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Keywords

statuteinjunctioneconomic sanctions

contractstatuteeconomic sanctions

Related Cases

Crosby v. National Foreign Trade Council, 530 U.S. 363, 120 S.Ct. 2288, 147 L.Ed.2d 352, 68 USLW 4545, 00 Cal. Daily Op. Serv. 4852, 2000 Daily Journal D.A.R. 6469, 2000 CJ C.A.R. 3538, 13 Fla. L. Weekly Fed. S 441

Facts

In 1996, Massachusetts enacted a law prohibiting state entities from purchasing goods or services from companies that did business with Burma. This law was challenged by the National Foreign Trade Council, which represented several companies affected by the law. The Council argued that the Massachusetts law infringed on federal foreign affairs power, violated the Foreign Commerce Clause, and was preempted by federal law. The District Court issued a permanent injunction against the enforcement of the state law, which was affirmed by the First Circuit.

In June 1996, Massachusetts adopted 'An Act Regulating State Contracts with Companies Doing Business with or in Burma (Myanmar),' 1996 Mass. Acts 239, ch. 130 (codified at Mass. Gen. Laws §§ 7:22G–7:22M, 40 F. ½ (1997)). The statute generally bars state entities from buying goods or services from any person (defined to include a business organization) identified on a 'restricted purchase list' of those doing business with Burma.

Issue

Whether the Massachusetts Burma law, which restricts the authority of state agencies to purchase goods or services from companies doing business with Burma, is invalid under the Supremacy Clause of the National Constitution due to its potential to frustrate federal statutory objectives.

The issue is whether the Burma law of the Commonwealth of Massachusetts, restricting the authority of its agencies to purchase goods or services from companies doing business with Burma, is invalid under the Supremacy Clause of the National Constitution owing to its threat of frustrating federal statutory objectives.

Rule

State law must yield to a congressional Act if Congress intends to occupy the field or if there is a conflict with a federal statute. Preemption occurs when it is impossible for a private party to comply with both state and federal law, or when the state law stands as an obstacle to the accomplishment of Congress's objectives.

Even without an express preemption provision, state law must yield to a congressional Act if Congress intends to occupy the field, California v. ARC America Corp., 490 U.S. 93, 100, 109 S.Ct. 1661, 104 L.Ed.2d 86, or to the extent of any conflict with a federal statute, Hines v. Davidowitz, 312 U.S. 52, 66–67, 61 S.Ct. 399, 85 L.Ed. 581.

Analysis

The court found that the Massachusetts law was an obstacle to the federal Act's delegation of discretion to the President regarding economic sanctions against Burma. The state law imposed immediate and perpetual sanctions that undermined the President's authority to manage foreign relations and economic pressure. Additionally, the state law conflicted with the federal Act by penalizing actions that Congress had explicitly exempted, thus interfering with the President's ability to conduct diplomacy effectively.

Applying this standard, we see the state Burma law as an obstacle to the accomplishment of Congress's full objectives under the federal Act. We find that the state law undermines the intended purpose and 'natural effect' of at least three provisions of the federal Act, that is, its delegation of effective discretion to the President to control economic sanctions against Burma, its limitation of sanctions solely to United States persons and new investment, and its directive to the President to proceed diplomatically in developing a comprehensive, multilateral strategy toward Burma.

Conclusion

The Supreme Court held that the Massachusetts Burma law was preempted by federal law and unconstitutional under the Supremacy Clause, affirming the lower court's decision.

Held: The state Act is preempted, and its application unconstitutional, under the Supremacy Clause.

Who won?

The National Foreign Trade Council prevailed in the case because the court determined that the Massachusetts law conflicted with federal law and undermined the President's authority in foreign affairs.

The District Court permanently enjoined the state Act's enforcement, holding that it 'unconstitutionally impinge[d] on the federal government's exclusive authority to regulate foreign affairs.'

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