State and Local Economic Sanctions:
Constitutional Issues
Jeanne J. Grimmett
Legislative Attorney
June 27, 2012
Congressional Research Service
7-5700
www.crs.gov
RL33948
CRS Report for Congress
Pr
epared for Members and Committees of Congress
State and Local Economic Sanctions: Constitutional Issues
Summary
States and localities have at times proposed or enacted measures restricting their agencies from
conducting economic transactions with firms that do business with or in foreign countries whose
conduct the jurisdictions find objectionable. While some maintain that sub-federal entities may
enact such laws under sovereign proprietary powers and other constitutional prerogatives, others
argue that such statutes impermissibly invade federal commerce and foreign affairs authorities
and in some cases may be preempted by federal law. In 2000, the U.S. Supreme Court
unanimously held in Crosby v. National Foreign Trade Council that a Massachusetts law
restricting state transactions with firms doing business in Burma was preempted by a federal
Burma statute. In American Insurance Association v. Garamendi, a 2003 case, the Court
reaffirmed the relevance of the dormant federal foreign affairs power to preempt state law, but the
scope of the 5-4 decision is unclear.
Due to the troubled situation in Darfur, a number of states have proposed or enacted some type of
divestment legislation against Sudan. States have also considered or adopted divestment
legislation involving Iran and terrorist states in general. In February 2007, a federal district court
held Illinois’s Sudan sanctions law unconstitutional and permanently enjoined its enforcement
(National Foreign Trade Council v. Giannoulias). Illinois subsequently repealed its statute, and
the state’s appeal in the case was dismissed as moot in November 2007.
Congress considered and enacted legislation in the 110th and 111th Congresses to authorize states
to divest assets involving Sudan and Iran. The Sudan Accountability and Divestment Act of 2007,
P.L. 110-174, enacted into law December 31, 2007, authorizes states and local governments to
adopt divestment measures involving (1) federally identified persons with investments and
business in the Sudanese energy and military equipment sectors or (2) persons having a direct
investment in or carrying on a trade or business with Sudan or the Government of Sudan,
provided certain notification requirements are met. The Comprehensive Iran Sanctions,
Accountability, and Divestment Act, P.L. 111-95, enacted into law on July 1, 2010, includes
provisions authorizing state and local governments to divest from businesses making investments
of $20 million or more in Iran’s energy sector after adequate investigation and notification have
occurred. Both laws provide that a measure falling within the scope of the authorization is not
preempted by any federal law or regulation.
Congressional Research Service
State and Local Economic Sanctions: Constitutional Issues
Contents
Types of State and Local Economic Sanctions ................................................................................ 1
Overview of Constitutional Issues................................................................................................... 2
Foreign Commerce Clause ........................................................................................................ 2
Intrusion into Foreign Affairs .................................................................................................... 4
Federal Preemption.................................................................................................................... 5
Federal Judicial Rulings on State Sanctions (2000-Present) ........................................................... 6
Crosby v. National Foreign Trade Council................................................................................ 6
American Insurance Association v. Garamendi ........................................................................ 7
National Foreign Trade Council v. Giannoulias ....................................................................... 7
Faculty Senate of Florida International University v. Winn.................................................... 10
Some Ongoing Legal and Practical Concerns ............................................................................... 11
Recent Federal Enactments............................................................................................................ 12
Sudan Accountability and Divestment Act.............................................................................. 12
Comprehensive Iran Sanctions, Accountability, and Divestment Act ..................................... 13
Appendixes
Appendix. State Enactments Relating to Divestment in Foreign Countries .................................. 14
Contacts
Author Contact Information........................................................................................................... 15
Acknowledgments ......................................................................................................................... 15
Congressional Research Service
State and Local Economic Sanctions: Constitutional Issues
tates and localities have at times proposed or enacted measures restricting governmental
transactions with firms doing business or having financial ties with foreign countries whose
S conduct the state or locality has found objectionable, particularly in the human rights area.1
This report summarizes constitutional arguments made for and against these laws and discusses
Crosby v. National Foreign Trade Council and American Insurance Association v. Garamendi,
U.S. Supreme Court decisions that address the constitutionality of state laws affecting U.S.
foreign affairs. The report also discusses National Foreign Trade Council v. Giannoulias, a 2007
federal district court decision holding an Illinois Sudan sanctions law unconstitutional. It also
suggests some possible legal ramifications of recent case law for future state and congressional
action in this area and summarizes legislation enacted in the 110th and 111th Congresses
addressing state economic sanctions.
Types of State and Local Economic Sanctions
State and local sanctions measures have generally taken the form of (1) selective purchasing or
contracting laws, which generally prohibit state or local agencies from contracting with or
procuring goods and services from companies that do business in a named country, or (2)
selective investment laws, which prohibit states or local agencies from investing public funds in
such companies. A variation of the latter is the state or local divestment law, which, for example,
may require divestment by state pension funds of stock in companies that do business with or in a
named country. In the 1990s, a number of state laws focused on conditions in Burma (Myanmar),
while others targeted Nigeria, Tibet, Cuba, Indonesia, Switzerland, and Northern Ireland. Other
state laws addressed poor foreign labor practices regardless of country.
Due to the troubled situation in Darfur,2 between 2006 and 2010 a number of states proposed or
enacted divestment legislation focused on Sudan.3 Other states have passed legislation prohibiting
pension fund investment in debt instruments issued by any nation designated by the State
Department as supporting or engaging in terrorism.4 Other pending or enacted state legislation is
aimed at divestment of state funds from companies engaged in certain business activities in Iran,
in either Iran or Sudan, or in state sponsors of terrorism.5
1 See generally National Conference of State Legislatures, State Divestment Legislation, at http://www.ncsl.org/
IssuesResearch/EmploymentWorkingFamilies/StateDivestitureEnactedLawsLegislation/tabid/13297/Default.aspx (last
visited March 11, 2011).
2 For further information on Sudan and Darfur, see CRS Report RL33574, Sudan: The Crisis in Darfur and Status of
the North-South Peace Agreement, by Ted Dagne.
3 The Government Accountability Office reported in 2010 that 35 states had enacted laws or adopted non-legislative
policies regarding state investments in Sudan. U.S. Gov’t Accountability Office, Sudan Divestment: U.S. Investors Sold
Assets but Could Benefit from Increased Disclosure Regarding Companies’ Ties to Sudan 13, GAO-10-742, June 22,
2010. Between 2006 and 2010, state fund managers divested or froze about $3.5 billion in assets related to Sudan. Id. at
11.
4 The State Department, pursuant to Section 6(j) of the Export Administration Act, currently lists Cuba, Iran, Sudan,
and Syria as countries whose governments have repeatedly provided support for acts of international terrorism. See
Dep’t of State, Country Reports on Terrorism 2009 (2010), available at http://www.state.gov/documents/organization/
141114.pdf.
5 See Appendix.
Congressional Research Service
1
State and Local Economic Sanctions: Constitutional Issues
In February 2007, an Illinois federal district court held the Illinois Sudan statute unconstitutional.
The state’s appeal to the U.S. Court of Appeals for the Seventh Circuit was dismissed as moot on
November 30, 2007.6
Overview of Constitutional Issues
State and local economic sanctions targeted at what is perceived as objectionable foreign
government behavior ordinarily raise three constitutional issues: (1) whether they burden foreign
commerce in violation of the Foreign Commerce Clause and, if so, whether they are protected by
the market participant exception to the Clause; (2) whether they impermissibly interfere with the
federal government’s exclusive power to conduct the nation’s foreign affairs; and (3) where
Congress or the President has acted, whether they are preempted by federal law.7
Foreign Commerce Clause
In granting Congress exclusive power to regulate interstate and foreign commerce (Art. I, §8, cl.
3), the Constitution also impliedly prohibits states and localities from unreasonably burdening or
discriminating against such commerce unless they are authorized by Congress to do so.8 In a
6 National Foreign Trade Council v. Giannoulias, 523 F.Supp.2d 731 (N.D.Ill. 2007). For further discussion of the case
and subsequent legislative developments, see infra text accompanying notes 38-50.
7 For legal background, see, e.g., Cong. Research Service, The Constitution of the United States of America, 2008
Supp. at 27-29 (H.Doc. 110-17)[hereinafter Constitution Annotated]; Louis Henkin, Foreign Affairs and the United
States Constitution 149-69 (2d ed. 1996)[hereinafter Henkin]; Matthew Schaefer, Constraints on State-Level Foreign
Policy: (Re) Justifying, Refining and Distinguishing the Dormant Foreign Affairs Doctrine, 41 Seton Hall L. Rev. 201
(2011); Sapna Desai, Note, Genocide Funding: The Constitutionality of State Divestment Statutes, 94 Cornell L. Rev.
669 (2009); Judith Resnick, Foreign as Domestic Affairs: Rethinking Horizontal Federalism and Foreign Affairs
Preemption in Light of Translocal Internationalism, 57 Emory L. J. 31 (2007); Adrian Barnes, Do They Have to Buy
From Burma?: A Preemption Analysis of Local Antisweatshop Procurement Laws, 107 Colum. L. Rev. 426 (2007);
Lucien J. Dhooge, Condemning Khartoum: The Illinois Divestment Act and Foreign Relations, 43 Am. Bus. L. J. 245
(2006); Todd Steigman, Lowering the Bar: Invalidation of State Laws Affecting Foreign Affairs Under the Dormant
Foreign Affairs Power After American Insurance Association v. Garamendi, 19 Conn. J. Int’l L. (2004); David D.
Caron, The Structure and Pathologies of Local Selective Procurement Ordinances: A Study of the Apartheid-Era South
Africa Ordinances, 21 Berkeley J. Int’l L. 161 (2003); Brandon P. Denning, American Insurance Ass’n v. Garamendi,
and Deutsch v. Turner Corp., 97 Am. J. Int’l L. 950 (2003); Brandon P. Denning & Jack H. McCall, Crosby v. National
Foreign Trade Council, 94 Am. J. Int’l L. 750 (2000); Jack Goldsmith, Statutory Foreign Affairs Preemption, 2000
Sup. Ct. Rev. 175; Robert Stumberg, Preemption & Human Rights: Local Options After Crosby v. NFTC, 32 Law &
Poly Int’l Bus. 109 (2000); Alejandra Carvajal, State and Local ‘Free Burma’ Laws: The Case for Sub-National Trade
Sanctions, 29 Law & Pol’y Int’l Bus. 257 (1998) [hereinafter Carvajal]; Daniel M. Price & John P. Hannah, The
Constitutionality of United States State and Local Sanctions, 39 Harv. Int’l. L. J. 443 (1998) [hereinafter Price &
Hannah]; Jack L. Goldsmith, Federal Courts, Foreign Affairs, and Federalism, 83 Va. L. Rev. 1617 (1997); David
Schmahmann & James Finch, The Unconstitutionality of State and Local Enactments in the United States Restricting
Business Ties with Burma (Myanmar), 30 Vand. J. Transnat’l L. 175 (1997)[hereinafter Schmahmann & Finch];
Richard B. Bilder, The Role of States and Cities in Foreign Affairs, 83 Am. J. Int’l L. 821 (1989); Harold G. Maier,
Preemption of State Law: A Recommended Analysis, 83 Am. J. Int’l L. 832 (1989); Constitutionality of South African
Divestment Statutes Enacted by State and Local Governments, 10 Op. Off. Legal Counsel 49 (1986) (concluded that
certain state divestment laws were constitutional)[hereinafter DOJ Opinion].
Note also Timothy J. Conlon, Robert L. Dudley, & Joel F. Clark, Taking on the World: The International Activities of
American State Legislatures, 34 Publius: The Journal of Federalism 183 (Summer 2004).
8 New York v. United States, 505 U.S. 144, 171 (1992); South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82,
87-93 (1984); note, e.g., Kraft Gen. Foods v. Iowa Dept. of Revenue, 505 U.S. 71, 81 (1992)(“Absent a compelling
justification ... a State may not advance its legitimate goals by means that facially discriminate against foreign
(continued...)
Congressional Research Service
2
State and Local Economic Sanctions: Constitutional Issues
series of cases involving state taxes, the Supreme Court has set out criteria for examining whether
state measures impermissibly burden foreign commerce where affirmative congressional
permission is absent. In sum, the Court has required a closer examination of measures alleged to
infringe the Foreign Commerce Clause than is required for those alleged to infringe its interstate
counterpart, but has also provided scope for state measures in situations where a federal role is
not clearly demanded.
In Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434 (1979), the Supreme Court struck
down on Foreign Commerce Clause grounds a California state statute that applied an ad valorem
property tax on foreign cargo containers, stating that “a more extensive constitutional inquiry is
required” in foreign commerce cases for two reasons: (1) the “enhanced risk of multiple taxation”
and (2) the possibility that the disputed measure “may impair federal uniformity in an area where
federal uniformity is essential,” or, in other words, may “prevent[] the Federal Government from
‘speaking with one voice when regulating commercial relations with foreign governments.’”9 The
Court made clear that “[i]f a state tax contravenes either of these precepts, it is unconstitutional
under the Commerce Clause.”10
In Container Corp. of America v. Franchise Tax Board, 463 U.S. 159, 194 (1983), the Court
upheld a state income tax law at variance with federal policy, indicating that state law may have
“merely foreign resonances” without implicating foreign affairs and stating that a differing state
tax law “will violate the ‘one voice’ standard if it either implicates foreign policy issues which
must be left to the Federal Government or violates a clear federal directive.”11 The Court noted
that the second of these factors “is, of course, essentially a species of preemption analysis.”12 The
Court later concluded in Barclays Bank PLC v. Franchise Tax Board of California, 512 U.S. 298
(1994), a case examining California’s income-based corporate franchise tax, that even a state
statute that may make it more difficult for the federal government to speak in a solo international
trade voice will be sustained if there is no clear indication that Congress had intended to bar the
state practice. The Court stated that Container Corporation and a subsequent case, Wardair
Canada Inc. v. Florida Dep’t of Revenue, 477 U.S. 1 (1986), in which the Court upheld a state tax
on jet fuel purchased by foreign airlines, suggest that “Congress may more passively indicate that
certain state practices do not ‘impair federal uniformity in an area where federal uniformity is
essential,’ ...; it need not convey its intent with the unmistakable clarity required to permit state
regulation that discriminates against interstate commerce....”13
Where Congress has not clearly immunized a state selective purchasing or divestment law for
Foreign Commerce Clause purposes, arguments that the law impermissibly burdens foreign
commerce14 may be countered by invocation of the market participant doctrine. First articulated
in Hughes v. Alexandria Scrap Corp., 426 U.S. 794 (1976), the doctrine exempts from the clause
those laws in which the state or local government acts as a buyer or seller of goods rather than as
(...continued)
commerce.”).
9 Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 446-48, 451 (1979).
10 Id. at 451.
11 Container Corp. of America v. Franchise Tax Board, 463 U.S. 159, 194 (1983).
12 Id.
13 Barclays Bank PLC v. Franchise Tax Board of California, 512 U.S. 298, 323 (1994).
14 See Price & Hannah, supra note 7, at 478-82; Schmahmann & Finch, supra note 7, at 189-91.
Congressional Research Service
3
State and Local Economic Sanctions: Constitutional Issues
a regulator.15 It is counter-argued, however, that the doctrine is inapplicable where the state seeks
to affect behavior beyond the immediate market in which it is operating, that it does not
immunize laws from other constitutional challenges, and that, as suggested by the Supreme Court,
it may not even apply in Foreign Commerce Clause cases.16
Intrusion into Foreign Affairs
In Zschernig v. Miller, 389 U.S. 429 (1968), the Supreme Court struck down an Oregon law
prohibiting nonresident aliens from inheriting property if they could not satisfy the state courts
that their home country allowed U.S. nationals to inherit estates on a reciprocal basis and that
payments to foreign heirs from the Oregon estate would not be confiscated. Although the federal
government had not exercised its power in the area, the Court nonetheless found that the inquiries
required by the state statute would result in “an intrusion by the State into the field of foreign
affairs which the Constitution entrusts to the President and the Congress.”17 The Court
distinguished Clark v. Allen, 331 U.S. 503 (1947), which had upheld a similar California statute,
on the ground that the statute in that case could be implemented through “a routine reading of
foreign law” and did not require the particularized inquiries demanded by the Oregon law.18
Although Zschernig’s parameters have been viewed as unclear,19 it is argued that selective
procurement laws are directed at influencing or scrutinizing foreign behavior in the manner that
the Zschernig Court found objectionable20 and that courts that have upheld restrictive
procurement laws attacked on Zschernig grounds have emphasized that the laws applied neutrally
to all foreign products and thus did not require the assessment of a particular government’s
policies that might result in constitutional infirmity.21
15 Carvajal, supra note 7, at 270-74; DOJ Opinion, supra note 7, at 53-59 (concluded that state divestment laws were
constitutional). Trojan Technologies, Inc. v. Pennsylvania, 916 F.2d 903, 909-913 (3d Cir. 1990), cert. denied, 501
U.S. 1212 (1991), applied the doctrine to a state “Buy America” law.
16 See, e.g., South Central Timber Dev., Inc. v. Wunnicke, 467 U.S. at 99 (downstream effects); United Building &
Construction Trades Council v. Mayor & Council of Camden, 465 U.S. 208 (1984)(no immunity from other
constitutional challenges); Reeves, Inc. v. Stake, 447 U.S. 429, 437-38, n.9 (1980)(application in Foreign Commerce
Clause cases unclear). See generally Price & Hannah, supra note 7, at 482-90; Schmahmann & Finch, supra note 7, at
191-97.
The Court of Appeals in National Foreign Trade Council v. Natsios, 138 F.3d 38 (1st Cir. 1999), infra note 28,
concluded that the State of Massachusetts was not acting as a market participant in enacting its Burma sanctions law
because it was “attempting to impose on companies with which it does business conditions that apply to activities not
even remotely connected to such companies’ interactions with Massachusetts.” Id. at 63. The court also found that in
any event the state would not be shielded from Foreign Commerce Clause scrutiny because of questions as to whether
the exception “applies at all (or without a much higher level of scrutiny) to the Clause.” Id. at 65; see also Antilles
Cement Corp. v. Acevedo Vilá, 408 F.3d 41, 46-47 (1st Cir. 2005). As indicated infra, the Supreme Court did not take
up the Foreign Commerce Clause issue in its ruling on the Massachusetts law.
17 Zschernig v. Miller, 389 U.S. 429, 432 (1968).
18 Id. at 433-36.
19 See, e.g., Henkin, supra note 7, at 162-65; Bilder, supra note 7, at 825-26; for further discussion, see Constitution
Annotated, supra note 7, at 27-29.
20 E.g., Price & Hannah, supra note 7, at 457-65; Schmahmann & Finch, supra note 7, at 198-99.
21 See Trojan Technologies, 916 F.2d 903; K.S.B. Technical Sales Corp. v. North Jersey Dist. Water Supply Comm’n,
381 A.2d 774 (N.J. 1977); and generally Price & Hannah, supra note 7, at 469-71. Prior to the lower court rulings on
the Massachusetts Burma law, see infra note 25, at least one state “Buy America” law had been struck down on foreign
affairs grounds. Bethlehem Steel Corp. v. Bd. of Comm’rs of the Dep’t of Water & Power of Los Angeles, 276 Cal.
App. 221 (1969).
It has also been argued that while state and local divestment measures may well survive Zschernig scrutiny, the
(continued...)
Congressional Research Service
4
State and Local Economic Sanctions: Constitutional Issues
Federal Preemption
In exercising its delegated powers, Congress may, by virtue of the Supremacy Clause (Art. VI, cl.
2), preempt state and local laws that conflict with or are incompatible with federal legislation and
thus limit the use of powers that a state or locality may exercise concurrently with Congress.
Where Congress has not expressly preempted state and local laws, two types of implied federal
preemption may be found: field preemption, in which federal regulation is so pervasive that one
can reasonably infer that states or localities have no role to play,22 and conflict preemption, in
which “compliance with both federal and state regulations is a physical impossibility,”23 or where
the state law, as described by the Supreme Court in Hines v. Davidowitz, 312 U.S. 52 (1941),
“stands as an obstacle to the accomplishment and execution of the full purposes and objectives of
Congress.”24 In preemption cases involving foreign affairs, courts may well weigh the deference
traditionally accorded areas subject to state and local regulation against the policy considerations
implicated by the federal scheme affecting foreign affairs or commerce. In Hines, which
invalidated a state alien registration statute on conflict grounds, the Court reiterated the long-
recognized, constitutionally based supremacy of federal authority in foreign affairs and made
clear that any concurrent state power in the area must be “restricted to the narrowest of limits,”
distinguishing the states’ limited authority with regard to aliens from their broadly based power to
tax.
Depending on the nature of a state statute and the type of federal action taken to deal with a
problematic foreign nation, opponents of a sanctions law may thus argue that, absent express
preemption, a state law may conflict with federal laws and policies targeted at a specific country
with respect to the activities and persons covered, or that there is reason to presume that Congress
intended that all state and local measures targeting a particular country be preempted.25 In
response, it might be maintained, inter alia, that federal limitations on the exercise of proprietary
powers to contract and invest must be expressly intended or must result from a highly pervasive
federal scheme.26 Moreover, state laws may arguably mandate consequences that differ from
federal remedies or that do not exist on the federal level so long as the federal legislation or action
involved does not constitute a “complex and interrelated federal scheme of law, remedy and
administration.”27
(...continued)
principles underlying the market participant doctrine—that the Commerce Clause was not intended “to limit the ability
of the States themselves to operate freely in the free market” and that judicial restraint in the area is “counseled by
considerations of state sovereignty, the role of each state as ‘guardian and trustee of its people,’”—should make the
doctrine generally applicable and thus state proprietary actions should not be subject to the Zschernig principle. DOJ
Opinion, supra note 6, at 63-64, quoting Reeves, Inc. v. Stake, 447 U.S. at 437-38.
22 See, e.g., Wardair Canada Inc. v. Florida Dep’t of Revenue, 477 U.S. 1, 6 (1986).
23 Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43 (1963).
24 See also Sprietsma v. Mercury Marine, 537 U.S. 51, 64-65 (2002); Freightliner Corp. v. Myrick, 514 U.S. 280, 287
(1995).
25 Price & Hannah, supra note 7, at 472-78; Schmahmann & Finch, supra note 7, at 184-89.
26 See, e.g., DOJ Opinion, supra note 7, at 64-65.
27 See id. at 65-66, citing Wisconsin Dep’t of Industry, Labor, and Human Relations v. Gould, Inc., 475 U.S. 282, 286
(1986); Carvajal, supra note 7, at 261-65.
Congressional Research Service
5
State and Local Economic Sanctions: Constitutional Issues
Federal Judicial Rulings on State Sanctions
(2000-Present)
Crosby v. National Foreign Trade Council
In Crosby v. National Foreign Trade Council, 530 U.S. 363 (2000), the Supreme Court
unanimously ruled that a Massachusetts selective purchasing law targeted at Burma was
preempted by federal Burma sanctions contained in the Foreign Operations Appropriations Act,
1997, P.L. 104-208.28 At the time, the absence of well-developed case law directly addressing
sub-federal sanctions had made the outcome of a constitutional challenge to state sanctions laws
unclear. Although various Supreme Court cases had examined aspects of such laws, none directly
ruled on such a statute. Moreover, the few state cases scrutinizing such measures on constitutional
grounds differed in result.29
Although Congress had not expressly preempted state laws in the federal Burma statute, the
Court, applying conflict preemption, found that the state law served as “an obstacle to the
accomplishment and execution of the full purposes and objectives of Congress,” as it
“undermines the intended purpose and ‘natural effect’ of at least three provisions of the federal
Act, namely, its delegation of effective discretion to the President to control economic sanctions
against Burma, its limitation of sanctions solely to United States persons and new investment, and
its directive to proceed diplomatically in developing a comprehensive, multilateral strategy
towards Burma.”30
After rejecting the state’s argument that the law could not be preempted because it was based on
the state’s spending power, the Court found that the law lacked the flexibility inherent in the
federal statute: the former had stringent application requirements and no termination provision,
while the latter authorized the President to lift federal measures in certain circumstances, allowed
him to prohibit new investment based on his own findings, and provided waiver authority with
regard to all sanctions imposed in the statute. 31 The state law was also found to exceed federal
authorities in covering most state contracts, foreign and domestic firms, and firms already
operating in Burma, whereas the federal law imposed sanctions solely on U.S. persons,
28 The Supreme Court narrowed the ruling of the First Circuit Court of Appeals, which had held that the state law
infringed the federal foreign affairs power, violated the Foreign Commerce Clause, and was preempted by federal law.
National Foreign Trade Council v. Natsios, 181 F.3d 38 (1st Cir. 1999). The district court ruled that the statute was an
unconstitutional infringement on the federal foreign affairs powers. National Foreign Trade Council v. Baker, 26
F.Supp.2d 287 (D.Mass.1998).
29 Compare, e.g., Bd. of Trustees of Employees’ Retirement System v. Mayor of Baltimore City, 317 Md. 72, 562 A.2d
720 (Md. 1989), cert. denied sub nom. Lubman v. Mayor and City Council of Baltimore, 493 U.S. 1093
(1990)(municipal ordinance requiring city pension funds to divest their holding in companies doing business in South
Africa upheld in face of preemption, foreign affairs and Foreign Commerce Clause challenges), with Springfield Rare
Coin Galleries v. Johnson, 115 Ill. 2d 221, 503 N.E. 2d 300, 307 (Ill. 1986)(state could not use its constitutional taxing
power to exempt from state taxes coins and currencies issued by the United States or any foreign country except South
Africa; creation of tax classification based on political and social policies of a single foreign nation impermissibly
intruded into regulation of foreign affairs; “regulations which amount to embargoes or boycotts” found to be “outside
the realm of permissible State activity”). Like the federal Burma law implicated in Crosby, the Comprehensive Anti-
Apartheid Act of 1986, cited in Bd. of Trustees, supra, did not expressly preempt sub-federal laws.
30 Crosby v. National Foreign Trade Council, 530 U.S. 363, 373-74 (2000).
31 Id. at 374-77.
Congressional Research Service
6
State and Local Economic Sanctions: Constitutional Issues
authorized a prohibition on new investment only, and exempted purchase and sales contracts from
any ban.32 Finally, the state law had impeded the President’s ability to pursue the multilateral
strategy envisioned in the federal act, the Court citing formal protests from U.S. trading partners,
World Trade Organization complaints, and the distraction caused by the state law in discussions
with foreign countries regarding the situation in Burma.33
Finally, the Court rejected the state’s argument that in not expressly preempting the state law
Congress had implicitly permitted it, the state noting that Congress was aware of the
Massachusetts law when it adopted the federal Burma statute in 1996. The Court found that “[a]
failure to provide for preemption expressly may reflect nothing more than the settled character of
implied preemption doctrine that the courts will dependably apply” and, citing Hines, that “in any
event, the existence of a conflict cognizable under the Supremacy Clause does not depend on
express recognition that federal and state law may conflict.”34 The Court found that in this case
Congress’s silence was ambiguous and as such insufficient to warrant the state’s inference of
congressional intent.35
American Insurance Association v. Garamendi
In American Insurance Association v. Garamendi, 539 U.S. 396 (2003), the Supreme Court
reaffirmed the Zschernig Court’s finding of a dormant federal foreign affairs power. In a 5-4 vote,
the Court struck down a California law, the Holocaust Victim Insurance Relief Act, which
required any insurer doing business in the state to disclose information about all life insurance
policies issued in Europe during the Nazi regime. An executive agreement with Germany signed
by the President provided that the International Commission on Holocaust Era Insurance Claims
serve as the sole vehicle for voluntary insurance claims to reduce litigation between foreign
nationals and German firms. Despite the lack of a specific preemption clause, the Court, citing the
“kid glove” approach chosen by the executive branch evident in the German agreement, as well
as in similar agreements with Austria and France, and in executive branch statements supporting
this approach, determined that there was a “clear conflict” between the policies adopted by the
executive and the “iron fist” that California sought to use.36 The Court made clear that state law
could be preempted by the President’s exercise of his independent constitutional authority to
conduct foreign affairs, noting that Congress had not acted on the matter addressed in the
California law and that given this independent authority, “congressional silence is not to be
equated with congressional disapproval.”37
National Foreign Trade Council v. Giannoulias
In National Foreign Trade Council v. Giannoulias, the first lower federal court decision since
Crosby and Garamendi to address a state sanctions law, the U.S. District Court for the Northern
District of Illinois held the Illinois Sudan Act unconstitutional and permanently enjoined its
32 Id. at 377-80.
33 Id. at 380-86.
34 Id. at 387-88.
35 Id. at 388.
36 American Insurance Association v. Garamendi, 539 U.S. 396, 425, 427 (2003).
37 Id. at 429.
Congressional Research Service
7
State and Local Economic Sanctions: Constitutional Issues
enforcement.38 At issue in the February 23, 2007, decision was a statute that placed restrictions
both on the deposit of state funds and the investment of state and municipal pension assets.
Defendants have since appealed the ruling.39
The Illinois law amended the Deposit of State Moneys Act to prohibit the Illinois Treasurer from
investing state funds in commercial instruments of Sudan and so-called “forbidden entities” and
also from depositing state funds into any financial institution that did not certify that it “has
implemented policies and practices that require loan applicants to certify that they are not
‘forbidden entities.’” The category of “forbidden entities” included any company that had not
certified that it did not own or control certain Sudan-related property or assets and did not engage
in certain Sudan-related transactions.
The statute also amended the Illinois Pension Code to prohibit the fiduciary of any pension fund
established under the Code from investing in any entity unless the company managing the funds’
assets certified that the managing company had not transferred any assets of the Illinois
retirement system or pension fund to a forbidden entity. The statute ultimately required that none
of the assets of the system or fund be invested in “forbidden entities” by the end of July 2007. For
purposes of the pension amendments, the term “forbidden entity” included not only the firms
described above, but also any publicly traded company that owned or controlled Sudan-related
property or assets or engaged in other Sudan-related transactions, and any non-publicly traded
company that failed to submit to the fund’s managing company a sworn affidavit averring that the
company did not own or control any Sudan-related property and did not transactions business in
Sudan. The statute was challenged on preemption, foreign affairs, and foreign commerce grounds.
In reaching its decision, the court set out federal law regarding Sudan, beginning with a 1997
Executive Order signed by President Clinton freezing Sudanese property in the United States and
prohibiting various transactions between the United States and Sudan, and continuing with three
subsequent public laws: the Sudan Peace Act (2002), the Comprehensive Peace in Sudan Act
(2004), and the Darfur Peace and Accountability Act (2006). None of these statutes contains a
provision addressing state law preemption and, as noted earlier, a “no preemption” provision in
the House-passed version of the 2006 enactment was not included in the final statute.
Addressing the statutory preemption argument, the court held that, with respect to the amendment
to the Deposit of State Moneys Act, the statute’s “lack of flexibility, extended geographic reach,
and impact on foreign entities interferes with the national government’s conduct of foreign
affairs,” and was thus preempted by federal law.40 On the other hand, the pension amendments
were found not to be preempted, since federal law did not expressly address divestment, and, in
the court’s view “the potential effects of pension divestment on the national government’s ability
to conduct foreign policy are highly attenuated.”41 The court stated that it had not been presented
with evidence “suggesting that these pension funds’ inability to purchase the securities of such
companies would be in any way likely to affect their decision to do business in that country” and
thus, citing Crosby, it had not been shown “that pension fund divestment stands as an ‘obstacle to
38 National Foreign Trade Council v. Giannoulias, 523 F. Supp. 2d 731 (N.D.Ill. 2007).
39 National Foreign Trade Council v. Giannoulias, appeal docketed, No. 07-2004 (7th Cir. May 2, 2007).
40 Giannoulias, 523 F. Supp.2d at 741-42. Because of its adverse holdings on Sudan-related preemption and the foreign
affairs infringement, the court did not address whether the banking amendments were preempted by the National Bank
Act. Id. at 750.
41 Id. at 742.
Congressional Research Service
8
State and Local Economic Sanctions: Constitutional Issues
the accomplishment and execution of the full purposes and objectives of Congress’ with regard to
Sudan policy.”42
Regarding foreign affairs preemption, the court found scant prior case law on the issue, but
concluded that the amendments to the Deposit of State Moneys Act “would have an impact on the
national government’s ability to deal with Sudan that is at least equal to or greater than the impact
of the state laws in Zschernig and Garamendi.”43 The court considered that the amendments
might cause multinational companies to pull out of Sudan resulting in a “real and direct” effect on
Sudan’s economy, and that they thus clearly had “more than an incidental or indirect effect” in
Sudan.44 Noting as well the amendments’ “substantive and direct impact on the national
government’s ability to carry out the flexible and measured approach to Sudanese relations that
Congress and the president have created,” the court held that they interfered impermissibly with
the federal government’s power to conduct the nation’s foreign affairs.45 At the same time, the
court held that the pension amendments did not improperly intrude on the federal foreign affairs
authority, finding that they did not place the same kind of pressure on firms to sever business ties
with that country that flowed from the banking amendments and thus were not likely to affect
firms’ willingness to do business in Sudan.
Because the court had already found the banking amendments unconstitutional on two grounds, it
did not consider them in light of the Foreign Commerce Clause. Nevertheless, it did find that
“there is little doubt that the conduct the Illinois Sudan Act seeks to proscribe involves foreign
commerce”46 and that “[w]ithout the protection of the market participant exception, the
amendment to the Pension Code violates the Foreign Commerce Clause.”47 The court found that
to the extent that the state was exercising control over municipal pension funds, however, it was
acting as a market regulator and that the market participant doctrine, even if it were determined
that the doctrine had a role in Foreign Commerce Clause cases, was inapplicable in this situation.
With respect to the state’s control of its own pension funds, the court held that, even were it to
find that the amendment was constitutional if only applied to these funds, it could not sever the
unconstitutional portion of the statute and thus struck down the pension amendment as a whole.
The State of Illinois appealed the decision to the U.S. Court of Appeals for the Seventh Circuit. It
also enacted new Sudan-related divestment legislation, which included a repeal of the invalidated
provisions.48 In October 2007, the state moved to dismiss the appeal as moot and to vacate the
district court judgment. The court granted the motion and remanded on November 30, 2007.
42 Id.
43 Id. at 745.
44 Id.
45 Id.
46 Id. at 747.
47 Id. at 749.
48 Ill. Pub. Act 095-0521 (S.B. 1168)(effective August 28, 2007), available at http://www.ilga.gov/legislation/
publicacts/fulltext.asp?Name=095-0521.
Congressional Research Service
9
State and Local Economic Sanctions: Constitutional Issues
Faculty Senate of Florida International University v. Winn
Faculty Senate of Florida International University v. Winn, a per curiam opinion of the Eleventh
Circuit, held that states can restrict the use of funds to sponsor travel by state education
employees to specific countries for national security reasons.49 At issue in Winn was a Florida
statute prohibiting the allocation of both public and non-public funds for travel to countries that
the federal government had identified as “State Sponsors of Terror.”50 Presented with plaintiff’s
arguments that the law impeded the federal foreign policy powers, the court distinguished Crosby
and Garamendi by emphasizing that there were no penalties for traveling to these countries and
that no conflict with a federal law existed.51 The court also considered Zschernig, but found that
Florida’s willingness to follow the federal list of state sponsors rather than create its own criteria
minimized the possibility of interference with the Executive’s foreign affairs powers.52 Finally,
the Eleventh Circuit emphasized that this statute did not place broad limits on trade with or travel
to these countries and thus lacked a large economic effect on the target nations.53 The U.S.
Supreme Court denied certiorari in the case on June 25, 2012.54
49 Faculty Senate of Fla. Int’l U. v. Winn, 616 F.3d 1206 (11th Cir. 2010) (per curiam).
50 Id. at 1207-08.
51 Id. at 1209, 1211.
52 Id. at 1211.
53 Id. at 1210.
54 Faculty Senate of Fla. Int’l U. v. Florida, 80 U.S.L.W. 3016 (U.S. June 25, 2012)(No. 10-1139).
In response to the Court’s invitation for U.S. government views on the case, the Solicitor General maintained that, as
applied to petitioners, the Florida statute conflicted with federal law and was therefore preempted, but also stated that
plenary review should be denied, mainly because the record in the case was “poorly developed” and the petitioners
neither contended that the decision conflicted with another circuit court ruling nor identified any other state laws that
might be affected by the decision. Brief for the United States as Amicus Curiae, at 20, Faculty Senate of Fla. Int’l Univ.
v. Florida, No. 10-1139, at http://www.justice.gov/osg/briefs/2011/2pet/6invit/2010-1139.pet.ami.inv.pdf.
The Solicitor General argued, in part, that federal sanctions regimes involving countries designated as state sponsors of
terror did not prohibit academic travel to these destinations, noting that 2011 regulations issued by the Treasury
Department at the direction of the President further eased restrictions on such travel to Cuba. The U.S. government
analogized the situation in Crosby v. National Foreign Trade Council, maintaining that “[b]y foreclosing the avenue
through which financing of such travel occurs – i.e., by barring the disbursement of state and even federal or private
funds by state universities – Florida’s Travel Act ‘undermines the congressional calibration of force’ against foreign
designated nations, …‘blunt[s] the consequences of discretionary Presidential action’ with respect to those nations, …
and ‘compromise[s] the very capacity of the President to speak for the Nation with one voice in dealing with other
governments,’ ….” Id. at 16.
Addressing the proprietary nature of state spending decisions, the Solicitor General noted that in Crosby, the Court had
rejected Massachusetts’s argument that its statute was protected from preemption because it was an exercise of the
state’s proprietary rather than its regulatory power, adding that “[a]lthough a State’s spending decisions in a proprietary
capacity generally are unaffected by federal law, … the State [of Florida] correctly acknowledges … that the mere fact
that a state law takes the form of a spending measure does not categorically insulate it from preemption.” Id. at 17. In
arguing against plenary review, however, the U.S. government maintained that the petitioners wrongly argued that the
circuit court decision conflicted with Crosby: “Crosby recognized that a State’s exercise of its spending power is not
altogether immune from preemption, … but it did not overrule the distinction that this Court has drawn between a
State’s acts as a regulator and its acts as a proprietor. The court of appeals erred in holding that the [Travel] Act
represents a permissible exercise of Florida’s proprietary authority over its own fisc insofar as federal and private acts
are concerned, but the court did not hold more broadly that Florida may always avoid preemption in ‘the guise of
setting budgetary priorities.’” Id. at 21.
In denying the petition for certiorari, the Court rejected the U.S. government’s suggestion that further proceedings in
the case may nonetheless be warranted. While arguing against plenary review, the U.S. government had proposed that
the Court might wish to grant the petition, vacate the appellate decision, and remand for further proceedings in light of
the new 2011 Cuba travel regulations, an action that, in the U.S. government’s view, would also permit the appeals
(continued...)
Congressional Research Service
10
State and Local Economic Sanctions: Constitutional Issues
Some Ongoing Legal and Practical Concerns
Where state or local sanctions are held to be preempted by federal statute, Congress may choose
expressly to authorize such measures in new legislation.55 It is also possible that a state or local
sanctions law could be written so as not to conflict with a federal enactment. Where Congress has
not enacted or authorized sanctions against a particular country, state or local sanctions directed at
that jurisdiction may be challenged on dormant foreign affairs or Foreign Commerce Clause
grounds, given that Crosby did not address, and thus did not foreclose or limit the use of, these
constitutional arguments. At the same time, questions remain as to the outcome of these
arguments in a particular case—among them, whether in a Foreign Commerce Clause challenge
legislative silence would be construed as implied authorization of a state sanctions law or,
instead, as a manifestation of an overriding federal policy that a particular country not be subject
to restrictive U.S. measures.56 Whether the market participant exception applies in Foreign
Commerce Clause cases also remains unclear.
Where a state law is challenged as intruding into the federal foreign affairs power, Garamendi
suggests that executive agreements or statements might preempt any state action, despite a lack of
specific agreement language showing the intent to do so.57 At the same time, the Court
recommended following Justice Harlan’s standard from the Zschernig case as a minimum
threshold for foreign affairs preemption, that is, that the state legislation should “produce
something more than incidental effect in conflict with express foreign policy of the National
Government.”58
Some commentators have provided practical criticisms of the state divestment laws. For instance,
state investors rely on private organizations to identify firms with business interests in targeted
countries. The particular concern is that this information might be inaccurate or fail to take
account of the federal government’s interests. This could lead to divestment activities inconsistent
or directly counter to U.S. foreign policy goals. In response, the National Conference of State
(...continued)
court “to focus more specifically on whether the State may validly decline to administer federal and private grants.” Id.
at 22.
55 A sub-federal sanctions law enacted under a congressional authorization could be challenged on statutory preemption
grounds as having exceeded the scope of the authorization. Were it found to be included, however, negative inferences
to be drawn from the dormant Foreign Commerce Clause and dormant foreign affairs power might also be removed by
virtue of the federal enactment. Moreover, Garamendi does not preclude that such a state law would prevail over an
exercise of independent executive foreign affairs power. See Garamendi, 539 U.S. at 427; note also Barclays Bank, 512
U.S. at 328-30; Hamdan v. Rumsfeld, 126 S.Ct. 2749, 2774, n.23 (2006); and id. at 2799-804 (Kennedy, J., concurring).
56 As shown in Crosby in the context of statutory preemption, an ambiguous congressional silence does not warrant an
inference of implied permission of a state law where there exists considerable evidence of a conflict between the state
and federal enactments.
57 See Garamendi, 539 U.S. at 424-25. The dissent would have left the California law intact absent a clear statement or
formal expression by the federal government disapproving it. See id. at 430.
58 See id. at 420. Applying principles ordinarily used in statutory preemption analysis, Justice Souter suggests that a
state law should be preempted under field preemption with or without action by the national government if the state
acts in a domain of foreign affairs not traditionally allocated to it; in the event of conflict between the federal foreign
policy interest and an act of a state within its sphere of “traditional competence” that affects foreign affairs, a balancing
test between the two interests might occur. Id. at 420, n.11. The Court does not establish a precise threshold, although,
citing Boyle v. United Technologies Corp., 487 U.S. 500, 507-508 (1988), it suggests that, “in an area of uniquely
federal interest,” “[t]he conflict with federal policy need not be as sharp as that which must exist for ordinary
preemption.” For additional discussion of Garamendi, see Constitution Annotated, supra note 7, at 26, 29.
Congressional Research Service
11
State and Local Economic Sanctions: Constitutional Issues
Legislatures has asked the federal government to provide U.S. investors with “authoritative
information” regarding foreign and domestic firms with financial and investment activities in
states that sponsor terrorism.59
There are also overarching concerns about whether public plans are suitable means for achieving
foreign policy goals. Besides questions of their efficacy in changing foreign government
behavior, divestment measures could diminish the rate of return on investment. There are
increased administrative costs related to screening investments for ties to targeted nations. Broad
restrictions on investment in certain companies could also undermine the goal of a diversified
portfolio. These risks are likely to be especially problematic because there may well be limited
overlap between those authorizing and making divestment decisions and the stakeholders whom
these decisions will affect.60
Recent Federal Enactments
Sudan Accountability and Divestment Act
The Sudan Accountability and Divestment Act of 2007, P.L. 110-174, enacted into law on
December 31, 2007, authorizes state and local governments to adopt divestment measures
involving (1) federally identified persons with investments and business in the Sudanese energy
and military equipment sectors or (2) persons having a direct investment in or carrying on a trade
or business with Sudan or the Government of Sudan, provided certain notification requirements
are met; the statute also provides that a measure falling within the scope of the authorization is
not preempted by any federal law or regulation.61 The enactment is based on S. 2271, an original
bill of the Senate Committee on Banking, Housing, and Urban Affairs (S.Rept. 110-213). H.R.
180 (Lee) and S. 831 (Durbin) also addressed Sudan divestment by state and local governments;
H.R. 180 passed the House July 31, 2007. President George W. Bush, upon signing the act,
stated that “the executive branch shall construe and enforce this legislation in a manner that does
not conflict” with the federal government’s “exclusive authority” to conduct foreign relations.62
59 Divestment Policy – NCSL 2010 Legislative Summit, National Conference of State Legislatures, at
http://www.ncsl.org/default.aspx?TabId=20933 (last visited March 11, 2011).
60 Alicia H. Munnell, Should Public Plans Engage in Social Investing?, 7-12 An Issue In Brief: Ctr. for Ret. Research
at Boston Coll. (2007), available at http://crr.bc.edu/images/stories/Briefs/ib_7-12.pdf.
61 Federal legislation proposed in 2006 to immunize state Sudan divestment laws was not enacted into public law. H.R.
3127, the Darfur Peace and Accountability Act, as originally passed the House in April 2006, provided that federal
laws were not to be construed to preempt certain Sudan-related state sanctions. In September 2006, the Senate passed
an amended version of the legislation without the state law provision; the House later agreed to the Senate amendment.
See P.L. 109-344.
62 Statement on Signing the Sudan Accountability and Divestment Act of 2007, 43 Weekly Comp. Pres. Doc. 1646
(December 31, 2007). Implicit in this statement is the argument that state divestment statutes could still be
unconstitutional notwithstanding a federal statute authorizing their enactment. Criticism of the President’s signing
statement was aired at a February 2008 hearing of the House Committee on Financial Services. Negative Implications
of the President’s Signing Statement on the Sudan Accountability and Divestment Act: Hearing Before the H. Comm.
on Financial Services, 110th Cong. (2008), at http://www.gpo.gov/fdsys/pkg/CHRG-110hhrg41178/pdf/CHRG-
110hhrg41178.pdf. Although the committee had invited the White House counsel or a designee to testify at the hearing,
the invitation was declined on the ground that the hearing might touch on what the White House counsel considered to
be privileged White House communications. Id. at 66 (letter from Fred F. Fielding, Counsel to the President, to Hon.
Barney Frank, Chairman, House Committee on Financial Services (February 4, 2008)).
Congressional Research Service
12
State and Local Economic Sanctions: Constitutional Issues
Comprehensive Iran Sanctions, Accountability, and Divestment Act
The Comprehensive Iran Sanctions, Accountability, and Divestment Act, P.L. 111-95, enacted into
law on July 1, 2010, includes provisions authorizing state and local governments to divest or
prohibit investments of public monies in Iran.63 Responding to state and local divestment
activities related to Iran, Congress designed Title II’s divestment provisions to “remove[] any
doubt as to the constitutionality of these measures.”64 Specifically, states can require public
divestment from businesses making investments of (or extending credit to persons who will make
investments of) $20 million or more in Iran’s energy sector.65 States must provide notice to those
affected by divestment measures and give those affected the opportunity to comment or challenge
the measures’ applicability to their business dealings.66 If 90 days elapses after notice is given
without the notified company changing its behavior, divestment can occur.67 The statute clearly
states that no federal laws or regulations preempt actions taken by the states under these
provisions.68 The enactment is based on H.R. 2194, introduced by Representative Howard
Berman (D-CA). In the previous Congress, H.R. 2347 (Frank) and S. 1430 (Obama) addressed
Iran divestment by state and local governments; H.R. 2347 passed the House July 31, 2007.
63 22 U.S.C.A. §8532 (West Supp. 2012).
64 H.Rept. 111-512, at 50. The statute grandfathered in previously enacted measures that met the listed procedural
requirements. 22 U.S.C.A. §8532(i).
65 22 U.S.C.A. §8532(c).
66 22 U.S.C.A. §8532(d)(1)-(3).
67 Id.
68 22 U.S.C.A. §8532(f).
Congressional Research Service
13
State and Local Economic Sanctions: Constitutional Issues
Appendix. State Enactments Relating to
Divestment in Foreign Countries
Below is a list of state laws related to divestment of public funds from companies doing business
in foreign countries. Unless otherwise indicated, the provided statute fits the general model of
identifying companies doing business in a country and, after giving notice and opportunity to
discontinue the offending activity, requiring divestment of public funds from these companies.
State Sudan Iran Other
Arizona
Ariz. Rev. Stat. Ann. §35-
Ariz. Rev. Stat. Ann. §35-
Also requires divestment
391.01 (West 2011)
393.02
from companies operating
in state sponsors of
terrorism. Ariz. Rev. Stat.
§35-392.
California
Cal. Gov’t Code §7513.6
Cal. Gov’t Code §7513.7
Colorado
Colo. Rev. Stat. §24-54.8-
104
Connecticut
Conn. Gen. Stat. Ann. §3-
Conn. Gen. Stat. Ann. §3-
21e
13g
District of Columbia
D.C. Code §1-335.0
D.C. Code §1-336.0
Florida
Fla. Stat. §215.473
Fla. Stat. §215.473
Georgia
Ga. Code Ann. §50-5-84
Ga. Code Ann. §47-20-
(barring bids on state
83.1
contracts by companies
with business operations in
Sudan)
Illinois
40 Ill. Comp. Stat. 5/1-
40 Ill. Comp. Stat. 5/1-
110.6
110.15
Indiana
Ind. Code §5-10.2-9-1
Also requires divestment
from companies operating
in state sponsors of
terrorism. Ind. Code §5-
10.2-10-1.
Iowa
Iowa Code Ann. §12F.3
Kansas
Kan. Stat. Ann. §74-4921c
Louisiana
La. Rev. Stat. Ann. §11:312
La. Rev. Stat. Ann. §11:312
Also requires divestment
from North Korea and
Syria. La. Rev. Stat. Ann.
§11:312.
Maryland
Md. Code Ann., State Pers. Md. Code Ann., State Pers.
& Pens. §21-123.1
& Pens. §21-123.1
Michigan
Mich. Comp. Laws
Mich. Comp. Laws
Also requires divestment
§38.1133c
§38.1133d
from certain companies
operating in state sponsors
of terrorism. Mich. Comp.
Laws §129.294.
Congressional Research Service
14
State and Local Economic Sanctions: Constitutional Issues
State Sudan Iran Other
Minnesota
Minn. Stat. Ann. §11A.243
Minn. Stat. Ann. §11A.244
Nevada
Nev. Rev. Stat. Ann.
§286.723 (only requires
report on investments in
companies doing business
in Iran)
New Hampshire
N.H. Rev. Stat. Ann. §100-
D:3
New Jersey
N.J. Stat. Ann. §52:18A-
N.J. Stat. Ann. §52:18A-
89.9
89.12
North Carolina
N.C. Gen. Stat. §147-86.41
Oregon
Or. Rev. Stat. Ann.
§293.814
Pennsylvania
72 Pa. Cons. Stat. Ann.
72 Pa. Cons. Stat. Ann.
§3837.4
§3837.4
South Carolina
S.C. Code Ann. §9-16-55
South Dakota
S.D. Codified laws §§4-5-
52, 53
Texas
Tex. Gov’t Code Ann.
§806.054
Utah
Utah Code Ann. §63G-6-
Utah Code Ann. §49-11-
208
306 (only provides for
Report on Investments in
companies doing business
in Iran)
Author Contact Information
Jeanne J. Grimmett
Legislative Attorney
jgrimmett@crs.loc.gov, 7-5046
Acknowledgments
Joseph A. Schoorl, law clerk in the American Law Division, CRS, contributed substantially to an earlier
2011 update of this report.
Congressional Research Service
15