diff --git a/refpolicy/Makefile b/refpolicy/Makefile
index 3cddbd9..00f3235 100644
--- a/refpolicy/Makefile
+++ b/refpolicy/Makefile
@@ -219,7 +219,7 @@ USER_FILES := $(POLDIR)/users
 
 ALL_LAYERS := $(filter-out $(MODDIR)/CVS,$(shell find $(wildcard $(MODDIR)/*) -maxdepth 0 -type d))
 ifdef LOCAL_ROOT
-LOCAL_LAYERS := $(filter-out $(LOCAL_MODDIR)/CVS,$(shell find $(wildcard $(LOCAL_MODDIR)/*) -maxdepth 0 -type d))
+ALL_LAYERS += $(filter-out $(LOCAL_MODDIR)/CVS,$(shell find $(wildcard $(LOCAL_MODDIR)/*) -maxdepth 0 -type d))
 endif
 
 GENERATED_TE := $(basename $(foreach dir,$(ALL_LAYERS),$(wildcard $(dir)/*.te.in)))
@@ -339,7 +339,7 @@ $(POLXML): $(DETECTED_MODS:.te=.if) $(foreach dir,$(ALL_LAYERS),$(dir)/$(LAYERXM
 	@test -d $(TMPDIR) || mkdir -p $(TMPDIR)
 	$(verbose) echo '<?xml version="1.0" encoding="ISO-8859-1" standalone="no"?>' > $@
 	$(verbose) echo '<!DOCTYPE policy SYSTEM "$(notdir $(XMLDTD))">' >> $@
-	$(verbose) $(GENXML) -m $(LAYERXML) -t $(GLOBALTUN) -b $(GLOBALBOOL) -o $(TMPDIR) $(ALL_LAYERS) $(LOCAL_LAYERS) >> $@
+	$(verbose) $(GENXML) -m $(LAYERXML) -t $(GLOBALTUN) -b $(GLOBALBOOL) -o $(TMPDIR) $(ALL_LAYERS) >> $@
 	$(verbose) if test -x $(XMLLINT) && test -f $(XMLDTD); then \
 		$(XMLLINT) --noout --path $(dir $(XMLDTD)) --dtdvalid $(XMLDTD) $@ ;\
 	fi
diff --git a/refpolicy/Rules.modular b/refpolicy/Rules.modular
index f534a95..18e29e9 100644
--- a/refpolicy/Rules.modular
+++ b/refpolicy/Rules.modular
@@ -25,9 +25,9 @@ MOD_PKGS := $(addprefix $(BUILDDIR)/,$(notdir $(MOD_MODS:.te=.pp)))
 INSTPKG := $(addprefix $(MODPKGDIR)/,$(notdir $(BASE_PKG)) $(MOD_PKGS))
 
 # search layer dirs for source files
-vpath %.te $(ALL_LAYERS) $(LOCAL_LAYERS)
-vpath %.if $(ALL_LAYERS) $(LOCAL_LAYERS)
-vpath %.fc $(ALL_LAYERS) $(LOCAL_LAYERS)
+vpath %.te $(ALL_LAYERS)
+vpath %.if $(ALL_LAYERS)
+vpath %.fc $(ALL_LAYERS)
 
 .SECONDARY:
 
diff --git a/refpolicy/Rules.monolithic b/refpolicy/Rules.monolithic
index b04723f..b383186 100644
--- a/refpolicy/Rules.monolithic
+++ b/refpolicy/Rules.monolithic
@@ -28,9 +28,9 @@ POST_TE_FILES := $(USER_FILES) $(POLDIR)/constraints
 POLICY_SECTIONS := $(TMPDIR)/pre_te_files.conf $(TMPDIR)/generated_definitions.conf $(TMPDIR)/all_interfaces.conf $(TMPDIR)/all_attrs_types.conf $(GLOBALBOOL) $(GLOBALTUN) $(TMPDIR)/only_te_rules.conf $(TMPDIR)/all_post.conf
 
 # search layer dirs for source files
-vpath %.te $(ALL_LAYERS) $(LOCAL_LAYERS)
-vpath %.if $(ALL_LAYERS) $(LOCAL_LAYERS)
-vpath %.fc $(ALL_LAYERS) $(LOCAL_LAYERS)
+vpath %.te $(ALL_LAYERS)
+vpath %.if $(ALL_LAYERS)
+vpath %.fc $(ALL_LAYERS)
 
 ########################################
 #