transaction as all or part of the consideration for that transaction.

(d) A scrap metal dealer in a purchase transaction shall examine the identification presented under subsection (2)(a) by the seller or individual acting on behalf of the seller, and if the identification presented displays the date of birth of the individual, confirm that the individual is at least 16 years old based on that date of birth.

(e) A scrap metal dealer shall ensure that it trains each scale operator, purchaser, and supervisor employed by the dealer concerning the legal requirements of this act and the responsibilities of the scrap metal dealer under this act.

(2) In a purchase transaction, all of the following apply to a seller, if the seller is an individual, or to an individual acting as an agent or representative of a seller:

(a) He or she must present his or her operator’s or chauffeur’s license, military identification card, Michigan identification card, passport, or other government-issued identification containing his or her photograph to the scrap metal dealer and allow the scrap metal dealer to make a photocopy or electronic copy of the identification.

(b) He or she must allow the scrap metal dealer to take his or her thumbprint, to be used only for identification purposes by the scrap metal dealer and for investigation purposes by a law enforcement agency.

(c) He or she must provide the scrap metal dealer with a signed statement that certifies that he or she is the owner of, or is otherwise authorized to sell, the scrap metal to the scrap metal dealer and is at least 16 years old.

(d) An individual who has been convicted of a crime involving the theft, the conversion, or the sale of scrap metal may not enter into a purchase transaction. As part of a purchase transaction, the individual shall certify that he or she has not been convicted of a crime described in this subdivision.

Sec. 6. (1) In a purchase transaction of any of the following items, the only methods of payment a scrap metal dealer may use to pay a seller are a direct deposit or electronic transfer to the seller’s account at a financial institution; subject to subsection (5), payment with a check or money order described in section 5(1)(a)(i); or, subject to subsection (5), payment with an electronic payment card or encrypted receipt described in section 5(1)(a)(ii):

(a) Catalytic converters, unless the seller is an automotive recycler as defined in section 2a of the Michigan vehicle code, 1949 PA 300, MCL 257.2a; a manufacturer or wholesaler of catalytic converters; or a muffler shop, tire store, or other retail business that sells converters separately or as part of an exhaust system.

(b) Air conditioners, air conditioner evaporator coils or condensers, or parts of air conditioner evaporator coils and condensers.

(c) Copper wire, including copper wire that is burned in whole or in part to remove the insulation, copper pipe, or copper fittings.

(2) Representatives of a group of companies in the scrap metal industry, at their expense, may in consultation with the department of state police develop or contract for the development of, and if selected by the department of state police under subsection (3) may implement, operate, and maintain, an electronic database that meets all of the following:

(a) Is available to all scrap metal dealers in this state.

(b) Is web-based.

(c) Has the capability to conduct statewide real-time searches by item description or seller.

(d) Is accessible to law enforcement agencies through a password supported, internet-based platform.

(e) Allows a scrap metal dealer to report all of the following information concerning the purchase of 1 or more of the items described in subsection (1)(a) to (c) by 12 noon of the next business day after the purchase transaction of the item or items:

(i) Name and address of the scrap metal dealer and seller.

(ii) Date and time of the purchase transaction.

(iii) A description of the item or items purchased.

(iv) The weight or volume of the item or items purchased.

(f) Allows a law enforcement agency to flag the name of any seller that appears in the database and who is an individual who has been convicted of a crime involving the theft, conversion, or sale of scrap metal; and, if a law enforcement agency has flagged the name of that convicted seller, to notify the law enforcement agency if he or she is the seller in subsequent purchase transactions and provide the agency all of the information about that convicted seller and his or her purchase transactions that scrap metal dealers have reported to the database.

(3) If 1 or more electronic databases are developed under subsection (2), the department of state police shall determine, and shall notify each group of companies in the scrap metal industry that developed a database or contracted for its development, whether the features of the electronic database meet the requirements of subsection (2)(a) to (f); and shall select a single shared electronic database that meets the requirements of subsection (2)(a) to (f) for implementation and operation in this state for purposes of subsection (4). A person that objects to a determination or selection by the department of state police under this subsection may file a petition with the department that describes the basis of the person’s objection. If a person files a petition under this subsection, the department of state police shall provide that person an opportunity for an administrative hearing. The hearing shall be conducted as a contested case under the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.

(4) If a single shared electronic database selected by the department of state police is implemented under subsection (3), beginning not later than 30 days after the database is implemented and in operation, as determined by the department of state police, and after the department of state police publishes notice that the database is implemented and in operation, a scrap metal dealer shall do all of the following:

(a) Register or subscribe to the database and pay a reasonable fee for that registration or subscription.

(b) By 12 noon of the next business day after a purchase transaction of 1 or more items described in subsection (1)(a) to (c) occurs, electronically report the purchase of the item or items to the database. The report described in this subdivision shall include all of the information described in subsection (2)(e). A scrap metal dealer is not required to report the consideration paid for the item or items or other pricing information for inclusion in the database.

(5) If the purchase price in a purchase transaction described in subsection (1) is $25.00 or more, or if the purchase price for all of a seller’s purchase transactions in a business day is $25.00 or more, the scrap metal dealer must pay the seller by mailing 1 of the following items to the seller at the address shown on the identification card presented under section 5(2)(a), and shall not deliver that payment in person or using any other form of delivery:

(a) A check or money order described in section 5(1)(a)(i).

(b) An electronic payment card or encrypted receipt described in section 5(1)(a)(ii).

(c) A nontransferable receipt that the seller may redeem at the scrap dealer’s premises for 1 of the items described in subdivision (a) or (b).

Sec. 7. (1) Subject to subsection (4), and except as otherwise provided in this section, a scrap metal dealer shall prepare and maintain a separate, accurate, and legible record of each purchase transaction. The dealer shall maintain the records described in this section for at least 1 year; the dealer shall keep the records in a location that is readily accessible to a local, state, or federal law enforcement agency, or to railroad police in investigation of stolen railroad property, for inspection during normal business hours; and the dealer shall make the records, or copies of those records, available on request to any local, state, or federal law enforcement agency.

(2) The record of a purchase transaction described in subsection (1) must include all of the following:

(a) The name and address of the seller and the name and address of the individual who is delivering the scrap metal if he or she is not the seller. If an individual is a seller or representative of a seller in more than 1 purchase transaction, the scrap metal dealer may retain a copy of the individual’s information or document described in this subdivision in a separate file and use that information in future purchase transactions.

(b) The name, address, and identifying number from the identification presented under section 5(2)(a). A legible scan or photocopy of the identification meets the requirement of this subdivision. If an individual is a seller or representative of a seller in more than 1 purchase transaction, the scrap metal dealer may retain a copy of the information or document described in this subdivision in a separate file and use that information in future purchase transactions.

(c) If the scrap metal is delivered by licensed vehicle, the license plate number of the vehicle.

(d) The date and time of the purchase transaction.

(e) A description of the predominant types of scrap metal purchased, made in accordance with the custom of the trade.

(f) The weight, quantity, or volume of the scrap metal purchased, described and calculated in accordance with the custom of the trade; the name of the scale operator who weighs and inspects that property; and the name of the employee of the scrap metal dealer who purchased or authorized the purchase of the scrap metal on the dealer’s behalf if the purchaser was not the scale operator.

(g) A photograph or digital, electronic, or video image of the scrap metal purchased. A photograph or digital, electronic, or video image that meets 1 of the following is sufficient for purposes of this subdivision even if each item of scrap metal is not shown in the image:

(i) If the scrap metal and the vehicle in which it is delivered are weighed, an overhead photograph or image of the vehicle and the scrap metal in the vehicle on the scale.

(ii) If only the scrap metal is weighed, a photograph or image of the scrap metal on the scale.

(h) The consideration paid and the method of payment.

(i) The signed statement described in section 5(2)(c).

(j) A legible thumbprint described in section 5(2)(b).

(k) A digital photograph of the seller, or the individual who is delivering the scrap metal if he or she is not the seller, that includes his or her face and is taken at the time the scrap metal is delivered to the scrap metal dealer.

(3) A scrap metal dealer is not required to obtain the information described in subsection (2) for a purchase transaction with an industrial or commercial customer that meets all of the following:

(a) Payment is made directly to the industrial or commercial customer.

(b) The personal and business identifying information of the industrial or commercial customer is on file with the scrap metal dealer and conforms to a written description of the type of scrap metal customarily purchased by the scrap metal dealer from that customer.

(c) The information on file with the scrap metal dealer under subdivision (b) is periodically reviewed at least every 2 years and validated as current or updated by the scrap metal dealer.

(4) A scrap metal dealer may utilize an electronic record-keeping system for purposes of subsection (1) if that system allows for immediate access to each seller’s purchase transaction activities, documents, and images, including, but not limited to, electronic copies of the records described in subsection (2) or (3), the payment information contained in the card or receipt, and the image described in section 5(1)(a)(i) or (ii).

Sec. 10. A person shall not knowingly sell or attempt to sell to a scrap metal dealer, and a scrap metal dealer shall not knowingly purchase or offer to purchase, any of the following types of property:

(a) Public fixtures. This subdivision does not apply if the seller is a governmental unit or the seller has written authorization from the governmental unit that owned the property to sell the property.

(b) Metal articles or materials that are clearly marked as property belonging to a person other than the seller. This subdivision does not apply if the seller has authorization from that person to sell the property.

(c) A commemorative, decorative, or other cemetery-related or apparently ceremonial article. This subdivision does not apply if the seller is the owner of the article; if the seller is authorized by the owner of the article to sell the article; or if the seller of a cemetery-related article is the cemetery in which the article was located.

(d) Metal articles or materials removed from property owned by a railroad company or from a railroad right-of-way. This subdivision does not apply if the seller is the owner of the metal articles or materials; is the manufacturer of the metal articles or materials; is a contractor engaged in the business of repairing railroad equipment; or is a person that has written authorization from that owner, manufacturer, or contractor to sell those metal articles or materials.

(e) A silver alloy telecommunication battery with a threaded insert terminal connection. This subdivision does not apply to a battery used in auto or mobile equipment. This subdivision does not apply if the seller is a provider of telecommunication service or if the seller has written authorization from the provider of telecommunication service that owned the property to sell the property.

Sec. 11. (1) A scrap metal dealer shall register with or subscribe to, maintain that registration or subscription with, and use in the conduct of its business, an internet-based database available to scrap metal dealers, law enforcement agencies, and the general public that lists and tracks, at a minimum, thefts of scrap metal. The database may be reasonably limited in terms of time and geographical area.

(2) The existing database established by the institute of scrap recycling industries, inc., referred to as the ISRI theft alert system, is considered an appropriate internet-based database. A scrap metal dealer may register with or subscribe to any other database that provides substantially the same services as a database described in subsection (1).

(3) A scrap metal dealer shall ensure that it makes available to each of its employees engaged in purchasing or weighing scrap metal sold or offered for sale to the scrap metal dealer each theft alert, or similar notice that a scrap metal theft has occurred, that the scrap metal dealer receives from the database service described in this section, and that those employees review any recent alerts or similar notices that they have not previously reviewed on a daily basis.

Sec. 13. (1) If a person violates section 7, or section 9, and knows or should have known that the person has violated that section, the person is guilty of a misdemeanor punishable by a fine of not more than $500.00 or imprisonment for not more than 93 days, or both. If a violation of section 7 is the result of a malfunction of an electronic record-keeping system described in section 7(4), it is an affirmative defense in an action against the scrap metal dealer that utilizes that system that the dealer diligently pursued repair of the electronic record-keeping system after the malfunction occurred, and implemented and maintained a manual record-keeping system for purchase transactions that occurred while the electronic record-keeping system was malfunctioning.

(2) In connection with a purchase transaction, each of the following is guilty of a felony punishable by imprisonment for not more than 5 years or a fine of not more than $5,000.00, or both, for a first offense and is guilty of a felony punishable by imprisonment for not more than 5 years or a fine of not more than $10,000.00, or both, for a second or subsequent offense:

(a) A scrap metal dealer that purchases scrap metal or an item of property described in section 10 and knew or should have known that it was stolen.

(b) A person that sells scrap metal or an item of property described in section 10 to a scrap metal dealer and knew or should have known that it was stolen.

(3) By July 1, 2016, the department of state police shall provide a written report to the governor, the speaker of the house of representatives, and the senate majority leader concerning that department’s assessment of the effectiveness of this act in reducing scrap metal theft and assisting in the investigation and prosecution of scrap metal theft. The report shall also include any recommendations the department of state police may have for further legislative action.

Sec. 15. (1) Except as provided in subsection (2), a person that violates this act knowing or having reason to know that the person is violating this act is responsible for a state civil infraction and may be ordered to pay a civil fine of not more than $5,000.00.

(2) A scrap metal dealer that knowingly violates section 6(4) is responsible for a state civil infraction and shall pay a civil fine of $500.00 for the first violation, $1,000.00 for a second violation, and $5,000.00 for a third or subsequent violation.

Sec. 17. (1) A person may bring a private cause of action against a seller or a scrap metal dealer, in a court of competent jurisdiction, for monetary damages suffered from violation of this act.

(2) If the court in an action described in subsection (1) finds that the violation included the purchase or sale of stolen property and finds that the purchaser in an action against the purchaser, or the seller in an action against the seller, knew or should have known that the property was stolen, the court shall award treble damages for the value of the property stolen. As used in this subsection, “value of the property stolen” means the greatest of the following:

(a) The replacement cost of the stolen property.

(b) The cost of repairing the damage caused by the larceny of the property.

(c) The total of subdivisions (a) and (b).

(3) The court may award costs and reasonable attorney fees in an action brought under subsection (1).

Enacting section 1. This amendatory act takes effect July 1, 2014.

Enacting section 2. This amendatory act does not take effect unless House Bill No. 4595 of the 97th Legislature is enacted into law.

This act is ordered to take immediate effect.

Clerk of the House of Representatives

Secretary of the Senate

Approved

Governor