State law requiring American-made steel in public works projects upheld by 3rd Circuit
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The 3rd U.S. Circuit Court of Appeals has ruled that a Pennsylvania state law mandating that steel used in public works projects be made in the United States is not pre-empted by federal law or unconstitutional.
Mabey Bridge & Shore Inc., a Delaware corporation, argued that the Pennsylvania law barring the use of foreign steel on public works projects is pre-empted by the federal Buy American Act, which also says federal funds shall not be released for highway and transportation funding for road projects unless steel, iron and other products used in the projects are made in the U.S., according to the opinion in Mabey Bridge & Shore Inc. v. Schoch.
Mabey also argued the state law violates the Commerce, Contract and Equal Protection clauses of the U.S. Constitution.
Mabey challenged the state law because the company believes its temporary bridges would be exempted from the federal law: The federal law, it said, has an exception for highway and transit materials that include "no permanently incorporated steel or iron materials."
On that point, the court agreed, though that agreement had no bearing on the eventual ruling.
Judge Maryanne Trump Barry, writing in a opinion issued Jan. 25 and joined by Judges Thomas M. Hardiman and Franklin S. Van Antwerpen, said the Buy American Act did not pre-empt Pennsylvania's parallel law and "demonstrates Congress' intent to allow states to enact more restrictive requirements related to the use of domestic steel and, thus, that the Steel Act is not pre-empted."
"Congress was aware that individual states may have more stringent requirements than the Buy American Act, and specifically instructed the Secretary of Transportation not to interfere with those requirements," Judge Barry said. "Such an instruction is tantamount to congressional authorization for more stringent state practices to continue."
The Pennsylvania Steel Products Procurement Act, enacted in 1978, mandates that steel products used or supplied in the performance of a public works contract must be made domestically unless the head of a public agency determines that steel products are not produced domestically at a sufficient quantity to meet the requirements of a public works product.
But the law apparently had not been enforced against Mabey for more than 20 years because Mabey has been supplying temporary steel bridges, designed to handle traffic and pedestrians, while "permanent" PennDOT projects are under way. Mabey's products are made out of steel produced in the United Kingdom, Judge Barry said.
While Mabey argued that the Pennsylvania law violated the Commerce Clause because PennDOT was acting as a market regulator and not a participant, the 3rd Circuit had already concluded in the 1990 decision in Trojan Technologies Inc. v. Pennsylvania that Pennsylvania's state law barring the use of foreign steel in public works projects does not violate the Commerce Clause because public agencies are participants in the market.
The panel also rejected Mabey's arguments that the state law violates the Contract and Equal Protection clauses.
Mabey estimated that it provided temporary bridges on about 50 PennDOT projects, but because PennDOT decided to start enforcing the law in the spring of 2010, "it has been forced to cancel four contracts for temporary bridges on PennDOT projects and prevented from giving quotes to contractors for bids on future projects," Judge Barry wroted.
U.S. District Judge Sylvia H. Rambo of the Middle District of Pennsylvania entered the order that was appealed by Mabey to the 3rd Circuit.
First Published February 6, 2012 12:00 am