Academic journal article Law and Policy in International Business

Crosby V. NFTC and the Future of State and Local Sanctions

Academic journal article Law and Policy in International Business

Crosby V. NFTC and the Future of State and Local Sanctions

Article excerpt

I. INTRODUCTION

The Supreme Court had occasion to address last term, for the first time since its 1968 decision in Zschernig v. Miller,(1) whether the Constitution's allocation of the foreign affairs power to the federal government leaves any role for state and local governments. In Crosby v. National Foreign Trade Council,(2) the Supreme Court struck down a Massachusetts law effectively banning state agency procurement of goods or services from companies doing business with Burma. The Court held that the Massachusetts law was in conflict with a federal Burma-sanctions statute and was therefore preempted under the Supremacy Clause.(3) Proponents of local foreign policy initiatives have emphasized that the Court's decision disposes of the law on the relatively narrow ground of statutory preemption.(4) Though perhaps limited as a technical matter, the Court's opinion rests on observations and reasoning that suggest a more sweeping constitutional reach. Properly understood, Crosby offers more cause for concern than comfort to the advocacy groups that have seized upon local foreign policymaking to advance their many causes.(5)

II. CROSBY'S HOLDING

A. Conflict Preemption

The Court's ruling in Crosby was straightforward: because a federal statute imposed economic sanctions on Burma, the Supremacy Clause of the Constitution preempted Massachusetts's parallel effort to punish Burma.(6) More specifically, the Court ruled that the Massachusetts law threatened to frustrate federal statutory objectives in at least three ways.

First, the Massachusetts sanctions were mandatory and perpetual, unlike the federal law which confers wide discretion on the President. Most significantly, the federal law authorizes the President to "waive, temporarily or permanently, any sanction" upon his determination that doing so would serve U.S. national security interests.(7) Second, the Massachusetts law explicitly sought to reach a much broader class of economic actors and behaviors than its federal counterpart and thereby violated the federal scheme's carefully calibrated strategy of sanctioning certain types of activity but not others.(8) Third, the Massachusetts law, by antagonizing America's diplomatic partners in Europe and Asia, threatened to undermine Congress's explicit directive that the President work to build an international coalition in support of human rights and democracy in Burma.(9)

B. Judicial Economy and the First Circuit's Opinion in Natsios

Having found the Massachusetts legislation to be in conflict with the federal Burma statute(10) and therefore invalid under the Supremacy Clause, the Court declined to extend its analysis further. This, of course, was in keeping with the Court's longstanding rule that it should not rule on issues of broader constitutional sweep--particularly as they implicate the distribution of powers between the different branches and levels of government--if the case can plausibly be resolved on more modest grounds.(11)

The Court affirmed the First Circuit Court of Appeals' holding in National Foreign Trade Council v. Natsios(12) that federal law preempted the Massachusetts law. However, the Court explicitly declined to address three of the circuit court's more far-reaching constitutional findings. Regarding preemption, the First Circuit strongly suggested that whenever Congress passed a law touching on foreign affairs, an area traditionally reserved to the federal government, the presumption exists that Congress intended to "occupy the field."(13) Accordingly, the federal law would preempt any state law covering the same subject, regardless of whether any actual conflict exists.

The First Circuit also found that the Massachusetts Burma law violated the federal government's powers over foreign affairs. Even in the absence of a federal statute, the Massachusetts law had more than an "indirect or incidental effect" on foreign countries. …

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