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<pre>                          <br>                  United States Court of Appeals <br>                      For the First Circuit <br> <br>                       ____________________ <br> <br>No. 98-2304 <br>                                 <br>                NATIONAL FOREIGN TRADE COUNCIL, <br>                                 <br>                       Plaintiff, Appellee, <br> <br>                                v. <br> <br>  ANDREW S. NATSIOS, in his official capacity as Secretary of <br>Administration and Finance of the Commonwealth of Massachusetts, <br> and PHILMORE ANDERSON, III, in his official capacity as State <br>    Purchasing Agent for the Commonwealth of Massachusetts, <br> <br>                     Defendants, Appellants. <br> <br>                                 <br>                      ____________________ <br>                                 <br>          APPEAL FROM THE UNITED STATES DISTRICT COURT <br>                                 <br>               FOR THE DISTRICT OF MASSACHUSETTS <br>                                 <br>          [Hon. Joseph L. Tauro, U.S. District Judge] <br>                                 <br>                      ____________________ <br>                                 <br>                             Before <br>                                 <br>                     Lynch, Circuit Judge, <br>                                 <br>             Coffin and Cyr, Senior Circuit Judges. <br>                      ____________________ <br> <br>     Thomas A. Barnico, Assistant Attorney General, with whom <br>Thomas F. Reilly, Attorney General, and James A. Sweeney, Assistant <br>Attorney General, were on brief, for appellants. <br>     Timothy B. Dyk, with whom Gregory A. Castanias, Jones, Day, <br>Reavis & Pogue, Michael A. Collora, and Dwyer & Collora were on <br>brief, for appellee. <br>     Jonathan P. Hiatt and Deborah Greenfield on brief for amicus <br>curiae American Federation of Labor and Congress of Industrial <br>Organizations. <br>     Loretta M. Smith, Cynthia L. Amara, and New England Legal <br>Foundation on brief for amici curiae Associated Industries of <br>Massachusetts and Retailers Association of Massachusetts. <br>     Zach Cowan, Acting City Attorney, and Christopher Alonzi, <br>Deputy City Attorney, on brief for amicus curiae City of Berkeley, <br>California. <br>     Martin S. Kaufman, Edwin L. Lewis, III, and Atlantic Legal <br>Foundation, Inc. on brief for amici curiae William E. Brock, Sam M. <br>Gibbons, Alexander M. Haig, Jr., Lee H. Hamilton, Carla A. Hills, <br>George P. Shultz, and Clayton Yeutter. <br>     Deborah E. Anker, Peter Rosenblum, Anusha Rasalingam, and <br>Harvard Law School Immigration and Refugee Clinic on brief for <br>amici curiae Center for Constitutional Rights, Citizens for <br>Participation in Political Action, The International Labor Rights <br>Fund, The New England Burma Roundtable, and The Unitarian <br>Universalist Service Committee. <br>     Daniel M. Price, Powell, Goldstein, Frazer & Murphy LLP, Robin <br>S. Conrad, National Chamber Litigation Center, Inc., Jan Amundson, <br>and Quentin Riegel on brief for amici curiae Chamber of Commerce of <br>the United States of America, Organization for International <br>Investment, National Association of Manufacturers, United States <br>Council for International Business, American Insurance Association, <br>American Petroleum Institute, and American Farm Bureau Federation. <br>     Sara C. Kay, Associate General Counsel, Office of the <br>Comptroller of the City of New York, on brief for amici curiae the <br>Comptroller of the City of New York, the Cities of Los Angeles, <br>California, Philadelphia, Pennsylvania, Oakland, California, <br>Boulder, Colorado, Santa Cruz, California, and Newton, <br>Massachusetts, the Towns of Amherst, Massachusetts and Carrboro, <br>North Carolina, the City and County of San Francisco, California, <br>and the County of Alameda, California. <br>     George A. Hall, Jr. and Anderson & Kreiger LLP on brief for <br>amici curiae Consumer's Choice Council, American Lands Alliance, <br>Preamble Center, Institute for Agriculture and Trade Policy, <br>Friends of the Earth, Humane Society of the United States, <br>Defenders of Wildlife, and Rainforest Relief. <br>     Richard L. Herz and Steven B. Herz on brief for amicus curiae  <br>EarthRights International.  <br>     Richard L.A. Weiner, David G. Leitch, Gil A. Abramson, and <br>Hogan & Hartson L.L.P. on brief for amici curiae The European <br>Communities and Their Member States.  <br>     Robert Stumberg, Matthew Porterfield, and Harrison Institute <br>for Public Law, Georgetown University Law Center on brief for amici <br>curiae Members of Congress Sen. Edward Kennedy, Rep. David Bonior, <br>Rep. Sherrod Brown, Rep. Michael Capuano, Rep. Peter DeFazio, Rep. <br>William Delahunt, Rep. Lane Evans, Rep. Barney Frank, Rep. Marcy <br>Kaptur, Rep. Dennis Kucinich, Rep. Edward Markey, Rep. James <br>McGovern, Rep. Martin Meehan, Rep. Joseph Moakley, Rep. George <br>Miller, Rep. Richard Neal, Rep. Robert Ney, Rep. John Olver, Rep. <br>Ileana Ros-Lehtinen, Rep. Bernard Sanders, Rep. Janice Schakowsky, <br>Rep. Christopher Smith, Rep. Ted Strickland, Rep. John Tierney, <br>Rep. James Traficant, and Rep. Henry Waxman. <br>     Charles Clark, W. Thomas McCraney, III, and Watkins & Eager, <br>PLLC on brief for amici curiae Members of Congress Sen. Richard G. <br>Lugar, Sen. Rod Grams, Sen. Craig Thomas, Sen. Pat Roberts, Rep. <br>Calvin Dooley, Rep. Donald Manzullo, Rep. Amory Houghton, Rep. <br>Michael G. Oxley, Rep. Doug Bereuter, and Rep. David Dreier. <br>     Heidi Heitkamp, Attorney General of North Dakota, Bill <br>Lockyer, Attorney General of California, J. Joseph Curran, Jr., <br>Attorney General of Maryland, Philip T. McLaughlin, Attorney <br>General of New Hampshire, Patricia A. Madrid, Attorney General of <br>New Mexico, Eliot Spitzer, Attorney General of New York, John <br>Cornyn, Attorney General of Texas, Hardy Myers, Attorney General of <br>Oregon, and William H. Sorrell, Attorney General of Vermont, on <br>brief for amici curiae States of North Dakota, California, New <br>York, Texas, Oregon, New Mexico, New Hampshire, Vermont, and <br>Maryland. <br>     Daniel J. Popeo, R. Shawn Gunnarson, Evan Slavitt, and Gadsby <br>& Hannah LLP on brief for amici curiae The Washington Legal <br>Foundation, American Legislative Exchange Council, Rep. George N. <br>Katsakiores, Rep. Howard L. Fargo, and New York State Assemblyman <br>Clifford W. Crouch. <br>      <br>      <br>      <br>                      ____________________ <br>                                 <br>                         June 22, 1999 <br>                      ____________________ <br>

  LYNCH, Circuit Judge.  The Commonwealth of Massachusetts <br>appeals from an injunction restraining enforcement of the <br>Massachusetts Burma Law, which restricts the ability of <br>Massachusetts and its agencies to purchase goods or services from <br>companies that do business with Burma.  We affirm the district <br>court's finding that the law interferes with the foreign affairs <br>power of the federal government and is thus unconstitutional.  We <br>also find that the Massachusetts Burma Law violates the Foreign <br>Commerce Clause.  We further find that the Massachusetts Burma Law <br>violates the Supremacy Clause because it is preempted by federal <br>sanctions against Burma.  We affirm the injunction issued by the <br>district court. <br>  There is one matter on which the parties are agreed: <br>human rights conditions in Burma are deplorable.  This case <br>requires no inquiry into these conditions. <br>                                I <br>1.  The Massachusetts Burma Law <br>  In 1996, Massachusetts enacted "An Act Regulating State <br>Contracts with Companies Doing Business with or in Burma <br>(Myanmar),"  ch. 130, 1996 Mass. Acts 239 (codified at Mass. Gen. <br>Laws ch. 7,  22G-22M, 40F (West Supp. 1998)) ("Massachusetts <br>Burma Law").  The law restricts the ability of Massachusetts and <br>its agencies and authorities to purchase goods or services from <br>individuals or companies that engage in business with Burma.  The <br>law requires the Secretary of Administration and Finance to <br>maintain a "restricted purchase list" of all firms engaged in <br>business with Burma.  Mass. Gen. Laws ch. 7,  22J.  As the <br>district court explained, companies may challenge inclusion on the <br>list by submitting an affidavit stating that they do no business <br>with Burma, but final determination as to whether a company is in <br>fact "doing business" as defined by the law is made by the <br>Executive Office's Operational Services Division.  See National <br>Foreign Trade Council v. Baker, 26 F. Supp. 2d 287, 289 (D. Mass. <br>1998). <br>  Under the law, Massachusetts and its agencies and <br>authorities may not contract with companies on the restricted <br>purchase list except in three situations: when procurement of the <br>bid is essential and there is no other bid or offer, when the <br>Commonwealth is purchasing certain medical supplies, or when there <br>is no "comparable low bid or offer."  Mass. Gen. Laws ch. 7,  22H.  <br>The law defines a "[c]omparable low bid or offer" as an offer equal <br>to or less than ten percent above a low bid from a company on the <br>restricted purchase list.  Id.  22G.  In practice, the law means <br>that in most cases a company on the restricted purchase list can <br>sell to Massachusetts only if the company's bid is for all <br>practical purposes ten percent lower than all bids by companies not <br>on the restricted purchase list.  Before a company can bid on a <br>Massachusetts contract, the law requires it to provide a sworn <br>declaration disclosing any business it is doing with Burma.  See <br>id.  22H. <br>   The law defines "doing business with Burma" to include:  <br>    (a) having a principal place of business, place of <br>  incorporation or . . . corporate headquarters in Burma <br>  (Myanmar) or having any operations, leases, franchises, <br>  majority-owned subsidiaries, distribution agreements, or <br>  any other similar agreements in Burma (Myanmar), or being <br>  the majority-owned subsidiary, licensee or franchise of <br>  such a person; <br>     <br>    (b) providing financial services to the government of <br>  Burma (Myanmar), including providing direct loans, <br>  underwriting government securities, providing any <br>  consulting advice or assistance, providing brokerage <br>  services, acting as a trustee or escrow agent, or <br>  otherwise acting as an agent pursuant to a contractual <br>  agreement; <br>     <br>    (c) promoting the importation or sale of gems, timber, <br>  oil, gas or other related products, commerce in which is <br>  largely controlled by the government of Burma (Myanmar), <br>  from Burma (Myanmar); <br>  <br>    (d) providing any goods or services to the government of <br>  Burma (Myanmar). <br> <br>Id.  22G. <br>  The law allows exceptions for entities "with operations <br>in Burma (Myanmar) for the sole purpose of reporting the news, or <br>solely for the purpose of providing goods or services for the <br>provision of international telecommunications."  Id.  22H(e).  The <br>law also exempts firms whose business in Myanmar "is providing only <br>medical supplies."  Id.  22I.  The law does not impose any <br>explicit limits on the ability of private parties to engage in <br>business in Burma, or on the ability of private parties or local <br>governments to purchase products from firms engaged in business in <br>Burma.  It does, however, effectively force businesses to choose <br>between doing business in Burma or with Massachusetts.  <br>Massachusetts annually purchases more than $2 billion in goods and <br>services. <br>  The law does not include an express statement of purpose.  <br>In introducing the law to the legislature, the bill's sponsor, Rep. <br>Byron Rushing, stated that the law established a selective purchase <br>program because "if you're going to engage in foreign policy, you <br>have to be very specific."  Rep. Rushing also stated that the <br>"identifiable goal" of the law was "free democratic elections in <br>Burma."  In signing the bill, then-Lieutenant Governor Cellucci <br>stated that "[d]ue to a steady flow of foreign investments, <br>including those of some United States companies, [the] brutal <br>military regime [in Burma] has been able to supply itself with <br>weapons and portray itself as the legitimate government of Burma.  <br>Today is the day that we call their bluff."  Then-Governor Weld <br>commented that "[o]ne law passed by one state will not end the <br>suffering and oppression of the people of Burma, but it is my hope <br>that other states and the Congress will follow our example, and <br>make a stand for the cause of freedom and democracy around the <br>world." <br>  Massachusetts argued to the district court that the law <br>"expresses the Commonwealth's own disapproval of the violations of <br>human rights committed by the Burmese government" and "contributes <br>to the growing effort . . . to apply indirect economic pressure <br>against the Burma regime for reform."  Massachusetts also argued <br>that the law reflects "the historic concerns of the citizens of <br>Massachusetts" with supporting the rights "of people around the <br>world."  Massachusetts does not contend that the law is designed to <br>provide any economic benefit to Massachusetts. <br>  At the time the National Foreign Trade Council ("NFTC") <br>filed its complaint, there were 346 companies on the restricted <br>purchase list.  Forty-four of these companies were United States <br>companies.  The law has generated protests from a number of this <br>country's trading partners, including Japan, the European Union, <br>and the Association of Southeast Asian Nations ("ASEAN").  A number <br>of companies have withdrawn from Burma in recent years; at least <br>three cited the Massachusetts law as among the reasons for their <br>withdrawal. <br>  At least nineteen municipal governments have enacted <br>analogous laws restricting purchases from companies that do <br>business in Burma.  In addition, local jurisdictions have enacted <br>similar laws relating to China, Cuba, Nigeria, and other nations. <br>2.  Federal Sanctions Against Burma <br>  Congress imposed sanctions on Burma three months after <br>Massachusetts passed the Massachusetts Burma Law.  See Foreign <br>Operations, Export Financing, and Related Programs Appropriations <br>Act, 1997,  570, 110 Stat. 3009-166 to 3009-167 (enacted by the <br>Omnibus Consolidated Appropriations Act, 1997, Pub. L. No. 104-208, <br> 101(c), 110 Stat. 3009-121 to 3009-172 (1996)) ("Federal Burma <br>Law").  The federal law provides for sanctions to remain in place <br>"[u]ntil such time as the President determines and certifies to <br>Congress that Burma has made measurable and substantial progress in <br>improving human rights practices and implementing democratic <br>government."  Id.  570(a).  The federal legislation is divided <br>into five primary parts.  First, the statute bars any "United <br>States assistance to the Government of Burma," except for <br>humanitarian assistance, assistance for anti-narcotics efforts, or <br>"assistance promoting human rights and democratic values."  Id. <br> 570(a)(1).  This first part of the statute also instructs the <br>Secretary of the Treasury to oppose any "loan or other utilization <br>of funds" by international financial institutions and bars most <br>Burmese officials from entering the United States unless required <br>by treaty.  Id.  570(a)(2), (3).  <br>  Second, the federal law authorizes the President to <br>impose conditional sanctions.  The law states:  <br>    The President is hereby authorized to prohibit, and shall <br>  prohibit United States persons from new investment in <br>  Burma, if the President determines and certifies to <br>  Congress that, after the date of enactment of this Act, <br>  the Government of Burma has physically harmed, rearrested <br>  for political acts, or exiled Daw Aung San Suu Kyi or has <br>  committed large-scale repression of or violence against <br>  the Democratic opposition.                                        <br> <br>Id.  570(b).  The law defines "new investment" to include a range <br>of activity concerning "the economical development of resources <br>located in Burma."  Id.  570(f)(2).  However, "'new investment' <br>does not include the entry into, performance of, or financing of a <br>contract to sell or purchase goods, services, or technology."  Id. <br>  Third, the federal law instructs the President to work <br>with "members of ASEAN and other countries having major trading and <br>investment interests in Burma" to develop "a comprehensive, <br>multilateral strategy to bring democracy to and improve human <br>rights practices and the quality of life in Burma, including the <br>development of a dialogue between the State Law and Order <br>Restoration Council (SLORC) and democratic opposition groups within <br>Burma."  Id.  570(c).  Fourth, the law instructs the President to <br>report to Congress on conditions in Burma and on progress made in <br>furthering a multilateral strategy.  See id.  570(d).  Fifth, the <br>law grants the President the power to waive any of the sanctions if <br>"he determines and certifies to Congress that the application of <br>such sanction would be contrary to the national security interests <br>of the United States."  Id.  570(e). <br>  In May 1997, President Clinton issued an Executive Order <br>pursuant to the Federal Burma Law imposing trade sanctions on <br>Burma.  See Exec. Order No. 13,047, 62 Fed. Reg. 28,301 (1997); see <br>also 31 C.F.R. Pt. 537 (1998) (regulations implementing sanctions <br>authorized by the President's Executive Order).  The President <br>determined and certified that <br>    for purposes of section 570(b) of the [Federal Burma <br>  Law], the Government of Burma has committed large-scale <br>  repression of the democratic opposition in Burma . . . <br>  [and] the actions and policies of the Government of Burma <br>  constitute an unusual and extraordinary threat to the <br>  national security and foreign policy of the United <br>  States. <br> <br>62 Fed. Reg. at 28,301.  The President declared "a national <br>emergency to deal with [the] threat."  Id.  The Executive Order <br>prohibited new investment, as defined by the Federal Burma Law, by <br>"United States persons" and prohibited United States persons from <br>approving or facilitating new investment in Burma by foreign <br>persons.  Id.  Like the Federal Burma Law, the Executive Order <br>explicitly exempts contracts "to sell or purchase goods, services, <br>or technology," provided such transactions are not to guarantee, <br>support, or make payments related to the development of resources <br>in Burma.  Id.  <br>3.  District Court Proceedings <br>  The NFTC, a nonprofit corporation representing member <br>companies that engage in foreign trade, filed suit on April 30, <br>1998, seeking declaratory and injunctive relief against two <br>Massachusetts officials.  The NFTC contended that the <br>Massachusetts Burma Law unconstitutionally interfered with the <br>federal foreign relations power, violated the Foreign Commerce <br>Clause, and was preempted by the Federal Burma Law. <br>  Thirty-four NFTC members are on Massachusetts's most <br>recent restricted purchase list.  Three NFTC members withdrew from <br>Burma after the passage of the Massachusetts law, citing the law as <br>the reason for their decision to cease doing business in Burma.  <br>One current NFTC member has had a bid for a procurement contract in <br>Massachusetts increased by ten percent pursuant to the law. <br>  The district court found that the Massachusetts Burma Law <br>unconstitutionally infringed on the foreign affairs power of the <br>federal government and thus granted declaratory and injunctive <br>relief.  See National Foreign Trade Council, 26 F. Supp. 2d at <br>289; National Foreign Trade Council v. Baker, No. 98-10757 (D. <br>Mass. Nov. 17, 1998) (order granting relief).  The court also found <br>that the NFTC had not met its burden of showing that the Federal <br>Burma Law preempted the Massachusetts Burma Law.  The district <br>court did not consider the NFTC's argument that the Massachusetts <br>law also violates the Foreign Commerce Clause.  See id. at 293. <br>4.  Standard of Review <br>  The district court ruled on cross-motions for summary <br>judgment, on stipulated facts and uncontested affidavits.  The <br>decision turned entirely on questions of law.  This court thus <br>reviews the district court's determinations de novo.  See Philip <br>Morris Inc. v. Harshbarger, 122 F.3d 58, 61-62 (1st Cir. 1997). <br>                                II <br>1.  The Foreign Affairs Power of the Federal Government <br>  We begin with a review of the Constitution's grant of <br>power over foreign affairs to the political branches of the federal <br>government.  The Constitution grants Congress the power "[t]o lay <br>and collect Taxes, Duties, Imposts and Excises, to pay the Debts <br>and provide for the common Defence and general Welfare of the <br>United States," U.S. Const. art. I,  8, cl. 1, "[t]o regulate <br>Commerce with foreign Nations," id. cl. 3, "[t]o establish an <br>uniform Rule of Naturalization," id. cl. 4, "[t]o define and punish <br>Piracies and Felonies committed on the high Seas, and Offences <br>against the Law of Nations," id. cl. 10, and "[t]o declare War, <br>grant Letters of Marque and Reprisal, and make Rules concerning <br>Captures on Land and Water," id. cl. 11.  In addition, "no Person <br>holding any Office of Profit or Trust under [the United States], <br>shall, without the Consent of the Congress, accept any present, <br>Emolument, Office, or Title, of any kind whatever, from any King, <br>Prince, or foreign State."  Id.  9, cl. 8.  Finally, "[t]he <br>Congress shall have Power to declare the Punishment of Treason."  <br>Id. art. III,  3, cl. 2.  <br>  The Constitution declares that the President shall be <br>Commander in Chief, id. art. II,  2, cl. 1, and, with the advice <br>and consent of the Senate, grants him the power "to make Treaties" <br>and to "appoint Ambassadors," id. cl. 2.  Additionally, the <br>President "shall receive Ambassadors and other public Ministers."  <br>Id.  3. <br>  The states are forbidden to "enter into any Treaty, <br>Alliance, or Confederation" or to "grant Letters of Marque and <br>Reprisal," id. art. I,  10, cl. 1, may not "without the Consent of <br>the Congress, lay any Imposts or Duties on Imports or Exports, <br>except what may be absolutely necessary for executing [their] <br>inspection Laws," id. cl. 2, and may not, "without the Consent of <br>Congress . . . enter into any Agreement or Compact with another <br>State, or with a foreign Power, or engage in War, unless actually <br>invaded, or in such imminent Danger as will not admit of delay," <br>id. cl. 3. <br>  The Constitution's foreign affairs provisions have been <br>long understood to stand for the principle that power over foreign <br>affairs is vested exclusively in the federal government.  James <br>Madison commented that "[i]f we are to be one nation in any <br>respect, it clearly ought to be in respect to other nations."   The <br>Federalist No. 42, at 302 (James Madison) (B.F. Wright ed., Barnes <br>& Noble Books 1996); see also id. at 303 (noting that the Articles <br>of Confederation, by failing to contain any "provision for the case <br>of offences against the law of nations," left "it in the power of <br>any indiscreet member to embroil the Confederacy with foreign <br>nations").  Alexander Hamilton, discussing state regulation of <br>foreign commerce, noted that  <br>    [t]he interfering and unneighborly regulations of some <br>  States, contrary to the true spirit of the Union, have, <br>  in different instances, given just cause of umbrage and <br>  complaint to others, and it is to be feared that examples <br>  of this nature, if not restrained by a national control, <br>  would be multiplied and extended till they became not <br>  less serious sources of animosity and discord than <br>  injurious impediments to the intercourse between the <br>  different parts of the Confederacy. <br> <br>Id. No. 22, at 192 (Alexander Hamilton); see also id. No. 45, at <br>328 (James Madison) (stating that "[t]he powers delegated by the <br>proposed Constitution to the federal government are few and <br>defined," and "will be exercised principally on external objects, <br>as war, peace, negotiation, and foreign commerce").  Justice Taney <br>echoed Madison's and Hamilton's views in Holmes v. Jennison, 39 <br>U.S. (14 Pet.) 540 (1840), commenting that "[i]t was one of the <br>main objects of the Constitution to make us, so far as regarded our <br>foreign relations, one people, and one nation."  Id. at 575 <br>(opinion of Taney, J.). <br>  Indeed, the Supreme Court has long held that "[p]ower <br>over external affairs is not shared by the States; it is vested in <br>the national government exclusively."  United States v. Pink, 315 <br>U.S. 203, 233 (1942).  In The Chinese Exclusion Case, for example, <br>the Court commented that "[f]or local interests the several States <br>of the Union exist, but for national purposes, embracing our <br>relations with foreign nationals, we are but one people, one <br>nation, one power."  Chae Chan Ping v. United States, 130 U.S. 581, <br>606 (1889).  In Hines v. Davidowitz, 312 U.S. 52 (1941), the Court <br>stated that "[o]ur system of government is such that the interest <br>of the cities, counties and states, no less than the interest of <br>the people of the whole nation, imperatively requires that federal <br>power in the field affecting foreign relations be left entirely <br>free from local interference."  Id. at 63; see also United States <br>v. Belmont, 301 U.S. 324, 331 (1937) ("[I]n respect of our foreign <br>relations generally, state lines disappear.").  As the Court <br>explained in United States v. Curtiss-Wright Export Corp., 299 U.S. <br>304 (1936), when it comes to foreign affairs, the powers of the <br>federal government are not limited: "[t]he broad statement that the <br>federal government can exercise no powers except those specifically <br>enumerated in the Constitution, and such implied powers as are <br>necessary and proper to carry into effect the enumerated powers, is <br>categorically true only in respect of our internal affairs."  Id. <br>at 315-16 (emphasis added).  <br>  Federal dominion over foreign affairs does not mean that <br>there is no role for the states. A limited role is granted by the <br>Constitution, as discussed earlier.  See Restatement (Third) of <br>Foreign Relations Law of the United States  201 reporters' note 9 <br>(commenting that "[u]nder the United States Constitution, a State <br>of the United States may make compacts or agreements with a foreign <br>power with the consent of Congress (Article I, Section 10, clause <br>2), but such agreements are limited in scope and subject matter" <br>and that "[a] State may make some agreements with foreign <br>governments without the consent of Congress so long as they do not <br>impinge upon the authority or the foreign relations of the United <br>States").  Indeed, Massachusetts itself maintains twenty-three <br>"sister state" and other bilateral agreements with sub-national <br>foreign governments and trade promotion organizations.  As one <br>learned commentator explains, some degree of state involvement in <br>foreign affairs is inevitable: "[i]n the governance of their <br>affairs, states have variously and inevitably impinged on U.S. <br>foreign relations."  L. Henkin, Foreign Affairs and the United <br>States Constitution 162 (2d ed. 1996). <br>  The central question is whether the state law runs afoul <br>of the federal foreign affairs power as interpreted by the Supreme <br>Court in Zschernig v. Miller, 389 U.S. 429 (1968), the case in <br>which the Supreme Court has most directly considered the boundaries <br>of permissible state activity in the foreign affairs context. <br>2.  The Decision in Zschernig <br>  In Zschernig, the Supreme Court invalidated an Oregon <br>statute that barred a non-resident alien from taking property by <br>testamentary disposition or succession unless he showed the <br>existence of three conditions: 1) "the existence of a reciprocal <br>right of a United States citizen to take property on the same terms <br>as a citizen or inhabitant of the [alien's] foreign country"; 2) <br>the right of United States citizens to "receive payment here of <br>funds from estates in the foreign country"; and 3) "the right of <br>the foreign heirs to receive the proceeds of Oregon estates <br>'without confiscation.'"  Id. at 430-31 (quoting Ore. Rev. Stat.  <br>111.070 (1957)).  If these requirements were not fulfilled and <br>there were no other heirs, the Oregon property would escheat to the <br>state.  In Zschernig, the sole heirs to the estate of an Oregon <br>resident who had died intestate in 1962 were residents of East <br>Germany, and thus Oregon's State Land Board had petitioned for the <br>escheat of the proceeds of the estate.  See id. at 430.  The Court <br>held that the statute was "an intrusion by [Oregon] into the field <br>of foreign affairs which the Constitution entrusts to the President <br>and the Congress."  Id. at 432.   <br>  The Zschernig Court distinguished the law at issue from <br>a similar California statute previously upheld in Clark v. Allen, <br>331 U.S. 503 (1947).  The California statute was upheld against a <br>facial challenge.  In contrast, the challenge to the Oregon statute <br>involved "the manner of its application."  Zschernig, 389 U.S. at <br>433.  The Supreme Court stated in Zschernig that "[h]ad [Clark] <br>appeared in the posture of the present [case], a different result <br>would have obtained."  Id.  As the Court explained, the problem <br>with the Oregon law was not that it required courts to inquire into <br>foreign law -- for "[s]tate courts, of course, must frequently <br>read, construe, and apply laws of foreign nations," id., but was <br>rather that probate courts had used the reciprocity requirement to <br>"launch[] inquiries into the type of governments that obtain in <br>particular foreign nations," id. at 434.  The Oregon statute had <br>"led into minute inquiries concerning the actual administration of <br>foreign law, into the credibility of foreign diplomatic statements, <br>and into speculation whether the fact that some received delivery <br>of funds should not preclude wonderment as to how many may have <br>been denied the right to receive."  Id. at 435 (internal quotation <br>marks omitted).  Such evaluations "affect[] international relations <br>in a persistent and subtle way," the Court found, and thus "may <br>well adversely affect the power of the central government to deal <br>with" problems of international relations.  Id. at 440-41. <br>  The district court found the Massachusetts Burma Law <br>invalid under Zschernig.  The court interpreted Zschernig to stand <br>for the proposition that "states and municipalities must yield to <br>the federal government when their actions affect significant issues <br>of foreign policy."  National Foreign Trade Council, 26 F. Supp. 2d <br>at 291.  The court stated that because the Massachusetts law "has <br>more than an 'indirect or incidental effect in foreign countries,'" <br>and has a "'great potential for disruption or embarrassment,'" it <br>unconstitutionally infringes on the federal government's foreign <br>affairs power.  Id. (quoting Zschernig, 389 U.S. at 434-35).  The <br>district court noted that the law was enacted solely to sanction <br>Burma so as to pressure the Burmese government to change its <br>domestic policies, and that the views of the European Union and <br>ASEAN demonstrated that the law was having a "disruptive impact on <br>foreign relations."  Id. <br>  The precise boundaries of the Supreme Court's holding in <br>Zschernig are unclear.  Nonetheless, we agree with the district <br>court that the Massachusetts Burma Law is unconstitutional under <br>Zschernig.  Because the parties' arguments raise issues of first <br>impression, we consider these arguments in detail. <br>  Massachusetts's arguments that the district court erred <br>can be divided into two lines of attack.  First, Massachusetts <br>attempts to distinguish the facts in Zschernig from the facts of <br>this case, and to argue that the Zschernig Court recognized the <br>need to balance state interests against possible harm resulting <br>from state intrusion in foreign affairs.  This balance, says <br>Massachusetts, weighs in favor of the Massachusetts law being found <br>constitutional.  Second, Massachusetts in effect argues that <br>Zschernig is weak precedent.  In particular, Massachusetts contends <br>that the Supreme Court's decision in Barclays Bank PLC v. Franchise <br>Tax Board, 512 U.S. 298 (1994), demonstrates that the Supreme <br>Court's holding in Zschernig is limited.  The NFTC, in turn, <br>contends that the Massachusetts Burma Law constitutes far greater <br>interference in foreign affairs than did the law under attack in <br>Zschernig, and argues that Massachusetts is in effect asking this <br>court to overrule Zschernig. <br>  First, Massachusetts attempts to distinguish Zschernig by <br>arguing that the Court struck down the Oregon law as applied, and <br>did not question the ability of states to enact laws that <br>indirectly affect foreign affairs.  Massachusetts argues that its <br>law does not entail nearly the degree of ongoing scrutiny or <br>criticism of foreign government action by the state that the Oregon <br>law entailed.  Massachusetts contends that Zschernig left intact <br>the holding in Clark, although the law there was also designed to <br>influence the behavior of foreign countries.  Indeed, Clark <br>expressly stated that the fact that a state law has "incidental or <br>indirect effect in foreign countries" does not make the law <br>invalid.  Clark, 331 U.S. at 517.  According to Massachusetts, the <br>district court incorrectly read Zschernig to stand for the <br>proposition that a state law that goes beyond an incidental or <br>indirect effect on foreign affairs is impermissible, and Zschernig <br>instead stands for the proposition that courts must weigh the <br>degree of impact against the particular state interest at issue. <br>  Massachusetts further argues that its law is concerned <br>with expressing its moral views regarding conditions in Burma, that <br>its desire to disassociate Massachusetts from Burma's human rights <br>violations is a valid purpose of the law, and that Massachusetts <br>would have enacted the law regardless of whether it believed that <br>the law would result in change in Burma. <br>  Massachusetts's arguments fail under Zschernig.  The <br>Massachusetts Burma Law clearly has more than an "incidental or <br>indirect effect in foreign countries."  We do not read Zschernig as <br>instructing courts to balance the nation's interests in a unified <br>foreign policy against the particular interests of an individual <br>state.  Instead, Zschernig stands for the principle that there is <br>a threshold level of involvement in and impact on foreign affairs <br>which the states may not exceed.  As Zschernig stated: <br>    The several States, of course, have traditionally <br>  regulated the descent and distribution of estates.  But <br>  those regulations must give way if they impair the <br>  effective exercise of the Nation's foreign policy.  Where <br>  those laws conflict with a treaty, they must bow to the <br>  superior federal policy.  Yet, even in absence of a <br>  treaty, a State's policy may disturb foreign relations. <br> <br>Id. at 440-41 (emphasis added) (citations omitted).  Zschernig did <br>not hold, as Massachusetts argues, that a sufficiently strong state <br>interest could make lawful an otherwise impermissible intrusion <br>into the federal government's foreign affairs power. <br>  Massachusetts makes another preliminary argument which we <br>reject.  It attempts to distinguish the instant case from Zschernig <br>based on the level and frequency of scrutiny that the Massachusetts <br>law entails.  This argument is largely beside the point.  Further, <br>the argument fails even on its own terms.  It is beside the point <br>because the effect of the law is not measured solely by the level <br>or frequency of scrutiny.  Every decision by a company to withdraw <br>from or not seek new business in Burma has an ongoing impact every <br>bit as corrosive as scrutiny.  Massachusetts correctly notes that <br>its courts are not engaging in ongoing evaluations of the situation <br>in Burma; nor does the law permit or encourage such inquiries.  Yet <br>while the statute itself creates no mechanism for the Massachusetts <br>courts or legislature to evaluate conditions in Burma on an ongoing <br>basis, the law quite clearly establishes ongoing scrutiny.  The <br>Massachusetts law creates a mechanism for ongoing investigation <br>into whether companies are doing business with Burma: every time a <br>firm bids for a Massachusetts procurement contract, Massachusetts <br>inquires into whether that firm does business in Burma.  The <br>scrutiny involved here is not of human rights conditions alone.  By <br>investigating whether certain companies are doing business with <br>Burma, Massachusetts is evaluating developments abroad in a manner <br>akin to the Oregon probate courts in Zschernig.  <br>  The conclusion that the Massachusetts law has more than <br>an incidental or indirect effect on foreign relations is dictated <br>by the combination of factors present here: (1) the design and <br>intent of the law is to affect the affairs of a foreign country; <br>(2) Massachusetts, with its $2 billion in total annual purchasing <br>power by scores of state authorities and agencies, is in a position <br>to effectuate that design and intent and has had an effect; (3) the <br>effects of the law may well be magnified should Massachusetts  <br>prove to be a bellwether for other states (and other governments); <br>(4) the law has resulted in serious protests from other countries, <br>ASEAN, and the European Union; and (5) Massachusetts has chosen a <br>course divergent in at least five ways from the federal law, thus <br>raising the prospect of embarrassment for the country. <br>  Our discussion of the facts demonstrates the first two of <br>these factors; the fifth factor is discussed in our preemption <br>analysis later in this opinion.  We turn to the third and fourth <br>factors.  <br>  The threat to federal foreign affairs power is magnified <br>when Massachusetts is viewed as part of a broader pattern of state <br>and local intrusion.  Under Zschernig, the effect of state and <br>local laws should not be considered in isolation; rather, courts <br>must consider the combined effects of similar laws in numerous <br>jurisdictions.  In determining whether the Oregon law was likely to <br>have a significant effect on the nation's foreign affairs, the <br>Supreme Court noted that "[i]t now appears that in this reciprocity <br>area under inheritance statutes, the probate courts of various <br>States have launched inquiries into the type of governments that <br>obtain in particular foreign nations."  Id. at 433-34.  <br>Massachusetts is not alone in its views regarding Burma and there <br>is great potential for the proliferation of similar statutes.  Many <br>municipalities have passed laws akin to the Massachusetts Burma <br>Law, whether targeting Burma or some other country with disfavored <br>policies, and amici inform us that other states and large cities <br>are waiting in the wings.  This country has, we are told, 39,000 <br>governments at levels other than the federal government, some <br>twenty of which have participated in the briefs amici curiae here. <br>  We also consider the protests received from this <br>country's allies and trading partners.  A European Union official <br>stated that the Massachusetts Burma Law is "an attack on <br>international law."  An ASEAN official commented that ASEAN is <br>"dismayed by this trend [of sub-national laws targeting Burma], <br>because you cannot negotiate with states and provinces."  We reject <br>Massachusetts's claim that we should ignore the fact that foreign <br>nations have objected to the Massachusetts Burma Law.  In <br>Zschernig, the Supreme Court expressly cited Bulgaria's objections <br>to the Oregon law as evidence of the fact that the law was <br>affecting foreign relations.  See id. at 436-37, 437 n.7.  The <br>Zschernig Court also noted the "great potential for disruption or <br>embarrassment" caused by the Oregon law.  Id. at 435.  The protests <br>of America's trading partners are evidence of the great potential <br>for disruption or embarrassment caused by the Massachusetts law.   <br>  Massachusetts points to two sources to support its claim <br>that, when examining whether a state or local law intrudes on the <br>federal government's foreign affairs power, United States courts <br>should simply ignore foreign government objections.  First, <br>Massachusetts notes that the federal law implementing the Uruguay <br>Round of the General Agreement on Tariffs and Trade (GATT) denies <br>foreign governments and private persons the right to challenge <br>state laws based on the GATT.  See Uruguay Round Agreements Act, <br>Pub. L. No. 103-465.  102, 108 Stat. 4809, 4815-19 (1994) <br>(codified at 19 U.S.C.  3512 (West Supp. 1999)).  Massachusetts <br>contends that, given this provision, objections from foreign states <br>to the Massachusetts law should not be considered.  This argument <br>is inapposite: this action has not been brought pursuant to the <br>GATT or any World Trade Organization agreement, and the NFTC does <br>not argue that the law should be invalidated because of a conflict <br>with any international trade agreement or treaty. <br>  Second, Massachusetts claims that Barclays rejected <br>reliance on the views of our trading partners.  We disagree with <br>Massachusetts's interpretation of Barclays.  Setting aside our <br>view, discussed further below, that Barclays does not apply outside <br>the context of Commerce Clause challenges to laws that do not <br>target specific foreign nations or foreign commerce, Barclays does <br>not stand for the proposition that courts should ignore foreign <br>government objections.  While the Supreme Court in Barclays found <br>foreign government views to be unpersuasive, it did not ignore such <br>views.  See Barclays, 512 U.S. at 324 n.22, 327-28.  The message of <br>Barclays is thus consistent with Zschernig: foreign government <br>views, although not dispositive, are one factor to consider in <br>determining whether a law impermissibly interferes with the federal <br>government's foreign affairs power. <br>  The preemption analysis later in this opinion outlines <br>the inconsistencies and conflicts between the Massachusetts Burma <br>Law and the Federal Burma Law.  The point for Zschernig purposes is <br>distinct.  The Massachusetts law presents a threat of embarrassment <br>to the country's conduct of foreign relations regarding Burma, and <br>in particular to the strategy that the Congress and the President <br>have chosen to exercise.  That significant potential for <br>embarrassment, together with the other factors listed above, drives <br>the conclusion that the Massachusetts Burma Law has more than an <br>"incidental or indirect effect" and so is an impermissible <br>intrusion into the foreign affairs power of the national <br>government.  <br>3.  Applications of Zschernig <br>  Our approach to this case is largely consistent with that <br>taken by the few other courts that have considered challenges to <br>state and local laws brought under Zschernig.  These cases have <br>generally fallen into two categories: challenges to the application <br>of laws targeting specific foreign states, most often South Africa, <br>and challenges to state "buy-American" laws.  <br>  In New York Times Co. v. City of New York Commission on <br>Human Rights, 361 N.E.2d 963 (N.Y. 1977), the court found that New <br>York could not apply local anti-discrimination laws to prohibit the <br>New York Times from carrying an advertisement for employment <br>opportunities in South Africa.  Under Zschernig, the court said <br>that "[e]ven longstanding state regulation of traditional fields of <br>law . . . must fall by the wayside if enforcement of State <br>regulations would 'impair the effective exercise of the Nation's <br>foreign policy.'"  Id. at 968 (quoting Zschernig, 389 U.S. at 440).  <br>Similarly, in Springfield Rare Coin Galleries, Inc. v. Johnson, 503 <br>N.E.2d 300 (Ill. 1986), the Illinois Supreme Court invalidated a <br>state statute that had excluded South African coins from state tax <br>exemptions applying to coins and currency issued by all other <br>nations.  The court found that the "sole motivation [for the law] <br>was disapproval of a nation's policies" and that the legislation <br>effectively "impose[d], or at least encourage[d], an economic <br>boycott of the South African Krugerrand," and thus was "outside the <br>realm of permissible state activity."  Id. at 307; see also Tayyari <br>v. New Mexico State Univ., 495 F. Supp. 1365, 1376-80 (D.N.M. 1980) <br>(finding that a state university's decision to bar admission or <br>readmission of Iranian students could affect international <br>relations and thus was impermissible). <br>  In contrast, in Board of Trustees of the Employees' <br>Retirement System of Baltimore v.  Mayor and City Council of <br>Baltimore, 562 A.2d 720 (Md. 1989), cert. denied, 493 U.S. 1093 <br>(1990), the Maryland Court of Appeals found that Baltimore <br>ordinances requiring city pension funds to divest their holdings <br>from companies engaged in business in South Africa were not <br>unconstitutional under Zschernig.  The court thought Zschernig <br>"circumscribes, but apparently does not eliminate, a state's <br>ability under certain circumstances to take actions involving <br>substantive judgments about foreign nations."  Id. at 746.  <br>Massachusetts relies heavily on the decision in Board of Trustees, <br>attempting to distinguish between Baltimore's decisions regarding <br>how to invest the city's funds and the laws struck down in New York <br>Times Co. and Springfield Rare Coin Galleries, Inc., which were <br>designed to regulate private conduct.  The district court correctly <br>distinguished Board of Trustees as involving quite different facts, <br>see National Foreign Trade Council, 26 F. Supp. 2d at 291-92, and <br>the NFTC urges this court to do the same.  Board of Trustees, <br>whether rightly or wrongly decided, does not alter our decision <br>that the Massachusetts Burma Law, by targeting a foreign country, <br>monitoring investment in that country, and attempting to limit <br>private interactions with that country, goes far beyond the limits <br>of permissible regulation under Zschernig. <br>  Courts have also split on whether state buy-American <br>statutes are unconstitutional under  Zschernig.  In Bethlehem Steel <br>Corp. v. Board of Commissioners, 80 Cal. Rptr. 800 (Ct. App. 2d <br>Dist. 1969), the court invalidated the California Buy American Act <br>as "an unconstitutional encroachment upon the federal government's <br>exclusive power over foreign affairs," id. at 802, and noted that <br>the fact that "there are countervailing state policies which are <br>served by the retention of such an Act is 'wholly irrelevant,'"  <br>id. at 803 (quoting Pink, 315 U.S. at  233).  In contrast, in <br>Trojan Technologies, Inc. v. Pennsylvania, 916 F.2d 903 (3d Cir. <br>1990), cert. denied, 501 U.S. 1212 (1991), and K.S.B. Technical <br>Sales Corp. v. North Jersey District Water Supply Commission, 381 <br>A.2d 774 (N.J. 1977), courts upheld buy-American statutes at least <br>in part because such statutes did not require state governments to <br>evaluate the policies of foreign nations, and because the laws <br>treated all foreign states in the same fashion.  See Trojan Techs., <br>916 F.2d at 913-914; K.S.B. Technical Sales Corp., 381 A.2d at 782- <br>84.  Thus, in Trojan Technologies, the Third Circuit upheld a <br>Pennsylvania buy-American statute because the law "provides no <br>opportunity for state administrative officials or judges to comment <br>on, let alone key their decisions to, the nature of foreign <br>regimes" and because there was no "indication from the record that <br>the statute [had] been selectively applied according to the foreign <br>policy attitudes of Commonwealth courts or the Commonwealth's <br>Attorney General."  Trojan Techs., 916 F.2d at 913.   <br>  As the district court correctly noted, see National <br>Foreign Trade Council, 26 F. Supp. 2d at 292, K.S.B. Technical <br>Sales Corp. and Trojan Technologies both involved laws that did not <br>single out or evaluate any particular foreign state, and did not <br>involve state evaluations of political conditions abroad.  In <br>contrast, the Massachusetts Burma Law is aimed at a specific <br>foreign state and has more than incidental effects. <br>4.  Subsequent Supreme Court Decisions and Zschernig <br>  Massachusetts's second line of attack against the <br>district court's ruling is that Supreme Court decisions subsequent <br>to Zschernig, in particular the Barclays decision, demonstrate that <br>Zschernig is so limited as not to invalidate the statute.  <br>Massachusetts relies on both the language of Barclays and on the <br>views of some academic commentators to argue that Zschernig is or <br>should be treated as a highly limited holding. <br>  a.  Subsequent Supreme Court References to Zschernig <br>  Zschernig remains "[t]he only case in which the Supreme <br>Court has struck down a state statute as violative of the foreign <br>affairs power" of the federal government.  International Ass'n of <br>Indep. Tanker Owners v. Locke, 148 F.3d 1053, 1069 (9th Cir. 1998), <br>petition for cert. filed, 67 U.S.L.W. 3671 (U.S. Apr. 23, 1999) <br>(No. 98-1706).  Subsequent Supreme Court decisions have done little <br>to clarify the reach of the Court's holding in Zschernig.  Most <br>often the Court has cited the case for the proposition that the <br>federal government's powers over foreign affairs are plenary, or <br>for the proposition that cases in United States courts that involve <br>foreign sovereigns raise sensitive issues of foreign affairs.  See, <br>e.g., Hillsborough County v. Automated Med. Lab., Inc., 471 U.S. <br>707, 719 (1985); Verlinden B.V. v. Central Bank of Nigeria, 461 <br>U.S. 480, 493 (1983) ("Actions against foreign sovereigns in our <br>courts raise sensitive issues concerning the foreign relations of <br>the United States, and the primacy of federal concerns is <br>evident."); see also Dennis v. Higgins, 498 U.S. 439, 463 (1991) <br>(Kennedy, J., dissenting).  In First National City Bank v. Banco <br>Nacional de Cuba, 406 U.S. 759 (1972), involving the application of <br>the act of state doctrine, the plurality distinguished Zschernig by <br>noting that in Zschernig "the Court struck down an Oregon statute <br>that was held to be 'an intrusion by the State into the field of <br>foreign affairs which the Constitution entrusts to the President <br>and the Congress.'"  Id. at 765 (plurality opinion of Rehnquist, <br>J.) (quoting Zschernig, 389 U.S. at 432).  No decision by the Court <br>citing Zschernig suggests that it is not binding. <br>  b.  The Effect of Barclays <br>  Massachusetts argues that this court should nonetheless <br>look to Barclays.  Barclays, however, did not consider the reach of <br>the foreign affairs power and did not cite Zschernig.  See <br>Barclays, 512 U.S. at 301-31.  <br>  In Barclays, the Court upheld California's corporate tax <br>system against Commerce Clause and due process challenges to its <br>worldwide combined reporting requirement.  Petitioner Barclays had <br>argued that the system burdened foreign-based multinationals; <br>Barclays had also argued that the law impeded the federal <br>government's ability to "speak with one voice when regulating <br>commercial relations with foreign governments."  Id. at 302-03 <br>(quoting Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, <br>449 (1979)) (internal quotation marks omitted).   <br>  The Barclays Court reaffirmed that, in addition to the <br>ordinary domestic commerce clause analysis set forth in Complete <br>Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977), state <br>regulation of foreign commerce raises two additional concerns: <br>first, an "enhanced risk of multiple taxation," Barclays, 512 U.S. <br>at 311 (quoting Container Corp. of Am. v. Franchise Tax Bd., 463 <br>U.S. 159, 185 (1983)) (internal quotation marks omitted), and <br>second, the risk of harm to the "Federal Government's capacity to <br>speak with one voice when regulating commercial relations with <br>foreign governments," id.  (quoting Japan Line, 441 U.S. at 449) <br>(internal quotation marks omitted).  In the absence of a <br>congressional or presidential assertion that the challenged <br>California law violated federal policy, however, the Court could <br>not "conclude that 'the foreign policy of the United States -- <br>whose nuances . . . are much more the province of the Executive <br>Branch and Congress than of this Court -- is [so] seriously <br>threatened' by California's practice as to warrant our <br>intervention."  Barclays, 512 U.S. at 327 (alteration in original) <br>(citation omitted) (quoting Container Corp., 463 U.S. at 196).  <br>  Barclays also reaffirmed that recognition of the <br>importance of the federal government's ability to speak with one <br>voice on foreign affairs does not mean that Congress must act, or <br>that the states can never act, in a particular area.  See id. at <br>329.  As the Court commented in Wardair Canada Inc. v. Florida <br>Department of Revenue, 477 U.S. 1 (1986), where it similarly found <br>that a state tax law did not impede the ability of the federal <br>government to speak with one voice, <br>    [b]y negative implication . . . the United States has at <br>  least acquiesced in state taxation of fuel used by <br>  foreign carriers in international travel. . . . [T]he <br>  Federal Government is entitled in its wisdom to act to <br>  permit the States varying degrees of regulatory <br>  authority. <br>      . . . [W]e never suggested in [Japan Line] or in <br>  any other [case] that the Foreign Commerce Clause insists <br>  that the Federal Government speak with any particular <br>  voice. <br> <br>Id. at 12-13 (emphasis in original). <br>  Massachusetts contends that Barclays means that only <br>Congress, not the courts, should ever determine whether a state law <br>interferes with the foreign affairs power of the federal <br>government.  This argument echoes academic debate over whether <br>Barclays undercuts Zschernig or not.  <br>  Scholarly debate about the continuing viability of a <br>Supreme Court opinion does not, of course, excuse the lower federal <br>courts from applying that opinion.  We need not delve into the <br>merits of the academic debate over Barclays in order to resolve <br>this case.  We do not view Barclays as having the impact in the <br>foreign affairs power analysis that Massachusetts contends it has, <br>for at least two reasons.  First, Barclays did not involve a state <br>law that targeted any foreign nation or nations, and there was no <br>claim in the case that California was engaging in foreign policy <br>via its tax system; the case involved claims only that the <br>California law violated the Commerce and Due Process clauses.  See <br>Barclays, 512 U.S. at 302-03.  The Court's discussion of <br>congressional inaction came only in the context of an examination <br>of the "speak with one voice" prong of the Foreign Commerce Clause <br>analysis, a prong that the court reached only after concluding that <br>the law was not otherwise unconstitutional.  See id. at 320-30.  In <br>contrast, the present case involves a law impacting one foreign <br>nation, and a claim that the Massachusetts law violates the foreign <br>affairs power of the federal government.  Second, the Supreme Court <br>did not cite to Zschernig in Barclays, thus keeping separate the <br>analyses that apply when examining laws under the Foreign Commerce <br>Clause and under the foreign affairs power.  This is particularly <br>so given that the parties in Barclays cited Zschernig to the Court <br>in their briefs and at oral argument.  In sum, there is simply no <br>indication, in Barclays or in any other post-Zschernig case, that <br>Zschernig is not good law and is not binding on us.  As this court <br>explained in Figueroa v. Rivera, 147 F.3d 77 (1st Cir. 1998), the <br>Supreme Court "has admonished the lower federal courts to follow <br>its directly applicable precedent, even if that precedent appears <br>weakened by pronouncements in its subsequent decisions, and to <br>leave to the Court 'the prerogative of overruling its own <br>decisions.'"  Id. at 81 n.3 (quoting Agostini v. Felton, 521 U.S. <br>203, 237 (1997)). <br>5.  Additional Arguments Regarding the Foreign Affairs Power <br>    a.  There is No Market Participant Exception to the <br>              Foreign Affairs Power <br> <br>   Massachusetts suggests that, even if its interpretation <br>of Barclays and Zschernig is incorrect, the Massachusetts Burma Law <br>can be upheld by applying a market participant exception.  This is <br>a novel argument.  Massachusetts contends that the market <br>participant exception to the dormant domestic Commerce Clause <br>should be extended both to the Foreign Commerce Clause -- an <br>extension that the Supreme Court has never made -- and from there <br>to the foreign affairs power.  Even assuming that Massachusetts is <br>acting as a market participant (and not exercising its police or <br>regulatory powers) and that the market participant exception <br>applies to the Foreign Commerce Clause, we find no support for <br>Massachusetts's contention that the exception should shield its law <br>from challenges brought under the federal foreign affairs power as <br>interpreted in Zschernig.   <br>  Massachusetts provides little support for its argument, <br>citing no case which has ever accepted it.  Massachusetts contends <br>that in The Federalist the Framers were concerned with state <br>regulatory action that infringed on foreign affairs, not state <br>proprietary action.  The same rationales that support the market <br>participant exception in dormant domestic Commerce Clause <br>jurisprudence, Massachusetts insists, support extension of the <br>exception to claims under the foreign affairs power. <br>  Massachusetts also relies on a 1986 Department of Justice <br>advisory opinion concerning the constitutionality of state and <br>local statutes regarding divestment from South Africa.  See 10 Op. <br>Off. Legal Counsel 49 (1986).  The opinion argues that "[t]he <br>historical rationale for the general federal power over foreign <br>affairs does not imply the displacement of state proprietary <br>power," and that "[b]ecause states . . . possessed proprietary <br>powers at the time of the Constitution, these powers should not be <br>displaced unless they are prohibited by a specific limitation <br>imposed by the Constitution or federal legislation passed pursuant <br>to a constitutional grant of power to the federal government."  Id. <br>at 63-64.  This view directly contradicts the Supreme Court's <br>repeated statements that the federal government's foreign affairs <br>power is not limited.  Zschernig makes clear that, by necessary <br>implication, the federal government's foreign affairs power exceeds <br>the power expressly granted in the text of the Constitution, and <br>that state action, even in traditional areas of state concern, must <br>yield to the federal power when such state action has more than an <br>indirect effect on the nation's own foreign policy.  Nothing in <br>Zschernig or in the Supreme Court's market participant caselaw <br>supports Massachusetts's argument.  The Supreme Court has already <br>rejected one attempt to extend the market participation doctrine to <br>constitutional provisions other than the domestic Commerce Clause.  <br>See United Bldg. & Constr. Trades Council v. Mayor & Council of <br>Camden, 465 U.S. 208, 219-20 (1984) (stating that the "distinction <br>between market participant and market regulator relied upon in <br>[domestic Commerce Clause caselaw] to dispose of the Commerce <br>Clause challenge is not dispositive" of a claim brought under the <br>Privileges and Immunities Clause, because "[t]he two Clauses have <br>different aims and set different standards for state conduct").    <br>  b. The Tenth Amendment Does Not Insulate the <br>              Massachusetts Burma Law from Constitutional Scrutiny <br> <br>  Massachusetts also suggests in passing that its law <br>should be protected by the Tenth Amendment, or that the Tenth <br>Amendment, at the least, indicates that strong state interests are <br>at stake here.  To the extent that Massachusetts intended to assert <br>a direct Tenth Amendment claim, that claim is waived.  It would <br>not suffice in any event.  Massachusetts suggests that the Tenth <br>Amendment prevents the courts and Congress from imposing regulatory <br>burdens on the states that are not borne by private persons, and <br>that states cannot be compelled to administer a federal regulatory <br>program.  Cf. Printz v. United States, 117 S. Ct. 2365, 2384 <br>(1997); New York v. United States, 505 U.S. 144, 178-80 (1992).  <br>Massachusetts argues that the effect of the district court decision <br>is to compel Massachusetts to engage in commerce with members of <br>the NFTC.  These arguments miss their mark: even if Massachusetts <br>were being compelled to deal with firms that do business in Burma, <br>such compulsion is not similar to the federal government compulsion <br>of states found impermissible in New York and Printz. <br>  Massachusetts also contends that a state's purchasing <br>decisions "lie[] at the core of state sovereignty" and thus fall <br>within the area protected by the Tenth Amendment, and that the <br>Massachusetts law is an "expression of a moral position on an <br>important issue of public policy."  We do not view these arguments <br>as distinct from Massachusetts's claim that the law reflects <br>important state interests that, under Zschernig, must be balanced <br>against the federal government's foreign affairs power.  Even where <br>they exist, strong state interests do not make an otherwise <br>unconstitutional law constitutional. <br>    c.  The Massachusetts Burma Law is Not Shielded by the   <br>      First Amendment <br> <br>  Massachusetts also argues that, regardless of the effect <br>of Zschernig on the Massachusetts Burma Law, the law is protected <br>by the First Amendment.  At oral argument, Massachusetts stated <br>that it is not actually contending that the First Amendment <br>protects its law or that the Commonwealth has First Amendment <br>rights.  Instead, Massachusetts argues that First Amendment values <br>should weigh in favor of a finding that Massachusetts has <br>significant interests at stake here, interests that should be <br>considered under Zschernig.  Although a few district courts in <br>other circuits have found that local governments do have First <br>Amendment rights, see, e.g., County of Suffolk v. Long Island <br>Lighting Co., 710 F. Supp. 1387, 1390 (E.D.N.Y. 1989), aff'd, 907 <br>F.2d 1295 (2d Cir. 1990), the First Circuit has expressed doubt, <br>holding that a legal services office of a state university lacks <br>such rights and saying that "a state entity[] itself has no First <br>Amendment rights," Student Gov't Ass'n v. Board of Trustees, 868 <br>F.2d 473, 481 (1st Cir. 1989).  Nothing in Zschernig suggests that <br>a state government's First Amendment interests, if any, should <br>weigh into a consideration of whether a state has impermissibly <br>interfered with the federal government's foreign affairs power. <br>                               III <br>  The foreign affairs power is, of course, not the only <br>aspect of the Constitution at work in the foreign affairs arena.  <br>In addition to the foreign affairs power, the Commerce Clause <br>grants Congress the power "[t]o regulate Commerce with foreign <br>Nations, and among the several States."  U.S. Const. art. I,  8, <br>cl. 3.  "It has long been understood, as well, to provide <br>'protection from state legislation inimical to the national <br>commerce [even] where Congress has not acted . . . .'"  Barclays, <br>512 U.S. at 310 (alterations in original) (quoting Southern Pac. <br>Co. v. Arizona ex rel. Sullivan, 325 U.S. 761, 769 (1945)).  The <br>NFTC argues that, regardless of whether the Massachusetts Burma Law <br>violates the foreign affairs power, the law violates the dormant <br>Commerce Clause.  Massachusetts responds that it is a market <br>participant, and that the market participant exception that the <br>Supreme Court has recognized in its dormant domestic Commerce <br>Clause analysis should be applied to the Foreign Commerce Clause.  <br>Even if the exception does not apply, Massachusetts further <br>contends, the law still does not violate the Foreign Commerce <br>Clause.  The district court did not reach these arguments.  See <br>National Foreign Trade Council, 26 F. Supp. 2d at 293.   <br>  We examine these claims in three stages.  First, applying <br>dormant domestic Commerce Clause caselaw, we find that <br>Massachusetts is not a market participant when it acts pursuant to <br>the Massachusetts Burma Law.  Second, we examine whether, in any <br>event, the market participant exception should be extended to the <br>Foreign Commerce Clause.  Third, we find that the Massachusetts law <br>violates the Foreign Commerce Clause.  <br>1.  Massachusetts is Not Acting as a Market Participant <br>  Massachusetts says that it is exempt from any Foreign <br>Commerce Clause scrutiny because it is a market participant and not <br>a market regulator.  Massachusetts relies on the Supreme Court's <br>domestic Commerce Clause decisions in White v. Massachusetts <br>Council of Construction Employers, Inc., 460 U.S. 204 (1983), <br>Reeves, Inc. v. Stake, 447 U.S. 429 (1980), and Hughes v. <br>Alexandria Scrap Corp., 426 U.S. 794 (1976).  These cases establish <br>that "if a State is acting as a market participant, rather than as <br>a market regulator, the dormant Commerce Clause places no <br>limitation on its activities."  South-Central Timber Dev., Inc. v. <br>Wunnicke, 467 U.S. 82, 93 (1984) (plurality opinion of White, J.); <br>see also White, 460 U.S. at 214-15; Reeves, 447 U.S. at 436-37; <br>Alexandria Scrap, 426 U.S. at 810.  We will assume arguendo that <br>there is a market participant exception under the Foreign Commerce <br>Clause and test whether Massachusetts is acting as a market <br>participant or as a market regulator. <br>  Even applying domestic market participant doctrine in <br>this context, we hold that Massachusetts has not acted as a mere <br>market participant.  The Supreme Court first recognized the <br>domestic market participant exception in Alexandria Scrap, <br>upholding a Maryland law that imposed extra documentation <br>requirements on out-of-state processors of scrap metal who sought <br>to receive bounties from the state for converting junk cars into <br>scrap.  See Alexandria Scrap, 426 U.S. at 800-01, 814.  In Reeves, <br>the Court upheld South Dakota's decision to sell cement from a <br>state-owned plant only to state residents during a cement shortage.  <br>See Reeves, 447 U.S. at 432-34, 446-47.  The cases bearing most <br>directly on the issue here are the Supreme Court's subsequent <br>decisions in White, South-Central Timber, and Camps <br>Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564 (1997). <br>  In White, the Supreme Court upheld against a domestic <br>Commerce Clause challenge a mayoral order that required at least <br>half of the workforce to be Boston residents on projects funded <br>partially or entirely by Boston city funds.  The Court commented <br>that there was no evidence that the executive order in question was <br>an "'attempt to force virtually all businesses that benefit in some <br>way from the economic ripple effect' of the city's decision to <br>enter into contracts for construction projects 'to bias their <br>employment practices in favor of the [city's] residents.'"  White, <br>460 U.S. at 211 (alteration in original) (quoting Hicklin v. <br>Orbeck, 437 U.S. 518, 531 (1978)).  <br>  In South-Central Timber, the Supreme Court held that the <br>domestic market participant doctrine has limits.  The Court held <br>that the state of Alaska, as a seller of timber, could not require <br>that timber from state lands be processed within the state before <br>being exported, and said that the market participant doctrine does <br>not permit a state to impose extensive conditions on firms with <br>which the state does business: "Although the Court in Reeves did <br>strongly endorse the right of a State to deal with whomever it <br>chooses when it participates in the market, it did not -- and did <br>not purport to -- sanction the imposition of any terms that the <br>State might desire."  South-Central Timber, 467 U.S. at 95-96 <br>(plurality opinion of White, J.).  The plurality added that the <br>"doctrine is not carte blanche to impose any conditions that the <br>State has the economic power to dictate, and does not validate any <br>requirement merely because the State imposes it upon someone with <br>whom it is in contractual privity."  Id. at 97.  The plurality <br>noted that Alaska was not just participating in the market, for <br>"the seller usually has no say over, and no interest in, how the <br>product is to be used after sale," id. at 96, and that "[u]nless <br>the 'market' [in the market participation doctrine] is relatively <br>narrowly defined, the doctrine has the potential of swallowing up <br>the rule that States may not impose substantial burdens on <br>interstate commerce even if they act with the permissible state <br>purpose of fostering local industry," id. at 97-98.  "In sum, the <br>State may not avail itself of the market-participant doctrine to <br>immunize its downstream regulation of [a] market in which it is not <br>a participant."  Id. at 99. <br>  More recently, in Camps Newfound/Owatonna, the Court <br>again rejected an attempt to use the market participant exception <br>to shield state conduct from domestic Commerce Clause scrutiny.  <br>The Court said that the market participant exception is a narrow <br>one, noting that Reeves and Alexandria Scrap both involved "a <br>discrete activity focused on a single industry."  Camps <br>Newfound/Owatonna, Inc., 520 U.S. at 594.  The Court invalidated a <br>Maine statute that granted more limited tax benefits to non-profit <br>organizations largely serving non-residents than to organizations <br>primarily serving Maine residents.  See id. at 567-69, 594-95.  The <br>Court warned against an expansion of the market participant <br>exception that "would swallow the rule against discriminatory tax <br>schemes."  Id. at 594.  Maine's tax exemption, it said, "must be <br>viewed as action taken in the State's sovereign capacity rather <br>than a proprietary decision to make an entry into all of the <br>markets in which the exempted charities function."  Id. <br>  We find that in enacting the Massachusetts Burma Law the <br>Commonwealth has crossed over the line from market participant to <br>market regulator.  Massachusetts contends that its law is akin to <br>the Boston order upheld in White.  But White involved an attempt to <br>dictate the employment of Boston residents in projects funded by <br>the city; it did not involve an attempt by Boston to require all <br>contractors with the city to employ Boston residents in all of <br>their other projects, a situation more akin to this case.  Here, <br>Massachusetts is attempting to impose on companies with which it <br>does business conditions that apply to activities not even remotely <br>connected to such companies' interactions with Massachusetts. <br>  Massachusetts attempts to distinguish its law from the <br>controlling Supreme Court precedent.  Massachusetts notes that <br>South-Central Timber involved an attempt to impose a downstream <br>restriction on timber.  Indeed, the Alaska regulation there at <br>issue imposed a "restriction on private economic activity [that <br>took] place after the completion of the parties' direct commercial <br>obligations, rather than during the course of an ongoing commercial <br>relationship in which the [state actor] retained a continuing <br>proprietary interest in the subject of the contract."  South- <br>Central Timber, 467 U.S. at 99 (plurality opinion of White, J.).  <br>In contrast, Massachusetts contends, its law does not attempt to <br>impose limits after the completion of a contract.  Massachusetts is <br>technically correct that firms are free to engage in business with <br>Burma once their contracts with Massachusetts are completed.  But <br>this distinction is hollow: the Massachusetts law, by creating a <br>selective purchasing list, creates a mechanism to monitor the <br>ongoing activities of private actors.  This monitoring is not <br>limited to individual purchasing decisions.  Further, Massachusetts <br>is attempting to regulate unrelated activities of its contractors <br>once a contract is signed but before its performance is completed.  <br>Massachusetts also attempts to regulate unrelated activities of <br>anyone negotiating with the state or responding to a request for <br>bids.  Importantly, the Massachusetts Burma Law applies to conduct <br>not even remotely linked to Massachusetts.  It imposes restrictions <br>on markets other than the market for state procurement contracts.  <br>Under South-Central Timber, states may not use the market <br>participant exception to shield otherwise impermissible regulatory <br>behavior that goes beyond ordinary private market conduct. <br>  Massachusetts also argues that the effects of its law are <br>not relevant to the inquiry into whether it is acting as a <br>regulator.  Massachusetts notes that the Supreme Court has found <br>that states were acting as market participants even when they <br>pursued goals not directly linked to local economic well-being.  <br>Massachusetts is correct that in Alexandria Scrap the Supreme Court <br>permitted Maryland to act as a market participant to pursue <br>environmental concerns.  See Alexandria Scrap, 426 U.S. at 809, <br>814; see also L. Tribe, Constitutional Choices 144 (1985) (noting <br>that Alexandria Scrap and Reeves involved situations in which <br>states "intended their entrances [into the market] to affect the <br>flow of commerce so as to enhance public values" (emphasis in <br>original)).  Yet this is not enough to save a law that regulates <br>activity outside of Massachusetts that is not related to the <br>seller's interactions with Massachusetts.  As the Supreme Court has <br>explained, Alexandria Scrap, Reeves, and White stand for the <br>proposition that "under the dormant Commerce Clause, a State acting <br>in its proprietary capacity as a purchaser or seller may 'favor its <br>own citizens over others.'"  Camps Newfound/Owatonna, 520 U.S. at <br>592-93 (quoting Alexandria Scrap, 426 U.S. at 810).  But this <br>doctrine does not permit Massachusetts to pursue goals that are not <br>designed to favor its citizens or to secure local benefits.  Cf. <br>Air Transport Ass'n of Am. v. City and County of San Francisco, 992 <br>F. Supp. 1149, 1163 (N.D. Cal. 1998). <br>  Massachusetts's action is also invalid under Wisconsin <br>Department of Industry, Labor and Human Relations v. Gould Inc., <br>475 U.S. 282 (1986), in which the Supreme Court held that Wisconsin <br>was not acting as a market participant when it refused to purchase <br>products from repeated violators of the National Labor Relations <br>Act.  See id. at 289.  The Court found that "Wisconsin's debarment <br>scheme is tantamount to regulation," id., as the law could not <br>"even plausibly be defended as a legitimate response to state <br>procurement constraints or to local economic needs, or [as] a law <br>that pursues a task Congress intended to leave to the States," id. <br>at 291.  In Building & Construction Trades Council v. Associated <br>Builders & Contractors, 507 U.S. 218 (1993), the Court stated that <br>"Gould makes clear" that "[w]hen the State acts as regulator, it <br>performs a role that is characteristically a governmental rather <br>than a private role."  Id. at 229. <br>  Attempting to distinguish Gould, Massachusetts argues <br>that Gould was concerned primarily with the NLRA's preemption of <br>state law and that Gould involved punishment of companies for past <br>actions.  Massachusetts protests that under the Massachusetts Burma <br>Law the Commonwealth is imposing conditions on current activities <br>-- and thus companies can respond by changing their practices.  Cf. <br>Board of Trustees, 562 A.2d at 751 (distinguishing Gould).  Under <br>Gould and South-Central Timber, however, state regulations that go <br>beyond the scope of normal market participation are not immune from <br>Commerce Clause scrutiny.  Massachusetts's desire to eliminate <br>moral taint that it claims it suffers from dealing with firms that <br>do business in Burma does not permit it to act to regulate <br>activities beyond its borders.   <br>  Massachusetts contends that it acts as private actors do <br>because some companies have ceased doing business with Burma due to <br>human rights concerns.  The NFTC, in turn, argues that these <br>companies have not ceased doing business with other companies that <br>remain involved in Burma.  Even if certain companies ceased <br>purchasing goods from companies that maintain investments in Burma, <br>such a fact would not be sufficient to lead us to consider the <br>Massachusetts Burma Law to be market participation.  The proper <br>inquiry is whether Massachusetts is acting as an ordinary market <br>participant would act, not whether any participant has acted in <br>such a fashion.  Massachusetts has created a market, but it cannot <br>regulate the market that it has created so as to regulate conduct <br>elsewhere not related to that market.  As the NFTC noted at oral <br>argument, Massachusetts's action here is akin to prohibiting <br>purchases from companies that do business in states that have <br>policies with which Massachusetts disagrees.  This would plainly be <br>unconstitutional under the domestic Commerce Clause.  Massachusetts <br>surely cannot do the same in the international context, as state <br>actions that affect international commerce receive even greater <br>scrutiny than do actions that affect interstate commerce.  See <br>Japan Line, 441 U.S. at 448. <br>2.  It is Unlikely that the Market Participant Exception Applies to <br>    the Foreign Commerce Clause <br> <br>  Our finding that Massachusetts is not acting as a market <br>participant means that the Massachusetts law must be subjected to <br>ordinary Foreign Commerce Clause analysis.  Yet there is likely an <br>additional reason that the Massachusetts law is not shielded from <br>Foreign Commerce Clause scrutiny: we are skeptical of whether the <br>market participation exception applies at all (or without a much <br>higher level of scrutiny) to the Foreign Commerce Clause. <br>   The Supreme Court has not resolved this issue.  In <br>Reeves, the Court commented that "[w]e have no occasion to explore <br>the limits imposed on state proprietary actions by the 'foreign <br>commerce' Clause" but added that such "scrutiny may well be more <br>rigorous when a restraint on foreign commerce is alleged."  Reeves, <br>447 U.S. at 437 n.9; see also South-Central Timber, 467 U.S. at 92 <br>n.7 (expressing concern about the international ramifications of <br>Alaska's challenged timber policy).   <br>  Massachusetts's argument relies on the decisions in <br>Trojan Technologies, Inc., 916 F.2d at 912, Board of Trustees, 562 <br>A.2d at 752-53, and K.S.B. Technical Sales Corp., 381 A.2d at 788.  <br>Cf. Tribe, American Constitutional Law  6-21, at 469 (2d ed. 1988) <br>(noting that while state laws banning private individuals or <br>companies from doing business with South Africa would be invalid <br>under Zschernig, "under the Supreme Court's market participant <br>exception to the commerce clause, a state would be free to <br>pass . . . rules requiring that purchases of goods and services by <br>and for the state government be made only from companies that have <br>divested themselves of South African commercial involvement" <br>(footnote omitted)).  Massachusetts urges us to follow Trojan <br>Technologies, Board of Trustees, and K.S.B. Technical Sales Corp.  <br>We decline to do so.   <br>  The Supreme Court has repeatedly suggested that state <br>regulations that touch on foreign commerce receive a greater degree <br>of scrutiny than do regulations that affect only domestic commerce.  <br>See South-Central Timber, 467 U.S. at 96; Reeves, 447 U.S. at 437 <br>n.9; Japan Line, 441 U.S. at 448 (noting that "there is evidence <br>that the Founders intended the scope of the foreign commerce power <br>to be . . . greater" than that of the domestic commerce power).  <br>Contrary to the Third Circuit's view in Trojan Technologies, we <br>believe that the risks inherent in state regulation of foreign <br>commerce -- including the risk of retaliation against the nation as <br>a whole and the weakening of the federal government's ability to <br>speak with one voice in foreign affairs, see Japan Line, 441 U.S. <br>at 450-51 -- weigh against extending the market participation <br>exception to the Foreign Commerce Clause.  When it comes to state <br>actions that touch on foreign affairs, "[a] foreign government has <br>little inclination to discern whether a burdensome action taken by <br>a political subdivision of the United States was taken under a <br>proprietary or a regulatory guise," and "the potential for the <br>creation of friction between the United States and a foreign nation <br>is not lessened because the state acts as a proprietor instead of <br>a regulator."  K. Lewis, Dealing With South Africa: The <br>Constitutionality of State and Local Divestment Legislation, 61 <br>Tul. L. Rev. 469, 485 (1987).  To extend the market participant <br>doctrine would be to ignore these additional risks that arise in <br>the foreign commerce context.  But the issues are complex and we <br>choose to leave their resolution to another day and another case. <br>3.  The Massachusetts Burma Law Violates the Foreign Commerce  <br>    Clause       <br> <br>  Because the market participation exception does not <br>shield the Massachusetts Burma Law from Commerce Clause scrutiny, <br>we must turn to whether the law does indeed violate the Foreign <br>Commerce Clause.  "Absent a compelling justification . . . a State <br>may not advance its legitimate goals by means that facially <br>discriminate against foreign commerce."  Kraft Gen. Foods, Inc. v. <br>Iowa Dep't of Revenue & Fin., 505 U.S. 71, 81 (1992).  Like the <br>dormant domestic Commerce Clause, which has the "core purpose . . <br>. [of] prevent[ing] states and their political subdivisions from <br>promulgating protectionist policies," Houlton Citizens' Coalition <br>v. Town of Houlton, No. 98-1999, 1999 WL 228274, at *10 (1st Cir. <br>Apr. 22, 1999), the Foreign Commerce Clause restricts protectionist <br>policies, but it also restrains the states from excessive <br>interference in foreign affairs. <br>  The crucial inquiry in this case is whether the <br>Massachusetts Burma Law is facially discriminatory.  The NFTC does <br>not claim that the law is invalid as applied under the balancing <br>test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137, 142 <br>(1970).  <br>  Massachusetts puts forth two arguments to support its <br>claim that its law does not violate the Foreign Commerce Clause.  <br>First, Massachusetts contends that the law does not discriminate <br>between domestic and foreign companies.  Second, Massachusetts <br>argues that its law does not impair the federal government's <br>ability to speak with one voice regarding foreign commerce.  Under <br>standard Commerce Clause analysis, a statute that facially <br>discriminates against interstate or foreign commerce will, in most <br>cases, be found unconstitutional.  See, e.g., Oregon Waste Sys., <br>Inc. v. Department of Envtl. Quality, 511 U.S. 93, 99 (1994) ("If <br>a restriction on commerce is discriminatory, it is virtually per se <br>invalid.  By contrast, nondiscriminatory regulations that have only <br>incidental effects on interstate commerce are valid unless 'the <br>burden imposed on such commerce is clearly excessive in relation to <br>the putative local benefits.'" (quoting Pike, 397 U.S. at 142) <br>(emphasis in original) (citation omitted)).  Even under that <br>analysis, we find that the law is discriminatory and violates the <br>Foreign Commerce Clause.  Although the law does not discriminate <br>against foreign companies, it does discriminate against foreign <br>commerce.  Also, the law impedes the federal government's ability <br>to speak with one voice in foreign affairs, and amounts to an <br>attempt to regulate conduct outside of Massachusetts and outside of <br>this country's borders.  For these three reasons, we hold that the <br>Massachusetts law violates the Foreign Commerce Clause. <br>    a.  The Massachusetts Burma Law Facially Discriminates <br>              Against Foreign Commerce <br> <br>  Massachusetts first argues that its law does not actually <br>discriminate against foreign commerce, primarily because the law <br>does not distinguish between foreign and domestic companies.  <br>Massachusetts relies on Oregon Waste Systems and Kraft.  In Oregon <br>Waste Systems, the Supreme Court said that the domestic Commerce <br>Clause "has long been understood to have a 'negative' aspect that <br>denies the States the power unjustifiably to discriminate against <br>or burden the interstate flow of articles of commerce."  Oregon <br>Waste Sys., 511 U.S. at 98.  In Kraft, the Supreme Court <br>invalidated as facially discriminatory a state tax scheme that <br>treated dividends from foreign subsidiaries less favorably than <br>dividends from domestic subsidiaries.  See Kraft, 505 U.S. at 74- <br>77, 82.  Massachusetts contends that these cases support its <br>argument that a law must distinguish between foreign and domestic <br>producers in order to be held facially invalid.  That is not the <br>test.  Massachusetts also argues that the crucial factor in <br>determining whether a law discriminates is not whether the law <br>singles out a particular foreign state, but rather whether it <br>discriminates "in favor of in-state businesses."  Board of <br>Trustees, 562 A.2d at 754 n.56.  That is also not the test.   <br>  A law need not be designed to further local economic <br>interests in order to run afoul of the Commerce Clause.  The <br>Supreme Court has said, "[o]ur cases . . . indicate that where <br>discrimination is patent, as it is here, neither a widespread <br>advantage to in-state interests nor a widespread disadvantage to <br>out-of-state competitors need be shown."  New Energy Co. v. <br>Limbach, 486 U.S. 269, 276 (1988).  In Kraft, the Supreme Court <br>explicitly rejected the argument that local favoritism is crucial <br>to a finding that a law is facially discriminatory, stating that it <br>was "not persuaded . . . that such favoritism is an essential <br>element of a violation of the Foreign Commerce Clause. . . .  As <br>the absence of local benefit does not eliminate the international <br>implications of the discrimination, it cannot exempt such <br>discrimination from Commerce Clause prohibitions."  Kraft, 505 U.S. <br>at 79.   <br>  Nor does the law's applicability to both foreign and <br>domestic companies save it.  Supreme Court decisions under the <br>Foreign Commerce Clause have made it clear that state laws that are <br>designed to limit trade with a specific foreign nation are <br>precisely one type of law that the Foreign Commerce Clause is <br>designed to prevent.  In Container Corp., the Supreme Court stated <br>that state legislation that relates to foreign policy questions <br>violates the Foreign Commerce Clause "if it either implicates <br>foreign policy issues which must be left to the Federal Government <br>or violates a clear federal directive."  Container Corp., 463 U.S. <br>at 194 (emphasis in original); see also Japan Line, 441 U.S. at <br>448-49 (stating that "[f]oreign commerce is preeminently a matter <br>of national concern" and noting that "[t]he need for federal <br>uniformity is no less paramount in ascertaining the negative <br>implication of Congress' power to 'regulate Commerce with foreign <br>Nations' under the Commerce Clause").  "If state action touching <br>foreign commerce is to be allowed, it must be shown not to affect <br>national concerns to any significant degree, a far more difficult <br>task than in the case of interstate commerce."  Tribe, American <br>Constitutional Law  6-21, at 469.  Although the Court in Container <br>Corp. stated that a state law would not be held invalid if it had <br>only "foreign resonances," Container Corp., 463 U.S. at 194, <br>Massachusetts's law clearly has more than just foreign resonances.  <br>Indeed, a chief goal of the Massachusetts law is to affect business <br>decisions pertaining to a foreign nation. <br>  The Massachusetts Burma Law discriminates against two  <br>subsets of foreign commerce -- that involving companies or persons <br>organized or operating in Burma and that involving companies or <br>persons doing business with Burma.  The law is thus a direct <br>attempt to regulate the flow of foreign commerce.  Massachusetts's <br>arguments miss a crucial point.  When the Constitution speaks of <br>foreign commerce, it is not referring only to attempts to regulate <br>the conduct of foreign companies; it is also referring to attempts <br>to restrict the actions of American companies overseas.  Long- <br>standing Supreme Court precedent indicates that the Framers were <br>concerned with "discriminations favorable or adverse to commerce <br>with particular foreign nations [under] state laws."  Cooley v. <br>Board of Wardens, 53 U.S. (12 How.) 299, 317 (1851). <br>    b.  The Massachusetts Burma Law Interferes with the <br>              Ability of the Federal Government  <br>              to Speak with One Voice <br> <br>  The NFTC's argument that the Massachusetts Burma Law <br>violates the Commerce Clause because it interferes with the federal <br>government's ability to speak with one voice is similar to, but <br>distinct from, the argument that the law violates the foreign <br>affairs power of the federal government.  Independent of any claim <br>under Zschernig, the Supreme Court decisions in Japan Line and <br>Container Corp. make clear that a state law can violate the dormant <br>Foreign Commerce Clause by impeding the federal government's <br>ability to "speak with one voice" in foreign affairs, because such <br>state action harms "federal uniformity in an area where federal <br>uniformity is essential."  Japan Line, 441 U.S. at 448-49; see also <br>Container Corp., 463 U.S. at 193. <br>  Massachusetts contends that Barclays "severely undercuts, <br>if not eliminates" the Commerce Clause "one voice" test.  <br>Massachusetts also argues that Barclays demonstrates that the one <br>voice test has never actually forbidden voices other than that of <br>the federal government, and that while the federal government has <br>the last word on foreign affairs -- and thus can preempt the <br>Massachusetts law -- it does not have the only word. <br>  Massachusetts misreads Barclays.  Rather than dismantling <br>the one voice test, Barclays applied this test.  The Court found, <br>however, that since Congress had effectively condoned the <br>challenged law, the Court could not conclude that the California <br>worldwide reporting requirement impeded the ability of the federal <br>government to speak with one voice.  See Barclays, 512 U.S. at 328- <br>30. Barclays reached this determination in light of repeated <br>congressional consideration of the precise issue at hand and in <br>light of the fact that the challenged law did not directly regulate <br>foreign commerce.  Nothing in Barclays suggests that we should <br>reduce the amount of scrutiny that a state law that directly <br>regulates foreign commerce should receive. <br>    c.  Massachusetts is Attempting to Regulate Conduct  <br>              Beyond Its Borders <br> <br>  The Massachusetts Burma Law violates the Foreign Commerce <br>Clause for an additional reason: Massachusetts is attempting to <br>regulate conduct beyond its borders and beyond the borders of this <br>country.  In the domestic Commerce Clause arena, the Supreme Court <br>has held that "one State's power to impose burdens on the <br>interstate market . . . is not only subordinate to the federal <br>power over interstate commerce but is also constrained by the need <br>to respect the interests of other States," and that "it follows <br>from . . . principles of state sovereignty and comity that a State <br>may not impose economic sanctions on violators of its laws with the <br>intent of changing . . . lawful conduct in other States."  BMW of <br>N. Am., Inc. v. Gore, 517 U.S. 559, 571-72 (1996) (citation <br>omitted).  In Brown-Forman Distillers Corp. v. New York State <br>Liquor Authority, 476 U.S. 573 (1986), the Court invalidated a New <br>York law that required that wholesale prices of alcohol in New York <br>not exceed the lowest price at which the seller would sell the same <br>product in any other state.  See id. at 575-78.  The Court held <br>that the fact that the law was "addressed only to sales of liquor <br>in New York is irrelevant if the 'practical effect' of the law is <br>to control liquor prices in other States."  Id. at 583 (quoting <br>Southern Pac. Co. v. Arizona ex rel. Sullivan, 325 U.S. 761, 775 <br>(1945)).  The Massachusetts statute does not meet even these <br>standards because both the intention and effect of the statute is <br>to change conduct beyond Massachusetts's borders. <br>  Massachusetts is in no better position because it seeks <br>in part to change conduct not only outside Massachusetts, but also <br>outside the United States.  Cf. Hostetter v. Idlewild Bon Voyage <br>Liquor Corp., 377 U.S. 324, 333-34 (1964) (equating state attempts <br>to control commerce flowing into foreign countries with attempts to <br>control commerce flowing into a federal enclave).  Massachusetts <br>may not regulate conduct wholly beyond its borders.  Yet the <br>Massachusetts Burma Law -- by conditioning state procurement <br>decisions on conduct that occurs in Burma -- does just that.  Cf. <br>Healy v. Beer Inst., 491 U.S. 324, 336 (1989) ("The Commerce Clause <br>. . . precludes the application of a state statute to commerce that <br>takes place wholly outside of the State's borders, whether or not <br>the commerce has effects within the State."  (alteration in <br>original) (quoting Edgar v. MITE Corp., 457 U.S. 624, 642-43 (1982) <br>(plurality opinion)) (internal quotation marks omitted)).  The <br>"critical inquiry" here is "whether the practical effect of the <br>regulation is to control conduct beyond the boundaries of the <br>State."  Healy, 491 U.S. at 336.  Because we find that the <br>Massachusetts Burma Law has such an effect, and is not otherwise <br>shielded by the market participant exception, we find that the law <br>violates the Foreign Commerce Clause.  <br>  Massachusetts cannot save its law by protesting that a <br>company doing business with Burma can simply forgo contracts with <br>Massachusetts, or simply beat the next highest bidder's price by <br>ten percent.  Every discriminatory state law can be avoided by <br>withdrawing from the enacting state.  In Healy, for example, liquor <br>distributors could have avoided the New York law by staying out of <br>the New York liquor market.  To allow state laws to stand on this <br>ground, however, would be to read the Commerce Clause out of the <br>Constitution.  Moreover, the relative influence of a state's <br>purchasing power cannot suffice to save discriminatory legislation.  <br>If a Massachusetts can enact a Burma law, so too can California or <br>Texas.  Finally, we have no reason to view a ten-percent bidding <br>penalty as anything other than an effective exclusion from the <br>bidding process.   <br>    d.  Massachusetts Has Failed to Put Forth a Legitimate  <br>              Local Justification in Support of its Law <br> <br>  Given that the Massachusetts Burma Law discriminates on <br>its face against foreign commerce, it can survive Commerce Clause <br>scrutiny only if it is "demonstrably justified" because it <br>"advances a legitimate local purpose that cannot be adequately <br>served by reasonable nondiscriminatory alternatives."  New Energy <br>Co., 486 U.S. at 274, 278.  Massachusetts, having made its primary <br>arguments on other grounds, provides no support under either <br>domestic or Foreign Commerce Clause jurisprudence for the <br>proposition that a state's expression of moral concerns can provide <br>a valid basis for a discriminatory law.   Even if expression of <br>moral outrage about foreign human rights concerns were a valid <br>local purpose, Massachusetts would need to show that it has no less <br>discriminatory means of expressing its outrage.  It has not done <br>so, or even attempted to do so. <br>  The NFTC argues that the Supreme Court has made clear <br>that the only facially discriminatory laws that survive domestic <br>Commerce Clause scrutiny are laws designed to protect a state's <br>natural resources or the health and safety of its citizens.  Cf. <br>Maine v. Taylor, 477 U.S. 131, 151 (1986); Oregon Waste Sys., 511 <br>U.S. at 101.  Regardless of any such limits in the Commerce Clause <br>context, as discussed above, Massachusetts's attempt to justify <br>this statute as falling within traditional areas of state concern <br>is unconvincing.  The Supreme Court has recognized a number of <br>disparate topics and fields of law as traditional areas of state <br>concern, but has not suggested that moral concerns regarding human <br>rights conditions abroad -- though effectuated via state <br>procurement policy -- are such an area.  The argument that there is <br>a local purpose that cannot otherwise be adequately served is very <br>weak and does not suffice.  <br>                                IV <br>  The NFTC contends that the Massachusetts Burma Law is <br>preempted by the Federal Burma Law, and thus violates the Supremacy <br>Clause.  Massachusetts contends both that Congress has implicitly <br>permitted the law and that, in any event, the federal sanctions do <br>not preempt the Massachusetts law.  We reject Massachusetts's claim <br>that Congress has permitted the law and find that Congress has <br>preempted the law.  <br>  The district court found that the NFTC "failed to carry <br>[its] burden" of showing "that Congress intended to exercise its <br>authority to set aside a state law."  National Foreign Trade <br>Council, 26 F. Supp. 2d at 293.  The district court rejected the <br>NFTC's claim that the Massachusetts law reflected a unilateral <br>approach to trade with Burma, one that conflicted with federal <br>law's endorsement of a multilateral strategy.  The court based this <br>finding on its determination that the federal statute "actually <br>provides for unilateral sanctions against [Burma]."  Id.  In so <br>doing, the district court misapprehended NFTC's burden and applied <br>an erroneous legal standard to the facts. <br>1.  Congress Has Not Implicitly Approved of or Permitted the <br>    Massachusetts Law <br> <br>  Massachusetts attempts to preclude an inquiry into <br>whether its law is preempted by the Federal Burma Law by arguing <br>that Congress, fully aware of the Massachusetts law when it <br>considered federal sanctions against Burma, failed explicitly to <br>preempt the state law and thus impliedly permitted it.  <br>Massachusetts again relies on the Supreme Court's opinion in <br>Barclays, arguing that Congress's failure explicitly to preempt the <br>law shields the law from constitutional scrutiny.  We reject <br>Massachusetts's argument. <br>  As it had done in Container Corp., 463 U.S. at 196-97, <br>and  Wardair, 477 U.S. at 6-7, the Supreme Court in Barclays looked <br>for indicia that Congress had acted to preempt the state practices <br>in dispute.  Noting that Congress was fully aware of foreign <br>government opposition to state combined reporting requirements, see <br>Barclays, 512 U.S. at 324, that the Court itself had ruled <br>favorably to the state on the issue in a previous case, see id. at <br>321-22, and that Congress had "on many occasions studied state <br>taxation of multinational enterprises," id. at 324-25, including <br>consideration of proposed legislation that would have prohibited <br>California's reporting requirements, see id. at 325, the Court <br>stated that "Congress implicitly has permitted the States to use <br>the worldwide combined reporting method,"  id. at 326 (emphasis in <br>original); see also id. at 329 ("Congress has focused its attention <br>on this issue, but has refrained from exercising its authority to <br>prohibit state-mandated worldwide combined reporting.").  Barclays <br>made clear that determining "whether the national interest is best <br>served by tax uniformity, or state autonomy," was a decision best <br>left to Congress, not the courts.  Id. at 331; see also Container <br>Corp., 463 U.S. at 194 ("This Court has little competence in <br>determining precisely when foreign nations will be offended by <br>particular acts, and even less competence in deciding how to <br>balance a particular risk of retaliation against the sovereign <br>right of the United States as a whole to let the States tax as they <br>please.").  The posture of Congress here is nothing like the <br>position of Congress recounted in Barclays. <br>  Massachusetts notes that, in addition to failing to <br>indicate a desire to preempt in the Federal Burma Law, Congress has <br>debated the appropriateness of state and local actions concerning <br>Burma, but has not passed legislation explicitly preempting state <br>and local selective purchasing laws.  See 144 Cong. Rec. H7,277- <br>H7,285 (daily ed. Aug. 5, 1998).  Massachusetts's argument is <br>supported by amici curiae members of Congress in support of <br>reversal, who contend that "Congress is well aware of the criticism <br>being directed at the Massachusetts law and other state and local <br>purchasing measures," and who point to repeated testimony regarding <br>the issue before congressional subcommittees.  These amici curiae <br>also state that Congress's failure to address state and local <br>measures, either when it enacted the federal sanctions against <br>Burma or when it considered legislation reforming federal sanctions <br>law, see H.R. 2708, 105th Cong. (1997), was intentional.  <br>Massachusetts's argument is opposed by other amici curiae who are <br>also members of Congress, who say that the Massachusetts law <br>threatens to destroy the carefully crafted federal scheme of <br>sanctions against Burma, and who argue that Congress lacks the <br>ability to monitor the legislative activities of the fifty states <br>and thousands of municipalities in this country to determine <br>whether laws of such jurisdictions are harming the nation's foreign <br>policy. <br>  We do not believe that Barclays applies to the facts of <br>this case, for four reasons.  First, the discussion of preemption <br>in Barclays came as part of a Commerce Clause inquiry into whether <br>the challenged law impaired the federal government's ability to <br>speak with one voice.  The California law was not challenged under <br>the Supremacy Clause.  Barclays commented that "there is no claim <br>here that the federal tax statutes themselves provide the necessary <br>pre-emptive force."  Barclays, 512 U.S. at 321 (quoting Container <br>Corp., 463 U.S. at 196) (internal quotation marks omitted).  <br>Barclays thus did not discuss how courts should address Supremacy <br>Clause challenges to state laws that impact foreign affairs, such <br>as the Massachusetts Burma Law. <br>  Second, Barclays involved an area of traditional state <br>activity: taxation of companies which do business within the state <br>and elsewhere and the appropriate allocation to the state of such <br>companies' income.  The California law had few direct foreign <br>policy implications and was not structured so as to affect conduct <br>beyond the borders of the state. <br>  Third, the clarity and frequency in Barclays of the <br>refusal of Congress to act, despite a host of bills and a Supreme <br>Court decision, is vastly different than the situation we face in <br>this case.  In Barclays, Congress had been put on notice by the <br>Court's prior decision in Container Corp. and had considered <br>"numerous bills [that] . . . would have prohibited the California <br>reporting requirement."  Id. at 325.  In contrast, Congress never <br>formally voted on provisions that would have explicitly preempted <br>the Massachusetts law.  The Barclays discussion of implied <br>permission involved only a Commerce Clause inquiry into whether <br>state laws are preempted by the need for the nation to speak with <br>one voice in foreign affairs.  Massachusetts has given us no reason <br>to extend Barclays to the different facts we face here, and we <br>decline to do so.   <br>  Fourth, although Barclays involved congressional silence, <br>Congress has not been silent about Burma.  The real question is not <br>what to infer from congressional inaction, but how to interpret the <br>action that Congress has already taken in enacting sanctions <br>against Burma. <br>2.  The Massachusetts Burma Law is Preempted by Federal Sanctions  <br>    Against Burma                 <br> <br>  We address the question of whether the Federal Burma Law <br>preempts Massachusetts's law by examining the usual indicia of <br>congressional intent where there is no express preemption <br>statement.  Congressional intent to preempt may be found where a <br>federal statute is so pervasive as to occupy the field, see Gade v. <br>National Solid Wastes Management Ass'n, 505 U.S. 88, 98 (1992), <br>where it would be physically impossible to comply with both the <br>federal and the state law, see Florida Lime & Avocado Growers, Inc. <br>v. Paul, 373 U.S. 132, 142-43 (1963), or where enforcement of the <br>state law "stands as an obstacle to the accomplishment and <br>execution of the full purposes and objectives of Congress," Hines, <br>312 U.S. at 67. <br>  If the subject matter of the law in question is an area <br>traditionally occupied by the states, congressional intent to <br>preempt must be "clear and manifest."  Rice v. Santa Fe Elevator <br>Corp., 331 U.S. 218, 230 (1947).  The district court, relying on a <br>domestic commerce clause case, stated that "[p]laintiff's burden is <br>particularly heavy."  National Foreign Trade Council, 26 F. Supp. <br>2d at 293.  This was error. <br>  Preemption will be more easily found where states <br>legislate in areas traditionally reserved to the federal <br>government, and in particular where state laws touch on foreign <br>affairs.  The test which should be applied is set forth in Hines. <br>  In Hines, the Supreme Court found that Pennsylvania's <br>Alien Registration Act was preempted by the federal Alien <br>Registration Act.  The Court stated that "[n]o state can add to or <br>take from the force and effect of [a] treaty or statute [regarding <br>aliens]."  Hines, 312 U.S. at 63.  The Court commented: <br>    [T]he regulation of aliens is so intimately blended and <br>  intertwined with responsibilities of the national <br>  government that where it acts, and the state also acts on <br>  the same subject, "the act of Congress, or the treaty, is <br>  supreme; and the law of the State, though enacted in the <br>  exercise of powers not controverted, must yield to it."  <br>  And where the federal government, in the exercise of its <br>  superior authority in this field, has enacted a complete <br>  scheme of regulation and has therein provided a standard <br>  for the registration of aliens, states cannot,  <br>  inconsistently with the purpose of Congress, conflict or <br>  interfere with, curtail or complement, the federal law, <br>  or enforce additional or auxiliary regulations. <br> <br>Id. at 66-67 (quoting Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 211 <br>(1824)) (footnote omitted). Likewise, in Boyle v. United <br>Technologies Corp., 487 U.S. 500 (1988), the Court, considering the <br>liability of an independent contractor who had supplied a military <br>helicopter to the United States, commented that when considering <br>"an area of uniquely federal interest," a "conflict with federal <br>policy need not be as sharp as that which must exist for ordinary <br>pre-emption when Congress legislates 'in a field which the States <br>have traditionally occupied.'"  Id. at 507 (quoting Rice, 331 U.S. <br>at 230). <br>  Hines and its progeny establish that preemption is much <br>more easily found when Congress has passed legislation relating to <br>foreign affairs.  The Supreme Court has repeatedly cited Hines for <br>the proposition that an "Act of Congress may touch a field in which <br>the federal interest is so dominant that the federal system will be <br>assumed to preclude enforcement of state laws on the same subject."  <br>Maryland v. Louisiana, 451 U.S. 725, 746 (1981); Ray v. Atlantic <br>Richfield Co., 435 U.S. 151, 157 (1978); City of Burbank v. <br>Lockheed Air Terminal, Inc., 411 U.S. 624, 633 (1973); Rice, 331 <br>U.S. at 230.  Other cases make the same point using similar <br>language.  See, e.g., Hillsborugh County, 471 U.S. at 713; <br>Pennsylvania v. Nelson, 350 U.S. 497, 504 (1956). <br>  The Supreme Court, distinguishing Hines in considering a <br>state labor law, explained: <br>     [In Hines] we were dealing with a problem which had an <br>     impact on the general field of foreign relations.  The <br>     delicacy of the issues which were posed alone raised <br>     grave questions as to the propriety of allowing a state <br>     system of regulation to function alongside of a federal <br>     system.  In that field, any "concurrent state power that <br>     may exist is restricted to the narrowest of limits." <br>     Therefore, we were more ready to conclude that a federal <br>     Act in a field that touched international relations <br>     superseded state regulation than we were in those cases <br>     where a State was exercising its historic powers over <br>     such traditionally local matters as public safety and <br>     order and the use of streets and highways. <br>Allen-Bradley Local No. 1111 v. Wisconsin Employment Relations Bd., <br>315 U.S. 740, 749 (1942) (quoting Hines, 312 U.S. at 68) (citation <br>omitted).   <br>  Massachusetts argues that the ordinary clear statement <br>rule regarding congressional intent to preempt should apply because <br>state procurement is a traditional area of state power reserved to <br>the states by the Tenth Amendment.  Cf. Gregory v. Ashcroft, 501 <br>U.S. 452, 460 (1991) ("[I]f Congress intends to alter the usual <br>constitutional balance between the States and the Federal <br>Government, it must make its intention to do so unmistakably clear <br>in the language of the statute."  (quoting Will v. Michigan Dep't <br>of State Police, 491 U.S. 58, 65 (1989)) (internal quotation marks <br>omitted)).  This argument is no more convincing here than it is in <br>the context of Massachusetts's claim that its Tenth Amendment <br>interests shield its law from scrutiny under Zschernig.  <br>Massachusetts argues that "state procurement is not an area of <br>unique federal interest" (internal quotation marks omitted), but <br>ignores the fact that its law, like the federal sanctions against <br>Burma, is aimed primarily at effecting change in and expressing <br>disapproval of the current regime in Burma.  Similarly, the fact <br>that Congress has at times explicitly preempted local sanctions, <br>see, e.g., 50 U.S.C. app.  2407(c) (West 1991) (stating that <br>federal provisions prohibiting United States persons from complying <br>with foreign boycotts against nations with which the United States <br>maintains friendly relations preempted state and local laws, <br>regulations, and rules), does not prevent our finding of preemption <br>where Congress has not spoken so directly.  To do otherwise would <br>be to ignore Hines. <br>      Massachusetts attempts to distinguish this case from <br>Hines by relying on De Canas v. Bica, 424 U.S. 351 (1976).  De <br>Canas concerned a California law forbidding employers from <br>"knowingly employ[ing] an alien who is not entitled to lawful <br>residence in the United States if such employment would have an <br>adverse effect on lawful resident workers."  Id. at 352 (quoting <br>Cal. Labor Code  2805(a)) (internal quotation marks omitted).  The <br>Supreme Court found that the Immigration and Nationality Act, while <br>a "comprehensive federal statutory scheme for regulation of <br>immigration and naturalization," nevertheless did not preempt the <br>California law.  Id. at 353-54.  To reach this conclusion, however, <br>the Court first assumed that the California statute "only applie[d] <br>to aliens who would not be permitted to work in the United States <br>under pertinent federal laws and regulations."  Id. at 353 n.2.  <br>Thus, the California law simply "adopt[ed] federal standards in <br>imposing criminal sanctions against state employers who knowingly <br>employ aliens who have no federal right to employment within the <br>country."  Id. at 355. <br>  In contrast, Massachusetts is attempting to regulate the <br>same conduct -- trade with Burma -- addressed by the Federal Burma <br>Law, but is doing so by imposing distinct restrictions different in <br>scope and kind from the federal law.  Some actions lawful under <br>federal law would be unlawful under the state statute.  The <br>Massachusetts law is therefore akin to a hypothetical California <br>statute prohibiting employment of any aliens, even those allowed to <br>work under federal law.  The De Canas Court considered, and <br>rejected, such laws.  See id. at 358 n.6.  California acted to <br>regulate employment, an area where states  "possess broad authority <br>under their police powers."  Id. at 356.  Massachusetts is not <br>acting under its traditional state police powers. <br>  Hines and its progeny mean that when Congress legislates <br>in an area of foreign relations, there is a strong presumption that <br>it intended to preempt the field, in particular where the federal <br>legislation does not touch on a traditional area of state concern.  <br>Under this standard we find that Congress has preempted the <br>Massachusetts Burma Law.  Congress has constructed a reasonably <br>comprehensive statute covering a field of foreign relations.  But <br>even if Congress had not been so comprehensive, the state law would <br>still conflict with the federal law.  "The basic subject of the <br>state and federal laws is identical," Hines, 312 U.S. at 61, but <br>Massachusetts's law veers from the carefully balanced path that <br>Congress has constructed.  Congress is attempting to balance <br>various concerns and is "trying to steer a middle path."  Id. at <br>73.  In enacting sanctions against Burma, Congress attempted to <br>strike at least two sorts of balances.  First, Congress sought to <br>improve human rights in Burma, but did so in the context of this <br>country's overall foreign relations, including, at the least, the <br>United States' experiences with human rights practices elsewhere, <br>this country's relationships with its trading partners, its <br>economic interests, and its interest in forming alliances rather <br>than taking unilateral actions.  Second, Congress considered <br>various mechanisms to accomplish and balance this country's various <br>interests and goals and chose a set of carefully calibrated tools.  <br>This careful calibration reflects the judgment of the Congress and <br>the President that the federal choice of tools is the most <br>effective means to improve human rights conditions in Burma while <br>safeguarding other national interests.  Massachusetts, in contrast, <br>has chosen a blunt instrument to further only a single goal, making <br>judgments different from and contrary to the judgments made by <br>Congress and the President. <br>  Congress considered and rejected barring all United <br>States investment in Burma, see S. 1092, 104th Cong. (1995), <br>instead choosing to limit only new investment in the "development <br>of resources."  In contrast, the Massachusetts law applies to <br>virtually all investment in Burma.  The Federal Burma Law permits <br>some trade with Burma, while the Massachusetts law does not.  For <br>example, the Federal Burma Law does not sanction companies for <br>merely having subsidiaries with operations in Burma, having been <br>organized in Burma, being a majority-owned franchise of a company <br>with Burma operations, or being a United States subsidiary or a <br>foreign company that engages in business in Burma.  The <br>Massachusetts law does.   <br>  The Massachusetts law thus regulates conduct not covered <br>by the federal law and applies to parties, including foreign <br>companies, not covered by the federal law.  As in Hines, the <br>Massachusetts law therefore has effects more inimical to foreign <br>interests than those of the federal law.  The Massachusetts law <br>penalizes the activities of foreign companies which are lawful <br>under the laws of those companies' home countries and are not <br>prohibited by trade agreements with the United States or by United <br>States federal law.  In addition, the federal law provides for <br>sanctions to be terminated upon a finding by the President that <br>human rights conditions in Burma have improved; the Massachusetts <br>Burma Law has no such provision.  In the Federal Burma Law, <br>Congress has chosen to rely on both carrots and sticks.  <br>Massachusetts uses a cudgel.  In doing so, Massachusetts risks <br>upsetting Congress's careful choice of tools and strategy. <br>  Additionally, Massachusetts's unilateral strategy toward <br>Burma directly contradicts the federal law's encouragement of a <br>multilateral strategy.  That the federal government has itself at <br>times acted unilaterally in its approach to Burma, or has created <br>a mechanism that allows the President to fine-tune the federal <br>government's approach, does not eliminate the fact that <br>Massachusetts's unilateral sanctions are inconsistent with the <br>federal regime.  Cf. 142 Cong. Rec. S8753 (daily ed. July 25, 1996) <br>(stating that the United States "maintain[s] a range of unilateral <br>sanctions [against] Burma").  The Massachusetts law directly <br>conflicts with Congress's instruction that the federal government <br>pursue a multilateral strategy with regard to Burma.  It is of <br>little importance that some companies can comply with both federal <br>and state laws regarding Burma.  Massachusetts's argument to this <br>effect resembles the argument made by the three dissenters in <br>Hines, see Hines, 312 U.S. at 81 (Stone, J., dissenting), an <br>argument that the Hines majority implicitly rejected, see Hines, <br>312 U.S. at 68 (majority opinion) ("Any concurrent state power that <br>may exist is restricted to the narrowest of limits; the state's <br>power here is not bottomed on the same broad base as is its power <br>to tax.").  Finally, the fact that Congress may have been aware of <br>the Massachusetts law at the time it passed the Federal Burma Law <br>does not lead to a different outcome.  In Hines, nineteen states <br>had passed alien registration laws prior to Congress's passage of <br>the federal law, see id., at 79 (Stone, J., dissenting), yet the <br>Supreme Court nevertheless did not conclude from earlier <br>congressional inaction that these laws were not preempted. <br>  Massachusetts protests that the goals of its statute -- <br>promoting change in Burma and expressing disapproval of conditions <br>in Burma -- are the same as those of the federal legislation, and <br>thus that there can be no conflict between the Massachusetts law <br>and federal sanctions.  Yet the fact that state and federal <br>legislation share common goals, either in whole or in part, is not <br>sufficient to preclude a finding of preemption.  See Gade, 505 U.S. <br>at 103.  The crucial inquiry is whether a state law impedes the <br>federal effort.  See Gould, 475 U.S. at 286; International Paper <br>Co. v. Ouellette, 479 U.S. 481, 494 (1987).  Where, as here, the <br>federal government has acted in an area of unique federal concern <br>and has crafted a balanced, tailored approach to an issue, and the <br>state law threatens to upset that balance, the state law is <br>preempted.  Under the Supremacy Clause, the Massachusetts Burma Law <br>is unconstitutional.  Cf. Missouri v. Holland, 252 U.S. 416 (1920). <br>                                V <br>  The passage of the Massachusetts Burma Law has resulted <br>in significant attention being brought to the Burmese government's <br>human rights record.  Indeed, it may be that the Massachusetts law <br>was a catalyst for federal sanctions.  Massachusetts also played a <br>role, through its representatives in the House and the Senate, in <br>Congress's decision to impose sanctions on Burma.  Nonetheless, the <br>conduct of this nation's foreign affairs cannot be effectively <br>managed on behalf of all of the nation's citizens if each of the <br>many state and local governments pursues its own foreign policy.  <br>Absent express congressional authorization, Massachusetts cannot <br>set the nation's foreign policy.  <br>  The judgment of the district court is affirmed.</pre>

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