State and Local Economic Sanctions: Constitutional Issues [June 27, 2012]   [open pdf - 305KB]

"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. […] 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 Illinois subsequently repealed its statute, and the state's appeal in the case was dismissed as moot in November 2007.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."

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CRS Report for Congress, RL33948
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