Opinion ID: 2347729
Heading Depth: 1
Heading Rank: 2

Heading: the new jersey buy american statute and the federal foreign affairs power

Text: Plaintiffs argue that the New Jersey Buy American provisions, N.J.S.A. 52:33-2 and 3, even if found not to conflict with GATT, represent an impermissible intrusion by the State into the field of foreign affairs, an area constitutionally reserved to Congress and the President. The Constitution contains no specific grant to Congress to enact legislation to regulate foreign affairs, but existence of such power stemming from national sovereignty has been acknowledged by the Supreme Court. Perez v. Brownell, 356 U.S. 44, 57, 78 S.Ct. 568, 575, 2 L.Ed. 2d 603, 613 (1958); United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 318, 57 S.Ct. 216, 220, 81 L.Ed. 255, 261-262 (1936). Although the extent of the national foreign affairs power residing in the executive and legislative branches has been the subject of considerable controversy, see, e.g., Henkin, The Treaty Makers and the Law Makers: The Law of the Land and Foreign Relations, 107 U. Pa. L. Rev. 903 (1959), it is generally agreed that the constitution imposes severe limitations on state participation in foreign affairs. See, e.g., Lofgren,  United States v. Curtiss-Wright Export Corporation: An Historical Reassessment, 83 Yale L.J. 1, 3 (1973). Plaintiffs rely primarily upon the Supreme Court opinion in Zschernig v. Miller, 389 U.S. 429, 88 S.Ct. 664, 19 L.Ed. 2d 683 (1968), reh. den. 390 U.S. 974, 88 S.Ct. 1018, 19 L.Ed. 2d 1196 (1968), for their position that the Buy American provisions constitute an impermissible state invasion of foreign policy. Zschernig involved an Oregon probate law which conditioned the right of a nonresident alien to inherit from Oregon residents upon the alien's ability to demonstrate that his country of origin would grant reciprocal rights to U.S. citizens and would not confiscate personalty passing to the alien claimant. The Supreme Court found that the statute as applied represented an unconstitutional intrusion upon the foreign affairs power. Mr. Justice Douglas, writing for the majority, observed that under similar provisions courts of other states had conducted minute inquiries into the ideological climates of various foreign countries, often disfavoring claimants from Marxist nations. 389 U.S. at 435, 88 S.Ct. at 667, 19 L.Ed. 2d at 689. He further noted that the real desiderata of the Oregon decisions under the statute seemed to be foreign policy attitudes, the freezing or thawing of the `cold war' and the like   . 389 U.S. at 437, 88 S.Ct. at 669, 19 L.Ed. 2d at 690. In a concurring opinion, Mr. Justice Stewart (joined by Mr. Justice Brennan) stated that any realistic attempt to apply [the criteria of the statute] would necessarily involve the Oregon courts in an evaluation, either express or implied, of the administration of foreign law, the credibility of foreign diplomatic statements, and the policies of foreign governments. 389 U.S. at 442, 88 S.Ct. at 671, 19 L.Ed. 2d at 693. It is significant that the Supreme Court in Zschernig refused to reexamine its ruling in Clark v. Allen, 331 U.S. 503, 67 S.Ct. 1431, 91 L.Ed. 1633 (1947). In Clark, a California statute permitted a nonresident alien to inherit personalty only if there was a reciprocal right on the part of United States' citizens to take on the same terms and conditions as citizens of the other nation. The challenge to the statute grounded on its intrusion into the field of foreign affairs was rejected. In Zschernig Mr. Justice Douglas, who had also written the opinion in Clark, pointed out that the California reciprocity statute did not on its face intrude in the federal domain and would only have some incidental or indirect effect in foreign countries, 389 U.S. at 433-438, 88 S.Ct. at 667, 19 L.Ed. 2d at 688. See also In re Estate of Kish, 52 N.J. 454, 466 (1968), where Justice Hall upheld the validity of the New Jersey custodial statute, N.J.S.A. 3A:25-10. He construed the statute to prohibit payments to foreign beneficiaries when it was apparent from a routine reading of the foreign country's laws that the beneficiary's receipt was forbidden. It is quite clear that the New Jersey Legislature, by means of the statutory provisions under review, has not authorized its local units of government to engage in the sensitive business of evaluating the politics of countries whose citizens seek to market their products in this State. The Buy American provisions apply without any discrimination based on the ideology of the seller's country. Nor is there any evidence to suggest that the political climate in a potential foreign bidder's nation has ever motivated the inclusion of the Buy American condition in an invitation for bids or that its inclusion is predicated on an assessment of the internal policies of any foreign country. If refined inquiries into foreign ideologies entered into the decision to apply or not to apply the condition, there would, of course, be little difficulty in finding a constitutional infirmity of the type condemned in Zschernig. But the statute in no way requires, nor should it be construed to permit, such inquiries. We can only conclude the statute does not represent the kind of intrusion into the foreign affairs power condemned in Zschernig. [6] See Berliner, State `Buy American' Policies  One Vice, Many Voices, 32 Geo. Wash. L. Rev. 584, 594-598 (1964). For a comparable interpretation of Zschernig, see Note, 6 Texas Int'l L.F. (1970). In addition to Zschernig, the plaintiffs rely heavily on Bethlehem Steel Corp. v. Board of Comm'rs of Dept. of W. & P., 276 Cal. App. 2d 221, 80 Cal. Rptr. 800 (Ct. App. 1969). The California court in a 3 to 1 decision declared unconstitutional the California Buy American Act containing an absolute requirement that only materials manufactured in the United States be used. The court likened the California act to the Oregon statute in Zschernig and reasoned that the states have no power to affect foreign commerce, an exclusive federal domain. Referring to the numerous treaties and agreements concerned with trade which the United States has entered into with foreign nations, including GATT (noting that it was unnecessary to delve into an analysis of that agreement), the court held that the California statute had more than an incidental or indirect effect on foreign affairs. [7] The California Buy American Act did not have the restricted sphere and more limited impact of the New Jersey statute. Compare N.J.S.A. 52:33-2 and 3 with Cal. Gov't Code §§ 4300-4305 (West 1966). Unlike the California Code N.J.S.A. 52:33-2 and 3 provide that domestic materials need not be used if the cost is unreasonable or it is inconsistent with the public interest or it is impracticable. Nor did the California court consider the express exemption in GATT into which the New Jersey legislation fits. This exemption indicates that the federal government has not foreclosed state action which does not have a significant and direct impact on foreign affairs. Indeed, it would appear that federal policy reflected by the GATT exemption would tolerate state action which is not inconsistent with the overriding federal approach to foreign trade. Moreover, we do not agree that every and any state statute which in any way touches upon foreign affairs is proscribed. States may properly exercise their police powers and in doing so have some permissible effect on foreign trade. Cf. DeCanas v. Bica, 424 U.S. 351, 96 S.Ct. 933, 47 L.Ed. 2d 43 (1976) (upholding a California statute regulating alien employment even though it touches upon the exclusive federal power to regulate immigration). We read Zschernig and Clark to permit state regulation which does not result demonstrably in a significant and direct impact upon foreign affairs.