Prolerized New England v. City of Manchester

The Statute that Governs Junk and Scrap Metal Dealers, NH RSA Chapter 322, does not Preempt a City Ordinance that Requires Scrap Dealers to Prepare and Transmit Electronic Records and to Pay a Fifty-Cent Fee on Each Transaction.
No. 2013-357
Thursday, August 28, 2014

The NH Supreme Court reversed the decision of the Superior Court granting summary judgment for Prolerized and finding that RSA Chapter 322 preempted a Manchester ordinance regulating scrap metal dealers.

In 1995, the City of Manchester adopted an ordinance requiring all scrap dealers to maintain certain transaction records as a condition for obtaining a scrap dealer license. In 2012, the ordinance was amended to require dealers to maintain electronic transaction records and send the records to either the Police Department or an authorized data storage site. The City designated a private company, LeadsOnline, as the storage site for the records retention. In addition, the ordinance imposed a fee of fifty cents for every transaction. Prolerized, the operator of two scrap metal centers in the City, filed a Petition with the Court to declare that the ordinance was unenforceable because it was preempted by RSA Chapter 322, which governs junk and scrap metal dealers.

The Supreme Court determined that RSA Chapter 322 did not preempt the City ordinance.

First, the Court had to determine whether RSA Chapter 322 constitutes a “comprehensive and detailed scheme” showing that the State intended to occupy the entire area of junk and scrap metal regulation, thus precluding the City form enacting the ordinance at issue. The Court determined that the State did not intend to occupy the entire field because RSA Chapter 322 specifically grants authority to the governing bodies of towns and cities to establish rules for the granting of licenses and requires dealers to keep records “sufficient to the licensing authority.” As a result, the Court found that the State intended to vest authority in the local governments to regulate scrap and junk metal businesses.

Second, the Court held that the City’s ordinance was enforceable because it did not conflict with RSA Chapter 322. Although RSA Chapter 322 does set some requirements for record keeping, it explicitly allows municipal licensing authorities to determine what record keeping will be considered sufficient. In other words, the requirements in the statute were not the maximum record-keeping requirements allowed, so it was permissible for the City to enact additional requirements. Furthermore, because RSA Chapter 322 explicitly allows local boards to enact regulations governing record keeping, the City had the power to require scrap dealers to send electronic records to a third-party. Therefore, because dealers could comply both with RSA 322 and the ordinance, there was no conflict between the two. Finally, the Court held that the fifty-cent transaction fee was not a license fee and was therefore not preempted by the statute.

RSA Chapter 322 does not preempt the municipal regulation of junk and scrap metal dealers. The State gave municipalities discretion to regulate this area, and, therefore, municipal ordinances will be upheld as long as they do not conflict with RSA 322.