# Amicus Curiae Brief — Crosby v. National Foreign Trade Council > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0337%3A16 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 2000 - **Citation:** 530 U.S. 363 ## Text Jon '2 000 FIDED No. 99-474 JAN IN THE OFFICE OF THE CLER! SUPPORTING PETITIONERS ROBERT BRAUNEIS RICHARD RUDA * 720 20th Street, N.W. Chief Counsel Washington, D.C. 20052 JAMES I. CROWLEY (202) 994-6138 STATE AND LOCAL LEGAL CENTER 444 North Capitol Street, N.W. Suite 345 Supreme Court of the United States AnpreEw S. NaTsi0s, SECRETARY OF ADMINISTRATION AND FINANCE OF THE COMMONWEALTH OF MASSACHUSETTS, AND PHILMORE ANDERSON, III, STATE PURCHASING AGENT, y Petitioners, NATIONAL FOREIGN TRADE COUNCIL, Respondent. On Writ of Certiorari to the United States Court of Appeals for the First Circuit BRIEF OF THE COUNCIL OF STATE GOVERNMENTS, NATIONAL GOVERNORS’ ASSOCIATION, NATIONAL CONFERENCE OF STATE LEGISLATURES, NATIONAL LEAGUE OF CITIES, NATIONAL ASSOCIATION OF COUNTIES, INTERNATIONAL CITY/COUNTY MANAGEMENT ASSOCIATION, INTERNATIONAL MUNICIPAL LAWYERS ASSOCIATION, AND U.S. CONFERENCE OF MAYORS AS AMICI CURIAE Washington, D.C. 20001 (202) 434-4850 * Counsel of Record for the Amici Curiae (1) Euprems Court, Us WILSON-EpPes Printinc Co., Inc. - (202) 789-0096 - WASHINGTON, D.C. 20001 au . “ae 0" QUESTION PRESENTED Amici will address the following question: Whether the Massachusetts Burma Law violates the Foreign Commerce Clause. (i) II. SUMMARY OF ARGUMENT CONCLUSION ..................-.-... TABLE OF CONTENTS QUESTION PRESENTED _ ..................c-csscscsorssesseessnensees y TABLE OF AUTHORITIES .......... Pi INTEREST OF THE AMICI CURIAE ...............---0-0-0-« GET ccssnsscssssccesecssssscnscsenenssnentamencengscasemsuccssnessamnetes I. THE MASSACHUSETTS BURMA LAW DOES NOT VIOLATE THE FOREIGN COMMERCE CLAUSE BECAUSE IT ADDRESSES THE COMMONWEALTH’S ACTIVITIES AS A MARKET PARTICIPANT ................--..ceceecesee-eees A. The Market Participant Doctrine Applies To The Massachusetts Burma Law’s Condi- tions On Public Procurement ......................... B. The Rationales Underlying The Market Par- ticipant Doctrine Make It Fully Applicable To Foreign Commerce Clause Analysis........ THE MASSACHUSETTS BURMA LAW DOES NOT VIOLATE THE FOREIGN COMMERCE CLAUSE BECAUSE IT ADVANCES A LEGITIMATE STATE PURPOSE THAT CANNOT BE ADEQUATELY SERVED BY REASONABLE NONDISCRIMINATORY AL- eG GD cccnscnnisnmnnsnienssesssemnteancenenecemenseaseneainanes (iii) 14 19 Cases iv TABLE OF AUTHORITIES Page Atkin v. Kansas, 191 U.S. 207 (1908) ......000...00..... 8 Barclays Bank PLC v. Franchise Tax Bd., 512 OE ae eee 19 BMW of North America, Inc. v. Gore, 517 U.S. ae SE SS oe ee 21 Board of Trustees of the Employees’ Retirement System v. Baltimore, 562 A.2d 720 (Md. 1989).. 23-24 Brown-Forman Distillers Corp. v. New York State Liquor Authority, 47€ U.S. 573 (1986) ............ 20 Cooley v. Board of Wardens, 53 U.S. (12 How.) ff ete 16 Edgar v. MITE Corp., 457 U.S. 624 (1982).......... 21, 22 Geer v. Connecticut, 161 U.S. 519 (1896) ............ 7 Graham v. Connor, 490 U.S. 386 (1989) ......0...... 4 Heim v. McCall, 239 U.S. 175 (1915) ......000.. & Hicklin v. Orbeck, 437 U.S. 518 (1978) 2000000000... 10 Hughes v. Alexandria Scrap Corp., 426 U.S. 794 Se ccscrernteninccstcintitatialiialadtaiadelinnaiildanadactibatshinteinimeitninieae 6, 8,9 Hughes v. Oklahoma, 441 U.S. 322 (1979) ............. 6, 7,19 Japan Line, Ltd., v. County of Los Angeles, 441 RIESE a SRR Se 15 Maine v. Taylor, 477 U.S. 131 (1986) 000000. 20 Michelin Tire Corp. v. Wages, 423 U.S. 276 EE CaS ae et SE a 15 Minnesota v. Clover Leaf Creamery Co., 449 U.S. RRR Ree Sr ee 8 New Energy Co. v. Limbach, 486 U.S. 269 (1988) ..passim New York v. United States, 505 U.S. 144 (1992).. 25 Perkins v. Lukens Steel Co., 310 U.S. 113 (1940).. 8 Pike v. Bruce Church, Inc., 397 U.S. 137 (1970)... 10 Printz v. United States, 521 U.S. 898 (1997) ........ 25 Reeves, Inc. v. Stake, 447 U.S. 429 (1980) ...... 6, 7-8, 8, 19 South Carolina State Highway Dept. v. Barnwell SU OF eee 8 South-Central Timber Development, Inc. v. Wun- es Ce ee I itteiritnittienees 10, 12 Southern Pacific Co. v. Arizona ez rel. Sullivan, ee ee Se CD cethttictetieteniettstaicennteniel 6, 16, 21 v TABLE OF AUTHORITIES—Continued Page United Building and Construction Trades Council v. Camden, 465 U.S. 208 (1984) —.......................... 18 West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 EE ee eae 8,9 White v. Massachusetts Council of “Construction Employers, Inc., 460 U.S. 204 (1983) ................. 8, 10,12 Willson v. Black-Bird Creek Marsh Co., 27 U.S. (2 Pet.) 245 (1829) 16 Zschernig v. Miller, 389 U.S. 429 (1968) ................. 1,4 Federal Constitution U.S. Const. art. I, § 8, cl. 3 (Commerce Clause) ... 1,4 U.S. Const. art. IV, §2 (Privileges and Immuni- ff 18 State Statutes An Act Regulating State Contracts with Com- panies Doing Business with or in Burma (My- anmar), ch. 130, 1996 Mass. Acts 239 (codified at Mass. Gen. Laws ch. 7, §§ 22G-22M) ............. 1 Other Authorities Earl H. Fry, “The US States and foreign eco- nomic policy: federalism in the ‘new world order,’” in Foreign Relations and Federal States (Brian Hocking, ed. 1993) _....................... 17 M. Farrand, Records of the Federal Convention ff eee 5 Social Investment Forum, 1999 Report on So- cially Responsible Investing Trends in the United States (1999), http://www.socialinvest. org/areas/research/trends/1999-Trends.htm...... 14 INTEREST OF THE AMICI CURIAE Amici, organizations whose members include state, county, and municipal governments and officials through- out the United States, have a strong interest in legal issues that concern state and local governments, including issues of the allocation of state and federal powers that affect foreign relations and foreign commerce.’ This case, in- volving a challenge to a Massachusetts law entitled “An Act Regulating State Contracts with Companies Doing Business with or in Burma (Myanmar),” ch. 130, 1996 Mass. Acts 239 (codified at Mass. Gen. Laws ch. 7, §§ 22G-22M) (the “Massachusetts Burma Law,” presents three related issues in that area: whether federal law pre- empts the Massachusetts law; whether the law violates the Foreign Commerce Clause, U.S. Const. art. I, § 8, cl. 3; and whether the law runs afoul of the federal foreign affairs power. See Zschernig v. Miller, 389 U.S. 429 (1968) (recognizing such a power). For reasons stated at the beginning of the Argument section below, this brief will address only the Foreign Commerce Clause issue. The question whether the Massachusetts Burma Law is unconstitutional is of fundamental importance to amici. See Pet. App. 10a (noting that municipal governments have enacted similar purchasing laws). The public pro- curement activities governed by the Burma Law are tradi- tional exercises of the power of state and local govern- ments to spend their lawfully gathered resources in accord- ance with the wishes of their citizens. Amici respectfully submit that the Constitution permits States and munici- 1 Pursuant to Rule 37.3 of the Rules of this Court, the parties have consented to the filing of this brief amicus curiae. Their letters of consent have been filed with the Clerk of the Court. Pursuant to Rule 37.6, amici state that this brief was not au- thored in whole or in part by counsel for a party, and no person or entity, other than amici or their members, made a monetary contribution to the preparation or submission of this brief. 2 palities to refrain from using public funds in ways that they believe support persistent, egregious, and well-docu- mented human rights violations by foreign governments. Because of the importance of the issues presented to amici and their members, amici submit this brief to assist the Court in its resolution of this case. SUMMARY OF ARGUMENT The Massachusetts Burma Law does not run afoul of this Court’s dormant Foreign Commerce Clause doctrine. It does not offend either of the policies that are common to this Court’s analysis under the Domestic and Foreign Commerce Clauses: it is neither in purpose nor effect economically protectionist, and it is not an attempt to regulate extraterritorial conduct. Neither does it conflict with the policy particular to the dormant Foreign Com- merce Clause, the preservation of the federal government's ability to “speak with one voice” on foreign commercial relations. Central to the constitutionality of the Massachusetts Burma Law is the fact that it concerns an exercise of the proprietary, noncoercive power to determine the disposition of public funds rather than an exercise of the States’ coercive governmental powers of regulation or taxation. This feature of the Burma Law renders it constitutional under two independent components of dormant Commerce Clause analysis. 1. As an exercise of the power to direct the uses of the public fisc without an economically protectionist motive or effect, the Burma Law fits within the Court’s “market participant” doctrine. Because the Burma Law neither links an exercise of the spending power to a targeted tax in a manner likely to endanger Commerce Clause values, nor leverages the State’s spending power in the service of ee 3 economic protectionism, it does not fall into either of the exceptions to the market participant doctrine recognized by this Court. Contrary to the reasoning of the court of appeals, the protection of the market participant doctrine cannot be limited to proprietary actions motivated by eco- nomic self-interest, but rather must extend to actions based on ethical concerns. The rationales underlying the market participant doctrine—the self-limiting character of state proprietary actions, their importance to state sovereignty, and their lack of interference with federal regulation of private interstate and foreign commerce, which constitutes the great bulk of that commerce—make it fully applicable to Foreign Commerce Clause analysis. 2. Although the Massachusetts Burma Law facially discriminates against foreign commerce, its discrimination “is demonstrably justified by a valid factor unrelated to economic protectionism.” New Energy Co. v. Limbach, 486 U.S. 269, 274 (1988). The law therefore does not violate the Commerce Clause regardless of its qualifica- tion under the market participant doctrine. The clearest “valid factor” or “legitimate local purpose,” New Enérgy Co., 486 U.S. at 278, is the State’s interest in ensuring that public funds are not used to support morally offensive practices of the Burmese government, whether or not withholding those funds leads to reform or communicates disapproval to the relevant Burmese officials. That legiti- mate interest in the use of state funds is not related to economic protectionism, and “cannot be adequately served by reasonable nondiscriminatory alternatives,” id., because any attempt to avoid supporting morally offensive prac- tices perpetrated by a foreign regime must identify that regime. 4 ARGUMENT I. THE MASSACHUSETTS BURMA LAW DOES NOT VIOLATE THE FOREIGN COMMERCE CLAUSE BECAUSE IT ADDRESSES THE COMMON- a ACTIVITIES AS A MARKET PARTICI- Amici agree with petitioners that federal law clearly does not preempt the Massachusetts Burma Law, so that the Court will have to address the constitutional issues presented in this case. Amici also believe that this Court’s analysis of state law that affects foreign commercial rela- tions should and will be conducted under the Commerce Clause, which explicitly grants Congress the power “{t]o regulate Commerce with foreign Nations.” U.S. Const. art. I, § 8, cl. 3. Whatever may be the scope of the non- textual “foreign affairs power” in areas of foreign relations outside of the commercial realm, see Zschernig v. Miller, 389 U.S. 429 (1968), there is no reason to give it any scope at all when addressing foreign commercial rela- tions, because the powers of federal and state governments in that area are governed by an express constitutional provision. Cf. Graham v. Connor, 490 U.S. 386, 395 (1989). Since the Massachusetts Burma Law is concerned exclusively with Massachusetts’ commercial relations with companies doing business with or in Burma, it falls within that category of state law subject to analysis under the Commerce Clause. This brief will therefore address only the question whether the Massachusetts Burma Law is invalid under this Court’s dormant Foreign Commerce Clause doctrine. The Massachusetts Burma Law does not violate the Foreign Commerce Clause because it addresses a pro- prietary activity—the State’s determination of how it will spend its own lawfully collected funds. As this Court has articulated in its “market participant” doctrine, such activ- 5 ity is generally not subject to dormant Commerce Clause scrutiny, and the Burma Law does not fall within either of the two exceptions to that rule. The rationales under- lying the market participant doctrine make the doctrine fully applicable in the Foreign Commerce Clause context. A. The Market Participant Doctrine Applies To The Massachusetts Burma Law’s Conditions On Public Procurement The Massachusetts Burma Law sets guidelines for the Commonwealth and its agencies to follow while they are exercising their noncoercive spending power. The guide- lines do not create any identified risk of protectionism. Together, those features qualify the Burma Law for pro- tection under this Court’s market participant doctrine. That doctrine recognizes that Congress’s Commerce Clause power does not need prophylactic protection from a State’s choices about how to exercise its noncoercive power to distribute its lawfully gathered resources, as long as those choices do not present a particular, identified risk of protectionism. 1. At the core of the powers granted Congress by the Commerce Clause is the power to invalidate or negate state laws that, in Congress’s judgment, unduly hinder interstate or foreign commerce. This is the original mean- ing of the “negative” Commerce Clause. See, e.g., 3 M. Farrand, Records of the Federal Convention of 1787, 478 (1911) (Letter of James Madison) (the Commerce Clause “was intended as a negative and preventive provi- sion against injustice among the States themselves, rather than as a power to be used for the positive purposes of the Federal Government”). Over the past one-and-a-half centuries, this Court has developed its own prophylactic “negative” or “dormant” Commerce Clause doctrine, under which the Court itself invalidates some of the most serious 6 state-law challenges to the free market values that the Commerce Clause granted Congress the power to pro- mote, while leaving Congress the power explicitly to sanc- tion such laws. See, e.g., Southern Pacific Co. v. Arizona ex rel. Sullivan, 325 U.S. 761, 769 (1945) (recognizing that, while the Commerce Clause limits state power even absent Congressional legislation, Congress has “undoubted” power to “permit the states to regulate the commerce in a manner which would otherwise not be permissible”). This Court has decided scores of dormant Commerce Clause cases over the last 150 years. But until 1976 it was not asked to decide whether an exercise of a State’s proprietary functions—its power to spend state funds or dispose of state property—ran afoul of dormant Com- merce Clause doctrine, even though over that period States routinely discriminated against interstate and for- eign commerce while spending and disposing of property in ways that would have violated core dormant Com- merce Clause doctrine had that discrimination accom- panied exercises of state powers to tax or regulate. See Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 808 (1976); id. at 817 (Stevens, J., concurring) (“{T]here must have been countless situations during the past two centuries in which the several States have experimented with differing methods of encouraging local enterprise without providing like encouragement to out-of-state com- petitors.”); Reeves, Inc. v. Stake, 447 U.S. 429, 437 n. 9 (1980) (citing numerous state court decisions from 1898 onwards holding that state proprietary functions were not subject to dormant Commerce Clause scrutiny). The explanation for the tacit agreement that spending power exercises do not ordinarily raise dormant Com- merce Clause concerns rests on the distinction between a State’s coercive sovereign powers and its noncoercive pro- prietary powers, and on the full applicability of the dor- 7 mant Commerce Clause to its coercive powers. When States decide how to spend state funds and dispose of State property, they are not exercising any distinctive sovereign powers, but rather are exercising the same prop- erty rights as they recognize in private individuals and businesses.2, To be sure, States usually acquire property through the coercive sovereign power of taxation, which distinguishes them from private parties. That power of taxation, however, is fully subject to dormant Commerce Clause strictures. Thus, the funds over which a State has proprietary discretion have been gathered through taxes that do not discriminate against interstate or foreign com- merce, and the bulk of those funds are ordinarily gathered from the same state residents who, through their legis- lators, decide how to use those funds. Once it is determined that state funds have been gathered in an evenhanded manner falling largely on par- ticipants in the state political process, dormant Commerce Clause concerns have usually been satisfied. Absent spe- cial, limited circumstances, a State, “‘[l]ike private in- dividuals and businesses, . . . enjoys the unrestricted 2 This distinction was muddied by the 19th-century legal fiction, since discarded, that States “owned” all natural resources within their jurisdictions. See Hughes v. Oklahoma, 441 U.S. 322, 335 (1979) (holding that state regulation of wild animals should be governed by ordinary Commerce Clause analysis, and overruling Geer v. Connecticut, 161 U.S. 519 (1896)). The Massachusetts Burma Law does not concern natural resources, however, but funds to which the State has title in the same way that a private Massa- chusetts resident would. Of course, property rights are themselves enforced by coercive sovereign powers, but the powers of disposal granted proprietors under state property law normally include a realm of discretion that does not draw any distinction between domestic and foreign jurisdictions. Needless to say, state property law that discrimi- nates without justification against interstate or foreign commerce is fully subject to invalidation under dormant Commerce Clause doctrine. 8 power to produce its own supplies, to determine those with whom it will deal, and to fix the terms and conditions upon which it will make needed purchases.’” Reeves, 447 US. at 439 n. 12 (1980) (quoting Perkins v. Lukens Steel Co., 310 U.S. 113, 127 (1940)) (emphasis deleted). The policy grounds underlying the recognition of this “un- restricted power” include both respect for the role of each State “‘ “as guardian and trustee of its people,”’” Reeves, 447 U.S. at 438 (quoting Heim v. McCall, 239 U.S. 175, 191 (1915) (quoting Atkin v. Kansas, 191 U.S. 207, 222-223 (1903))), and acknowledgment that spending power discrimination is self-limiting, because it relies on the legislature’s ability and willingness to assess taxes on participants in the state political process. See West Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 200 (1994) (noting that evenhanded taxes are generally up- held in part because “ ‘[t]he existence of major in-state interests adversely affected . . . is a powerful safeguard against legislative abuse’”) (quoting Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 473 n. 17 (1981)); South Carolina State Highway Dept. v. Barnwell Bros., 303 U.S. 177, 184 n. 2, 187 (1938). Since 1976, this Court has articulated the longstanding tacit approval of discriminatory spending power exercises as the “market participant” doctrine. See Hughes, 426 U.S. at 810; Reeves, 447 U.S. at 436; White v. Massa- chusetts Council of Construction Employers, Inc., 460 U.S. 204, 215 (1983). This doctrine covers a wide variety of exercises of the power to spend funds and dispose of property, including purchasing goods and services, see White, 460 U.S. at 205-06 (financing public construction projects on the condition that 50% of construction work- ers be city residents), selling state-owned property, see Reeves, 447 U.S. at 431-32 (preferring state residents in selling a limited supply of cement from a state-owned 9 plant), and subsidizing local businesses, see Hughes, 426 U.S. at 801 (providing “bounties” for the delivery of inoperable automobiles to scrap processors on easier terms to in-state than out-of-state processors). The public procurement activities governed by the Massachusetts Burma Law fall squarely within the scope of the market participant doctrine. They are traditional exercises of a State’s power to determine how to spend its lawfully gathered resources. 2. In the last fifteen years, this Court has also for the first time struck down spending power exercises on Com- merce Clause grounds. It did so in two narrow circum- stances in which those exercises presented an acute risk of undermining core Commerce Clause values because they were not self-limiting as spending power exercises usually are. The Massachusetts Burma Law does not create any such condition. In West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994), this Court held that a Massachusetts subsidy to Massachusetts dairy farmers violated dormant Commerce Clause doctrine because the subsidy was directly linked to and funded by a tax on all milk sold in Massachusetts. The Court noted that such a subsidy “funded out of general revenue ordinarily imposes no burden on inter- state commerce.” Jd. at 199. The linkage of subsidy and targeted tax, however, insulated the tax from the normal political processes that would keep it in check, and thus created a concentrated threat to Commerce Clause values: “when a nondiscriminatory tax is coupled with a subsidy to one of the groups hurt by the tax, a State’s political processes can no longer be relied upon to prevent legis- lative abuse, because one of the in-state interests which would otherwise lobby against the tax has been mollified by the subsidy.” Jd. at 200. 10 Second, in South-Central Timber Development, Inc. v. Wunnicke, 467 U.S. 82 (1984), the Court held that a sale of state-owned timber conditioned on the purchaser processing the timber before shipping it out of the State violated the Commerce Clause because the State was using its power to dispose of public property to favor intrastate commerce in a manner that risked circumvent- ing the self-limiting quality of that power. The South- Central Timber plurality concluded that Alaska was at- tempting to leverage its ownership of timber by “govern- [ing] the private, separate economic relationships of its trading partners,” id. at 99 (plurality opinion), in order to encourage “ ‘business operations to be performed in the home State that [might] more efficiently be performed elsewhere.’” Jd. at 100 (quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 145 (1970)). This was, the plurality reasoned, a type of burden on commerce that the Court has “ ‘declared to be virtually per se illegal.’” Jd. (quoting Pike, 397 U.S. at 145). The Court had previously questioned a similar leveraging technique in dictum in White when it noted that the residency requirement in that case “does not represent the sort of ‘attempt to force virtually all businesses that bene- fit in some way from the economic ripple effect’ of the city’s decision to enter into contracts for construction projects ‘to bias their employment practices in favor of the [city’s] residents.’” White, 460 U.S. at 211 (quoting Hicklin v. Orbeck, 437 U.S. 518, 531 (1978)). Here, the presumed vice of Alaska’s law was that through lever- aging it created a protectionist effect greater than a simple subsidy would, and thus did not limit the quantum of economic favoritism to that for which local taxpayers were willing to pay.’ 3 Amici do not necessarily agree that the law in South-Central Timber actually had such a disproportionate effect, or that South- 11 The Massachusetts Burma Law does not present either of these two kinds of threats. The Burma Law obviously does not create a tax/subsidy linkage of the type the Court struck down in West Lynn Creamery. The court of appeals’ heavy reliance on the South- Central Timber plurality and the dictum in White, see Pet. App. 43a-45a, is also misplaced. Not only does the Burma Law not produce leveraged economic favoritism of the type the Court disapproved of in South-Central Timber, it does not produce any economic favoritism at all. There is no identifiable group of Massachusetts politi- cal participants that is economically benefited by the Massachusetts Burma Law. If Massachusetts rejects a low bid from a company with Burmese connections due to Burma Law procurement restrictions, Massachusetts taxpayers suffer because they must pay more for the goods or services at issue; Massachusetts beneficiaries of public projects suffer because the projects are more likely to be eliminated or scaled down due to higher costs; and Massachusetts businesses suffer because they, like out-of- State businesses, must choose between doing business with Burma and doing business with the Commonwealth of Massachusetts.* In other words, as developed more fully Central Timber was correctly decided, but assume that it was cor- rectly decided for purposes of this argument. #There are apparently more foreign companies than United States companies on Massachusetts’s “restricted purchase list” of all firms engaged in business with Burma. See Pet. App. 10a (at the time respondent filed its complaint, forty-four of 346 com- panies on the restricted purchase list were United States com- panies). This fact, however, does not demonstrate that Massa- chusetts businesses are favored by the Burma Law. Many of the foreign companies engaged in business with Burma undoubtedly have operations limited to southeast Asia or other parts of the world outside the United States and have never desired to engage in business with the Commonwealth of Massachusetts: to amici’s knowledge, there is no evidence in the record concerning the num- 12 below, the Massachusetts Burma Law is simply not an economically protectionist law, which cleanly distinguishes it from the law struck down in South-Central Timber. The unduly formalistic language in the South-Central Timber plurality opinion that influences some of the court of appeals’ reasoning about the “regulatory” character of the Massachusetts Burma Law, see Pet. App. 43a-44a, is, if read literally, simply mistaken. In one passage, the South-Central Timber plurality seems to suggest that, while Alaska acted as a proprietor exercising its non- coercive power to dispose of its property as long as it imposed only contractual conditions relating directly to the transaction in which it was disposing of the property, it became a government exercising its distinctive coercive power of regulation the moment it imposed unrelated conditions on such a disposition. See South-Central Tim- ber, 467 U.S. at 97-99 (plurality opinion) (distinguish- ing between Alaska’s roles as “market regulator” and “market participant”). This makes no sense. A private owner disposing of property does not suddenly exercise sovereign powers when he imposes unrelated conditions on that disposition.® ber of foreign and domestic companies that have actually sub- mitted or desired to submit bids on Massachusetts projects, either before or after the passage of the Burma Law. Of course, there has never been the slightest suggestion that the Massachussetts Burma Law was motivated in any part by a desire to favor Massa- chussetts companies. 5 The South-Central Timber plurality cites as a major inspira- tion for its decision to invalidate economically protectionist lever- aging the antitrust law limitation on vertical restraints. See South-Central Timber, 467 U.S. at 98 (plurality opinion); see also White, 460 U.S. at 219 n.4 (Blackmun, J., concurring in part and dissenting in part) (similarly referring to the antitrust vertical- restraint limitation). Antitrust law, however, does not limit vertical restraints because they are invalid attempts by private parties to 13 He is still acting as a proprietor, and so was the State of Alaska in South-Central Timber when it conditioned a sale of state-owned timber on in-state processing but did not attempt to force in-state processing of privately owned timber. The South-Central Timber plurality’s use of the terms “market regulator” and “market participant” only make sense as shorthand for types of proprietary actions that do and do not create a special danger to Commerce Clause values. Because the Massachusetts Burma Law creates no special danger to those values, there is no rea- son for this Court to invalidate it as “market regulation.” Finally, the court of appeals erred on two levels when it reasoned that Massachusetts’s refusal to do business with companies involved in Burma could not be classified as market participation because “ordinary” private market participants would not so act. The court stated: Even if certain companies ceased purchasing goods from companies that maintain investments in Burma, such a fact would not be sufficient to lead us to consider the Massachusetts Burma Law to be market participation. The proper inquiry is whether Massa- chusetts is acting as an ordinary market participant would act, not whether any participant has acted in such a fashion. Pet. App. 48a. Surely, however, the proper inquiry is whether a private market participant could act as Massa- chusetts has, not whether statistics would show that the average private market participant has or has not so acted. A freedom that is exercised infrequently may be nonetheless an important freedom, precisely because it exercise a coercive sovereign power of regulation; it limits vertical restraints because they endanger the values and policies underlying antitrust law. In the same way, the only intelligible ground of the ban on economically protectionist leveraging is the danger it poses to Commerce Clause values. 14 becomes crucial only in egregious cases that are them- selves rare. Moreover, it is simply incorrect to assert, as the court of appeals did, that the “ordinary market participant” rarely if ever breaks off ties with a company due to ethical objections to that company’s dealings. For ex- ample, investors are quintessential ordinary market par- ticipants, yet in 1999 American investors had over $2.16 trillion in “socially responsible” investment funds that used some guideline other than raw profit to limit their investments in companies. See Social Investment Forum, 1999 Report on Socially Responsible Investing Trends in the United States (1999), http: //www.socialinvest.org / areas/research/trends/1999-Trends.htm. That figure rep- resents over one-eighth of the total $16.3 trillion in in- vestment assets under management in the United States. See id. Thus, the court of appeals’ assumption that sensi- ble private market participants virtually never take ethical considerations into account is simply wrong, further un- dermining the notion that the market participant doctrine should protect actions motivated by pure greed but not actions stemming from moral concerns. The Massachu- setts Burma Law falls squarely into the realm of spending power discretion recognized by this Court under the market participant doctrine, and should for that reason pass dormant Commerce Clause scrutiny. B. The Rationales Underlying The Market Participant Doctrine Make It Fully Applicable To Foreign Commerce Clause Analysis This Court has at times suggested that Foreign Com- merce Clause scrutiny is more rigorous than Domestic Commerce Clause scrutiny. It has stated that it will con- sider an additional factor under the Foreign Commerce Clause, namely whether the law “prevents the Federal 15 Government from ‘speaking with one voice when regulat- ing commercial relations with foreign governments.’ ” ® Japan Line, Ltd. v. County of Los Angeles, 441 US. 434, 451 (1979) (quoting Michelin Tire Corp. v. Wages, 423 U.S. 276, 285 (1976)); see also South-Central Tim- ber, 467 U.S. at 100 (plurality opinion) (same). It has also stated that it will generally look more closely at state laws touching on foreign commerce. See, e.g., id. at 96 (plurality opinion). Citing these statements, the court of appeals expressed its skepticism “of whether the market participation exception applies at all . . . to the Foreign Commerce Clause.” Pet. App. 48a. The court of appeals’ skepticism is unwarranted. The rationales underlying the market participant doctrine are equally applicable in domestic and foreign contexts, and the doctrine should be given full effect in Foreign Com- merce Clause analysis. The “one voice” language used in Japan Line and South-Central Timber employs a striking metaphor, but applied as a test within dormant Foreign Commerce Clause analysis, it is misleading and largely unhelpful, because it ultimately rests on a categorical understanding of the dormant Commerce Clause that this Court long ago rejected. Under one literal interpretation of the “one voice” language, the test is so permissive as to be utterly in- effectual. There is not a single state law that actually prevents the federal government from “speaking with one voice” when regulating foreign commerce. The For- eign Commerce Clause fully empowers Congress both ~ pass positive regulations of foreign commerce that wi 6 n Line states that where a state tax is at issue, a court