Facts
- Massachusetts enacted a law restricting state agencies from purchasing goods or services from companies “doing business with” Burma (Myanmar), implemented through a “restricted purchase list” that imposed a substantial bidding disadvantage with limited exceptions.
- The law targeted companies with qualifying Burma-related ties, defined broadly to include operations or subsidiaries in Burma, financial services to the Burmese government, or providing goods or services to the Burmese government.
- Massachusetts adopted the measure to protest human rights abuses by Burma’s military regime.
- After enactment of the Massachusetts law, Congress imposed federal Burma sanctions that (i) barred certain new investment in Burma by U.S. persons and (ii) delegated substantial discretion to the President to calibrate, suspend, expand, or terminate sanctions based on specified findings and national security considerations, and to pursue a diplomatic, multilateral strategy.
- The National Foreign Trade Council, representing companies engaged in foreign commerce (including firms affected by the state list), sued to enjoin enforcement, asserting federal preemption and other constitutional theories.
- The district court permanently enjoined enforcement; the First Circuit affirmed on multiple grounds.
- The Supreme Court affirmed the injunction on conflict-preemption grounds only.
Issues
- Whether the Massachusetts Burma contracting restrictions were preempted under the Supremacy Clause because they conflicted with Congress’s federal Burma sanctions regime.
- Whether the state law posed an impermissible “obstacle” to Congress’s purposes and objectives by constraining the President’s federally delegated discretion and the federal government’s sanctions strategy.
Decision
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The Supreme Court unanimously held the Massachusetts law preempted and unconstitutional under the Supremacy Clause.
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The Court applied conflict preemption, focusing on “obstacle” preemption rather than impossibility of dual compliance.
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The Court identified three conflicts with federal objectives:
- The state law interfered with the President’s congressionally granted flexibility to calibrate sanctions for foreign policy and national security purposes.
- The state law imposed sanctions broader than the federal scheme, penalizing activities and entities Congress chose not to reach, disrupting Congress’s calibrated approach.
- The state law undermined the federal government’s effort to speak with one voice and pursue a multilateral diplomatic strategy toward Burma.
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The Court declined to decide whether the law independently violated the federal foreign affairs power or the dormant Foreign Commerce Clause.
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Justice Scalia (joined by Justice Thomas) concurred in the judgment, agreeing the state law was preempted but reading the analysis more narrowly in statutory-conflict terms.
Legal Principles
- State law is preempted when it conflicts with federal law, including when it stands as an obstacle to the accomplishment and execution of Congress’s purposes and objectives.
- In assessing obstacle preemption, courts consider not only what federal law forbids, but also what it permits as part of Congress’s chosen regulatory calibration.
- When Congress enacts a foreign-policy sanctions regime that delegates substantial discretionary authority to the President, a state measure that constrains that discretion or complicates the federal government’s diplomatic strategy may be conflict-preempted.
- A court may resolve a case on statutory conflict-preemption grounds without reaching broader constitutional questions concerning foreign affairs exclusivity or the dormant Foreign Commerce Clause.
Conclusion
The Court invalidated Massachusetts’s Burma selective-purchasing law because it obstructed Congress’s federally calibrated sanctions program and the President’s delegated discretion to manage sanctions and diplomacy, making the state measure conflict-preempted under the Supremacy Clause.