(CN) – The 6th Circuit upheld a Memphis ordinance requiring scrap metal dealers to “tag and hold” scrap metal for 10 days before resale. A three-judge panel said the Tennessee scrap metal dealers who challenged the ordinance were unlikely to succeed on the merits of their claims.
Legislators passed the scrap dealer ordinance in December 2007, during a wave of scrap metal theft in Memphis. The ordinance contains several regulatory provisions, including the contested tag-and-hold requirement, which gives victims of metal theft and the police 10 days to inspect all recently purchased scrap metal.
Local dealers strongly objected, saying the ordinance would put them out of business by forcing them to buy more land or reduce inventory to comply with the holding requirement. The Tennessee Scrap Dealers Association, Metal Management Memphis and H. Iskiwitz & Co. urged the court to enjoin its enforcement.
The Cincinnati-based federal appeals court agreed with the lower court that the plaintiffs’ claims would likely fail.
Judge Martin rejected their dormant commerce clause claim, noting that the ordinance “is a local law with local effect.” If anything, it actually benefits out-of-state dealers, Martin said.
The court similarly dismissed the dealers’ takings claim, saying the ordinance only regulates their use of scrap metal, but doesn’t authorize the government to take it.