The Federal Government has Acted on the Matter and yet it Considered Decision
is not the Law of the Land
State and Local Governments Are Inapprobriate Bodies for Foreign Policymaking

* This volume will be available in print in mid-May 1997.

 

ABSTRACT

As a punitive measure against the military regime in Burma, state and municipal governments in the United States have adopted laws penalizing firms that conduct business in that nation. This Article analyzes the validity of these statutes and ordinances under various provisions of the U.S. Constitution.

After introducing the nature of this development and the constitutional issues raised, Part II of this Article proceeds to examine the character of the local enactments and the political backdrop which lead to their adoption. In Part III, the Authors analyze four federal constitutional issues surrounding the local legislation: implied preemption by federal legislation, impermissible intrusion into federal jurisdiction under the Foreign Commerce Clause, impermissible usurpation of federal authority under the Supremacy Clause, and impermissible delegation of authority to private parties in violation of the Due Process Clause. In Part IV, the Authors discuss the practical problems presented by parallel and inconsistent foreign policies. This Article concludes that while the local measures are constitutionally infirm, they are unlikely to be challenged by injured firms.

 

I. INTRODUCTION

By the end of 1996, one state¹ and eight cities² in the United States had adopted measures seeking to penalize business entities conducting activities in Burma (Myanmar)³. These local anti-Burma initiatives employ immediate economic disengagement as a punitive measure against the regime in Rangoon.⁴ Federal legislation, on the other hand, threatens to prohibit new investment as leverage to secure the safety of Aung San Suu Kyi and other Burmese democracy leaders, and to encourage dialogue and reconciliation.⁵

Local excursions into the realm of foreign affairs are not new,⁶ but they continue to raise difficult issues. While several excellent articles on the constitutionality of these local measures exist,⁷ the case law is almost completely undeveloped.⁸ The fact that serious questions remain about the constitutionality of these local forays into foreign affairs may largely be due to the significant political disincentives to challenging their constitutionality.⁹ Few corporations would have been bold enough to challenge a community's censure of apartheid, and not many more will want to be perceived as supporting the State Law and Order Restoration Council (SLORC) regime in remote Burma.

This Article analyzes the constitutionality of these state and local enactments under the U.S. Constitution. Part II of this Article reviews the character of these statutes and ordinances, examining their structure, language, and adoption. In Part III, the constitutional infirmities of these state and local enactments are presented and discussed. With a detailed analysis of Supreme Court case law, this Article asserts that these state and local enactments are constitutionally infirm under preemption, the Foreign Commerce Clause, and the Supremacy Clause of the U.S. Constitution. Further, this Article suggests that these statutes and ordinances may also amount to an impermissible delegation by state and local governments under Due Process. Part IV of this Article then presents the practical problems of multiple foreign policies by federal, state, and local governments, including the failure to "speak with one voice" on international issues. Finally, this Article concludes that these state and local laws are unconstitutional and susceptible to great mischief, and that their constitutional infirmities are congruent with their practical flaws. Finally, in the case of Burma, local enactments, however well-intentioned, may even work at cross purposes with national policy.

 

II. LOCAL ENACTMENTS

It is not difficult to understand why Burma has captured the attention of American activists, nor why local initiatives such as those under discussion have proliferated. Aung San Suu Kyi's serene and principled stand against a military regime calling itself the SLORC¹⁰ presents a "good" versus "evil" scenario ripe for indignation.¹¹ An issue such as this presents a high visibility, low risk opportunity for local political leaders and activist groups. It "draws the attention of the local press, is more substantive than adoption of a precatory resolution of censure or disapproval, and presents little economic risk to the jurisdiction."¹²

The first city to act was Berkeley, California, which passed a Resolution in February, 1995 prohibiting contracts for personal services or for the purchase of commodities from entities doing business in Burma "until the City Council determines that the people of Burma have become self-governing."¹³ The first state to act was Massachusetts, which amended its general laws in June 1996, to prohibit the state, except in certain limited circumstances, from doing business with entities on a "restricted purchase list" supposedly containing the names "of all persons currently doing business with Burma (Myanmar)."¹⁴ Seven other localities adopted like measures within the next eighteen months.¹⁵

The local measures are similar in most salient respects. Each contains a preamble referencing and condemning the political practices of the Burmese regime, and several refer to the struggles and valor of Aung San Suu Kyi and other notables who have expressed their opposition to the SLORC regime.¹⁶ Significantly for purposes of constitutional analyses, each locality, except Ann Arbor and Carborro, includes in its measure language purporting to establish a legitimate local purpose in taking a stand against injustice across the world. Berkeley's measure begins:

The citizens of the City of Berkeley, believing that their quality of life is diminished when peace and justice are not fully present in the world adopted Ordinance No. 5985-N.S. to promote universal respect for human rights and fundamental freedoms, recognize the responsibility of local communities to take positive steps to support the rule of law and to help end injustices and egregious violations of human rights wherever they may occur....¹⁷

San Francisco's and Takoma Park's measures contains almost identical language. Madison's ordinance notes that the SLORC regime is "illegal and contrary to international law and covenants," and declares its existence "morally repugnant to the citizens of the City of Madison...."¹⁸ Santa Monica's measure recites how "the city and the government of the City of Santa Monica reflect a community united in its commitment to policies which guarantee broad human rights to people throughout the world."¹⁹ Oakland "recognize[s] the moral responsibility of communities to take positive steps to end human rights abuses and support legitimately elected governments."²⁰

Further, with respect to substantive debarment provisions, two distinct but related features are notable. First, the Massachusetts statute and four city measures incorporate the analysis of independent organizations in determining which businesses are present in Burma (as variously defined and modified) so as to merit debarment.²¹ Second, none of the measures clearly defines or anticipates what constitutes doing business "with" or "in" Burma.²²

More significantly, however, several of the measures include language contemplating their possible consititutional infirmity.²³ The measures adopted by Berkeley, Madison, Oakland, San Francisco, and Takoma Park provide as follows:

The United States Supreme Court has upheld the power of a municipality to make legitimate economic decisions without being subject to the restraints of the Interstate Commerce Clause when it participates in the market place as a corporation or a citizen as opposed to exerting its regulatory powers.²⁴

 

III. CONSTITUTIONAL ATTACKS ON LOCAL FOREIGN POLICYMAKING

All of the cited measures are vulnerable to constitutional attack on three grounds, and by delegating legislative authority to third parties for the compilation of "restricted" or "prohibited" lists, possibly four. First the local measures are preempted by federal legislation.²⁵ Second, under the Foreign Commerce Clause of the Constitution, they constitute an impermissible intrusion into an area reserved for the federal government.²⁶ Third, the local measures are an impermissible usurpation of federal authority under the Supremacy Clause of the Constitution.²⁷ These latter two doctrines are closely related.²⁸ Finally, those local measures that incorporate by reference the judgement of third parties such as the Investor Responsibility Research Center may present Due Process problems if found as a matter of fact to be an impermissible delegation of authority.²⁹

 

A. Preemption

Article VI of the Constitution provides that the laws and treaties of the United States are "the Supreme Law of the Land" and prevail over, or preempt, state and local enactments. Thus any local law that purports to regulate or govern a matter explicitly³⁰ or implicitly covered by federal legislation is preempted, even if it is in an area otherwise amenable to state regulation.³¹ Since the Omnibus Consolidated Appropriations Act of 1997³² is silent as to its preemptive effect, preemption, if it exists, must be implied.

The parameters of implied preemption were spelled out in Hines v. Davidowitz,³³ which dealt with Pennsylvania's attempts to impose registration requirements on aliens that were in several respects different from and more onerous than the federal requirements. The Pennsylvania law contained a number of provisions evincing a suspicion of or hostility to aliens, i.e., the requirement to carry identification cards with proof of registration, many of which the Supreme Court found had actually been considered by Congress, severely criticized, and not included in the federal act.³⁴

The Supreme Court struck down Pennsylvania's law, noting that the "basic subject of the state and federal laws is identical.... The only question is whether...the state and Federal Government have concurrent jurisdiction...."³⁵ Even in the absence of preemption, however, the fate of the Pennsylvania statute may have been sealed because it interfered in foreign affairs. Taking careful note of the possible foreign ramifications of Pennsylvania's hostility to aliens,³⁶ the Court reiterated that the "the supremacy of the national power in the general field of foreign affairs...is made clear by the Constitution, was pointed out by the authors of The Federalist in 1787, and has since been given continuous recognition by this Court."³⁷

The Court could not provide a timeless prescription for circumstances in which preemption would be found. "In the final analysis," it said, "there can be no one crystal clear distinctly marked formula. Our primary function is to determine whether, under the circumstances of this particular case, Pennsylvania's law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."³⁸ Important in considering the question of whether federal enactments preclude enforcement of state laws on the same subject was "[t]he nature of the power exerted by Congress, the object sought to be attained, and the character of the obligations imposed by the law...."³⁹ Furthermore, in the field of international relations "[a]ny concurrent state power that may exist is restricted to the narrowest of limits; the state's power here is not bottomed on the same broad base as is its power to tax."⁴⁰

Indeed, not only may "[t]he scheme of federal regulation...be so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it,"⁴¹ but even legislation facially consistent with a stated federal policy may be preempted if the Court finds that it intrudes on foreign commerce. In South-Central Timber Dev. v. Wunnicke,⁴² for instance, the Court struck down an Alaskan statute that required any timber sold within the state to have been processed in Alaska. Although this requirement did not in fact conflict with any federal law, the Court made it clear that the state had to show more than consistency with federal policy in taking a step so intrusive on foreign commerce. The Court stated:

The need for affirmative approval is heightened by the fact that Alaska s policy has substantial ramifications beyond the Nation's borders. The need for a consistent and coherent foreign policy. which is the exclusive responsibility of the Federal Government. enhances the necessity that congressional authorization not be lightly implied.⁴³

Finally, the constitutionality of contract debarment laws that impinge on federal jurisdiction may already have been decided by the Supreme Court in Wisconsin Dept. of Industry v. Gould.⁴⁴ In Gould, the state of Wisconsin had sought to punish companies violating the National Labor Relations Act⁴⁵ by barring such firms from receiving state contracts. The Supreme Court held Wisconsin could not enact such measures and expressed a concern completely appropriate to the Burma sanctions, specifically the proliferation of local sanctions which, while not inconsistent with federal law, "further detracts from the 'integrated scheme of regulation' created by Congress."⁴⁶ "[I]f Wisconsin's debarment law is valid, nothing prevents other States from taking similar action against labor law violators.... Each additional statute incrementally diminishes the Board's control over enforcement of the NLRA...."⁴⁷ The State's "goal may be laudable, but it assumes for the State of Wisconsin a role Congress reserved exclusively for the [National Labor Relations] Board."⁴⁸

Juxtaposing federal law imposing conditional sanctions on Burma with the local enactments leaves little room for a plausible argument that the state and local ordinances are not preempted. Senator Mitchell McConnell of Kentucky tried without success to persuade his colleagues in the U.S. Senate to require U.S. business interests to withdraw from Burma, the stated purpose of the local measures.⁴⁹ A review of Senator McConnell and his supporters' comments to the Senate in July, 1996, when an Amendment removed provisions from his bill requiring an economic withdrawal, establishes that his motivations and objectives were completely congruent with the local measures now under scrutiny.⁵⁰ While every legislator who spoke voiced disapproval of the SLORC regime, most senators viewed their decision as involving "the effectiveness of mandatory...sanctions as a tool of foreign policy to encourage change in Burma. It is about the best policy to pursue that will bring about the changes that we all want to see in the nation of Burma."⁵¹

The proponents of mandatory unilateral sanctions did not prevail. Instead, the Amendment filed by Senator Cohen, reflecting his analysis as to the better federal policy, is now the law of the land.⁵² Furthermore, the State Department and the President also rejected the McConnell view.⁵³

The local measures are an attempt to implement through local action a strategy expressly considered and rejected by the Senate. The local measures seek to institute that situation which opponents of the McConnell bill and proponents of the Cohen amendment wanted to avoid: diminishing the U.S. presence in Burma, reducing the flexibility and leverage the President has to influence events in a volatile situation, and removing a salutary U.S. influence from the local scene. Whether one agrees with the Senate's analysis and conclusions is irrelevant; local measures that may undermine the path chosen by the Senate must be preempted, or the entire Senate discussion, if proponents of local sanctions continue to prevail, is rendered moot.

This problem would persist even if the President were to determine that conditions for imposing sanctions had arisen. The federal act only prohibits "new investments," primarily in the development of natural resources in Burma.⁵⁴ It specifically exempts many, if not all, of the economic activities presently caught in the web of state and local sanctions, namely "entry into, performance of, or financing of a contract to sell or purchase goods, services or technology."⁵⁵

 

B. The Foreign Commerce Clause

Article I, Section 8, Clause 3 of the Constitution prohibits states or localities from regulating or taxing commerce if such actions burden interstate or foreign commerce.⁵⁶ With regard to foreign commerce, the Supreme Court has held that the federal government's regulatory power is "exclusive,"⁵⁷ and in a much quoted phrase, has stated that the nation must "speak with one voice" in its foreign commercial relations.⁵⁸ As early as 1851, the Supreme Court described the Commerce Clause as preventing:

discriminations favorable or adverse to commerce with particular foreign nations [that] might be created by state laws....deeply affecting that equality of commercial rights, and that freedom from state interference, which those who formed the Constitution were so anxious to secure, and which the experience of more than half a century has taught us to value so highly.⁵⁹

The seminal case applying Article I, Section 8, Clause 3 to state legislation which burdens foreign commerce is Japan Line, Ltd. v. County of Los Angeles,⁶⁰ which dealt with several California counties' attempts to impose ad valorem taxes on Japanese shipping containers that were used consistently in international commerce, but that happened to be sitting on a California wharf or in a repair shop on a certain day of the year. The Court concluded that the taxes were an impermissible impediment to international commerce. "[A] state tax on the instrumentalities of foreign commerce may impair federal uniformity in an area where federal uniformity is essential."⁶¹ Accordingly, "[f]oreign commerce is preeminently a matter of national concern. 'In international relations and with respect to foreign intercourse and trade the people of the United States act through a single government with unified and adequate national power.'"⁶² This is also true in those situations where the federal government is silent on a particular international issue. Even if Congress had not acted on the Burma issue, "it long has been 'accepted constitutional doctrine that the commerce clause, without the aid of Congressional legislation...affords some protection from state legislation inimical to the national commerce, and that in such cases, where Congress has not acted, this Court, and not the state legislature, is under the commerce clause the final arbiter of the competing demands of the competing demands of state and national interests.'"⁶³

Moreover, the Supreme Court has held that "a more extensive constitutional inquiry" is required when analyzing claims arising under the Foreign Commerce Clause rather than under the Interstate Commerce Clause.⁶⁴ "It is a well-accepted rule," the Court has held, "that state restrictions burdening foreign commerce are subjected to a more rigorous and searching scrutiny."⁶⁵ The Court has found "evidence that the [F]ounders intended the scope of the foreign commerce power to be...greater" than the federal government's power to regulate interstate commerce, and citing Michelin Tire Corp. v. Wages,⁶⁶ referred to the "[f]ramers' overriding concern that 'the Federal Government must speak with one voice when regulating commercial relations with foreign governments.'"⁶⁷

Although the Constitution...grants Congress power to regulate commerce with foreign Nations and 'among the several States' in parallel phrases, there is evidence that the Founders intended the scope of the foreign commerce power to be the greater. Cases of this Court, stressing the need for uniformity in treating with other nations, echo this distinction.⁶⁸

Because states and localities "have virtually no ability to "influence a particular foreign nation through curtailing or eliminating their own international trading activities (a primary economic boycott), they exercise their domestic leverage over firms with which they do business in a manner designed to influence foreign nations (a secondary economic boycott.)"⁶⁹

Depending on the size of the government procurement contracts involved and the market positions of the companies involve, these laws range from being mere nuisances to constituting virtual commands. The Eastman Kodak Company, for example, withdrew from South Africa altogether, allegedly in response to the threatened loss of its business with the New York City Government.⁷⁰

Notwithstanding the obvious market power states possess, several of the local ordinances reference a line of cases decided under the Interstate Commerce Clause which hold that where a state or locality imposes requirements on those with whom it does business as a market participant, rather than as a "regulator," some interference with interstate commerce is permitted.⁷¹ A "market participant" analysis is inappropriate to the local Burma enactments for at least three reasons.

First, the market participant doctrine has no application in those instances where the federal government has actually acted. Except for those situations where federal law is silent, it is irrelevant whether the local action is consistent with a federal regulatory scheme as in Wisconsin Dept. of Industry v. Gould⁷² or inconsistent, and thus precluding the federal government from "speaking with one voice." Federal law is not silent in the case of the Burma enactments.

Second, the Supreme Court has suggested that the market participant doctrine does not apply when a restraint on foreign commerce is alleged⁷³ and where constitutional scrutiny "may well be more rigorous."⁷⁴ Indeed, it has never applied the market participant doctrine to a case involving foreign commerce.⁷⁵

Third, and most significantly, even if this were a situation where the federal government had not acted, and even if it did not involve foreign commerce, the market participant doctrine would not apply because the local Burma ordinances go beyond the types of activities contemplated by the Court in carving out this limited exception to the general prohibition on a locality's intrusion into interstate or foreign commerce.

The market participant doctrine was first enunciated in Hughes v. Alexandria Scrap Corp.,⁷⁶ in which the Court upheld a Maryland statutory scheme that made it more difficult for out-of-state scrap processors to be awarded bounties for destroying cars abandoned on state highways. The Court's rationale for allowing the encumbrance of free commerce between the states was clear: The Commerce Clause does not prohibit a state from "participating in the market and exercising the right to favor its own citizens over others."⁷⁷ In Reeves, Inc. v. Stake,⁷⁸ the Court permitted South Dakota to restrict its sales of state produced cement to out-of-state buyers. The Court observed that the states have a role as "guardian and trustee" for their citizens, noted the state's apprehension that absent its intervention cement shortages would be "threatening the people of this state,"⁷⁹ and held that this both suggested a duty and supplied a legitimate local purpose for states to discriminate in their citizen's favor.⁸⁰

The limits of the doctrine are seen in White v. Massachusetts Council of Construction Employers, Inc.,⁸¹ in which the Court considered a mayoral order that required all construction projects funded in whole or in part by the city to be performed by at least one-half Boston residents. The Court upheld this particular requirement, but cautioned that state and local governments could not develop restrictions that "reach beyond the immediate parties with which the government transacts business."⁸² Because the mayor's order "cover[ed] a discrete, identifiable class of economic activity in which the city [was] a major participant," the order fell within the limits of the doctrine.⁸³ The Court noted, "Everyone affected by the mayoral order is, in a substantial if informal sense, 'working for the city.'"⁸⁴

If White left any ambiguity as to the limits of the market participant doctrine, South-Central Timber Dev. v. Wunnicke⁸⁵ removed it. In South-Central Timber, the State of Alaska sought to require all timber sold from certain state owned parcels to be processed within the state. Alaska argued that it was acting as "'a seller of timber, pure and simple,'"⁸⁶ and that it could thereby impose any requirements on a sale that any private person could. The Court found it "clear that the State is more than merely a seller of timber."⁸⁷

In the commercial context, the seller usually has no say over, and no interest in, how the product is to be used after sale; in this case, however, payment for the timber does not end the obligations of the purchaser, for, despite the fact that the purchaser has taken delivery of the timber and has paid for it, he cannot do with it as he pleases. Instead he is obligated to deal with a stranger (a local processor) to the contract after completion of the sale.⁸⁸

This, the Court said, rendered Alaska more than a mere market participant.

There are sound reasons for distinguishing between a State's preferring its own residents in the initial disposition of goods when it is a market participant and a State's attachment of restrictions on dispositions subsequent to the goods coming to rest in private hands....

Instead of merely choosing its own trading partners, the State is attempting to govern the private, separate economic relationships of its trading partners; that is, it restricts the post-purchase activity of the purchaser, rather than merely the purchasing activity. In contrast to the situation in White, this restriction on private economic activity takes place after the completion of the parties direct commercial obligations, rather than during the course of an ongoing commercial relationship in which the city retained a continuing proprietary interest in the subject of the contract. [Citation omitted.] In sum, the State may not avail itself of the market-participant doctrine to immunize its downstream regulation of the timber-processing market in which it is not a participant.⁸⁹

The Court's language establishes that the market-participant doctrine could not reasonably be invoked to immunize local debarment enactments predicated on the political acts of a foreign government.

The market-participant doctrine permits a State to influence "a discrete, identifiable class of economic activity in which [it] is a major participant. [Citation omitted.] Contrary to the State's contention, the doctrine is not carte blanche to impose any conditions that the State has the economic power to dictate, and does not validate any requirement merely because the State imposes it upon someone with whom it is in contractual privity. [Citation omitted.]

The limit of the market-participant doctrine must be that it allows a State to impose burdens on commerce within the market in which it is a participant, but allows it to go no further. The State may not impose conditions, whether by statute, regulation, or contract, that have a substantial regulatory effect outside of that particular market. [Citation omitted.] Unless the "market" is relatively narrowly defined, the doctrine has the potential of swallowing up the rule that States may not impose substantial burdens on interstate commerce even if they act with [a] permissible state purpose....⁹⁰

In the South Africa divestment debate, the issue became whether the state as an investment market participant had the same rights as a private investor to decide with whom to do business.⁹¹ While the issue was not resolved in that context, debarment in an area subject to federal action is probably prohibited under Wisconsin v. Gould.⁹²

Wisconsin notes correctly that state action in the nature of "market participation" is not subject to the restrictions placed on state regulatory power by the Commerce Clause. We agree with the Court of Appeals, however, that by flatly prohibiting state purchases from repeat labor law violators Wisconsin "simply is not functioning as a private purchaser of services." For all practical purposes, Wisconsin's debarment scheme is tantamount to regulation.⁹³

The problem for localities advancing the market participant argument is compounded by the complete absence of a legally cognizable local purpose, something that existed in each of the market participant cases. While several of the anti-Burma measures purport to establish a nexus is between local interests and ethical concerns abroad, such a nexus is beyond anything the Court has ever recognized as weighing in the balance regarding the "necessary accommodation between local needs and the overriding requirement of freedom for the national commerce."⁹⁴

In contrast, the necessary balance was best articulated in Pike v. Bruce Church, Inc.⁹⁵

Where the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. [citation omitted] If a legitimate local purpose is found, then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved..."⁹⁶

In Pike, which dealt with Arizona's attempt to impose a packing and labeling requirement on melon growers, the Court said:

We are not, then, dealing here with 'state legislation in the field of safety where the propriety of local regulation, has long been recognized'.... [T]he Arizona statute...does impose...a straitjacket on the appellee company with respect to the allocation of its interstate resources. Such an incidental consequence of a regulatory scheme could perhaps be tolerated if a more compelling state interest were involved. But here the State's interest in ensuring people knew certain high quality cantaloupes were grown in Arizona) is minimal at best - certainly less substantial than a State s interest in securing employment for its people.⁹⁷

In the context of foreign relations, the Court set a clear standard for weighing the balance in Container Corp. of America v. Franchise Tax Board.⁹⁸ According to the Court, permissible local actions are those that have a legitimate local purpose with "merely foreign resonances" short of interfering with foreign affairs.⁹⁹ It is unclear how the balancing test should be applied to local ordinances designed to have a foreign effect.¹⁰⁰

Several local enactments under scrutiny purport to serve a legitimate local purpose in the hope of surviving a constitutional challenge.¹⁰¹ The Berkeley Ordinance has a preamble that states that the "quality of life" of the people of Berkeley "is diminished when peace and justice are not fully present in the world," and "recognize[s] the responsibility of local communities to take positive steps to support the rule of law and to help end injustices and egregious violations of human rights wherever they may occur."¹⁰² San Francisco's Ordinance contains a similar declaration,¹⁰³ as does Takoma Park and Maryland's.¹⁰⁴ Takoma Park's enactment, however, "recognize[s] the important role local communities can take to promote universal respect for human rights and fundamental freedoms," and emphasizes its "strong and vibrant tradition of organizing local action to affect larger world events, as manifested by the Takoma Park Nuclear Free Zone Act."¹⁰⁵

Perhaps the clearest rebuttal to the argument that this alleged interest constitutes a local nexus to an international event is found in Lujan v. Defenders of Wildlife,¹⁰⁶ a standing case. In Lujan, as in the case of localities attempting to establish a sufficient nexus between a world event and a local interest by a showing of local injury, the plaintiffs tried to stop certain construction projects abroad that threatened a certain species of Nile crocodile and Asian elephant, and argued that they had standing under an "ecosystem nexus" theory where "any person who uses any part of a 'contiguous ecosystem' adversely affected by a funded activity has standing even if the activity is located a great distance away."¹⁰⁷ The plaintiffs also argued standing based on an "animal nexus" theory, "whereby anyone who has an interest in studying or seeing the endangered animals anywhere on the globe has standing."¹⁰⁸

The Court flatly rejected both theories of standing:

This is beyond all reason. Standing is not 'an ingenious academic exercise in the conceivable,'.... It goes beyond the limit...and into pure speculation and fantasy, to say that anyone who observes or works with an endangered species, anywhere in the world, is appreciably harmed by a single project affecting some portion of that species with which he has no more specific connection.¹⁰⁹

 

C. The Supremacy Clause

The Supremacy Clause of the Constitution, Article VI, clause 2, provides that the foreign policy of the United States will be conducted by the federal government. Consequently, local enactments designed to participate in the conduct of foreign policy may run afoul of the Supremacy Clause. In Hines v. Davidowitz,¹¹⁰ the Supreme Court was explicit in defining the boundary:

The Federal Government, representing as it does the collective interests of the forty-eight states, is entrusted with full and exclusive responsibility for the conduct of affairs with foreign sovereignties. 'For local interests the several States of the Union exist, but for national purposes, embracing our relations with foreign nations, we are but one people, one nation, one power.' Our 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.¹¹¹

Zschernig v. Miller,¹¹² a landmark on the subject, was decided at the height of the Cold War and reflects the Court's distaste for local officials attempting to imprint their particular reaction to an international matter in their local governance, even in a field so specifically subject to local regulation as probate. In Zschernig, an Oregon statute prohibited a resident of East Germany from inheriting under an Oregon will on the basis (couched in general language but leaving no doubt as to its rationale) that no Oregonian could receive an estate bequeathed him from behind the Iron Curtain because the recipient stood a good chance of getting his proceeds confiscated. Citing Hines, the Court disallowed the meddling as "an intrusion by the State into the field of foreign affairs which the Constitution entrusts to the President and the Congress,"¹¹³ and would not permit the practice of "the probate courts of various States...launch[ing] inquiries into the type of governments that obtain in particular foreign nations."¹¹⁴ What was supposed to be a probate statute was, in effect, "not an inheritance statute, but a statute of confiscation and retaliation,"¹¹⁵ and "foreign policy attitudes, the freezing or thawing of the 'cold war,' and the like [were] the real desiderata."¹¹⁶ That, the Court said, "affects international relations in a persistent and subtle way," and "must give way if they impair the effective exercise of the Nation's foreign policy."¹¹⁷

Particularly noteworthy as well is that the Court reached its decision in spite of an amicus brief filed by the Justice Department which indicated that it had no objection to Oregon's statutory stand against Communism.¹¹⁸ "But," Justice Stewart found, "that is not the point. We deal here with the basic allocation of power between the States and the Nation. Resolution of so fundamental a constitutional issue cannot vary from day to day with the shifting winds at the State Department."¹¹⁹

The Supremacy Clause analysis is thus quite similar to the Foreign Commerce Clause analysis. A local action must have a legitimate local purpose, and its effect on foreign affairs, "a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject,"¹²⁰ must be incidental. The analysis, whether regarding preemption or under the Foreign Commerce or Supremacy Clauses, contemplates that the nation must speak with one voice, and that particularly in foreign matters, the voice must emanate from the federal government.

The logic of this rationale is obvious. "If state action could defeat or alter our foreign policy, serious consequences might ensue. The nation as a whole would be held to answer if a State created difficulties with a foreign power."¹²¹

 

D. Possible Impermissible Delegation

The yardstick by which Massachusetts and several local governments have decided to measure compliance by reference to third party organizations, primarily the Investors Responsibility Research Center (IRRC) in Washington D.C., may present Due Process problems and leave business entities without fair redress.

In Fuentes v. Shevin,¹²² the Supreme Court emphasized that "the central meaning of procedural due process has been clear: 'Parties whose rights are to be affected are entitled to be heard; and in order that they may enjoy that right they must first be notified."¹²³ The Court continued that "[t]he purpose of this requirement is not only to ensure fair play to the individual. Its purpose, more particularly, is to protect his use and possession of property from arbitrary encroachment--to minimize substantively unfair or mistaken deprivations..."¹²⁴

As discussed above,¹²⁵ the local measures are ambiguous as to the quantum of business in Burma that will place companies on a blacklist. Nor is it clear how the IRRC, a private group, arrives at the criteria it uses in compiling its list. As in Eubank v. Richmond,¹²⁶ in which the Court invalidated an ordinance under which certain property owners could decide the rights of others without a clear definition of their terms of reference, a municipal ordinance which "confer[s] the power on some property holders to virtually control and dispose of the proper [sic] rights of others [is unconstitutional because it] creates no standard by which the power thus given is to be exercised."¹²⁷ A delegation of power uncontrolled by any standard or rule prescribed by legislative action, and with no provision for review, is "repugnant to the due process clause of the Fourteenth Amendment."¹²⁸ While delegation of fact-finding to a private consultant is not problematic per se, it becomes problematic where the facts create an inference that the local government functions as "simply a 'rubber stamp'" for the decisions of the outside entity."¹²⁹ Such a determination would be a question of fact.¹³⁰ It is unclear as a matter of practice what, if any, scrutiny or review Massachusetts or the local municipalities perform of the IRRC, its processes, its criteria for inclusion, or its decisions as it wields the considerable power delegated to it.

A matter, similar to the one here, was before a Maryland court in a very similar context in Bd. of Trustees v. Mayor of Baltimore.¹³¹ In that case, the Trustees of the Employees' Retirement System of Baltimore challenged a municipal ordinance that required divestment of the city's three pension funds from companies doing business in or with South Africa. The ordinance, moreover, delegated the determination as to who was doing business in or with South Africa to an entity called the Africa Fund.

The Maryland court did not find impermissible delegation in this scheme largely due to the principle that a court should, whenever possible, interpret a statute in a manner upholding its constitutionality.¹³² The ordinance's use of the word "reference" in regard to the Africa Fund's Unified List, the court said, was reasonably subject to the construction that the list did not in fact bind the trustees. If it had bound the trustees, the delegation would have violated the Maryland constitution. As one of several commentators criticizing the decision has said:

It stands to reason, however, that the court...should have inquired into how the Africa Fund compiles and annotates the [Africa Fund's] Unified List and, finally, into how the Trustees employ it...[and] to demonstrate that they acted with some degree of independence in making divestment decisions as evidence of the nonbinding effect of the Unified List.

The issue is of great importance because the Africa Fund could be thrust into a position of great power, depending on the number of state or local governments that rely upon the Unified List. The Africa Funds decisions can indirectly but decisively affect South Africa's population and government, scores of owners and employees of America's corporations, and millions of pension fund beneficiaries. It is not in the best interest of pension beneficiaries to remain wedded to this or any other organization....¹³³

The question is one of process and of fact. While several of the ordinances contain language suggesting that they do not simply "rubber stamp" the IRRC's findings, it would be important to establish that this is in fact so. It is also important to ensure that the other safeguards the courts have emphasized are indeed present in a process conducted almost entirely outside public scrutiny.

 

IV. PRACTICAL PROBLEMS PRESENTED BY PARALLEL FOREIGN POLICIES

 
A. The Federal Government has Acted on the Matter and yet its Considered Decision is not the Law of the Land

The local enactments under scrutiny here have had an effect. Apple Computer, Philips Electronics, Amoco, Columbia Sportswear, Carlsberg, Levi Strauss, Liz Claiborne, and Spiegel's Eddie Bauer "have already left Burma. There is a steadily growing number of companies that have evaluated the business opportunities in Burma, and have decided that it makes more sense to leave rather than face consumer boycotts of penalties from selective purchasing laws."¹³⁴

Yet this is not the law of the nation, nor the approach Congress has chosen after deliberation. Whether future events prove Congress' judgment to be right or wrong remains to be seen. It is, however, undeniably Congress' policy that the threat of sanctions should be the President's to deploy, and that even if such sanctions are imposed, they should not be so broad as to jeopardize the long term interests of U.S. businesses.¹³⁵ Economic sanctions, involving various issues such as against whom, when, and how broadly to deploy them, have become important tools of U.S. foreign policy. The actions of state and municipal governments designed specifically to influence foreign nations provides a clear example of the nation's failure to "speak with one voice" on international issues.¹³⁶

While a particular locality may succeed in pressing a corporation to withdraw from Burma so as to be eligible for that locality's business, such action may undermine efforts at the federal level to assist U.S. businesses to compete internationally,¹³⁷ may limit the President's ability to choose between a range of policy options,¹³⁸ and may restrict the federal government from responding to positive changes such as a commitment to start a dialogue with the democratic opposition. In striking their own balance between pragmatism and principle and diminishing to some extent U.S. global presence, localities may be sacrificing U.S. jobs in areas where the anti-Burma initiatives are not law.

Finally, the constitutional system has no mechanism to ensure that the state and federal governments respond uniformly to changes in the circumstances that led to the adoption of measures aimed at foreign nations.¹³⁹ One commentator notes that in 1991 the United States softened sanctions on South Africa to encourage President de Klerks's reforms, but that only-one of the 140 local laws, which were mostly far broader than the federal law, was repealed. "This has raised fundamental questions about the United States' basic policy toward South Africa and the reforms of the minority white government."¹⁴⁰

 

B. State and Local Governments Are Inappropriate Bodies for Foreign Policymaking

There are at least three major problems with local governments in the United States purporting to make and implement the nation's foreign policy.

First, the United States is a large and diverse nation in which carrying parochial concerns to the international stage could have repercussions well beyond the localities themselves. No harm is done when Boston's large population of Irish politicians gathers to sing Irish songs on St. Patrick's day; there may be harm done, however, if Boston is allowed to instigate a skirmish with the United Kingdom over Northern Ireland in which the rest of the country is not inclined to participate.¹⁴¹ Nor is the local slant only geopolitical.¹⁴² Although vigorous local input is both protected and beneficial in the debate that precedes the crafting of foreign policy, it would seem particularly unwise to have parochial concerns interposed in the implementation of a national foreign policy.

Second, U.S. foreign policy is informed by organizations and intelligence networks that, flawed or not, are instrumentalities designed for that particular purpose. Local actions may be intemperate and not informed by larger, national policy issues. At least one federal court took a dim view of retaliation as mounted by the State University of New Mexico against Iran during the embassy hostage crisis where the university denied admission to students whose home government held or permitted the holding of U.S. citizens as hostages.¹⁴³ In disallowing the retaliatory measure, the Court stated that "sensitive judgments" in foreign affairs should not be made by those lacking expertise and information in foreign policy.

In the Burma context, the issue of whether engagement or divestment is a better impetus for change is unclear and was much debated at the federal level, and references to the success of similar business retaliation in the context of South Africa may be inapposite. As several senators noted, there are major differences between the two foreign policy problems. First, Burma is surrounded by countries that by and large either ignore or easily tolerate its regime; South Africa had only hostile neighbors.¹⁴⁴ Second, South Africa had an economy intertwined with the rest of the world: "The scope of companies [with South African ties] is immense. They are among the nation's biggest and most prestigious, with a total stock value of $600 billion, representing half the capitalization of the Standard and Poor's 500 Index.¹⁴⁵ Burma, after years of isolation, does not have the sort of economy that a U.S. withdrawal is likely to damage.¹⁴⁶ Third, South Africa's oligarchy, its white middle class, benefitted from foreign engagement and suffered at divestment from the collapsing Rand, from deteriorating standards of living, and from the sense of international castigation that resulted. Burma has no appreciable middle class, nor is it clear who sanctions will hurt since the withdrawal of U.S. investment is unlikely to result in a vacuum.¹⁴⁷ There was also a measure of consensus about South Africa because of the sensitive issue of race in the United States.¹⁴⁸ Burma, on the other hand, is much less reported and the issues that confront that country are less well known.

Finally, as a practical matter, these local measures may be difficult for business entities to follow, let alone comply with. As noted above, several measures are ambiguous and not readily susceptible of clear and reasonably uniform interpretation.¹⁴⁹ For instance, in Berkeley's statute, "willingness" alone to do business in Burma is grounds for debarment, as is "assisting" someone to do business there. In trying to get a city contract in San Francisco, Ericsson GE was disqualified due to the activities of a related entity in Europe over which it had no control. "Ericsson GE denies doing business in Burma. 'It's our parent company, Ericsson LM in Sweden, that's doing business there,'" a spokesman for Ericsson GE is reported to have said.¹⁵⁰

The prohibited quantum of business involvement in Burma is phrased differently in different locations. A business entity considering a venture abroad, or without control over a subsidiary or affiliate with majority foreign ownership, could be at a loss as to whether it is the foreign policy of a city in North Carolina or that of the federal government that governs foreign commerce.

 

V. CONCLUSION

A unilateral U.S. boycott of Burma is unlikely to have much impact on Burma for the same reason that the local anti-Burma enactments are likely to go unchallenged. The few U.S. businesses that remain in Burma are unlikely to have much interest in mounting a constitutional challenge to a grassroots and superficially reasonable movement. Such reluctance, however, does not mean that the enactments are constitutional, or that the process they betoken is wise. Indeed, the Burma situation may be one of those circumstances about which it is aptly noted that hard cases make bad law.

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