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VOL. 123 | NO. 29 | Tuesday, February 12, 2008

Scrap Metal Companies File Claim Against City, State

By Bill Dries

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Three Memphis scrap metal companies and the Tennessee Scrap Recyclers Association are taking the city of Memphis and the state of Tennessee to court over how the companies buy the metal from the public.

The suit was filed last week in the U.S. District Court for the Western District of Tennessee by H. Iskiwitz & Company Inc., Worley Brothers Scrap Iron & Metal Inc., Metal Management Memphis LLC and the association, according to The Daily News Online, www.memphisdailynews.com.

It specifically targets the requirement in state law and a recently enacted city ordinance that requires scrap buyers to "tag and hold" certain metal items for no less than 10 days. The items covered under tag and hold in the city ordinance enacted in December are air conditioner coils and condensers, copper wiring and catalytic converters from cars. The theft of all three as prices for the metals have soared was cited by police as the need for the ordinance.

The lawsuit claims the new restrictions are unconstitutional because they "directly regulate, curtail, interfere with and burden interstate commerce. The law and ordinance constitute an embargo on these shipments in interstate and foreign commerce."

The legal claim also cites the volatility of the metal market.

"Market fluctuations are common and are an ever-present reality and danger for recyclers. They can cause huge losses. Thus, recyclers sell and ship scrap metal as quickly as possible," reads the civil lawsuit filed by several attorneys including Vanderbilt University Law School professor James F. Blumstein.

The city ordinance was one of the last major pieces of business for the Memphis City Council that left office at the end of 2007. While some scrap metal dealers argued for a less bureaucratic approach to regulating their businesses, homebuilders in particular were adamant that stricter regulations were needed to prevent the stripping of recently built homes of their copper wiring.

But the companies claim in the court filing that keeping metal items separate for 10 days is impractical. Metal Management would need an area "larger than two football fields" to comply and Iskiwitz would need "an area larger than its entire business premises," according to the lawsuit.

The suit also claims the voucher system of paying those who bring in scrap metal is unconstitutional because it amounts to a ban and restriction on the use of cash.

The case has been assigned to U.S. District Court Judge Bernice Donald. The plaintiffs are seeking a hearing on a preliminary injunction to stop enforcement of the state law and the city ordinance, specifically the "tag and hold" provisions in each, until the legal dispute is resolved. No hearing date had been set on the injunction request as of Monday.

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