STATE OF WASHINGTON; STATE OF CALIFORNIA; STATE OF COLORADO; STATE OF CONNECTICUT; STATE OF DELAWARE; DISTRICT OF COLUMBIA; STATE OF HAWAII; STATE OF ILLINOIS; STATE OF MAINE; STATE OF MARYLAND; COMMONWEALTH OF MASSACHUSETTS; STATE OF MICHIGAN; STATE OF MINNESOTA; STATE OF NEW JERSEY; STATE OF NEW YORK; STATE OF NORTH CAROLINA; STATE OF OREGON; COMMONWEALTH OF PENNSYLVANIA; STATE OF RHODE ISLAND; STATE OF VERMONT; COMMONWEALTH OF VIRGINIA; STATE OF NEW MEXICO; STATE OF WISCONSIN v. UNITED STATES DEPARTMENT OF STATE; ANTONY J. BLINKEN, in his official capacity as Secretary of State; DIRECTORATE OF DEFENSE TRADE CONTROLS; MIKE MILLER, in his official capacity as Deputy Assistant Secretary of State for Defense Trade; SARAH HEIDEMA, in her official capacity as Director of Policy, Office of Defense Trade Controls Policy; UNITED STATES DEPARTMENT OF COMMERCE; GINA RAIMONDO, in her official capacity as Secretary of Commerce; BUREAU OF INDUSTRY AND SECURITY; MATTHEW S. BORMAN, in his official capacity as Acting Assistant Secretary of Commerce for Export Administration; CORDELL HULL; NATIONAL SHOOTING SPORTS FOUNDATION, INC.; FREDRIC‘S ARMS & SMITHS, LLC
No. 20-35391
United States Court of Appeals, Ninth Circuit
April 27, 2021
D.C. No. 2:20-cv-00111-RAJ
FOR PUBLICATION
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
OPINION
Appeal from the United States District Court for the Western District of Washington Richard A. Jones, District Judge, Presiding
Argued and Submitted January 11, 2021 San Francisco, California
Filed April 27, 2021
Before: Jay S. Bybee
Opinion by Judge R. Nelson; Dissent by Judge Whaley
SUMMARY**
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
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
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
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.
COUNSEL
Daniel Aguilar (argued) and Sharon Swingle, Appellate Staff, Civil Division, United States Department of Justice, Washington, D.C., for Defendants-Appellants.
Brendan Selby (argued) and Kristin Beneski, Assistant Attorneys General; Jeffrey Rupert, Division Chief; Robert W. Ferguson, Attorney General; Office of the Attorney General, Seattle, Washington; Xavier Becerra, Attorney General; John W. Killeen, Deputy Attorney General; Office of the Attorney General, Sacramento, California; Philip J. Weiser, Attorney General; Grant T. Sullivan, Assistant Solicitor General; Office of the Attorney General, Denver, Colorado; William Tong, Attorney General; Maura Murphy Osborne, Assistant Attorney General; Kimberly Massicotte and Joseph Rubin; Office of the Attorney General, Hartford, Connecticut;
Neal Kumar Katyal and Jo-Ann Tamila Sagar, Hogan Lovells US LLP, Washington, D.C., for Amicus Curiae Brady.
OPINION
R. NELSON, Circuit Judge:
The U.S. Department of State (“DOS“) and Department of Commerce appeal the district court‘s order granting the motion of 22 states and the District of Columbia to
I
A
In 1976, Congress authorized the President to “designate those items which shall be considered defense articles” and “to promulgate regulations for the import and export of such articles.” International Security Assistance and Arms Export Control Act of 1976 (“Control Act“), Pub. L. No. 94-329,
Congress did not define when an item qualifies as a “defense article.” Instead, it delegated this decision to the President. See
In 1981, Congress added a provision to the Control Act requiring the President to give notice to several congressional committees 30 days “before any item is removed from the Munitions List.” International Security and Development Cooperation Act of 1981, Pub. L. No. 97-113,
In 1989, Congress added an additional wrinkle at the heart of this appeal: “The designation . . . of items as defense articles . . . shall not be subject to judicial review.” Anti-Terrorism and Arms Export Amendments Act of 1989, Pub. L. No. 101-222,
B
The Department of Commerce (“Commerce“) is empowered to regulate non-Munitions List items under the Export Control Reform Act (“Reform Act“). See
C
On May 24, 2018, DOS proposed a rule removing all “non-automatic and semi-automatic firearms to caliber .50 . . . and all of the parts, components, accessories, and attachments specifically designed for those articles” from the Munitions List. International Traffic in Arms Regulations: U.S. Munitions List Categories I, II, and III, 83 Fed. Reg. 24,198, 24,198 (proposed May 24, 2018) (“DOS Proposed Rule“). The DOS Proposed Rule clarified that technical data would remain on the Munitions List only if “directly related to the defense articles” remaining on the Munitions List.
The same day, Commerce proposed its own rule expressly assuming regulatory jurisdiction over those items removed from the Munitions List. Control of Firearms,
Guns, Ammunition and Related Articles the President Determines No Longer Warrant Control Under the United States Munitions List, 83 Fed. Reg. 24,166 (proposed May 24, 2018) (“Commerce Proposed Rule“). Commerce also provided a period of public comment.
During the Proposed Rules’ concurrent comment periods, many commentors expressed concerns that shifting 3D-printed-gun files from the Munitions List to the
DOS responded to these comments in its final rule, promulgated on January 23, 2020, explaining that the Commerce Final Rule would “sufficiently address the U.S. national security and foreign policy interests relevant to export controls.” International Traffic in Arms Regulations: U.S. Munitions List Categories I, II, and III, 85 Fed. Reg. 3,819, 3,823 (Jan. 23, 2020) (“DOS Final Rule“); see also
That same day, Commerce promulgated its final rule. Control of Firearms, Guns, Ammunition and Related Articles the President Determines No Longer Warrant Control Under the United States Munitions List, 85 Fed. Reg. 4,136, 4,140 (Jan. 23, 2020) (“Commerce Final Rule“). Whereas the DOS Proposed and Final Rules were identical in all relevant respects, the Commerce Proposed and Final Rules were not. Originally, Commerce proposed no changes to the EAR as it believed then-existing EAR regulations “struck the appropriate approach in providing for national security and foreign policy control of firearms that would transfer to the CCL.”
The day the Final Rules were promulgated, 22 states and the District of Columbia (“States“) sued DOS and Commerce, claiming both Final Rules violated the APA and seeking to preliminarily and permanently enjoin their enforcement. Washington v. U.S. Dep‘t of State (Washington III), 443 F. Supp. 3d 1245, 1253 (W.D. Wash.
2020). The district court held the Final Rules were reviewable and the States had shown a likelihood of success on their APA claims. Id. at 1255-60. The district court primarily faulted the Commerce Final Rule for its procedural errors in adding
II
We review the grant of a preliminary injunction for an abuse of discretion, the underlying legal conclusions de novo, and factual findings for clear error. Am. Trucking Ass‘n, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009). Questions of statutory interpretation are reviewed de novo. Id. Accordingly, whether Congress statutorily precluded judicial review of final agency action under
III
An individual “suffering legal wrong because of agency action” is entitled to judicial review under the APA.
can only be overcome if there is “clear and convincing” evidence that Congress intended to preclude judicial review. Abbott Lab‘ys v. Gardner, 387 U.S. 136, 140-41 (1967), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99 (1977). The texts of both the Control Act and Reform Act demonstrate Congress‘s intent to preclude judicial review of both the DOS and Commerce Final Rules.
A
We first turn to the reviewability of the DOS Final Rule. The Control Act states: “The designation . . . of items as defense articles or defense services for purposes of this section shall not be subject to judicial review.”
The phrase “designation . . . as defense articles” in
The term “designate” in
Congress‘s later addition to the Control Act supports this reading as well. In 1980, Congress required the President to review the Munitions List and determine which items, “if any, should be removed from such List.” International Security and Development Cooperation Act of 1980, Pub. L. No. 96-533,
Despite recognizing the President‘s power to remove items from the Munitions List, these amendments contain no language expressly granting the President that authority. Rather, Congress recognized what had always been implicit from
The dissent finds it “plausible” to assume that “the President‘s power to remove articles from the Munitions List stems from
But neither the 1980 nor 1981 iterations of
Rather, the Control Act‘s only plausible reading is that
Nonetheless, the dissent finds Congress‘s single mention of “removed” in
(clarifying “congressional reporting requirements are, and heretofore have been, a management tool employed by Congress for its own purposes” (citation omitted)); see also Dep‘t of Com. v. New York, 139 S. Ct. 2551, 2602 (2019) (Alito, J., concurring in part). Even if we relied on this distinction, it bolsters our conclusion: Congress distinguished removals in
The dissent also incorrectly applies the canon of expressio unius est exclusio alterius. We agree generally “that all omissions from a statute should be understood as intentional exclusions.” Dissent at 28 (citing Wheeler v. City of Santa Clara, 894 F.3d 1046, 1054 (9th Cir. 2018)). This canon only applies, however, if “it is fair to suppose that Congress considered the unnamed possibility and meant to say no to it.” Marx v. Gen. Revenue Corp., 568 U.S. 371, 381 (2013) (internal quotation marks and citation omitted). But it is not “fair to suppose” that Congress intended to exclude removal decisions from
Because
(Scalia, J., concurring in part) (“Applying the interpretive presumption of validity . . . we are to prefer the meaning that preserves to the
The States also contend
At a more fundamental level, the States’ reliance on the phrase “as defense articles” misunderstands what actually happens when DOS removes an item from the Munitions List. The States argue that removing an item is akin to designating an item as something other than a defense article. But by removing an item from the Munitions List, DOS only undesignates the defense article and no longer regulates it—DOS does not re-designate an item as a non-defense article or place it on some alternative list. Put differently, when removing items from the Munitions List, DOS merely removes those items’ designations “as defense articles.” Thus,
The dissent attempts to cabin our analysis as “[a]t best . . . a plausible account for how to interpret the statute.” Dissent at 30. But the dissent does not offer a plausible counter-reading of
B
We next turn to the reviewability of the Commerce Final Rule. The Reform Act states: “[T]he functions exercised under [the Reform Act] shall not be subject to sections 551, 553 through 559, and 701 through 706 of Title 5.”
The district court recognized as much, noting the “Commerce Rule, when viewed in isolation, appears to fall within [
Congress not only barred APA challenges to Commerce‘s Reform Act functions; it rendered them, in effect, judicially unreviewable. The federal government cannot be sued unless it first waives sovereign immunity. Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 412 (1821) (“The universally received opinion is, that no suit can be commenced or prosecuted against the United States . . . .“); see also Federalist No. 81 (Alexander Hamilton) (“It is inherent in the nature of sovereignty not to be amendable to the suit of an individual without its consent.” (emphasis omitted)). And the APA is, foremost, a waiver of sovereign immunity to allow private litigants to challenge agency action.
The dissent would hold that the bar on APA review under the Reform Act is irrelevant to this appeal given that the district court only enjoined the DOS Final Rule. Dissent at 30-31. We agree that the district court could have taken judicial notice of Commerce‘s Proposed and Final Rules. See United States v. Woods, 335 F.3d 993, 1001 (9th Cir. 2003). This is especially true given DOS considered Commerce‘s Final Rule when making the decision to remove 3D-printed-gun files from the Munitions List. See DOS Final Rule, 85 Fed. Reg. at 3,823. But contrary to the dissent‘s assertion, Dissent at 30, the district court did more than take judicial notice. Like the dissent, the district court never acknowledged that the DOS Proposed and Final Rules were identical in every substantive respect—DOS did what it said it would do. Instead, the district court grounded its substantive APA review in part on perceived procedural defects of the Commerce Final Rule, especially Commerce‘s “out of left field” decision to include § 734.7(c) in its final rule.9
Accordingly, the district court also erred by enjoining the DOS Final Rule in part for perceived procedural deficiencies in the Commerce Final Rule.
C
Because both the DOS and Commerce Final Rules are unreviewable, the States have not demonstrated the requisite likelihood of success on the merits. See Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). Absent this showing, we need not address the other preliminary injunction factors. Glob. Horizons, Inc. v. U.S. Dep‘t of Labor, 510 F.3d 1054, 1058 (9th Cir. 2007).
IV
Congress expressly barred judicial review of designations and undesignations of defense articles under the Control Act and of any functions exercised under the Reform Act. Accordingly, the district court erred in reviewing the DOS and Commerce Final Rules, and its injunction is therefore contrary to law.
VACATED and REMANDED with instructions to dismiss.
This case concerns the regulatory authority over 3D-printed gun files (hereinafter “3D gun files“), which can be used to produce undetectable, untraceable, and deadly weapons. During prior litigation, the U.S. Department of State (“DOS“) argued that the proliferation of this technology could provide terrorist and criminal organizations with access to dangerous firearms, contribute to armed conflict and terrorist or criminal acts, and undermine global export control and non-proliferation regimes. However, DOS abruptly changed course in 2018, transferring its regulatory authority over 3D gun files to the Department of Commerce (“Commerce“). The States and amicus argue that this new regime contains substantial loopholes that would allow for the widespread proliferation of this dangerous technology.
I disagree with the majority‘s holding which allows this new regulatory system to escape appropriate oversight. Therefore, I respectfully dissent.
I.
The majority‘s conclusion that DOS‘s final rule is unreviewable flows from DOS‘s argument that “designation” in
“[O]nly upon a showing of clear and convincing evidence of a contrary legislative intent should the courts restrict access to judicial review.” Abbott Labs. v. Gardner, 387 U.S. 136, 141 (1967) (citation and internal quotation marks omitted)), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99 (1977). Although the majority contends that its interpretation of the statute meets this “clear and convincing” standard, a more plausible interpretation of
Likewise, the majority disregards the States’ argument under the canon of expressio unius est exclusio alterius, which presumes that all omissions from a statute should be understood as intentional exclusions, see Wheeler v. City of Santa Clara, 894 F.3d 1046, 1054 (9th Cir. 2018), because the majority finds no basis to infer an intention by Congress to separate designations from removals. However, if Congress intended to separate removals from designations following the addition of
There are additional reasons to infer that Congress intended to distinguish between designation and removal actions. The lack of judicial oversight over designations means that the President‘s decision over which weapons to regulate is wholly discretionary,
Given these considerations, contrary to the majority‘s position, Congress‘s intention to preclude judicial review over the President‘s decision to remove items from the Munitions List is not clear and convincing. See Abbott Labs., 387 U.S. at 140-41 (restricting access to judicial review over agency action requires
II.
As to Commerce‘s final rule, I agree with the majority that this rule is unreviewable pursuant to
Although the district court considered the contents of Commerce‘s final rule in its review of DOS‘s final rule, this was appropriate given the statutory framework at issue in this case. In DOS‘s final rule, DOS stated that it was transferring its regulatory authority to Commerce and expressly invoked Commerce‘s final rule. See International Traffic in Arms Regulations: U.S. Munitions List Categories I, II, and III [hereinafter “ITAR“], 85 Fed. Reg. 3,819, 3,823 (Dep‘t of State Jan. 23, 2020). DOS even explained that transferring jurisdiction to regulate certain 3D gun files to Commerce was justified because Commerce‘s controls on technology and software for firearms previously controlled in [Munitions List] Category I(a)—and for all other items this rule removes from the [Munitions List]—sufficiently address the U.S. national security and foreign policy interests relevant to export controls. In sum, while Commerce controls over such items and technology and software are appropriate, continued inclusion of them on the [Munitions List] is not.
Id.
Not only was it appropriate for the district court to consider Commerce‘s final rule in the analysis, but to ignore it would undoubtedly lead to the conclusion that DOS‘s final rule is arbitrary and capricious. Agency action is arbitrary and capricious if the agency fails to explain or acknowledge a change in policy. See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009) (explaining that an agency must “provide [a] reasoned explanation for its action . . . [and] may not, for example, depart from a prior policy sub silentio . . .“). Considered in isolation, DOS‘s final rule removes certain 3D gun files from the Munitions List and does not provide for any replacement regulatory controls. See generally ITAR, 85 Fed. Reg. at 3,819-33. So absent Commerce‘s final rule, the subject 3D gun files would become completely unregulated, a clear change in DOS policy that would be arbitrary and capricious.
III.
As to the remaining bases raised by the parties in this appeal, I agree with the district court‘s disposition. In particular, I would affirm the district court‘s determination that the States have demonstrated a likelihood of success on the merits as to
The rulemaking at issue in this case must be considered in the context of DOS‘s prior litigation and eventual settlement with Defense Distributed, a private company intent on publishing 3D gun files on the internet. See Def. Distributed v. U.S. Dep‘t of State, 121 F. Supp. 3d 680, 686-87 (W.D. Tex. 2015). In defending the lawsuit, DOS contended that Defense Distributed‘s files could be used to create “virtually undetectable” firearms that presented a “serious risk of acts of violence,” specifically that the “proposed export of undetectable firearms technology could be used in an assassination, for the manufacture of spare parts by embargoed nations, terrorist groups, or guerrilla groups, or to compromise aviation security overseas in a manner specifically directed at U.S. persons.”
The district court denied Defense Distributed‘s motion for a preliminary injunction, and the Fifth Circuit affirmed. See Def. Distributed v. U.S. Dep‘t of State, 838 F.3d 451, 458-61 (5th Cir. 2016). The Fifth Circuit determined that “[DOS‘s] stated interest in preventing foreign nationals—including all manner of enemies of this country—from obtaining technical data on how to produce weapons and weapon parts is not merely tangentially related to national defense and national security; it lies squarely within that interest.” Id. at 458. The Fifth Circuit subsequently denied rehearing the case en banc, Def. Distributed v. U.S. Dep‘t of State, 865 F.3d 211, 212 (5th Cir. 2017), and the Supreme Court declined to review the case, Def. Distributed v. Dep‘t of State, 138 S. Ct. 638 (2018).
After the denial of certiorari, DOS suddenly and secretly changed course. DOS settled with Defense Distributed and agreed to initiate rulemaking that would remove Defense Distributed‘s 3D gun files from the Munitions List. According to an expert declaration provided by the States in the present case, the terms of the settlement permitting the export of Defense Distributed‘s 3D gun files could lead to the proliferation of untraceable “ghost guns.” This potential increase in the accessibility of “ghost guns” presents a serious threat to public safety, as “ghost guns” have already been linked to multiple mass shootings in the United States. Despite the threat to public safety posed by the settlement, the terms of the settlement were not publicly disclosed until after the comment period on DOS‘s proposed rule had ended.
This history between DOS and Defense Distributed demonstrates both the arbitrariness and capriciousness of DOS‘s final rule and the lack of adequate notice. First, with regard to the arbitrary and capricious standard, DOS argued to this Court that its final rule was simply the result of a “decade-long effort to revise the Munitions List,” and that DOS‘s position on regulating 3D gun files has never changed. Yet the terms of the settlement belie that assertion, as it appears that DOS‘s settlement with Defense Distributed was the driving force behind DOS‘s rulemaking. On this record, it is difficult to view DOS‘s final rule as anything but a change in policy, since that is what the settlement required. See Int‘l Rehab. Sciences Inc. v. Sebelius, 688 F.3d 994, 1001 (9th Cir. 2012) (explaining when an unexplained agency inconsistency can lead to a finding that the agency acted arbitrarily).
Furthermore, it appears that DOS deliberately kept its settlement with Defense Distributed a secret. According to the States’ allegations, Defense Distributed and DOS finalized their settlement agreement in April 2018, DOS and Commerce
However, rather than announcing the settlement that compelled this proposed rulemaking, DOS delayed making the settlement public until after the comment period closed. Neither at oral argument nor in its briefing to this Court has DOS explained that delay. And once the settlement did become public a few weeks after the comment period had ended, the federal government received over 106,000 emails from concerned members of the public regarding the deregulation of 3D gun files. This outpouring of public comments after the terms of the settlement came to light indicates that an ordinary interested member of the public likely did not understand that the proposed rules implicated the regulation of 3D gun files. See Nat. Res. Def. Council v. EPA, 279 F.3d 1180, 1187 (9th Cir. 2002) (adequate notice depends on whether interested parties reasonably could have anticipated the final rulemaking from the proposed rule.).
Further, the language of DOS‘s proposed rule obscured its true intent to deregulate 3D gun files, as was required under the settlement. See Louis v. U.S. Dep‘t of Labor, 419 F.3d 970, 975-76 (9th Cir. 2005) (explaining that even if “each of the components . . . are technically present” in the proposed rule, notice is still deficient if it “obscures the intent of the agency” such that it would allow “potentially controversial subject matter . . . to go unnoticed buried deep in a non-controversial publication.“). For instance, although DOS‘s proposed rule generally refers to “technical data,” it never mentions “3D gun files” or any of the other terms used to describe this technology, even though the settlement agreement specifically required rulemaking that would exclude such items from the Munitions List. See International Traffic in Arms Regulations: U.S. Munitions List Categories I, II, and III [hereinafter “Proposed Rule“], 83 Fed. Reg. 24,198, 24,201 (Dep‘t of State May 24, 2018). Additionally, rather than being transparent about the connection between the settlement and the proposed rulemaking, DOS‘s proposed rule stated only that small-caliber firearms were being removed from the Munitions List because they did not “provide the United States with a critical military or intelligence advantage,” primarily because they are “widely available in retail outlets in the United States and abroad.” Proposed Rule, 83 Fed. Reg. at 24,198. Yet this stated rationale clearly did not apply to the 3D gun files that were the subject of the settlement, as these files were not widely available in retail outlets.
On a fundamental level, I question DOS‘s candor in this case. DOS has never explained why, after securing several victories in the litigation with Defense Distributed, it decided to settle and agreed to permit the export of 3D gun files, even though DOS had argued that the export of these files would irreparably harm the United States’ national security interests. It also appears that DOS deliberately hid the settlement from the public until after the comment period had closed, as DOS‘s proposed rule never mentions “3D gun files” and instead misleadingly stated that the rule was aimed at munitions that were already widely available at retail establishments. Given this lack of explanation about the settlement and the failure to publicly disclose the settlement until after the notice-and-comment period had ended, the States were likely to succeed in showing that DOS‘s final rule was arbitrary and capricious and violated the APA‘s notice-and-comment requirements.