Divestiture Will Survive : Claims That Congress Silences States on S. Africa Are Wrong

<i> Gerald Warburg advises Sen. Alan Cranston on foreign policy, defense and trade matters on the Senate Foreign Relations Committee. </i>

Will the South Africa sanctions legislation pending in Congress undermine California’s new anti-apartheid law? Can federal authority require local governments to profit from apartheid against their will?

The answer to both vexing questions is yes, according to proponents of a sweeping federal preemption doctrine recently advanced by Sen. Richard G. Lugar (R-Ind.).

The specter that enacting the pending congressional measure on anti-apartheid trade sanctions would strike down broader state divestiture legislation has alarmed grass-roots activists. At stake is the fate of as many as 20 state statutes and more than 80 city and county regulations that address the South Africa issue.


There is valid reason for concern when one hears the views of Lugar, the respected Foreign Relations Committee chairman: “When we get into anti-apartheid law, the federal government is speaking for the nation . . . we cannot have individual states and cities establishing their own foreign policies.”

Lugar rests his case on the presumptive constitutional grant of federal supremacy in international affairs, and concludes that any federal legislation on South Africa--no matter how limited its scope--preempts all state legislation on the matter.

But before the activists’ concern turns to panic, the full record needs to be scrutinized. There is no reason for California to back away from the strong measures adopted in Sacramento. Lugar’s is a minority opinion--one unlikely to prevail if pressed in a legal challenge.

“When I use a word, it means just what I choose it to mean,” says the Queen in “Alice In Wonderland.” So it often is with lawmakers struggling to place their own interpretation on legislation during the drafting process. Lugar currently is advancing his own preemption thesis as a selling point to persuade the White House and corporate leaders to live with the Senate bill, which Lugar maintains would at least get local authorities off their backs on the emotionally charged South Africa issue.

Yet the “Lugar bill” actually is a cut-and-paste job of legislation drafted by a half-dozen senators. These co-authors utterly rejected Lugar’s interpretation, as the following statements culled from the long and tortured legislative history of the South Africa debate illustrate.

William Proxmire of Wisconsin, senior Democrat on the Banking Committee: “We have no intention of preempting state divestment laws.”


Alan Cranston of California, Democratic floor manager of the measure: “Courts always recognize the distinction between the state as market participant and the state as a market regulator . . . we have no intention of compelling sovereign states to invest in companies that they do not wish to invest in.”

Edward M. Kennedy of Massachusetts, senior Democrat on the Judiciary Committee: “The law is clear that this legislation will not preempt the kind of state and local action against apartheid that has occurred throughout this country.”

Advocates of total preemption make much of a vote last month against an amendment by Sen. Alfonse M. D’Amato (R-N.Y.). But this amendment pertained only to a special contracting issue (whereby federal funds for New York City might be withheld if local authorities, acting against companies still in South Africa, ignored U.S. civil-rights and budget laws requiring acceptance of low-bid contracts). D’Amato said explicitly that this debate “had nothing to do with divestiture.”

Those who wish that the federal legislation explicitly preempted local divestiture have failed to win their point in the congressional debate. The only effort to legislate a total ban on state laws pertaining to South Africa, an amendment introduced by Sen. William V. Roth Jr. (R-Del.), was withdrawn in the face of very strong opposition. The final legislative product has no substantive provisions whatsoever on preemption. And it is totally silent on the divestiture issue. Thus it is grasping at straws to maintain, as Lugar has, that the bill “occupies the field” on all South Africa-related matters.

While Lugar is correct that the Constitution yields supremacy to Washington in conducting foreign relations, the Supreme Court has defended repeatedly the right of states to manage their own funds--even if their trusteeship involves choices affecting international affairs.

As is often the case, Washington law-makers have followed, not led, local governments, churches and university activists in addressing the South Africa issue. The federal courts are unlikely to sustain an illogical assertion that congressional action, which imposes trade sanctions butis silent on divestiture and preemption, could force states to keep their IBM stock. Yet, because of the stir created by Lugar’s assertions, proponents of sanctions will move to enact new provisions that would make the case for total preemption legally untenable.


The bottom line is that local authorities already have a clear legal right (and moral obligation) to exercise discretion in how they invest their money. While a minority may wish that the emerging federal law would immobilize grass-roots action, wishing isn’t going to make it so.