State Actions on Divestiture Will Survive

The Senate bill to impose limited trade sanctions against South Africa has spawned an important controversy: Would the federal legislation deprive states and local governments of the right to pursue divestiture or other sanctions?

Sen. Richard G. Lugar (R-Ind.), chairman of the Foreign Relations Committee and sponsor of the federal sanctions bill, believes that it would. He argues that the federal law would represent the nation’s entire sanctions policy and preempt any local policy on that subject, even though aimed at the shared goal of ending apartheid. Foreign policy being the sole prerogative of the national government, local divestiture or other sanction measures may not intrude.

Under the Constitution, valid federal law is supreme. But state power yields only to federal if Congress both intended that result and possessed constitutional power to strip away state authority. Congress’ intent on the preemption issue is murky at best--the U.S. Supreme Court may someday have to read tea leaves because Congress failed to address the preemption issue head on. More fundamentally, however, Congress may lack the constitutional power to preempt local sanction policies.

Certainly the federal government possesses broad constitutional power to override state law in foreign affairs. But the usual case of preemption poses a conflict between federal and state regulation of private citizens. Thus in 1941 the Supreme Court held invalid a Pennsylvania statute requiring the registration of aliens, because Congress had enacted its own comprehensive alien-registration law. Congress similarly could preempt state laws attempting to outlaw private-sector trade with South Africa.

But when Congress attempts to control state expenditures, not private conduct, it more severely encroaches on states’ rights--especially when it imposes an affirmative obligation to spend state money as Congress directs.

Even if Congress may nullify local sanction policies when federal grant money is spent, and even if it may forbid state payments to foreign governments, it is a far different matter for Congress to compel states and municipalities to bankroll foreign regimes whose policies they oppose.

State budgetary choices are an essential element of state sovereignty. Could Congress really order states to provide financial assistance to a particular country like South Africa? Could Congress, in order to stimulate foreign trade, demand that states provide subsidies to local businesses that trade with other nations?

Many current local sanction laws simply refuse to use taxpayer revenues for the benefit of South Africa. That is no less an exercise of state financial sovereignty simply because the motive behind divestiture is to register objections to apartheid. Indeed, local financial measures designed to promote human rights may have the greatest claim to constitutional immunity from overbearing federal directive.

A decade ago Chief Justice-designate William H. Rehnquist wrote a court opinion that held unconstitutional Congress’ attempt to force state and local governments to comply with federal minimum-wage laws. That decision was overruled last year, 5 to 4, the court concluding that private and state employers were equally subject to federal labor regulation and suggesting that the states generally would have to rely on Congress for the protection of their sovereign interests.

Despite the seeming breadth of that closely divided decision, the court has not given carte blanche to Congress to dictate to the states what their financial policies must be, and over the court’s history a wide range of justices--from William O. Douglas to Rehnquist--have urged that federal power not be allowed to devour the essentials of state sovereignty.

Of some relevance is the court’s decision allowing states to refuse to fund abortions, even though women have a federal constitutional right to choose to have one. Surely if the states may withhold funds to take a stand against a constitutionally guaranteed right, they should be able to do so to take a stand against apartheid.

The argument in favor of local sanctions is strengthened by the fact that states’ rights are being exercised in support of human rights. Ironically, the political alignment on the issue of sanctions preemption finds those who normally champion the cause of states’ rights (mostly Republicans) arguing that the states will have no independent say on sanctions, while those who normally support uniform federal standards (mostly Democrats) now argue that the states may maintain an independent position. Clearly there are two sides to “states’ rights”: the pejorative side that too often has stood against equality, and the commendable side that would promote it.

The combination of state financial sovereignty and state power to support equality, even abroad, should make the claim of states’ rights in support of human rights a powerful constitutional shield against federal preemption. At minimum, the strength of the state-sovereignty position should, and probably would, lead the court to conclude that Congress did not intend to invade local power so fundamentally.