Come to Ipse Dixit to see what I'm talking about today.
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© The Society for More Creative Speech, 2000.
All rights reserved.
Date Last Modified: 23 June 2000.
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Gratifyingly, the Supreme Court ruled on this case a few weeks after I drafted this mock opinion; they concurred unanimously with my judgement (which was rather bright of them, I think).
NATSIOS v. NATIONAL FORIEGN TRADE COUNCIL
Harris, J. delivered the opinion of the Court.
In 1996, the State of Massachusetts enacted the "Mass. Burma Law".1 The Law restricts the State from entering into contracts to provide goods and services to Massachusetts agencies with companies doing business in Myanmar. The Law defines "doing business" expansively.2 Under the Law, Massachusetts prepares and circulates a restricted purchase list of companies known to do business in Myanmar.3 State agencies are effectively required to increase the bid price for goods and services by 10 percent if the bidder is on the restricted purchase list.4
The Law does not explicitly prohibit any person or corporation from doing business in Myanmar. Rather, it forces companies to choose between doing business with Myanmar or the State of Massachusetts.5 Statements of the sponsors of the Mass. Burma Law indicate that its purpose is to use its purchasing power to condemn Myanmar and to affect the domestic policies of that nation. None of the legislative history of the Law indicates that it is expected to provide any economic benefit to Massachusetts, its agencies, or its citizens.
Shortly after Massachusetts enacted the Law, Congress enacted the "Federal Burma Law"6 in response to political conditions in Myanmar. The federal law did not include trade sanctions.7 Congress instead granted the President the power to impose trade sanctions if warranted.8
In 1997, the President imposed sanctions on Myanmar pursuant to the authority granted in the Federal Burma Law.9 The federal law and executive order pursue a balance between too harsh sanctions, which would eliminate the possibility of further influencing the Myanmar regime, and too-lenient sanctions that would be ineffective.
On April 30, 1998, the NFTC filed suit in seeking a declaratory judgment that the Mass. Burma Law was unconstitutional and a permanent injunction barring its enforcement.10 The district court granted the injunction, holding that the federal government had exclusive authority to regulate foreign affairs.11 On appeal, the First Circuit affirmed.12 We now affirm.
A. The Foreign Affairs Power of the Federal Government
Under our Constitution, the conduct of foreign affairs is reserved exclusively to the federal government. The historical record of the Constitution, the Federalist Papers, and 200 years of this Court's precedents all point to the importance of adherence to this “single voice” rule.
Under the Articles of Confederation, the several States were free to conduct their own foreign policy. The inability of the central government to conduct a unified foreign policy led to embarrassment and conflict with foreign powers due to inconsistent and self-serving local policy and the intransigence of local policymakers.13 These difficulties, and the danger of the fledgling Republic's weak central government they revealed, shared a significant role in the decision to recast the form of our national government into the federal Constitution in 1787.14
The Constitution's grant of power over foreign affairs to the federal government is exclusive, though it is divided amongst the branches.15 Where the Constitution does mention the States in a foreign policy context in the Constitution, it is in the form of limitations on their power.16 The Constitution's foreign affairs provisions have been long understood to mean that power over foreign affairs is vested exclusively in the federal government.17
Our decisions have consistently echoed this concern.18 Nevertheless, the dissent argues that the Constitution's specific enumerations of particular foreign-affairs powers define the limits of federal exclusivity. We have consistently and unequivocally rejected this argument.19
This line of decision in our foreign-relations jurisprudence was most recently confirmed in Zschernig v. Miller, 389 U.S. 429 (1968), which concluded that "foreign affairs and international relations" are "matters which the Constitution entrusts solely to the Federal Government."20 Zschernig confirms that the exclusive federal authority to regulate foreign relations is violated by state or local laws that have more than an "incidental or indirect effect in foreign countries," or that have "great potential for disruption or embarrassment" of United States foreign policy.21 Since Zschernig, we have reaffirmed that the federal foreign-affairs power is not merely supreme to, but completely "exclusive" of, the states.22
The dissent would have us treat Zschernig as an anomaly and presses us to restrict that case to its facts. But, as we have recounted above, constitutional history and structure, as well as case law before and since Zschernig, demonstrate that Zschernig is consistent with the doctrine of federal foreign affairs power that has been followed since the Constitution was ratified. Alternatively, the dissent argues that the Mass. Burma Law is predominantly local in character, its purpose and effect being to disassociate Massachusetts from Myanmar. Even were we to accept this as true, Zschernig holds that state statutes, even if nominally local in character, can intrude "into the field of foreign affairs which the Constitution entrusts to the President and the Congress."23
Because we find that the Mass. Burma Law to be indistinguishable from the law invalidated in Zschernig, we find the Mass. Burma Law to be an unconstitutional exercise of foreign-affairs power by the Commonwealth of Massachusetts.
B. Foreign Commerce Clause
We also fail to see any compelling reason to disturb the Court of Appeals decision that the Mass. Burma Law is impermissible under the Foreign Commerce Clause in that it a) singles out commerce with and in Myanmar and treats that commerce less favorably than it does domestic and other international commerce,24 b) seeks to regulate commerce far beyond the borders of Massachusetts,25 and c) significantly impairs the ability of the federal government to "speak with one voice when regulating commercial relations with foreign governments."26
The dissent is most emphatic in its insistence that the Mass. Burma Law is valid under the market participant exception. This doctrine frees States from the Interstate Commerce Clause when they are participating in a market in a proprietary fashion.27 We have never held that this exception applies to the Foreign Commerce Clause,28 but the action here fails to qualify in any event because we have consistently held that the market participant exception is inapplicable where the State action is regulatory in nature. The Mass. Burma Law is indistinguishable from the Alaska statute we struck down as regulatory in South-Central Timber. There, as here, the State law acted as a secondary boycott on economic activity not directly related to the State's purported purpose.
Because we find the Mass. Burma Law to be regulatory, rather than proprietary, we continue to reserve the question whether or not the Foreign Commerce Clause admits of an exception for market participation.
C. Approval of Mass. Burma Law by Congress
The dissent, citing Barclays Bank PLC v. Franchise Tax Board, 512 U.S. 298 (1994), also urges that we shield the Mass. Burma Law from scrutiny on the theory that Congress has implicitly approved the law insofar as Congress was aware of the Mass. Burma Law when it enacted the federal Burma Law yet it failed to pre-empt it. We do not find anything in Barclays to support a rule that failure to pre-empt confers "implicit... permission" for the Law.29 Our case law is not entirely clear as to whether or not Congress may in fact authorize a State to pass foreign affairs legislation.30 Nevertheless, even if we set this question aside, Congress has not in fact approved the Burma Law, implicitly or otherwise. In fact, Barclays confirms that, where a law is discriminatory, any permissive intent Congress may intend must be conveyed “with... unmistakable clarity."31 Since the Mass. Burma Law is discriminatory on its face and there is no affirmative indication that Congress intended to approve of the law, we need not reach the question whether Congress in fact possesses the authority to give such approval.
The Mass. Burma Law unconstitutionally intrudes on exclusive Federal authority in the sphere of foreign affairs. Further, the Law violates the Foreign Commerce Clause and is not explicitly authorized by Congress. The judgment of the Court of Appeal that the Mass. Burma Law is unconstitutional and the injunction permanently enjoining enforcement of the Law are therefore affirmed.
It is so ordered.
1 "An Act Regulating State Contacts with Companies Doing Business with or in Burma (Myanmar)" ch. 130, 1996, Mass. Acts 239 (codified at Mass. Gen. Laws ch.7, §§ 22G-22M, 40F ˝ (West Supp.1998)).
2 The Mass. Burma Law defines "doing business" as:
3 Id. § 22J.
4 To prevent itself from being included on the list a company must provide documentation demonstrating to the State why it should not be listed. Id. § 22H. State agencies must give a preference for bids to provide goods and services which are up to 10 percent higher than a bid from a company on the restricted purchase list. See id. § 22G. The Law makes explicit exceptions for companies whose sole business in Myanmar is reporting the news or providing goods and services for international telecommunications. Id. § 22H(e). The Law also makes exception for firms whose sole line of business in Myanmar is selling medical supplies. Id. § 22I.
5 Massachusetts has significant purchasing power; contracts with the State total more than $2 billion each year. At the time this case was filed, the list contained 346 companies, including 44 U.S. companies, and numerous foreign companies with U.S. subsidiaries and affiliates. According to the Law's sponsor, at least 13 companies have exited Myanmar because of the Law's passage. Some NFTC members have chosen to discontinue doing business in Myanmar to avoid sanctions; others have been penalized by Massachusetts for continuing to do business in Myanmar.
6 See Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1997, § 570, 110 Stat. 3009-166 to 3009-167 (enacted by the Omnibus Consolidated Appropriations Act, 1997, Pub.L. No. 104-208, § 101(c), 110 Stat. 3009-121 to 3009-172 (1996))
7 The Federal Burma Law prohibits all but humanitarian, anti-narcotic, or promotion of democracy assistance to Myanmar. Id. § 570(a)(1). The Law directs the Secretary of the Treasury to vote against assistance to Myanmar in international financial institutions and bars Myanmar officials from entering the United States. Id. § 570(a)(2),(3).
8 Id. § 570(b).The Federal Burma Law empowered the President to restrict only "new investment" in Myanmar, and not contracts for goods, services, or technology. Id. §§ 570(f)(2). The President was further authorized to waive any sanctions if "he determines and certifies to Congress that the application of such sanction would be contrary to the national security interests of the United States." Id. § 570(e).
9 See Exec. Order No. 13,047, 62 Fed.Reg, 28,301 (1997)
10 There was no factual dispute, including no dispute concerning the human-rights situation in Myanmar. The lower court's decision was decided entirely as a matter of law. The Court of Appeals therefore reviewed the district court decision de novo. See Philip Morris Inc. v. Harshbarger, 122 F. 3d 58, 61-62 (1st Cir. 1997).
11 The district court did not agree, however, that the NTFC had demonstrated that the Mass. Burma Law was pre-empted by the Federal Burma Law nor did the district court reach the NTFC's contention that the Mass. Burma Law violated the Foreign Commerce Clause.
12 The Appellate Court held that: (1) the Mass. Burma Law is unconstitutional because it encroached on the federal government's exclusive power over foreign relations; (2) Massachusetts did not act as a mere market participant within the recognized exception to Commerce Clause restrictions; (3) the Law violates the Foreign Commerce Clause; and (4) federal law imposing sanctions on Burma pre-empted the Massachusetts Burma Law.
13 See F. Marks, Independence on Trial: Foreign Affairs and the Making of the Constitution, at 11, 60-66 (1973).
14 Id. at 50. See also LeFeber, The Constitution and United States Foreign Policy: An Interpretation, 74 J. Am. Hist. 695, 697 (1987)("Nothing contributed more directly to the calling of the 1787 Constitutional Convention than did the spreading belief that under the Articles of Confederation Congress could not effectively and safely conduct foreign policy.").
The Constitution grants Congress the power to "lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States," U.S. Const. art. I, § 8, cl. 1, "regulate Commerce with foreign Nations," id. cl. 3, " establish an uniform Rule of Naturalization," id. cl. 4, "define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations," id. cl. 10, and " declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water," id. cl. 11.
15 The Constitution declares that the President shall be Commander in Chief, id. art. II, § 2, cl. 1, and, with the advice and consent of the Senate, grants him the power "to make Treaties" and to "appoint Ambassadors," id. cl. 2. Additionally, the President "shall receive Ambassadors and other public Ministers." Id. § 3.
16 The States are forbidden to "enter into any Treaty, Alliance, or Confederation" or to "grant Letters of Marque and Reprisal," id. art. I, § 10, cl. 1, may not "without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing [State] inspection Laws," id. cl. 2, and may not, "without the Consent of Congress... enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay," id. cl. 3.
17 James Madison commented that "[i]f we are to be one nation in any respect, it clearly ought to be in respect to other nations." Federalist No. 42, at 302. See also Federalist No. 32, at 198 ("[A]lienation of state sovereignty" occurs "where the Constitution in express terms granted an exclusive authority to the Union; where it granted in one instance an authority to the Union and in another prohibited the States from exercising the like authority; and where it granted an authority to the Union, to which a similar authority in the States would be absolutely and totally contradictory and repugnant.") See also Federalist No. 44, at 281 "This alteration [in the structure of the government] is fully justified by the advantage of uniformity in all points which relate to foreign powers; and of immediate responsibility to the nation in all those for whose conduct the nation itself is to be responsible."
18 Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 427 n.25 (1964). Holmes v. Jennison, 39 U.S. (14 Pet.) 540, 575-76 (1840) (opinion of Taney, C.J.)("Every part of [the Constitution] shows that our whole foreign-intercourse was intended to be committed to the hands of the general government.... It was one of the main objects of the Constitution to make us, so far as regarded our foreign relations, one people, and one nation; and to cut off all communications between foreign governments and the several state authorities."); Hines v. Davidowitz, 312 U.S. 52 (1941)(The national government's authority over foreign relations as "full and exclusive," "entirely free from local interference"); United States v. Pink, 315 U.S. 203, 233 (1942)(National government's authority over foreign relations "not shared by the States [but] vested in the national government exclusively.”); Board of Trustees v. United States, 289 U.S. 48, 59 (1933) ("In international relations and with respect to foreign intercourse and trade the people of the United States act through a single government with unified and adequate national power."); United States v. Arjona, 120 U.S. 479, 483 (1887) ("The Government of the United States has been vested exclusively with the power of representing the nation in all its intercourse with foreign countries."); The Legal Tender Cases, 79 U.S. (12 Wall.) 457, 555 (1870) (Bradley, J., concurring)(the national government "is invested with power over all the foreign relations of the country, war, peace, and negotiations and intercourse with other nations; all of which are forbidden to the state governments").
19 United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 315-16 (1936)("The broad statement that the federal government can exercise no powers except those specifically enumerated in the Constitution, and such implied powers as are necessary and proper to carry into effect the enumerated powers, is categorically true only in respect of our internal affairs.").; Fong Yue Ting v. United States, 149 U.S. 698, 711 (1893)(The "entire control of international relations" is vested in the federal government not just because of the Constitution's specific textual provisions, but due to the United States' status as a "sovereign and independent nation.")
20 Zschernig v. Miller, 389 U.S. 429, 436 (1968). Zschernig involved a facially neutral Oregon probate law that conditioned the inheritance rights of a nonresident alien upon the alien's ability to demonstrate that his country of origin would grant reciprocal rights to a U.S. citizen. Id. at 430-31. However, under the Oregon law, judges searched "for the 'democracy quotient' of a foreign regime." This use of the law had "great potential for disruption or embarrassment" (id. at 435) "affect[ed] international relations in a persistent and subtle way," and "impair[ed] the effective exercise of the Nation's foreign policy." Id. at 440.
21 Id. at 434-35.
22 See Perpich v. Department of Defense, 496 U.S. 334, 353 (1990); South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 92 n.7 (1984).
23 Zschernig at 432.
24 For over a century, the position of this Court has been that "one main object of the Constitution" was preventing "discriminations favorable or adverse to commerce with particular foreign nations [that] might be created by State laws." Cooley v. Board of Wardens, 53 U.S. (12 How.) 299, 317 (1851).
25 Bonaparte v. Tax Court, 104 U.S. 592, 594 (1881) (“State can[not] legislate except with reference to its own jurisdiction"). See also BMW of North America, Inc. v. Gore, 517 U.S. 559, 571 (1996) (No single State may "impose its own policy choice[s] on neighboring States").
26 Japan Line, Ltd. V. County of Los Angeles, 441 U.S. 434, 449 (1979).
27 Camps Newfound/Owatonna, Inc. v. Town of Harrison, Maine, 520 U.S. 564 (1997) (a state "acting in its proprietary capacity... may 'favor its own citizens over others. "). See also Reeves, Inc. v. Stake, 447 U.S. 429 (1980)(permissible for a South Dakota-owned cement plant to prefer residential sales over out-of-state sales); Hughes v Alexandria Scrap Corp., 426 U.S. 794 (1976)(Maryland may purchase scrap automobiles solely from in-state scrap processors to help rid the state of junk cars); White v. Massachusetts Council of Construction Employers, Inc., 460 U.S. 204 (1983)(mayoral order requiring all City of Boston-funded construction projects to be performed by a work force comprised of at least 50% bona fide Boston residents upheld).
28 See Reeves, 447 U.S. at 437 n.9; South-Central Timber, 467 U.S. 82, 92 (1984)(Alaska statute requiring all purchasers of state-owned timber to process that timber in-state was downstream regulation, not proprietary activity).
29 In Barclays, we rebuffed a Foreign Commerce Clause "speak-with-one-voice" challenge to a nondiscriminatory California tax statute requiring worldwide combined reporting of income and expenses in part because Congress had thoroughly debated, but not enacted, numerous bills that would have eliminated the challenged state-taxation system. 512 U.S. at 325-26. We concluded that "[g]iven these indicia of Congress' willingness to tolerate" the taxation scheme, there was no threat to Congress' ability to speak with "one voice." Id. at 37.
30 See, eg., DeCanas v. Bica, 424 U.S. 351 (1976)(if California's alien-employment statute had in fact been a "constitutionally proscribed regulation of immigration," Congress "would be powerless to authorize or approve" it).
31Barclays at 323.
Come to Ipse Dixit to see what I'm talking about today.
Fold Space Back To Signal-To-Noise.
Fold Space Back To House Atreides.
© The Society for More Creative Speech, 2000.
All rights reserved.
Date Last Modified: 23 June 2000.
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