U.S. Ordnance, Inc. v. U.S. Dept. of State

• Decision Date: 05 June 2006
• Docket Number: Civil Action No. 05-2304(ESH).
• Citation: 432 F.Supp.2d 94
• Parties: U.S. ORDNANCE, INC., Plaintiff, v. U.S. DEPARTMENT OF STATE, et al., Defendants.
• Court: U.S. District Court — District of Columbia

432 F.Supp.2d 94

U.S. ORDNANCE, INC., Plaintiff, v. U.S. DEPARTMENT OF STATE, et al., Defendants.

Civil Action No. 05-2304(ESH).

United States District Court, District of Columbia.

June 5, 2006.

Joseph Roll Conte, Robert Ernest Sanders, Washington, DC, for Plaintiff.

Paul A. Mussenden, Assistant United States Attorney, John F. Henault, Jr., U.S. Attorney's Office, Washington, DC, for Defendants.

MEMORANDUM OPINION AND ORDER

HUVELLE, District Judge.

Plaintiff U.S. Ordnance, Inc. ("USO" or "plaintiff") asks the Court to direct the Department of State (the "Department") and its employees to issue plaintiff a license to export M16 machine guns to foreign countries. In response, defendants have filed a motion to dismiss wherein they argue that the Court lacks subject matter jurisdiction to hear plaintiff's claims. The Court agrees and will therefore grant defendants' motion and dismiss plaintiff's complaint.

BACKGROUND

Plaintiff is a manufacturer and exporter of defense articles. Defendants are the Department and John Hillen, Assistant Secretary of State for Political and Military Affairs; Rose M. Likens, Deputy Secretary (formerly Acting Assistant Secretary of State for Political and Military Affairs); and David M. Trimble, Director of the Office of Defense Trade Controls. In February 2000 plaintiff registered with the Department as a manufacturer and exporter of defense articles pursuant to the Arms Export Control Act ("AECA"), 22 U.S.C. § 2751 et seq. From that time until May 2004, plaintiff engaged in the business of manufacturing and exporting defense articles to foreign countries. In May 2004, however, the Department learned that plaintiff allegedly was associated with an individual named Curtis Lynn Debord ("Debord Sr."),¹ who had been indicted in 1997 for violations of § 2778 of the AECA, and therefore was considered as being ineligible to engage in the export of arms under the AECA's implementing regulations—International Traffic in Arms Regulations ("ITAR").² See United States v. Debord, No. 97-CR-239 (N.D.Cal.) (charging Debord Senior with smuggling arms into the United States, dealing in firearms without a license, entry by false statements, conspiracy, making false statements and witness tampering).³

The Department immediately initiated an administrative investigation into Debord Senior's association with plaintiff. By letters dated June 2, June 24, and July 9, 2004, the Department requested information regarding Debord Senior's activities and interest in USO. (Defs.' Exs. 1, 4, 5.) On June 2, 2004, the Department also informed plaintiff that pending the conclusion of the Department's investigation, plaintiffs license applications "would be processed only as transaction exemptions that must be supported by a request meeting strict national security, foreign policy and law enforcement criteria." (Defs.' Mem. at 4; see also Defs.' Ex. 1.) According to the Department, "[a]pplication of such license review criteria in effect imposed a policy of denial for plaintiff's export license applications under the ITAR." (Defs.' Mem. at 4.) Furthermore, on June 24, 2004, the Department suspended the licenses it previously had issued to plaintiff. (See Defs.' Ex. 4.) At the time of the Department's June 2 and June 24 actions, plaintiff had seven pending license applications. Three of those applications were the subject of transaction exemption requests (which were denied in October 2004), and the other four applications were returned without action because no transaction exemption requests had been submitted. In addition, the Department suspended thirty licenses that it previously had issued to plaintiff.

From June 2004 through April 2005, the Department reviewed information submitted by plaintiff in response to its requests.⁴ On April 4, 2005, the Department issued plaintiff a draft charging letter pursuant to § 128.11(b) of the ITAR, which permits the settlement of administrative enforcement actions prior to the issuance of a formal charging letter. (See Defs.' Ex. 7.) On October 26, 2005, the Department issued plaintiff another proposed charging letter that alleged 35 violations of the AE CA. (Defs.Ex. 10.)

Instead of responding to the Department's October 26, 2005 proposed charging letter, plaintiff initiated this lawsuit on November 29, 2005, seeking an order requiring the Department to process all of its pending license applications and declaring that plaintiff is in full compliance with the ITAR. (See Compl. ¶¶ 5, 6.) By letter dated February 3, 2006, plaintiff formally responded to the Department's October 26, 2005 proposed charging letter by asserting that the charges set forth therein are without merit. (Defs.' Ex. 13.) After reviewing plaintiff's letter, the Department, through the DDTC, began "preparations for the process to formally charge USO with violations of AE CA and ITAR in an administrative proceeding under Part 128 of the ITAR," which provides for debarment as a penalty for violations of the AECA and the ITAR following a formal administrative proceeding. See 22 C.F.R. § 128.1. (Defs.' Mem. at 9.) The Department also, on March 10, 2006, formally denied all of plaintiffs pending license applications. (Defs.' Ex. 14.)

ANALYSIS

I. Plaintiff's Request for Injunctive Relief

Because the Department has now formally denied all of plaintiff's pending license applications, plaintiffs request that the Court order the Department to process these applications has been rendered moot. See Columbian Rope Co. v. West, 142 F.3d 1313, 1316 (D.C.Cir.1998) MO/en where litigation poses a live controversy when filed, the [mootness] doctrine requires a federal Court to refrain from deciding it if events have so transpired that the decision will neither presently affect the parties' rights nor have a more-thanspeculative chance of affecting them in the future."); Better Gov't Ass'n v. Dep't of State, 780 F.2d 86 (D.C.Cir.1986) (claims challenging the individual denials of fee waiver requests were moot where the agency had ultimately waived the fees in question); Barabski v. Buckles, No. 02-0073(HHK) (D.D.C., Oct. 31, 2002) (dismissing as moot plaintiffs request for an order requiring Treasury Department to process his applications to import firearms once Treasury has denied the applications).

II. Plaintiff's Request for Declaratory Judgment

A. The Department's Denial of Plaintiff's License Applications

To the extent that plaintiff asks this Court to review the Department's denial of plaintiffs license applications under the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq., this Court has no jurisdiction to do so because the Department's actions fall within its discretionary authority.

Plaintiff claims that jurisdiction is proper under 5 U.S.C. § 706(2), which provides that a reviewing court shall "hold unlawful and set aside agency action ... found to be (A) arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with law (B) contrary to constitutional right ... (D) without observance of procedure required by law." 5 U.S.C. § 706(2)(A), (B), and (D). Plaintiff argues that because the Department's charges regarding its alleged violations of the ITAR are without merit, the Department has no basis for its denial of plaintiff's license applications. Further, according to plaintiff, the ITAR provide justiciable standards for the Court to conduct its review.

Defendants rely on 5 U.S.C. § 701(a)(2), which provides that an action, deriving from discretionary authority committed to an agency by law, falls outside the court's jurisdiction and is therefore not subject to judicial review under the APA. Defendants argue that the authority to grant or deny a license for export of defense articles has been committed to the Department's discretion, and therefore, the Department's denial of plaintiffs license applications is unreviewable.

Whether an agency action is committed to the discretion of an agency depends on the nature of the delegation of authority and the statutory language. See Webster v. Doe, 486 U.S. 592, 599-600, 108 S.Ct. 2047, 100 L.Ed.2d 632 (1988). This narrow exception to judicial reviewability is especially prevalent in cases involving agency decisions relating to foreign affairs and national security, for, as recognized by the D.C. Circuit, these cases involve "judgments on questions of foreign policy and the national interest" that are not "fit for judicial involvement." See Dist. No. 1, Pac. Coast Dist., Marine Eng'rs' Beneficial Ass'n v. Mar. Admin., 215 F.3d 37, 42 (D.C.Cir.2000); see also Legal Assistance for Vietnamese Asylum Seekers v. Dep't of State, 104 F.3d 1349, 1353 (D.C.Cir.1997) ("By long-standing tradition, courts have been wary of second-guessing executive branch decisions involving complicated foreign policy matters.").

Moreover, where the language of a statute provides no justiciable standard by which a court can review the agency's exercise of its delegated authority, the matter is treated as committed to the agency's discretion. See Webster, 486 U.S. at 600, 108 S.Ct. 2047 (a statute allowing the Director of the CIA to terminate employment of any employee whenever he found termination "advisable" for the national interest "fairly exude[d] deference" and thereby precluded judicial review under the APA). In particular, if the statute uses language that permits an executive official, such as the President or another agency official, to take action that the official "deems" in the "national interest," these statutes have been consistently interpreted to preclude judicial review under the APA. See Zhu v. Gonzales, 411 F.3d 292, 295 (D.C.Cir.2005) (construing a statute, which allows the Attorney General to waive a requirement if waiver is in the "national interest," as being committed to the discretion of the Attorney General).

In this case, the AECA's delegation of authority to control arms exports is decidedly one involving foreign affairs...