Antilles Cement v. Calderon

United States Court of Appeals
For the First Circuit
Nos. 03-2713
04-1231
04-1232
ANTILLES CEMENT CORPORATION,
Plaintiff, Appellee,
v.
ANÍBAL ACEVEDO VILÁ, GOVERNOR OF THE COMMONWEALTH
OF PUERTO RICO,* ET AL.,
Defendants, Appellants.
PUERTO RICAN CEMENT CORPORATION, INC.,
Intervenor, Appellant.
____________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jaime Pieras, Jr., Senior U.S. District Judge]
Before
Selya, Circuit Judge,
Coffin, Senior Circuit Judge,
and Lynch, Circuit Judge.
Doraliz E. Ortiz-de-Leon, Assistant Solicitor General, with
whom Roberto J. Sánchez-Ramos, Solicitor General, and Kenneth
Pamias-Velázquez, Deputy Solicitor General, were on brief, for
appellants.
__________
*By operation of law, Aníbal Acevedo Vilá, who became the eighth
elected governor of Puerto Rico on January 2, 2005, has been
substituted for his predecessor in office as a party defendant.
See Fed. R. App. P. 43(c)(2).
Juan Ramón Cancio, with whom Patricia Ramírez Gelpí, Cancio
Covas & Santiago, LLP, Dora L. Monserrate Peñagarícano, Rubén T.
Nigaglioni, and Nigaglioni & Ferraiouli Law Offices, PSC were on
brief, for intervenor.
Lino J. Saldaña for appellee.
May 25, 2005
SELYA, Circuit Judge. In the proceedings below, the
district court declared two statutes enacted by the Puerto Rico
legislature — one requiring the use of Puerto Rican cement in
publicly funded construction projects and the other requiring
special labels for cement manufactured elsewhere — antithetic to
the dormant Foreign Commerce Clause of Article I, section 8 of the
United States Constitution and enjoined their enforcement. The
defendants (government officials sued in their representative
capacities) appeal. They are joined by an intervenor, Puerto Rican
Cement Corporation (PRCC).
Despite the obvious importance of the case, two questions
of statutory interpretation — one critical to the resolution of
these appeals and another of potential significance — were not
addressed below. Perhaps more troublesome, we do not have a fully
developed record to assist us in their resolution. This unfinished
business sends up a red flag: courts should not hurry to resolve
issues of great public import on the basis of incomplete
information. Consequently, we return the case to the district
court for further proceedings consistent with this opinion.
I. THE STATUTORY SCHEME
On July 12, 1985, the Puerto Rico legislature enacted Law
109, codified at 3 P.R. Laws Ann. §§ 927-927h, which, inter alia,
requires the use of "construction materials manufactured in Puerto
Rico" in all construction works financed with public funds. Id. §
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927a. "Public funds" are defined as "funds or guarantees from the
Commonwealth or from the United States Government, and those funds
provided by federal laws for the purposes of revitalizing the
economy." Id. § 927(f).
The scope of the law's application is unclear. The
statute states that in "those cases in which a call for bids is
required for the contracting of a construction work with public
funds," the building specifications must contain a provision
mandating the use of Puerto Rican construction materials. Id. §
927a. This section does not expressly limit the law's scope to
situations in which the Commonwealth, or an agency of the
Commonwealth, is the contracting entity. By contrast, section 927b
provides that the law applies to projects not requiring competitive
bidding when "the Commonwealth contracts a construction work." Id.
§ 927b. The law also applies to situations in which the
Commonwealth undertakes construction to its own behoof. Id. §
927c. The Puerto Rico Supreme Court has never spoken to the scope
of Law 109, nor has it interpreted the relationship among its
various sections.
In all events, the requirements of Law 109 are rendered
inapplicable in two sets of circumstances. First, the law does not
hold with respect to any particular construction material when the
cost associated with the use of local, as opposed to off-island,
material would exceed a certain percentage set by the Puerto Rico
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Board of Preference for Government Purchases (Preference Board).
See id. § 927e(a); see also id. §§ 914a-914k. Second, the law does
not apply if indigenous construction materials are not available in
sufficient quantity or quality. Id. § 927e(b).
While the statute covers a myriad of construction
materials, only one — cement — is specifically defined. See id. §
927(d). "Cement manufactured in Puerto Rico" is described as that
cement created from Puerto Rican raw materials, save only for
components not available in industrial quantities from Puerto Rican
sources. Id. The term "cement" as used in the statute encompasses
"cement blocks, pre-mixed concrete, concrete mixed at the site and
mixture for plastering." Id.
The statute not only confers the standard statutory
exemptions upon cement but also allows the use of off-island cement
for up to six months "in a case of force majeure or for causes or
reasons beyond the control of the local factory." Id. This six-
month window may be extended for up to six additional months if the
Preference Board approves. Id.
Law 109's Statement of Motives explains that, at the time
of the law's passage, Puerto Rico was experiencing a severe
recession in the construction industry. See Act of July 12, 1985,
No. 109, 1985 P.R. Laws 378, 379. The cement industry was a
prominent player in the construction market, and it had suffered as
a result. Id. Expressing concern about the loss of high-paying
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jobs and the reduction in the tax base accompanying the decline in
the local cement industry, the legislature enacted the law to
provide "greatly needed aid for [its] rehabilitation." Id.There is a second statute at issue here. On September
17, 2001, the Puerto Rico legislature passed Law 132, requiring,
inter alia, all bags of cement manufactured outside of Puerto Rico
to carry a warning label, in both Spanish and English, stating that
"in accordance with the federal laws (41 U.S.C. sec 10a et seq.)
and the laws of Puerto Rico (§§ 927 et seq. of Title 3), th[is]
cement shall not be used in construction works of the governments
of the United States and of Puerto Rico nor in works financed with
funds from said governments except in the specific cases
established in said laws." 10 P.R. Laws Ann. § 167e(a)(4). Bags
of foreign cement that are not so labeled cannot be sold within the
Commonwealth. Id. § 167e(b). Law 132's Statement of Motives
reiterated that cement is the principal material used in Puerto
Rico construction projects. See Act of Sept. 17, 2001, No. 132,
2001 P.R. Laws 637, 638.
II. TRAVEL OF THE CASE
On April 30, 2002, Antilles Cement Corporation
(Antilles), a Puerto Rico corporation engaged solely in importing
foreign-made cement for distribution in the Commonwealth, brought
suit against the governor of Puerto Rico and other executive branch
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officials in their representative capacities.1 The complaint
sought a declaration (i) that Law 109 and Law 132 are
unconstitutional as applied to cement imported from foreign nations
and (ii) that Law 109 is preempted by both the Buy American Act
(BAA), 41 U.S.C. §§ 10a-10d, and section 165 of the Surface
Transportation Assistance Act of 1982 (STAA), Pub. L. No. 97-424,
96 Stat. 2097. The complaint also sought concomitant injunctive
relief.
Before the Commonwealth answered the complaint, Antilles
filed a motion for summary judgment, appending thereto a series of
affidavits and other exhibits. These exhibits included a letter
from the Preference Board noting that there were only two
manufacturers of cement in Puerto Rico (PRCC and ESSROC San Juan,
Inc.). The letter verified that the Preference Board required
indigenous cement to be used in projects subject to Law 109 so long
as it cost no more than 115% of the price of off-island cement.
The Commonwealth asked the court to deny the summary
judgment motion without prejudice on the ground that discovery had
not yet commenced. Subsequently, Antilles abandoned its claim that
1
The other defendants are the Secretary of Justice, the
Secretary of Transportation and Public Works, and the Secretary of
Consumer Affairs. The current occupants of these offices have been
substituted as defendants by operation of law. See Fed. R. App. P.
43(c)(2). For simplicity's sake, we refer to the defendants,
collectively, as "the Commonwealth."
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the BAA preempted Law 109. At that juncture, the Commonwealth
answered the amended complaint.
On October 16, 2003, the district court rejected the
Commonwealth's request to deny the summary judgment motion pro
forma. See Antilles Cement Corp. v. Calderón, 288 F. Supp. 2d 187,
190-91 (D.P.R. 2003). The court proceeded to decide the merits of
that motion. First, it ruled that Antilles lacked standing to
raise STAA preemption, as that law only proscribes discrimination
against certain domestic construction materials. Id. at 193.
Antilles does not challenge this ruling on appeal. Next, the court
inquired whether Law 109 and/or Law 132 infringed the dormant
Foreign Commerce Clause. Finding that Law 109 discriminated on its
face against foreign commerce, the court concluded that the law was
"virtually per se invalid." Id. at 199 (citing Philadelphia v. New
Jersey, 437 U.S. 617, 624 (1978)). The court deemed the interests
asserted by the Commonwealth — essentially, the economic benefits
accruing to the local economy — far outweighed by the federal
government's interest in "speaking with one voice" with respect to
international trade. Id. Relatedly, the court determined that
although the Commonwealth was acting as a market participant, the
market participant exception was not available to it in a case
which, like this one, involved foreign commerce. Id. at 197.
Finally, the court inquired whether congressional authorization
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shielded Law 109 from attack under the dormant Foreign Commerce
Clause and answered that inquiry in the negative. Id. at 199-201.
Based on this reasoning, the court declared Law 109
unconstitutional. Id. at 201. The court simultaneously held Law
132 unconstitutional to the extent that it required labels on bags
of cement that specifically referenced the use restrictions
established by Law 109. Id. at 202. It enjoined enforcement of
both statutes.
The Commonwealth filed a motion to reconsider or, in the
alternative, to alter or amend the judgment. See Fed. R. Civ. P.
59(e). On December 17, 2003, the district court summarily denied
the motion. The next day, PRCC moved to intervene for the purpose
of prosecuting an appeal. See Fed. R. Civ. P. 24. The putative
intervenor asserted that it had an interest protected by Law 109;
that its interest would be threatened should the district court's
judgment withstand review; and that the government defendants would
not adequately represent its interest. On January 15, 2004, the
Commonwealth filed a notice of appeal.2 The following day, the
district court granted PRCC's motion to intervene, whereupon PRCC
filed a notice of appeal in its own right.
2
The Commonwealth originally had filed a premature notice of
appeal on November 14, 2003 (No. 03-2713). The new appeal (No. 04-
1231) was intended to supersede that appeal and to encompass the
denial of the Rule 59(e) motion. These two appeals and the
intervenor's appeal (No. 04-1232) have been consolidated.
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In this court, Antilles moved to dismiss PRCC's appeal,
arguing that the Commonwealth's second notice of appeal, filed on
January 15, 2004, divested the district court of jurisdiction over
the motion to intervene. We denied that motion without prejudice
to its renewal before this panel. PRCC has since moved for
intervention at the appellate level.
A federal court of appeals has broad discretion to grant
or deny intervention at the appellate level. See, e.g., Mangual v.
Rotger-Sabat, 317 F.3d 45, 62 (1st Cir. 2003). Since PRCC
satisfies all the criteria for permissive intervention, see Fed. R.
Civ. P. 24(b), we choose to exercise that discretion affirmatively
in this instance. That ruling puts an end to the procedural
contretemps. Having allowed PRCC to intervene in the
Commonwealth's pending appeals, PRCC's own appeal (No. 04-1232)
becomes superfluous.
III. DISCUSSION
This case brings into bold relief the principle that
federal courts ordinarily "should withhold decision on vexing
constitutional questions until consideration of those questions
becomes necessary." Eulitt v. Me. Dep't of Educ., 386 F.3d 344,
350 (1st Cir. 2004) (citing Ala. State Fed'n of Labor v. McAdory,
325 U.S. 450, 461 (1945)); see also Aggarwal v. Ponce Sch. of Med.,
745 F.2d 723, 726 (1st Cir. 1984) ("It has long been a basic tenet
of the federal courts to eschew the decision of cases on
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constitutional grounds unless and until all other available avenues
of resolution were exhausted."). It presents a paradigmatic
example of a situation in which constitutional questions have been
answered in advance of the demonstrated necessity for their
decision.
As framed in the lower court and briefed by the parties
on appeal, this litigation centers on novel constitutional
questions concerning the reach of the dormant Foreign Commerce
Clause and the existence vel non of a market participant exception
to that clause. A brief discussion regarding the doctrine is
appropriate.
The Constitution gives Congress the authority "[t]o
regulate Commerce with foreign Nations, and among the several
States." U.S. Const. art. I, § 8, cl. 3. This affirmative grant
of power has a negative aspect, known as the dormant Commerce
Clause. See Grant's Dairy-Me., LLC v. Comm'r of Me. Dep't of
Agric., Food & Rural Res., 232 F.3d 8, 18 (1st Cir. 2000). In
general, the dormant Commerce Clause "prevents state and local
governments from impeding the free flow of goods from one state to
another." Houlton Citizens' Coalition v. Town of Houlton, 175 F.3d
178, 184 (1st Cir. 1999). As such, it "prohibits protectionist
state regulation designed to benefit in-state economic interests by
burdening out-of-state competitors." Grant's Dairy, 232 F.3d at
18. The dormant Commerce Clause and its doctrinal accouterments
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apply to Puerto Rico as though Puerto Rico were a state. Walgreen
Co. v. Rullan, ___ F.3d ___, ___ (1st Cir. 2005) [No. 03-2542, slip
op. at 9].
Although the language of dormant Commerce Clause
jurisprudence most often concerns interstate commerce, essentially
the same doctrine applies to international commerce. See Barclays
Bank v. Franchise Tax Bd., 512 U.S. 298, 310 & n.9 (1994). This
latter application — which, for ease in reference, we shall deem as
emanating from the dormant Foreign Commerce Clause — is relatively
undeveloped in the Supreme Court's case law. The Court's only
iterations of it have come in situations involving state taxation
of foreign commerce. See, e.g., Barclays Bank, 512 U.S. 298;
Wardair Can. Inc. v. Fla. Dep't of Revenue, 477 U.S. 1 (1986);
Container Corp. of Am. v. Franchise Tax Bd., 463 U.S. 159 (1983);
Japan Line, Ltd. v. County of L.A., 441 U.S. 434 (1979).
In those cases, the Supreme Court recognized that, with
respect to foreign trade and relations, "the people of the United
States act through a single government with unified and adequate
national power." Japan Line, 441 U.S. at 448 (internal quotation
marks omitted). Consequently, there is a more pressing need for
uniformity in the realm of foreign trade; the government must be
able to "speak with one voice when regulating commercial relations
with foreign governments." Barclays Bank, 512 U.S. at 311(citation and internal quotation marks omitted). We regard this
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concern as equally vivid in non-tax dormant Foreign Commerce Clause
cases. See Nat'l Foreign Trade Council v. Natsios, 181 F.3d 38,
68-69 (1st Cir. 1999), aff'd on other grounds sub nom. Crosby v.
Nat'l Foreign Trade Council, 530 U.S. 363 (2000).
The market participant doctrine complicates this
constitutional algorithm. The Supreme Court has held, in cases
involving domestic commerce, that "if a State is acting as a market
participant, rather than as a market regulator, the dormant
Commerce Clause places no limitation on its activities." S.-Cent.
Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 93 (1984). Under this
elaboration, states have been shielded when engaged in activities
such as purchasing, Hughes v. Alexandria Scrap Corp., 426 U.S. 794,
808-10 (1976), selling commodities produced in a state-owned
facility, Reeves, Inc. v. Stake, 447 U.S. 429, 440 (1980), and
contracting for the construction of public buildings, White v.
Mass. Council of Constr. Employers, Inc., 460 U.S. 204, 205-06,
214-15 (1983). Withal, this shield has relatively modest
dimensions; for example, it does not extend to hybrid
proprietary/regulatory activities that have downstream effects in
a market in which the state is not a participant. See, e.g., S.-
Cent. Timber, 467 U.S. at 84-85 (holding invalid Alaska's practice
of selling state-owned timber with a contractual condition
requiring purchasers partially to process the timber before
shipping it out of state).
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It is uncertain whether the market participant doctrine
applies at all in the context of the dormant Foreign Commerce
Clause. The Supreme Court has never breached this frontier,
although it has insinuated that the doctrine, if viable to any
extent in the area of foreign commerce, would have to be more
narrowly configured. See Reeves, 447 U.S. at 437 n.9 ("We have no
occasion to explore the limits imposed on state proprietary actions
by the 'foreign commerce' Clause. . . . We note, however, that
Commerce Clause scrutiny may well be more rigorous when a restraint
on foreign commerce is alleged."). The issue has arisen
sporadically in other courts, and what little case law there is
appears to be in some disarray. Compare, e.g., Bethlehem Steel
Corp. v. Bd. of Comm'rs, 276 Cal. App. 2d 221, 228-29 (1969)
(holding state "Buy American" statute unconstitutional because it
interfered with federal foreign affairs power, emphasizing its
effect on foreign commerce), with, e.g., Trojan Techs., Inc. v.
Pennsylvania, 916 F.2d 903, 910 (3d Cir. 1990) (holding market
participant exception applicable to Foreign Commerce Clause so as
to shield state "Buy American" law); K. S. B. Tech. Sales Corp. v.
North Jersey Dist. Water Supply Comm'n, 381 A.2d 774, 789 (N.J.
1977) (same). This court has taken pains to leave the question
open. See Natsios, 181 F.3d at 65-66.
The district court, perhaps led astray by the parties,
ventured to resolve this case by plunging into this complex and
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largely undeveloped area of constitutional law. In doing so,
however, the court failed to consider two antecedent statutory
issues that have the capacity either to eliminate the need for
vexing constitutional adjudication or to narrow the constitutional
question. In our judgment, these issues — one of which concerns
the scope of the BAA and the second of which concerns the proper
interpretation of a key aspect of Law 109 — warrant further
development. In addition, the insights gleaned by a further
examination of the two challenged statutes may have some impact on
the question of their downstream effects — a factor that is
relevant to assessing the potential applicability of the market
participant doctrine.
We turn first to the BAA. Early in the game, Antilles
abandoned its claim that the BAA preempts Law 109.3 See Antilles
Cement, 288 F. Supp. 2d at 190 n.1. The BAA remained in the case,
however, through the Commonwealth's insistence that the BAA,
coupled with Congress's knowing acquiescence in the "Buy American"
statutes adopted by several states, furnished evidence of
congressional authorization for statutes such as Law 109. The
district court brushed aside this argument, stating without
elaboration that the BAA "applies only to contracts with federal
3
Antilles abandoned its claim because of its belief that the
BAA did not apply to purchases by the Commonwealth and/or its
agencies. Since this opinion calls that premise into question,
there is no impediment to the plaintiff's reinstating its
preemption argument, should it move to do so in a timely fashion.
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agencies, not to contracts involving . . . agencies of the
Commonwealth of Puerto Rico." Id.The text of the BAA seems to contradict this statement.
It provides that
only such unmanufactured articles, materials,
and supplies as have been mined or produced in
the United States, and only such manufactured
articles, materials, and supplies as have been
manufactured in the United States
substantially all from articles, materials, or
supplies mined, produced, or manufactured, as
the case may be, in the United States, shall
be acquired for public use . . . [unless]
sufficient and reasonably available commercial
quantities and . . . quality [of American-made
goods are not available].
41 U.S.C. § 10a. It further provides, with exceptions not relevant
here, that "[e]very contract for the construction, alteration, or
repair of any public building or public work in the United States"
must contain a clause requiring the "contractor, subcontractors,
material men, or suppliers" to use only American-made goods unless
"the head of the department or independent establishment making the
contract" determines that such usage is impracticable or
unreasonably expensive. Id. § 10b(a). When used in sections 10a
and 10b of the BAA, "[t]he terms 'public use,' 'public building,'
and 'public work' shall mean use by, public building of, and public
work of, the United States, the District of Columbia, Puerto Rico,
American Samoa, the Canal Zone, and the Virgin Islands." Id. §
10c(b) (emphasis supplied). Thus, it is at least arguable that the
BAA applies to public works contracts entered into by the
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government of Puerto Rico and requires that Puerto Rico include in
those contracts a clause restricting the use of foreign goods. It
is also arguable that, if so, Puerto Rico is not free to impose
clauses containing restrictions on the use of foreign goods greater
than those imposed by federal law. So viewed, the constitutional
questions might be avoided by construction of the statute.
We have been able to find only one reported case
interpreting the BAA as it pertains to Puerto Rico. See Caribbean
Tubular Corp. v. Fernandez Torrecillas, 67 B.R. 172 (D.P.R. 1986),
vacated on other grounds sub nom. In re Caribbean Tubular Corp.,
813 F.2d 533, 535 (1st Cir. 1987) (per curiam). There, the
district court concluded that the BAA applied four-square to
procurements and purchases of the Commonwealth. Id. at 174. The
court rejected an argument that the statute only covered federal
procurement and purchases within Puerto Rico. Id. at 174-75. The
court also rebuffed an argument that the Federal Relations Act, 48
U.S.C. §§ 731-731e, which authorized self-government for Puerto
Rico, rendered the BAA locally inapplicable. Id. at 175-76.
The language of the BAA is suggestive and that language,
reinforced by the reasoning of the Caribbean Tubular court, gives
us pause. Although we hesitate to say with certainty — after all,
neither side has briefed the issue — both the BAA and Law 109
appear at first blush to forbid the use of foreign construction
materials unless their domestic counterparts are unavailable in
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sufficient quantities or qualities. Indeed, the parallels between
the BAA and Law 109 are remarkable. The BAA forbids the use of
foreign materials in public works, but gives "the head of the
department or independent establishment making the contract"
authority to determine when to grant exemptions from that rule
based on impracticability or expense. 41 U.S.C. § 10b(a). Law 109
forbids the use of foreign materials in public works and directs an
independent establishment — now the Preference Board — to authorize
exceptions if domestic goods are unavailable or markedly more
costly. 3 P.R. Laws Ann. § 927e.
Notwithstanding these similarities, there are some
salient differences between Law 109 and the BAA.4 For instance,
the BAA permits the use of foreign goods if it is in the "public
interest," 41 U.S.C. § 10d, and Law 109 does not contain such an
exception. There are also disparities between the BAA and Law 109
as the former has been interpreted in federal regulations. One
such disparity is that the preference for domestic construction
materials in procurement by federal agencies is 6%, see 48 C.F.R.
§ 25.204(b), whereas the Preference Board currently sets the
preference for purposes of Law 109 at 15%. Furthermore, the BAA
4
Among other things, Law 109 goes well beyond the BAA in that
it forbids procurement of American cement not manufactured in
Puerto Rico. Because Antilles does not contest the lower court's
finding, Antilles Cement, 288 F. Supp. 2d at 193, that it lacks
standing to challenge the provisions of Law 109 insofar as those
provisions apply to American-made cement manufactured off-island,
we need not dwell upon this difference.
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requires contracts for construction of public buildings to favor
items manufactured in the United States that are "substantially
all" composed from American raw materials. 41 U.S.C. § 10b. The
applicable federal regulation defines "substantially all" as
meaning at least 50%. See 48 C.F.R. § 25.101(a)(2). In
contradistinction, Law 109 seems to require that cement be
manufactured 100% from indigenous (Puerto Rican) raw materials,
save for those indigenous materials that are unavailable in
commercial quantities. See 3 P.R. Laws Ann. § 927(d).
Viewed in this light, one might reasonably question
whether Law 109, in its differential treatment of foreign goods, is
consistent or inconsistent with federal law. This question can be
explored on remand, along with the related questions of whether the
BAA essentially preempts Law 109, see Natsios, 181 F.3d at 73-77,
or whether it represents direct congressional authorization for
that law. See N.Y. State Dairy Foods, Inc. v. Northeast Dairy
Compact Comm'n, 198 F.3d 1, 9 (1st Cir. 1999) (noting that
discriminatory state legislation may be shielded from dormant
Commerce Clause scrutiny if congressional consent is "expressly
stated or made unmistakably clear" (citation and internal quotation
marks omitted)); Houlton Citizens' Coalition, 175 F.3d at 184(explaining that "[t]he dormant Commerce Clause does not affect
state or local regulations directly authorized by Congress"). If
the final question were to be answered in the affirmative — a
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matter on which we take no view — that answer would cast doubt upon
the district court's holding that, in enacting the BAA, "Congress
has given express approval for restrictions on the use of foreign
materials in federally-funded construction projects . . . [but] has
not granted similar approval for laws prohibiting the use of
foreign materials in . . . construction projects [funded by the
Commonwealth of Puerto Rico]." Antilles Cement, 288 F. Supp. 2d at
201. After all, the district court predicated this holding on the
assumption, quite possibly incorrect, that the BAA did not
expressly apply to Puerto Rico.
There is another unanswered question looming here. We
already have mentioned the market participant doctrine. Even were
we to assume that the doctrine applies in this context — a matter
on which we take no view — it is readily evident that determining
whether particular state activity constitutes market participation
would require a clear understanding of what the state is doing.
The record in this case does not furnish the basis for
such an understanding. One problem is that the scope of Law 109 is
unclear. On its face, section 927a does not appear to limit the
law's application to government contracts for construction goods
and services, but, rather, to reach all competitively bid
construction projects subsidized to any extent by either the
Commonwealth or the federal government. Notwithstanding the
breadth of the language contained in section 927a, however,
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sections 927b and 927c seem less expansive. Whether the latter two
provisions act to narrow section 927a is an open question.
Without discussing this tension, the district court
assumed that Law 109 was limited to public works projects. See
Antilles Cement, 288 F. Supp. 2d at 189. Based on that assumption,
the court concluded that Puerto Rico was acting as a market
participant with respect to construction goods and services. Id.
at 194. Whatever the lower court may have been told — the record
is silent on the subject — we have been given reason to doubt its
underlying assumption.
At oral argument in this court, we queried the parties as
to whether Law 109 applies to private development projects for
which either the Commonwealth or the federal government provided
some funding (say, a grant to an entrepreneur building housing for
the elderly). The Commonwealth and Antilles, who have agreed on
little else during the currency of this litigation, both asserted
that Law 109 would apply in such situations.5 The intervenor
disagreed, maintaining that the law only applies to public works.
Remarking the obvious — that the Commonwealth would be hard-pressed
to portray itself as a market participant if the statute regulated
private sector construction — we invited supplemental briefing.
5
Antilles's counsel further asserted that, as a result of this
law, Antilles had been unable to sell off-island cement products to
private developers. There are no facts in the record that either
support or contradict that assertion.
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The supplemental briefs provide scant assistance.
Antilles elected not to file one. The Commonwealth made a complete
about-face and took the position that Law 109 only applies to
public works. The intervenor remained steadfast in its view,
noting that the title of Law 109 describes it as providing "for the
use of all types of construction materials manufactured in Puerto
Rico in the public works and buildings to be constructed,
reconstructed, preserved or repaired with public funds." 1985 P.R.
Laws at 378. As the title of an act may shed some light on its
meaning, E. Mt. Platform Tennis, Inc. v. Sherwin-Williams Co., 40
F.3d 492, 499 (1st Cir. 1994), this is helpful — but far from
conclusive.
A second obstacle impedes our effort to gauge Law 109's
reach: the record is devoid of any factual evidence of custom,
usage, or administrative practice. While the docket does contain
a translation of the Preference Board's "Guidelines for the
Interpretation and Application of Laws" — a document compiled in
2002 that discusses Law 109 — those guidelines do not purport to be
definitive with respect to the law's scope.6 To add to the
mystery, the local courts have had virtually no occasion to discuss
Law 109. Given this apparent void, evidence of custom, usage, and
6
The most relevant datum contained in the guidelines is a
footnote stating that Law 109 "is applicable to government entities
. . . and also to contractors and their subcontractors who perform
construction work under government contracts" (emphasis supplied).
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administrative practice is likely to be useful. The statute is now
almost twenty years old. If the agencies charged with enforcing
its command consistently have interpreted the language one way or
another, that fact may prove to be of considerable assistance in
determining the statute's meaning. See Pharm. Research & Mfrs. of
Am. v. Concannon, 249 F.3d 66, 75 (1st Cir. 2001) (holding that
deference is owed to state agency's interpretation of state law);
Zambrana v. Gonzalez, 145 P.R. Dec. 616, 639 (P.R. 1998) (stating
that "the administrative interpretation given to an act by the
[Commonwealth] agency in charge of enforcing it deserves great
weight and deference").
These issues — the applicability of the BAA to Puerto
Rico, its significance (if any) as a sign of either congressional
authorization for or inconsistency with Law 109, the scope and
proper interpretation of Law 109, and the custom, usage, and
administrative practice that has gone before — are important.
Singly or in combination, they have the potential of allowing a
court to avoid, or at least to frame more precisely, a potentially
difficult constitutional inquiry. Yet, these issues remain virgin
territory. They have not been briefed or argued; they have not
been vetted in the district court; and they have not been the focus
of any discovery.
In the past, we have not shied from remanding cases when
significant questions of fact or law have been insufficiently
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considered by the parties or the trial court. See, e.g., Anderson
v. Boston Sch. Comm., 105 F.3d 762, 769 (1st Cir. 1997); In re San
Juan Dupont Plaza Hotel Fire Litig., 45 F.3d 564, 568-69 (1st Cir.
1995); see also 28 U.S.C. § 2106 (stating that appellate courts
"may remand [a] cause and . . . require such further proceedings to
be had as may be just under the circumstances"). This makes good
sense, as the district court is in the best position to develop the
record regarding previously overlooked issues, to examine their
factual foundations, and to explore their legal ramifications. We
elect to follow that salutary praxis here.
We do not limit this disposition to the issues
surrounding Law 109. The lower court's decision to declare Law 132
unconstitutional is inextricably intertwined with, and ostensibly
justified by, its decision anent the constitutionality of Law 109.
See Antilles Cement, 288 F. Supp. 2d at 202 ("As the Court today
has ruled that Law 109 is unconstitutional, Defendants are not
permitted to order that cement bags carry warnings reflecting the
language of Law 109. Therefore, the Court holds that the portions
of . . . Law 132 that impact upon foreign commerce are
unconstitutional under the Foreign Commerce Clause."). We
therefore remand the Law 132 issues as well and direct the district
court to reconsider its ruling with regard thereto in light of the
additional information (factual and legal) that it will glean in
the course of the remand.
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IV. CONCLUSION
We need go no further. For the reasons elucidated above,
we remand to the district court for further proceedings consistent
with this opinion. While we vacate the court's declaratory
judgment, we do not vacate the existing injunction at this time.
We believe that the more orderly course is for the district court,
on remand, to consider whether the usual criteria counsel in favor
of preliminarily enjoining enforcement of the statutes pendente
lite. See, e.g., Ross-Simons of Warwick, Inc. v. Baccarat, Inc.,
102 F.3d 12, 15 (1st Cir. 1996) (limning four-part test for
preliminary injunctive relief); Narragansett Indian Tribe v.
Guilbert, 934 F.2d 4, 5 (1st Cir. 1991) (same). The district court
should make that determination within ninety days of the date of
this court's judgment. Cf. Langlois v. Abington Hous. Auth., 207
F.3d 43, 52 (1st Cir. 2000) (remanding but maintaining the status
quo for a limited period of time while affording the parties and
the trial court an opportunity to develop arguments about new
issues not previously addressed in the trial court). We intimate
no view on the outcome of this or any other issue in the case.
Appeal No. 04-1232 is dismissed as moot. The remaining
appeals are terminated and the case remanded to the district court
with instructions as contained herein. All parties shall bear
their own costs. So ordered.
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