On Appeal from the United States District Court for the Middle District of Pennsylvania; (M.D. Pa. No. 89-0364).
Stapleton and Greenberg, Circuit Judges and Pollak*fn* , District Judge.
This case presents the question whether the Pennsylvania Steel Products Procurement Act ("Steel Act"), Act of March 3, 1978, P.L. 6, No. 3, Pa. Stat. Ann. tit. 73, §§ 1881-87, is unconstitutional. The grounds of challenging the Steel Act are several: it is contended that the Steel Act (1) is preempted by various federal statutes and executive agreements regulating foreign commerce; (2) unconstitutionally burdens foreign commerce; (3) interferes with the federal government's exercise of the foreign relations power; (4) is unconstitutionally vague; and (5) violates the equal protection clause.
The essential facts are not in dispute. The Steel Act requires suppliers contracting with a public agency in connection with a public works project to provide products whose steel is American-made. Pa. Stat. Ann. tit. 73, § 1884. "Public agency" is defined broadly to include not only state agencies but all local governmental entities including "all municipal . . . authorities . . . created or organized by any county, city, borough [or] township." Pa. Stat. Ann. tit. 73, § 1886.*fn1 The range of steel products affected is similarly exhaustive, covering "products rolled, formed, shaped, drawn, extruded, forged, cast fabricated or otherwise similarly processed . . . by the open hearth, basic oxygen, electric furnace, Bessemer or other steel making process." Id. at § 1884.
Payments made in violation of the Act are "recoverable directly from the contractor, subcontractor, manufacturer or supplier who did not comply with" the Act. Id. at § 1885(a). Willful violators of the Act are prohibited from bidding on public agency contracts for five years. Id. at § 1885(b).
Appellant Trojan is a Canadian corporation that manufactures a "UV-2000" ultraviolet light water-disinfection system. Stipulation of Fact, para. 1. Appellant Kappe is Trojan's exclusive distributor in Pennsylvania. Id., para. 2. The basic UV-2000 contains from four to eight ultraviolet lamps, located in a "UV Module." The UV Module, in turn, is housed in a stainless steel frame. Steel is also found in a stainless steel control box that houses many of the devices for monitoring the UV-2000's operation. The steel components constitute less than 15% of the UV-2000's total cost. Id., para. 7-11.
The UV-2000 has applications in industry, potable water plants and residential use. Several Pennsylvania municipalities and authorities have purchased the UV-2000 and installed it at waste-water and sewage-treatment facilities. Id., paras. 4-5. On July 8, 1988, the Pennsylvania Attorney General's Office sent letters to several municipal authorities requesting information concerning compliance with the Act. On July 11, 1988, the Attorney General's Office sent a letter directly to Trojan, requesting documentation confirming that its ultraviolet disinfection system complies with the Act. Trojan has not supplied any such documentation. While the Attorney General sought such information in order to ensure compliance with the Steel Act, there has been no final determination that the Act has been violated, nor have any sanctions been imposed. Id., para. 20.
On August 8, 1988, Trojan and Kappe filed this suit against the Commonwealth and the Commonwealth's Attorney General in the District Court for the Eastern District of Pennsylvania, seeking a declaration of the unconstitutionality of the Steel Act and an injunction against its enforcement. On defendants' motion the case was transferred to the Middle District of Pennsylvania. The parties filed cross motions for summary judgment. On January 5, 1990, Judge Caldwell issued a memorandum and order denying Trojan's request for declaratory and injunctive relief. Appellants took this appeal. At the invitation of this court the United States has submitted a brief as amicus curiae.*fn2 We affirm.
II. The Preemption Challenge
In accordance with the principle that statutory questions should be considered first in order to avoid possibly needless constitutional inquiry, we turn initially to appellants' claim that the Steel Act is preempted by a variety of federal statutes and trade agreements.
Federal law may preempt state law in any of three ways. Kentucky West Virginia Gas Co. v. Pennsylvania Public Utility Commission, 837 F.2d 600, 605 (3d Cir.) cert. denied 488 U.S. 941, 109 S. Ct. 365, 102 L. Ed. 2d 355 (1988). First, Congress may explicitly occupy a regulatory field. Id. at 606. Second, preemption may occur when Congress completely, although not explicitly, occupies an entire field of regulation, leaving no room for the states to supplement federal law. Id. ; Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 299, 99 L. Ed. 2d 316, 108 S. Ct. 1145 (1988). Finally, federal law preempts its state counterpart when simultaneous compliance with both state and federal law is "impossible or when state law stands as an obstacle to accomplishment and execution of the full purposes and objectives of Congress." Kentucky West Virginia Gas, 837 F.2d at 606 (citations omitted). Because of federalism concerns, it is presumed that Congress ordinarily does not intend to displace existing state authority. See Tafflin v. Levitt, 493 U.S. 455, 107 L. Ed. 2d 887, 110 S. Ct. 792, 795 (1990). Further, "where . . . the field which Congress is said to have preempted has been traditionally occupied by the States," Congressional intent to preempt must be "clear and manifest." Jones v. Rath Packing Co., 430 U.S. 519, 525, 51 L. Ed. 2d 604, 97 S. Ct. 1305 (1977). State procurement policy would appear to be such a field.
Appellants contend that the United States-Canada Free Trade Agreement, the Agreement on Government Procurement, the Steel Import Stabilization Act of 1984, the Trade Act of 1984 and the Trade Agreements Act of 1979 require an inference of Congressional intent to preempt state-level "buy-American" statutes such as Pennsylvania's. Appellants argue both that each individual federal enactment justifies an inference of preemption, and that the cited acts and agreements in toto reveal an attempt to develop a comprehensive scheme that leaves no room for supplementary state activity.
A. International Agreements
1. United States-Canada Free Trade Agreement
The United States-Canada Free Trade Agreement, 27 I.L.M. 281, --- an executive agreement both negotiated and implemented pursuant to statutory directives --- became effective January 1, 1989.*fn3 Chapter 13 of that agreement deals specifically with the issue of government procurement in areas of trade between the two nations. The chapter commits the parties to "actively strive to achieve, as quickly as possible, multilateral liberalization of international government procurement policies." Article 1301, Free Trade Agreement. The Agreement's implementing legislation provides that "the provisions of the [Free Trade] Agreement prevail over -- (A) any conflicting State law . . . [and] any conflicting application of any State law to any person or circumstance. . ." Implementation of the United ...