Fed. Express Corp. v. U.S. Dep't of Commerce

• Decision Date: 08 July 2022
• Docket Number: 20-5337
• Citation: 39 F.4th 756
• Parties: FEDERAL EXPRESS CORPORATION, Appellant v. UNITED STATES DEPARTMENT OF COMMERCE, et al., Appellees
• Court: U.S. Court of Appeals — District of Columbia Circuit

39 F.4th 756

FEDERAL EXPRESS CORPORATION, Appellant

v.UNITED STATES DEPARTMENT OF COMMERCE, et al., Appellees

No. 20-5337

United States Court of Appeals, District of Columbia Circuit.

Argued November 5, 2021

Decided July 8, 2022

Eric D. McArthur argued the cause for appellant. With him on the briefs was Chelsea A. Priest.

Daniel Aguilar, Attorney, U.S. Department of Justice, argued the cause for appellees. With him on the brief were Brian M. Boynton, Acting Assistant Attorney General at the time the brief was filed, and Sharon Swingle, Attorney.

Before: Henderson and Millett, Circuit Judges, and Sentelle, Senior Circuit Judge.

Circuit Judge Henderson concurs in the judgment.

Millett, Circuit Judge:

The Department of Commerce has long regulated the export of items that have sensitive military, national security, intelligence, and foreign policy implications. The Export Controls Act of 2018, Pub. L. No. 115-232, 132 Stat. 2209 (codified as amended at 50 U.S.C. §§ 4801 – 4826 ), legislatively confirmed that authority and statutorily empowered the President and the Secretary of Commerce to control "the export, reexport, and in-country transfer" of restricted items, as well as the "activities of United States persons, wherever located, relating to specific" weapons and intelligence activities. 50 U.S.C. §§ 4812 – 4813. Penalties imposed by the Act apply not just to those who directly violate its terms, but also to those who "cause or aid, [or] abet" violations. Id. § 4819(a)(2)(B).

Some violations of the 2018 Export Controls Act and its implementing regulations trigger liability only if the entity acts willfully or knowingly, but others are enforced on a strict liability basis. Federal Express Corporation—commonly known as FedEx—challenges the Department of Commerce's authority to hold it strictly liable for aiding and abetting violations of the 2018 Export Controls Act. Because the statutory text, circuit precedent, and deference to the Executive Branch in matters of national security and foreign affairs all support Commerce's interpretation, we affirm the district court's dismissal of FedEx's complaint.

I

A

The 2018 Export Controls Act directs the President and the Secretary of Commerce "to restrict the export of items" (i) that "would make a significant contribution to the military potential of any other country or combination of countries which would prove detrimental to the national security of the United States[,]" and (ii) as "necessary to further significantly the foreign policy of the United States or to fulfill its declared international obligations." 50 U.S.C. § 4811 ; see id . §§ 4812–4813. In turn, the Export Administration Regulations, 15 C.F.R. Part 730, which are authorized by the 2018 Export Controls Act, "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 ; see 50 U.S.C. § 4812(b).

As relevant in this case, those regulations include an "Entity List" that identifies the persons, governments, and other entities to whom exports are prohibited, unless licensed by the Commerce Department. 15 C.F.R. Part 744, Supp. No. 4. The regulations also include "[g]eneral [o]rders" the "terms and conditions" of which may not be violated, including orders that bar certain exports to some countries. 15 C.F.R. § 736.2(9) ; 15 C.F.R. Part 736, Supp. No. 1.

The 2018 Export Controls Act is only the latest version of the federal government's export control framework. The Executive and Legislative Branches have long sought to prevent exports from the United States that could assist the Nation's enemies. Before the 1940s, the United States primarily restricted exports in wartime, in response to emergency situations, or when other countries were engaged in conflict. See IAN F. FERGUSSON , PAUL K. KERR & CHRISTOPHER A. CASEY , CONG. RSCH. SERV. , R46814, THE U.S. EXPORT CONTROL SYSTEM AND THE EXPORT CONTROL REFORM ACT OF 2018, at 2 (2021); 1 BRUCE E. CLUBB , UNITED STATES FOREIGN TRADE LAW § 8.1, at 133–134 (1991).

In 1949, Congress enacted "the first comprehensive system of export controls ever adopted * * * in peace time." CLUBB, supra § 8.1.2, at 135–136 (citation omitted); see Export Control Act of 1949, Pub. L. No. 81-11, 63 Stat. 7; JOHN R. LIEBMAN & WILLIAM A. ROOT , UNITED STATES EXPORT CONTROLS xxx–xxxi (2d ed. 1989). Since then, the statutory scheme has been repeatedly updated, refined, and reauthorized. See, e.g. , Export Administration Act of 1969, Pub. L. No. 91-184, 83 Stat. 841 ; Export Administration Act of 1979, Pub. L. No. 96-72, 93 Stat. 503.

Pursuant to those statutes, the Department of Commerce developed the Export Administration Regulations. See 15 C.F.R. § 730.2. Before the 2018 Export Controls Act, Congress's export administration laws were not permanent. See H.R. REP. NO. 115-784, at 51–52 (2018). The Export Administration Regulations were sustained by Congress's temporary legislation. Whenever those statutes lapsed, Presidential executive orders issued under the International Emergency Economic Powers Act, Pub. L. No. 95-223, 91 Stat. 1626 (1977) (codified at 50 U.S.C. §§ 1701 – 1706 ), "directed and authorized the continuation in force" of the Export Administration Regulations. 15 C.F.R. § 730.2.

When enacting the 2018 Export Controls Act, Congress statutorily endorsed those preexisting regulations, explicitly preserving in law "[a]ll delegations, rules, regulations, orders, determinations, licenses, or other forms of administrative action that have been made, issued, conducted, or allowed to become effective under the Export Administration Act of 1979 * * * or the Export Administration Regulations" that were "in effect as of August 13, 2018[.]" 50 U.S.C. § 4826(a). Congress specified that these rules and regulations were to "continue in effect according to their terms until modified, superseded, set aside, or revoked under the authority of" the 2018 Export Controls Act. Id .

This case concerns the specific statutory and regulatory provisions addressing civil aiding or abetting violations of the 2018 Export Controls Act. The Act makes it "unlawful for a person to violate, attempt to violate, conspire to violate, or cause a violation of [the Act] or of any regulation, order, license, or other authorization issued under [the Act], including any of the unlawful acts described in paragraph (2)." 50 U.S.C. § 4819(a)(1).

"Paragraph (2)" in turn provides an extensive list of "unlawful acts" that includes, as relevant here that "[n]o person may cause or aid, abet, counsel, command, induce, procure, permit, or approve the doing of any act prohibited, or the omission of any act required by [the 2018 Export Controls Act], the Export Administration Regulations, or any order, license or authorization issued thereunder." 50 U.S.C. § 4819(a)(2).

The 2018 Export Controls Act prescribes criminal penalties for one "who willfully commits, willfully attempts to commit, or willfully conspires to commit, or aids and abets in the commission of, an unlawful act described in [ Section 4819(a).]" 50 U.S.C. § 4819(b).

The Act separately authorizes the Secretary of Commerce to impose "civil penalties on a person for each violation by that person of [the 2018 Export Controls Act] or any regulation, order, or license issued under [the Act.]" 50 U.S.C. § 4819(c).

The Export Administration Regulations largely mirror these statutory provisions, stating that "[n]o person may cause or aid, abet, counsel, command, induce, procure, permit, or approve the doing of any act prohibited, or the omission of any act required, by [the 2018 Export Controls Act], the [Export Administration Regulations], or any order, license or authorization issued thereunder." 15 C.F.R. § 764.2(b).

The regulations delineate a variety of sanctions for violating these provisions, including administrative sanctions, civil penalties, denial of export privileges, and criminal punishment. 15 C.F.R. § 764.3. The regulations specify that criminal sanctions are authorized to punish one who "willfully commits, willfully attempts to commit, or willfully conspires to commit, or aids and abets in the commission of, an unlawful act described in 50 U.S.C. [§] 4819(a) [.]" 15 C.F.R. § 764.3(b).

The regulatory provision that makes it unlawful to "cause or aid, [or] abet" an export control violation, 15 C.F.R. § 764.2(b), predates the 2018 Export Controls Act. A version of this regulation existed as early as 1954. At that time, the regulation made it unlawful to "knowingly" "cause, or aid, abet, counsel, command, induce, procure, or permit the doing of any act prohibited by, or the omission of any act required by the export control law or any proclamation, order, rule, regulation, or license issued thereunder." Miscellaneous Amendments, 19 Fed. Reg. 89, 92 (Jan. 7, 1954) ; see also 15 C.F.R. § 381.2 (1956). In the 1980s, the Department of Commerce removed the word "knowingly" from the provision. 15 C.F.R. § 387.2 (1981). The provision has remained largely unchanged since that time and was "continue[d] in effect" when the 2018 Export Controls Act was enacted. 50 U.S.C. § 4826(a).

B

FedEx is an international express courier that offers expedited and time-definite delivery of approximately 15 million packages daily to more than 220 countries and territories.

In 2011, the Department of Commerce's Bureau of Industry and Security ("Bureau") sent FedEx a "charging letter" alleging that FedEx had violated 15 C.F.R. § 764.2(b) six times. Specifically, the letter asserted that FedEx "caused, aided or abetted" acts "prohibited by the [Export Administration] Regulations" when it transported items to Syria, the United Arab Emirates, and China without the required licenses. Joint Appendix ("J.A.") 74–79. In sending items to Syria and the United Arab Emirates, FedEx had allegedly violated two "general orders" promulgated under the Export Administration Regulations. 15 C.F.R. Part 736, Supp....