Crosby v. National Foreign Trade Council
530 U.S. 363 (2000)
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Rule of Law:
A state law is preempted under the Supremacy Clause if it stands as an obstacle to the accomplishment and execution of the full purposes and objectives of a federal statute, particularly in the realm of foreign affairs where the federal government requires flexibility and a single voice.
Facts:
- In June 1996, the Commonwealth of Massachusetts enacted a law barring state entities from purchasing goods or services from any company identified as 'doing business with Burma (Myanmar).'
- The Massachusetts law defined 'doing business with Burma' broadly to include having operations, providing financial services, or promoting trade with Burma, and it lacked any provision for termination or presidential waiver.
- Three months later, in September 1996, the U.S. Congress passed its own act imposing sanctions on Burma.
- The federal act imposed limited immediate sanctions, authorized the President to ban 'new investment' by U.S. persons, and expressly exempted contracts for the sale of goods, services, or technology from this potential ban.
- The federal act granted the President the authority to develop a comprehensive multilateral strategy, and critically, to waive any or all sanctions if he determined it was in the 'national security interests of the United States.'
- In May 1997, the President issued an Executive Order banning new investment in Burma by 'United States persons,' consistent with the authority granted by the federal act.
- The National Foreign Trade Council, an organization representing companies in foreign commerce, had 84 of its members placed on the Massachusetts restricted purchase list, causing some to withdraw from Burma or have their state contract bids penalized.
Procedural Posture:
- The National Foreign Trade Council (Council) filed suit against Massachusetts state officials in the U.S. District Court for the District of Massachusetts, seeking declaratory and injunctive relief.
- The District Court granted a permanent injunction against the enforcement of the state law, holding it unconstitutionally impinged on the federal government's exclusive authority to regulate foreign affairs.
- The state officials, as appellants, appealed to the U.S. Court of Appeals for the First Circuit.
- The Court of Appeals affirmed the injunction, finding the state law was invalid on three separate grounds: preemption by the federal act, interference with the federal foreign affairs power, and violation of the dormant Foreign Commerce Clause.
- The state officials, as petitioners, petitioned for a writ of certiorari, which the U.S. Supreme Court granted.
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Issue:
Does a federal act imposing a variety of sanctions on Burma, and granting the President discretionary authority to control those sanctions, preempt a Massachusetts state law that restricts state entities from purchasing from companies doing business with Burma?
Opinions:
Majority - Justice Souter
Yes, the Massachusetts law is preempted because it stands as an obstacle to the accomplishment of Congress’s full objectives under the federal act. The state law undermines the federal statutory scheme in three critical ways. First, it interferes with the President's discretion and flexibility to control economic sanctions, which Congress intended to be a tool of foreign policy. The state law's rigid and perpetual application strips the President of leverage and reduces the value of sanctions as a 'bargaining chip.' Second, the state law's scope conflicts with the carefully calibrated and limited sanctions established by Congress, which targeted only 'new investment' by 'U.S. persons' while deliberately permitting other forms of commerce. Third, the state law compromises the President's ability to speak for the nation with a single voice and pursue the congressionally mandated 'comprehensive, multilateral strategy,' as evidenced by formal diplomatic protests and WTO complaints from U.S. allies.
Concurring - Justice Scalia
Yes, the Massachusetts law is preempted, but this conclusion is evident from the plain text of the statute and the factual record without resorting to legislative history. The majority opinion's extensive reliance on statements by legislative sponsors, unenacted bills, and executive branch letters is unnecessary and improper. The conflict between the state law's inflexibility and the federal law's grant of calibrated, discretionary authority to the President is 'perfectly obvious' on the face of the statute. The use of unreliable legislative history to confirm an obvious conclusion is a wasteful and harmful practice that unnecessarily complicates litigation.
Analysis:
This case significantly reinforces the doctrine of federal supremacy in foreign affairs and clarifies the application of 'obstacle preemption.' The Court's decision establishes that even when a state law shares the same overarching goal as a federal law, it can be preempted if its means and mechanisms conflict with the federal scheme's intended flexibility, scope, and diplomatic strategy. The ruling serves as a powerful check on the ability of state and local governments to conduct their own foreign policy through procurement or divestment laws, solidifying the principle that the federal government must speak with 'one voice' on the international stage. Consequently, this precedent limits the viability of similar state-level sanctions against other nations.
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