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Eighth Circuit pans Minnesota gold rules

Out-of-state bullion dealers can't be made to register and maintain bonds, a three-judge panel found.

ST. LOUIS (CN) — Coin, gold and other precious metal dealers struck it rich at the Eighth Circuit on Wednesday, when the federal appeals court found that a Minnesota regulation requiring them to register with the state’s Department of Commerce violates the U.S. Constitution’s dormant commerce clause. 

A three-judge panel of two Donald Trump appointees and one George W. Bush appointee struck down what remained of a Minnesota statute governing bullion transactions, much of which bit the dust in a 2021 ruling by U.S. District Judge Nancy Brasel, a Trump appointee.  

Brasel granted partial summary judgment to bullion traders Thomas Styczinski and Treasure Island Coins, striking down a collection of rules for bullion sales that she found discriminated against out-of-state dealers and sought to regulate transactions outside the state. She did not, however, find that rules requiring dealers to register with the state and to maintain a surety bond in order to sell to Minnesota residents created an undue burden on sellers– a finding that the Eighth Circuit panel reversed Wednesday.

“Chapter 80G does not merely burden in-state dealers with a monetary obligation,” wrote U.S. Circuit Judge Steven Grasz, a Trump appointee. “Rather, it prohibits an in-state dealer… from conducting any bullion transaction, including out-of-state transactions, without first registering with the Commissioner.”

The St. Louis-based appeals court reversed Brasel’s partial grant of summary judgment to the state's commissioner of commerce, with instructions on remand to determine whether offending provisions could be severed from the rest of the statute. 

“While Minnesota certainly has an interest in requiring dealers to register before doing business in Minnesota,” Grasz continued, “such interest does not allow Minnesota to pin its law onto its in-state dealers and their transactions wherever they travel.” 

The bond requirement, Grasz noted, “does not fare any better.” Giving the example of a Las Vegas dealer selling to a Minnesota resident, he noted that the rule, which requires dealers to secure their sales with bonds proportional to the value of the metal being sold, “could apply to a Nevadan—unbeknownst to him or her—who has never set foot in Minnesota nor conducted any business there.”

The rules were passed in 2013, and amended this year in an effort to comply with Brasel’s ruling. 

Attorney Erick Kaardal, who represented the bullion dealers, said he thought Grasz had struck the right vein in the order.

“The Department of Commerce commissioner was taking the position that Minnesota can regulate transactions out of state, Las Vegas, Hong Kong,” he said. 

The rules, he added, had led bullion dealers to avoid selling in Minnesota at all.

“It destroyed the market in Minnesota for certain types of coins in volume,” Kaardal said. “This decision’s going to open up the market in Minnesota so that out-of-state dealers can operate in the state freely.” 

Kaardal also speculated that the opinion could have an impact on another hot-button issue: abortion bans, noting that states attempting to ban abortion seekers from traveling out of state should take notice. 

“We think it’s a significant victory,” he said, adding that he is planning on looking at other regulations in the area of precious-metals dealing.

Grasz was joined on the unanimous panel by U.S. Circuit Judges Bobby Shepherd and Jonathan Kobes, appointed by Bush and Trump, respectively.

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