Public Projects of Steel? Only If It's Made in America - Contract Law - U.S. Third Circuit
U.S. Third Circuit - The FindLaw 3rd Circuit Court of Appeals Opinion Summaries Blog

Public Projects of Steel? Only If It's Made in America

The Third Circuit Court of Appeals recently upheld a Pennsylvania state law - the Pennsylvania Steel Products Procurement Act - requiring American-made steel in public works projects unless there wasn’t a sufficient amount available.

A Delaware corporation, Mabey Bridge & Shore Inc., had challenged the law, but a lower court granted summary judgment in favor of Pennsylvania’s Secretary of Transportation. Mabey then appealed the case to the Third Circuit, arguing that the law was pre-empted by the federal Buy American Act and violated the Commerce, Contract and Equal Protection clauses of the U.S. Constitution.

Although the law has been in place since 1978, Mabey only recently started to chafe under its American-only restrictions when one of its clients, the Pennsylvania Department of Transportation, started to follow the Act’s provisions and cancelled four current contracts and any future dealings with Mabey.

The Third Circuit, however, didn’t buy any of the petitioner’s challenges. Addressing Mabey’s preemption challenge, the court held that Congress intended “to allow states to enact more restrictive requirements related to the use of domestic steel.”

The court also referenced one of its previous opinions, Trojan Technologies Inc. v. Pennsylvania, which had already held that the law did not violate the Commerce Clause because public agencies are participants in the market and not market regulators. It also relied on Trojan in denying Mabey’s Equal Protection claim.

Finally, in regards to Mabey’s Contact Clause claim, the Third Circuit found that there was no “change in law” that affected Mabey’s contracts since the Act was passed in 1978. Further, it did not agree with Mabey’s argument that a change in the interpretation of the law satisfied the Contract Clause’s provision.

Related Resources: