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A Memorandum of Legal Opinion Re: Constitutionality of Local Laws Restricting Government Transactions With Companies Doing Busin

by Professor Robert Benson
International Law Center for
Human, Economic & Environmental Defense (HEED)

October 1, 1997
TO: City Attorneys nationwide

International Law Center for Human, Economic & Environmental Defense
National Lawyers Guild,
8124 W. Third Street, Suite 201
Los Angeles, California 90048, USA
Telephone 213/736-1094.
Fax 213/380-3769.
E-mail : heed@igc.org

Synopsis: A nationwide corporate lobbying group argues that it is a violation of the U.S. Constitution for state and local governments to have their own foreign policies. The corporations assert that state and local laws restricting government purchases from or investment in companies doing business in Burma, for example, are unconstitutional. Analysis of such an issue requires a review of the case precedents, scholarly articles, and American political history. That review reveals that the U.S. Supreme Court has never spoken clearly on the issue, that scholarly opinion is evenly divided, and that in practice states and major cities have had their own foreign policies since colonial times and continue to do so today. Weighing all factors, it is unlikely that the U.S. Supreme Court in the foreseeable future would announce a new rule striking down local laws such as those on Burma. There is some chance that the Court would endorse such laws as protected by the First Amendment and as consistent with its more recent notions of local powers in the federalist system. The most likely scenario, however, is that the Court will not be eager to speak on this issue and, if it does, will not speak clearly.

I. U.S. Supreme Court doctrine

The issue implicates five major doctrines, each with its own line of case authority and internal analysis.

1) Federal pre-emption: To strike down a local Burma law, litigants would have to show that Congress and the President have either intentionally pre-empted such laws by some explicit federal law or they have implicitly pre-empted local laws by enacting a conflicting federal scheme of regulation. As of this date, there has been no explicit pre-emption enacted, and policies of the President, the State Department and the Congress can be read to be congruent and even supportive of local laws on Burma.

2) Federal supremacy over foreign affairs: The Court has occasionally said that the federal government has “exclusive” power over foreign affairs, but in practice local governments have extensive concurrent involvement. There are only a few old precedents discussing when this involvement is impermissible, and they are inconsistent.

3) Burdens on foreign commerce: Under the so-called “dormant commerce clause,” local regulations on foreign as well as interstate commerce are prohibited if on balance they are too burdensome. There is no clear guidance on how to balance. Also, there is an exception when local governments act as “market participants” (say, purchasing goods and services) instead of as regulators. But it is undecided whether the market participant exception applies to foreign as opposed to interstate commerce.

4) First Amendment: Laws such as those in question have been principal channels of political expression from the colonial Stamp Act Boycotts to modern laws condemning apartheid in South Africa. While the Court has not clearly faced the question, it is possible that the First Amendment shields such local laws from congressional or executive branch interference.

5) Federalism: Breaking with the legacy of the New Deal, the current Court has frequently tipped the balance of federal and local power toward the local, a fact which could favor upholding of local laws such as those on Burma. Of the more than 140 state and local laws restricting business with South Africa during the apartheid years, apparently only three were litigated. Two decisions struck down the laws on unique state law grounds. Fenton, The Fallacy of Federalism in Foreign Affairs: State and Local Foreign Policy Trade Restrictions, 13 Northwestern Journal of International Law and Business 563, note 4 (1993) The one decision that dealt with the U.S. Constitution was written by the highest court in Maryland, which found that the law in question was constitutional. Board of Trustees v. Mayor and City Council of Baltimore, 562 A. 2d 720 (1989). The U.S. Supreme Court declined to review the case. 493 U.S. 1093 (1990).

II. Legal scholarship

The widespread enactment of state and local laws on business with South Africa in the 1980s stimulated a flurry of legal scholarship. Now Burma is starting to enter the scholarly stream. The scholars are divided. A leading constitutional law scholar, Professor Laurence Tribe of Harvard, opines that local laws on South Africa were not pre-empted by federal legislation on the topic, and were protected by the market participant doctrine. Tribe, American Constitutional Law 469, 480 n. 12 (2d ed. 1988).

For other scholarship supporting the constitutionality of such local laws, see Jubinsky, State and Municipal Governments React Against South African Apartheid: An Assessment of the Constitutionality of the Divestment Campaign, 54 U. Cincinnati Law Review 543 (1985); Lewis, Dealing With South Africa: The Constitutionality of State and Local Divestment Legislation, 61 Tulane Law Review 469 (1987); McArdle, In Defense of Sate and Local Government Anti-Apartheid Measures: Infusing Democratic Values Into Foreign Policymaking, 62 Temple Law Review 813 (1989); Berat, Undoing and Redoing Business in South Africa: The Lifting of the Comprehensive Anti-Apartheid Act of 1986 and the Continuing Validity of State and Local Anti-Apartheid Legislation , 6 Connecticut Journal of International Law 7 (1990).

For scholarship arguing that such laws are unconstitutional, see Note, The Constitutionality of State and Local Governments’ Response to Apartheid: Divestment Legislation, 13 Fordham Urban Law Journal 763 (1985); Spiro, State and Local Anti-South Africa Action As An Intrusion Upon The Federal Power In Foreign Affairs, 72 Virginia Law Review 813 (1986); Fenton, The Fallacy of Federalism in Foreign Affairs: State and Local Foreign Policy Trade Restrictions, 13 Northwestern Journal of International Law and Business 563 (1993); Schmahmann and Finch, The Unconstitutionality of State and Local Enactments in The United Sates Restricting Business Ties With Burma (Myanmar), 30 Vanderbilt Journal of Transnational Law 175 (1997).

III. Practice

In practice, state and local governments have been involved in foreign affairs at least since 1798 when the city of Boston raised $125,000 to build two battleships in preparation for a U.S. war with France. Most states and major cities promote a foreign policy of trade through an international trade or tourism office, some located overseas. Border states and communities have long had official agreements with Canada and Mexico regarding roads, electricity, water, autos, fire, police and other matters. In recent years, some 900 local governments enacted nuclear freeze resolutions, 140 passed laws on South Africa, hundreds formed sister-city relationships with communities abroad, and scores approved legislative actions relating to such issues as depletion of the global ozone layer, the Arab boycott of Israel, and war, peace and human rights in Nicaragua, El Salvador, Guatemala, China, the former Soviet Union, Northern Ireland, Poland, Sri Lanka, Libya and other nations.See Schuman, Dateline Main Street: Local Foreign Policies, 65 Foreign Policy 154 (1986-87); Schuman, Dateline Main Street: Courts v. Local Foreign Policies, 86 Foreign Policy 158 (1992).

IV. Conclusion

Given the ambiguity of Supreme Court doctrine, the disagreement among legal scholars, and the long-standing practice of local government involvement in foreign affairs, it appears unlikely that the courts would strike down local Burma laws as unconstitutional.