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Petroleum

Federal Court Strikes Down Massachusetts Sanctions Law

Strategic Insights

— 1 min read

A federal court ruling has struck down a Massachusetts law that sought to punish companies, including oil and gas firms, for doing business in Myanmar (Burma). The 1st U.S. Circuit Court of Appeals unanimously ruled that the state law, passed in 1996, was unconstitutional as it interfered with the federal government's duty to manage foreign policy. The ruling is seen as a significant step in overturning similar state laws, particularly by oil and gas companies that deal with pariah nations like Myanmar. Unocal Corp. continues to operate in the country, despite efforts by the National Foreign Trade Council (NFTC) to persuade the company to withdraw.

Key Takeaways:

  • The 1st U.S. Circuit Court of Appeals has struck down the Massachusetts sanctions law as unconstitutional, citing interference with federal foreign policy duties.
  • The unanimous ruling, written by Judge Sandra Lynch, notes that foreign policy cannot effectively be managed if each state pursues its own foreign policy.
  • The decision may set a precedent for overturning similar state laws in the United States, with 23 municipal or county legislatures having enacted sanctions bills targeting Myanmar.
  • The ruling specifically targeted Massachusetts, which is the only state to have passed a sanctions law against Myanmar.
  • Several states, including Washington, Vermont, New York, and Texas, have pending legislation that may be impacted by the ruling.
  • Local laws, such as those in Nigeria, may still stand as they do not raise similar concerns as the Massachusetts law.
  • The National Foreign Trade Council (NFTC) hopes to use the ruling as a precedent to strike down similar laws in municipalities across the country.
  • Unocal Corp. continues to operate in Myanmar, despite efforts by the NFTC to persuade the company to withdraw.

Statistics:

  • 580 member companies represent the National Foreign Trade Council (NFTC).
  • 1st U.S. Circuit Court of Appeals unanimously agreed that the Massachusetts state law was unconstitutional.
  • 23 municipal or county legislatures across the United States have enacted sanctions bills specifically targeting Myanmar.
  • 30 NFTC member companies were placed on a "restricted purchase list" by Massachusetts, impacting their ability to do business with the state without withdrawing from Myanmar.

Sources:

  • "U.S. Foreign Trade Council Wins Ruling" (The Oil Daily, April 23, 1997, p. 1)

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