Authority, 935 F.2d 345 (1st Cir. 1991) (en banc), rev=d,

U.S. Const. art. I, ' 10, cl. 2 19

U.S. Const. art. I, ' 10, cl. 3 19

U.S. Const. art. I, ' 10, cl. 4 19

U.S. Const. art II, ' 2, cl. 2 19

President=s Message to Congress Transmitting Exec. Order No. 13,047

STATEMENT OF ISSUES

1. Whether the Massachusetts Burma Law (Chapter 130, ' 1, 1996 Mass. Acts 210, codified at Mass. Gen. Laws, ch. 7 '' 22G-22M), indisputedly enacted to condemn Myanmar and influence the conduct of its government, unconstitutionally infringes upon the federal government=s exclusive authority to regulate foreign affairs.

2. Whether the Burma Law, which prohibits state agencies from contracting with persons doing business in or with Myanmar, violates the Foreign Commerce Clause by discriminating against foreign commerce, impeding the national government=s ability to Aspeak with one voice,@ and regulating extraterritorial conduct.

3. Whether the Burma Law is preempted by federal law, which adopts a markedly different approach to Myanmar sanctions.

STATEMENT OF FACTS

The Act of June 25, 1996 (Chapter 130, ' 1, 1996 Mass. Acts 210, codified at Mass. Gen. Laws, ch. 7 '' 22G-22M) (Athe Massachusetts Burma Law@) effectively prohibits most companies doing business in the Union of Myanmar (formerly Burma) from providing goods and services to Massachusetts agencies. The Law=s sole purpose, as stated by the Commonwealth below, is to Aexpres[s] the Commonwealth=s own disapproval of the violations of human rights committed by the Burmese government@ and Aapply indirect economic pressure against the Burma regime for reform@ with the Agoal of human rights in Burma.@ Defendants= Motion for Summary Judgment (ACMSJ@) 1-2, 22.

This state law admittedly seeks to alter the domestic policies of a foreign nation. It thus directly intrudes on the national government=s exclusive power to regulate foreign affairs, discriminates against foreign commerce, and subverts federal legislation imposing markedly different sanctions on Myanmar. The law is unconstitutional, and the district court properly enjoined it.

Even so, the parties do not disagree as to the need for reform in Myanmar. Myanmar=s authoritarian regime, the SLORC, has reportedly committed numerous human-rights violations and refused to recognize democratic election results. But under our Constitution, United States policy toward Myanmar may be made only by the federal government. As the district court concluded, A[s]tate interests, no matter how noble, do not trump the federal government=s exclusive foreign affairs power.@ (A600)

A. The Burma Law=s Operation and History

The Burma Law restricts state agencies from purchasing goods or services from companies that do business in, or with, Myanmar. Mass. Gen. Laws, ch. 7 ' 22H(a). The Burma Law thus requires defendant Laskey (Secretary of Administration and Finance) to develop a Arestricted purchase list@ of persons doing business in Myanmar, update that list at least once every three months, and provide the list to all state agencies. ' 22J(a).

When an agency negotiates a contract, it must obtain an affidavit detailing the company=s business ties with Myanmar. ' 22H(c). Unless the agency certifies both (i) that Athe procurement is essential,@ and (ii) that Acompliance . . . would eliminate the only bid or offer, or would result in inadequate competition,@ ' 22H(b), no company on the restricted list may provide the goods or services. Further, in competitive bid situations the Law forbids an award to a company on the list, unless (1) there is no other bid, or (2) the only bid from a company not doing business with Myanmar is 10% greater than the restricted company=s bid. ' 22H(d). This is enforced by adding ten percent to the offer price submitted by any company on the list. The Law renders A[a]ny contract entered into in violation@ of its terms Avoid.@ ' 22L. Thus, the Law generally has the effect of requiring a company seeking to do business with Massachusetts to sever all ties with Myanmar or with companies doing business there, since a 10% bid-price increase is fatal to securing the contract in almost all instances. (See A31)

Here, the Commonwealth admits that the Law=s sole purpose is to affect the domestic policies of a foreign nation, e.g., to apply Aindirect pressure@ and Ainfluence change in Burma.@ (CMSJ 2; Br. 50) The legislative history compels these concessions. Its sponsor, Representative Byron Rushing, solicited support by urging that A[t]he Commonwealth has a history of assisting fledgling democratic movements throughout the world. . . . Continued pressure from Massachusetts is necessary to vigorously combat well documented repression and intolerance in Burma.@ (A433)

Throughout the legislative debates, its supporters and detractors alike considered the Burma Law a Aforeign policy@ measure, not a government-contracting law. Indeed, no legislator suggested that the Law would produce any local economic benefit, nor has the Commonwealth suggested so here. The legislative debates focused strictly on foreign policy. (A102-16) Even Representative Rushing recognized that the Burma Law was Aengag[ing] in foreign policy,@ and that its Aidentifiable goal is, free democratic elections in Burma.@ (A105-06) And when Representative Teague proposed an amendment targeting another country, he noted that Afrom time to time [the Massachusetts legislature] has decided [to] engage in their own little version of foreign policy@; Aif we are to begin [to] engage in foreign policy restrictions and prohibitions,@ it should not be limited to Myanmar. (A102-03)

The Senate debates also focused on foreign policy. Senator Lees asked the floor: A[W]hy isn=t the Congress of the United States doing it? Why isn=t the [P]resident of the United States saying Burma ought to be put into this? But no, we . . . the Massachusetts legislature tried to set up some foreign policy business guidelines.@ (A110) Senator Hicks similarly queried, A[i]f this is so important . . . why hasn=t our congressional delegation acted and come forth with something in the appropriate forum, which would be the U.S. Congress?@ (A111) She urged her colleagues to Anot try to dabble in foreign affairs.@ (A112) Supporting the bill, Senator Walsh responded that this bill sends an Aappropriate and simple message@ that Adollars of our government [will] help promote and stand for civil and human rights.@ (A114)

Then-Governor Weld likewise saw the Burma Law as a foreign-policy initiative. His signing statement declared that A[o]ne law passed by one state will not end the suffering and oppression of the people of Burma, but it is my hope that other states and the Congress will follow our example, and make a stand for the cause of freedom and democracy around the world.@ (A117) The Governor made no mention of any economic benefit to the Commonwealth, its agencies or its citizens.

Thus, the Law=s exclusive purposeCas described by its sponsor, the legislators who debated it, the Governor who signed it, the lawyers who defend it, and as it operatesCwas to send a political message by putting economic pressure on Myanmar to alter its policies. Massachusetts was not acting like a rational purchaser of goods and services; it was announcing and enforcing its own foreign policy.

B. The Law=s Impact On Business Operations

The Law=s impact is substantial. When Governor Weld signed the Law, he called it A>more than symbolic action=@ that would A>affect millions of dollars in state business.=@ Each year the Commonwealth and its agencies purchase at least $2 billion worth of supplies and services; the Law covers every purchase. (A87) Foreign trade with Myanmar generated nearly $2.3 billion annually in revenues, including trade in products such as timber, oil and gas. Id. Not surprisingly, companies historically have done business with both Massachusetts and Myanmar. Id.

The Law=s impact is perhaps best measured by the broad scope of the restricted purchase list. When the complaint was filed, the list contained 346 companies. Forty-four were United States companies, of which 15 were Fortune 500 companies. (A83) The total annual revenue of the publicly traded United States companies on the list exceeded $255 billion. Many foreign companies with U.S. subsidiaries and affiliates also appeared on the list. Id. According to the Law=s sponsor, at least 13 companies have exited Myanmar since the Law=s passage. (A323)

The Law=s impact on business planning activities is also substantial. Companies doing business with Myanmar that wish to do business in Massachusetts (as well as vice-versa) must plan their activities to conform to the Law before expending their resources. (A31-32)

Finally, the Law also regulates the conduct of foreign companies in other countries and, thus, the United States companies with which they do business. Foreign companies are discouraged from contracting with United States companies because of the possibility that various states and municipalities will, in the future, adopt additional sanctions legislation. (A32)

C. The Law=s Impact On International Relations

The Law has already had considerable impact on international relations. State Department officials have recognized that the Law and other similar statutes intrude into federal foreign policy. Undersecretary of State Stuart Eizenstat has called Aefforts by a variety of State and local officials around the United States . . . to impose various economic sanctions@ Ainappropriate and counterproductive.@ The Eizenstat Report and Related Issues Concerning United States and Allied Efforts to Restore Gold and Other Assets Looted by Nazis During World War II: Hearing Before the House Comm. on Banking and Financial Services, 105th Cong., 1st Sess. 31 (June 25, 1997). See also A454 (Eizenstat: Auncoordinated responses [by state and local governments] can put the US on the political defensive and shift attention away from the problem@). Deputy Assistant Secretary of State David Marchick, testifying before the California State Assembly regarding proposed (but ultimately failed) legislation targeting companies that do business in Myanmar, similarly explained:

[T]he Department of State [is] concerned [that] state and local sanctions [may impair] the President=s ability to send a clear and unified message to the rest of the world. As the world=s only economic and military superpower, the United States has the obligation to project a coherent and consistent message. . . . Ad hoc and scattered actions at various levels of government, however well-intentioned, can do more harm than good in achieving the desired objective and impede the President=s and Secretary of State=s conduct of foreign policy.

A454; see also A475-83; A484-85. Assistant Secretary of State Alan P. Larson recently noted that such sanctions can Adisrupt the Executive Branch=s conduct of foreign policy,@ and that the Burma Law has Acomplicated our ability to build coalitions with our allies to affect the changes in policy that both we and the sponsors of the Massachusetts statute seek.@ Larson, State and Local Sanctions: Remarks to the Council of State Governments (Dec. 8, 1998) at 3-4.

Effective negotiation and implementation of United States foreign policy is always a delicate matter. It requires centralized authorityCwhich the Constitution places squarely and exclusively in the federal governmentCbecause foreign nations must know that when the President, the Secretary of State, or their deputies speak, they speak for the United States, without doubt or uncertainty. The federal government must retain control over any sanctions regime; A[o]nly the President can weigh all the issues at stake at any given moment, take account of rapidly changing situations, and effectively tailor our response to the specific situation at hand.@ Larson, supra, at 2.

Several foreign nations have expressed objections to the Burma Law. The Association of South East Asian Nations (AASEAN@) and Japan have expressed serious concerns to the federal government regarding the Massachusetts Law. (A328-29; A330-32) In 1997, the EU and Japan each lodged complaints with the World Trade Organization (AWTO@), condemning the law as a violation of the United States= international obligations. (A169; A167-68)

To date, Massachusetts remains the only state to have enacted a restrictive purchasing law penalizing companies doing business in or with Myanmar. However, at least 18 municipal jurisdictions have imposed similar restrictions. (A87; A173-321) Since the district court=s decision, Los Angeles has also enacted a Burma ordinance, despite constitutional objections. Los Angeles, Cal., City Council Ordinance 172351 (Dec. 15, 1998). The severity of the problem caused by the Burma Law is increased by the growing number of states and municipalities that are considering similar foreign-policy measures. (A172) This problem will only grow worse with time. Nine states and 13 municipalities have filed amicus briefs with this Court supporting Massachusetts and claiming the right to enact sanctions legislation.

D. The Inconsistent Federal Statute

In 1996 Congress enacted legislation that imposed certain specific sanctions on Myanmar, and authorized the President to impose trade sanctions if he determined that they were warranted. See Omnibus Consolidated Appropriations Act of 1997, Pub. L. No. 104-208, ' 570, 110 Stat. 3009-166 (1997). As discussed at pp. 58-64, below, the Massachusetts sanctions differ significantly from the federal statute, and conflict with the federal approachCwith respect to the scope of the sanctions, the companies affected, the agencies responsible for them, and the very goals of the legislation.

E. Proceedings Below

The National Foreign Trade Council (ANFTC@) commenced this action for declaratory and injunctive relief on April 30, 1998, against two defendantsCthe Commonwealth officials responsible for enforcing the Burma Law. The NFTC, founded in 1914, has long represented its members in foreign-trade matters. (A76) Its members specifically authorized it to bring this action. (A93-97) Thirty-four NFTC members appear on the Massachusetts restricted list. (A84) NFTC members have stopped doing business in Myanmar as a result of the law, or have been restricted in bidding for Massachusetts contracts because of continued ties with Burma. (A85-86)

By agreement, the case was submitted on cross-motions for summary judgment, on stipulated facts (A75-488), and uncontested affidavits. After oral argument, the district court (Tauro, C.J.) held on November 4, 1998, that the Burma Law unconstitutionally infringes upon the federal government=s exclusive foreign-affairs authority.

The court reasoned that the Aconstitutional provisions evidenc[ing] the Framers= intent to vest plenary power over foreign affairs in the federal government@ and the Supreme Court=s consistent recognition of Athe exclusive role assigned to the federal government in the area of foreign affairs,@ grant Athe federal government . . . exclusive authority to conduct foreign affairs.@ (A593-94) Accordingly, Astates and municipalities must yield to the federal government when their actions affect significant issues of foreign policy.@ (A594) Their interests, Ano matter how noble, do not trump the federal government=s exclusive foreign affairs power.@ (A600)

The court dismissed as Airrelevant@ Massachusetts= argument that the law does not violate the foreign-affairs power because it Adoes not establish direct contact between Myanmar and the Commonwealth,@ holding that the law=s Apurpose of changing Burma=s domestic policy@ is an Aunconstitutional infringement on the foreign affairs power of the federal government.@ (A599-600)

The court did not discuss in detail the NFTC=s other challenges to the Burma LawCthat it (1) violates the Foreign Commerce Clause; and (2) is preempted by federal Burma sanctionsCcharacterizing them as not Adispositive@ in view of its foreign-affairs-power holding. (A599-601) The court did opine, however, that the NFTC had not met its burden of establishing preemption. (A600-01)

On November 17, 1998, the district court entered final judgment declaring the statute unconstitutional and enjoining its enforcement. (A604-05) Defendants subsequently sought a stay of the injunction, which was denied. This appeal followed.

SUMMARY OF ARGUMENT

I. The district court correctly held the Burma Law unconstitutional under the exclusive federal foreign-affairs power. Since the Constitution=s framing, it has been accepted that only the federal government may conduct foreign policy. Otherwise, the United States could not conduct a coherent national policy. The leading case, Zschernig v. Miller, 389 U.S. 429 (1968), establishes that a state may not conduct foreign policy by passing legislation aimed at a particular foreign country, based upon the state=s evaluation of that country=s Ademocracy quotient.@ The Commonwealth=s arguments that Zschernig should be overruled or distinguished are meritless.

II. The Burma Law also violates the Foreign Commerce Clause. It discriminates against companies engaged in commerce with Myanmar, interferes with the United States= ability to Aspeak with one voice,@ and impermissibly seeks to regulate extraterritorially. There is no Amarket-participant@ exception under the Foreign Commerce Clause, and that exception would not apply in any event since Massachusetts is acting as a market regulator, not as a market participant. Nor is there any basis for arguing that Congress approved the Massachusetts Law.

III. The Burma Law is also preempted by conflicting federal sanctions legislation. There are at least three such conflicts: The Massachusetts Law imposes more stringent sanctions than the carefully considered and limited federal sanctions; the federal sanctions leave major decisions to the President, who cannot control application of the Massachusetts Law; and the Massachusetts Law=s unilateral approach conflicts with the federal approach of multilateral sanctions.

ARGUMENT

While this case comes to this Court on an undisputed factual record and on de novo review, the district court=s decision was unquestionably correct. The court properly invalidated the Burma Law because it makes foreign policy and intrudes on the exclusive federal domain. The Commonwealth=s arguments to the contrary, stripped of their rhetoric, ask this Court to overrule the Supreme Court=s decision in Zschernig v. Miller, 389 U.S. 429 (1968). Although the district court did not decide whether the Burma Law is also unconstitutional under the Foreign Commerce Clause or is preempted, those grounds also support affirmance.

1. THE BURMA LAW UNCONSTITUTIONALLY INFRINGES UPON THE FEDERAL GOVERNMENT=S EXCLUSIVE FOREIGN-AFFAIRS POWER

The Supreme Court has established that the Arole assigned to the federal government in the area of foreign affairs@ is Aexclusive.@ (A594). Relying upon this principle, settled since the framing of the Constitution itself, the district court held that the Burma Law is unconstitutional because Astates and municipalities must yield to the federal government when their actions affect significant issues of foreign policy.@ (Id.) This was a correct and faithful application of Supreme Court jurisprudence.

The Commonwealth nonetheless offers several arguments in favor of reversal. First, it urges this Court to effectively overrule Zschernig and hold that the Constitution contains no self-executing exclusive federal foreign-affairs power. Second, the Commonwealth alternatively urges that Zschernig is distinguishable from the present case. Third, the Commonwealth suggests that a doctrine recognized in only a handful of Interstate Commerce Clause casesCthe so-called Amarket-participant exception@Cshould be engrafted as a limitation to the federal government=s otherwise exclusive foreign-relations power. Fourth, the Commonwealth contends that Congress= passage of WTO legislation bars this suit. Finally, the Commonwealth advances the curious suggestion that the First and Tenth Amendments somehow allow the Commonwealth to intrude upon the federal government=s exclusive foreign-relations power. None of these arguments provides any basis for reversal.

A. As Zschernig v. Miller And Many Other Cases Establish, The Constitution Places Foreign-Relations Power Exclusively In The Federal Government

Placing exclusive power over foreign affairs in the national government was one of the central purposes of the Constitution, for the Amajor drive wheel in the movement for constitutional reform@ was the confused state of foreign affairs under the Articles of Confederation. F. Marks, Independence on Trial: Foreign Affairs and the Making of the Constitution 50 (1973). Prior to the Constitution, under the Articles of Confederation, individual states caused at least two major foreign-policy embarrassments by conducting their own foreign relations. In one, several states refused to comply with the British peace treaty; in another, when Britain refused to open the West Indies to American trade, retaliation through sanctions was rendered impossible by the different approaches of the individual states, each of which was empowered to make its own foreign policy. See Rakove, Making Foreign PolicyCThe View From 1787, in Foreign Policy and the Constitution 1, 2 (Goldwin & Licht, eds., 1990). This multitude of foreign-policy voices left foreign governments uncertain about who, exactly, they would be required to negotiate with in the United States; consequently, those governments Aregarded the United States as unreliable.@ Levy, Federalism and Collective Action, 45 U. Kan. L. Rev. 1241, 1254 (1997).

The Constitution replaced the Articles of Confederation with a truly national government, particularly regarding relations with other nations. The new Constitution fundamentally altered the federal-state relationship, placing centralized, exclusive control over foreign affairs with the federal government. The authors of the Federalist Papers urged the importance of this centralized and exclusive national authority: AIf we are to be one nation in any respect, it clearly ought to be in respect to other nations.@ The Federalist No. 42 (J. Madison). This concern specifically addressed the problem of individual states conducting individual foreign policies, as A[t]he union will undoubtedly be answerable to foreign powers for the conduct of its members.@ The Federalist No. 80 (A. Hamilton). Thus, the shift to a national government with exclusive control over foreign policy was Afully justified by the advantage of uniformity in all points which relate to foreign powers; and of immediate responsibility to the nation in all those for whose conduct the nation itself is to be responsible.@ The Federalist No. 44 (J. Madison). Although many provisions in the new Constitution were hotly debated, Athere was virtual unanimity@ on one thingCforeign-relations responsibility had to be taken from the individual states and vested in the national government. Marks, supra, at 143.

Several Constitutional provisions reflect this Aconcern for uniformity in this country=s dealings with foreign nations and indicat[e] a desire to give matters of international significance to the jurisdiction of federal institutions.@ Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 427 n.25 (1963). In Article I, Section 8, Congress is authorized Ato pay the Debts and provide for the common Defence . . . of the United States@ (cl. 1), A[t]o regulate Commerce with foreign Nations@ (cl. 3), and A[t]o establish an uniform Rule of Naturalization@ (cl. 4). Article II, Section 2 grants Presidential authority to make treaties and appoint ambassadors (cl. 2). In addition to granting these express federal powers, the Constitution prohibits states from making treaties or other agreements with foreign nations (Art. I, ' 10, cls. 1 & 3), and from imposing duties upon imports and exports. (Art. I, ' 10, cl. 2) Thus, under the Constitution, AForeign affairs are national affairs. The United States is a single nation-state and it is the United States (not the States of the Union, singly or together) that has relations with other nations; and the United States Government (not the governments of the states) conducts those relations and makes national foreign policy.@ L. Henkin, Foreign Affairs and the Constitution 13 (2d ed. 1996). While exclusive federal power over foreign affairs was not expressly stated, the Framers clearly recognized that Athe exclusive delegation, or rather this alienation, of State sovereignty@ exists not only where the Constitution has expressly Agranted an exclusive authority to the Union,@ but also where it granted Aan authority to the Union to which a similar authority in the States would be absolutely and totally contradictory and repugnant.@ The Federalist No. 32 (A. Hamilton).

From the framing onward, the Supreme Court has recognized, in an unbroken line of cases, that A[o]ur system of government is such that the interest of the cities, counties and states, no less than the interest of the people of the whole nation, imperatively requires that federal power in the field affecting foreign relations be left entirely free from local interference.@ Hines v. Davidowitz, 312 U.S. 52, 63 (1941). The federal government Ais entrusted with full and exclusive responsibility for the conduct of affairs with foreign sovereignties.@ Id. (emphasis added). This A[p]ower over external affairs is not shared by the States; it is vested in the national government exclusively.@ United States v. Pink, 315 U.S. 203, 233 (1942) (emphasis added).

This exclusive federal control necessarily constrains the states. Thus, in Sabbatino, the Supreme Court held that the Constitution does not allow Arules of international law@Cthere, the Aact of state@ doctrineCto Abe left to divergent and perhaps parochial state interpretations.@ 376 U.S. at 425. The Court reasoned that the act of state doctrine could be Aeffectively undermined@ if Astate courts [we]re left free to formulate their own rules.@ Id. at 424. The issue Amust be treated exclusively as an aspect of federal law.@ Id. at 425. Five years after Sabbatino, the Court again unequivocally held that the exclusive federal authority to regulate foreign relations requires that state or municipal laws that have more than an Aincidental or indirect effect in foreign countries,@ or that have Agreat potential for disruption or embarrassment@ of United States foreign policy, cannot survive. Zschernig v. Miller, 389 U.S. at 434-35. Zschernig involved an Oregon probate law that conditioned the inheritance rights of nonresident aliens upon the alien=s ability to demonstrate that his country of origin would grant reciprocal rights to a U.S. citizen, and would not confiscate any of the inherited property. Id. at 430-31. Judges under the law searched Afor the >democracy quotient= of a foreign regime,@ thus intruding impermissibly into Amatters which the Constitution entrusts solely to the Federal Government.@ Id. at 435-36.

The Burma Law, as written and as applied, represents the same sort of impermissible state judgments about a foreign regime. Indeed, the Law is effectively an economic embargo based upon the Commonwealth=s evaluation of Myanmar=s Ademocracy quotient.@ This state enactment is exactly the kind of foreign-policy activity that plagued the states under the Articles of Confederation, and that the Framers sought to abolish with the Constitution. See Marks, supra, at 50. The law has much more than Aan indirect or incidental effect@ on Myanmar; it is designed to, and does, create powerful disincentives to doing business in Myanmar. Indeed, the Burma Law is a far more serious intrusion into federal foreign-relations powers than the Oregon probate law held unconstitutional in Zschernig: Unlike the Oregon statute, the Burma Law in fact has no other purpose than to impose an economic embargo on a foreign country in an attempt to alter its domestic policies.

The Burma Law has caused controversy between the United States and its international allies. See generally Br. Amici Curiae of the European Communities et al. As noted, Japan and ASEAN have complained that the Burma Law may violate the United States= international obligations. (A330-332) Likewise, on June 20, 1997, after several unsuccessful efforts at informal negotiation with the United States Trade Representative, the EU lodged a complaint with the WTO, formally noting its position that the Burma Law violated the WTO=s AGovernment Procurement Agreement,@ to which the United States and Massachusetts are both signatories. (A167-68) On July 18, 1997, Japan joined the EU in urging that the Burma Law violates the United States= international obligations; Japan requested WTO consultation on the conflict. (A169) Whatever the resolution of these matters, they indicate that the Burma Law Aaffects international relations in a persistent and subtle way.@ Zschernig, 389 U.S. at 440.

The fact that the Burma Law has received considerable international attention and complaints is strong evidence that it intrudes into foreign affairs. In Zschernig, the Supreme Court noted with concern that the Oregon statute had caused the Bulgarian government to lodge a complaint with the State Department. Id. at 437 n.7. As Zschernig recognized, the fact that a foreign government takes issue with local lawsCforcing the United States government to defend a state policy in the international arenaCclearly indicates that the local law interferes with foreign relations.

The foreign-relations implications of the Burma Law are even stronger in light of the growing number of selective-purchasing laws in other local jurisdictions. See generally Br. Amici Curiae of the Chamber of Commerce of the United States of America et al.; Br. Amici Curiae of the European Communities et al. (both discussing at greater length the foreign-relations problems caused by the proliferation of state and local purchasing sanctions). Each additional local law diminishes the central and exclusive federal role in foreign affairs. The Commonwealth=s amici confirm that these problems will persist: Such laws have been adopted by Amore and more local governments@ over the last 20 years (City of N.Y. Br. 4), including laws in A22 states or localities . . . to avoid doing business with companies that operate in Burma@ as well as one aimed at Cuba and Afour [aimed at] restricting business with companies extracting oil from Nigeria.@ North Dakota Br. 9. Additionally, A[f]ifteen state or local governments have enacted purchasing preferences disfavoring businesses that operate in Northern Ireland.@ Id. Indeed, these amici urge that U.S. cities= Aincreasingly international presence@ in foreign affairs should continue. City of N.Y. Br. 14. Like the Commonwealth, these amici candidly confess the foreign-policy purpose of these laws: to Aadvance social goals@ (Center for Constitutional Rights Br. 1) and to limit commerce with Aforeign sovereigns having poor human rights records.@ City of N.Y. Br. 4-5. It is just this sort of foreign policymaking by states and municipalities that the Supreme Court forbade in Zschernig, and that the Constitution prohibits. Indeed, the circumstances here are much like those in Zschernig, in which the Court noted that the foreign-relations impact of the Oregon law was even greater given that similar laws were in force in other states. 389 U.S. at 434-35. See also Wisconsin Department of Industry, Labor and Human Relations v. Gould Inc., 475 U.S. 282, 288-89 (1986).

The fact that the current regime in Myanmar deserves international rebuke cannot be allowed to alter the constitutional analysis. As one court observed in considering a local law directed to South African apartheid, A[w]e must divorce the issue in this case from its emotionally charged surroundings.@ Springfield Rare Coin Galleries, Inc. v. Johnson, 115 Ill.2d 221, 227, 503 N.E.2d 300, 303 (1986). Indeed, one of the concerns articulated in Zschernig was that laws like the Burma Law Amay well adversely affect the power of the central government to deal with those problems.@ Zschernig, 389 U.S. at 441. There is evidence that this has occurred: State Department officials have noted that such laws may Ainadvertently aid pariah states@ (A483) and, with specific reference to the Massachusetts Law, Acomplicat[e] our ability to build coalitions with our allies to affect the changes in policy that both we and the sponsors of the Massachusetts statute seek.@ Larson, supra, at 4.

The Massachusetts Law adversely affects the conduct of U.S. foreign policy in other ways as well. Ranking State Department officials have repeatedly described these state and local sanctions as Acounterproductive,@ as well as having the potential to Aimpede the President=s and the Secretary of State=s conduct of foreign policy.@ (A454) These statements are clearly significant in evaluating the Burma Law=s effect on foreign affairs, although the Court in Zschernig noted that the opposite was not trueCthe federal government=s endorsement of local foreign-policy measures could not save those measures from constitutional infirmity. 389 U.S. at 434.

B. This Court Must Follow Zschernig

The Commonwealth urges that the Supreme Court=s foreign-relations-power decision in Zschernig was Aseverely undercut,@ although implicitly so, by the Court=s Commerce-Clause decision in Barclays Bank PLC v. Franchise Tax Board, 512 U.S. 298 (1994). In effect, the Commonwealth asks this Court to find that Barclays overruled Zschernig and that state foreign-affairs legislation is permissible if ACongress had failed to nullify@ it. (Br. 26).

Contrary to the Commonwealth=s position (Br. 30), this Court is not permitted to ignore Zschernig on the theory that its rationale was Aundercut@ by another decision, or because some commentator views it as a Arelic.@ Rather, this Court must apply Supreme Court decisions, for Aonce the Court has spoken, it is the duty of other courts to respect that understanding of the governing rule of law.@ Rivers v. Roadway Express, Inc., 511 U.S. 298, 312 (1994). Lower courts must Afollow the case which directly controls, leaving to this [Supreme] Court the prerogative of overruling its own decisions.@ Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 484 (1989). Indeed, the Court repeatedly chastizesCand reversesCthe Courts of Appeals for Aignor[ing] the import of [prior Supreme Court] decisions,@ Hunter v. Bryant, 502 U.S. 224, 227 (1991) (per curiam); Acontradict[ing] . . . repeated statements in past cases,@ Mazurek v. Armstrong, 520 U.S. 968, 974 (1997) (per curiam); and failing to apply principles Ama[de] clear@ by prior Court decisions. Mireles v. Waco, 502 U.S. 9, 11 (1991) (per curiam).

In any event, there can be no serious claim that Barclays Aundercut@ Zschernig. The question presented in Barclays was strictly a question regarding the constitutionality, under the Foreign Commerce Clause, of California=s taxation of foreign commerce; no one contended that California was, by its taxing system, doing anything akin to Asanction[ing] Myanmar for human rights violations@ or attempting Ato change Myanmar=s domestic policies.@ (A595) Neither the question presented in Barclays, nor the briefs, nor the Court=s opinion, challenged the full and exclusive federal foreign-affairs power, or suggested that Zschernig be overruled. Zschernig was not even cited in the Barclays opinion.

Indeed, given the Court=s long and unanimous recognition that federal foreign-affairs power is exclusive, and the unequivocal constitutional history that exclusivity was intended, there is no basis for questioning Zschernig. As the framers recognized, exclusive federal control is the only sensible approach. If one state could adopt its own foreign policy, all states would suffer the consequences. Some would be political. Some would be economic. Fifty different foreign-trade policies would create significantly higher barriers to trade generally. The increased costs and uncertainty created by such a regime would be felt by every state. Additionally, many of these individually crafted policies would inevitably conflict (e.g., one state might favor trade with a particular country; other states might oppose such trade on non-economic policy groundsCe.g., human-rights violations). And if states can make foreign policies, so can thousands of municipalities, which exponentially increases the potential for conflict and disruption. See generally Br. Amici Curiae of the Chamber of Commerce of the United States of America, et al. The Commonwealth=s suggestion (Br. 26-29), that Congress could solve these obvious problems by individually policing state and local sanctions activity, is breathtaking. Congress could not possibly monitor and act to eliminate the myriad state and local sanctions that would be permitted if there were no self-executing constitutional limitation on state and local foreign-affairs activities.

Finally, Professor Tribe, whose treatise the Commonwealth quotes at length (Br. 47), does not support its position on the foreign-affairs issueChe contradicts it:

[W]hatever the division of foreign policy responsibility within the national government, all such responsibility is reposed at the national level rather than dispersed among the states and localities. . . . It follows that all state action, whether or not consistent with current federal foreign policy, that distorts the allocation of responsibility to the national government for the conduct of American diplomacy is void as an unconstitutional infringement upon an exclusively federal sphere of responsibility.

L. Tribe, American Constitutional Law ' 4-6, at 230 (2d ed. 1988). There is no basis for this Court to overrule Zschernig or to question its fundamental premise.

C. The Commonwealth=s Efforts To Distinguish Zschernig Are Unconvincing

The Commonwealth makes several unsuccessful efforts to distinguish Zschernig.

First, the Commonwealth incorrectly suggests (Br. 31) that Clark v. Allen, 331 U.S. 503 (1947)Cwhich AZschernig did not overrule@Csaves the Burma Law. In Clark, the Court upheld a California probate statute with reciprocity requirements similar to the Oregon statute in Zschernig. Even though Zschernig did not explicitly overrule Clark, Zschernig recognized that Clark failed to grasp, as a factual matter, what states were really doing:

At the time Clark v. Allen was decided, the case seemed to involve no more than a routine reading of foreign laws. It now appears that in this reciprocity area under inheritance statutes, the probate courts of various States have launched inquiries into the type of governments that obtain in particular foreign nations. . . .

Zschernig, 389 U.S. at 433-34. Thus, Clark rested on a finding that the California statute required only Aa routine reading of foreign laws,@ and not state Ainquiries@ or evaluations of Athe type of governments that obtain@ in particular foreign nations. The Court in Zschernig noted particularly that it had not considered in Clark the Alegislative history indicating . . . the purpose of the statute.@ Id. at 433 n.5. Given the legislative history of the Burma Law (and its text and operation), and the Commonwealth=s admissions, it is clear that Massachusetts Alaunched inquiries,@ and made value judgments, about Athe type of governmen[t] that obtain[s]@ in Myanmar. AThat kind of state involvement in foreign affairs and international relationsCmatters which the Constitution entrusts solely to the Federal GovernmentCis not sanctioned by Clark v. Allen.@ Zschernig, 389 U.S. at 436.

Second, citing three cases, an Office of Legal Counsel (OLC) opinion, and a United States amicus brief from almost a decade ago, Massachusetts suggests (Br. 34 n.2) that these authorities have distinguished Zschernig and upheld state procurement laws against constitutional challenges. These authorities are themselves distinguishable. Two of the cases, Trojan Technologies, Inc. v. Pennsylvania, 916 F.2d 903 (3d Cir. 1990), and K.S.B. Technical Sales Corp. v. North Jersey District Water Supply Comm=n, 75 N.J. 272, 381 A.2d 774 (1977), appeal dismissed, 435 U.S. 982 (1978), involved ABuy American@ directives, which apply to all foreign countries and thus pose no risk, as in Zschernig, that the states would be making Ainquiries into the type of governments that obtain in particular foreign nations.@ 389 U.S. at 434 (emphasis added). See Trojan Technologies, 916 F.2d at 913 (Athe statute applies to steel from any foreign source, without respect to whether the source country might be considered friend or foe@); K.S.B. Technical Sales, 75 N.J. 291-92, 381 A.2d at 783-84 (AThe Buy American provisions apply without any discrimination based on the ideology of the seller=s country. . . .@). Similarly, the United States= brief in Trojan Technologies distinguished Pennsylvania=s ABuy American@ statute as A[u]nlike the Oregon statute@ in Zschernig because Athe Pennsylvania statute does not require the state officials who administer it to make judgments regarding the policies and practices of foreign countries.@ Brief Amicus Curiae of the United States at 21, Trojan Technologies, Inc. v. Pennsylvania, 916 F.2d 903 (3d Cir. 1990) (No. 90-5057).

The third case, Board of Trustees v. Mayor and City Council of Baltimore City, 317 Md. 72, 562 A.2d 720 (1989), involved a divestiture provision with less of an impact on foreign relations than the procurement limitations imposed by the Burma Law. As the Court there noted, (1) divestment alone would not cause companies to pull out of South Africa; (2) the ordinances provided for gradual divestment to ensure minimal impact; and (3) the ordinance applied Aonly to investments in companies doing a significant amount of business in South Africa.@ Id. at 127, 562 A.2d at 747. Thus, the impact of the Baltimore ordinances was evidently less than that of the Burma Law. And OLC opinions are entitled to little if any weight as a matter of law. See, e.g., Crandon v. United States, 494 U.S. 152, 177 (1990) (Scalia, J., concurring) (OLC opinions not entitled to Chevron deference).

Lower courts have repeatedly invalidated state legislation targeting specific foreign countries. In Springfield Rare Coin Galleries, the Supreme Court of Illinois struck down a state sales-tax provision exempting all rare coins except South African Krugerrands: AThe undisputed purposes of the exclusion are to express disapproval toward South Africa and to discourage investment in its products,@ thus creating a Arisk of conflict between nations, and possible retaliatory measures.@ 115 Ill.2d at 232, 236, 503 N.E.2d at 305, 307. Whatever the merits of the underlying issue motivating the local law, A[n]o single State should put the nation as a whole to such a risk.@ Id. at 236, 503 N.E.2d at 307. The Illinois court noted that the law impermissibly compromised the federal government=s ability Ato choose between a range of policy options in developing its foreign policy.@ Id.

In Tayyari v. New Mexico State University, 495 F. Supp. 1365 (D.N.M. 1980), the court invalidated a University policy excluding Iranian students until the return of American hostages, noting that the Atrue purpose in enacting the [regulation] was to make a political statement.@ Id. at 1376. This impermissibly entered the state Ainto the arenas of foreign affairs and immigration policy, interrelated matters entrusted exclusively to the federal government.@ Id. at 1376. And in New York Times Co. v. New York Comm=n on Human Rights, 41 N.Y.2d 345, 393 N.Y.S.2d 312 (1977), the court concluded that efforts to apply local antidiscrimination laws to prohibit a newspaper from running ads for employment in South Africa >would impair the effective exercise of the Nation=s foreign policy.=@ Id. at 353, 393 N.Y.S.2d at 317 (quoting Zschernig, 389 U.S. at 440). A[I]f New York City could do this in one instance, it could do so in many instances. Each locality in each State may not adopt its own foreign policy.@ Id. at 353, 393 N.Y.S.2d at 318. Even the cases upholding ABuy American@ laws noted that targeting specific countries is unconstitutional: AIf refined inquiries into foreign ideologies entered into the decision to apply or not to apply the [contract] condition, there would, of course, be little difficulty in finding a constitutional infirmity.@ K.S.B. Technical Sales Corp., 75 N.J. at 291-92, 381 A.2d at 784.

Third, the Commonwealth claims (Br. 29-39) that the Burma Law is constitutional because it has only an Aindirect impact on foreign affairs.@ This is demonstrably untrue. In the Commonwealth=s own words, the specific and only purpose of the Burma Law was Ato apply indirect economic pressure against the Burma regime for reform@ (CMSJ 2) and to Ainfluence change in Burma.@ (Br. 50) There is little doubt, based on these concessions and the Law=s legislative history (A80, 101-16) that Massachusetts has engaged in the same impermissible evaluations of Myanmar=s Ademocracy quotient@ that rendered the Oregon statute in Zschernig unconstitutional. The purpose and effects of the Burma Law are at least as Adirect@ as the Oregon probate statute struck down in Zschernig.

Although the Commonwealth urges (Br. 41) that the Burma Law regulates a matter generally left to the statesCstate contractsCthat cannot save the Law. The Law is not an exercise in traditional state police power, for it has no actual local purpose. The legislative history shows no suggestion that the statute was designed to provide any economic benefit to the Commonwealth, its agencies or its citizens. The Law=s only purpose is to criticize and influence Burma=s current political regime. That is foreign policymaking, not state oversight of local economic affairs. But even if traditional state regulation were implicated, the Law would still have to give way to the exclusive federal foreign-relations power. See, e.g., Zschernig, 389 U.S. at 440 (invalidating local inheritance law); Springfield Rare Coin Galleries, Inc., 115 Ill.2d at 231-32, 503 N.E.2d at 305 (invalidating state sales-tax provision); Tayyari, 495 F. Supp. at 1380 (invalidating state educational regulation); Pink, 315 U.S. at 216 (refusing to apply state property law). See also Hines, 312 U.S. at 66 (A[E]ven though they may be immediately associated with the accomplishment of a local purpose@ the challenged laws Aprovoke questions in the field of international affairs@).

D. There Is No AMarket-Participant Exception@ To The Exclusive Federal Foreign-Relations Power

The Commonwealth (Br. 45-49), and its amici argue that the Law is supported by a supposed Amarket-participation@ exception to the foreign relations power. They urge a wholly unprecedented application of this exception, which heretofore has been applied by the Supreme Court only to claims involving the dormant Commerce Clause. There is no basis whatsoever for extending that exception from the Commerce Clause, where economic parochialism is the primary concern, to the foreign-affairs arena, where overall relations with foreign nations are at stake. The Commonwealth cites no case that has ever done so. And, as shown below (pp. 50-56), even under the Commerce Clause there is no basis for finding a market-participant exception here.

E. The Commonwealth=s Other Arguments Do Not Save The Burma Law

The Commonwealth and its amici advance three other unconvincing arguments in support of the Law.

First, they argue (Br. 21; Congressional Br. 10-13; Consumer=s Choice Council Br. 1-2) that this constitutional challenge is somehow precluded by the Uruguay Round Agreement Act of 1994 (URAA), Pub. L. No. 103-465, 108 Stat. 4809. This argument was not raised below. In any event, there is nothing in the URAA or its legislative history suggesting it was intended to foreclose constitutional remedies. And this Court must interpret statutes to avoid foreclosing constitutional remedies. See generally Davis v. Passman, 442 U.S. 228, 247 (1979).

Second, the Commonwealth suggests (Br. 42) that, A[w]hether 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.@ (footnote omitted) The Commonwealth does not actually urge that it has First Amendment rights, and for good reasonCthis Court has already held that Aa state entity . . . itself has no First Amendment rights,@ Student Government Association v. Board of Trustees, 868 F.2d 473, 481 (1st Cir. 1989), and even the Commonwealth=s amici=s authority concedes that A[o]nly a few cases address the question whether municipalities or other state subdivisions or agencies have any First Amendment rights [and a]ll but one . . . answer >no.=@ Creek v. Village of Westhaven, 80 F.3d 186, 192 (7th Cir.), cert. denied, 117 S. Ct. 180 (1996).

In any event, it is scarcely credible that Athe purpose and spirit of the First Amendment@ can cloak an otherwise unconstitutional law in the mantle of constitutionality. If Athe purpose and spirit of the First Amendment@ allowed states to use their laws to Aspeak out@ against a foreign regime by passing an otherwise unconstitutional law regulating conduct, any unconstitutional law could be so justified. The Commonwealth and its amici cite no case which has so held, and we are aware of none.

Finally, although not advocated at all by the Commonwealth, various amici urge that the Tenth Amendment supports the Burma Law, arguing Athat even congressional intervention [to invalidate the Massachusetts law] would be problematic@ (Earthrights Inc. Br. 3) and that Athe Tenth Amendment precludes the federal government from forcing States to do business with entities that are engaged in conduct the States have deemed to be inappropriate.@ North Dakota Br. 2; see also City of Berkeley Br. 13-16. This argument is, to put it charitably, astonishing. The very decisions amici cite reaffirm unequivocally the invalidity of state statutes that are contrary to the Constitution or federal law. Printz v. United States, 117 S. Ct. 2365, 2374 (1997); New York v. United States, 505 U.S. 144, 179 (1992). The Tenth Amendment=s history confirms that it applies equally to powers expressly or impliedly delegated to the federal government. Indeed, the Framers refused to insert Aexpressly@ before the word Adelegated@ in the Tenth Amendment. J. Killian & G. Costello, The Constitution of the United States: Analysis and Interpretation 1509 (1996). See Annals of Congress 767-68, 1st Cong. (1789) (amendment to insert Aexpressly@ in the Tenth Amendment defeated 17 to 32 in the House of Representatives); 2 B. Schwartz, The Bill of Rights: A Documentary History 1150-51 (1971) (amendment defeated in Senate by unrecorded vote).

In sum: The district court correctly held that the Burma Law violates the exclusive federal foreign-affairs power.

II. THE BURMA LAW VIOLATES THE FOREIGN COMMERCE CLAUSE

The Burma Law also violates the Foreign Commerce ClauseCit (1) discriminates against foreign commerce; (2) impedes the federal government=s ability to speak with one voice; and (3) regulates extraterritorial conduct.

A. The Burma Law Discriminates Against Foreign Commerce

The Burma Law discriminates against foreign commerce by directing state agencies not to contract with companies doing business in a targeted foreign nation. This discrimination is precisely what the Commerce Clause prohibits. In the Interstate Commerce Clause context, the Supreme Court has established that A[i]f a restriction on commerce is discriminatory, it is virtually per se invalid.@ Oregon Waste Systems, Inc. v. Department of Environmental Quality, 511 U.S. 93, 99 (1994). States likewise may not pass laws that discriminate against foreign commerce. See, e.g., Barclays, 512 U.S. at 313-14; Kraft General Foods, Inc. v. Iowa Dept. of Revenue and Finance, 505 U.S. 71, 75-77 (1992). Indeed, laws discriminating against foreign commerce are subject to even more rigorous scrutiny, since Athe Founders intended the scope of the foreign commerce power to be greater@ than that of the interstate commerce power. Japan Line Ltd. v. County of Los Angeles, 441 U.S. 434, 448 (1979).

Although most cases involve laws that discriminate against all out-of-state commerce, discrimination aimed against commerce in a single other state, or in several specific states, is equally unconstitutional. See, e.g., New Energy Co. v. Limbach, 486 U.S. 269, 276 (1988) (invalidating Ohio law targeting a single Indiana ethanol producer); Hunt v. Washington State Apple Advertising Comm=n, 432 U.S. 333, 352-53 (1977) (invalidating North Carolina provision discriminating against apple distributors in seven states). The same principle applies to foreign commerce: Over a century ago, the Court explained that Aone main object of the Constitution@ was preventing Adiscriminations favorable or adverse to commerce with particular foreign nations [that] might be created by State laws.@ Cooley v. Board of Wardens, 53 U.S. (12 How.) 299, 317 (1851) (emphasis added).

The Burma Law discriminates against companies that do business in or with Myanmar. Indeed, defendants admit (Br. 56-57), that companies who choose to do business in Myanmar are denied the right to compete for Massachusetts business on equal terms with companies who do not do business in Myanmar.

Relying on a 1989 Maryland state case, the Commonwealth argues (Br. 56-57) that the law does not unlawfully discriminate because it does not favor in-state interests. There, the Maryland Court of Appeals held that a decision to divest pension-fund investments from companies doing business in South Africa did not violate the Foreign Commerce Clause because it did not Afavor residents of the City of Baltimore or the State of Maryland over residents of any other State@ and Adid not intend to secure economic advantages for local businesses at the expense of businesses situated elsewhere.@ Board of Trustees, 317 Md. at 142, 562 A.2d at 754.

That reasoning was explicitly rejected by the Supreme Court in Kraft. There, Iowa discriminated for tax purposes between dividends received from domestic and foreign subsidiaries, but no more favorable treatment was given to Iowa domestic subsidiaries than to other domestic subsidiaries. Iowa argued that the statute was constitutional because it did not favor in-state interests. The Court disagreed: AWe are not persuaded . . . that such favoritism is an essential element of a violation of the Foreign Commerce Clause. . . . As the absence of local benefit does not eliminate the international implications of the discrimination, it cannot exempt such discrimination from Commerce Clause prohibitions.@ 505 U.S. at 79. The Commonwealth attempts to distinguish Kraft on the ground (Br. 57) that it involved discrimination against foreign commerce generally, not just the commerce of one foreign country. As discussed above, that is no distinction at all.

Even though the Law discriminates, Massachusetts urges that it should be upheld because it serves a Alegitimate local purpose,@ that is, Ato reflect Massachusetts= moral judgment about human rights violations in Burma.@ (Br. 58 n.10) That purpose is neither Alegitimate@ nor Alocal.@ AStrictest scrutiny@ applies to arguments of this type, and this Aextremely difficult burden@ is Aso heavy that facial discrimination by itself may be a fatal defect.@ Camps Newfound/Owatonna v. Town of Harrison, Inc., 117 S. Ct. 1590, 1601 (1997) (quotations and citations omitted). The only Alocal purpose@ that has ever validated a discriminatory state law is to Aprotect the health and safety of its citizens and the integrity of its natural resources,@ Maine v. Taylor, 477 U.S. 131, 151 (1986), interests not at stake here. See Oregon Waste Systems, Inc., 511 U.S. at 101 (noting that respondents failed to offer Aany safety or health reason@ to support a discriminatory restriction). The Commonwealth cannot credibly assert that attempting to influence affairs in a nation half a world away is a Alegitimate local purpose,@ and it cites no case supporting its position.

B. The Law Inhibits the Federal Government=s Ability to ASpeak With One Voice@

In addition to discriminating against foreign trade, the Law significantly impairs the ability of the federal government to Aspeak with one voice when regulating commercial relations with foreign governments.@ Japan Line, 441 U.S. at 449 (citation omitted). The requirement that the states not undermine the federal government=s Aone voice@ derives from the long-recognized fact that A[f]oreign commerce is preeminently a matter of national concern.@ Id. at 448. Drafted against the historical backdrop of economic balkanization under the Articles of Confederation, Athe Foreign Commerce Clause recognizes that discriminatory treatment of foreign commerce may create problems, such as the potential for international retaliation, that concern the Nation as a whole.@ Kraft, 505 U.S. at 79. Thus, although a law may not run afoul of the Foreign Commerce Clause if it Amerely has foreign resonances, but does not implicate foreign affairs,@ a law that Aimplicates foreign policy issues which must be left to the Federal Government@ violates the Constitution. Container Corp. of America v. Franchise Tax Board, 463 U.S. 159, 194 (1983). The Burma Law falls on the constitutionally impermissible side of this line.

In Container Corporation, the Court emphasized that Athe threat [a law] might pose of offending our foreign trading partners@ is an important aspect of the Foreign Commerce Clause analysis. Id. As noted, the Burma Law has already caused considerable international tensions involving Japan, the ASEAN, and the EU. See p. 10, supra; Br. Amici Curiae of the European Communities, et al.

Even if the Burma Law had not already provoked strong negative international reactions, the law would still violate the Foreign Commerce Clause. The Law penalizes foreign and United States corporations because those companies have commercial relations with a particular foreign nation. Both in purpose and in effect, this law Aimplicate[s] foreign affairs@ directly. Container Corp., 463 U.S. at 194. The Massachusetts Law thus Aimpair[s] federal uniformity in an area where federal uniformity is essential.@ Japan Line, 441 U.S. at 448. The discrimination of the Burma Law, if sustained, will only increase, given the growing number of existing state and local sanctions laws and the support of the amici states and municipalities for further legislation.

1. The Massachusetts Law Unconstitutionally Regulates Conduct Occurring Outside The State

ANo State can legislate except with reference to its own jurisdiction.@ Bonaparte v. Tax Court, 104 U.S. 592, 594 (1881). The Burma Law clearly attempts to legislate beyond its borders by influencing actions outside Massachusetts. Its extraterritorial application is yet another reason that it violates the Foreign Commerce Clause.

The Supreme Court has consistently held that no single state can Aimpose its own policy choice[s] on neighboring States.@ BMW of North America, Inc. v. Gore, 517 U.S. 559, 571 (1996). In Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U.S. 573 (1986), the Court struck down a New York statute prohibiting distillers from selling to wholesalers Aexcept in accordance with a price schedule filed with the State Liquor Authority.@ Id. at 575. The statute required that price schedule to Ainclude an affirmation that the bottle and case price . . set forth in such schedule is no higher than the lowest price at which such item of liquor will be sold by such [distiller] to any wholesaler anywhere in any other state of the United States.@ Id. at 576 (emphasis added; quotation omitted).

The Court held that the statute Aregulates out-of-state transactions in violation of the Commerce Clause,@ because A[f]orcing a merchant to seek regulatory approval in one State before undertaking a transaction in another directly regulates interstate commerce.@ Id. at 582. Here, the Burma Law effectively requires

companies to obtain Massachusetts= approval before conducting business in or with Myanmar. Moreover, the Court noted that Athe proliferation of state affirmation laws . . . has greatly multiplied the likelihood that a seller will be subjected to inconsistent obligations in different States.@ Id. at 583. The nationwide proliferation of state and local sanctions will similarly subject sellers to inconsistent obligations. See also Healy v. The Beer Institute, 491 U.S. 324, 336 (1989) (reaffirming that Athe Commerce Clause protects against inconsistent legislation arising from the projection of one state regulatory regime into the jurisdictions of another state@).

On this ground, another federal district court recently held unconstitutional a municipal ordinance, similar to the Burma Law, barring contracts with companies whose employee-benefit plans discriminate against employees with domestic partners. The court found the ordinance was not limited to benefit plans operating within the municipality, but sought to regulate the contractor=s activities Athroughout the United States.@ Air Transport Ass=n of America v. City and County of San Francisco, 992 F. Supp. 1149, 1155 (N.D. Cal. 1998). The court summarized the Brown-Forman/Healy rule that A[t]he dormant Commerce Clause precludes State and local laws that have the extraterritorial effect of regulating commerce occurring wholly outside the boundaries of a State.@ Id. at 1161 (quotations omitted). Since such statutes are Agenerally struck down . . . without further inquiry@ (id.), the ordinance was struck as an unconstitutional Aattempt by the City to regulate conduct performed beyond its borders.@ Id. at 1160.

Just as state legislation regulating commerce in other states is invalid under the Interstate Commerce Clause, so too statutes regulating commerce in foreign countries are invalid under the Foreign Commerce Clause. State and local sanctions such as the Burma Law jeopardize Aprinciples of state sovereignty and comity@ whether they seek to regulate conduct in another state or a foreign country. BMW, 517 U.S. at 572.

3. Congress Has Not Approved The Burma Law

Massachusetts and its amici argue that Congress has approved the Burma Law, relying heavily on the Supreme Court=s decision in Barclays. There, the Court upheld California=s nondiscriminatory Aworldwide combined reporting method@ of determining the state corporate franchise tax as applied to Adomestic corporations with foreign parents or [to] foreign corporations with either foreign parents or foreign subsidiaries,@ 512 U.S. at 302, against a Commerce Clause challenge. Barclays has no relevance here.

The primary challenge to the California law was that it violated the Aspeaks with one voice@ requirement of the Foreign Commerce Clause by interfering with the federal government=s ability to Aregulat[e] commercial relations with foreign governments.@ Id. at 303. The Court rejected this claim because Congress had been presented with, but did not enact, numerous bills that, if passed, would have explicitly preempted the challenged state-taxation system. Id. at 325-26; see also id. at 326 nn.24-25 (listing the various bills rejected by Congress). The Court concluded that A[g]iven these indicia of Congress= willingness to tolerate@ the taxation scheme at issue, there was no serious threat to foreign policy. Id. at 327.

Barclays itself made clear that inferences from Congressional inaction cannot save a state law that discriminates against foreign commerce. Where, as here, the state law is discriminatory, Barclays confirms that Congress must Aconvey its intent with . . . unmistakable clarity.@ 512 U.S. at 323. See also New England Power Co. v. New Hampshire, 455 U.S. 331, 343 (1982) (Apassive indication@ insufficient); Maine v. Taylor, 477 U.S. at 139 (requiring Aan >unambiguous statement of . . . congressional intent . . .=@) (citation omitted). No congressional approval of Aunmistakable clarity@ exists here, or is even suggested by the Commonwealth. Nor does Barclays remotely suggest that extraterritorial state action can be justified.

Even as to the Aspeaks with one voice@ issue, Barclays is distinguishable. Massachusetts relies on a number of federal actions that purportedly support the Burma Law by indicating that ACongress has implicitly permitted selective purchasing laws on Burma.@ (Br. 28) These federal actions, however, do not evidence a Congressional intent to implicitly endorse the Massachusetts Law; in none of these actions did Congress specifically approve or disapprove state sanctions. Nor was such legislation even proposed. Indeed, none of the Commonwealth=s supporting citations (Br. 29) remotely suggests congressional approval. In fact, the only two mentions of state and local sanctions noted that such sanctions were a burgeoning problem (143 Cong. Rec. E2080 (Oct. 24, 1997) (Rep. Hamilton)), and that the Kucinich amendment Adoes not preclude constitutional challenges to State and local laws.@ 144 Cong. Rec. H7279 (August 5, 1998) (Rep. Ros-Lehtinen). That hardly constitutes Congressional Apermission.@

E. The Market-Participant Exception Does Not Apply

The Commonwealth urges (Br. 45) that the Burma Law is also saved by the Amarket-participant exception@ to the Commerce Clause. That doctrine does not apply for two reasons: (1) the exception should not apply to Foreign Commerce Clause challenges; and (2) the Law amounts to market regulation, not market participation.

While the Supreme Court has not directly decided this first point, see Reeves, Inc. v. Stake, 447 U.S. 429, 437 n.9 (1980), it has confirmed that Athe Founders intended the scope of the foreign commerce power to be greater@ than the interstate commerce power. Japan Line, 441 U.S. at 448. Thus, ACommerce Clause scrutiny may well be more rigorous when a restraint on foreign commerce is alleged.@ Reeves, 447 U.S. at 437-38 n.9. See also South-Central Timber Development, Inc. v. Wunnicke, 467 U.S. 82, 92 n.7 (1984); Brief for the United States as Amicus Curiae at 21-22, South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82 (1984) (No. 82-1608) (arguing against extension of the market-participant exception to the foreign-commerce context). No Supreme Court case has extended the market-participant doctrine into the foreign-commerce context, and strong policy concerns counsel against it. The need for uniform federal treatment of foreign trade derives from the risk that a foreign nation will retaliate against all of the states because of the foreign policies of one state. Kraft, 505 U.S. at 79; see also Larson, supra, at 4. This concern remains even when the offending state claims to act as a market participant.