Additional Notes on State Sanctions Laws
Since I posted last week on the push for new state divestment and selective contracting laws targeting foreign companies doing business with Iran, that effort has gone from the margins to the mainstream, as reports indicate that up to 25 U.S. states might have ballot measures in the upcoming elections regarding such sanctions laws. News of this follows a letter to President Obama from Republican Governors regarding their intent to continue to implement existing state divestment and selective contracting laws and to push for new sanctions that target foreign companies engaged in business with Iran, as well as a petition from New York State Assemblymen calling on Governor Andrew Cuomo to take care that that laws, including NY state sanctions laws, be faithfully executed.
As I’ve indicated, I’m skeptical that these efforts will bear fruit. First, any existing or newly-adopted state divestment or selective contracting laws have to be carefully tailored to the grant of statutory permission found in Section 201-5 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA). If a particular law exceeds the scope of that expressly authorized in Section 202, then the analysis is straightforward and is controlled by Crosby, in which case the law will be struck down as a violation of the Supremacy Clause to the extent that it conflicts with federal law. In fact, I think the argument here is even stronger than the one that prevailed in Crosby, as an additional case could be made that, by insulating certain sanctions provisions and not others from federal preemption, Congress enacted a statutory scheme that rendered permissible certain state sanctions laws and implicitly prohibited others. As such, state divestment and selective contracting laws that exceed the scope of what Congress viewed as permissible in CISADA are prohibited to the extent that they conflict with federal law.
Second, I’m a big believer that if push came to shove, the federal government has strong arguments in reserve to claim that even those state divestment and selective contracting laws that are carefully tailored to the mandate of Section 202 of CISADA are preempted to the extent that they conflict with federal law (or federal policy) or are otherwise an unconstitutional infringement on the President’s foreign affairs power. As I’ve noted, Crosby was decided on the grounds that the Massachusetts law “[stood] as an obstacle to the accomplishment of Congress’s full objectives under the federal Act.” But the NFTC argued several things, including that “the state law unconstitutionally infringed on the federal foreign affairs power, violated the Foreign Commerce Clause, and was preempted by the federal Act.” Indeed, in the lower courts, the first of these arguments prevailed before the District Court and all three were successful before the Court of Appeals. The Supreme Court ruled on the grounds that the state law was preempted and thus saw no need to inquire into the legitimacy of the NFTC’s other constitutional arguments.
I have no doubt that a legal challenge to state laws specifically tailored to CISADA’s mandate would push to the forefront the argument regarding the constitutional infringement of the federal foreign affairs power and, more particularly, the Executive’s unique power over foreign affairs. While the Iran nuclear accord might not have the status of law in U.S. courts, it does evidence a new federal policy towards the Iran nuclear dispute and thus is likely to have persuasive value before the Court, which has long been reticent to dip its toes too deeply into what are otherwise policy questions.
Nonetheless, as I’ve written, efforts to maintain (and impose additional) state divestment and selective contracting laws will prove a nuisance to the ongoing implementation of the nuclear accord. This is especially true, when considering the fact that any attempts to nullify the state sanctions laws by claiming preemption or other federal powers will result in litigation that will only get to play out over the long-term (though an injunction could well-serve the purposes of the Iran nuclear deal).
3 Comments
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Interesting post. Thanks, Tyler. States are clearly in their strongest legal position if their divestment statutes conform with CISADA’s boundaries. It’s far from clear, however, that any state legislation outside those boundaries is necessarily preempted. That’s uncharted waters about the preemptive effects of CISADA and I do think both sides would have legal arguments. Nevertheless in the parallel context of state divestment from Sudan under SADA, I urged states to exercise restraint (i.e., to stay within the SADA boundaries) and on first blush I believe the same argument for restraint holds here. See Darfur, Divestment & Dialogue, U Penn J Intl L, available here: http://works.bepress.com/perry_bechky/2/.
Regarding your suggestion that even state divestment that conforms precisely with the CISADA boundaries could still be preempted, call me skeptical. Just as states should be cautious against exceeding CISADA’s limits, I believe the Executive should show restraint against challenging state actions that stay within those limits. The limits after all were enacted by Congress and signed into law by President Obama. The Bush Administration advanced this kind of sole executive power argument against SADA and Congress rejected it in enacting SADA and CISADA. The Senate Banking Committee report for CISADA is quite explicit: “[T]he Committee has concluded that, with respect to each of these challenges [statutory preemption, dormant foreign commerce, and dormant foreign affairs], Congress and the President have the constitutional power to authorize States to enact divestment measures, and Federal consent removes any doubt as to the constitutionality of those measures.” See The Politics of Divestment, a book chapter in The Politics of International Economic Law, available here: http://works.bepress.com/perry_bechky/6/.
There is perhaps one more reason for the Obama Administration to respect the CISADA boundaries here: as a Senator from Illinois, Barack Obama was the chief Senate sponsor of a divestment bill that evolved into CISADA. The states would be sure to quote Senator Obama in their defense, just as Members of Congress quoted him in support of enacting CISADA in 2009. Challenging CISADA-compliant state laws would force the Obama Administration to confront the constitutional arguments made by Barack Obama himself. Awkward. See the Politics of Divestment, supra.
Thanks again,
Perry.
Thanks for the thoughtful reply, Perry. I will be sure to read with interest your article on this subject.
One brief comment: Is there not an argument that US federal policy towards Iran and its nuclear program has undergone a monumental shift since 2010 and, being the case, that CISADA § 202 loses some of its value as the final word on the (lack of) preemptive effect of federal law on certain state divestment & selective contracting laws? Couldn’t there be an argument that CISADA § 202 barred the preemptive effect of federal law at the time of its inception, but with this fundamental change in federal policy towards Iran’s nuclear program, it is no longer ultimately decisive as to the question of the preemptive effect of federal law?
I’m skeptical of claims that CISADA § 202 is decisive as to this question. I can’t think of a federal court running into a similar case as the one that would be presented here, but we have seen federal courts provide the federal Gov’t (and, in particular, the Executive branch) significant power to preempt state laws that interfere with prevailing federal policy (e.g., Movsesian; but see Medellin). Should suit be brought against a particular state for its Iran divestment laws, I wouldn’t be terribly surprised to see a federal court rule in the Executive’s favor.
Thanks for your reply, Tyler. I think we agree on at least two points: JPCOA is a major change in Executive policy towards Iran since enactment of CISADA, and there’s never been a similar case claiming that a state statute is preempted by Executive policy where federal legislation expressly authorizes states to enact such a statute. I think CISADA would weigh heavily and probably determinatively against preemption in such a case (assuming the state stayed within the bounds of the CISADA authorization).
To find preemption, it seems to me, the Court would have to follow one of two paths. First, it could find that CISADA (in relevant respect) unconstitutionally intrudes into an area of the Executive’s sole power. That strikes me as a rather adventurous proposition, not least because of the obvious connections between CISADA and foreign commerce, a power the Constitution expressly assigns to Congress.
Second, the Court could find that JPCOA negated the CISADA authorization. As a thought experiment, consider the analysis that would apply if JPCOA were approved by the Senate as a treaty or by Congress as a Congressional-Executive agreement (like NAFTA). In that case, the Court would engage in later-in-time analysis to determine whether the hypothetically-so-approved JPCOA was so inconsistent with the earlier-enacted CISADA authorization as to effectively (though silently) negate that authorization. It seems to me that’s the greatest weight that could possibly be given to JPCOA, treating it exactly the same as a statute or treaty. But it’s not clear to me either that JPCOA deserves that same weight or that the CISADA authorization is so inconsistent with JPCOA as to fail the later-in-time test.
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