Senate File 2287 - Introduced SENATE FILE 2287 BY COMMITTEE ON COMMERCE (SUCCESSOR TO SSB 3088) A BILL FOR An Act relating to scrap metal transactions, including by 1 regulating the sale of catalytic converters to scrap metal 2 dealers and providing for recordkeeping requirements, 3 providing penalties, and making penalties applicable. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5065SV (3) 89 th/ns

S.F. 2287 Section 1. Section 714.1, subsection 4, Code 2022, is 1 amended to read as follows: 2 4. Exercises control over stolen property, knowing such 3 property to have been stolen, or having reasonable cause to 4 believe that such property has been stolen, unless the person’s 5 purpose is to promptly restore it to the owner or to deliver it 6 to an appropriate public officer. The fact that the person is 7 found in possession of property which has been stolen from two 8 or more persons on separate occasions, or that the person is a 9 dealer or other person familiar with the value of such property 10 and has acquired it for a consideration which is far below its 11 reasonable value, or that the person is a scrap metal dealer 12 and has violated section 714.27, subsection 2, paragraph “b” , or 13 section 714.27, subsection 3, paragraph “c” , in a transaction 14 involving the property, shall be evidence from which the court 15 or jury may infer that the person knew or believed that the 16 property had been stolen. 17 Sec. 2. Section 714.27, Code 2022, is amended to read as 18 follows: 19 714.27 Scrap metal transactions and reporting —— penalties. 20 1. For purposes of this section , and unless the context 21 otherwise requires , the following definitions shall apply : 22 a. “Business transaction” means an exchange of consideration 23 for scrap metal, including a bulk sale of scrap metal, 24 between a scrap metal dealer and another scrap metal dealer, 25 an authorized vehicle recycler licensed under chapter 321H 26 operating a business at a fixed location, a motor vehicle 27 dealer licensed under chapter 322 operating a business at a 28 fixed location, a towable recreational vehicle dealer licensed 29 under chapter 322C operating a business at a fixed location, 30 or a mechanic or employee of an automotive repair facility 31 operating a business at a fixed location. 32 b. “Scrap metal” means any metal suitable for reprocessing. 33 “Scrap metal” does not include a motor vehicle, but does include 34 a catalytic converter detached from a motor vehicle. 35 -1- LSB 5065SV (3) 89 th/ns 1/ 8

S.F. 2287 b. c. “Scrap metal dealer” means any person operating a 1 business at a fixed or mobile location that is engaged in one 2 of the following activities: 3 (1) Buying, selling, procuring, collecting, gathering, 4 soliciting, or dealing in scrap metal. 5 (2) Operating, managing, or maintaining a scrap metal yard. 6 c. d. “Scrap metal yard” means any yard, plot, space, 7 enclosure, building, mobile facility, or other place where 8 scrap metal is collected, gathered together, stored, or kept 9 for shipment, sale, or transfer. 10 2. a. A person shall not sell scrap metal to a scrap metal 11 dealer in this state unless the person provides to the scrap 12 metal dealer, at or before the time of sale, the person’s name, 13 address, and place of business, if any, and presents to the 14 scrap metal dealer a valid driver’s license or nonoperator’s 15 identification card, military identification card, passport, or 16 other government-issued photo identification. 17 b. A scrap metal dealer shall not make an initial a purchase 18 of scrap metal from a person without demanding and receiving 19 the information required by this subsection and subsection 3, 20 as applicable . However, after an initial transaction involving 21 scrap metal other than a catalytic converter , a scrap metal 22 dealer may only require the person’s name and place of business 23 waive the requirement that the person present an address and 24 photo identification for subsequent purchases not involving a 25 catalytic converter , provided the scrap metal dealer retains 26 all information received during the initial transaction. 27 3. For transactions involving the sale of a catalytic 28 converter, all of the following apply in addition to the 29 requirements of subsection 2: 30 a. For a business transaction, the person selling the 31 catalytic converter shall provide to the scrap metal dealer a 32 copy of the person’s valid sales tax permit issued pursuant to 33 chapter 423. 34 b. For transactions other than business transactions, 35 -2- LSB 5065SV (3) 89 th/ns 2/ 8

S.F. 2287 the person selling the catalytic converter shall provide 1 an original receipt or invoice for a replacement catalytic 2 converter purchased fewer than thirty days before the person 3 sells the replaced catalytic converter to the scrap metal 4 dealer, or a junking certificate for a vehicle that was issued 5 fewer than thirty days before the person sells the catalytic 6 converter to the scrap metal dealer. 7 (1) The receipt, invoice, or junking certificate presented 8 by the person to the scrap metal dealer must be unmarked by a 9 scrap metal dealer pursuant to paragraph “c” . 10 (2) This paragraph does not apply to a transaction if 11 the person presents proof, unmarked by a scrap metal dealer 12 pursuant to paragraph “c” , to the scrap metal dealer that the 13 sale is approved by the sheriff of the county in which the 14 vehicle from which the catalytic converter was removed is 15 registered. 16 c. The scrap metal dealer shall mark the receipt, invoice, 17 junking certificate, or proof of sheriff approval presented 18 under paragraph “b” to indicate the catalytic converter has 19 been sold. The scrap metal dealer shall take a photograph of 20 the catalytic converter that clearly identifies the item as a 21 catalytic converter. 22 3. 4. A scrap metal dealer shall keep a confidential 23 register or log of each transaction, including a record copy 24 of the information required by subsection subsections 2 and 3 . 25 All records and information kept pursuant to this subsection 26 shall be retained for at least two years, and shall be provided 27 to a law enforcement agency or other officer or employee 28 designated by a county or city to enforce this section upon 29 request during normal business hours when the law enforcement 30 agency or designated officer or employee of a county or city 31 has reasonable grounds to request such information as part 32 of an investigation. A law enforcement agency or designated 33 officer or employee of a county or city shall preserve the 34 confidentiality of the information provided under this 35 -3- LSB 5065SV (3) 89 th/ns 3/ 8

S.F. 2287 subsection and shall not disclose it to a third party, except 1 as may be necessary in enforcement of this section or the 2 prosecution of a criminal violation. 3 4. 5. All scrap metal transactions, other than those 4 transactions exempt pursuant to subsection 5 6 , in which the 5 total sale price exceeds fifty dollars shall require payment by 6 check or electronic funds transfer. 7 5. 6. The following scrap metal transactions Transactions 8 in which the total sale price is fifty dollars or less, except 9 transactions for the sale of a catalytic converter, are exempt 10 from the requirements of this section : . 11 a. Transactions in which the total sale price is fifty 12 dollars or less, except transactions for the sale of catalytic 13 converters. 14 b. Transactions for the sale of catalytic converters in 15 which the total sale price is seventy-five dollars or less. 16 c. Transactions in which a scrap metal dealer is selling 17 scrap metal. 18 d. Transactions in which the person selling the scrap 19 metal is known to the scrap metal dealer purchasing the scrap 20 metal to be the officer, employee, or agent of an established 21 commercial or industrial business, operating from a fixed 22 location, that may reasonably be expected to produce scrap 23 metal during the operation of the business. 24 6. 7. a. The provisions of this section shall take 25 precedence over and supersede any local ordinance adopted by a 26 political subdivision that regulates scrap metal transactions. 27 b. Notwithstanding paragraph “a” of this subsection , a city 28 ordinance regarding scrap metal or other scrap material in 29 effect prior to January 1, 2012, in a city with a population 30 exceeding one hundred fifty thousand as shown by the 2010 31 federal decennial census may continue to be enforced by the 32 city which adopted it. 33 7. 8. A person who violates subsection 2 , paragraph “a” , 34 or , including a person who conducts a scrap metal transaction 35 -4- LSB 5065SV (3) 89 th/ns 4/ 8

S.F. 2287 by or on behalf of a scrap metal dealer , who violates this 1 section shall be subject to a civil penalty as follows: 2 a. An initial violation shall subject the person to a civil 3 penalty in the amount of one hundred thousand dollars. 4 b. A second violation within two years shall subject 5 the person to a civil penalty in the amount of five hundred 6 thousand dollars. 7 c. A third or subsequent violation within two years shall 8 subject the person to a civil penalty in the amount of one ten 9 thousand dollars. 10 9. Proof that a scrap metal dealer, or a person acting 11 on behalf of a scrap metal dealer, conducted a scrap metal 12 transaction in violation of subsection 2, paragraph “b” , or 13 subsection 3, paragraph “c” , shall be evidence from which the 14 court or jury may infer any of the following: 15 a. The person aided and abetted the underlying theft of the 16 catalytic converter involved in the transaction from a vehicle, 17 under section 703.1. 18 b. The person had knowledge that a public offense has been 19 committed and that a certain person committed it, for purposes 20 of proving the scrap metal dealer or person acting on behalf of 21 a scrap metal dealer acted as an accessory after the fact under 22 section 703.3. 23 Sec. 3. Section 805.8C, subsection 10, Code 2022, is amended 24 to read as follows: 25 10. Scrap metal transaction violations. For violations of 26 section 714.27 , the scheduled fine is one hundred thousand 27 dollars for a first violation, five hundred thousand dollars 28 for a second violation within two years, and one ten thousand 29 dollars for a third or subsequent violation within two years. 30 The scheduled fine under this subsection is a civil penalty 31 which shall be deposited into the general fund of the county 32 or city if imposed by a designated officer or employee of a 33 county or city, or deposited in the general fund of the state 34 if imposed by a state agency, and the crime services surcharge 35 -5- LSB 5065SV (3) 89 th/ns 5/ 8

S.F. 2287 under section 911.1 shall not be added to the penalty. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanation’s substance by the members of the general assembly. 4 Current law generally requires all scrap metal transactions 5 with a scrap metal dealer to meet certain requirements. A 6 person who sells the scrap metal must provide identifying 7 information to the scrap metal dealer and the dealer must 8 keep a confidential record of each transaction. In addition, 9 payments for the scrap metal must be made by check or 10 electronic funds transfer. A person who violates these 11 provisions is subject to a civil penalty of between $100 and 12 $1,000. These provisions do not apply to the sale of catalytic 13 converters totaling $75 or less, or to the sale of other scrap 14 metal totaling $50 or less. 15 This bill requires a person selling a catalytic converter as 16 part of a business transaction (transactions between a scrap 17 metal dealer and certain businesses with fixed locations) to 18 provide to the scrap metal dealer a copy of the person’s valid 19 sales tax permit issued pursuant to Code chapter 423. 20 The bill requires a person selling a catalytic converter to a 21 scrap metal dealer other than as part of a business transaction 22 to provide to the scrap metal dealer an original receipt or 23 invoice for a replacement catalytic converter purchased fewer 24 than 30 days before the person sells the replaced catalytic 25 converter, or a junking certificate for a vehicle issued fewer 26 than 30 days before the person sells the catalytic converter. 27 The receipt, invoice, or junking certificate must be unmarked 28 by a scrap metal dealer. The requirement does not apply if 29 the person presents proof, unmarked by a scrap metal dealer, 30 that the sale is approved by the sheriff of the county in which 31 the vehicle from which the catalytic converter was removed is 32 registered. 33 A scrap metal dealer is required to keep a confidential 34 register or log of each transaction, including a copy of the 35 -6- LSB 5065SV (3) 89 th/ns 6/ 8

S.F. 2287 information required by the bill. Under the bill, a scrap 1 metal dealer must mark the original receipt, invoice, junking 2 certificate, or proof of sheriff approval, as applicable, to 3 indicate the catalytic converter has been sold. A scrap metal 4 dealer must also take a photograph of the catalytic converter 5 that clearly identifies the item as a catalytic converter. 6 The bill makes Code section 714.27 applicable to all scrap 7 metal transactions with a scrap metal dealer except for sales 8 of $50 or less that do not involve a catalytic converter. 9 The bill strikes an exception relating to city ordinances, 10 thereby providing that any local ordinance adopted by a 11 political subdivision that regulates scrap metal transactions 12 is superseded by Code section 714.27. 13 The bill increases the civil penalty for persons who violate 14 Code section 714.27 for an initial violation from $100 to 15 $1,000, for a second violation within two years from $500 to 16 $5,000, and for a third or subsequent violation within two 17 years from $1,000 to $10,000. 18 For purposes of theft as defined in Code section 714.1(4), 19 the bill adds that a scrap metal dealer’s violation of 20 recordkeeping and other requirements is evidence from which the 21 court or jury may infer that the person knew or believed that 22 the property had been stolen. The penalty for theft ranges 23 from a simple misdemeanor to a class “C” felony depending on 24 the value of the property. A simple misdemeanor is punishable 25 by confinement for no more than 30 days and a fine of at 26 least $105 but not more than $855, and a class “C” felony is 27 punishable by confinement for no more than 10 years and a fine 28 of at least $1,370 but not more than $13,660. 29 Under the bill, proof that a scrap metal dealer, or a person 30 acting on behalf of a scrap metal dealer, conducted a scrap 31 metal transaction in violation of the recordkeeping and other 32 requirements is evidence from which the court or jury may infer 33 that the person aided and abetted the underlying theft of the 34 catalytic converter involved in the transaction from a vehicle, 35 -7- LSB 5065SV (3) 89 th/ns 7/ 8

S.F. 2287 under Code section 703.1, or that the person had knowledge that 1 a public offense has been committed and that a certain person 2 committed it, for purposes of proving the scrap metal dealer 3 or person acting on behalf of a scrap metal dealer acted as an 4 accessory after the fact under Code section 703.3. 5 -8- LSB 5065SV (3) 89 th/ns 8/ 8