Washington v. United States Department of State, No. 20-35391 (9th Cir. 2021)
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The Ninth Circuit vacated the district court's order granting the motion of 22 sates and the District of Columbia, seeking to enjoin the DOS's Final Rule removing 3D-printed guns and their associated files from the U.S. Munitions List. In 2018, DOS proposed a rule removing 3D-printed-gun files from the Munitions List and regulation under the International Traffic in Arms Regulations, and placing them on the Commerce Control List, regulated by Commerce under the Export Administration Regulations instead. On the same day, Commerce proposed its own rule expressly assuming regulatory jurisdiction over these items. DOS and Commerce, respectively, promulgated Final Rules on January 23, 2020. After plaintiffs' actions challenging both Final Rules, the district court preliminarily enjoined only the DOS Final Rule.
The panel held that Congress expressly barred judicial review of designations and undesignations of defense articles under the International Security Assistance and Arms Export Control Act of 1976 (the Control Act) and of any functions exercised under the Export Control Reform Act (the Reform Act). The panel explained that Congress not only barred Administrative Procedure Act (APA) challenges to Commerce's Reform Act functions, it rendered them, in effect, judicially unreviewable. Because the APA's section 702 did not apply to functions exercised under the Reform Act, federal sovereign immunity had not been waived, precluding judicial review of plaintiffs' challenge. In this case, the district court erred by enjoining the DOS Final Rule in part for perceived procedural deficiencies in the Commerce Final Rule. Therefore, because both the DOS and Commerce Final Rules are unreviewable, the States have not demonstrated the requisite likelihood of success on the merits. Accordingly, the panel remanded with instructions to dismiss.
Court Description: Federal Rulemaking / Judicial Review. The panel vacated the district court’s order that granted the motion of 22 states and the District of Columbia (“Plaintiffs”) to enjoin the U.S. Department of State (“DOS”)’s Final Rule removing 3D-printed guns and their associated files from the U.S. Munitions List. Under the International Security Assistance and Arms Export Control Act of 1976 (the “Control Act”) (codified at 22 U.S.C. § 2778(a)(1)), Congress authorized the President to designate “defense articles” and regulate their import and export. When DOS designates an item as a defense article, it is placed on the U.S. Munitions List and regulated by the International Traffic in Arms Regulations (“ITAR”). Congress delegated to the President’s discretion the decision concerning when an item becomes a “defense article.” The Department of Commerce (“Commerce”) is empowered to regulate non-Munitions List items under the Export Control * The Honorable Robert H. Whaley, United States District Judge for the Eastern District of Washington, sitting by designation. 4 STATE OF WASHINGTON V. U.S. DEP’T OF STATE Reform Act, and these items are placed on the Commerce Control List (“CCL”). Congress gave Commerce broad discretion in deciding which items to place on the CCL. On May 24, 2018, DOS proposed a rule removing 3D- printed-gun files from the Munitions List and regulation under ITAR, and placing them on the CCL, regulated by Commerce under the Export Administration Regulations instead. The same day, Commerce proposed its own rule expressly assuming regulatory jurisdiction over these items. Following notice and comments, DOS and Commerce, respectively, promulgated Final Rules on January 23, 2020. Pursuant to plaintiffs’ action challenging both Final Rules under the Administrative Procedure Act (“APA”), the district court preliminarily enjoined only the DOS Final Rule. The panel held that Congress expressly precluded judicial review of the relevant agency actions here. The panel first addressed the reviewability of the DOS Final Rule. The panel held that clear and convincing evidence demonstrated that § 2778(h) of the Control Act could only be read one way: Congress precluded judicial review of both the designation and undesignation of items as defense articles. The panel next addressed the reviewability of the Commerce Final Rule. The panel held that Congress not only barred APA challenges to Commerce’s Reform Act functions, it rendered them, in effect, judicially unreviewable. Because the APA’s § 702 did not apply to functions exercised under the Reform Act, federal sovereign immunity had not been waived, precluding judicial review of the plaintiffs’ challenge. The panel held that the district court erred by enjoining the DOS Final Rule in part for STATE OF WASHINGTON V. U.S. DEP’T OF STATE 5 perceived procedural deficiencies in the Commerce Final Rule. The panel held that because both the DOS and Commerce Final Rules were unreviewable, the plaintiffs had not demonstrated the requisite likelihood of success on the merits, and therefore, a preliminary injunction was not merited. The panel remanded with instructions to dismiss. Dissenting, District Judge Whaley would affirm the district court’s order granting plaintiffs’ request for a preliminary injunction. Judge Whaley disagreed with the majority’s holding which would allow the new regulatory system to escape appropriate oversight. He would affirm the district court’s determination that the plaintiffs have demonstrated a likelihood of success on the merits as to their claims that DOS’s Final Rule was arbitrary and capricious, and the district court’s finding that DOS failed to comply with the notice requirement under the APA before implementing its rule.
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