January 26, 2012
Third Circuit: Federal Buy America Act Does Not Preempt State Law
A three-judge panel of the Third Circuit ruled this week in Mabey v. Schoch that the federal Buy America Act and implementing regulations do not preempt Pennsylvania's Steel Act. Both acts require the use of steel made in the United States for public works projects funded by the federal and state governments, respectively. But the Buy America Act has broader exceptions, including, importantly, a provision that says that the Act is satisfied when a project "[i]ncludes no permanently incorporated steel or iron materials."
The case arose after the state, citing the state Steel Act, declined to use Mabey's temporary bridge on a project, because Mabey gets its steel from the United Kingdom. Pennsylvania previously contracted with Mabey, notwithstanding the state Steel Act. But it apparently changed its policy, decided to enforce the Steel Act against Mabey, and, according to Mabey, forced Mabey to cancel four of its state contracts.
Mabey sued, alleging that exception in the federal Buy America Act preempted the state Steel Act, and that its temporary bridge met the federal Act's provision relating to "no permanently incorporated steel or iron materials." The Third Circuit rejected this claim. It ruled that another section of the federal Buy America Act and its regulations, read as a whole, did not clearly reflect congressional intent to preempt; instead, they left room for states to issue more stringent regulations--exactly what Pennsylvania did here. Thus, the state's Steel Act restrictions applied with their full force to Mabey.
The court also rejected Mabey's Dormant Commerce Clause, Contract Clause, and equal protection claims. As to the dormant Commerce Clause, the court ruled that the Steel Act fell under the market participant exception (because Pennsylvania was a market participant when it contracted for public works) and, moreover, that Congress authorized Pennsylvania to discriminate against interstate commerce through the federal Buy America Act. The court said that the state's late-coming enforcement of the Steel Act against Mabey didn't violate the Contract Clause, because the Act was on the books since Mabey started contracting with the state, and the state agency's decision to enforce it didn't amount to "legislative authority subject to scrutiny under the Contract Clause." And finally the court ruled that the state didn't violate the Equal Protection Clause, because the state's action--first not enforcing, then enforcing, the Steel Act--was rational: "A state agency could rationally determine that application of domestic steel requirements to items used at the discretion of the contractor is too onerous and difficult to enforce."
June 26, 2011
New Jersey: Public Employees' Complaint Alleging Violations of Federal and State Constitutions
New Jersey - - - like Wisconsin and Florida amonsgt other states - - - has acted to limit public employee compensations and benefits. And, as in Wisconsin and Florida, public employees have filed a lawsuit alleging constitutional infringements.
The bill S-2937/A-4133 is an extensive overhauling of the public employee pension and health care benefits of New Jersey employees. Governor Christie promoted the bill and is expected to sign it.
The complaint, filed in federal court, alleges violations of both federal and state law. Like the Florida complaint, it alleges impairments of the obligations of contracts, although it includes the federal provision, as well as a takings clause claim. There is also a federal tax claim.
April 09, 2011
Footnote of the Day: It's the Contract(s) Clause
Article I, section 10 of the Constitution provides that "no state shall" "pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts." That last prohibition is known as the Contracts Clause - - - or is it the Contract Clause?
Professor Jay Wexler reveals that federal courts are about five times more likely to use the term "Contract Clause" than "Contracts Clause" - - - 4800 to 900 cases in the "allfeds" database.
But as Wexler notes, the Fourth Circuit has devoted a footnote to deciding the issue. Wexler is exceedingly knowledgeable about judicial footnotes and we've previously discussed his useful taxonomy. But how would this footnote be classified? Footnote 2 in the opinion in Crosby v. City of Gastonia, decided March 10, 2011, stated:
The Clause provides, in pertinent part, that "[n]o State shall . . . pass any . . . Law impairing the Obligation of Contracts." U.S. Const. art. I, § 10, cl. 1. The Supreme Court and nearly all federal courts have, over the years, inconsistently denominated this key provision of Article I as both the "Contract Clause" and the "Contracts Clause." Because the text of the Constitution speaks of the obligation of "contracts" in the plural, we will use that form of the noun to refer to the Clause in this opinion.
(ellipses in orginal).
Wexler notes that Justice O'Connor was sitting by designation on the Fourth Circuit panel, but also expresses his opinion about the relevance of the singular and plural designations for the clause in question. Wexler's post - - - and his new blog "Odd Clauses Watch" is well worth a read.