Commr of Health & Hospitals of Cambridge,

affd, 907 F.2d 1295 (2d Cir. 1990) 42n

Exxon Corp. v. Governor of Maryland,

437 U.S. 117 (1978) 57

First National Bank of Boston v. Bellotti,

435 U.S. 765 (1978) 42n

Gregory v. Ashcroft,

501 U.S. 452 (1991) 22

Hughes v. Alexandria Scrap Corp.,

426 U.S. 794 (1976) 45, 50

Japan Lines, Ltd. v. County of Los Angeles,

441 U.S. 434 (1979) 58

K.S.B. Technical Sales Corp. v.

New Jersey District Water Supply Commn,

Kraft General Foods, Inc. v. Iowa Dept of Revenue,

505 U.S. 71 (1992) 57

NAACP v. Claiborne Hardware Co.,

458 U.S. 886 (1982) 42

New York v. United States,

505 U.S. 144 (1992) 44n

New York Times Co. v.

City of New York Commn on Human Rights,

41 N.Y. 2d 345,

361 N.E.2d 963 (1977) 40n

Oregon Waste Systems v. Dept. of Environmental Quality,

511 U.S. 93 (1994) 56

Perez v. Brownell,

356 U.S. 44 (1958) 37

Perkins v. Lukens Steel Co.,

310 U.S. 113 (1940) 48

Philip Morris, Inc. v. Harshbarger,

122 F.3d 58 (1st Cir. 1997) 19, 22, 25

Printz v. United States,

117 S. Ct. 2365 (1997) 44n

Reeves, Inc. v. Stake,

447 U.S. 429 (1980) 22, 41, 45, 46

South-Central Timber Development, Inc. v.

Wunnicke,

467 U.S. 82 (1984) 51, 52

Springfield Rare Coin Galleries, Inc. v. Johnson,

115 Ill.2d 221,

503 N.E.2d 300 (1986) 40n

Student Government Association v.

Board of Trustees,

868 F.2d 473 (1st Cir. 1989) 42n

Tayyari v. New Mexico State University,

495 F. Supp. 1365 (D.N.M. 1980) 39n

Trojan Technologies, Inc. v.

Commonwealth of Pennsylvania,

742 F. Supp. 900 (M.D. Pa. 1990),

affd, 916 F.2d 903 (3d Cir. 1990), cert. denied,

Wardair Canada, Inc. v. Florida Dept of Revenue,

Wisconsin Dep of Industry v. Gould,

475 U.S. 282 (1982) 48, 50, 53, 54

Zschernig v. Miller,

389 U.S. 429 (1968) passim

U.S. Const., Preamble 3, 44

U.S. Const. Art. I 20

U.S. Const. Art. I,  8,

the Commerce Clause and

Foreign Commerce Clause passim

U.S. Const. Art. I,  10, cls. 1-3 20

U.S. Const. Art. II 20

U.S. Const. Art. II, 2 20

U.S. Const. Art. III 20

U.S. Const. Art. VI, cl. 2, Supremacy Clause 20

U.S. Const., 1st Amendment 42 & n

U.S. Const., 10th Amendment 16, 41, 44n

28 U.S.C. 1291 (1994) 1

28 U.S.C.  1331 (1994) 1

Export Administration Act of 1979

50 U.S.C. > 2407(c) 22

Comprehensive Anti-Apartheid Act (CAAA) of 1986,

P.L. 99-349, 100 Stat. 1086 23

P.L. 99-349, 606 23

Uruguay Round Agreement Act of 1994 (URRA),

P.L. 103-465, 108 Stat. 4809 21, 38

19 U.S.C. 3511(a) 21

19 U.S.C. 3512(b)(2)(a) 21

19 U.S.C. 3512(c) 21

19 U.S.C. 3512(c)(1) 21

19 U.S.C. 3512(d) 21

The Omnibus Consolidated Appropriations Act of 1997,

Pub. L. No. 104-208, 570, 110 Stat. 3009-166 8

 570(b) 8, 10

This is an appeal from a final judgment of the United States District Court for the District of Massachusetts. The judgment declares that the Massachusetts Burma Law, Mass. Gen. L. A. ch. 7,  22G-22M (West 1998 Supp.)(the Burma Law), is unconstitutional and enjoins the defendants from enforcing the statute. A. 604-605.

Plaintiff National Foreign Affairs Council (NFTC) invoked the jurisdiction of the District Court under 28 U.S.C.  1331 (1994). A. 11. The District Courts judgment was entered on November 17, 1998. A. 605. Defendants filed their notice of appeal on November 23, 1998. A. 606. Jurisdiction in this Court rests upon 28 U.S.C.  1291 (1994).

STATEMENT OF ISSUES

1. Whether the Massachusetts Burma Law -- which restricts the authority of Massachusetts agencies to buy goods and services from persons who do business with Burma -- unconstitutionally infringes on the authority of the federal government to regulate foreign affairs.

2. Whether the selective purchasing of goods and services represented by the Burma Law is market participation, rather than the regulation of private conduct, and thus not subject to review under the Foreign Commerce Clause or the

dormant foreign affairs power of the United States Constitution.

3. If the Burma Law is subject to review under the Foreign Commerce Clause, whether it discriminates against Foreign Commerce or interferes with the capacity of the federal government to conduct foreign affairs.

STATEMENT OF THE CASE

Introduction

The Massachusetts Burma Law restricts the authority of Massachusetts state agencies to buy goods and services from persons who do business with Burma. According to the United States Department of State, the people of Burma continue to live under a highly authoritarian military regime that is widely condemned for its serious human rights abuses. A. 336. In the months following enactment of the Massachusetts Burma Law in 1996, the United States, European Union, and other countries imposed economic sanctions on Burma.

The Massachusetts Burma Law effectively requires state agencies to increase by 10% the price of offers to sell goods and services to the Commonwealth submitted by companies that do business with Burma. M.G.L.A. ch. 7,  22H(d). The Law applies equally to Massachusetts purchases of goods and services from persons domiciled in Massachusetts, other States, and foreign countries. The Burma Law does not prohibit or regulate purchases of goods or services by private persons or regulate contact between private persons and the Government of Burma.

For more than two hundred years, citizens of Massachusetts and other States have used boycotts to support the natural, essential, and unalienable rights of people around the world. See Mass. Const. of 1780, Pt. 1, art.1. The Burma Law struck down by the District Court closely resembles divestment and selective purchasing laws enacted in the 1980s concerning South Africa -- laws ruled constitutional by Marylands highest court in 1989 and the United States Department of Justice in 1986. The Massachusetts Burma Law is also similar to dozens of state and municipal laws and resolutions concerning Northern Ireland, Cuba, Switzerland, Nigeria, and other countries -- laws and resolutions now at risk in light of the broad ruling of the District Court. See A. 170-321 (collecting similar laws); M.G.L.A. ch. 7,  22C-22F (West 1996 ed.)(restricting purchases from companies employing ten or more persons in Northern Ireland).

Nothing in the Constitution denies to the States the right to apply a moral standard to the exercise of their spending powers. Nor has Congress -- whose voice, in th[e] area [of foreign affairs], is the Nations (Barclays Bank v. Franchise Tax Board, 512 U.S. 298, 331 (1994)) -- denied to the States the right to apply such a standard and thereby seek to secure the blessings of liberty around the world. U.S. Const., Preamble. Indeed, in this case, the District Court found that when Congress imposed federal sanctions on Burma in October, 1996 -- three months after Massachusetts enacted its Burma Law -- Congress did not preempt state and local selective purchasing laws. The District Court stated that the NFTC failed to carry [its] burden to show preemption and that the evidence does not establish sufficient actual conflict for th[e] court to find preemption. A. 600-01 (citation omitted).

Nevertheless, the District Court held that the Burma Law impermissibly infringes on the federal governments power to regulate foreign affairs. A. 591. The Court should reverse this judgment because (1) the Burma Law does not violate any express provision of the Constitution, a federal treaty, or statute; (2) when Congress imposed sanctions on Burma it implicitly permitted consistent state and local action, see Barclays Bank, 512 U.S. at 320-331; (3) the Burma Law has only indirect effects on foreign affairs -- effects permitted by the federal Constitution; (4) any impact of the Burma Law on foreign affairs is justified by the fundamental state interests promoted by the Burma Law; and (5) the Burma Law represents market participation, rather than regulation, and thus is not subject to review under the foreign affairs or foreign commerce powers at all.

The Massachusetts Burma Law

In July, 1996, the Massachusetts Legislature enacted Chapter 130 of the Acts of 1996, An Act Regulating State Contracts with Companies Doing Business with or in Burma (Myanmar), codified at M.G.L.A. c. 7,  22G-M. Subject to certain exceptions, the Burma Law provides that a state agency, a state authority, the house of representatives or the state senate may not procure goods or services from any person listed on the restricted purchase list maintained by the secretary [of administration and finance], or who is determined through affidavit or through other reliable methods to meet the criteria for so being listed. M.G.L.A. ch. 7,  22H(a). By its terms, the statute imposes preference requirements ( 22I) rather than an absolute prohibition on state contracting with companies doing business in Burma. Thus, exceptions are authorized when the procurement is essential and enforcement of the restriction would eliminate the only bid or offer, or would result in inadequate competition[,]  22H(b)(1) and (2); when the State is purchasing certain kinds of medical supplies,  22I; or when there is no comparable low bid or offer by a bidder who is not on the list.

 22H(d). A comparable low bid or offer is defined as a responsive and responsible bid or offer which is no more than ten percent greater than the lowest bid or offer submitted for goods or a service. Section 22G. In practice, the comparable low bid or offer provision is applied by adding 10% to offers made by persons determined to be doing business with Burma. A. 83-84.

Section 22J(a) provides that the secretary shall establish and maintain a restricted purchase list . . . [which] shall contain the names of all persons currently doing business with Burma (Myanmar). Doing business with Burma is defined by  22G as:

(a) having a principal place of business, place of incorporation or its corporate headquarters in Burma (Myanmar) or having any operations, leases, franchises, majority-owned subsidiaries, distribution agreements, or any other similar agreements in Burma (Myanmar), or being the majority-owned subsidiary licensee or franchise[e] of such a person;

(b) providing financial services to the government of Burma (Myanmar), including providing direct loans, underwriting government securities, providing any consulting advice or assistance, providing brokerage services, acting as a trustee or escrow agent, or otherwise acting as an agent pursuant to a contractual agreement;

(c) promoting the importation or sale of gems, timber, oil, gas or other related products, commerce in which is largely controlled by the government of Burma (Myanmar), from Burma (Myanmar).

(d) providing any goods or services to the government of Burma (Myanmar).

Under Sections 22H(e) and 22I, persons with operations in Burma limited to the reporting the news or providing goods or services for the provision of international telecommunications, or providing only medical supplies are exempt from the restrictions of the Act.

The Act directs the Secretary of Administration and Finance (the Secretary), [i]n establishing the restricted purchase list, to consult United Nations reports, resources of the Investor Responsibility Research Center and the Associates to Develop Democratic Burma, and other reliable sources. Section 22J(b). The Secretary shall also place the name of any person [on the list] who, in the statement [submitted to state agencies under Section 22H], declared that he meets the criteria for being so listed. Id. The restricted purchase list shall be updated at least once every three months. Section 22J(c). The Act applies to new contracts and renewals, but not contracts existing at its effective date in September, 1996. Chapter 130 of the Acts of 1996,  3. The Act has been implemented by the Operational Services Division (OSD), an agency under the supervision of the Secretary. A. 77-86, 500-520.

Finally, Section 2 of the 1996 act provides that [i]t shall be the policy of the commonwealth . . . not [to] sell, rent, or dispose of any real property . . . to any person doing business in or with Burma (Myanmar), [unless it is] certif[ied] in writing . . . that such action is essential to protect the health or safety of the public. The NFTC does not challenge this provision and the judgment does not apply to it. See A. 604-05.

Federal Legislation Concerning Burma

Three months after Massachusetts enacted its Burma Law, Congress authorized federal sanctions against Burma. The Omnibus Consolidated Appropriations Act of 1997 (the Federal Burma Law), Pub. L. No. 104-208,

 570, 110 Stat. 3009-166 through 3009-167 (Section 570), approved September 30, 1996, imposed conditional sanctions on Burma [u]ntil such time as the President determines and certifies to Congress that Burma has made measurable and substantial progress in improving human rights practices and implementing democratic government . . . . Section 570(a). The sanctions include an end to most bilateral assistance ( 570 (a)(1)) and the opposition by the United States to most multilateral aid. Id. at  570(a)(2).

Section 570 also authorizes and directs the President to prohibit . . . United States persons from new investment in Burma, if [he] determines and certifies to Congress that, after the date of th[e] Act, the Government of Burma has physically harmed, rearrested for political acts, or exiled Daw Aung San Suu Kyi or has committed large-scale repression of or violence against the Democratic opposition. Id. at  570(b). New investment is defined by the Act to include the economical development of resources located in Burma, but does not include the entry into, performance of, or financing of a contract to sell or purchase goods, services or technology. Id. at  570(f)(2).

The Act further directs the President to seek to develop, in coordination with members of the Association of Southeast Asian Nations (ASEAN) and other countries having major trading and investment interests in Burma, a comprehensive, multilateral strategy to bring democracy to and improve human rights practices and the quality of life in Burma, including the development of a dialogue between the State Law and Order Restoration Council (SLORC) and democratic opposition groups within Burma. Id. at  570(c).

Finally, the Act requires the President to submit reports every six months to certain Congressional committees on: (1) progress toward democraticization in Burma; (2) progress on improving the quality of life of the Burmese people . . .; and (3) progress made in developing the [multilateral] strategy referred to in subsection (c) [ to bring democracy to and improve human rights practices . . . in Burma]. Id. at  570(d).

Federal Executive Action Concerning Burma

On October 3, 1996, the President issued a proclamation entitled Suspension of Entry as Immigrants and Nonimmigrants of Persons Who Formulate or Implement Policies That Are Impeding the Transition to Democracy in Burma or Who Benefit from Such Policies. Proclamation No. 6925 (October 3, 1996), 61 Fed. Reg. 52233, 1996 U.S.C.A.A.N. at A83. The President stated that the current regime in Burma continues to detain a significant number of duly elected members of parliament, National League of Democracy activists, and other persons attempting to promote democratic change in Burma. Id. The President further stated that the regime has failed to enter into serious dialogue with the democratic opposition and representatives of the countrys ethnic minorities, . . . and has failed to meet internationally recognized standards of human rights. Id.

Seven months later, the President issued an Executive Order implementing Section 570. Exec. Ord. 13047, 62 Fed. Reg. 28,301 (1997). In the Order the President determine[d] and certif[ied] that, for purposes of [Section 570(b)], the Government of Burma has committed large-scale repression of the democratic opposition in Burma after September 30, 1996, and further determine[d] that the actions and policies of the Government of Burma constitute an unusual and extraordinary threat to the national security and foreign policy of the United States and declare[d] a national emergency to deal with that threat. Id. Accordingly, the President prohibit[ed] new investment in Burma by United States persons . . . , subject to certain exceptions. Id.; see also A. 338 (summarizing earlier unilateral United States sanctions, including suspending economic aid, withdrawing GSP [General System of Preferences] . . . , implementing an arms embargo, blocking assistance from international financial institutions, downgrading our representation [from ambassador to charge daffaires], and imposing visa restrictions on senior regime leaders and their families).

Sanctions Imposed on Burma by Other Countries

Other countries have likewise imposed sanctions on Burma. According to the Massachusetts Congressional delegation, concerns about Burmas forced labor practices prompted the European Communities (EC) to revoke Burmas tariff preferences. A. 342-43. In 1997 and 1998, the European Parliament passed resolutions concerning Burma. A. 342-48. The 1998 resolution expresses deep concern[] at the continuing and extremely serious human rights abuses committed by the military authorities in Burma. A. 345. The 1998 resolution notes that the Communities common position has included a ban on entry visas, an embargo on sales of arms, munitions, and military equipment, and the suspension of non-humanitarian aid or development programmes. A. 347. The 1997 resolution urged the European Commission to refrain from pursuing a challenge to the Massachusetts Burma law at the World Trade Organization (WTO). A. 348; see A. 167-69 (EU and Japanese request for consultations at WTO). Canada, Australia and Japan have joined the EU in enacting sanctions against Burma; each has enacted an arms embargo and Japan has limited itself to humanitarian aid. A. 338.

Proceedings in District Court

The NFTC filed its complaint on or about April 30, 1998. A. 4, 10-23. The parties filed a stipulation of facts, cross-motions for summary judgment, and affidavits. A. 75-560. No party argued that a material fact was in dispute. A. 489. The District Court heard oral argument on the cross-motions on September 23, 1998. A. 561-588. On November 4, 1998, the court entered a memorandum and order granting summary judgment for the NFTC. A. 589-603. The District Court found no preemption by federal action but nevertheless held that the Burma Law violated the Constitution. A. 601, 591. On November 17, 1998, the Court entered final judgment. A. 604.

SUMMARY OF ARGUMENT

I. The Court should review the summary judgment of the District Court de novo because of the facial nature of the constitutional claims and the lack of any material, disputed fact below. [P. 19]

II.A. The Burma Law does not infringe on the federal governments power to regulate foreign affairs. First, the Burma Law does not violate any express provision of constitutional, treaty, or statutory law. While the Constitution grants certain powers to the federal government over foreign affairs and denies certain powers to the States, none of the powers denied to the States concerns a proprietary power such as procurement, and other parts of the Constitution show that the Framers contemplated that the States would sometimes affect foreign affairs. [Pp. 19-21]

Second, there is no basis for a claim that the Burma Law violates an international agreement. The federal act implementing the 1994 Uruguay Round of the General Agreement on Tariffs and Trade (GATT) denies to private persons and foreign countries the right to maintain an action in federal court against a State law on the basis of GATT. Only the United States may file such an action, and it has not. Despite the complaints of the EU and Japan against the Burma Law at the WTO, the Court must presume that the Burma Law is consistent with GATT. [Pp. 21-22]

Third, the District Court correctly stated that the federal sanctions against Burma do not preempt state and local action on the same subject. There is no plausible claim of express preemption in this case; in contrast, Congress has spoken clearly in the past when it wished to preempt state and local action related to foreign affairs. Nor is there a basis to imply preemption where, as here, both state and federal laws promote the same goals and the state law does not stand as an obstacle to the means chosen by the federal government to reach those goals. [Pp. 22-25]

I.B. Congressional action and inaction on matters related to Burma also represent implicit permission of such laws under the reasoning of Barclays Bank, 512 U.S. at 326, and that permission shields the Burma Law from claims that it interferes with the conduct of foreign relations. Under Barclays Bank, express Congressional approval of a state law affecting foreign affairs is not required for the Court to uphold the law: Congress may more passively indicate that certain state practices do not impair federal uniformity, and it need not convey its intent with the unmistakable clarity required to permit state regulation that discriminates against interstate commerce. Under this more deferential rule for state laws affecting foreign policy, it is Congress -- whose voice, in this area, is the Nations-- not the courts, that is best equipped to evaluate whether the national interest is best served by uniformity, or state autonomy. Id. at 331. Where, as here, several congressional actions show that Congress has implicitly permitted selective purchasing laws on Burma, the Court should hold that such permission shields the Burma Law from claims that it interferes with the conduct of foreign relations. [Pp. 26-29]

II.C.1. Even if Congress has not implicitly permitted the Burma Law, it is constitutional because its indirect effects do not interfere with the capacity of the United States to regulate foreign affairs. Zschernig v. Miller, 389 U.S. 429 (1968), represents the only time that the Supreme Court has employed the general power of the federal government over foreign affairs to strike down an exercise of state police power. In 1994, Barclays Bank severely undercut the rationale of Zschernig and diverted similar claims under the Foreign Commerce to the legislative branch. Whatever the vitality of Zschernig today, the indirect effects of the Massachusetts Burma Law are distinguishable from the great potential for disruption and embarrassment in the conduct of foreign relations cited in that case, 389 U.S. at 435. The Burma Law does not conflict with American foreign policy toward Burma or interfere with the conduct of that policy. Like the California statute upheld in Clark v. Allen, 331 U.S. 503 (1947), and unlike the Oregon statute in Zschernig, the implementation of the Burma Law does not require repeated decision by state officials about the operation of Burmese law or the credibility of Burmese officials. On this record, there is simply no basis to conclude that the Burma Law has created the same great potential for disruption or embarrassment created by the implementation of the inheritance law in Zschernig. Any indirect effects of the Burma Law on the government of Burma do not render it unconstitutional. [Pp. 29-36]

II.C.2. The complaints of the EU and Japan at the WTO do not create a great potential for disruption or embarrassment. Barclays Bank rejected similar reliance on a battalion of countries lodging similar complaints and amicus briefs. The Court likewise discounted past protests of the Executive Branch. Congress retains broad powers to weigh such complaints and decide whether the national interest requires uniformity in a matter touching foreign relations. In this case, the District Court erred by devaluing the role of Congress and giving constitutional weight to the complaints of foreign countries against the Burma Law. [Pp. 36-39]

II.D. The District Court also erred by failing to weigh the important state interests promoted by the Burma Law, appearing instead to deem the federal power over foreign affairs exclusive and to hold that any state law that affects the federal power is unconstitutional, regardless of the interests promoted by the law. This Court should not follow this per se approach.

The Burma Law represents the States fundamental choice about with whom it will deal -- a choice reserved to the States by the Tenth Amendment. The Burma Law also represents the expression of a moral position on an important issue of foreign policy. The long history of boycotts in aid of human rights around the world -- most recently, regarding South Africa in the 1980's -- shows that the Massachusetts Burma Law is the product of a tradition with deep roots in the right of freedom of expression. The selective purchasing law is no different in kind from the selective purchasing codes applied by members of the NFTC to pressure foreign firms and countries for reform or the decisions by NFTC members to withdraw from Burma, citing human rights concerns. Finally, the fact that the NFTC claims that even state and local resolutions on foreign affairs are unconstitutional (A. 569, 573-74) shows the threat to free speech posed by the broad holding of the district court. [Pp. 40-45]

III. The Court should reverse the judgment below on the alternate ground -- not reached by the District Court -- that the state procurement restricted by the Burma Law is market participation, not regulation, and is therefore not subject to the dormant foreign affairs or foreign commerce powers. The Court should apply the market participation exception to both the foreign commerce and foreign affairs claims in this case, because (1) lower federal and state courts have applied the exception to the Foreign Commerce Clause; (2) the concerns which underlie that clause are closely related to those that underlie the dormant foreign affairs powers; and (3) the Framers well understood the difference between state laws directly prohibiting or restricting private contact with foreign citizens or countries and state laws that apply to a States own procurement. [Pp. 45-49]

The price preference applied to state purchasing is market participation, not regulation. State purchasing creates the relevant market sua sponte. The Burma Law does not restrict existing markets among Burma, foreign or domestic companies, or the citizens of any country or State. Like each of these market participants, Massachusetts has the power to decide with whom it will deal. The intended indirect effects of the Burma Law -- human rights for the people of Burma -- do not convert this price preference into a regulatory measure. The similar standards for purchasing applied by members of the NFTC in their own markets show that the Burma Law is the action of a market participant free from the constraints of the dormant foreign commerce and foreign affairs powers. [Pp. 49-55]

IV. Even if the Court holds that the market participant exception does not apply to the Burma Law, it should rule that the Law does not violate the Foreign Commerce Clause. The Law applies equally to United States and foreign companies and does not otherwise discriminate in favor of Massachusetts or United States interests. Furthermore, for the reasons stated in Arg. II.A-II.D., the Law does not interfere with the capacity of the federal government to speak with one voice in foreign affairs. As Marylands highest court observed in upholding a divestment ordinance regarding South Africa, even a state law that singles out a foreign country does not violate the Foreign Commerce Clause unless it discriminates in favor of in-state or United States interests. Finally, after Barclays Bank, the one-voice rule is now a rule of judicial restraint, diverting constitutional questions to Congress -- whose voice, in this area, is the Nations -- to evaluate whether the national interest is best served by uniformity or state autonomy. Id. at 331. [Pp. 56-59]

ARGUMENT

I. THE COURT SHOULD REVIEW THE DISTRICT COURTS SUMMARY JUDGMENT DE NOVO.

The Court should review the district courts summary judgment ruling de novo. Philip Morris, Inc. v. Harshbarger, 122 F.3d 58, 62 (1st Cir. 1997)(citation omitted). The ultimate determination whether the federal Constitution or laws preempts the Massachusetts Burma Law presents a legal question subject to plenary review. Id. Plenary review is particularly apt here, where the parties filed cross-motions for summary judgment, no party argued that a material fact was in dispute, and no underlying issue of material fact exists with respect to the legal . . . issue[s]. Id. at 62 n.4.

II. THE BURMA LAW DOES NOT INFRINGE ON THE FEDERAL GOVERNMENTS POWER TO REGULATE FOREIGN AFFAIRS.

A. The Burma Law Does Not Violate Any Express Provision of Constitutional, Treaty, or Statutory Law.

1. The Burma Law does not violate any express provision of the Constitution. The Constitution does not use the terms foreign relations, foreign policy, or foreign affairs. Instead, it grants certain powers to the federal government and denies certain powers to the States, reserving to the States in the 10th Amendment all those powers not granted or denied. Thus, the Constitution makes the President Commander in Chief of the armed forces of the United States and authorizes him to enter into treaties and to appoint and receive ambassadors. U.S. Const. art. II,  2. Congress is given authority to regulate foreign commerce, raise and support armies, define offenses against the law of nations, and to declare war. Art. I,  8. The powers granted to the federal government under Articles I and II, when exercised, are made plenary through the Supremacy Clause, Art. VI,  2.

The Constitution denies to the States specific powers, e.g., to declare war, enter into treaties, violate treaties, or levy duties on imports or exports. Art. I,  10, cls. 1-3. Each of these prohibitions concerns the exercise of powers usually associated with international sovereignty. None of the prohibitions in Art. I concerns powers generally reserved to the States, such as the purchase of goods and services and the management of investments. Furthermore, other parts of the Constitution show that the Framers contemplated that the States would sometimes affect foreign affairs. U.S. Const. Art. I,  10 (authorizing agreements between States and foreign countries with consent of Congress); Art. III (jurisdiction to hear cases between States and foreign parties).

Nothing in the Burma Law establishes or violates a treaty, declares war, levies duties on imports or exports, or engages in direct relations with Burma. The NFTC does not argue otherwise. Accordingly, the Court must begin its review with the assumption that the Massachusetts Burma Law does not violate any express provision of the Constitution concerning foreign affairs.

2. There is likewise no basis for any claim that the Burma Law violates an international agreement. The federal act implementing the 1994 Uruguay Round of the General Agreement on Tariffs and Trade (GATT) denies to private persons and foreign governments the right to maintain an action in federal or state court against a State law on the basis of GATT. See Uruguay Round Agreement Act of 1994 (URRA), P.L. 103-465,  102(c)(1), 108 Stat. 4809, 4818, 19 U.S.C.  3512(b)(2)(A), 3512(c)(1). Only the United States may file such an action, and it has not. Id. In the URRA, Congress stated its intention to occupy the field with respect to any cause of action . . . in connection with the Uruguay Round Agreements. 19 U.S.C.  3512(c). Furthermore, in approving the Statement of Administrative Action proposed by the President for implementation of the URRA (see 19 U.S.C.  3511(a) and 3512(d)), Congress stated that the denial of all private rights of action extends to those that seek, directly or indirectly, the private enforcement of [GATT], including suits based on Congress Commerce Clause authority. 1994 U.S.C.A.A.N. at 4055. For these reasons, despite the complaints made by the EU and Japan against the Burma Law at the WTO and the District Courts reliance on such complaints for its constitutional holding (A. 595-96), this Court must presume that the Burma Law is consistent with GATT.

3. As the District Court correctly noted, the Burma Law is not preempted by the Federal Burma Law because Congress in 1996 did not expressly preempt state or local laws on Burma and because the Massachusetts Burma Law is consistent with the terms and objectives of the federal law on Burma. At the threshold, the usual presumption against preemption -- known as the clear statement rule -- applies fully to a state law restricting procurement, which represents the fundamental state power to expend public resources reserved to the States by the Tenth Amendment. See Philip Morris, Inc. v. Harshbarger, 122 F.3d at 79; Reeves v. Stake, 447 U.S. 429, 441 (1980) (market participant exception to Commerce Clause rests on principles of federalism); Gregory v. Ashcroft, 501 U.S. 452, 461 (1991) (Congress must make clear statement of intent to preempt).

Congress knows how to state clearly its intent to preempt state action that might affect foreign affairs. See Export Administration Act of 1979, 50 U.S.C.  2407(c) (stating expressly that Anti-Arab boycott provisions preempt[ed] any law, rule or regulation that the several states or the District of Columbia, or any governmental subdivision thereof ). In 1986, Congress enacted the Comprehensive Anti-Apartheid Act (CAAA) of 1986, P.L. 99-349, 100 Stat. 1086, which included a limited preemption provision addressing federally-funded contracts awarded by state and local governments. P.L. 99-349,  606. In 1989, the Maryland Court of Appeals held that the CAAA did not preempt a Baltimore ordinance that required city pension funds to divest their holdings in companies doing business in South Africa. See Board of Trustees v. Mayor and City Council of Baltimore, 562 A.2d 720, 740-44 (Md. 1989) (hereafter Board of Trustees), cert. denied, 493 U.S. 1093 (1990). Since Congress in 1996 was aware that Board of Trustees had found no preemption in the 1986 CAAA, it would have expressed its intent clearly in the 1996 Federal Burma Law if it had intended to preempt state selective purchasing laws.

Nothing in the federal law on Burma or the 1997 Executive Order preempts state and local selective purchasing laws. Each was enacted or issued after Massachusetts enacted its Burma Law in early June, 1996, and the Court must therefore infer that Congress and the President were aware of the Massachusetts law when they imposed federal sanctions on Burma. See Beal v. Doe, 432 U.S. 438, 447 (1977).

The Massachusetts Burma Law does not conflict with the federal measures. Both federal and state laws reflect disapproval of the current regime in Burma and an effort to improve conditions there. The federal sanctions are intended by Congress and the President to bring democracy to and improve human rights practices and the quality of life in Burma, including the development of a dialogue between the State Law and Order Restoration Council (SLORC) and democratic opposition groups within Burma. P.L. 104-208,  570(c); see also A. 354 (State Department official describes shared goal of federal and state action); A. 419 (Secretary of State opines that it is only right that Burma is subject to international sanctions and consumer boycotts)(emphasis added). The Massachusetts Burma Law promotes several purposes, each of which is broadly consistent with the purposes of federal law. The Burma Law discourages companies from doing business with Burma; encourages companies to lobby for change in Burma; highlights the conditions in Burma and thereby invites action by Congress and other interested bodies; and reflects the disapproval of the people of Massachusetts of the conditions in Burma. Where, as here, state and federal laws further the same purposes, a claim of actual conflict fails. See A. 600-01; CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 82-83 (1987) (no preemption where state furthers the federal policy); Associated Gen. Contractors of Mass., Inc. v. Altshuler, 490 F.2d 9, 14-15 (1st Cir. 1973), cert. denied, 416 U.S. 957 (1974) (no preemption of state law by Executive Order where broad purposes of the two are congruent).

Nor does the Massachusetts law stand as an obstacle to the means chosen by the United States to reach the shared goal of human rights in Burma. Nothing in the Burma Law impedes enforcement of the federal ban on new investment by United States persons; the Burma Law does not, for example, authorize investments prohibited by federal law. United States companies can easily comply with both state and federal restrictions. Nor does the Massachusetts law interfere with federal policy toward foreign companies: the federal sanctions do not apply to foreign companies at all. Cf. Philip Morris, Inc., 122 F.3d at 83 (no conflict because prohibitions in federal law apply only to federal officials). The Massachusetts Burma Law applies equally to United States and foreign firms and permits United States firms to continue to conduct trade with Burma in the goods and services permitted by federal law, restricting only procurement by state agencies of Massachusetts. For these reasons, the District Court correctly stated that the federal law on Burma does not preempt the Massachusetts Burma Law.

B. Congress has Implicitly Permitted State and Local Laws on Burma.

Congressional action and inaction in matters related to the Burma Law also represent implicit permission of such laws, under the reasoning of Barclays Bank, 512 U.S. at 326. The District Court did not cite Barclays Bank or consider the constitutional significance of Congresss willingness to tolerate state and local action on Burma. Id. at 327. This Court should apply Barclays and conclude that Congress in 1996 implicitly permitted state and local governments to enact selective purchasing laws regarding Burma, and that this permission shields the Burma Law from claims that it interferes with the conduct of foreign relations.

In Barclays Bank, the Court upheld the California worldwide unitary method of taxing multinational corporations, relying on Congresss failure to preempt and the implicit permission that failure represented. Id. at 324, 326, 329. The Court noted that the Constitution allocates to Congress the power to establish uniformity -- to speak with one voice in matters affecting foreign nations -- when it wishes to do so. Id. at 329. Where, however, Congress had failed to nullify the state tax at issue, despite withering attacks by the Executive Branch, id. at 328-29, and a battalion of foreign countries, id. at 320, 324 n.22, the Court determined that Congress had implicitly permitted the law and thus protected it from a claim that it interfered with the conduct of foreign relations.

Thus, under Barclays, express Congressional approval of a state law affecting foreign affairs is not required for the Court to hold a state law constitutional: while the federal government must have the capacity to speak with one voice on foreign affairs when the national interest so requires, Congress may more passively indicate that certain state practices do not impair federal uniformity in an area where federal uniformity is essential; . . . it need not convey its intent with the unmistakable clarity required to permit state regulation that discriminated against interstate commerce . . . . Id. at 323 (emphasis added); see Wardair Canada, Inc. v. Florida Dept of Revenue, 477 U.S. 1, 12-13 (1986) (state law did not interfere with ability of federal government to speak with one voice, even where federal government had entered into international conventions related to same subject matter); Container Corp. of America v. Franchise Tax Board, 463 U.S. 159, 196-97 (1983) (fact that Congress had not preempted certain method of state taxation of multinational companies shows that State had not undermined any federal policy of uniform treatment of such companies). This more deferential rule for state laws affecting foreign policy reflects the fact that the nuances of the foreign policy of the United States -- are much more the province of the Executive Branch and Congress than of th[e] Court . . . , Barclays Bank, 512 U.S. at 327, and the judiciary is not vested with power to decide how to balance the effects of a state law on foreign relations. Id. at 328. Under this principle of judicial restraint in the area of foreign affairs, the Court leave[s] it to Congress -- whose voice, in this area, is the Nations -- to evaluate whether the national interest is best served by uniformity, or state autonomy. Id. at 331.

In this case, several congressional actions show that Congress has implicitly permitted selective purchasing laws on Burma. First, when Congress imposed federal sanctions three months after enactment of the Massachusetts Burma Law in 1996, it gave no specific indications of an intent to preempt state laws. Id. at 321, 324. Second, when Europe and Japan challenged the Burma Law at the WTO, the unanimous congressional delegation from Massachusetts objected to the Japanese complaint and urged the United States Trade Representative (USTR) to defend the Law as an internal affair[] of Massachusetts. A. 342, 427. Third, a 1997 bill intended to limit federal trade sanctions did not apply to state and local legislation, even though its sponsor noted that roughly 20 States and localities have adopted laws prohibiting government commercial dealings with United States or foreign companies that do business with countries that have poor human rights records and some of [these] . . . sanctions raise difficult questions concerning the constitutional authority to conduct U.S. trade and foreign policy. H.R. 2708, 105th Cong., 2d Sess. (1997); 143 Cong. Rec. E2080 (October 23, 1997)(Rep. Hamilton). Fourth, in 1998, the House of Representatives debated the constitutionality and wisdom of state and local actions affecting foreign policy without acting to preempt such laws. See 144 Cong. Rec. H7277-H7285 (August 5, 1998). Fifth, the denial of a private cause of action under the URRA shows that Congress intended to protect state and local laws from constitutional attack by private persons and foreign countries. See Arg. II.A.2; 1994 U.S.C.A.A.N. at 4055. In light of this legislative history, the Court should hold that Congress has implicitly permitted state and local selective purchasing laws regarding Burma and thus shielded such laws from constitutional attack.

C. Even If Congress Has Not Implicitly Permitted the Burma Law, It Is Constitutional Because Its Indirect Effects Do Not Interfere with the Capacity of the United States to Regulate Foreign Affairs.

The District Court did not cite Barclays Bank or give constitutional weight to the failure of Congress to preempt state and local laws on Burma. Instead, the District Court held that the Burma Law impermissibly infringes on the federal power to regulate foreign affairs. A. 591. For this holding, the District Court principally relied on Zschernig v. Miller, 389 U.S. 429 (1968), and the fact that (1) the Massachusetts Burma Law is intended indirectly to improve conditions in Burma, and (2) some foreign countries have complained that the Burma Law violates GATT. On the latter point, the District Court cited the EU amicus brief for the proposition that the Burma Law interferes with the normal conduct of E.U.-U.S. relations because it raises questions about the ability of the U.S. to honor international commitments it has entered in the framework of the [WTO]. A. 595-96.

 

1. The Indirect Effects of the Burma Law Are Distinguishable from the Great Potential for Disruption and Embarrassment Cited in Zschernig v. Miller.

Zschernig represents the only time that the Supreme Court has employed the general power of the federal government over foreign affairs to strike down an exercise of state police power. The case remains a unique statement and a sole application of constitutional doctrine. L. Henkin, Foreign Affairs and the Constitution (1996 ed.) at 165. The doctrine has been criticized and the result in Zschernig attributed to Cold War tensions. See id. at 162 (until 1968, there was no hint of such a principle); id. at 165 & n. (relic of the Cold War). More recently, Barclays Bank has severely undercut the rational of Zschernig and raised a threshold bar -- Congressional acquiescence -- against similar constitutional claims.

In Zschernig, the Oregon statute provided that a nonresident alien could not inherit property from an Oregon decedent unless three conditions were satisfied: (1) the aliens government must accord Americans the right to inherit on equal terms with its citizens; (2) the aliens government must give Americans the right to receive payment in the United States of funds from foreign estates; and (3) the nonresident alien must be able to receive the benefit, use or control of the proceeds of the Oregon estate without confiscation by his government. The Court concluded that this type of probate law as enforced in the Oregon courts had a direct impact on foreign relations and may well adversely affect the power of the central government to deal with those problems. Id. at 441. The Court stressed that the extensive record of enforcement of the statute by the Oregon courts showed a great potential for disruption or embarrassment in the conduct of foreign relations: the Oregon courts had repeatedly criticized the administration of foreign laws by foreign officials, questioned their credibility, and denied foreign citizens private inheritances based on foreign policy attitudes toward particular governments. See 429 U.S. at 435 (emphasis added); 437 (As one reads the Oregon decisions, it seems that foreign policy attitudes, the freezing or thawing of the cold war and the like are the real desiderata.).

Nothing in Zschernig, however, establishes that any law intended indirectly to affect foreign affairs is unconstitutional. Zschernig did not overrule Clark v. Allen, 331 U.S. 503 (1947), which upheld the facial validity of a California statute similar to the first two sections of the Oregon law. Although the California statute was clearly designed to influence foreign countries to change their laws to allow Americans to inherit, the Court dismissed the claim against the law as farfetched. Id. at 517. Emphasizing that rights of succession were peculiarly a matter of local law, the Court agreed that [w]hat California has done will have some incidental or indirect effect in foreign countries, but concluded that is true of many state laws which none would claim cross the forbidden line. Id.

The District Court in this case cited Zschernig for the proposition that any law that has more than an incidental or indirect effect in foreign countries, or has a great potential for disruption or embarrassment, is necessarily unconstitutional. See A. 594-95. This was legal error. The language in Zschernig cited by the District Court quotes Clark and stands for the proposition that a state law with merely an incidental or indirect effect on foreign affairs is constitutional. 389 U.S. at 434-35. The fact that Zschernig thus distinguishes Clark does not establish the broad rule applied by the District Court, namely, that any law that does have more than an incidental or indirect effect is necessarily unconstitutional. See A. 594-95. Rather, Zschernig and Clark show that the Court will consider the degree of the impact of the state law on foreign affairs and the nature of the state interest at stake. See Zschernig, 389 U.S. at 440; Jack L. Goldsmith, Federal Courts, Foreign Affairs, and Federalism, 83 Va. L. Rev. 1617, 1691 (1997). In both Clark and Zschernig, the States were performing a traditional state function in enacting rules of inheritance. What distinguished the cases from each other was that the California statute in Clark had only an indirect influence on foreign affairs because the state law could be implemented by state judges simply through the routine reading of foreign law. Zschernig, 389 U.S. at 433 (emphasis added). The Oregon statute in Zschernig, on the other hand, by forcing state courts to assess the actual operation of foreign laws, prompted state courts to evaluate the credibility of foreign representatives and engage in persistent judicial criticism of foreign states -- actions that are outside the state courts ordinary role and which threatened a direct impact on foreign relations. See generally, Henkin, supra, at 163-165.

The different results in Clark and Zschernig reflect the fact that the foreign relations of the United States are not in fact wholly insulated from the states. Henkin, supra, at 150. The Supreme Court well knows that [i]n the governance of their affairs, states have variously and inevitably impinged on United States foreign relations. Id. at 162. The inevitable effects of state laws on foreign affairs has led federal and state courts and the Department of Justice to distinguish Zschernig v. Miller and uphold Buy American laws governing state and local procurement.

The Massachusetts Burma Law is constitutional under Zschernig and Clark because it does not conflict with American foreign policy toward Burma or interfere with the implementation of that policy. Like the statute in Clark and unlike the statute in Zschernig, the implementation of the Burma Law does not require repeated decisions by state officials about the operation of Burmese law or the credibility of Burmese officials. A. 81 ( 21), 505 ( 14). The general statements critical of Burma made by Massachusetts supporters of the Burma Law do not render the Law unconstitutional because Zschernig does not foreclose all actions involving substantive judgments about foreign nations; rather, a single general decision about a nation is beyond the scope of Zschernig. Board of Trustees, 562 A.2d at 745-746 (upholding such a decision even where divestment law had few if any exceptions and required withdrawal from existing investments).

Furthermore, the Burma Law does not establish or regulate official relations with the Government of Burma or regulate the relationship between private companies and that government. In contrast, the state law Zschernig ensured the continuous regulation of the settlement of private estates and assessment of the legal relationship between foreign citizens and their own governments. There is no evidence of a similarly direct effect of the Burma Law on foreign relations. Indeed, the NFTC has repeatedly argued that such unilateral action has had no success in any country and only make[s] a statement without any impact. A. 362, 365, 367. Statements without impact do not cause disruption or embarrassment in the conduct of American foreign relations, whatever their goals. The effects of the Burma Law cited by the District Court are like those permitted in Clark, not those criticized in Zschernig. For these reasons, the effects of the Burma Law do not render it unconstitutional. Cf. Arthur D. Little, Inc. v. Commr of Health & Hospitals of Cambridge, 395 Mass. 535, 545-48, 481 N.E.2d 441, 448-49 (1985) (city regulation prohibiting testing, storage, and disposal of chemical warfare agents not ousted by federal war and defense powers).

2. The Complaints of Foreign Countries Do Not Establish the Unconstitutionality of the Burma Law.

Nor do the complaints by foreign countries under GATT establish that the Burma Law unconstitutionally disrupts or infringes on the federal governments power to regulate foreign affairs. A. 591. Barclays Bank rejected similar reliance on the disapproval of many of our trading partners. Id. at 324 n.22. The Courts approach is supported by diplomatic history: on the stage of international politics, the drama never ceases, and each season is full of conflicts, conspiracies, and the usual protests and threats. None of these perennials, however, should influence a United States court to strike down the democratic act of the citizens of a State. See Barclays Bank, 512 U.S. at 320 (battalion of foreign governments that has marched to [plaintiffs] aid, [through] diplomatic notes, amicus briefs, and even retaliatory legislation . . . [lacks] such force as to dictate th[e] Courts Commerce Clause jurisprudence); see id. at 327-328 (even state action likely to provoke retaliatory action by foreign governments not unconstitutional); id. at 324 n. 22 and 337 (OConnor, J., concurring in judgment in part and dissenting in part)(detailing complaints of foreign nations). Congress retains broad powers to reduce to a minimum the frictions that are unavoidable in a world of sovereigns sensitive in matters touching their dignity and interests. Perez v. Brownell, 356 U.S. 44, 57 (1958), overruled on other grounds, Afroym v. Rusk, 387 U.S. 253 (1967). The District Court erred by devaluing the role of Congress and giving constitutional weight to the complaints of foreign countries against the Massachusetts Burma Law.

In relying on the pending complaints of Europe and Japan at the WTO, the District Court not only ignored Barclays but also principles of federalism embodied in the URRA. As explained in Arg. II.A.2., Congress in 1994 denied private companies and foreign governments a right of action against state laws under GATT in order to protect laws like the Burma Law. The District Courts decision overrides the broad state protection intended by Congress and creates a private cause of action under the guise of a constitutional claim. Congress protected the States against collateral use of complaints or decisions by the WTO; a fortiori, Congress did not intend to delegate to foreign complainants the power to establish the unconstitutionality of a state law simply through a complaint at the WTO.

The Court should also discount the foreign complaints because they are the inevitable results of the WTO regime created by GATT. See Goldsmith, 83 Va. L. Rev. at 1678-79, 1688-89. If the federal government wishes to end such complaints and the resulting contact between foreign countries and the States, it can bring actions against the States under the URRA. In the meantime, however, the Court should not rely on the complaints to find a great potential for disruption or embarrassment in the conduct of foreign relations.

Finally, recent statements by the Executive Branch concerning state and local laws on Burma do not establish unconstitutional interference with the federal governments regulation of foreign affairs. See A. 434-488. Barclays Bank expressly rejected reliance on Executive statements and briefs filed criticizing state action. 512 U.S. at 328-330 (majority opinion) and 334 (opinion of OConnor, J.). The precatory statements (id. at 330) of executive officials cannot substitute for hard evidence of interference with the capacity of the federal government to speak with one voice on foreign policy. See Zschernig, 389 U.S. at 443 (Stewart, J., concurring) ([r]esolution of so fundamental a constitutional issue cannot vary from day to day with the shifting winds at the State Department); see also A. 425 (USTR pledges strong defense of Burma Law at WTO). For all of these reasons, the District Court erred in concluding that the Burma Law unconstitutionally infringed on the federal governments power to regulate foreign affairs.

D. The District Court Erred by Failing to Weigh the Important State Interests Promoted By the Burma Law -- Interests Embodied in the First and Tenth Amendments.

The District Court also erred by failing to give sufficient weight to the important state interests promoted by the Massachusetts Burma Law. The District Court stated that State interests, no matter how noble, do not trump the federal governments exclusive foreign affairs power. A. 600 (citations omitted). In stating this per se rule, which appears to nullify any state law that concerns foreign affairs, the District Court went beyond even Zschernig. Zschernig at least acknowledged that the States have traditionally regulated the descent and distribution of estates and applied a balancing test, stating that state regulations must give way if they impair the effective exercise of the Nations foreign policy. Id. at 440; see Goldsmith, 83 Va. L. Rev. at 1691.

The state procurement governed by the Burma Law lies at the core of state sovereignty. Procurement is a vital -- not elective -- state function. It represents the fundamental choice of with whom one will deal reserved to the States by the Tenth Amendment. See Reeves v. Stake, 447 U.S. at 441.

The Burma Law also represents the expression of a moral position on an important issue of public policy. In the New England and other colonies, the founding generation considered the nonimportation boycott to be a wise alternative to war. The long history of boycotts in aid of human rights around the world shows that the moral statement made by the Burma Law is a product of tradition and reason, not whim or show.

Thousands of citizens made similar public and private statements in the 1980's regarding South Africa. Ultimately, twenty-three states, 14 countries, and 80 cities enacted divestment or procurement legislation directed at South Africa. See Richard B. Bilder, The Role of States and Cities in Foreign Relations, 83 Am. J. Intl Law 821, 822 (1989); see Board of Trustees, 562 A.2d at 744-49. These statements by the people acting collectively through their state and local governments promote values embodied in the First Amendment. See Bilder at 826-829; Andrea L. McCardle, In Defense of State and Local Government Anti-Apartheid Measures: Infusing Democratic Values into Foreign Policymaking, 62 Temple L. Rev. 813, 831-35 (1989). Whether or not a state or local government qua government actually has rights of speech enforceable under the First Amendment, the purpose and spirit of the First Amendment are embodied in selective purchasing laws. See NAACP v. Claiborne Hardware Co., 458 U.S. 886, 907 (1982) (First Amendment protects consumer boycotts).

In these respects, state and local laws on Burma are strikingly similar to the actions of members of the NFTC and other corporations who conduct their own selective purchasing by enforcing voluntary codes of conduct for their purchases of goods and services from developing countries and who, in some cases, have withdrawn from Burma and other countries on human rights grounds. See United States Department of Labor, The Apparel Industry Codes of Conduct: A Solution to the International Child Labor Problem? (1996) at 124-207; A. 89 ( 61); 374-412. Private companies are beginning to accept responsibility for labor practices and human rights abuses of their foreign subcontractors. Debora L. Spar, The Spotlight and the Bottom Line -- How Multinationals Export Human Rights, 77 Foreign Affairs (March/April 1998) at 7. In 1995, the Clinton Administration encouraged United States corporations and organizations to develop their own voluntary codes of conduct for their foreign operations. A. 391 n.16. NFTC members Levi Strauss and Liz Claiborne have established codes of conduct that define decent and humane working conditions. See A. 389, 402-03, 411-12. The same two companies have withdrawn from Burma, citing human rights concerns. A. 413-14; see A. 87 (members of NFTC have directly encouraged legal reforms in foreign countries and have asked foreign governments to change their laws and practices concerning child labor). Despite its members own efforts to influence foreign affairs, the NFTC now claims that even resolutions by state and local governments on questions of foreign policy are unconstitutional. A. 573 (transcript of Dist. Ct. hearing). The judgment of the District Court casts doubt on resolutions condemning or supporting a foreign government; resolutions urging citizens to boycott; and divestment laws. The unspoken command of the District Court is that state and local legislators must share the identical moral vision of their national leaders. The Court should reject this unreasonable, if not unconstitutional, command.

In sum, the Massachusetts Burma Law -- like its predecessors concerning South Africa -- echoes the historical concern of the citizens of Massachusetts for human rights. It was a son of Massachusetts -- John F. Kennedy -- who asked the people of all the States to pay any price, bear any burden, [and] meet any hardship . . . to assure the survival and success of liberty. In the Burma Law the people of Massachusetts have pledged their allegiance to the cause of freedom in Burma. This is a constitutional purpose in the highest sense: it reflects the desire to secure the blessings of liberty around the world. U.S. Const., Preamble. The constitutional values embodied in the moral statement made by the Burma Law outweigh any indirect effects of the Law on the federal governments capacity to regulate foreign affairs.

III. THE BURMA LAW IS CONSTITUTIONAL BECAUSE STATE PROCUREMENT IS MARKET PARTICIPATION, NOT REGULATION, AND IS THEREFORE NOT SUBJECT TO THE DORMANT FOREIGN AFFAIRS OR FOREIGN COMMERCE POWERS.

A. The Court Should Apply the Market Participation Exception to Both the Foreign Commerce and Foreign Affairs Claims in this Case.

The Court should also reverse the judgment on the alternate ground -- not reached by the District Court -- that the Burma Law is not subject to review under the foreign affairs or foreign commerce powers because state procurement is market participation, not regulation.

The Supreme Court has held that when a state or local government enters the market as a participant it is not subject to the restraints of the Commerce Clause. White v. Massachusetts Council of Construction Employers, Inc., 460 U.S. 204, 208 (1983) (rejecting Commerce Clause challenge to City of Boston requirement that at least 50% of the private workforce on all construction projects funded wholly by the city must be Boston residents); see Reeves, Inc. v. Stake, 447 U.S. at 436-37 (upholding state law restricting sale of state-produced cement to state residents); Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 810 (1976) (upholding state bounties for scrap cars where law favored state residents seeking bounties). The market participant doctrine stems from the fact that [t]here is no indication of a constitutional plan to limit the ability of the States themselves to operate freely in the free market. Reeves, Inc. v. Stake, 447 U.S. at 437. Indeed, in light of the long recognized right of trader or manufacturer, engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal, id. at 438-439 (quoting United States v. Colgate & Co., 250 U.S. 300, 307 (1919)), the Court has reasoned that when acting as proprietors, States should similarly share existing freedoms from federal constraints, including the inherent limits of the Commerce Clause. Reeves, Inc. v. Stake, 447 U.S. at 439. The doctrine rests on a healthy regard for federalism and good government rooted in the powers reserved to the States by the 10th Amendment. Id. at 441. The market participation principle operates at the very threshold of a commerce clause challenge: if the principle applies, both the challenged laws impact on commerce and its justifications are irrelevant; the law is simply immune from judicial veto under the Commerce Clause. See White, 461 U.S. at 210.

Federal and state courts have also applied the market participant doctrine to claims against state and local selective purchasing laws under the Foreign Commerce Clause. See A. 601; Trojan Technologies, Inc. v. Commonwealth of Pennsylvania, 916 F.2d 903, 909-13 (3d Cir. 1990), cert. denied, 501 U.S. 1212 (1991); Brief for the United States as Amicus Curiae in id., No. 90-5057 (3d Cir. 1990) at 17-18; Board of Trustees, 562 A.2d at 752; K.S.B. Technical Sales Corp., 381 A.2d at 784-89; Reeves v. Stake, 447 U.S. at 438 n.9 (reserving same question). Professor Tribe has summarized the point as follows:

A distinction must be drawn between state regulations of foreign commerce, and state participation in foreign commerce. The former activity is tightly proscribed by the negative implications of what might be called the foreign commerce clause. Thus, a state or local government that opposed the regime of apartheid in the Union of South Africa could not, absent congressional authorization, enact a measure denying South African companies the privilege of doing business within its jurisdiction; nor could a state or locality forbid its citizens and resident corporations from investing or trading with multinational corporations which have affiliates or subsidiaries in South Africa. But under the Supreme Courts market participant exception to the Commerce Clause, a state would be free to pass laws forbidding investment of the states pension funds in companies that do business with South Africa, or rules requiring that purchases of goods and services by and for the state government be made only from companies that have divested themselves of South African commercial involvement.

L. Tribe, Constitutional Law (1988 ed.)  6-22, p. 469 (emphasis added).

The same principle should apply to claims that a state law interferes with the ability of the federal government to conduct foreign affairs. As the Maryland Court of Appeals noted, the concerns which underlie the foreign Commerce Clause are closely related to the concerns underlying the limits on a states authority to affect foreign policy. Board of Trustees, 562 A.2d at 752. Therefore, the foreign affairs power -- no less than the foreign commerce power -- must be analyzed to determine whether it was intended by the Framers to constrain the proprietary power of the States. Cf. Wisconsin Dept of Industry v. Gould, 475 U.S. 282, 289-291 (1982)(market participant doctrine does not apply to preemption analysis under NLRA because comprehensive statutory scheme reflects intent to foreclose certain state action, but Commerce Clause does not itself interfere with power of States to contract freely in market). In the absence of any such intent, it is inappropriate to strike down a states exercise of proprietary power absent preemption by Congress.

The historical basis for the plenary federal power over foreign relations does not imply the displacement of state proprietary power. The Framers were primarily concerned with congressional control over the exercise of state regulatory power affecting foreign affairs -- particularly tariffs. See The Federalist No. 22, at 144 (C. Rossiter ed. 1961); id. No. 23 at 153. They also expressly denied to the States the right to undertake actions -- such as treaties or declarations of war -- long associated with international sovereignty. At the same time, the Framers understood the power of any corporate entity, private or public, to deal with whomever it chooses. See Perkins v. Lukens Steel Co., 310 U.S. 113, 127 (1940). The Framers thus knew the difference between the direct effects of, e.g., a state ban on travel and the indirect effects of state limits on its own procurement. In light of the historical basis of the foreign affairs power and nature of state selective purchasing laws, the Court should apply the market participant doctrine to the claims under the foreign affairs and foreign commerce powers in this case. See Trojan Technologies, Inc. v. Comm. of Pennsylvania, 742 F. Supp. 900, 903 (M.D. Pa. 1990), affd, 916 F.2d 903 (3d Cir. 1990), cert. denied, 501 U.S. 1212 (1991); 10 Op. Office of Legal Counsel, Dept of Justice at 84-86 (We do not think the [Zschernig] principle should be extended to state proprietal action), 1986 WL 213238.

B. The Price Preference Applied to State Purchasing By the Burma Law Is Market Participation, Not Regulation.

In imposing a price preference for firms that do not do business with Burma, Massachusetts is acting as a market participant. In its procurement of goods and services, Massachusetts has created a market sua sponte, not regulated an existing private market. The Burma Law does not restrict existing markets among Burma, foreign or domestic companies, and citizens of any country or State. Like each of these market participants, Massachusetts has the power to decide with whom it will deal. As the Maryland Court of Appeals noted, just as a private merchant may elect not to deal with companies doing business in [a foreign country] . . . [state and local governments] too may make the same choice unhindered by the constraints of the Commerce Clause. Board of Trustees, 562 A.2d at 750.

The NFTC argued below that the market participant doctrine does not save the Burma Law because in the . . . Law, the Commonwealth is acting to regulate, not simply to participate, in a market. NFTC Dist. Ct. Mem. at 31, 32-36 (citing Gould, 475 U.S. at 283, 289). The NFTC asserted that while the law employs the Commonwealths purchasing power to effectuate its ends, [it] is quite evidently an effort to regulate not only the relationship between Myanmar and certain companies, but also the domestic policies of Myanmar itself. NFTC Dist. Ct. Mem. at 32.

This point confuses regulation with intended or actual effects. While Massachusetts through the Burma Law hopes to influence change in Burma, neither that aspiration -- or its indirect effects -- is the regulation of private relationships within or outside Burma. The Supreme Court has deemed state action to be proprietary even where the stated or obvious purpose of the state law was to influence private conduct and thus to achieve goals unrelated to local economic self-interest. See Hughes, 426 U.S. at 814 (environmental concerns). Thus, in Hughes and Reeves, [the States] did not enter a presumably unmanipulable market with the profit-maximizing goals implied in the phrase market participation. Instead, the States intended their entrances to affect the flow of commerce so as to enhance public values -- improvement of the environment or increased supply of a needed product at the expense of the state as a business. L. Tribe, Constitutional Choices (1985) at 144-46 (emphasis in original). Likewise, restrictions on state purchases -- even if intended to achieve reform in Burma -- do not constitute regulation of the Burmese government or its contractors or other supporters. The essence of the Burma Law remains a self-imposed price preference that governs a market wholly created by state purchases. Cf. Camps Newfound/Owatonna v. Town of Harrison, 520 U.S. 564, 593 (1997) (state tax exemption not market participation where there is no direct state involvement in the market through state purchase or sale of goods).

Nothing in South-Central Timber Development, Inc. v. Wunnicke, 467 U.S. 82 (1984), suggests that the Burma Law is a regulatory measure. In Wunnicke, a plurality of the Court held that the market participant doctrine did not protect a discriminatory restriction imposed by Alaska, which required purchasers of state-owned timber to process the logs within the State. The plurality reasoned that this additional restriction on private activity reached beyond the immediate market in which the State was participating -- the sale of its timber -- and that for purposes of applying the market participant doctrine, the market must be relatively narrowly defined. Id. at 97-98. However, the Court also emphasized that the State was attempting to impose an additional downstream restriction, going beyond what sellers, who in the ordinary course of commercial endeavor have no continuing interest in the product once it is sold, traditionally do. Id. at 98-99.

In contrast, the Massachusetts state government is the ultimate purchaser of all goods and services covered by the Burma Law, and purchasers traditionally do decide with whom they will deal, even if that decision indirectly affects secondary upstream markets. Indeed, given that White accepted an upstream restriction on whom private contractors can hire (460 U.S. at 208), a selective purchasing law could not possibly be invalid simply because it might affect secondary upstream markets. Like the Baltimore divestment ordinance and the Buy American laws, the Burma Law places no restriction on private economic activity [which] takes place after the completion of the parties direct commercial obligation. Board of Trustees, 562 A.2d at 752 (quoting South Central Timber, 467 U.S. at 99). Like the restriction in White, the Burma Law imposes a narrow condition precedent on companies who are competing for state contracts and thus cover[s] a discrete, identifiable class of economic activity in which the State is a major participant. 460 U.S. at 211 n.7.

Nor do the cases decided under the National Labor Relations Act (NLRA) cited by the NFTC below restrict the scope of the exemption from the Commerce Clause at issue here. Each of these cases concerned the scope of the preemption of the NLRA, not the scope of the Commerce Clause. Thus, the Court in Gould held that the market participant doctrine reflects the particular concerns underlying the Commerce Clause, not any general notion regarding the necessary extent of state power in areas where Congress has acted. 475 U.S. at 289 (emphasis added). Emphasizing that what the Commerce Clause would permit States to do in the absence of the NLRA is thus an entirely different question from what the States may do with the Act in place, the Court held that in enacting the NLRA, Congress intended to prohibit the States from interfering in any way with the interrelated federal scheme of law, remedy, and administration. Id. (citations omitted). The NFTC relies on a single sentence in Gould, which stated that for all practical purposes, Wisconsins debarment scheme is tantamount to regulation. Id. But this sentence merely shows that the Court viewed the Wisconsin statute as a regulation (under the NLRA)