Summary
**Federal Express Corporation v. U.S. Department of Commerce, 2022, D.C. Cir.** **Topics:** Export Controls Act; strict liability for aiding/abetting; ultra vires review; national security deference; due process fair notice. **Holdings:** The D.C. Circuit affirmed dismissal of FedEx's ultra vires challenge to Commerce's strict-liability interpretation of 15 C.F.R. § 764.2(b) (civil aiding/abetting of export violations). The court held that the regulation's omission of a mens rea requirement was consistent with the 2018 Export Controls Act, which omits a mental state for civil aiding/abetting while requiring willfulness for criminal penalties. Applying the demanding ultra vires standard—requiring a patent violation of statutory authority—the court found no such violation, noting circuit precedent upholding strict liability for "causing" violations (Iran Air v. Kugelman) and emphasizing deference to the Executive Branch in national security and foreign affairs. The court also rejected FedEx's common-law aiding/abetting argument and its due process fair notice claim, as the regulation's text and long-standing interpretation provided adequate notice.
Topics
Practice areas
Questions Presented
- Whether the Department of Commerce acted ultra vires by interpreting 15 C.F.R. § 764.2(b) to impose strict liability for aiding and abetting export control violations.
- What standard applies to ultra vires review when Congress has only withdrawn APA review, and whether FedEx satisfied that standard.
Holdings
- Ultra vires review imposes the same demanding standard in all cases, including those where only APA review is foreclosed. The challenger must show that the agency action is a 'clear departure from its statutory mandate' or 'blatantly lawless,' and that the agency 'contravened a clear and specific statutory mandate.'
- Commerce's interpretation of its regulation to impose strict liability for aiding and abetting export control violations is not ultra vires. The regulation falls squarely within statutory authority, is supported by circuit precedent, and is entitled to deference in matters of national security and foreign policy.
Key quotations
“No person may cause or aid, abet, counsel, command, induce, procure, permit, or approve the doing of any act prohibited, or the omission of any act required by [the 2018 Export Controls Act], the Export Administration Regulations, or any order, license or authorization issued thereunder.” (2)
“Such review, commonly known as an ultra vires claim, is available where (i) there is no express statutory preclusion of all judicial review; (ii) 'there is no alternative procedure for review of the statutory claim; and (iii) the agency plainly acts in excess of its delegated powers and contrary to a specific prohibition in the statute that is clear and mandatory.'” (10-11)
“For all of those reasons, we hold that Commerce’s regulation, 15 C.F.R. § 764.2(b), and its strict-liability interpretation of it are not ultra vires.” (31)
Factual background
FedEx is an international express courier. In 2011 and 2017, the Bureau of Industry and Security issued charging letters alleging that FedEx violated 15 C.F.R. § 764.2(b) by transporting items to restricted entities (Syria, UAE, China, France, Pakistan) without required licenses. FedEx settled both matters, paying civil penalties. Subsequently, FedEx filed a complaint challenging Commerce's strict liability interpretation of the aiding and abetting regulation as ultra vires and a due process violation. The district court dismissed the complaint, and FedEx appealed only the ultra vires claim.
Procedural history
FedEx filed a complaint challenging the Department of Commerce's strict liability interpretation of 15 C.F.R. § 764.2(b) as ultra vires and a violation of due process. The district court granted Commerce's motion to dismiss. FedEx appealed only the dismissal of its ultra vires claim.