Changji Esquel Textile Co. v. Raimondo
| Decision Date | 04 November 2021 |
| Docket Number | Civil Action No. 21-1798 (RBW) |
| Citation | 573 F.Supp.3d 104 |
| Parties | CHANGJI ESQUEL TEXTILE CO. LTD., et al., Plaintiffs, v. Gina M. RAIMONDO, in her official capacity as the Secretary of Commerce, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Caroline Lewis Wolverton, Lide E. Paterno, James Edward Tysse, Akin Gump Strauss Hauer & Feld LLP, Washington, DC, for Plaintiffs.
Matthew Charles Skurnik, Alexis J. Echols, Kevin Matthew Snell, U.S. Department of Justice, Civil Division, Washington, DC, for Defendants.
The plaintiffs, Changji Esquel Textile Co. Ltd. ("Changji"), Esquel Enterprises Limited, and Esquel Apparel Inc.,1 bring this civil action against the defendants, the United States Department of Commerce (the "Department"), Gina M. Raimondo, the Secretary of the Department, the Bureau of Industry and Security ("BIS"), Jeremy Pelter, the Acting Under Secretary of the BIS, Matthew S. Borman, the BIS Deputy Assistant Secretary for Export Administration, and Joseph Cristofaro, the BIS End-User Review Committee Chair, alleging that defendants, in placing Changji on the U.S. Entity List, acted ultra vires and in excess of their statutory and regulatory authority in violation of the Administrative Procedure Act (the "APA") and the Fifth Amendment to the United States Constitution. See Am. Compl. ¶¶ 84–104. Currently pending before the Court is the Plaintiffs’ Motion for [a] Preliminary Injunction ), ECF No. 9. Upon careful consideration of the parties’ submissions2 and the oral arguments presented at the motion hearing held on September 24, 2021, the Court, on October 6, 2021, issued an order denying the plaintiffs’ motion because "the plaintiffs cannot establish a likelihood of success on the merits[.]" Order at 1 (Oct. 6, 2021), ECF No. 34. The Court is issuing this Memorandum Opinion to further explain that decision.
On July 22, 2020, the defendants exercised their authority under the Export Control and Reform Act ("ECRA") to place Changji on the United States’ "Entity List," see Addition of Certain Entities to the Entity List; Revision of Existing Entities on the Entity List, 85 Fed. Reg. 44,159 –60 (July 22, 2020) () (the "ECRA provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule."), which is being challenged by the plaintiffs.
Broadly, the ECRA provides authorization for, inter alia, the creation and maintenance of various lists and the establishment of licensing regimes and regulatory processes. See 50 U.S.C. §§ 4813(a)(1)–(16). "[I]n consultation with the Secretary of State, the Secretary of Defense, the Secretary of Energy, and the heads of other Federal agencies as appropriate," the Department is empowered to engage in a plethora of regulatory activity, including "establish[ing] and maintain[ing] a list of items that are controlled[,]" see id. § 4813(a)(1), "requir[ing] licenses or other authorizations," id. § 4813(a)(5), "creat[ing], as warranted, exceptions[,]" id. § 4813(a)(14), and "undertak[ing] any other action as is necessary to carry out [the objectives of the ECRA] that is not otherwise prohibited by law[,]" id. § 4813(a)(16). The Department is also empowered to "establish and maintain a list of foreign persons and end-uses that are determined to be a threat to the national security and foreign policy of the United States pursuant to the policy set forth in [§] 4811(2)(A)[,]" id. § 4813(a)(2). Section 4811(2)(A), as referenced by § 4813(a)(2), explains that "[t]he national security and foreign policy of the United States require ... control[s]" on the release of items for use in:
Id. § 4811(2)(A). Section 4811 further provides that "[t]he national security and foreign policy of the United States require" controls for the purpose of "carry[ing] out the foreign policy of the United States, including the protection of human rights and the promotion of democracy." Id. § 4811(2)(D).
Pursuant to the ECRA's broad grant of authority, the Department "maintains [an] ‘Entity List,’ which includes foreign persons ‘reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States.’ " Defs.’ Opp'n at 1 (quoting 15 C.F.R. § 744.16 ; 15 C.F.R. pt. 744 Supp. No. 4). The BIS, which publishes the Entity List, notes that the "grounds for inclusion on the Entity List have expanded to activities sanctioned by the State Department and activities contrary to U.S. national security and/or foreign policy interests." Bureau of Indus. & Sec., Entity List (2020), https://www.bis.doc.gov/index.php/policy-guidance/lists-of-parties-of-concern/entity-list.
The Export Administration Regulations ("EARs") serve as the defendants’ primary export control regulations promulgated, inter alia, pursuant to the ECRA and are "intended to serve the national security, foreign policy, nonproliferation of weapons of mass destruction, and other interests of the United States." 15 C.F.R. § 730.6. Within the EARs, the defendants have established that an entity may be placed on the Entity List if "there is reasonable cause to believe, based on specific and articulable facts, that the entity has been involved, is involved, or poses a significant risk of being or becoming involved in activities that are contrary to the national security or foreign policy interests of the United States[.]" Id. § 744.11(b). The End-User Review Committee, an inter-agency committee, id. pt. 748 Supp. No. 9, is charged with maintaining the Entity List in accordance with the criteria for placement on the Entity List, see id. § 744.11. Listed entities are "prohibited from receiving some or all items subject to the EARs [ ] unless the exporter secures a license." Pls.’ Mem. at 2–3; see generally 15 C.F.R. § 744.11. The defendants issue licenses on a case-by-case basis for items "necessary to detect, identify and treat infectious disease[,]" but all other license applications are presumptively denied for most items. 85 Fed. Reg. at 44,160. The defendants also "consider[ ] that transactions of any nature with listed entities carry a ‘red flag’ and recommends that U.S. companies proceed with caution with respect to such transactions." Bureau of Indus. & Sec., Entity List FAQs (2020), https://www.bis.doc.gov/index.php/cbc-faqs.
On July 22, 2020, the defendants added Changji to the Entity List. The defendants listed Changji pursuant to section 744.11(b) of the EARs, see 85 Fed. Reg. at 44,159, which provides that an entity may be placed on the "Entity List" where "there is reasonable cause to believe, based on specific and articulable facts, that the entity has been involved, is involved, or poses a significant risk of being or becoming involved in activities that are contrary to the national security or foreign policy interests of the United States[,]" 15 C.F.R. § 744.11(b). According to the defendants, Changji was added to the Entity List because the defendants determined that Changji was "engaging in activities contrary to the foreign policy interests of the United States through the practice of forced labor involving members of Muslim minority groups in the [Xinjiang Uyghur Autonomous Region]." 85 Fed. Reg. 44,159. Along with Changji, the defendants added ten other entities for the same reasons. Id.
On July 6, 2021, the plaintiffs initiated this case, "seek[ing] relief from devastating economic and reputational harms that efendants have inflicted on laintiffs" as a result of the defendants’ addition of Changji to the Entity List. See Complaint for Declaratory and Injunctive Relief ¶ 1, ECF No. 1. On July 19, 2021, the plaintiffs filed an amended complaint, see generally Am. Compl., and their motion for an injunction, see generally Pls.’ Mot.
In response to the plaintiffs’ motion, the Court set dates for briefing and an expedited hearing on August 6, 2021. Min. Order (July 20, 2021). However, on August 3, 2021, the parties filed a joint request to vacate the August 6, 2021 hearing date and to extend the defendants’ date to file their opposition to the plaintiffs’ motion. See Joint Motion to Vacate Hearing Date and Extend Defendants’ Deadline to Oppose Preliminary Injunction by 30 Days at 1, ECF No. 17. In that motion, the parties represented that, on July 31, 2021, the End-User Review Committee "decided to remove [Changji] from the Entity List subject to certain conditions." Id. at 1–2.
Therefore, on August 3, 2021, the Court granted the parties’ joint motion. See Min. Order (August 3, 2021).
However, on August 27, 2021, the plaintiffs filed a motion to reschedule the preliminary injunction hearing. Plaintiffs’ Unopposed Motion to Re-Set Hearing on Preliminary Injunction Motion Within 21 Days at 1, ECF No. 18. According to the plaintiffs, "[u]nfortunately, despite good-faith efforts by all parties to resolve the underlying dispute, ... efendants have not been able to provide any concrete timeline or assurance of imminent relief from the ongoing irreparable harms laintiffs are suffering." Id. at 3. Thus, Changji remains on the Entity List, though some negotiations between the plaintiffs and defendants remain ongoing. See id.
On September 24, 2021, the Court held a hearing on the plaintiffs’ ...
To continue reading
Request your trial