Thorne v. United States Department of State, No. 19-17606 (9th Cir. 2020)
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The Ninth Circuit affirmed the district court's order denying plaintiffs' motion for a preliminary injunction seeking to force the government to abide by procedural protections before debarring plaintiffs under 22 C.F.R. 127.7 from engaging in their business. Plaintiffs are exporters and resellers of United States armaments. Specifically, plaintiffs claim that they have been completely prohibited from engaging in all International Traffic in Arms Regulations (ITAR) and Arms Export Control Act (AECA) activities without being afforded the requisite procedural protections.
The panel held that plaintiffs have insufficiently pleaded facts and submitted evidence to support their assertion that they have been de facto debarred. In this case, the entirety of plaintiffs' action, including its request for a preliminary injunction, rests on two presuppositions—that they have been de facto debarred and that the DDTC has improperly imposed a presumption of denial on their license applications. However, plaintiffs have not sufficiently established that either of these things happened. Therefore, the district court did not abuse its discretion in denying plaintiffs' motion for a preliminary injunction.
Court Description: Arms Export Control Act. The panel affirmed the district court’s order denying the motion of plaintiff exporters and resellers of United States armaments for a preliminary injunction seeking to force the federal government to abide by procedural protections before debarring plaintiffs under 22 C.F.R. § 127.7 from engaging in their business. The Arms Export Control Act (AECA) authorizes the President to “control the import and the export of defense articles and defense services.” 22 U.S.C. § 2778(a)(1). Pursuant to that authority, the Department of State promulgated the International Traffic in Arms Regulations (ITAR). One of those regulations, 22 C.F.R. § 127.7, allows for the “debarment” of an individual or entity who wishes to act under ITAR and AECA. Plaintiffs claimed that they were de facto debarred from engaging in their business. To establish a de facto debarment under § 127.7, plaintiffs need to show that the Directorate of Defense Trade Councils (DDTC) has completely prohibited them from legally engaging in all ITAR and AECA activities. The panel held that plaintiffs did not meet their burden. The panel further held that plaintiffs presented facts and evidence that established, at best, the denial of some license applications to export arms, not a complete prohibition to act under ITAR and AECA. The panel also held that plaintiffs did not sufficiently establish that the DDTC improperly THORNE V. DOS 3 imposed a presumption of denial on their license applications. The panel concluded that the district court did not abuse its discretion in denying plaintiffs’ motion for a preliminary injunction.
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