Crosby, Mass. Secy. of Finance v. National Foreign Trade Council (06/19/2000)

By: Laura Sivitz, Medill News Service

Questions presented

(1) Do economic sanctions against Burma enacted by Congress in 1996 — three months after enactment of the Massachusetts Burma Law — implicitly permit, or preempt, state and local selective purchasing laws regarding Burma? (2) Do selective purchasing laws represent ""market participation,"" not regulation, making them exempt from claims based on the Foreign Commerce Clause and the foreign affairs power of the federal government? (3) Do selective purchasing laws unconstitutionally interfere with the power of federal government to conduct foreign affairs? (4) Do selective purchasing laws discriminate against foreign commerce in violation of the Foreign Commerce Clause?

Brief

A military dictatorship overthrew Burmas government in 1988, renamed the southeast Asian country ""Myanmar"" and launched a policy of intimidation toward its people. The government arrested anyone who posed a democratic challenge — including the 1991 Nobel Peace Prize winner, Aung San Suu Kyi.

Appalled by these human rights abuses, Massachusetts decided to protest. In 1996 it became the first state to pass a law that restricted state agencies from purchasing from companies with ties to Burma. The legislation became known as the Massachusetts Burma Law.

Many local governments including Los Angeles and New York City have enacted similar laws targeting repressive regimes such as Burma, Cuba and Nigeria.

Businesses with ties to Burma landed on Massachusetts ""restricted trade"" list. The list came to include 34 members of the National Foreign Trade Council, a non-profit advocate for American companies that do business abroad.

Three months after Massachusetts passed its Burma Law, the U.S. Congress passed the Federal Burma Law, which imposes sanctions on Burma to pressure the country into ""improving its human rights practices and implementing democratic government.""

But the federal law imposes different restrictions than Massachusetts. In fact, it is possible for a company to be on Massachusetts restricted trade list while acting legally under federal law.

This influenced the National Foreign Trade Council to file suit in U.S. District Court in Boston in April 1998, seeking to enjoin state officials from enforcing the Massachusetts Burma Law. The council declared its lawsuit would be a test case challenging the right of state and local governments to establish sanctions against foreign countries.

The suit named as defendants Andrew S. Natsios, then the Massachusetts secretary of administration and finance, and Philmore Anderson III, state purchasing agent.

In its complaint, the council contended the Massachusetts Burma Law unconstitutionally interferes with federal foreign relations power, violates the Foreign Commerce Clause and is preempted by the Federal Burma Law.

U.S. District Judge Joseph L. Tauro declined to consider the argument that the Massachusetts law violates the Foreign Commerce Clause. He also decided the trade council had failed to carry its burden of proving the Massachusetts law is preempted by the federal statute.

But Judge Tauro granted declaratory and injunctive relief because he found the state law unconstitutionally infringes upon the foreign affairs power of the federal government. He based his decision on the 1968 Supreme Court opinion in Zschernig v. Miller.

The Massachusetts Burma Law has a ""disruptive impact on foreign relations,"" the judge wrote in finding it unconstitutional. ""States and municipalities must yield to the federal government when their actions affect significant issues of foreign policy,"" he held, quoting from Zschernig.

The 1st Circuit Court of Appeals unanimously affirmed, ruling in favor of the trade council on all three causes of action.

Writing for the court on June 22, 1999, Judge Sandra Lynch agreed that the Massachusetts Burma Law is unconstitutional under Zschernig.

In addition she gave three reasons why the law violates the Foreign Commerce Clause: it discriminates against foreign commerce, it attempts to regulate conduct outside the United States, and it ""impedes the federal governments ability to speak with one voice in foreign affairs.""

The appeals court also decided the Massachusetts Burma Law violates the Supremacy Clause. The court reasoned that the federal government was acting in an area of unique federal concern — foreign policy — through a balanced, tailored approach. The state Burma law threatens to upset that balance because its approach is blunt and its restrictions, overly broad. For that reason, the Federal Burma Law preempts it.

On Nov. 29, 1999, the U.S. Supreme Court granted certiorari.

Amici weighing in for the National Foreign Trade Council include the Clinton administration, the U.S. Chamber of Commerce, the European Union, the National Association of Manufacturers and the American Petroleum Institute. In addition, George P. Shultz, Alexander M. Haig, Ed Meece, Brent Scowcroft and at least 10 other former government officials have jointly filed an amicus brief through the Atlantic Legal Foundation.

Massachusetts friends of the court include the AFL-CIO, the National Governors Association, the National Conference of Mayors and 22 State Attorneys General. The Sierra Club and the Unitarian Universalist Service Committee are among 64 non-profit organizations filing amicus briefs along with Sen. Edward Kennedy (D-Mass.), Sen. Barbara Boxer (D-Cal.) and 76 other U.S. congressmen.

On June 19, 2000, a unanimous Court affirmed, holding that Massachusetts infringed on the foreign policymaking prerogatives of the federal government, and therefore that the state law was preempted under the Supremacy Clause of the Constitution.

The Court, in an opinion written by Justice David Souter, found that Massachusetts' law was problematic on three counts; first that it created an obstacle to the President's discretion to control economic sanctions against Burma, second that the state law interfered with Congress' intention to limit economic pressure against the Burmese Government by penalizingindividuals and conduct that Congress had explicitly exempted or excluded from sanctions, and third that the state law conflicted with thePresident's authority to speak for the United States among the world's nations to develop a comprehensive, multilateral strategy ""to bring democracy to and improve human rights practices and the quality of life in Burma.""

In answer to the argument that the Massachusetts law was no different from the state and local boycotts against South Africa, Justice Souter wrote, ""Since we never ruled on whether state and local sanctions against South Africa in the 1980s were pre-empted or otherwise invalid, arguable parallels between the two sets of federal and state acts do not tell us much about the validity of the latter.""