State legislatures and some local governments have been increasingly active in imposing sanctions on foreign governments for human rights violations, nuclear proliferation and foreign policy reasons. USA*Engage and the NFTC maintain that most of these measures violate the Constitution's Supremacy Clause, Foreign Commerce Clause and the President's authority to conduct foreign policy.
State sanctions critically undermine the ability of the United States to speak with one voice on foreign policy. The NFTC won a landmark victory in the Supreme Court in 2000 in Crosby v. NFTC, which held that Massachusetts' procurement ban on companies doing business in Burma was unconstitutional. Despite that precedent, a number of states have enacted procurement bans, which are vulnerable to legal challenge. The bulk of state sanctions activity subsequently shifted to divestment. In 2007, the NFTC won a victory in Federal District Court in Illinois in NFTC v. Alexi Giannoulias, which found that the state's Sudan sanctions law requiring state pension funds to divest from companies with business in Sudan violated the Foreign Commerce Clause. Legislatures have continued to enact sanctions laws requiring divestment from vehicles that invest in target countries. In many cases, these laws have been written to avoid conflicting with federal court decisions. USA*Engage and the NFTC closely monitor pending state legislation and notify governors and legislators of conflicts with federal court precedents.
Enacted State Sanctions
As of April 2012, sanctions legislation has been introduced in 28 states, 22 having been enacted into law. Five states have enacted bans on procurement from identified companies. These laws may be in conflict with the Supreme Court decision in Crosby v. NFTC.
The template for these bills requires the composition of a list of "scrutinized companies" deemed to be doing business in the target country. In some states these lists are compiled by a state government agency and in others the lists are compiled by private organizations under contract to the state. In both cases they are frequently updated. Questions about the lists and their composition should be addressed to the relevant state authorities.
Click here for a list of state sanctions legislation that has been enacted as of April 2012.
Crosby v. NFTC
NFTC v. Giannoulias
State and Local Economic Sanctions: Constitutional Issues
NCSL Economic Development & Trade Issues