By Andrew Stern CHICAGO, Feb 23 (Reuters) - An Illinois law barring state-backed investments in non-U.S. companies doing business in Sudan to protest genocide in the Darfur region was declared unconstitutional by a federal judge on Friday. The ruling by U.S. District Judge Matthew Kennelly could impact similar laws enacted in the past year in at least eight other U.S. states and proposals being considered by several other state legislatures. Illinois, in 2005, was the first state to pass such a law concerning Sudan, but all in some way are designed to mirror the disinvestment campaign against South Africa during the apartheid era. The ruling "means pension funds won't have to sell assets" in order to comply with Illinois' law, said William Reinsch, president of the National Foreign Trade Council, a trade group representing international companies that filed a federal lawsuit last year against the Illinois law. Reinsch said the states' disinvestment laws inhibit the U.S. president's ability to conduct foreign policy. Three federal laws and other presidential decrees already bar U.S. companies from doing business with Sudanese interests seen as supporting the genocide that experts say has killed around 200,000 people and driven 2.5 million others from their homes since 2003. "We think these are cases where the government should speak in one voice," Reinsch said, adding that some state laws did not differentiate between Sudanese elements the United States backs. The law's sponsor, Illinois state Sen. Jacqueline Collins, defended the legislation and said she would address the judge's concerns with "some minor technical changes to the act." "We expect to be introducing legislation to that effect very soon. Hundreds of pension funds across the state have been implementing this in good faith and we'll act quickly to ensure that the state goals of disassociating from genocide and terrorism are promoted," she said. Precedent was set by a 2000 U.S. Supreme Court decision that struck down sanctions on Myanmar enacted by Massachusetts because they overlapped with federal sanctions, Reinsch said. Other plaintiffs in the suit against the Illinois law included eight Illinois public pension funds, some for retired policemen and firemen. The state attorney general defended the law, which required full disinvestment in companies such as Siemens AG <SIEGn.DE> by July 2007, Reinsch said.
