Israel and the Boycott, Divestment, and 

Sanctions (BDS) Movement

Jim Zanotti, Coordinator

Specialist in Middle Eastern Affairs

Martin A. Weiss

Specialist in International Trade and Finance

Kathleen Ann Ruane

Legislative Attorney

Jennifer K. Elsea

Legislative Attorney

June 9, 2017

Congressional Research Service

7-5700

www.crs.gov

R44281
Israel and the Boycott, Divestment, and Sanctions (BDS) Movement

Congressional Research Service

Summary

This report provides information and analysis on a boycott, divestment, and sanctions (“BDS”) 

movement against Israel. The BDS movement is generally seen as a loose grouping of actors 

from various countries who advocate or engage in economic measures against Israel or Israelrelated individuals or organizations, though defining precisely what may or may not constitute 

BDS activity is subject to debate.

The report also analyzes economic measures that “differentiate” or might be seen as 

differentiating between (1) Israel in general and (2) entities linked with Israeli-developed areas 

and settlements (whose legality is questioned under international law). Such settlements are found 

in the West Bank, East Jerusalem, and Golan Heights—areas that Israel has controlled and 

administered since the 1967 Arab-Israeli war. Debate is ongoing in the United States and 

elsewhere about whether economic differentiation (such as with regard to product labeling 

policies) between Israel proper and Israeli settlements constitutes a form of BDS. 

The report also discusses

 Anti-BDS or anti-differentiation efforts to date, including U.S. legislative action 

and proposals at the federal and state level.

 Legislative considerations arising from existing antiboycott law, First 

Amendment issues, and issues regarding congressional powers over commerce 

and foreign affairs.

These considerations present a number of policy questions for Congress and the Trump 

Administration. For more information, see CRS Report RL33476, Israel: Background and U.S. 

Relations, by Jim Zanotti. 

The labeling of certain products imported from the West Bank is a subject with some connection 

to the debate regarding the BDS movement and economic differentiation. There appear to be 

some similarities between U.S. and European Union (EU) labeling laws and guidelines. Both 

jurisdictions call for the West Bank to be identified as the place of origin, but a November 2015 

European Commission notice called for the labels for certain imports into the EU—Israel’s 

largest trading partner—to provide additional information to EU consumers by further 

differentiating between products from Israeli settlements and from non-settlement areas within 

the West Bank. This has fueled debate about whether the EU’s guidelines might constitute, 

encourage, or foreshadow punitive economic measures against Israel. 

In 2015 and 2016, President Barack Obama signed trade and customs legislation (P.L. 114-26 and 

P.L. 114-125, respectively) that opposed BDS-related measures against Israel. However, the 

Administration asserted—including in a presidential signing statement for P.L. 114-125—that 

certain provisions in the legislation that sought to treat “Israeli-controlled territories” beyond 

1949-1967 armistice lines (including West Bank settlements) in the same manner as Israel itself 

were not in line with U.S. policy. Some legislation proposed in the 115th Congress contains 

similarly controversial language.

Participating in the BDS movement would not appear to place a U.S. organization in violation of 

existing federal antiboycott legislation, which targets organizations’ participation in foreign 

boycotts. No foreign state has proclaimed that it participates in the BDS movement, and the 

movement does not have a secondary tier targeting companies that do business in or with Israel. 

If Members of Congress are inclined to propose legislation regarding BDS, they might consider 

using, as points of reference, legal and regulatory frameworks Congress and the executive branch
Israel and the Boycott, Divestment, and Sanctions (BDS) Movement

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have used to designate actors of concern under various rubrics having to do with trade and/or 

national security.

Opponents of the BDS movement or of economic differentiation have proposed the enactment of 

legislation that would prohibit the provision of public funding to U.S. corporations, academic 

institutions, groups, or individuals that engage in BDS activity. Some scholars and commentators 

have argued that such legislation would raise First Amendment concerns, while others have 

argued that such legislation would be consistent with the First Amendment. The constitutionality 

of a restriction on the availability of public funds would depend upon the particulars of the 

legislation at issue.

Some state and local governments have enacted or are considering measures to counteract BDSrelated or differentiation measures. State and local economic sanctions meant to influence foreign 

politics ordinarily raise three related constitutional issues: (1) whether they are preempted by 

federal law under the Constitution’s Supremacy Clause, (2) whether they burden foreign 

commerce in violation of the dormant Foreign Commerce Clause and, if so, whether they are 

protected by the market participant exception; and (3) whether they impermissibly interfere with 

the federal government’s exclusive power to conduct the nation’s foreign affairs. Some Members 

of Congress have proposed legislation intended to preserve state and local anti-BDS or antidifferentiation measures.
Israel and the Boycott, Divestment, and Sanctions (BDS) Movement

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Contents

Introduction ..................................................................................................................................... 1

Background ..................................................................................................................................... 1

The BDS Movement ................................................................................................................. 1

Differentiation Between Israel and the Settlements.................................................................. 2

Impact and Israeli Responses in Larger Political Context......................................................... 4

Labeling Products from Israeli Settlements..................................................................................... 5

European Union Policy ............................................................................................................. 6

U.S. Policy ................................................................................................................................ 8

Anti-BDS or Anti-Differentiation Legislative Action and Proposals.............................................. 9

In Congress ............................................................................................................................... 9

State Level Legislation............................................................................................................ 10

General Antiboycott Legislative Considerations............................................................................11

Potential First Amendment Issues Facing Laws Intended to Deter BDS Activity ........................ 12

Is BDS Activity Speech Protected by the First Amendment? ................................................. 13

Potential Restrictions on the Provision of Government Funding to Entities Engaged in 

BDS...................................................................................................................................... 18

Restrictions on Government Contractors and State Investments............................................ 21

Government-Contractor Restrictions................................................................................ 22

State Investment Restrictions............................................................................................ 23

Federal Preemption Questions: Commerce Clause and Foreign Affairs....................................... 24

Preemption by Federal Statute ................................................................................................ 24

Foreign Commerce Clause...................................................................................................... 25

Intrusion into Foreign Affairs.................................................................................................. 26

Tables

Table 1. Proposed Anti-BDS or Anti-Differentiation Legislation Under Consideration: 

115th Congress............................................................................................................................ 10

Contacts

Author Contact Information .......................................................................................................... 28

Acknowledgments......................................................................................................................... 28
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Introduction

This report provides information and analysis on the following:

 Background on a “BDS” (boycott, divestment, and sanctions) movement against 

Israel.

 Private economic measures and product labeling policies—including those of the 

United States and European Union (EU)—that “differentiate” between (1) Israel 

in general and (2) entities linked with Israeli-developed areas and settlements in 

the West Bank, East Jerusalem, and Golan Heights (areas that Israel has 

controlled and administered since the 1967 Arab-Israeli war).

 Anti-BDS or anti-differentiation efforts to date, including federal and state 

legislation and proposals.

 Legislative considerations arising from existing antiboycott law, First 

Amendment issues, and issues regarding congressional powers over commerce 

and foreign affairs.

Congress and the Trump Administration currently face a number of policy questions on these 

issues. The BDS movement exists within a larger context of Israel’s complex economic and 

political relations with the world. For more information, see CRS Report RL33476, Israel: 

Background and U.S. Relations, by Jim Zanotti.

Background

The BDS Movement 

The BDS movement is generally seen as a loose grouping of actors from various countries who 

advocate or engage in economic measures against Israel or Israel-related individuals or 

organizations, though defining precisely what may or may not constitute BDS activity is subject 

to debate.1 Those who are part of the movement or support it generally express sympathy for the 

Palestinian cause. No foreign government has acknowledged participating in the BDS movement, 

and the movement does not have a secondary tier targeting companies that do business in or with 

Israel.

In July 2005, various Palestinian civil society groups issued a “Call for BDS.”2 These groups 

compared their grievances against Israel to the “struggle of South Africans against apartheid,” and 

 

1

See, e.g., Sean F. McMahon, “The Boycott, Divestment, Sanctions Campaign: Contradictions and Challenges,” Race 

& Class, vol. 55, issue 4, July-September 2014; Marc Tracy, “With All the Boycott Israel Talk, What Is BDS?,” 

newrepublic.com, February 2, 2014; RAND Corporation, The Costs of the Israeli-Palestinian Conflict, 2015. Some 

commentators have claimed that a number of the civil society groups involved in the BDS movement receive a large 

amount of their funding from European governments. See, e.g., Testimony submitted for a July 28, 2015, hearing of the 

House Oversight and Government Reform Committee, Subcommittee on National Security, by SodaStream CEO 

Daniel Birnbaum and law professor Eugene Kontorovich, available respectively at https://oversight.house.gov/wpcontent/uploads/2015/07/7-28-2015-Natl-Security-Hearing-on-BDS-Birnbaum-SodaStream-Testimony.pdf, pp. 59-60; 

and https://oversight.house.gov/wp-content/uploads/2015/07/7-28-2015-Natl-Security-Hearing-on-BDS-KontorovichNorthwestern-Testimony.pdf, p. 3 and footnote 5.

2

http://www.bdsmovement.net/call.
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sought international support for “non-violent punitive measures”3against Israel unless and until it 

changes its policies by (in the words of the “call”)

1. ending its occupation and colonization of all Arab lands and dismantling the 

Wall;

4

2. recognizing the fundamental rights of the Arab-Palestinian citizens of Israel to 

full equality; and 

3. respecting, protecting and promoting the rights of Palestinian refugees to return 

to their homes and properties as stipulated in UN [General Assembly] resolution 

194.5

Specifically, these Palestinian civil society groups called upon “international civil society 

organizations and people of conscience all over the world to impose broad boycotts and 

implement divestment initiatives against Israel similar to those applied to South Africa in the 

apartheid era,” and sought to have this audience pressure their “respective states to impose 

embargoes and sanctions against Israel.”

6

The stated goals of the movement to change Israel’s treatment of Palestinians might, if achieved, 

have broader implications for the demographic and sociopolitical structure of Israel within its 

original 1948 borders.7For example, some Israelis and their supporters voice concern that the 

movement’s demands for an end to “occupation” of Arab lands and for promoting a “right of 

return” for Palestinian refugees could endanger Israel’s identity as a Jewish state if the demands 

were interpreted as insisting that refugee populations be able to live and vote in Israel.

Israeli officials strenuously oppose the BDS movement, and statements by U.S. officials have 

consistently denounced any boycotts or other punitive economic measures targeting Israel. In 

their Senate confirmation hearings in January 2017, Secretary of State Rex Tillerson and 

Permanent Representative to the United Nations Nikki Haley stated their opposition to BDSrelated measures.8

Differentiation Between Israel and the Settlements

Debate is ongoing in the United States and elsewhere about whether economic “differentiation” 

(such as through product labeling policies) between (1) Israel proper and (2) Israeli-developed 

areas and settlements in the West Bank, East Jerusalem, and Golan Heights constitute a form of 

BDS. Some individuals and groups who proclaim the need to maintain Israel’s Jewish identity 

publicly oppose BDS measures against companies inside Israel, but voice support for economic 

measures that target the settlements or those doing business there.9 These individuals and groups 

 

3

Ibid.

4 The “Wall” is a term commonly used by Palestinians to describe the separation barrier that Israel has built in various 

areas roughly tracking (though departing in significant ways at some points from) the 1949-1967 Israel-Jordan (West 

Bank) armistice line, also known as the “Green Line.”

5 These three objectives are found at http://www.bdsmovement.net/call.

6

https://bdsmovement.net/call. 

7

See, e.g., McMahon, op. cit.; Tracy, op. cit.

8

In his January 11 hearing, Secretary Tillerson indicated that actions by countries that are seen to advance BDS-related 

goals would “shade” the U.S. view of those countries. In her January 18 hearing, Ambassador Haley said, “I will not go 

to New York and abstain when the U.N. seeks to create an international environment that encourages boycotts of 

Israel.” 

9

See, e.g., Nathan Hersh, “Want to fight boycotts of Israel? Boycott West Bank settlements instead,” Washington Post, 

(continued...)
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sometimes cite international political and legal views calling into question the legitimacy of 

Israeli civilian communities and businesses in areas that Israel has controlled since the 1967 

Arab-Israeli war.

10

For example, some European countries’ pension funds and companies have withdrawn 

investments or canceled contracts owing to concerns regarding connections with settlement 

activity, as distinguished from broader anti-Israel economic measures.11 Also, the leading councils 

of a number of U.S.-based Christian churches have either voted to divest from companies with 

settlement ties or have considered doing so.

Developments Involving International Organizations

On December 23, 2016, the U.N. Security Council adopted Resolution 2334 (or UNSCR 2334) by a vote of 14 in 

favor, zero against, and one abstention by the United States. The resolution, among other things:

 reaffirms that settlements established by Israel in “Palestinian territory occupied since 1967, including East 

Jerusalem,” constitute “a flagrant violation under international law” and a “major obstacle” to a two-state 

solution and a “just, lasting and comprehensive peace”;

 reiterates the Council’s demand that Israel “immediately and completely cease all settlement activities”; and

 calls upon all states to “distinguish, in their relevant dealings, between the territory of the State of Israel and the 

territories occupied since 1967.”

Following the adoption of UNSCR 2334, Palestinian political leaders indicated that they will campaign “to require that 

other countries not just label products made in the settlements, but ban them.”

12 Claims by Palestinian activists and 

observers that the resolution provides legal and political backing for future boycotts were accompanied by 

expressions of consternation by Israeli observers.13 Although the Palestinian Authority (PA) supports boycotts of 

settlement products, it generally opposes wider boycotts of Israel.14 One analyst asserted that because UNSCR 2334 

distinguishes between Israel and the settlements, the resolution “flies in the face of the demands of many BDS 

supporters, by explicitly advocating a two-state solution, including a secure (and legitimate) Israel.”15

Other notable actions or developments from the past two years include:

 

(...continued)

December 19, 2016; Todd Gitlin, et al., “For an Economic Boycott and Political Nonrecognition of the Israeli 

Settlements in the Occupied Territories,” New York Review of Books, October 13, 2016; Peter Beinart, “To Save Israel, 

Boycott the Settlements,” New York Times, March 18, 2012.

10 The most-cited international law pertaining to Israeli settlements is the Fourth Geneva Convention, Part III, Section 

III, Article 49 Relative to the Protection of Civilian Persons in Time of War, August 12, 1949, which states in its last 

sentence, “The Occupying Power shall not deport or transfer parts of its own civilian population into the territory it 

occupies.” Israel insists that the West Bank does not fall under the international law definition of “occupied territory,” 

but is rather “disputed territory” because the previous occupying power (Jordan) did not have an internationally 

recognized claim to it, and given the demise of the Ottoman Empire at the end of World War I and the end of the 

British Mandate in 1948, Israel claims that no international actor has superior legal claim to it.

11 See, e.g., Barak Ravid, “Denmark’s Largest Pension Fund Divests From German Firm Which Operates Quarries in 

Israeli Settlements,” Ha’aretz, December 15, 2016; Bernard Avishai, “The E.U. vs. B.D.S: The Politics of Israel 

Sanctions,” New Yorker, January 22, 2016; Noah Browning, “Major Dutch pension firm divests from Israeli banks over 

settlements,” Reuters, January 8, 2014; Ministry of Finance (Norway), “Three companies excluded from the 

Government Pension Fund Global,” press release, August 23, 2010, https://www.regjeringen.no/en/aktuelt/threecompanies-excluded-from-the-govern/id612790/.

12 Peter Baker, “A Defiant Israel Vows to Expand Its Settlements,” New York Times, December 27, 2016.

13 Jumana al Tamimi, “Boycott move buoyed by UN resolution,” Gulf News, December 26, 2016; Alan Baker, “The 

Dangers of UN Security Council Resolution 2334 (2016),” Jerusalem Center for Public Affairs, December 26, 2016.

14 Uri Savir, “Why the PA is distancing itself from BDS movement,” Al-Monitor Israel Pulse, May 8, 2016; Yoel 

Goldman, “Abbas: Don’t Boycott Israel,” Times of Israel, December 13, 2013.

15 Natan Sachs, “What’s new and what’s not in the U.N. resolution on Israeli settlements,” Brookings Institution 

(Markaz blog), December 26, 2016.
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 In March 2016, the U.N. Human Rights Council adopted a controversial resolution which, among other 

things, requested that the U.N. Office of the High Commissioner for Human Rights produce a database of 

all business enterprises that have “directly and indirectly, enabled, facilitated and profited from the 

construction and growth of the (Israeli) settlements.”16 This action was denounced by Israeli as a “blacklist” 

and by the United States as biased against Israel.17

 In March 2017, a special committee from the International Federation of Association Football (FIFA), 

soccer’s international governing body, warned Israel that it could face suspension from international 

competition if it continues to allow clubs from West Bank settlements to play in its national league.18

Impact and Israeli Responses in Larger Political Context

BDS or economic differentiation measures exist within a larger context of international criticism 

of Israel. Israel and many of its supporters, along with the international media, frequently raise 

the possibility of Israel’s “isolation” (or, as some Israelis characterize it, “delegitimization”).

19

Some Israeli officials and outside observers have downplayed the concern, pointing to 

improvements in Israel’s relations with a number of countries.20 Moreover, while some 

divestment from and boycotts of Israel or Israeli goods have taken place in recent years,21 such 

measures appear to have had little overall effect on Israel’s economy. For example, one observer 

pointed to the tripling of foreign investment in Israel from 2005 to 2016 to claim that BDS or 

related economic measures against Israel have not been successful.22

In September 2015, the Israel-based company SodaStream closed its West Bank factory and 

relocated its operations inside Israel, though its CEO claimed that the BDS movement had only a 

“marginal” effect on these changes.23 Reportedly, all of SodaStream’s West Bank-based 

Palestinian employees (between 500 and 600) were laid off because none could obtain permits 

from Israeli authorities to work at the new location.24 A common Israeli assertion is that BDS 

advocates or those who differentiate economically between Israel and West Bank settlements 

harm the employment situation of West Bank Palestinians.25 Many Palestinians and some 

international human rights groups counter this assertion by stating that Palestinians would be able 

to enjoy greater job prospects if Israeli settlements and movement/access/zoning restrictions in 

the West Bank did not constrain Palestinians’ entrepreneurial capacities or their ability to attract 

 

16 See U.N. Human Rights Council resolution 31/36 (A/HRC/31/L.39), March 22, 2016, paragraph 17; and paragraphs

96 and 117 of Human Rights Council Document, A/HRC/22/63, Report of the independent international fact-finding 

mission to investigate the implications of the Israeli settlements on the civil, political, economic, social and cultural 

rights of the Palestinian people throughout the Occupied Palestinian Territory, including East Jerusalem, February 7, 

2013.

17 Mohamad Torokman, “U.S. condemns U.N. call for list of firms operating in West Bank,” Reuters, March 31, 2016; 

Transcript of Remarks by Ambassador Nikki Haley, U.S. Permanent Representative to the United Nations, Geneva, 

Switzerland, June 6, 2017, available at https://usun.state.gov/remarks/7828.

18 “Israel fumes over world soccer official’s ultimatum,” Agence France Presse, March 24, 2017.

19 See, e.g., Lidar Grave-Lazi, “First Situation Room to Combat BDS Opens in US,” jpost.com, January 24, 2017.

20 Ruthie Blum, “Israel’s Outgoing Foreign Ministry Chief Dispels ‘Myth’ of Jewish State’s Diplomatic Isolation,” 

Algemeiner, October 20, 2016.

21 Avishai, op. cit.

22 Sangwon Yoon, “The Boycott Israel Movement May be Failing,” Bloomberg, June 2, 2016.

23 “SodaStream Leaves West Bank as CEO Says Boycott Antisemitic and Pointless,” theguardian.com, September 2, 

2015.

24 “SodaStream fires last Palestinian workers after permit row,” Agence France Presse, February 29, 2016.

25 See, e.g., David Horovitz, “Victory for BDS as SodaStream’s last Palestinian workers lose their jobs,” Times of 

Israel, February 29, 2016.
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international employers or outside investment.26 Some Israelis attempt to justify constraints on 

West Bank Palestinians by reference to concerns about security for Israeli citizens located in 

Israel proper and the settlements.

While widespread consensus across Israel’s political spectrum favors countering economic and 

political measures targeting Israel, there is debate over the extent to which changes in Israeli 

policy toward Palestinians can improve international attitudes toward Israel. Right-of-center 

political figures within the government sometimes portray criticisms of Israeli actions as pretexts 

for more deep-seated prejudice against Israel and/or Jews, while left-of-center figures within the 

opposition periodically criticize government leaders for steps that may have the potential to 

undermine support for Israel in international fora.

27

Israeli political leaders routinely denounce BDS, and Israel’s government has reportedly allocated 

about $26 million in annual funding to the Ministry of Strategic Affairs aimed at countering BDSrelated activities.28 Such countermeasures apparently include assertive public diplomacy, outreach 

to enlist anti-BDS allies within the Jewish diaspora, and digital initiatives like gathering 

intelligence on activist groups.29 Some current and former Israeli diplomats were cited in 2016 as 

saying that robust Israeli efforts to counter BDS may backfire by providing the movement with 

free publicity and by possibly alienating would-be diaspora supporters—including in the United 

States—via polarizing rhetoric.30 Some private individuals and organizations have raised funds 

and public awareness in an effort to counter pro-BDS sentiment in the United States (such as on 

college campuses and social media websites) and elsewhere,31 and Israel and a number of 

organizations held an anti-BDS summit in May 2016 at the U.N. General Assembly.32

In March 2017, Israel’s Knesset (parliament) passed a law that allows the government to block 

entry into the country of nonresidents who publicly call for a boycott against Israel or Israelis in 

West Bank settlements, or are associated with organizations that do so.

33 Some of the law’s 

opponents warn of negative consequences to Israel if it keeps out those who assert that they 

support its interests by means of their opposition to settlements.34

Labeling Products from Israeli Settlements

Debates regarding policies that govern the labeling of consumer products imported into the 

European Union and United States from Israeli settlements, as well as the broader implications of 

such policies, have become part of the overall policy discussion regarding BDS and 

differentiation.

 

26 See, e.g., Human Rights Watch, Occupation, Inc.: How Settlement Businesses Contribute to Israel’s Violation of 

Palestinian Rights, 2016.

27 See, e.g., Lahav Harkov, “Netanyahu says Israel's image improving as he defends Foreign Ministry's diplomatic 

efforts,” Jerusalem Post, July 26, 2016.

28 Daniel Estrin, “Covertly, Israel prepares to fight boycott activists online,” Associated Press, February 17, 2016.

29 Ibid.; Ben Caspit, “Did Israel’s reaction to BDS drive movement’s growth?” Al-Monitor Israel Pulse, April 27, 2016.

30 Caspit, “Did Israel’s reaction to BDS drive movement’s growth?” op. cit.

31 Grave-Lazi, op. cit.; “Saban said to quit anti-BDS campus initiative he launched with Adelson,” Jewish Telegraphic 

Agency/Times of Israel, October 1, 2015.

32 Cathryn J. Prince, “Israel hosts first-ever anti-BDS conference at UN,” Times of Israel, June 1, 2016.

33 Joshua Mitnick, “Law in Israel bans boycott backers,” Los Angeles Times, March 7, 2017.

34 Ibid.
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European Union Policy

Given that the 28-country European Union (EU) is Israel’s largest trading partner,35 Israeli 

officials routinely express concern regarding prospects of reduced Israel-EU economic 

cooperation as a consequence of Palestinian-related developments. Dating back even to the 

previous decade, some EU member states have taken a number of steps to “differentiate between 

Israel and its settlements project in the day-to-day conduct of bilateral relations.”36 The EU does 

not view such “differentiation” measures as part of or supporting the BDS movement.

On November 11, 2015, the European Commission issued a notice setting forth guidelines 

regarding labeling of certain products37 imported into EU countries from areas that Israel captured 

in the 1967 Arab-Israeli war, along with an accompanying factsheet.38 The labeling notice 

provides that products in question coming from Israeli settlements in the West Bank (including 

East Jerusalem) or Golan Heights should be clearly differentiated from products coming from 

Israel and those produced (generally by Palestinian-run businesses) outside of settlements in the 

West Bank, Golan Heights, and Gaza Strip. According to one media report, “EU diplomats say 

there are no serious plans for additional measures” and that the EU “insists the move is purely 

technical, applying the EU policy that settlements are illegal.”39 The factsheet accompanying the 

notice stated

The EU does not support any form of boycott or sanctions against Israel. The EU does 

not intend to impose any boycott on Israeli exports from the settlements. The 

Commission will only help Member States to apply already existing EU legislation. The 

indication of origin will give consumers the possibility to make an informed choice.

The Israeli Foreign Ministry responded to the European Commission notice with a statement that 

read in part, “We regret that the EU has chosen, for political reasons, to take such an exceptional 

and discriminatory step, inspired by the boycott movement.”40 After the move, Israel suspended 

contact with several EU bodies until a February 2016 conversation between Prime Minister 

 

35 According to the European Commission’s Directorate General for Trade, for 2015 the countries of the European 

Union accounted for 30.2% of Israel’s total trade volume, while the United States accounted for 20.5%. Document 

available at http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113402.pdf. General EU-Israel trade 

information is available at http://ec.europa.eu/trade/policy/countries-and-regions/countries/israel/.

36 Hugh Lovatt and Mattia Toaldo, “EU Differentiation and Israeli Settlements,” European Council on Foreign 

Relations (ECFR), July 2015. According to one report, the EU has excluded products from settlements from trade 

preferences for over a decade. “EU sets rule for labeling products made in West Bank settlements,” Al Jazeera, 

November 11, 2015.

Additionally, various EU governments have cautioned investors about legal, political, and economic risks supposedly 

involved in doing business with Israeli settlements. Andrew Rettman, “EU states promote settler boycott amid Israel 

crisis,” EUObserver, July 4, 2014.

37 The labeling rules are required for fresh fruit and vegetables, wine, honey, olive oil, eggs, poultry, organic products, 

and cosmetics; and are optional for pre-packaged foodstuffs and the majority of industrial products.

38 The text of the notice is available at http://eeas.europa.eu/delegations/israel/documents/news/

20151111_interpretative_notice_indication_of_origin_of_goods_en.pdf, and the factsheet at http://eeas.europa.eu/

delegations/israel/documents/news/20151111_indication_of_origin_fact_sheet_final_en.pdf. According to one report, 

“EU foreign ministers made the decision in 2012 but Brussels has repeatedly delayed producing its guidelines, saying it 

was working on the details.” Rory Jones, “Israel Decries EU Label Rules For Settlers,” Wall Street Journal, November 

12, 2015. In April 2015, 16 of 28 foreign ministers of EU member states signed a letter encouraging EU foreign policy 

chief Federica Mogherini to issue the notice, and the European Parliament passed a nonbinding resolution in support of 

this step in September 2015.

39 Jones, op. cit.

40 Text of statement available at http://mfa.gov.il/MFA/PressRoom/2015/Pages/Israel-condemns-EU-decision-onlabeling-11-Nov-2015.aspx.
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Netanyahu and the High Representative of the EU for Foreign Affairs, Federica Mogherini.41

Palestine Liberation Organization Secretary General Saeb Erekat called the European 

Commission notice “a significant move toward a total boycott of Israeli settlements, which are 

built illegally on occupied Palestinian lands.”42 Some Israelis from the left of the country’s 

political spectrum reportedly signed a petition welcoming the move.43

Some Members of Congress viewed the implementation of a policy of different labeling for 

goods from Israeli settlements in negative terms. Two days before the European Commission 

issued its notice, 36 Senators sent a letter to Mogherini urging her not to adopt the labeling 

guidelines.

44

A State Department deputy spokesperson in the Obama Administration reacted to the guidelines 

the day after their issuance. He said that the Administration did “not believe that [EU] labeling 

[of] the origin of products is equivalent to a boycott.”45 He further said that U.S. laws for Israeli 

settlement exports are somewhat similar in requiring them to be marked as products of the West 

Bank, but that the U.S. laws do not require further differentiation between products from and not 

from settlements.46

The economic impact of the EU guidelines has been somewhat muted. Some attribute that at least 

partly to decisions by some EU member states—facing Israeli government pressure—not to 

implement the guidelines in a robust way.

47 One media report citing EU officials emphasized that 

exports to the EU from within Israel’s “internationally recognized borders” still receive 

preferential customs treatment, and that product labeling analogous to what the EU prescribed has 

taken place in the United Kingdom (UK) for a few years with “no negative economic effect.”48

According to one media report, less than one percent of Israel’s annual trade with the EU has 

been affected by the guidelines.49

Debate has persisted about the implications of EU differentiation measures and proposals.50 An 

October 2016 report from a European think tank asserted that “One year on, progress on the [EU] 

application of differentiation has been slow, but important. EU consensus around differentiation 

has broadened, and European diplomats have taken concrete steps to own and defend it.”51 The 

report also acknowledged the “genuine threat of a resurgence of anti-Semitism” while making the 

case that differentiation is not a discriminatory measure.52 By contrast, one Israeli journalist 

 

41 Ori Lewis, “Israel says has mended fences with EU in Netanyahu-Mogherini call,” Reuters, February 12, 2016.

42 William Booth, “A Furor over Redefining ‘Made in Israel,’” Washington Post, November 12, 2015.

43 Andrew Rettman and Peter Teffer, “EU Shops to Mark ‘Israeli Settlement’ Products,” EUObserver, November 11, 

2015.

44 Text of letter available at http://www.cruz.senate.gov/files/documents/Letters/20151109_EU_IsraelLetter.pdf. 

45 Bradley Klapper, “US OK With New EU Labeling Rule for Israeli Settlement Goods,” Associated Press, November 

12, 2015. At a daily press briefing the day before the European Commission issued its labeling notice, the deputy 

spokesperson had said that it could be “perceived as a step on the way” to a boycott.

46 Ibid. See also U.S. Customs and Border Protection, op. cit.

47 Nigel Wilson, “Israel: EU labelling rules have ‘non-existent impact,’” Al Jazeera, December 12, 2016.

48 “EU sets rule for labeling products made in West Bank settlements,” op. cit.

49 Wilson, op. cit.

50 See, e.g., Teodora Coptil, “EU-Israel relations: Trojan horses, snakes, ladders and boycotts,” European Jewish Press, 

May 25, 2017; Sarah Leah Whitson, “Chipping Away at 50 Years of Occupation,” Public Diplomacy Magazine, June 

5, 2017.

51 Hugh Lovatt, “EU differentiation and the push for peace in Israel-Palestine,” European Council on Foreign 

Relations, October 31, 2016.

52 Ibid.
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characterized the EU labeling system as a “deceptive nascent phase in a slippery slope campaign 

to impose a full BDS program on Israel.”53

Given tensions between the EU and Israel over Israeli settlement policy, some may fear that the 

EU could seek to review and possibly expand differentiation measures.54 According to one early 

2017 news report, some EU diplomats have called for the EU to ensure full implementation of the 

labeling guidelines. At the same time, this press report noted that EU foreign policy chief 

Mogherini has not been enthusiastic about the labeling guidelines and appears to have little 

appetite for further differentiation measures.55

U.S. Policy

Under U.S. law, eligible articles imported into the United States from Israel, the West Bank, or 

the Gaza Strip are covered under the 1985 U.S.-Israel Free Trade Agreement (IFTA).56 In January 

2016, the Customs and Border Protection (CBP) Agency (within the Homeland Security 

Department) restated and clarified country of origin marking (i.e., labeling) requirements, based 

on previous executive branch guidance, as follows: 

...goods produced in the West Bank or Gaza Strip shall be marked as originating from 

‘‘West Bank,’’ ‘‘Gaza,’’ ‘‘Gaza Strip,’’ ‘‘West Bank/Gaza,’’ ‘‘West Bank/Gaza Strip,’’ 

‘‘West Bank and Gaza,’’ or ‘‘West Bank and Gaza Strip.’’ It is not acceptable to mark 

the aforementioned goods with the words ‘‘Israel,’’ ‘‘Made in Israel,’’ ‘‘Occupied 

Territories-Israel,’’ or any variation thereof. Goods that are erroneously marked as 

products of Israel will be subject to an enforcement action carried out by U.S. Customs 

and Border Protection.57

A few days after CBP issued these requirements, one commentator wrote: “It is unknown to what 

degree settlement exporters (and importers of settlement goods) comply with U.S. regulations. 

Anecdotal evidence indicates that to a great extent they do not, raising questions about the need 

for stronger enforcement and penalties for non-compliance.”58

In February 2016, proposed legislation was introduced in the House (H.R. 4555 and H.R. 4503) 

and Senate (S. 2474) that would have permitted products exported to the United States from West 

 

53 Benjamin Weinthal, “European Affairs: BDS spreading like wildfire in Europe?” Jerusalem Post, March 5, 2016. 

54 See, e.g., Jodi Rudoren, et al., “E.U. Move Fans Fear of Boycott Aimed at Israel,” New York Times, November 12, 

2015; Lovatt and Toaldo, op. cit. 

55 Andrew Rettman, “EU Diplomats Blame Israel for Jerusalem Volatility,” EUObserver, January 27, 2017.

56 United States-Israel Free Trade Area Implementation Act of 1985 (P.L. 99-47), as amended in 1996 by P.L. 104-234

(West Bank and Gaza Strip Free Trade Benefits). The text of the IFTA is available at http://tcc.export.gov/

Trade_Agreements/All_Trade_Agreements/exp_005439.asp. The IFTA rules of origin specify that products are eligible 

for duty-free treatment if (1) the product is the growth, product, or manufacture of a party, or a new or different article 

of commerce that has been grown, treated, or manufactured in a party; (2) imported directly from one party to another 

party; and (3) the cost or value of the materials plus the direct costs of processing operations is not less than 35% of the 

appraised value of the product. 

57 U.S. Customs and Border Protection, West Bank Country of Origin Marking Requirements, Cargo Systems 

Messaging Service #16-000047, January 23, 2016. Previous executive branch guidance on the subject had been 

provided via Treasury Decision (T.D.) 95-25, available at http://www.gpo.gov/fdsys/pkg/FR-1995-04-06/html/95-

8454.htm; T.D. 97-16, available at http://www.gpo.gov/fdsys/pkg/FR-1997-03-14/pdf/97-6434.pdf; and Presidential 

Proclamation 6955 of November 13, 1996, available at http://www.gpo.gov/fdsys/pkg/FR-1996-11-18/pdf/96-

29613.pdf.

58 Lara Friedman, “Settlement Product Labeling Policies, U.S. vs. EU,” Americans for Peace Now, January 27, 2016. 

See also David Horovitz, “‘There's a general condemnation of the West that you hear in many places: Is America 

withdrawing, is the West withdrawing?’” Times of Israel, February 23, 2016.
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Bank settlements to be labeled “Made in Israel.” None of these bills were enacted during the 114th

Congress.

Anti-BDS or Anti-Differentiation Legislative Action 

and Proposals

For additional analysis of enacted and proposed legislation discussed in this section, see “General 

Antiboycott Legislative Considerations,” “Potential First Amendment Issues Facing Laws 

Intended to Deter BDS Activity,” and “Federal Preemption Questions: Commerce Clause and 

Foreign Affairs” below.

In Congress

A number of U.S. policymakers and lawmakers have stated opposition to or taken action against 

the BDS movement. Some Members of Congress argue that the BDS movement is discriminatory 

and are seeking legislative options to limit its influence. See Table 1 below for a list of proposed 

anti-BDS or anti-differentiation legislation under congressional consideration.

In June 2015, the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (P.L. 

114-26) was enacted into law. This law provided trade promotion authority (TPA)59 to the 

President regarding the negotiation of certain U.S. trade agreements, including the proposed U.S.-

EU Transatlantic Trade and Investment Partnership (T-TIP). The law included a trade negotiating 

objective for T-TIP (U.S.-EU negotiations to achieve a comprehensive and “high-standard” free 

trade agreement) aimed at BDS-related activity. The trade negotiating objective, as enacted, 

discouraged politically motivated economic actions “intended to penalize or otherwise limit 

commercial relations specifically with Israel or persons doing business in Israel or in Israelicontrolled territories.” 

During and after congressional deliberations, public debate regarding this trade negotiating 

objective focused on whether EU “differentiation” between commerce with Israeli settlements 

and commerce with Israel constitutes or promotes BDS-related activity.60 The State Department 

spokesperson’s office weighed in on the debate with a statement following the enactment of P.L. 

114-26 that included the following passage:

The United States has worked in the three decades since signing the U.S.-Israel Free 

Trade Agreement – our first such agreement with any country – to grow trade and 

investment ties exponentially with Israel. The United States government has also strongly 

opposed boycotts, divestment campaigns, and sanctions targeting the State of Israel, and 

will continue to do so. 

However, by conflating Israel and “Israeli-controlled territories,” a provision of the Trade 

Promotion Authority legislation runs counter to longstanding U.S. policy towards the 

occupied territories, including with regard to settlement activity. Every U.S. 

administration since 1967 – Democrat and Republican alike – has opposed Israeli 

settlement activity beyond the 1967 lines. This [Obama] Administration is no different. 

The U.S. government has never defended or supported Israeli settlements and activity 

 

59 For more information, see CRS In Focus IF10038, Trade Promotion Authority (TPA), by Ian F. Fergusson. 

60 Sarah Saadoun, “Don’t Protect Israeli Settlement Trade,” The Hill, May 15, 2015; Melissa Apter, “Home Run for 

Cardin,” Baltimore Jewish Times, April 30, 2015; Lara Friedman, “The Stealth Campaign in Congress to Support 

Israeli Settlements,” December 1, 2015.
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associated with them and, by extension, does not pursue policies or activities that would 

legitimize them.61

In February 2016, President Obama signed the Trade Facilitation and Trade Enforcement Act of 

2015 (the Customs Act, P.L. 114-125) into law. The Act contains a provision similar to the one in 

P.L. 114-26 that opposes punitive economic measures (such as measures advocated by a nongovernmental boycott, divestment, and sanctions [BDS] movement) against businesses in Israel 

or Israeli-controlled territories. However, the Obama Administration asserted—including in a 

presidential signing statement—that certain provisions in P.L. 114-125 that seek to treat “Israelicontrolled territories” beyond 1949-1967 armistice lines (including West Bank settlements) in the 

same manner as Israel itself are not in line with U.S. policy.62

Table 1. Proposed Anti-BDS or Anti-Differentiation Legislation Under Consideration: 

115th Congress

Bill Number Name and Description

S. 720 Israel Anti-Boycott Act. A bill to amend the Export Administration Act of 1979 

to include in the prohibitions on boycotts against allies of the United States boycotts 

fostered by international governmental organizations against Israel, and to add 

opposition to economic measures taken against Israel as an additional possible basis 

for the President, in consultation with the House Financial Services and Senate 

Banking committees, to make a national interest determination to deny applications 

for credit at the Export-Import Bank for non-financial or non-commercial reasons.

H.R. 1697 Israel Anti-Boycott Act. Substantially similar to S. 720.

S. 170 Combating BDS Act of 2017. To provide for nonpreemption of measures by 

State and local governments to divest from entities that engage in commerce-related 

or investment-related boycott, divestment, or sanctions activities targeting Israel

(including persons doing business in Israel or Israeli-controlled territories), and for 

other purposes.

H.R. 2856 Substantially similar to S. 170.

State Level Legislation

Since 2015, various U.S. states have also enacted or proposed anti-BDS or anti-differentiation 

legislation. Some legislation explicitly applies to situations involving both Israel and “Israelicontrolled territories,”63 while observers speculate about the territorial applicability of other 

legislation that is less explicit.64

Examples of enacted legislation on the state level come under two broad categories:

 Investment-Focused. Laws that appear to require state investment vehicles to 

divest from or avoid investing in companies that—as specified variously in each 

state’s legislation—are characterized as engaging in, potentially engaging in, or 

advocating economic measures antithetical to Israel.65 In 2016, New York 

 

61 Full text of statement cited by an AP reporter at https://twitter.com/APDiploWriter/status/615969535087218688, 

June 30, 2015.

62 See, e.g., a presidential signing statement for P.L. 114-125 (H.R. 644) at https://obamawhitehouse.archives.gov/thepress-office/2016/02/25/signing-statement-hr-644. 

63 This is the case in Arizona, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, New Jersey, Ohio, and Texas. 

64 See, e.g., https://peacenow.org/WP/wp-content/uploads/State-BDS-and-Settlement-legislation-table.pdf.

65 States that have enacted legislation to this effect include Arizona, Arkansas, Colorado, Florida, Illinois, Indiana, 

(continued...)
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Governor Andrew Cuomo signed an executive order similar in content to other 

states’ legislation on this subject.66

 Contracting-Focused. Laws that appear to prohibit public entities from 

transacting business with entities that—as specified variously in each state’s 

legislation— are characterized as engaging in, potentially engaging in, or 

advocating economic measures antithetical to Israel.67

Additionally, as of May 2017, all 50 U.S. governors and the mayor of Washington, DC, had 

reportedly signed onto an initiative sponsored by the American Jewish Committee (AJC) entitled 

“Governors Against BDS.”68

General Antiboycott Legislative Considerations69

The existing U.S. antiboycott regime was largely crafted to address the Arab League (League of 

Arab States) boycott of Israel. Members might consider the extent to which the existing regime 

could be applied or modified with respect to efforts to address the BDS movement. 

The Arab League boycott has three tiers. The primary boycott prohibits citizens of an Arab 

League member state from buying from, selling to, or entering into a business contract with either 

the Israeli government or an Israeli citizen. The secondary boycott extends the primary boycott to 

any entity worldwide that does business in Israel. The tertiary boycott prohibits Arab League 

members and their nationals from doing business with a company that deals with companies that 

have been blacklisted by the Arab League.

In the late 1970s, the United States passed antiboycott legislation establishing a set of civil and 

criminal penalties to discourage U.S. individuals from cooperating with the Arab League 

boycott.70 U.S. antiboycott efforts are targeted at the secondary and tertiary boycotts. U.S. 

legislation was enacted to “encourage, and in specified cases, require U.S. firms to refuse to 

participate in foreign boycotts that the United States does not sanction. They have the effect of 

preventing U.S. firms from being used to implement foreign policies of other nations which run 

 

(...continued)

Iowa, New Jersey, and Texas.

66 See the text of Executive Order 157, signed on June 5, 2016, at 

https://www.governor.ny.gov/sites/governor.ny.gov/files/atoms/files/EO_157_new.pdf.

67 States that have enacted legislation to this effect include Arizona, Arkansas, Florida, Georgia, Iowa, Michigan, Ohio, 

Pennsylvania, Rhode Island, South Carolina, and Texas. California enacted legislation in September 2016 that requires 

parties seeking state contracts to certify that any policy that they have adopted against a sovereign nation or people 

(including Israel) is not discriminatory under specified civil rights or employment and housing legislation.

68 See http://www.ajc.org/site/c.7oJILSPwFfJSG/b.9394655/k.A643/Governors_United.htm. The text of the statement 

on which the AJC seeks governors’ signatures is available at http://www.ajc.org/atf/cf/%7Bf56f4495-cf69-45cb-a2d7-

f8eca17198ee%7D/GOVERNORS_AGAINST_BDS_STATEMENT.PDF.

69 This section was authored by Martin A. Weiss, Specialist in International Trade and Finance.

70 See CRS Report RL33961, Arab League Boycott of Israel, by Martin A. Weiss. U.S. regulations define cooperating 

with the boycott as (1) agreeing to refuse or actually refusing to do business in Israel or with a blacklisted company; (2) 

agreeing to discriminate or actually discriminating against other persons based on race, religion, sex, national origin, or 

nationality; (3) agreeing to furnish or actually furnishing information about business relationships in Israel or with 

blacklisted companies; and (4) agreeing to furnish or actually furnishing information about the race, religion, sex, or 

national origin of another person. The export-related antiboycott provisions are administered by the Department of 

Commerce and potentially fine and/or imprison U.S. persons participating in the boycott. The Internal Revenue Service 

(IRS) administers tax-related antiboycott regulations that deny tax benefits to U.S. taxpayers that participate in the 

boycott.
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counter to U.S. policy.”71 According to the Department of Commerce, in FY2016, 549 requests by 

Arab League members to participate in the boycott were reported to U.S. officials. The majority 

(325 requests) were from the United Arab Emirates, followed by Qatar (73) and Iraq (54).72

Participating in the BDS movement would not appear to place a U.S. organization in violation of 

existing federal antiboycott legislation, which targets organizations’ participation in foreign 

boycotts. No foreign state has proclaimed that it participates in the BDS movement, and the 

movement does not have a secondary tier targeting companies that do business in or with Israel. 

Some Members of Congress have introduced legislation seeking to extend existing antiboycott 

penalties to BDS-related activity. If enacted, the Israel Anti-Boycott Act (S. 720, H.R. 1697—see 

Table 1) would amend federal antiboycott legislation to also apply to boycotts fostered by 

international governmental organizations against Israel. Members might also consider legal and 

regulatory frameworks that Congress and the executive branch have used to designate actors of 

concern under various rubrics having to do with trade and/or national security. One option would 

be to create a dual system under which Congress could explicitly designate foreign BDS 

“offenders” (either individuals or entities) through legislation, while also authorizing executive 

branch agencies (including the State, Treasury, or Commerce Departments) to designate foreign 

“offenders” via case-by-case determinations based on a number of criteria. Such criteria could 

include market behavior and its impact or potential impact on Israel, evidence of intent, 

coordination with other parties, etc. Congress could require the executive branch to justify its 

designations/nondesignations through reports, either as a matter of course or upon congressional 

or congressional leadership request. Such congressional designation measures, however, could 

raise bill of attainder concerns under the Constitution, as well as definitional concerns in 

identifying BDS participation.73

Potential First Amendment Issues Facing Laws 

Intended to Deter BDS Activity74

As discussed above, opponents of the BDS movement have proposed the enactment of 

legislation, either at the federal or U.S. state level, which would limit or deter participation in 

BDS-related activities and/or economic “differentiation” (between Israel and Israeli 

settlements).75 These proposals have taken a number of forms. For instance, an early iteration of 

congressional legislation would have restricted the availability of federal funds to entities, 

 

71 Website of the Office of Antiboycott Compliance; http://www.bis.doc.gov/AntiboycottCompliance/

oacrequirements.html.

72 U.S. Department of Commerce, Bureau of Industry and Security, Annual Report to the Congress for Fiscal Year 

2016, Washington, DC.

73 A bill of attainder is a legislative act that imposes punishment without a trial. Such acts are expressly forbidden in 

Article 1, Section 9 of the Constitution. Designations for the purpose of implementing sanctions are subject to due 

process, that is, a designated person or entity is likely entitled to notice and opportunity to be heard by a neutral 

decision-maker prior to the implementation of sanctions. (The process that is due depends on the severity of sanctions, 

among other things.) For more information, see CRS Report R40826, Bills of Attainder: The Constitutional 

Implications of Congress Legislating Narrowly, by Kenneth R. Thomas.

74 This section was authored by Kathleen Ann Ruane, Legislative Attorney.

75 See supra “Anti-BDS or Anti-Differentiation Legislative Action and Proposals”. For ease of expression without any 

judgment as to the two concepts’ similarity or difference as a matter of law or policy, references to legislation 

addressing “BDS activity” or “BDS-related activity” in this section on First Amendment issues will also be deemed to 

include legislation addressing differentiation.
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including universities, which engaged in BDS activity.76 More recently, some states have enacted 

laws that prohibit government contractors from boycotting or discriminating against countries 

including Israel.77 Other states have taken action to restrict the investment of state funds in 

entities that engage in BDS activity.78 Under these restrictions, state pension funds, for example, 

may be required to divest from companies engaged in BDS activity.

Some scholars and commentators have argued that legislation and other government action 

designed to deter or eliminate BDS activity potentially would raise First Amendment concerns,79

while others have argued that such action would be consistent with the First Amendment or 

would not implicate the First Amendment at all.80 This section discusses key concepts and 

precedents that might factor into a reviewing court’s analysis of the constitutionality of certain 

proposed and enacted laws and executive actions related to BDS activity.

In sum, the degree to which a restriction on BDS activity would implicate the First Amendment 

and whether, even if it did, it would nonetheless be permissible turns on a number of unsettled 

questions. The first and most obvious is whether the act of refusing to deal with Israel or Israeliaffiliated entities is expressive conduct protected by the First Amendment. Important to this 

analysis may be whether those participating in BDS activity are attempting to make a political 

statement or are attempting to gain an economic advantage. Another relevant factor may be 

whether the government, in enacting the restriction, may be viewed by a reviewing court to be 

suppressing a disfavored message or, instead, to be regulating discriminatory conduct. Answers to 

these questions would likely turn on the text of the specific statutes at issue, as well as a number 

of other factors that may be difficult to predict.

Is BDS Activity Speech Protected by the First Amendment? 

The First Amendment to the Constitution, incorporated against the states by the Fourteenth 

Amendment,81 provides that “Congress shall make no law ... abridging the freedom of speech

....”

82 According to the Supreme Court, “the First Amendment [generally] means that government 

has no power to restrict expression because of its message, its ideas, its subject matter, or its 

 

76 See Protect Academic Freedom Act, H.R. 4009, 113th Cong. (2014).

77 See supra “State Level Legislation”.

78 Id.

79 Recent Legislation, First Amendment – Political Boycotts – South Carolina Disqualifies Companies Supporting BDS 

from Receiving State Contracts, 129 HARV. L. REV. 2029, 2031-32 (2015) (arguing that the BDS boycott of Israel is 

protected by the Constitution); Letter from the Ctr. for Constitutional Rights, Nat’l Lawyers Guild, and Council on 

Am.-Islamic Relations, to Rep. John Kline (Feb. 11, 2014), available at http://www.ccrjustice.org/sites/default/files/

assets/files/Letter-re-HR4009-Kline_2-11-14_CCR-NLG-CAIR.pdf; Rosie Gray, Major Jewish Groups Won’t Back 

Boycott Bill, BUZZFEED (Feb. 6, 2014), https://www.buzzfeed.com/rosiegray/major-jewish-groups-wont-back-boycottbill?utm_term=.tdVrV8G4BD#.cdp7KAwONn (last visited May 5, 2017) (quoting legal observers arguing that funding 

restrictions tied to BDS activity would be an unconstitutional restriction on speech, as well one legal scholar who 

disagreed with this concluding).

80 Eugene Kontorovich, Can States Fund BDS?, TABLET MAGAZINE (July 13, 2015), http://www.tabletmag.com/jewishnews-and-politics/192110/can-states-fund-bds; Eugene Volokh, Bill to block federal funding to universities that boycott 

Israel, WASH. POST: VOLOKH CONSPIRACY (Feb. 2, 2014), https://www.washingtonpost.com/news/volokhconspiracy/wp/2014/02/07/bill-to-block-federal-funding-to-universities-that-boycott-israel/; see also Marc A. 

Greendorfer, The Inapplicability of First Amendment Protections to BDS Movement Boycotts, 2016 CARDOZO L. REV.

DE NOVO 112 (2016) (arguing that BDS activity against Israel should not receive First Amendment protection).

81 See Murdoch v. Pennsylvania, 319 U.S. 105, 108 (1943) (“The First Amendment, which the Fourteenth makes 

applicable to the states, declares...”).

82 U.S. CONST. amend. I.
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content.”83 The Freedom of Speech Clause refers specifically to the freedom of speech.

84 Some 

non-verbal conduct, however, may also convey a message and be entitled to protection under the 

First Amendment.85

The Supreme Court has found that the government generally has more leeway to regulate 

expressive conduct than it has to regulate pure speech.86 Nonetheless, there are limits on the 

government’s ability to regulate conduct protected by the First Amendment.87 The government 

normally may not, for example, regulate conduct because of its expressive elements.88

The Supreme Court has generally interpreted refusals to do business, including through 

boycotts,89 as conduct that may be permissibly regulated.90 Boycotts aimed at gaining an 

economic advantage for the boycotting parties are generally considered to be within the 

government’s power to regulate and even to prohibit.91 However, boycotts aimed at achieving 

something other than an economic advantage, particularly when the motivation is political or 

social in nature, may have more of an expressive element which, according to Supreme Court 

precedent, could qualify for First Amendment protection.92

No definitive precedent exists examining whether BDS activity is protected by the First 

Amendment.93 Scholars who have written and commented on the issue disagree,94 leading one 

 

83 Ashcroft v. Am. Civ. Liberties Union, 535 U.S. 564, 573 (2002) (internal quotation marks omitted).

84 U.S. CONST. amend. I.

85 See Texas v. Johnson, 491 U.S. 397, 404 (1989) (“The First Amendment literally forbids the abridgment only of 

‘speech,’ but we have long recognized that its protection does not end at the spoken or written word.... Conduct may be 

‘sufficiently imbued with elements of communication to fall within the scope of the First and Fourteenth 

Amendments.’”) (internal citation omitted).

86 Id. at 406 (“The government generally has a freer hand in restricting expressive conduct than it has in restricting the 

written or spoken word.”).

87 Id.

88 Id. (“[The government] may not, however, proscribe particular conduct because it has expressive elements.”) 

(emphasis in original). See also R.A.V. v. City of St. Paul, 505 U.S. 377, 388 (1992) (striking down a state statute that 

prohibited certain conduct, such as cross-burning, with the intent to intimidate others on the basis of their race, gender, 

or religion because the statute impermissibly discriminated on the basis of viewpoint). 

89 The act of joining together with others and agreeing not to do business with a particular entity or entities is

commonly understood to constitute a boycott. Boycott, WEBSTER’S NEW COLLEGIATE DICTIONARY (5th ed. 1977).

90 See FTC v. Superior Court Trial Lawyers Ass’n, 493 U.S. 411, 426 (1990).

91 Id. at 426-28 (holding that a boycott involving attorneys that refused to accept cases unless the fees they were paid 

were raised was a violation of the antitrust laws); NAACP v. Claiborne Hardware, 458 U.S. 886, 912 (1982) (observing 

that the Supreme Court “has recognized the strong governmental interest in certain forms of economic regulation, even 

though such regulation may have an incidental effect on rights of speech and association”).

92 See Claiborne Hardware, 458 U.S. at 912-15.

93 One opinion of a federal district court in 2017 does touch on the issue of whether the First Amendment is implicated 

by BDS activity against Israel. Bronner v. Duggan, 2017 U.S. Dist. LEXIS 48917 (D.D.C. 2017). In that case, members 

of the American Studies Association (ASA) brought suit against the ASA and its board members alleging that a 

resolution to boycott Israeli academic institutions had been improperly adopted and that its adoption constituted a 

breach of fiduciary duty, breach of contract, and other violations. Id. at *1-*4. The defendants claimed, among other 

things, that to rule against them would violate their First Amendment rights because engaging in the boycott was 

constitutionally protected speech. Id. at *27-*28. The district court did not examine whether boycotting Israeli 

academic institutions was constitutionally protected speech. Instead, the court appears to have presumed for the 

purposes of the case at issue that it is, and held, nonetheless, that a ruling against the defendants in these circumstances 

would not violate their constitutional rights. Id. at *28. The court reached this conclusion because, to trigger First 

Amendment protection, the alleged infringement must have arisen from state action, and “the Court’s passive 

enforcement of the obligations expressly assumed by the parties does not constitute state action” Id. at *28-*29. 

94 See Recent Legislation, supra note 79 (arguing that BDS activity is protected speech); Greendorfer, supra note 80

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commentator to describe the question as a “thorny” one and others to acknowledge that the 

answer to the question may not be straightforward.95 Participants and advocates of the BDS 

movement characterize their activity as speech protected by the First Amendment.96

To support this argument, BDS supporters may point to the Court’s decision in NAACP v. 

Claiborne Hardware.

97 In that case, the Court held that an economic boycott of white-owned 

businesses by black citizens was entitled to First Amendment protection. The Court distinguished 

the situation from typical boycotts intended to secure an economic advantage for a particular 

business interest. While recognizing the government had considerable power to restrict 

economically motivated boycotts, the Court in Claiborne Hardware held that the “right of the 

States to regulate economic activity could not justify a complete prohibition against a nonviolent, 

politically motivated boycott designed to force governmental and economic change and to 

effectuate rights guaranteed by the Constitution itself.”98

It may be argued that, like the Claiborne Hardware boycotters, BDS participants’ intent is to 

cause economic harm, but their aim is not to destroy competition.99 Instead, BDS proponents’ 

stated aim is to place pressure on Israel to make desired policy changes.100 Moreover, the BDS 

participants might claim that their activity is non-violent and politically motivated, designed to 

force governmental change.101 Following that reasoning, it might be argued that their activity 

should receive a similar degree of protection under the First Amendment as the boycott at issue in 

Claiborne Hardware.

There are, however, characteristics that distinguish the protected boycott in Claiborne Hardware

from the BDS movement, which might factor into a reviewing court’s analysis as to whether BDS 

activity is similarly protected by the Constitution.102 For instance, the Claiborne Hardware

boycott involved an effort to influence the policies of domestic local governments and to 

vindicate rights guaranteed by the U.S. Constitution.103 Matters of foreign policy were not 

 

(...continued)

(arguing that BDS activity is not protected speech); Kontorovich, supra note 80 (arguing the state legislation directed at 

BDS activity does not violate the First Amendment); Volokh, supra note 80 (arguing the federal legislation directed at 

BDS activity would not violate the First Amendment).

95 Gilad Edelman, Cuomo and B.D.S.: Can New York State Boycott a Boycott?, THE NEW YORKER (June 16, 2016), 

http://www.newyorker.com/news/news-desk/cuomo-and-b-d-s-can-new-york-state-boycott-a-boycott (quoting 

Professor Ronald Collins as saying “[while] I wouldn’t say categorically that there’s a First Amendment violation here, 

I would say that it raises a number of thorny First Amendment issues” and quoting other law professors describing the 

complexity of the question surrounding possible constitutional protection for BDS activity).

96 See PALESTINE LEGAL AND CTR. FOR CONSTITUTIONAL RIGHTS, THE PALESTINE EXCEPTION TO FREE SPEECH at 34-5 

(2015), available at 

https://static1.squarespace.com/static/548748b1e4b083fc03ebf70e/t/560c2e0ae4b083d9c363801d/1443638794172/Pale

stine+Exception+Report+Final.pdf (arguing that BDS activity against Israel is protected speech).

97 458 U.S. 886 (1982). 

98 Id. at 913 (italics added).

99 See id.at 914 (finding that while the boycotters intended to cause economic harm, their aim was not to destroy 

legitimate competition); see also supra “The BDS Movement”.

100 See Claiborne Hardware, 458 U.S. at 914 (finding that the boycotters intended to “vindicate rights of equality and 

freedom that lie at the heart of the Fourteenth Amendment itself”); see also supra “The BDS Movement”.

101 See Claiborne Hardware, 458 U.S. at 914 (holding that the state’s ability to regulated “economic activity could not 

justify a complete prohibition against a nonviolent, politically motivated boycott”); see also supra “The BDS 

Movement”.

102 See Greendorfer, supra note 80 at 116 (distinguishing the boycott at issue in Claiborne Hardware from BDS 

activity).

103 Claiborne Hardware, 458 U.S. at 913.
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examined by the Court.104 The BDS movement, on the other hand, seeks to influence the conduct 

of a foreign government, Israel, perhaps in contravention of the foreign policy of the United 

States.105 Courts generally provide broad deference to Congress and to the executive branch in 

matters of foreign affairs.106 It remains unclear whether that deference might affect a court’s 

judgment regarding the degree to which the government may permissibly seek to deter BDS 

activity.

There is another important difference between Claiborne Hardware and regulation of BDS 

activity. In Claiborne Hardware, the Court explicitly noted that it was not deciding that “a 

narrowly tailored statute designed to prohibit certain forms of anticompetitive conduct or certain 

types of secondary pressure may restrict protected First Amendment activity.”107 The Claiborne 

Hardware Court left open the question of whether a statutory boycott restriction tailored by a 

legislature to balance legitimate competing interests might survive constitutional review even if it 

burdened protected speech.108

At least one commentator has argued that a Supreme Court decision issued the same year as 

Claiborne Hardware provides support for the argument that BDS activity is not protected by the 

Constitution.109 In International Longshoremen’s Ass’n, v. Allied Intern., Inc., the Court upheld a 

statutory prohibition on certain union boycotts as applied to a politically motivated boycott 

against a foreign government’s policies.110At issue in the case was a union’s decision, in the wake 

of the Soviet Union’s invasion of Afghanistan, to stop handling Russian products. A U.S. importer 

of Russian products challenged the union’s actions as violating the National Labor Relations Act, 

which prohibits “unions from inducing employees to refuse to handle goods with the object of 

forcing any person to cease doing business with any person.” 111 In reviewing the case, the 

Supreme Court considered whether, among other things, the boycott was protected by the First 

Amendment. 

The Court held that the union’s boycott was prohibited by federal law and the statutory

prohibition did not raise First Amendment concerns.112 With regard to the union’s argument that 

the boycott was protected by the First Amendment, the Court observed that it had previously held 

that secondary picketing by union members was not protected activity under the First 

Amendment.113 The Court went on to conclude that it was “even clearer” that the boycott at issue 

 

104 Id.; see also Greendorfer, supra note 80 at 116.

105 See supra “The BDS Movement”.

106 See, e.g., Holder v. Humanitarian Law Project, 561 U.S. 1, 28-30 (2010) (deferring to the judgment of Congress that 

restrictions on the provision of material support, even in the form of speech, to foreign terrorist organizations, would 

advance the government’s interest in combatting terrorism); Intel Containers Int’l Corp. v. Huddleston, 507 U.S. 60, 76 

(1993) (“[The] nuances of foreign policy ‘are much more the province of the Executive Branch and Congress than of 

this Court.’”) (quoting Container Corp. of Am. v. Franchise Tax Bd., 463 U.S. 159, 196 (1983)). 

107 Claiborne Hardware, 458 U.S. at 915 n. 49.

108 See id.

109 Greendorfer, supra note 80 at 119. See also Kontorovich, supra note 80 (arguing that Claiborne Hardware is not 

applicable to restrictions on government contracting with or investment in those engaged in BDS activity and that 

existing statutory prohibitions against boycotts are justified for similar reasons as BDS restrictions, making restrictions 

on BDS activity arguably permissible).

110 456 U.S. 212 (1982).

111 Id. at 222.

112 Id. at 226-27.

113 Id. 
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was entitled to “still less consideration under the First Amendment” because such conduct was 

“designed not to communicate but to coerce.”114

The Court’s opinion in International Longshoremen’s Ass’n, however, may not provide precise 

support for arguments regarding the permissibility of statutory restrictions on BDS activity. For 

example, International Longshoremen’s Ass’n dealt with restrictions on union boycotting 

activity.115 Such restrictions traditionally have been viewed by the Court (including in Claiborne 

Hardware) as permissible “as part of ‘Congress’ striking of the delicate balance between union 

freedom of expression and the ability of neutral employers, employees, and consumers to remain 

free from coerced participation in industrial strife.’”116 BDS activity does not primarily involve 

activities by unions or collective bargaining organizations, which may limit the applicability of 

Court jurisprudence regarding the First Amendment implications of government restrictions on 

union-led boycotts. 

Some commentators also point to federal statutes and executive orders that have restricted the 

ability of U.S. persons to participate in boycotts sponsored or enforced by a foreign government, 

to argue that BDS activity may permissibly be restricted.117 For example, the Export 

Administration Act of 1979 imposed criminal penalties on U.S. persons engaged in “any boycott 

fostered or imposed by a foreign country against a country which is friendly to the United 

States.”118 The EAA regulations prohibited, among other things, U.S. persons from responding to 

questionnaires sent by the Arab League to aid those countries in their boycott against Israel.119

These regulations were unsuccessfully challenged on First Amendment grounds by some 

companies who wished to respond to questionnaires that they received.120

The U.S. Court of Appeals for the Seventh Circuit upheld the restriction on answering the Arab 

League questionnaire, and found that the restriction was a constitutionally valid regulation of 

commercial speech.121 Commercial speech regulations are reviewed under a more lenient standard 

than regulations of political speech.122 The plaintiffs in these cases had attempted to argue that 

their decision to answer the questionnaire was political speech, warranting full First Amendment 

protection because “the decision to boycott Israel is itself a political decision,” and, therefore, 

“their answers to the questionnaires should be viewed as attempts to influence political decision 

 

114 Id. (citing NLRB v. Retail Store Employees, 447 U.S. 607, 616 (1980); American Radio Ass’n v. Mobile S.S. 

Ass’n, 419 U.S. 215, 229-231 (1974).

115 Id.

116 See NAACP v. Claiborne Hardware, 458 U.S. 886, 912 (1982) (quoting NLRB v. Retail Store Employees, 447 U.S. 

607, 616-17 (1980)).

117 See Greendorfer, supra note 80 at 120 (arguing that the Export Administration Act (EAA) prohibits boycotts against 

Israel); Edelman, supra note 95; but see Recent Legislation, supra note 79 at 2037-38 (arguing that the EAA might be 

unconstitutional under current precedent and distinguishing the activity prohibited by the EAA from BDS activity).

118 The EAA expired in 1994 and, after a brief reauthorization, again in 2001, but regulations issued pursuant to the 

EAA have remained in effect pursuant to executive orders issued under separate authorities. P.L. 96-72, § 8(a)(1) 

(1979); JOHN T. MASTERSON JR., OFFICE OF THE CHIEF COUNSEL FOR INDUS. AND SEC., LEGAL AUTHORITY: EXPORT 

ADMINISTRATION REGULATIONS 2 n.1 (2016). The Ribicoff Amendment to the Tax Reform Act of 1976 might also be 

of interest because it creates a disincentive to participate in “an international boycott” by denying certain tax 

advantages to those persons. P.L. 94-455, § 1061 (1976) (codified as amended at 26 U.S.C. § 999). 

119 P.L. 96-72, § 8(a)(1) (1979); MASTERSON JR., supra note 118, at 2 n.1.

120 Briggs & Stratton Corp. v. Baldridge, 728 F. 2d 915 (7th Cir. 1984); Trane v. Baldridge, 552 F. Supp. 1378 (W.D. 

Wis. 1983); Briggs & Stratton Corp. v. Baldridge, 539 F. Supp. 1307 (E.D. Wis. 1982).

121 Briggs, 728 F. 2d at 918.

122 Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557, 562-63 (1980) (“The Constitution 

therefore accords a lesser protection to commercial speech than to other constitutionally guaranteed expression.”).
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making.”123 The Seventh Circuit disagreed, finding instead that “the appellants do not seek to 

answer the questionnaire in order to influence the Arabs’ decision to conduct or enforce a trade 

boycott with Israel. ... They wish through their answers only to show that the boycott’s sanctions 

should not be applied to them, because they have not violated its terms.”124 In other words, they 

sought to protect their economic interests and not to engage in political arguments. The Seventh 

Circuit, therefore, held their speech was commercial and affirmed the lower court’s finding that 

the regulations were properly tailored to withstand scrutiny.125

BDS activity may be distinguishable from the activity prohibited and regulated by the EAA. The 

EAA prohibited participation in boycotts enforced by foreign governments.126 BDS activity is not 

enforced by a foreign government.127 Furthermore, unlike the companies that challenged the EAA 

regulations, BDS participants generally do not appear to be seeking to protect their own economic 

interests, rather, they appear to seek to pressure Israel to change its policies.128 It might, therefore, 

be argued that BDS activity is not commercial speech, but political speech, and regulations of 

political speech generally are scrutinized more closely than commercial speech restrictions. For 

these reasons, the case law upholding regulations promulgated under the EAA might not provide 

directly analogous precedent to regulations of BDS activity. However, the regulations at issue in 

the Seventh Circuit case applied unambiguously to speech.129 They prohibit the communication of 

information from one party to another via speech.130 The case did not examine whether the 

activity of boycotting a foreign nation for political or economic reasons was speech protected by 

the Constitution or the degree to which that activity might be restricted even if it is protected 

speech. 

The cases discussed above indicate that politically motivated boycotts generally may receive 

some degree of constitutional protection. However, the government may have greater leeway to 

regulate boycotts, even politically motivated boycotts, than it has to regulate pure speech, 

particularly where the boycotters have the power to coerce neutral third parties to comply with a 

boycott. Whether a particular statute or regulation burdening BDS activity would withstand 

scrutiny would likely turn on a number of factors, which may be difficult to predict, but could 

include the type of regulation at issue, the actors (i.e., would-be boycotters) to which it applied, 

and whether it was viewed by a reviewing court to be aimed at suppressing a particular message.

Potential Restrictions on the Provision of Government Funding to 

Entities Engaged in BDS

An early congressional proposal to deter participation in the BDS movement would have 

restricted participating entities from receiving government funding, igniting a debate about the 

 

123 Briggs, 728 F. 2d at 917.

124 Id.

125 Id. at 918.

126 P.L. 96-72, § 8(a)(1) (1979). See Recent Legislation, supra note 94 at 2038 (“A key feature of [the EAA] is that they 

apply only to boycotts organized by foreign nations against allies of the United States. ... By contrast, BDS is led by 

civil society groups, not foreign sovereigns or terrorist organizations.”).

127 See supra “The BDS Movement”.

128 Id.

129 Briggs, 728 F. 2d at 916-17 (adopting the lower court opinion, Briggs, 539 F. Supp. 1307 (E.D. Wis. 1982), but 

writing separately to clarify that the regulations applied to commercial speech rather than “traditional” speech).

130 Briggs, 539 F. Supp. at 1312-13 (describing the regulations).
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constitutionality of such a restriction.131 The government has broad powers under the Spending 

Clause of the Constitution to tax and spend for the general welfare.132 The powers granted by the 

Spending Clause include the powers to limit what can be done with federal funds in order to 

ensure that they are used in accordance with Congress’s will.133 However, the Supreme Court has 

found that the First Amendment does limit the conditions that can be placed on the receipt of 

federal funds.134 Whether the government constitutionally may restrict the availability of federal 

funding to entities engaged in BDS activity could depend upon a number of factors, including the 

specifics of the funding restriction at issue and whether it is intended to target or suppress speech. 

Some scholars have argued that, even if there is arguably some expressive quality to BDS 

activity, proposals to restrict entities engaged in BDS activity from receiving government funding 

should be viewed as possible prohibitions on discrimination.135 Specifically, some commenters 

have likened a possible restriction on discrimination against Israel-affiliated entities to other 

constitutionally permissible legislative prohibitions on discrimination, such as government 

restrictions against race-based discrimination by private entities.136

Two cases identified in support of this argument are Grove City College v. Bell and Christian 

Legal Society v. Martinez.

137 In Grove City College, the Supreme Court held that Title IX of the 

Higher Education Amendments of 1972, which bans sex discrimination by universities that 

receive federal funds, did not violate the First Amendment rights of the educational institutions 

accepting the funds.138 According to the Court, “Congress is free to attach reasonable and 

 

131 See Protect Academic Freedom Act, H.R. 4009, 113th Cong. (2014).

132 U.S. CONST. art. I, § 8, cl. 1.

133 Agency for Int’l Dev. v. Alliance for Open Soc’y Int’l, 133 S. Ct. 2321, 2327-28 (2013) (“The [Spending] Clause 

provides Congress broad discretion to tax and spend for the ‘general welfare,’ including by funding particular state or 

private programs or activities. That power includes the authority to impose limits on the use of such funds to ensure 

they are used in the manner Congress intends.”). 

134 Id. at 2328 (striking down a requirement that a recipient of federal funds adopt a policy of advocating “abstinence 

only” that applied to the entire organization, rather than only to the portion of the organization that was implementing 

the federally funded program).

135 Kontorovich, supra note 80; Volokh, supra note 80.

136 Kontorovich, supra note 80; Volokh, supra note 80. Laws prohibiting discrimination on the basis of affiliation with 

Israel are arguably not wholly analogous to prohibitions on discrimination on the basis of race, sex, religion, gender or 

sexual orientation. Courts generally consider traits like race, religion, sex, and national origin to be immutable 

characteristics, either unchangeable as a result of birth or central to a person’s identity, and afford them a higher degree 

of constitutional protection. See Fronteiro v. Richardson, 411 U.S. 677, 686 (1973) (plurality opinion) (“Moreover, 

since sex, like race and national origin, is an immutable characteristic determined solely by the accident of birth, the 

imposition of special disabilities on the members of a particular sex because of their sex would seem to violate ‘the 

basic concept of our system that legal burdens should bear some relationship to individual responsibility....’”) (internal 

citations omitted); see also Jessica A. Clarke, Against Immutability, 125 YALE L.J. 4 (2015) (outlining the concept of 

immutability in court decisions and arguing against its use); Tiffany C. Graham, The Shifting Doctrinal Face of 

Immutability, 19 VA. J. SOC. POL’Y & L. 169, 173 (2011) (also discussing immutability and approving of its use to 

guide court analysis). It might be argued that discrimination on the basis of affiliation with Israel is discrimination on 

the basis of national origin. See Edelman, supra note 95. However, if it is the case that discrimination against Israeliaffiliated companies is synonymous with discrimination on the basis of national origin, such a finding might throw the 

constitutionality of other existing prohibitions in doubt. For example, there may then be questions surrounding whether 

a state law restricting business with Iranian companies discriminates on the basis of national origin. Id. The immutable 

characteristic of natural origin as applied to individual persons may, therefore, be different than the national origin or 

location of a company.

137 Volokh, supra note 80. 

138 Grove City Coll. v. Bell, 465 U.S. 555, 575-76 (1984).
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unambiguous conditions to federal financial assistance that educational institutions are not 

obligated to accept.”139

In Christian Legal Society, the Court upheld a public law school’s requirement that student 

groups allow all interested students to join their organizations in order to be recognized by the 

school and to receive the benefits of recognition (e.g., recognized student groups could receive 

financial assistance from the school for their events).140 The Christian Legal Society (CLS) 

argued that the law school’s nondiscrimination policy violated CLS’s First Amendment rights to 

limit its membership to Christians. The Supreme Court disagreed.141 According to the Court, the 

law school’s policy did not require the group to refrain from discrimination directly. Instead, the 

law school’s policy placed only “indirect pressure” on the group to allow any interested student to 

join regardless of that student’s religious beliefs.142 If CLS wished to continue to discriminate in 

its membership, all it needed to do was forgo government subsidy.143 Furthermore, the Court 

noted that the law school’s nondiscrimination policy had no effect on the beliefs any organization 

wished to espouse.144 Instead, the policy regulated CLS’s conduct “without reference to the 

reasons motivating that behavior.”145

Applying the reasoning of these cases in the present context, if a federal funding restriction 

applied only to BDS activity, without reference to motivation, and did not restrict a funding 

recipient’s ability to speak about boycotts or to express an opinion about Israel, it could be argued 

that such a restriction would be constitutional. Under this reasoning, people would remain free to 

communicate their beliefs about Israel’s policies and the wisdom of placing economic pressure on 

the country, but would not be free to engage in conduct that discriminated on the basis of a 

person’s association with Israel.146 On the other hand, some have argued that laws aimed at 

restricting or deterring BDS activity, even if they would apply only to refusals to deal and not to 

the expression of support for the BDS movement, are nonetheless aimed at suppressing the 

message communicated by BDS participation and raise First Amendment issues.147 Supreme 

Court precedent has indicated that funding restrictions intended to suppress the private parties’ 

expression of a particular viewpoint are unconstitutional.148 In Christian Legal Society the Court 

upheld the anti-discrimination requirement but explicitly noted that the requirement did not 

“target conduct on the basis of its expressive content.”149 Opponents of BDS-related funding 

 

139 Id.

140 Christian Legal Soc’y v. Martinez, 561 U.S. 661 (2010).

141 Id. at 669 (“CLS enjoys no constitutional right to state subvention of its selectivity.”).

142 Id. at 682.

143 Id.

144 Id. at 696.

145 Id. 

146 See Volokh, supra note 80 (“Most important, the bill doesn’t restrict university speech based on content or 

viewpoint ... but only for actually boycotting Israel: refusing to deal with Israeli institutions or scholars.”).

147 See Recent Legislation, supra note 79 at 2031-32; Gray, supra note 79 (quoting a legal advocate as arguing that 

funding restrictions related to BDS activity would be an unconstitutional restriction on speech); Abraham H. Foxman, 

Op-Ed: Comprehensive Approach to Fighting BDS is Needed, JEWISH TELEGRAPHIC AGENCY (May 29, 2015)

(“Legislation that bars BDS activity by private groups, whether corporations or universities, strikes at the heart of First 

Amendment-protected free speech, will be challenged in the courts and is likely to be struck down. A decision by a 

private body to boycott Israel, as despicable as it may be, is protected by our Constitution.”).

148 See Regan v. Taxation with Representation, 461 U.S. 540, 550 (1983) (upholding a denial of a tax deduction for 

lobbying, but pointing out that the restriction on the availability of the deduction would likely be unconstitutional if the 

denial of funding was aimed “at the suppression of dangerous ideas”). 

149 Christian Legal Soc’y, 561 U.S. at 696 (quoting R.A.V. v. St. Paul, 505 U.S. 377, 390 (1992).
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restrictions might claim that a restriction on federal funding to entities engaged in BDS activity 

would be a restriction enacted on the basis of the message communicated by the BDS movement, 

which could arguably place the restriction outside the Court’s holding in Christian Legal Society. 

In other words, they might argue that in enacting the funding restrictions, the government was 

attempting to disfavor a message the government dislikes, and the funding restriction may 

implicate the First Amendment for that reason. 

Even if the First Amendment is implicated by a restriction on funding to entities engaged in BDS 

activity, in general, the government is not required to fund goals with which it does not agree.150

The government generally may prohibit recipients of federal funds from using those funds in a 

way the government does not approve, provided that the restrictions on the use of the funds are 

germane to the federal interest in the program to which the funds are directed.151 For example, the 

Supreme Court has held that the government could prohibit the use of federal funds for family 

planning services to advocate or provide referrals for abortion.152 However, under Supreme Court 

precedent, the government cannot prescribe what an entity that receives federal funds may say 

with private money.153 Therefore, the government could not require recipients of federal funds to 

espouse a government-approved policy that applied to the entire organization, including the 

portion funded privately.154 Consequently, even if BDS activity is protected by the Constitution, 

the government may be able to restrict the use of federal funds by entities engaged in the BDS 

movement to support BDS activity, so long as the conditions on the use of the funds are germane 

to the federal interest being funded and do not burden speech funded privately. 

Restrictions on Government Contractors and State Investments

As discussed earlier, since 2015 some states have taken action related to BDS activity. Generally, 

these actions fall into two categories: (1) prohibitions on state contracting with entities that 

engage in BDS activity and (2) divestment of state assets from companies that participate in 

BDS.155

 

150 Rust v. Sullivan, 500 U.S. 173, 194 (1991) (refusing to “hold that the Government unconstitutionally discriminates 

on the basis of viewpoint when it chooses to fund a program dedicated to advance certain permissible goals, because 

the program in advancing those goals necessarily discourages alternative goals.”).

151 See id. at 193-95 (upholding restrictions on communications about and referrals for abortions within a federallyfunded family planning program); see also Regan, 461 U.S. at 550-51 (finding that Congress could choose not to 

provide tax incentives to lobbying speech while providing those tax incentives to other kinds of speech without running 

afoul of the First Amendment). See CRS Report R44797, The Federal Government’s Authority to Impose Conditions 

on Grant Funds, by Brian T. Yeh (listing four limitations on the government’s power to place conditions on federal 

funding: “(1) “the condition must be unambiguously established ...; (2) [it must] be germane to the federal interest in 

the particular national projects or programs to which the money is directed; (3) [it must] not violate a separate 

constitutional provision, such as the First Amendment ...; and (4) [it must] not cross the line from enticement to 

coercion....”).

152 Rust, 500 U.S. at 198.

153 Agency for Int’l Dev. v. Alliance for Open Soc’y Int’l, 133 S. Ct. 2321 (2013); see also FCC v. League of Women 

Voters, 468 U.S. 364 (1984) (holding that the government could not prohibit radio broadcast stations that received 

some portion of their operating budgets from public funds from editorializing with private donations.).

154 Agency for Int’l Dev., 133 S. Ct. at 2332.

155 See supra “State Level Legislation”.
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Government-Contractor Restrictions

Some states have either considered or enacted legislation to restrict state contracting with entities 

engaged in BDS activity.156 Similar to the arguments surrounding proposed restrictions on 

government funding for entities engaged in BDS activity against Israel, some scholars and 

commentators argue that these laws bar discrimination by government contractors against Israel 

and Israeli-affiliated entities, and, thus, do not raise First Amendment concerns.157 Government 

contractors in many situations are already prohibited from discriminating on the basis of race, 

color, religion, sex, and national origin.158 If a reviewing court accepted the argument that the 

state government contracting restrictions applied only to discriminatory conduct and were not 

aimed at suppressing a particular viewpoint, the restrictions might be upheld.

However, similar to the arguments surrounding potential government funding restrictions, if BDS 

activity is protected speech, the First Amendment may limit the government’s ability to restrict 

that activity by government contractors.159 The Supreme Court has held that government 

contractors do not surrender their First Amendment rights as a result of the contract.160

Government contractors, therefore, retain their rights to engage in speech on matters of public 

concern, outside of the performance of the contract, and the Constitution limits the government’s 

ability to terminate the contract on the basis of their speech.161 However, the Supreme Court has 

also acknowledged that the government has legitimate interests as a contracting party, which may 

outweigh the First Amendment rights of contractors in some circumstances.162 Reviewing courts 

therefore weigh contractors’ rights to engage in speech on matters of public concern against the 

government’s rights and interests as a contractor to determine whether the limitation on speech 

rights is permissible under the circumstances.163 If a reviewing court determined that a restriction 

on a government contractor’s ability to engage in BDS activity outside the scope of the contract 

limited the speech of the contractor, a court might balance the competing interests of the state and 

the contractor to determine whether the limitation was permissible.

Another distinction that may be important is whether the contracting restriction applies to existing 

government contracts or to contracts prior to their formation.164 The Supreme Court has held only 

that the Constitution limits the termination of existing contracts in retaliation for engaging in 

protected speech.165 The Court has not opined on whether this protection would extend to new 

bids for government contracts, i.e., whether the Constitution limits the government’s ability to 

 

156 Id.

157 Kontorovich, supra note 80; Edelman, supra note 95 (discussing constitutional issues that might be raised by New 

York governor’s executive order directing state agencies to cease doing business with entities that support the BDS 

movement).

158 See 42 U.S.C. § 2000e-2 (prohibiting employers from discriminating against an individual because of the 

“individual’s race, color, religion, sex, or national origin”); Exec. Order No. 11,246, 30 Fed. Reg. 12319, 12935 (1965).

159 See Bd. of Cty. Comm’rs v. Umbehr, 518 U.S. 668, 685 (1996) (holding that “independent contractors do enjoy 

some First Amendment protection...”); O’Hare Trucking Serv. Inc. v. City of Northlake, 518 U.S. 712, 720-21 (1996) 

(finding that the government may not condition the contracting relationship on party affiliation “unless it has some 

justification beyond dislike of the individual’s political association”); see also Recent Legislation, supra note 79 at 

2033-34.

160 Umbehr, 518 U.S. at 685.

161 Id. 

162 Id. at 678-79.

163 Id. at 685.

164 Recent Legislation, supra note 79 at 2035.

165 Id.
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deny the award of a contract on the basis of the contractor’s otherwise-protected speech.166 Lower 

courts that have considered this question have disagreed on this issue.167

State Investment Restrictions

Certain states have also taken action to divest state funds from entities engaged in BDS activity.168

For example, the governor of New York recently signed an executive order requiring all state 

agencies to divest funds from entities engaging in BDS activity.169 As with previously analyzed 

restrictions, the key issues in determining the constitutionality of such actions are whether BDS 

activity is protected by the First Amendment and, if it is, the degree to which the government is 

attempting to suppress a disfavored message by enacting the restrictions on investment.170

Proponents of state action to restrict investment in entities engaged in BDS activity argue that 

BDS is not protected speech and investment restrictions, therefore, do not implicate the First 

Amendment.171 If a reviewing court were to accept that argument, the state restrictions on 

investment arguably could be permissible under the First Amendment.

Other observers, however, have noted that the constitutional status of BDS activity is, at the least, 

unclear.172 If BDS activity is protected by the First Amendment, the constitutionality of a 

restriction on state investment in entities engaged in that activity would also be uncertain.173

According to one scholar whether a state limitation on investing its funds in entities because of 

their speech might violate the First Amendment is without “direct precedent, at least at the 

Supreme Court.”174

The closest analogue appears to be the Supreme Court’s line of cases analyzing restrictions on 

government funding, discussed earlier.175 In the Court’s most recent opinion analyzing a 

government funding restriction on speech, Chief Justice Roberts distilled the Court’s precedent in 

this area, writing that “the relevant distinction that has emerged from our cases is between 

conditions that define the limits of the government spending program – those that specify the 

activities Congress wants to subsidize – and conditions that seek to leverage funding to regulate 

 

166 Id.

167 Id. Compare Oscar Renda Contracting, Inc. v. City of Lubbock, 463 F. 3d 378, 385 (5th Cir. 2006) (“Since First 

Amendment rights have been afforded to individuals applying for employment with the government no different result 

should be afforded to bidders.”), with McClintock v. Eichelberger, 169 F. 3d 812, 817 (3d Cir. 1999) (declining to 

extend First Amendment protections to new bidders).

168 See supra “State Level Legislation”.

169 N.Y. Executive Order 157, signed on June 5, 2016, at 

https://www.governor.ny.gov/sites/governor.ny.gov/files/atoms/files/EO_157_new.pdf.

170 See Edelman, supra note 95 (observing while analyzing Governor Cuomo’s executive order that “[the] first 

challenge is figuring out whether companies that join B.D.S. are engaging in free speech at all. ... But, even if the 

courts would view B.D.S. as a form of free speech, that doesn’t necessarily mean Cuomo’s order is unconstitutional.”).

171 Id. (quoting Alphonso David, counsel to Governor Cuomo, “[BDS activity] is not protected speech ... [It] is conduct 

that is being advanced to inflict economic harm.”); Kontorovich, supra note 80 (“The new laws relate to state 

contracting and public pension funds’ investments. They simply limit a state’s business relationships with companies 

that discriminatorily limit their own business relations. These laws do not prohibit any kind of speech.”).

172 Edelman, supra note 95 (quoting one legal scholar as characterizing the issue as raising “a number of thorny First 

Amendment issues”); Gray, supra note 79 (noting conflicting opinions about the constitutional protection of BDS 

activity).

173 Edelman, supra note 95.

174 Id.

175 Id.
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speech outside the contours of the program itself.”176 A court reviewing state investment 

restrictions might, therefore, examine whether the restriction represented the government’s 

expression of support for a specific public policy or an attempt by the government to “leverage” 

its investing power “to regulate speech.”177

Federal Preemption Questions: Commerce Clause 

and Foreign Affairs178

As noted above, some state and local governments have enacted or are considering measures to 

counteract BDS-related or differentiation measures. State and local economic sanctions meant to 

influence foreign politics ordinarily raise three related constitutional issues: (1) whether they are 

preempted by federal law under the Constitution’s Supremacy Clause, (2) whether they burden 

foreign commerce in violation of the dormant Foreign Commerce Clause and, if so, whether they 

are protected by the market participant exception; and (3) whether they impermissibly interfere 

with the federal government’s exclusive power to conduct the nation’s foreign affairs.179 The 

constitutionality of any given state or local measure would depend upon the particulars of the 

legislation at issue.

Preemption by Federal Statute

The Supremacy Clause of the Constitution establishes that federal statutes, treaties, and the 

Constitution itself are “the supreme Law of the Land.”180 Accordingly, states can be precluded 

from taking actions that are otherwise within their authority if federal law is thereby impeded.

The extent to which a federal statute preempts state law in a given area is within the control of 

Congress. Congress may, by clearly stating its intent, choose to preempt all state laws, no state 

laws, or only those state laws with certain attributes.181 When Congress enacted the antiboycott 

provisions of the Export Administration Act (EAA) in 1977,182 for example, it expressly 

preempted any state or local measure that “pertains to participation in, compliance with, 

implementation of, or the furnishing of information regarding restrictive trade practices or 

boycotts fostered or imposed by foreign countries against other countries.”

183

Even absent an express preemption provision such as that found in the EAA, an act of Congress 

can impliedly preempt state or local action. Where Congress has not expressly preempted state 

 

176 Agency for Int’l Dev. v. Alliance for Open Soc’y Int’l, 133 S. Ct. 2321, 2328 (2013); see also Edelman, supra note 

95 (describing one legal scholar as observing that “the key question is whether the government is simply stating its 

views or using the threat of withdrawing funding to pressure people to change their message”).

177 See Edelman, supra note 95 (In analyzing New York State’s executive action, quoting one legal scholar as 

observing that “It’s one thing to say, ‘We just want clean hands,’ and another to try to put pressure on those entities that 

support the B.D.S. movement.”). 

178 This section was authored by Jennifer K. Elsea, Legislative Attorney.

179 For a more in-depth overview of these issues, see CRS Report RL33948, State and Local Economic Sanctions: 

Constitutional Issues, by Michael John Garcia and Todd Garvey, from which some of the material in this section is 

drawn.

180 U.S. CONST., Art. VI, cl. 2.

181 See generally Retail Clerks Int’l Ass’n. v. Schermerhorn, 375 U.S. 96, 103 (1963) (“The purpose of Congress is the 

ultimate touchstone” with respect to preemption questions).

182 P.L. 96-72, § 8, Sept. 29, 1979, 93 Stat. 521.

183 50 USC § 4607(c).
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and local laws, two types of implied federal preemption may be found: field preemption, in which 

federal regulation is so pervasive that one can reasonably infer that states or localities have no 

role to play,184 and conflict preemption, in which “compliance with both federal and state 

regulations is a physical impossibility,”185 or where the state law “stands as an obstacle to the 

accomplishment and execution of the full purposes and objectives of Congress.”186 The Supreme 

Court felled a Massachusetts law on the latter ground because the law imposed sanctions on 

Burma (Myanmar) in such a way that frustrated the implementation of a federal statutory scheme 

also targeting Burma.187

In order to preclude implied preemption, Congress may sometimes include non-preemption 

language in sanctions legislation. One bill in the 115th Congress has been introduced to preserve 

state and local anti-BDS or anti-differentiation measures. The Combating BDS Act of 2017, S. 

170 (see Table 1), would permit state and local governments to divest their own assets from or 

prohibit government contracting with certain entities that they determine engage in BDS-related 

activity, as defined by the bill and subject to its restrictions. The bill appears to be modeled on 

Section 3 of the Sudan Accountability and Divestment Act of 2007, which provides that certain 

state and local actions targeting Sudan are not preempted by any federal law.188

Foreign Commerce Clause

The Constitution provides Congress with the authority to regulate both interstate and foreign 

commerce.189 In addition to this affirmative grant of constitutional authority, the Supreme Court 

has recognized that the Commerce Clause implies a corresponding restraint on the authority of 

the states to interfere with commerce, even absent congressional action.190 This inferred 

restriction arising from congressional inaction is generally referred to as the “dormant” 

Commerce Clause. Under this established principle, states and localities are prohibited from 

unreasonably burdening or discriminating against either interstate or foreign commerce unless 

they are authorized by Congress to do so.191 In a series of cases involving state taxes, the Supreme 

Court has set out criteria for examining whether state measures impermissibly burden foreign

commerce where affirmative congressional permission is absent. In sum, the Court has required a 

closer examination of measures alleged to infringe the Foreign Commerce Clause than is required 

 

184 See, e.g., Wardair Canada Inc. v. Fla. Dep’t of Revenue, 477 U.S. 1, 6 (1986).

185 Fla. Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43 (1963).

186 Arizona v. United States, 567 U.S. 387, 132 S. Ct. 2492, 2501 (2012) (quoting Fla. Lime, 373 U.S.at 142-43, and 

Hines v. Davidowitz, 312 U.S. 52, 67 (1941)). See also, e.g., Sprietsma v. Mercury Marine, 537 U.S. 51, 64-65 (2002); 

Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 372-73 (2000); Freightliner Corp. v. Myrick, 514 U.S. 280, 287 

(1995); Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248-49 (1984); Pac. Gas & Elec. Co. v. State Energy Res. 

Conservation & Dev. Comm'n, 461 U.S. 190, 203-04 (1983).

187 Crosby, 530 U.S. at 373-74 (noting that such obstacles are to be identified by “examining the federal statute as a 

whole and identifying its purpose and intended effects”). 

188 P.L. 110-174, 121 Stat. 2516, codified at 50 U.S.C. § 1701 note.

189 U.S. CONST. Art. I, § 8, cl. 3.

190 See, e.g., Cooley v. Bd. of Wardens of Port of Philadelphia, 53 U.S. 299 (1851).

191 See New York v. United States, 505 U.S. 144, 171 (1992) (“While the Commerce Clause has long been understood 

to limit the States’ ability to discriminate against interstate commerce, that limit may be lifted...by an expression of the 

‘unambiguous intent’ of Congress.”) (internal citations omitted); South-Central Timber Dev., Inc. v. Wunnicke, 467 

U.S. 82, 87-93 (1984). See also Kraft Gen. Foods v. Iowa Dept. of Revenue, 505 U.S. 71, 81 (1992)(“Absent a 

compelling justification ... a State may not advance its legitimate goals by means that facially discriminate against 

foreign commerce.”).
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for those alleged to infringe its interstate counterpart,192 but has also provided some room for state 

measures in situations where a federal role is not clearly demanded.193

Where Congress has not clearly immunized a state selective purchasing or divestment law, a state 

may defend a challenged law by invoking the market participant doctrine, which protects those 

laws in which the state or local government acts as a buyer or seller of goods rather than as a 

regulator.194 Consequently, state and local measures that pertain to the investment of government 

funds, as well as measures that regulate government procurement, may be defended on the ground 

that the state or local government is merely making investment or purchasing choices for itself 

and not regulating other investors or buyers, as the case may be. The market participant doctrine, 

however, may not apply where the state seeks to affect behavior beyond the immediate market in 

which it is operating; the doctrine does not immunize laws from other constitutional challenges; 

and the Supreme Court has suggested the doctrine may not even apply in Foreign Commerce 

Clause cases.195

Intrusion into Foreign Affairs

“Power over external affairs is not shared by the States; it is vested in the national government 

exclusively.”

196 Consequently, state or local laws that encroach on the federal government’s 

authority over foreign affairs may be deemed constitutionally impermissible. In its 1968 decision 

in Zschernig v. Miller,

197 the Supreme Court struck down an Oregon law prohibiting nonresident 

aliens from inheriting property unless they could demonstrate to the Oregon state courts that their 

 

192 See Japan Line, Ltd. v. Cty. of Los Angeles, 441 U.S. 434 (1979). One reason for the difference was that the state 

tax at issue on an instrumentality in foreign commerce “may impair federal uniformity in an area where federal 

uniformity is essential,” or, in other words, may “prevent [] the Federal Government from ‘speaking with one voice 

when regulating commercial relations with foreign governments.’” Id. at 446-48, 451. See also Container Corp. of 

America v. Franchise Tax Bd., 463 U.S. 159, 194 (1983).

193 Barclays Bank PLC v. Franchise Tax Bd. of Cal., 512 U.S. 298 (1994) (holding that state statutes that might 

otherwise violate the “one voice” standard may be valid if there is no clear indication that Congress had intended to bar 

the state practice). The Court also suggested that “Congress may more passively indicate that certain state practices do 

not ‘impair federal uniformity in an area where federal uniformity is essential....’” Id. at 323. Moreover, it has indicated 

that Congress “need not convey its intent with the unmistakable clarity required to permit state regulation that 

discriminates against interstate commerce....” Id.

194 See, e.g., Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 807-10 (1976) (“Nothing in the Commerce Clause 

prohibits a State, in the absence of congressional action, from participating in the market and exercising the right to 

favor its own citizens over others.”).

195 See, e.g., South-Central Timber Dev., Inc., 467 U.S. at 99 (downstream effects); United Bldg. & Constr. Trades 

Council v. Mayor & Council of Camden, 465 U.S. 208 (1984) (no immunity from other constitutional challenges); 

Reeves, Inc. v. Stake, 447 U.S. 429, 437-38, n.9 (1980) (application in Foreign Commerce Clause cases unclear). 

The Federal Court of Appeals for the First Circuit in National Foreign Trade Council v. Natsios, 181 F.3d 38 (1st Cir. 

1999), concluded that the State of Massachusetts was not acting as a market participant in enacting its Burma sanctions 

law because it was “attempting to impose on companies with which it does business conditions that apply to activities 

not even remotely connected to such companies’ interactions with Massachusetts.” Id. at 63. The court also found that 

in any event the state would not be shielded from scrutiny under the Foreign Commerce Clause because of questions as 

to whether the market participant exception “applies at all (or without a much higher level of scrutiny) to the Clause.” 

Id. at 65. See also Antilles Cement Corp. v. Acevedo Vilá, 408 F.3d 41, 46-47 (1st Cir. 2005). The Supreme Court in 

Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000) struck the Massachusetts Burma law on federal 

preemption grounds without taking up the Foreign Commerce Clause issue.

196 United States v. Pink, 315 U.S. 203, 232 (1942). See also, e.g., Hines v. Davidowitz, 312 U.S. 52, 63 (1941) (“The 

Federal Government, representing as it does the collective interests of the...states, is entrusted with full and exclusive 

responsibility for the conduct of affairs with foreign sovereignties.”). 

197 389 U.S. 429 (1968).
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home countries allowed U.S. nationals to inherit estates on a reciprocal basis and that payments to 

foreign heirs from the Oregon estates would not be confiscated. Although the federal government 

had not exercised its power in the area, the Supreme Court nonetheless found that the inquiries 

required by the Oregon statute would result in “an intrusion by the State into the field of foreign 

affairs which the Constitution entrusts to the President and the Congress.”198 The Court 

distinguished an earlier decision, Clark v. Allen,

199 which had upheld a similar California statute

on the ground that the statute in that case could be implemented through “a routine reading of 

foreign law” and did not require the particularized inquiries demanded by the Oregon statute.

200

The Supreme Court reaffirmed Zschernig and the dormant foreign affairs power in 2003 when it 

struck down a California law requiring insurers to report life insurance policies held by Holocaust 

victims because the law interfered with an executive agreement supporting a German initiative to 

resolve Holocaust insurance claims without litigation.

201 It appears to be an open question 

whether Congress can permit state and local regulations that conflict with federal foreign 

policy,202 or whether states and localities that enact such measures can invoke a “market 

participation” exception to shield them from challenges on foreign policy grounds.203 Prior to 

enactment of the Sudan Accountability and Divestment Act of 2007, a federal district court 

enjoined enforcement of an Illinois law that prohibited the deposit of state or municipal funds in 

any financial institution that does business in or with Sudan, on the basis that the law interfered 

with the federal government’s dormant foreign policy power.204 It does not appear that any court 

has yet addressed whether the non-preemption language in the Sudan Accountability and 

Divestment Act of 2007 would effectively shield similar state laws from legal challenges.

 

198 Id. at 432.

199 331 U.S. 503 (1947).

200 Zschernig, 389 U.S. at 433-36.

201 Am. Ins. Ass’n v. Garamendi, 539 U.S. 396 (2003).

202 Matthew Schaefer, Constraints on State-Level Foreign Policy: (Re) Justifying, Refining and Distinguishing the 

Dormant Foreign Affairs Doctrine, 41 SETON HALL L. REV. 201, 206 (2011) (noting that President George W. Bush 

objected in a signing statement to non-preemption language Congress included in the Sudan Accountability and 

Divestment Act of 2007). In his signing statement, President Bush wrote:

This Act purports to authorize State and local governments to divest from companies doing 

business in named sectors in Sudan and thus risks being interpreted as insulating from Federal 

oversight State and local divestment actions that could interfere with implementation of national 

foreign policy. However, as the Constitution vests the exclusive authority to conduct foreign 

relations with the Federal Government, the executive branch shall construe and enforce this 

legislation in a manner that does not conflict with that authority. 

Statement on Signing the Sudan Accountability and Divestment Act of 2007, 43 Weekly Comp. Pres. Doc. 1645 (Dec. 

31, 2007).

The language in § 3 of the Sudan Accountability and Divestment Act, like similar language in S. 170, may arguably be 

interpreted to apply to preemption under the Supremacy Clause but not interference in foreign policy in conflict with 

the dormant foreign affairs power.

203 Schaefer, supra note 202, at 260-61 (citing lower court cases finding a market participant exception to dormant 

foreign affairs doctrine but noting the Supreme Court has not expressly ruled on the issue).

204 Nat’l Foreign Trade Council, Inc. v. Giannoulias, 523 F. Supp. 2d 731 (N.D. Ill. 2007). The court also enjoined the 

law’s provision regarding divestment of pension funds, but on foreign commerce grounds and not the dormant foreign 

affairs power.
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Author Contact Information

Jim Zanotti, Coordinator

Specialist in Middle Eastern Affairs

jzanotti@crs.loc.gov, 7-1441

Kathleen Ann Ruane

Legislative Attorney

kruane@crs.loc.gov, 7-9135

Martin A. Weiss

Specialist in International Trade and Finance

mweiss@crs.loc.gov, 7-5407

Jennifer K. Elsea

Legislative Attorney

jelsea@crs.loc.gov, 7-5466

Acknowledgments

Clayton Thomas, Analyst in Middle Eastern Affairs, provided research assistance.