Credit: (Andrei Gorshkov, Sputnik, Kremlin Pool Photo via AP)After a recent federal court order, New Jersey has halted implementation of state-level economic sanctions put in place last year in response to Russia’s military invasion of Ukraine.
A notice in late August from the Department of the Treasury said a federal judge had issued a temporary restraining order earlier last month. The restraining order indicated that a company alleging the sanctions law is unconstitutional is “likely to succeed” in its case, according to court documents.
As a result, a list of more than 150 entities that was published several months after Gov. Phil Murphy and lawmakers enacted state sanctions against companies with ties to Russia and military ally Belarus has been removed from the state’s website, according to the notice.
“In light of the Court’s decision, and to protect the integrity and fairness of the State’s business dealings, including the procurement process, the State and its agencies and instrumentalities will be voluntarily applying the terms of the (temporary restraining order) to all persons and entities engaging with the State until further order of the Court,” the notice said.
Still, the Murphy administration is continuing to defend the sanctions law in court and the case remains ongoing, the notice said.
State response to invasion
Murphy and lawmakers rushed into action on a bipartisan basis last year as part of a broader international response to Russia’s launching of a war that has now lasted for well over a year, with no signs of letting up.
Just days after the war began, lawmakers in New Jersey passed a ceremonial resolution that formally condemned Russia and expressed support for the people of Ukraine and their efforts at resistance.
A separate piece of legislation drafted in response to the war called for severing any economic ties with Russia and Belarus, in part by adding both to a list of countries that New Jersey’s public-worker pension fund is legally prohibited from being linked to financially.
According to court documents, the legal challenge to the state sanctions law was filed by Kyocera Document Solutions America, Inc., a New Jersey-based company that has contracted with the state to provide it with copier machines and related services.
Among other things, the same law also prohibited individuals and entities engaging in certain business activities in Russia or Belarus from contracting or renewing contracts with state-government agencies or from receiving economic development subsidies through programs administered by the New Jersey Economic Development Authority.
The law also required the Murphy administration to draft a list of those engaging in prohibited activities and to update the list every six months.
Challenge by NJ company
According to court documents, the legal challenge to the state sanctions law was filed by Kyocera Document Solutions America, Inc., a New Jersey-based company that has contracted with the state to provide it with copier machines and related services.
While Kyocera America’s corporate parent owns a subsidiary based in Russia, Kyocera America has no relationship with the subsidiary and is not blocked by federal sanctions from doing business in the United States, including with state governments, the company’s lawyers have argued in court documents.
Earlier this year, Treasury officials said New Jersey’s public-worker pension-fund managers were still working to shed all holdings with links to Russia in response to the state sanctions law.
The company, which said in court documents it opposes the war and is in compliance with all federal sanctions, has also argued the U.S. Constitution grants the federal government the power to conduct foreign policy, not individual states like New Jersey.
The Murphy administration, in its defense of the law, argued there is legal precedent for states to enact tougher sanctions, including when a state acts as a “market participant,” according to court documents.
The temporary restraining order issued last month by Judge Robert Kirsch of the federal district court in New Jersey prevents the state from refusing to renew an existing contract with Kyocera or from “taking any other adverse action” against the company based on the provisions of the sanctions law.
In addition to announcing the state was suspending further implementation of the sanctions law, Treasury’s notice urged state agencies to “continue to defer to and follow any applicable federal laws, regulations, or guidance regarding sanctions programs administered by the U.S. Department of Treasury’s Office of Foreign Assets Control.”
Treasury officials declined further comment when reached earlier this week, citing the ongoing litigation.
Earlier this year, Treasury officials said New Jersey’s public-worker pension-fund managers were still working to shed all holdings with links to Russia in response to the state sanctions law.
Among other obstacles, the officials said restrictions on investment activities enacted by other government entities in response to the military conflict, as well as actions taken by securities exchanges themselves, were impacting the state’s divestment efforts.
