CROSBY, SECRETARY OF ADMINISTRATION AND FINANCE OF
MASSACHUSETTS v. NATIONAL
FOREIGN TRADE COUNCIL
certiorari to the united
states court of appeals for the first circuit
No.
99-474. Argued March 22, 2000--Decided June 19, 2000
In 1996, Massachusetts passed a law
barring state entities from buying goods or services from companies
doing business with Burma. Subsequently, Congress imposed mandatory and
conditional sanctions on Burma. Respondent (hereinafter Council), which has
several members affected by the state Act, filed suit against petitioner state
officials (hereinafter State) in federal court, claiming that the state Act
unconstitutionally infringes on the federal foreign affairs power, violates the
Foreign Commerce Clause, and is preempted by the federal Act. The District
Court permanently enjoined the state Act's enforcement, and the First Circuit
affirmed.
Held: The state Act is preempted, and its application
unconstitutional, under the Supremacy Clause. Pp. 7-26.
(a)
Even
without an express preemption provision, state law must yield to a congressional
Act if Congress intends to occupy the field, California v. ARC
America Corp., 490
U. S. 93, 100, or to the extent of any conflict with a federal statute, Hines v. Davidowitz, 312
U. S. 52, 66-67. This Court will find preemption where it is
impossible for a private party to comply with both state and federal law and
where the state law is an obstacle to the accomplishment and execution of
Congress's full purposes and objectives. What is a sufficient obstacle is
determined by examining the federal statute and identifying its purpose and
intended effects. Here, the state Act is such an obstacle, for it undermines the intended
purpose and natural effect of at least three federal Act provisions. Pp. 7-9.
(b)
First, the state Act is an obstacle to the federal Act's delegation of
discretion to the President to control economic sanctions against Burma.
Although Congress put initial sanctions in place, it authorized the President
to terminate the measures upon certifying that Burma has made progress in human
rights and democracy, to impose new sanctions upon findings of repression, and,
most importantly, to suspend sanctions in the interest of national security.
Within the sphere defined by Congress, the statute has given the President
as much discretion to exercise economic leverage against Burma, with an eye
toward national security, as law permits. The plenitude of Executive
authority controls the preemption issue here. The President has the authority
not merely to make a political statement but to achieve a political result, and
the fullness of his authority shows the importance in the congressional mind of
reaching that result. It is implausible to think that Congress would have
gone to such lengths to empower the President had it been willing to compromise
his effectiveness by allowing state or local ordinances to blunt the
consequences of his actions. Yet this is exactly what the state Act does.
Its sanctions are immediate and perpetual, there being no termination
provision. This unyielding application undermines the President's authority by
leaving him with less economic and diplomatic leverage than the federal Act
permits. Pp. 10-13.
(c)
Second, the state Act interferes with Congress's intention to limit economic
pressure against the Burmese Government to a specific range. The state Act
stands in clear contrast to the federal Act. It prohibits some contracts
permitted by the federal Act, affects more investment than the federal Act, and
reaches foreign and domestic companies while the federal Act confines its reach
to United States persons. It thus conflicts with the federal law by penalizing
individuals and conduct that Congress has explicitly exempted or excluded from
sanctions. That the two Acts have a common end hardly neutralizes the
conflicting means, and the fact that some companies may be able to comply with
both sets of sanctions does not mean the state Act is not at odds with
achievement of the congressional decision about the right calibration of force.
Pp. 13-16.
(d)
Finally, the state Act is at odds with the President's authority to speak
for the United States among the world's nations to develop a comprehensive,
multilateral Burma strategy. Congress called for Presidential cooperation
with other countries in developing such a strategy, directed the President to
encourage a dialogue between the Burmese Government and the democratic
opposition, and required him to report to Congress on these efforts. This
delegation of power, like that over economic sanctions, invested the President
with the maximum authority of the National Government. The state Act
undermines the President's capacity for effective diplomacy. In response to its
passage, foreign governments have filed formal protests with the National
Government and lodged formal complaints against the United States in the World Trade Organization. The Executive has consistently
represented that the state Act has complicated its dealing with foreign
sovereigns and proven an impediment to accomplishing the objectives assigned it
by Congress. In this case, the positions of foreign governments and the
Executive are competent and direct evidence of the state Act's frustration of
congressional objectives. Barclays Bank PLC v. Franchise Tax Bd.
of Cal., 512
U. S. 298, distinguished. Pp. 16-23.
(e)
The State's remaining argument--that Congress's failure to preempt state and
local sanctions demonstrates implicit permission--is unavailing. The existence
of a conflict cognizable under the Supremacy Clause does not depend on express
congressional recognition that federal and state law may conflict, and a failure to provide for
preemption expressly may reflect nothing more than the settled character of
implied preemption that courts will dependably apply. Pp. 23-25.
181
F. 3d 38, affirmed.
Souter,
J., delivered the opinion of the Court, in which Rehnquist,
C. J., and Stevens, O'Connor, Kennedy, Ginsburg, and Breyer,
JJ., joined. Scalia, J., filed an opinion concurring in the
judgment, in which Thomas, J., joined.
Justice
Souter delivered the opinion of the Court.
The issue is whether the Burma law of the
Commonwealth of Massachusetts, restricting the authority of its agencies to
purchase goods or services from companies doing business with Burma, is
invalid under the Supremacy Clause of the National Constitution owing to
its threat of frustrating federal statutory objectives. We hold that it is.
………………..
I
In September 1996, three
months after the Massachusetts law was enacted, Congress passed a
statute imposing a set of mandatory and conditional sanctions on Burma. See
Foreign Operations, Export Financing, and Related Programs Appropriations Act,
1997, §570, 110 Stat. 3009-166 to 3009-167 (enacted by the Omnibus Consolidated
Appropriations Act, 1997, §101(c), 110 Stat. 3009-121 to 3009-172). The
federal Act has five basic parts, three substantive and two procedural.
First,
it imposes three sanctions directly on Burma. It bans all aid to the
Burmese Government except for humanitarian assistance, counternarcotics
efforts, and promotion of human rights and democracy. §570(a)(1). The statute
instructs United States representatives to international financial institutions
to vote against loans or other assistance to or for Burma, §570(a)(2),
and it provides that no entry visa shall be issued to any Burmese
government official unless required by treaty or to staff the Burmese mission
to the United Nations, §570(a)(3). These restrictions are to remain in effect
"[u]ntil such time as the President determines and certifies to
Congress that Burma has made measurable and substantial progress in improving
human rights practices and implementing democratic government." §570(a).
Second,
the federal Act authorizes the President to impose further sanctions
subject to certain conditions. He may prohibit "United States
persons" from "new investment" in Burma, and shall do so
if he determines and certifies to Congress that the Burmese Government has
physically harmed, rearrested, or exiled Daw Aung San Suu Kyi (the opposition
leader selected to receive the Nobel Peace Prize), or has committed
"large-scale repression of or violence against the Democratic
opposition." §570(b). "New investment" is defined as entry into
a contract that would favor the "economical development of resources
located in Burma," or would provide ownership interests in or benefits
from such development, §570(f)(2), but the term specifically excludes (and thus
excludes from any Presidential prohibition) "entry into, performance of,
or financing of a contract to sell or purchase goods, services, or
technology," ibid.
Third,
the statute directs the President to work to develop "a comprehensive,
multilateral strategy to bring democracy to and improve human rights
practices and the quality of life in Burma." §570(c). He is instructed to
cooperate with members of the Association of Southeast Asian Nations (ASEAN)
and with other countries having major trade and investment interests in Burma
to devise such an approach, and to pursue the additional objective of fostering
dialogue between the ruling State Law and Order Restoration Council (SLORC) and
democratic opposition groups. Ibid.
…………………………….
II
Respondent
National Foreign Trade Council (Council) is a nonprofit corporation
representing companies engaged in foreign commerce; 34 of its members were on the
Massachusetts restricted purchase list in 1998. National Foreign Trade
Council v. Natsios, 181 F. 3d 38, 48 (CA1 1999). Three
withdrew from Burma after the passage of the state Act, and one member had its
bid for a procurement contract increased by 10 percent under the provision of
the state law allowing acceptance of a low bid from a listed bidder only if the
next-to-lowest bid is more than 10 percent higher. Ibid.
In
April 1998, the Council filed suit in the United States District Court for the
District of Massachusetts, seeking declaratory and injunctive relief against
the petitioner state officials charged with administering and enforcing the
state Act (whom we will refer to simply as the State). The Council argued
that the state law unconstitutionally infringed on the federal foreign affairs
power, violated the Foreign Commerce Clause, and was preempted by the federal
Act. After detailed stipulations, briefing, and argument, the District
Court permanently enjoined enforcement of the state Act, holding that
it "unconstitutionally impinge[d] on the federal government's exclusive
authority to regulate foreign affairs." National Foreign Trade
Council v. Baker, 26 F. Supp. 2d 287, 291 (Mass. 1998).
The
United States Court of Appeals for the First Circuit affirmed on
three independent grounds. 181 F. 3d, at 45. It found the state Act
unconstitutionally interfered with the foreign affairs power of the
National Government under Zschernig v. Miller, 389
U. S. 429 (1968), see 181 F. 3d, at 52-55; violated the dormant
Foreign Commerce Clause, U. S. Const. Art. I, §8, cl. 3, see 181
F. 3d, at 61-71; and was preempted by the congressional Burma Act,
see id., at 71-77.
The
State's petition for certiorari challenged the decision on all three grounds
and asserted interests said to be shared by other state and local governments
with similar measures. Though opposing certiorari, the Council acknowledged the
significance of the issues and the need to settle the constitutionality of such
laws and regulations. Brief in Opposition 18-19. We granted certiorari to
resolve these important questions, 528
U. S. 1018 (1999), and now affirm.
III
A fundamental principle of the
Constitution is that Congress has the power to preempt state law. Art. VI, cl. 2; Gibbons
v. Ogden, 9 Wheat. 1, 211 (1824); Savage v. Jones, 225
U. S. 501, 533 (1912); California v. ARC America Corp.,
490
U. S. 93, 101 (1989). Even without an express
provision for preemption, we have found that state law must yield to a congressional Act in
at least two circumstances.
When Congress intends federal law to "occupy the field," state law in
that area is preempted. Id., at 100; cf. United States v. Locke,
529 U. S. ___, ___ (2000) (slip op., at 23) (citing Charleston &
Western Carolina R. Co. v. Varnville Furniture Co., 237
U. S. 597, 604 (1915)). And even if Congress has not occupied the
field, state
law is naturally preempted to the extent of any conflict with a federal
statute. Hines
v. Davidowitz, 312
U. S. 52, 66-67 (1941); ARC America Corp., supra, at 100-101;
Locke, supra, at ___ (slip op., at 17). We will find preemption where
it is impossible for a private party to comply with both state and federal law,
see, e.g., Florida Lime & Avocado Growers, Inc. v. Paul,
373
U. S. 132, 142-143 (1963), and where "under the circumstances of
[a] particular case, [the challenged state law] stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of
Congress." Hines, supra, at 67. What is a sufficient obstacle is
a matter of judgment, to be informed by examining the federal statute as a
whole and identifying its purpose and intended effects:
"For
when the question is whether a Federal act overrides a state law, the entire
scheme of the statute must of course be considered and that which needs must be
implied is of no less force than that which is expressed. If the purpose of the
act cannot otherwise be accomplished--if its operation within its chosen field
else must be frustrated and its provisions be refused their natural effect--the
state law must yield to the regulation of Congress within the sphere of its delegated
power." Savage, supra, 533, quoted in Hines, supra, at
67, n. 20.
Applying
this standard, we see the state Burma law as an obstacle to the
accomplishment of Congress's full objectives under the federal Act. We find that the state law undermines
the intended purpose and "natural effect" of at least three
provisions of the federal Act, that is, its delegation of effective
discretion to the President to control economic sanctions against Burma,
its limitation of sanctions solely to United States persons and new investment,
and its directive to the President to proceed diplomatically in developing a
comprehensive, multilateral strategy towards Burma.
A
First,
Congress clearly intended the federal act to provide the President with
flexible and effective authority over economic sanctions against Burma.
Although Congress immediately put in place a set of initial sanctions
(prohibiting bilateral aid, §570(a)(1), support for international financial
assistance, §570(a)(2), and entry by Burmese officials into the United States,
§570(a)(3)), it authorized the President to terminate any and all of those
measures upon determining and certifying that there had been progress in human
rights and democracy in Burma. §570(a). It invested the President with the
further power to ban new investment by United States persons, dependent only on
specific Presidential findings of repression in Burma. §570(b). And, most
significantly, Congress empowered the President "to waive, temporarily or
permanently, any sanction [under the federal act] ... if he determines and
certifies to Congress that the application of such sanction would be contrary
to the national security interests of the United States." §570(e).
This
express investiture of the President with statutory authority to act for the
United States in imposing sanctions with respect to the government of Burma,
augmented by the flexibility to respond to change by suspending sanctions
in the interest of national security, recalls Justice Jackson's observation in Youngstown
Sheet & Tube Co. v. Sawyer, 343
U. S. 579, 635 (1952): "When the President acts pursuant to an
express or implied authorization of Congress, his authority is at its maximum,
for it includes all that he possesses in his own right plus all that Congress
can delegate." See also id., at 635-636, n. 2 (noting that
the President's power in the area of foreign relations is least restricted by Congress
and citing United States v. Curtiss-Wright Export Corp., 299
U. S. 304 (1936)). Within the sphere defined by Congress, then, the
statute has placed the President in a position with as much discretion to
exercise economic leverage against Burma, with an eye toward national security,
as our law will admit. And it is just this plenitude of Executive authority
that we think controls the issue of preemption here. The President has been
given this authority not merely to make a political statement but to achieve a
political result, and the fullness of his authority shows the importance in the
congressional mind of reaching that result. It is simply implausible that
Congress would have gone to such lengths to empower the President if it had
been willing to compromise his effectiveness by deference to every provision of
state statute or local ordinance that might, if enforced, blunt the
consequences of discretionary Presidential action.
And
that is just what the Massachusetts Burma law would do in imposing a
different, state system of economic pressure against the Burmese political
regime. As will be seen, the state statute penalizes some private action that
the federal Act (as administered by the President) may allow, and pulls levers
of influence that the federal Act does not reach. But the point here is that
the state sanctions are immediate, see 1996 Mass. Acts 239, ch. 130, §3
(restricting all contracts after law's effective date); Mass. Gen Laws §7:22K
(1997) (authorizing regulations for timely and effective implementation), and
perpetual, there being no termination provision, see, e.g., §7:22J
(restricted companies list to be updated at least every three months). This
unyielding application undermines the President's intended statutory authority
by making it impossible for him to restrain fully the coercive power of the
national economy when he may choose to take the discretionary action open to him,
whether he believes that the national interest requires sanctions to be lifted,
or believes that the promise of lifting sanctions would move the Burmese regime
in the democratic direction. Quite simply, if the Massachusetts law is
enforceable the President has less to offer and less economic and diplomatic
leverage as a consequence. In Dames & Moore v. Regan, 453
U. S. 654 (1981), we used the metaphor of the bargaining chip
to describe the President's control of funds valuable to a hostile country, id.,
at 673; here, the state Act reduces the value of the chips created by
the federal statute. It thus "stands as an obstacle to the accomplishment
and execution of the full purposes and objectives of Congress." Hines,
312
U. S., at 67.
B
Congress
manifestly intended to limit economic pressure against the Burmese Government
to a specific range. The federal Act confines its reach to United States
persons, §570(b), imposes limited immediate sanctions, §570(a), places only a
conditional ban on a carefully defined area of "new investment," §570(f)(2),
and pointedly exempts contracts to sell or purchase goods, services, or
technology, §570(f)(2). These detailed provisions show that Congress's
calibrated Burma policy is a deliberate effort "to steer a middle
path," Hines, supra, at 73.13
The
State has set a different course, and its statute conflicts with federal law at
a number of points by penalizing individuals and conduct that Congress has
explicitly exempted or excluded from sanctions. While the state Act differs
from the federal in relying entirely on indirect economic leverage through
third parties with Burmese connections, it otherwise stands in clear
contrast to the congressional scheme in the scope of subject matter addressed.
It restricts all contracts between the State and companies doing business in
Burma, §7:22H(a), except when purchasing medical supplies and other essentials
(or when short of comparable bids), §7:22I. It is specific in targeting
contracts to provide financial services, §7:22G(b), and general goods and
services, §7:22G(d), to the Government of Burma, and thus prohibits contracts
between the State and United States persons for goods, services, or technology,
even though those transactions are explicitly exempted from the ambit of new
investment prohibition when the President exercises his discretionary authority
to impose sanctions under the federal Act. §570(f)(2).
………………………….
C
Finally,
the state Act is at odds with the President's intended authority to speak for
the United States among the world's nations in developing a
"comprehensive, multilateral strategy to bring democracy to and improve
human rights practices and the quality of life in Burma." §570(c).
Congress called for Presidential cooperation with members of ASEAN and other
countries in developing such a strategy, ibid., directed the President
to encourage a dialogue between the government of Burma and the democratic
opposition, ibid., and required him to report to the Congress on the
progress of his diplomatic efforts, §570(d). As with Congress's explicit
delegation to the President of power over economic sanctions, Congress's
express command to the President to take the initiative for the United States
among the international community invested him with the maximum authority of
the National Government, cf. Youngstown Sheet & Tube Co., 343
U. S., at 635, in harmony with the President's own constitutional
powers, U. S. Const., Art. II, §2, cl. 2 ("[The President] shall
have Power, by and with the Advice and Consent of the Senate, to make
Treaties" and "shall appoint Ambassadors, other public Ministers and
Consuls"); §3 ("[The President] shall receive Ambassadors and other
public Ministers"). This clear mandate and invocation of exclusively national power
belies any suggestion that Congress intended the President's effective voice to
be obscured by state or local action.
Again,
the state Act undermines the President's capacity, in this instance for
effective diplomacy. It is not merely that the differences between the state
and federal Acts in scope and type of sanctions threaten to complicate
discussions; they compromise the very capacity of the President to speak for
the Nation with one voice in dealing with other governments. We need not get into any
general consideration of limits of state action affecting foreign affairs to realize
that the President's maximum power to persuade rests on his capacity to bargain
for the benefits of access to the entire national economy without exception for
enclaves fenced off willy-nilly by inconsistent political tactics. When such exceptions do qualify his
capacity to present a coherent position on behalf of the national economy, he
is weakened, of course, not only in dealing with the Burmese regime, but in
working together with other nations in hopes of reaching common policy and
"comprehensive" strategy. Cf. Dames & Moore, 453
U. S., at 673-674.
While
the threat to the President's power to speak and bargain effectively with other
nations seems clear enough, the record is replete with evidence to answer any
skeptics. First, in response to the passage of the state Act, a number of this
country's allies and trading partners filed formal protests with the National
Government, see 181 F. 3d, at 47 (noting protests from Japan, the European
Union (EU), and ASEAN), including an official Note Verbale from the EU
to the Department of State protesting the state Act. EU officials have warned
that the state Act "could have a damaging effect on bilateral EU-US
relations." Hugo Paemen, Ambassador, European Union, Delegation of the
European Commission, to William F. Weld, Governor, State of Massachusetts, Jan.
23, 1997, App. 75.
Second, the EU and Japan have
gone a step further in lodging formal complaints against the United States in
the World Trade Organization (WTO), claiming that the state Act violates
certain provisions of the Agreement on Government Procurement,19
H. R. Doc. No. 103-316, 1719 (1994) and the consequence has been to
embroil the National Government for some time now in international dispute
proceedings under the auspices of the WTO. In their brief before this Court, EU
officials point to the WTO dispute as threatening relations with the United
States, Brief for
European Communities et al. as Amici Curiae 7, and n. 7, and
note that the state Act has become the topic of "intensive
discussions" with officials of the United States at the highest levels,
those discussions including exchanges at the twice yearly EU-U. S. Summit.
Third,
the Executive has consistently represented that the state Act has complicated
its dealings with foreign sovereigns and proven an impediment to accomplishing
objectives assigned it by Congress. Assistant Secretary of State Larson, for
example, has directly addressed the mandate of the federal Burma law in saying
that the imposition of unilateral state sanctions under the state Act
"complicates efforts to build coalitions with our allies" to promote
democracy and human rights in Burma. A. Larson, State and Local Sanctions:
Remarks to the Council of State Governments 5 (Dec. 8, 1998). "[T]he EU's
opposition to the Massachusetts law has meant that U. S. government high
level discussions with EU officials often have focused not on what to do about
Burma, but on what to do about the Massachusetts Burma law." Id.,
at 3. This point has been consistently echoed in the State Department:
"While
the [Massachusetts sanctions on Burma] were adopted in pursuit of a noble goal,
the restoration of democracy in Burma, these measures also risk shifting the
focus of the debate with our European Allies away from the best way to bring
pressure against the State Law and Order Restoration Council (SLORC) to a potential
WTO dispute over its consistency with our international obligations. Let me be
clear. We are working with Massachusetts in the WTO dispute settlement process.
But we must be honest in saying that the threatened WTO case risks diverting
United States' and Europe's attention from focusing where it should be--on
Burma." Eizenstat testimony, App. 115.
This
evidence in combination is more than sufficient to show that the state Act
stands as an obstacle in addressing the congressional obligation to devise a comprehensive,
multilateral strategy.
…………………………..
V
Because
the state
Act's provisions conflict with Congress's specific delegation to the President
of flexible discretion,
with limitation of sanctions to a limited scope of actions and actors, and with
direction to develop a comprehensive, multilateral strategy under the federal Act, it is
preempted, and its application is unconstitutional, under the Supremacy Clause.
The
judgment of the Court of Appeals for the First Circuit is affirmed.
It
is so ordered