APPENDIX
H

Judicial Review under the Export Administration Act of 1979: Is It Time to Open the Courthouse Doors to U.S. Exporters?

Franklin D. Cordell for John L. Ellicott

Covington & Burling

In 1945, the United States had in place an extensive system of controls on the export of goods that had been imposed, temporarily it was thought, to prevent U.S. goods and technology from aiding the Axis Powers. However, the Cold War emerged from the ashes of World War II without any meaningful hiatus, and the export controls developed during the war became a fixture in U.S. trade law. At present, a number of federal statutes and administrative regulations control the export of various types of U.S. technology, goods, and services. Perhaps the most important statute governing the export of U.S. products is the Export Administration Act (EAA) of 1979.1

The EAA places restrictions for reasons of national security on the export of so-called "dual use" technology—that which has a legitimate civilian purpose but also can be used militarily. It also restricts exports for a variety of "foreign policy" reasons and to protect commodities in short domestic supply. The Commerce Department is charged with the administration of the EAA. The EAA, alone among the major export control statutes, exempts actions taken by the Commerce Department from the judicial review provisions of the Administrative Procedure Act (APA).2 Thus, until only recently, Commerce Department action in this area has been nearly impossible to challenge effectively in court. The Omnibus Trade and Competitiveness Act of 19883 amended the EAA so as to provide some limited judicial review to exporters against whom Commerce had successfully brought enforcement actions. Nevertheless, opportunities for aggrieved exporters to obtain judicial review of Commerce actions taken pursuant to the EAA remain extremely limited.



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment APPENDIX H Judicial Review under the Export Administration Act of 1979: Is It Time to Open the Courthouse Doors to U.S. Exporters? Franklin D. Cordell for John L. Ellicott Covington & Burling In 1945, the United States had in place an extensive system of controls on the export of goods that had been imposed, temporarily it was thought, to prevent U.S. goods and technology from aiding the Axis Powers. However, the Cold War emerged from the ashes of World War II without any meaningful hiatus, and the export controls developed during the war became a fixture in U.S. trade law. At present, a number of federal statutes and administrative regulations control the export of various types of U.S. technology, goods, and services. Perhaps the most important statute governing the export of U.S. products is the Export Administration Act (EAA) of 1979.1 The EAA places restrictions for reasons of national security on the export of so-called "dual use" technology—that which has a legitimate civilian purpose but also can be used militarily. It also restricts exports for a variety of "foreign policy" reasons and to protect commodities in short domestic supply. The Commerce Department is charged with the administration of the EAA. The EAA, alone among the major export control statutes, exempts actions taken by the Commerce Department from the judicial review provisions of the Administrative Procedure Act (APA).2 Thus, until only recently, Commerce Department action in this area has been nearly impossible to challenge effectively in court. The Omnibus Trade and Competitiveness Act of 19883 amended the EAA so as to provide some limited judicial review to exporters against whom Commerce had successfully brought enforcement actions. Nevertheless, opportunities for aggrieved exporters to obtain judicial review of Commerce actions taken pursuant to the EAA remain extremely limited.

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment The recent transformation of the East European states, the thawing of relations between the United States and the Soviet Union, and the evolutionary changes in the world economy all have prompted a reassessment of the effectiveness of the current export control regime in the United States. One focus of this reassessment has been whether, or to what extent, exporters should be able to obtain judicial review of Commerce Department action taken under the EAA. Some have argued, in Congress and elsewhere, that the extremely complex system of export controls places U.S. exporters at a competitive disadvantage vis-à-vis foreign firms dealing in similar or identical technology. Commentators and legislators recently have suggested that the Commerce Department on occasion has acted arbitrarily and has failed to comport with the intent of the Congress as expressed in the EAA, thus needlessly compounding the detriment to U.S. exporters. Consequently, it has been argued that the EAA should be amended so as to eliminate the exclusion from the judicial review provisions of the APA, thereby allowing aggrieved exporters to challenge all final actions of the Commerce Department in federal court. Indeed, a bill to reauthorize the EAA currently pending in Congress, at the time of this writing, would so amend the EAA. This paper, after a brief examination of the extent to which judicial review currently is available under the EAA, evaluates whether increased review of Commerce actions is desirable. The paper concludes that eliminating the EAA's current exemption of agency actions from judicial review under the APA would help ensure Commerce's fidelity to congressional intent as expressed in the EAA and would help prevent needless economic harm to U.S. exporters and to the competitiveness of U.S. technology on the world market. The benefits of increased access to judicial review clearly must be weighed against the executive branch's legitimate interests in preserving the value of export controls as tools for protecting national security and for promoting U.S. foreign policy goals. So long as judicial review of Commerce action under the EAA is limited to justiciable, nonpolitical questions, increased judicial review in this area is warranted and will imperil neither the national security nor the proper autonomy of the executive branch over questions of foreign policy. AVAILABILITY AND EFFICACY OF JUDICIAL REVIEW UNDER THE CURRENT EAA The present version of the EAA provides for judicial review of agency action only in limited circumstances. The starting point is Section 13(a) of the EAA,4 which, with certain exceptions, exempts agency functions taken under the EAA from both the formal adjudication provisions and the judicial review provisions of the Administrative Procedure Act. Thus, Section 13(a)

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment begins by depriving exporters of any review of adverse agency action, either judicial or administrative. There are several exceptions, however, to the general unavailability of judicial review of Commerce actions under the act. The EAA itself provides for judicial review in certain narrow circumstances, and general principles of administrative law may allow for judicial inquiry into Commerce actions in a few instances. In general, it is far easier to obtain review of Commerce enforcement actions than of purely administrative decisions. Review of Enforcement Actions The 1988 amendments to the EAA created a limited opportunity for judicial review of Commerce Department civil enforcement action.5 Section 13(a) of the EAA now provides that, when Commerce brings a civil enforcement action against an exporter for violation of the EAA or the Export Administration Regulations (EAR)6 promulgated thereunder, the exporter will be entitled to notice and an opportunity to be heard before an administrative law judge (ALJ) as provided for in Sections 556 and 557 of the APA. After the ALJ renders a decision, the secretary of commerce (or designee, usually the under secretary for export administration) will review the ALJ's findings of fact and conclusions of law. The secretary must, within 30 days of the ALJ's decision, affirm, modify, or vacate the decision. Section 13(c)(3) provides that the charged party may appeal the secretary's decision to the U.S. Court of Appeals for the District of Columbia Circuit, which "shall set aside any finding of fact for which the court finds there is not substantial evidence on the record and any conclusion of law which the court finds to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."7 There is an alternative route for judicial review if a civil enforcement action results in a penalty determination. Since penalties are not self-executing, EAA Section 11(f) allows the Commerce Department to bring an action against an exporter in a federal district court to recover unpaid civil penalties ordered in a civil enforcement proceeding. In the judicial proceeding brought under Section 11(f), the reviewing court is empowered to "determine de novo all issues necessary to the establishment of liability."8 Thus, if an exporter is assessed a penalty in a civil enforcement proceeding, the exporter will be entitled to de novo review of the enforcement judgment should the exporter choose not to pay the assessed penalty. The Section 11(f) avenue to judicial review has existed for some years. It has become less important since the 1988 amendments to the EAA, which provide for limited judicial review of all civil enforcement decisions. In addition, Section 11(f) was never a particularly valuable means of obtaining relief from adverse agency action, because the Commerce Department could

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment deny the offending exporter's export privileges if a civil penalty was not paid rather than go to court to collect the penalty.9 As matters now stand, there seems to be little justification for retaining the Section 11 (f) judicial review procedure. Finally, Section 13(d) of the EAA provides for judicial review of the issuance of a temporary denial order that is similar to that available in the Section 13(c) civil enforcement setting.10 Under Section 13(d), the exporter made subject to a temporary denial order is entitled, first, to appeal in writing to an ALJ, though in this setting a formal APA adjudication is not available. After reviewing the pleadings, the ALJ makes a recommendation as to whether the temporary denial order should stand. The secretary of commerce then may accept, reject, or modify the ALJ's recommendation. The exporter subject to the temporary denial order may appeal an adverse ruling of the secretary to the U.S. Court of Appeals for the District of Columbia Circuit. The standard of review in the D.C. Circuit here is the same ''arbitrary and capricious" standard as is mandated in the civil enforcement setting.11 Review of Nonenforcement Actions The 1988 EAA amendments do not affect the Section 13(a) preclusion of judicial review of nonenforcement, purely administrative actions, such as the denial of an export license. It has been suggested that there is a genuine need for judicial review of the day-to-day agency decisions that have a direct impact on all exporters of controlled goods and technology.12 Review of such administrative actions currently is available only in extremely limited circumstances. EAA Section 10(j) allows an exporter who has applied to the Commerce Department for a validated export license to file suit in federal district court to compel the agency to act on the application within the deadlines set out in EAA Section 10. However, even if an exporter is successful in compelling the agency to make a decision under Section 10(j), the agency may simply choose to deny the application or return it without action. Thus, the Section 10(j) route to judicial review does not provide an opportunity to challenge the legal correctness of the agency's decision. This section is of no value to the exporter seeking judicial review of a denial of a license application.13 "Ultra Vires" and Constitutional Challenges There are two possible avenues to obtaining judicial review of agency action under the EAA that do not depend on the provisions of the EAA. These avenues of review should be available in the contexts of enforcement and other administrative actions of the Commerce Department. First, an aggrieved exporter may challenge an action of the agency or of the secretary

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment as ultra vires, or as outside the statutory grant of power to the agency under the EAA. It now seems settled that an exporter can bring such an ultra vires challenge in federal district court despite EAA Section 13(a)'s apparent preclusion of judicial review of agency action.14 The leading case holding that EAA Section 13(a) does not preclude judicial review of agency action when that action is alleged to be ultra vires is Dart v. United States.15 Dart involved a Department of Commerce enforcement proceeding against Dart, an exporter of electronic manufacturing equipment, for allegedly exporting certain restricted machinery to Czechoslovakia without obtaining the required export license. After a five-day evidentiary proceeding held pursuant to EAA Section 13(c), the ALJ determined that Commerce had failed to prove that Dart knew or reasonably should have known that an export license was necessary for the products in question, and on that basis the ALJ dismissed the charges against Dart. Commerce then appealed the ALJ's dismissal to the assistant secretary for trade administration as provided for in EAA Section 13(c). As stated above, EAA Section 13(c) empowers the secretary of commerce (or a designee) to "affirm, modify, or vacate" the determination of the ALJ in an enforcement proceeding. In Dart's case, however, the assistant secretary reversed the ALJ's dismissal of the charges and imposed a fine of $150,000 and a 15-year denial of Dart's export privileges. Dart arose before the 1988 amendments to Section 13, and at that time Section 13(c) provided that the decision of the secretary would be "final and not subject to judicial review."16 Notwithstanding Section 13(c)'s apparent preclusion of judicial review, Dart filed suit in the U.S. District Court for the District of Columbia, arguing, inter alia, that the secretary in reversing the ALJ had acted outside of statutory authority. The district court dismissed Dart's complaint on the ground that the EAA made the secretary's judgment final and unreviewable. Dart appealed that ruling to the D.C. Circuit. In the D.C. Circuit, Dart argued that even if an enabling statute purports to make a particular administrative action unreviewable, that action must still be subject to judicial review if the action was taken outside of the agency's statutory grant of authority.17 The court agreed with this argument and held that EAA Section 13 did not authorize the secretary to reverse the ALJ's determination, and therefore the secretary's action was ultra vires and reviewable under established principles of administrative law. The Dart court placed great emphasis on the "well-established presumption favoring judicial review" of agency action alleged to be without statutory authority.18 According to the Dart court, "[a]bsent a clear indication to the contrary, the logical inference is that Congress expected courts to enforce this [statutory] limitation on administrative power. Especially this is so where the administrative power can destroy . . . an individual's livelihood."19 Thus, the court held that the limitations on judicial review found in EAA Sections

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment 13(a) and 13(c) were insufficient to overcome the strong presumption in favor of reviewability of challenges to the statutory authority of agency actions.20 Although Dart arose out of an agency enforcement proceeding, the court's rationale for allowing judicial review in ultra vires situations seems equally applicable to all administrative functions taken under the EAA. It appears that no court has had occasion to apply Dart in the context of a nonenforcement administrative action, but commentators have argued that the Dart holding should not be limited to the enforcement context.21 It is important to note the limits of the Dart holding. The court made clear that not every agency deviation from the provisions of its enabling statute will give rise to an opportunity for judicial review. Rather, review will be proper only when the agency has violated the statute "on its face," that is, "there must be a specific provision of the Act which, although it is clear and mandatory, was nevertheless violated."22 Thus, judicial review on ultra vires grounds will not be available when the dispute is merely ''over statutory interpretation or challenged findings of fact."23 Although it is likely that exporters may obtain judicial review of Department of Commerce actions when the actions in question were facially outside the statutory authority granted by the EAA, this form of judicial review is less valuable to exporters than one might expect. When a court determines that a particular agency action was ultra vires, the court will not grant substantive relief to the exporter by entering a final judgment on the claim.24 Rather, the court will only remand the case to the agency with instructions to proceed within the bounds of the statute. Therefore, an exporter could wage a long and expensive court battle to have a Commerce decision vacated as ultra vires, only to have the agency again rule against the exporter, albeit in a different, procedurally correct manner.25 Finally, an exporter may be able to obtain judicial review of Commerce Department action despite EAA Section 13(a) by claiming that the agency action in question violates the exporter's constitutional rights. While Section 13(a) of the EAA precludes judicial review under the APA, the EAA does not purport to limit review under other statutes. Thus, it seems that the EAA would not prevent a constitutional challenge to Commerce action brought under the federal courts' statutory "federal question" jurisdiction.26 Aggrieved exporters have raised constitutional challenges to Commerce enforcement actions on at least two reported occasions,27 but no court has yet addressed those arguments. The instances in which an exporter will be able to assert a constitutional challenge to Commerce Department action under the EAA will be relatively rare.28 Because there is no general constitutional right to engage in international trade, and because agency regulation of commercial activity will seldom implicate individual civil liberties,29 constitutional issues are most likely to arise in the setting of an enforcement action, when the potential for

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment deprivation of an exporter's liberty or property interest could give rise to a due process challenge. But, as noted above, the 1988 amendments to the EAA now provide for judicial review of the secretary's judgment in civil enforcement proceedings. POLICY AND LEGAL ARGUMENTS FOR AND AGAINST EXPANDED JUDICIAL REVIEW OF AGENCY ACTION UNDER THE EAA The above discussion shows that, while exporters can obtain judicial review of Commerce Department action in certain limited circumstances, there currently is no way for an exporter to challenge in an impartial forum the broad range of administrative (as opposed to enforcement) decisions of the agency that directly and regularly affect the ability of U.S. exporters to do business. This situation raises the question of whether Section 13(a) of the EAA should be amended to allow APA judicial review of the day-to-day administrative functions of the Department of Commerce. There are several valid arguments for so amending Section 13(a), which will be discussed in turn. These arguments must, of course, be weighed against the countervailing interests of the executive in exercising discretion on matters that affect important national security and foreign policy interests and in not imposing on government resources the burden that an increase in litigation in this area might cause. The primary argument for subjecting agency action under the EAA to APA judicial review is that the Department of Commerce on occasion has not always administered the export control regime in accordance with the provisions of the EAA and that, as a result, exporters at times have wrongly been denied permission to export goods or have been subjected to undue delay and expense in obtaining the necessary authorization. Although in certain egregious cases an exporter may be able to obtain some limited review under the Dart case, the day-to-day agency decisions that are most important to the exporter, such as licensing decisions, interpretation of the EAA, and determining whether a particular good is on the Commodity Control List, remain insulated from meaningful review.30 There is a good deal of at least anecdotal evidence that the Commerce Department has not always carried out its licensing functions as it should; the 1982 Soviet gas pipeline case and the more recent case involving wire-bonders are two examples.31 Allowing aggrieved exporters to seek judicial review under Sections 701-06 of the APA would go a long way toward preventing this type of administrative shortcoming and would help ensure agency accountability to congressional intent as expressed in the EAA. A related argument for expanding judicial review in the export control setting stems from the changes that have occurred in the world economy since export controls were first introduced in the period immediately follow-

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment ing World War II. During the early Cold War era, the United States was the dominant source for many types of technologically advanced dual use products. Consequently, export controls in that era at least arguably were effective in preventing or delaying Soviet bloc acquisition of these types of products. Thus, during this period the benefits conferred by the export control system arguably outweighed any detriment to individual exporters or to the U.S. balance of trade. Today, however, the situation is not so simple. There is mounting evidence that the vast array of export controls that have developed over the years impose significant costs on the U.S. export industry and impair the ability of U.S. companies to compete in the world market.32 Although these costs are difficult to quantify with precision, it seems reasonable to assume that they are sufficiently large to support an argument that export controls should be imposed only in the situations specifically mandated by Congress or the President, and that they should be administered correctly and as efficiently as possible. If the foregoing is true, then judicial review of the administration of the EAA is one means that may help to ensure that the controls are imposed in the least intrusive and most cost-effective way possible. However, this clearly is not the end of the inquiry, for there are at least two government interests that must be considered. First, removing the EAA Section 13(a) exemption from APA judicial review undoubtedly would result in an increase in the costs of administering the EAA, for the Commerce Department would be forced to defend its actions in court more often than under the present law. The Commerce Department undoubtedly would raise the familiar "floodgates of litigation" argument against opening EAA administration to judicial review. There are at least three responses to this argument.33 The most straight-forward response is this: The threat of judicial scrutiny of Commerce Department actions should encourage the Department to draft its implementing regulations more clearly and to document its administrative decisions more carefully. It would, at the same time, inhibit actions that are clearly inconsistent with the statute and the Commerce Department's own regulations.34 In addition, the well-established administrative law doctrines of standing, ripeness, and exhaustion of administrative remedies would limit the availability of judicial review to situations in which the administrative process has been effectively utilized and found wanting.35 Finally, it bears mentioning that the high cost of litigation should have a deterrent effect on frivolous challenges to Commerce action.36 The second, and more substantial, argument against exposing Commerce Department action under the EAA to APA judicial review concerns the close relationship between export controls and the foreign policy and national

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment security interests of the United States. The foreign policy judgments of the executive branch have long been afforded great deference by the courts. The executive branch, and the President in particular, are thought to be best equipped to act quickly and decisively in the international sphere, and courts are thought to lack expertise at deciding questions that are basically ones of policy.37 The legislative history of the original 1949 Export Control Act reflects that this was at least a part of the rationale for exempting the EAA from judicial review.38 It seems indisputable that the fundamental decisions of foreign policy and national security entrusted by Congress to the executive branch should remain free from judicial oversight. However, this does not mean that judicial review of Commerce Department actions under the EAA could not be expanded without infringing upon the proper domain of the executive branch. An examination of other statutes that allow the executive branch to restrict exports for foreign policy or national security reasons shows that judicial review is not incompatible with effective conduct of executive branch authority. First, the International Emergency Economic Powers Act(IEEPA)39 provides the President with broad powers to restrict exports and to implement various other economic restrictions when the President has declared a state of "national emergency" as defined in IEEPA. The primary uses of the IEEPA powers thus far have been to respond to the Iranian hostage crisis and the Soviet invasion of Afghanistan; to suspend certain transactions with Nicaragua, South Africa, Libya, and Panama; to respond to the recent Iraqi occupation of Kuwait; and to continue the export controls of the EAA during periods in which the EAA has lapsed. Clearly, the purposes of IEEPA are as closely related to the realm of foreign policy as those of the EAA. Unlike the EAA, however, IEEPA does not purport to negate the judicial review provisions of the APA. The court in Nuclear Pacific, Inc. v. United States Department of Commerce40 confirmed that agency actions taken pursuant to IEEPA are subject to judicial review. Nuclear Pacific arose during a period in which the EAA had lapsed and the President had used his powers under IEEPA to perpetuate the Export Administration Regulations until the EAA could be reenacted.41 The plaintiff in Nuclear Pacific was a manufacturer of radiation-shielding windows. The Commerce Department, acting under the temporary extension of the EAR under IEEPA, denied the plaintiff's application for a license to export windows to nuclear power plants located in India. The plaintiff brought suit in federal district court, claiming that the Commerce Department's denial of the export license was arbitrary and capricious and violative of the plaintiff's due process rights.42 The Commerce Department moved to dismiss the complaint, arguing, inter alia, that EAA Section 13(a) precluded judicial review of the denial of the license application.43 However, the court held that, because the EAA had lapsed at the time of the suit, the reviewability of the agency's action was

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment governed by IEEPA rather than the EAA.44 The court went on to find that "IEEPA neither expressly nor implicitly grants the President the power to limit the jurisdiction of the federal courts."45 Perhaps more important, the court squarely rejected the Commerce Department's argument that action taken under IEEPA nevertheless should be immune from judicial review because of the "intimate relationship . . . between the control of exports and foreign policy and national security."46 The court characterized this argument as simply raising the question of whether the challenged agency action constituted a nonjusticiable political question.47 The court noted that the plaintiff merely was challenging the Commerce Department's interpretation and application of the EAR in its particular circumstances, and was not challenging any broad policy decisions of the executive branch. Consequently, the court held that the plaintiff's challenge did not raise a nonjusticiable political question and that the Commerce Department's action was reviewable.48 The court did, however, emphasize that "in reviewing [the plaintiff's] claims the court will be careful to give appropriate deference to the policy questions [sic] which the legislative and executive branches have already made."49 Thus, the Nuclear Pacific opinion supports the argument that judicial review can exist in areas that are related to foreign policy or national security. The opinion is also significant because it suggests that the familiar "political question" doctrine should serve as the dividing line between reviewable ministerial decisions and unreviewable policy determinations. Although an extended discussion of the political question doctrine is outside the scope of this paper, the doctrine is set forth succinctly in Baker v. Carr50 The Baker Court described the doctrine as follows: Prominent on the surface of any case held to involve a political question is found a textually demonstrable constitutional commitment of the issue to a coordinate political department; or a lack of judicially discoverable and manageable standards for resolving it; or the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; or the impossibility of a court's undertaking independent resolution without expressing lack of the respect due coordinate branches of government, or an unusual need for unquestioning adherence to a political decision already made; or the potentiality of embarrassment from multifarious pronouncements by various departments on one question.51 Thus, it is reasonable to argue that the political question doctrine, as set out in Baker and developed in the courts, could be applied as a principled means of preventing judicial infringement on the proper discretion of the executive branch. Another example of a federal statute that has a function similar to the EAA's but does not exempt itself from APA judicial review is the Arms Export Control Act (AECA),52 which authorizes controls on the export of

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment defense goods and services. The AECA does not contain a judicial review exemption similar to EAA Section 13(a), and judicial review of executive action under the statute presumably is limited only by traditional doctrines of judicial restraint, including the political question doctrine.53 It seems self-evident that the national security and foreign policy considerations involved in the administration of the AECA are at least as important and sensitive as those underlying the EAA. A final argument for opening Commerce Department decisions under the EAA to judicial review under the APA despite the EAA's relation to foreign policy involves the standard of review of agency action under the APA. Section 706 of the APA governs the scope of review under the APA, and provides in relevant part as follows: To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall— compel agency action unlawfully withheld or unreasonably delayed; and hold unlawful and set aside agency action findings, and conclusions found to be— arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; . . . unsupported by substantial evidence in a case subject to Sections 556 and 557 of this title [formal rulemaking or adjudication] or otherwise reviewed on the record of an agency hearing provided by statute. . . .54 The "arbitrary and capricious" level of review set out in APA Section 706 is relatively deferential to agency action.55 The deferential nature of the review should help to ensure that opening the EAA to APA judicial review would not significantly intrude into the discretion of the executive56 branch except in the most egregious instances of agency error or neglect. In addition, the level of review of agency action under the APA has been developed over many years of experience under the APA and would be a familiar standard for most practitioners and judges in the administrative law setting.57 THE EXPORT FACILITATION ACT OF 1990 On June 6, 1990, the House of Representatives passed H.R. 4653, known as the Export Facilitation Act of 1990.58 Section 118 of the bill would amend Section 13(a) of the EAA so as to remove the current general exemption from APA judicial review.59 The only Commerce Department function that would remain exempt from judicial review under H.R. 4653 is "[a]ny discretionary determination of whether a good or technology should or should ]

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment not be on the control list. . . ."60 All other final actions of the Commerce Department would be reviewable in court; enforcement actions would be appealed to the D.C. Circuit under EAA Section 13(c), and other actions would be appealable in federal district court under the APA. Section 119 of H.R. 4653 relates to the judicial review issue as well. Section 119 would amend EAA Section 15, which governs the promulgation of regulations pursuant to the EAA. Section 119 provides that "[t]he provisions of this Act shall be self-executing and shall be in effect whether or not implementing regulations are issued by the agency or department with responsibility to do so."61 This proposed addition to the EAA is intended to prevent the Commerce Department from frustrating the purpose of the EAA by failing to implement the specific provisions of the statute with appropriate regulations.62 Although the necessity of such a "self-executing" provision seems questionable, this section nonetheless would serve to emphasize that the Commerce Department cannot lag behind Congress or the President in decontrolling certain goods or performing other functions under the EAA, as has occurred at times in the past. The Senate currently is considering its own bill that would amend the EAA. At the time of this writing, this bill had been reported out of the Senate Committee on Banking, Housing, and Urban Affairs. 63 The Senate measure, however, does not contain any provision amending the EAA so as to increase the amount of judicial review available to exporters. Further, the Bush administration opposes H.R. 4653, in part because of the bill's judicial review provisions and their potential negative impact on the executive branch's autonomy over export control matters. Thus, it is particularly difficult to determine the likelihood that the sections of H.R. 4653 dealing with judicial review will become law.* CONCLUSION In its current state, the Export Administration Act provides exporters with a meaningful opportunity to seek judicial review of Commerce Department action only in the setting of a civil enforcement proceeding. Because there is evidence that exporters on occasion have been subjected to needless delay and expense due to failures in the administration of the EAA by the Commerce Department, there recently has been a renewed call for an increase in the availability of judicial review under the EAA. Eliminating the exemption of the EAA from the judicial review provisions of the Administrative Procedure Act likely would benefit U.S. exporters and would restore an important cheek on the power of the executive branch. These benefits must be weighed against *   Subsequent to the preparation of this paper, the Export Facilitation Act of 1990 was passed by the Congress but pocket vetoed by President Bush on November 16, 1990.

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment the executive branch interest in avoiding new burdens on the Commerce Department's resources and in retaining unfettered discretion as to fundamental questions of policy. This paper concludes that the benefits of subjecting Commerce Department action under the EAA to the judicial review provisions of the APA would outweigh the possible costs, so long as review is limited by the traditional constraints on court oversight of administrative actions. NOTES 1.   50 U.S.C. App. 2401–20 (Supp. V 1987). 2.   5 U.S.C. 701–06 (1988). 3.   Pub. L. No. 100–418, 102 Stat. 1361 (1988). 4.   Export Administration Act of 1979, Pub. L. No. 96-72, § 13(a), 93 Stat. 503, 531 (codified as amended at 50 U.S.C. § 2401–20 (Supp. V 1987)). This paper refers to the EAA by its Public Law section number rather than as codified in the United States Code, because this is the convention among courts, commentators, and within the act itself. 5.   See Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100–418, 2428, 102 Stat. 1361 (1988)(amending, inter alia, EAA 13). 6.   15 C.F.R. 768–99 (1990). 7.   EAA 13(c)(3). This standard of review is identical to that found in APA 706. However, under the APA judicial review provisions, appeals are to be brought in federal district court unless the enabling statute provides otherwise. See APA 703. The drafters of H.R. 4653, discussed infra, chose to retain the provision of the current EAA that places appeals from Commerce Department enforcement decisions in the Court of Appeals for the District of Columbia Circuit. See infra, pp. 331–132 (discussing H.R. 4653). 8.   EAA 11 (f). 9.   See Judicial Review Under the Export Administration Act: Hearings on H.R. 4653 before the Subcommittee on International Economic Policy and Trade of the House Committee on Foreign Affairs, 101st Cong., 2d Sess., at 2 (1990) (statement of Grant D. Aldonas representing the American Bar Association; hereinafter Aldonas Testimony). 10.   The issuance of a temporary denial order arguably is more in the nature of an enforcement proceeding than a purely administrative decision, as such orders are issued when Commerce believes an EAR violation is imminent. 11.   EAA 13(d). 12.   See Aldonas Testimony at 5–9. 13.   See Aldonas Testimony at 2; Aldonas and Henderson, Judicial Review Under the Export Administration Act: Section 13 and the Cost of Unreviewable Regulation, in The Law and Policy of Export Controls 123-24 (1990) (forthcoming book from the American Bar Association) [hereinafter Aldonas and Henderson]. 14.   See Aldonas and Henderson at 124-25. 15.   848 F.2d 217 (D.C. Cir. 1988). 16.   Dart v. United States 848 F.2d 217, 227 (D.C. Cir. 1988). 17.   See Brief of Amicus Curiae American Bar Association at 12–20, Dart v. United States, 848 F.2d 217 (D.C. Cir. 1988) (No. 86-5715). 18.   Dart, 848 F.2d at 221. 19.   Id. at 223. 20.   Commentators as well have argued that Section 13 of the EAA should not preclude judicial challenges to agency action on ultra vires grounds. See H. Moyer and L. Mabry, Export Controls as Instruments of Foreign Policy: The History, Legal Issues and Policy Lessons

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment     of Three Recent Cases 132–36 (1988) (discussing presumption of reviewability in EAA setting); Aldonas and Herderson at 124–25 (discussing Dart and judicial review in ultra vires context). C.f. Murphy and Downy, National Security, Foreign Policy and Individual Rights: The Quandry of United States Export Controls, 30 Int'l & Comp. L.Q. 791, 832–34 (1981) (arguing that all EAA enforcement activities should be subject to judicial review). 21.   See Aldonas and Henderson at 125. 22.   Dart, 848 F. 2d at 231 (quoting Council of Prison Locals v. Brewer , 735 F.2d 1497, 1501 [D.C. Cir. 1984]). 23.   Id. 24.   Id. 25.   See Aldonas and Henderson at 125. 26.   See 28 U.S.C. 1331 (Supp. V 1987) (federal question jurisdiction). 27.   See Dart v. United States, 848 F.2d 217, 219 (D.C. Cir. 1988) (declining to reach exporter's due process challenge to secretary of commerce's enforcement action); Dresser Industries, Inc. v. Balridge , 549 F. Supp. 108, 110 (D.D.C. 1982). 28.   See Aldonas and Henderson at 126. 29.   But see H. Moyer and L. Mabry, supra note 20, at 119–28 (discussing possible constitutional challenges to agency action under the EAA, including first amendment, due process, and the export clause). 30.   See Aldonas and Henderson at 130–34. 31.   See P. Ray, Export Controls 7–10 (rev. ed. 1987) (describing Soviet gas pipeline case); House Comm. on Foreign Affairs, Report to Accompany the Export Facilitation Act of 1990, H.R. 4653, H.R. Rep. No. 482, 101st Cong., 2d Sess. at 17–18 (1990) (describing wire-bonders case); Aldonas and Henderson at 131–34 (describing examples of executive branch maladministration of the EAA); Aldonas Testimony at 8–9 (same). 32.   See, e.g., National Academy of Sciences, National Academy of Engineering, and Institute of Medicine, Balancing the National Interest: U.S. National Security Export Controls and Global Economic Competition 116–33 (1987) (describing competitive effects of U.S. export controls); H. Moyer and L. Mabry at 149–56 (discussing economic costs of export controls on country imposing the controls). 33.   See Aldonas and Henderson at 135–36. 34.   Id. at 136. 35.   Id.; see also R. Pierce, S. Shapiro, and P. Verkuil, Administrative Law and Process 180–204 (1985). 36.   See Aldonas and Henderson at 136. 37.   See, e.g., United States v. Curtiss-Wright Export Corp., 299 U.S. 304 (1936). 38.   See S. Rep. No. 31, 81st Cong., 2d Sess. 7 (1949); Aldonas and Henderson at 128-29 (criticizing argument that relation between export controls and foreign policy provides basis for insulation of EAA from judicial review). 39.   50 U.S.C. 1701–06 (Supp. V 1987). 40.   No. C84-49R (W.D. Wa. June 8, 1984) (order denying motion to dismiss). 41.   See Exec. Order No. 12470, 49 Fed. Reg. 13, 099 (1984). 42.   Nuclear Pacific, supra at 2. 43.   Id. at 3. 44.   Id. at 4. 45.   Id. at 10. 46.   Id. at 12. 47.   Id., citing Baker v. Carr, 369 U.S. 186 (1962); Sanchez-Espinoza v. Reagan, 568 F. Supp. 596 (D.D.C. 1983), aff'd on other grounds, 770 F.2d 202 (D.C. Cir. 1984). 48.   Nuclear Pacific, supra at 12. 49.   Id.

OCR for page 321
Finding Common Ground: U.S. Export Controls in a Changed Global Environment 50.   369 U.S. 186 (1962). 51.   Baker v. Carr, 369 U.S. 186, 217 (1962); see also L. Tribe, American Constitutional Law 96–107 (2d ed. 1988); Redish, Judicial Review and the "Political Question," 79 Nw. U.L. Rev. 1031 (1985); Aldonas and Henderson at 137-38. 52.   22 U.S.C. 2751-96d (Supp. V. 1987). 53.   See P. Ray, Guide to Export Controls 50 (1987). 54.   5 U.S.C. 706 (1988). 55.   See R. Pierce, S. Shapiro, and P. Verkuil, supra note 35, at 357-69 (describing standard of review of agency action under APA). 56.   See Aldonas and Henderson at 136-37. 57.   Id. 58.   H.R. 4653, 101st Cong., 2d Sess., 136 Cong. Rec. H-3284-90; see also H.R. Rep. No. 482, 101st Cong., 2d Sess. 50–51 (1990). 59.   See H.R. Rep. No. 482, at 50–51. 60.   Id. 61.   Id. at 51. 62.   Id. at 18. 63.   See Staff of Senate Committee on Banking, Housing, and Urban Affairs, 101st Cong., 2d Sess., Committee Print of A Bill to Amend and Extend the Export Administration Act of 1979 (July 12, 1990).