Court Opinion

ID: 6501080
Source: CourtListenerOpinion
Date Created: 2022-07-19 15:00:38.622112+00
Date Added: 2024-06-11T09:40:53.997642
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 25, 2022                  Decided July 19, 2022

                        No. 21-5219

         CHANGJI ESQUEL TEXTILE CO. LTD., ET AL.,
                      APPELLANTS

                             v.

    GINA RAIMONDO, SECRETARY OF COMMERCE, ET AL.,
                     APPELLEES

        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:21-cv-01798)

     James E. Tysse argued the cause for appellants. With him
on the briefs were Caroline L. Wolverton and Lide E. Paterno.

    Daniel J. Aguilar, Attorney, U.S. Department of Justice,
argued the cause for appellees. With him on the brief were
Brian M. Boynton, Principal Deputy Assistant Attorney
General, and Sharon Swingle, Attorney.

    Times Wang and Jennifer J. Rosenbaum were on the brief
for amici curiae Global Labor Justice - International Labor
Rights Forum, et al. in support of appellees.
                                2
    Before: ROGERS, MILLETT and KATSAS, Circuit Judges.

    Opinion for the Court filed by Circuit Judge KATSAS.

    KATSAS, Circuit Judge: This case presents the question
whether the Export Control Reform Act of 2018 (ECRA) and
its implementing regulations permit the Department of
Commerce to restrict exports to foreign entities that violate
human rights. The plaintiffs here contend that such restrictions
contravene clear and mandatory legal limits enforceable
through ultra vires review. The district court held that this
claim is unlikely to succeed and thus denied a preliminary
injunction. We affirm on the same ground.

                                 I

                                A

     ECRA confers various powers and duties on the Secretary
of Commerce, acting for the President and in consultation with
other agency heads. The statute also identifies various
national-security and foreign-policy interests of the United
States in the specific context of export controls.

      Section 4813(a) of Title 50 sets forth the Secretary’s
responsibilities under ECRA. It requires her to “establish and
maintain a list of foreign persons” who have been “determined
to be a threat to the national security and foreign policy of the
United States pursuant to the policy set forth in section
4811(2)(A) of this title.” 50 U.S.C. § 4813(a)(2). Section
4813(a) also requires the Secretary to establish and maintain a
list of controlled items, id. § 4813(a)(1), and to restrict exports
of these items to the listed foreign persons who present a threat,
id. § 4813(a)(4). Section 4813(a) requires the Secretary to take
various other substantive, licensing, and compliance actions
related to export controls. Id. § 4813(a)(3), (5)–(15). Finally,
                                3
it directs the Secretary to “undertake any other action as is
necessary to carry out this subchapter that is not otherwise
prohibited by law.” Id. § 4813(a)(16).

     Section 4811(2) of Title 50 states that the “national
security and foreign policy of the United States require” export
controls for purposes set out in ensuing subsections.
Subsection (A) references controlling (i) the proliferation of
weapons of mass destruction or conventional weapons, (ii) the
acquisition of destabilizing numbers or types of conventional
weapons, (iii) terrorism, (iv) military programs posing a threat
to the United States, and (v) the disruption of critical
infrastructure. Subsections (B) and (C) refer to preserving the
United States’ military superiority and strengthening its
defense industrial base. Subsection (D) refers to carrying out
“the foreign policy of the United States, including the
protection of human rights and the promotion of democracy.”

     With two exceptions not applicable here, ECRA provides
that “the functions exercised” under it are not subject to the
judicial-review provisions of the Administrative Procedure
Act. 50 U.S.C. § 4821(a).

                                B

     Acting under ECRA and its predecessor statutes, the
Department of Commerce has maintained a so-called Entity
List to restrict designated foreign parties from receiving United
States exports. A foreign party may be added to the list if it is
“involved in activities that are contrary to the national security
or foreign policy interests of the United States.” 15 C.F.R.
§ 744.11(b). Listed entities generally may not receive exports.
Id. § 744.11(a)(1) & Pt. 744, Supp. No. 4.

    In 2012, the Department began stating that human-rights
abuses are “contrary to U.S. national security or foreign policy
                                4
interests” and thus make the abusers eligible for the Entity List.
77 Fed. Reg. 71,097 (Nov. 29, 2012). But the Department did
not add anyone to the list for human-rights abuses until October
2019, when it listed several companies for oppressing various
religious and ethnic minorities in China’s Xinjiang Uyghur
Autonomous Region. 84 Fed. Reg. 54,002 (Oct. 9, 2019).
Since then, the Department has added many other Chinese
companies to the Entity List for repressing minorities in
Xinjiang. E.g., 86 Fed. Reg. 33,119 (June 24, 2021); 85 Fed.
Reg. 34,503 (June 5, 2020). It also has listed Chinese and
Burmese entities for other human-rights abuses. 86 Fed. Reg.
13,179 (Mar. 8, 2021); 85 Fed. Reg. 83,416 (Dec. 22, 2020).

                                II

     Changji Esquel Textile Co. operates a spinning mill in
Xinjiang. The United States has determined that China abuses
the human rights of Uyghurs and other religious or ethnic
minorities in Xinjiang, including by imprisonment and forced
labor. Xinjiang Supply Chain Business Advisory, 1–2 (July 13,
2021). Reports suggest that the Chinese government forcibly
relocates Uyghurs to internment camps, where they are trained
for low-skill work. The government also incentivizes Chinese
manufacturers, especially textile and garment companies, to
build factories in Xinjiang. The factories then are staffed with
“graduates” from the internment camps, who work for little to
no pay. Id. at 7–8.

     In 2020, the Department added Changji and ten other
Chinese companies to the Entity List. It stated that these
entities were “implicated in human rights violations and
abuses” against Uyghurs and other Muslim minority groups in
Xinjiang. 85 Fed. Reg. 44,159 (July 22, 2020). Specifically, it
concluded that Changji engages in “forced labor” involving
members of these groups. Id. Changji disputes this finding and
                                5
has petitioned the Department for relief, but it remains on the
Entity List.

     Changji and its parent company filed this lawsuit alleging
that the Department, in adding Changji to the Entity List,
violated ECRA and its implementing regulations, the APA, and
the Due Process Clause. They moved for a preliminary
injunction on the theory that the alleged ECRA and regulatory
violations were ultra vires. The district court denied the
motion on the ground that the plaintiffs are not likely to
succeed on this claim. Changji Esquel Textile Co. v.
Raimondo, No. 21-cv-1798, 2021 WL 5138472, at *9–11
(D.D.C. Nov. 4, 2021). We have jurisdiction to review this
interlocutory order under 28 U.S.C. § 1292(a)(1).

                                III

     A plaintiff seeking a preliminary injunction “must
establish that he is likely to succeed on the merits, that he is
likely to suffer irreparable harm in the absence of preliminary
relief, that the balance of equities tips in his favor, and that an
injunction is in the public interest.” Winter v. NRDC, Inc., 555
U.S. 7, 20 (2008). We review the denial of a preliminary
injunction for abuse of discretion. Trump v. Thompson, 20
F.4th 10, 23 (D.C. Cir. 2021).

                                A

     Although ECRA precludes APA review of the “functions
exercised under this subchapter,” 50 U.S.C. § 4821(a), the
absence of an express cause of action “does not necessarily
foreclose all judicial review,” Mittleman v. Postal Regul.
Comm’n, 757 F.3d 300, 307 (D.C. Cir. 2014). In particular, the
plaintiff “may still be able to institute a non-statutory review
action,” also known as ultra vires review. Trudeau v. FTC, 456
F.3d 178, 189 (D.C. Cir. 2006) (cleaned up). The claims here,
                                6
which challenge agency action under ECRA, are barred from
APA review, so they must proceed under the strictures of ultra
vires review. Fed. Express Corp. v. U.S. Dep’t of Com., No.
20-5337, slip op. at 10 (D.C. Cir. July 8, 2022) (FedEx).

     The leading Supreme Court decision on ultra vires review
is Leedom v. Kyne, 358 U.S. 184 (1958). That case arose from
an improper certification of a collective-bargaining unit—an
interlocutory order excluded from the judicial-review
provision of the National Labor Relations Act. See id. at 185,
187. Nonetheless, the Supreme Court held that district-court
review was available because the order was “made in excess of
[the agency’s] delegated powers and contrary to a specific
prohibition” in the NLRA. Id. at 188–89.

      Time and again, courts have stressed that ultra vires
review has “extremely limited scope.” Griffith v. FLRA, 842
F.2d 487, 493 (D.C. Cir. 1988); see Bd. of Governors of Fed.
Rsrv. Sys. v. MCorp Fin., Inc., 502 U.S. 32, 43 (1991) (Kyne
does not “authoriz[e] judicial review of any agency action that
is alleged to have exceeded the agency’s statutory authority”);
Boire v. Greyhound Corp., 376 U.S. 473, 479–80 (1964) (Kyne
was “characterized by extraordinary circumstances”). We have
described a Kyne claim as “essentially a Hail Mary pass—and
in court as in football, the attempt rarely succeeds.” Nyunt v.
Chairman, Broad. Bd. of Governors, 589 F.3d 445, 449 (D.C.
Cir. 2009).

     To prevail on an ultra vires claim, the plaintiff must
establish three things: “(i) the statutory preclusion of review is
implied rather than express; (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.”
DCH Reg’l Med. Ctr. v. Azar, 925 F.3d 503, 509 (D.C. Cir.
                                7
2019) (cleaned up). The third requirement is especially
demanding. “Only error that is patently a misconstruction of
the Act, that disregards a specific and unambiguous statutory
directive, or that violates some specific command of a statute
will support relief.” FedEx, slip op. at 11–12 (cleaned up). In
other words, an agency violates a “clear and mandatory”
statutory command only when the error is “so extreme that one
may view it as jurisdictional or nearly so.” Griffith, 842 F.2d
at 493.

     The plaintiffs contend that because the statute precludes
only APA review, but not judicial review generally, we should
relax these stringent requirements. Instead, the plaintiffs argue,
we should review the government’s interpretation of ECRA
and its implementing regulations by simply applying
traditional tools of textual analysis, as we would in considering
any agency interpretation challenged through the APA.
Recently, we rejected this very argument, instead holding that
ultra vires review imposes the “same demanding standard for
judicial intervention … even when Congress has only
withdrawn APA review, rather than cut off all statutory judicial
review.” FedEx, slip. op. at 14. And that standard requires
challengers to “show more than the type of routine error in
statutory interpretation or challenged findings of fact that
would apply if Congress had allowed APA review” or
something like it. Id. (cleaned up). For an agency
interpretation of its own organic statutes, we specifically
confirmed that there is “a delta between ultra vires review and
less-exacting review under Chevron.” Id. at 15; see Chevron
U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837 (1984). And for an
agency interpretation of its own regulations, the same
reasoning compels a delta between ultra vires review and less-
exacting review under Kisor v. Wilkie, 139 S. Ct. 2400 (2019).
(Following FedEx, we use the phrase “less-exacting review” to
                               8
mean a standard more favorable to the challengers and less
favorable to the agency.)

     The plaintiffs argue that the Department, in adding
Changji to the Entity List, flagrantly violated both ECRA and
its own regulations. As explained below, we disagree.

                               B

     Section 4813(a)(2) directs the Secretary to establish and
maintain a list of foreign persons posing a threat to American
national security and foreign policy “pursuant to the policy set
forth in section 4811(2)(A).” 50 U.S.C. § 4813(a)(2). The
plaintiffs understand this to mean that the Secretary may list
entities only to further the policy goals set forth in section
4811(2)(A). That section flags the need to control weapons
proliferation, terrorism, threatening military programs, and
interference with critical infrastructure. Id. § 4811(2)(A). But
it does not mention the protection of human rights, which is
listed as a foreign-policy goal only in section 4811(2)(D).
Thus, say the plaintiffs, the Secretary acted ultra vires in
adding Changji to the Entity List based on that consideration.

     This argument overlooks another important ECRA
provision. Section 4813(a)(16) empowers the Secretary to
“undertake any other action as is necessary to carry out this
subchapter that is not otherwise prohibited by law.” 50 U.S.C.
§ 4813(a)(16). Adding human-rights violators to the Entity
List falls comfortably within this provision. By its terms,
section 4811(2)(D) states that exports should be controlled to
“carry out the foreign policy of the United States, including the
protection of human rights and the promotion of democracy.”
Id. § 4811(2)(D). Actions taken to protect human rights thus
“carry out this subchapter” within the meaning of section
4813(a)(16). And although section 4813(a)(2) does not
independently and affirmatively authorize the Secretary to list
                                9
entities for human-rights abuses, neither does it affirmatively
prohibit her from doing so. At oral argument, the plaintiffs
themselves conceded that ECRA would likely permit the
Secretary to create a separate list of human-rights abusers. So,
listing entities for human-rights abuses cannot fairly be
described as “otherwise prohibited by law.” 50 U.S.C.
§ 4813(a)(16) (emphasis added).

     Our interpretive approach must also account for the
substantial deference due to the Executive Branch in this
context. There is a “customary policy of deference” to the
Executive “in matters of foreign affairs.” Jama v. ICE, 543
U.S. 335, 348 (2005). Likewise, we defer to Executive Branch
judgments on how best to protect national security. See, e.g.,
Ameziane v. Obama, 699 F.3d 488, 494 (D.C. Cir. 2012); CNSS
v. DOJ, 331 F.3d 918, 932 (D.C. Cir. 2003). In FedEx, we
recently confirmed that these principles require an additional
layer of deference in reviewing administrative interpretations
of statutes bearing on foreign policy and national security,
which makes it even more difficult for challengers to satisfy
the demanding ultra vires standard. FedEx, slip op. at 23–24.
Thus, we would be “hard-pressed” to set aside the Secretary’s
understanding of how section 4813(a)(16) interacts with the
rest of ECRA. Id. at 24.

     To narrow section 4813(a)(16), the plaintiffs invoke the
negative-implication canon of expressio unius. They argue that
because section 4813(a)(2) requires the Secretary to list entities
to advance the policies noted in section 4811(2)(A), it carries a
negative inference that the Secretary may not list entities for
any other reason. Yet even under Chevron, we do not lightly
apply the expressio unius canon. Instead, we repeatedly have
described the canon as “a feeble helper in an administrative
setting, where Congress is presumed to have left to reasonable
agency discretion questions that it has not directly resolved.”
                              10
Adirondack Med. Ctr. v. Sebelius, 740 F.3d 692, 697 (D.C. Cir.
2014) (cleaned up) (collecting authority). So the canon is even
more enfeebled under ultra vires review, which is more
deferential to the agency than is Chevron. And even if a
negative implication might occasionally establish a “clear and
mandatory” prohibition, no such inference is possible here,
where section 4813(a)(2) is silent on whether human-rights
violators may be listed and where section 4813(a)(16) provides
a separate grant of authority for doing so.

     The plaintiffs also raise the specific-controls-the-general
canon. They reason that section 4813(a)(2) is specific to the
Entity List whereas section 4813(a)(16) is a general grant of
residual authority, so the former must govern to the extent of
any conflict between the two. But this canon does not apply
unless the competing provisions are “irreconcilably
conflicting.” Adirondack, 740 F.3d at 698 (cleaned up). And
sections 4813(a)(2) and 4813(a)(16) do not irreconcilably
conflict on the question whether the Secretary may add human-
rights abusers to the Entity List. As explained, section
4813(a)(2) is silent on the issue, and the broad grant of
authority in section 4813(a)(16) allows it. No conflict arises
unless section 4813(a)(2) were construed to prohibit the
designation of entities for human-rights abuses by negative
implication. But that is simply a rehash of the expressio unius
argument, which fails for reasons explained above.

     The plaintiffs similarly invoke the canon against
surplusage, which disfavors construing a specific provision to
be “swallowed by” a general one. RadLAX Gateway Hotel,
LLC v. Amalgamated Bank, 566 U.S. 639, 645 (2012). The
plaintiffs contend that if section 4813(a)(16) empowered the
Secretary to make additions to the Entity List, then section
4813(a)(2)’s specific grant of authority to do so would be
surplusage. But the surplusage canon “is neither inviolable nor
                                11
insurmountable,” particularly “when agency authority is at
stake.” Adirondack, 740 F.3d at 699. Here, section 4813(a)(2)
specifically requires the Secretary to list entities to achieve
certain specified objectives, whereas section 4813(a)(16)
permits the Secretary to consider whether listing entities to
achieve other specified objectives is also necessary to carry out
the broader statutory scheme. Thus, each provision does
meaningful, independent work, despite the possibility for
partial overlap. And in any event, any latent surplusage in the
Department’s interpretation does not contravene a clear and
mandatory prohibition in the statute.

     Finally, the plaintiffs invoke the proposed United States
Innovation and Competition Act of 2021, a bill recently passed
by both houses of Congress and awaiting reconciliation. The
bill would add “serious human rights abuses” to section
4811(2)(A), which in turn would require the Secretary to add
human-rights violators to the Entity List pursuant to section
4813(a)(2). See H.R. 4521 amendment, 117th Cong. § 5211(f)
(Senate bill); H.R. 4521, 117th Cong. § 30316(g) (House bill).
According to the plaintiffs, if section 4813(a)(16) already
allowed the Secretary to add human-rights violators to the
Entity List, the proposed amendment would have no effect.
However, the proposed amendment would do meaningful work
by definitively resolving the interpretive dispute that the parties
litigate here. Moreover, the amendment would require the
Secretary to list human-rights abusers without further inquiry,
whereas the existing statutory scheme merely permits the
Secretary to do so based on her discretionary judgment about
what is necessary to carry out ECRA. In any event, the
plaintiffs’ argument depends on post-enactment legislative
history, which “is not a legitimate tool of statutory
interpretation” even under de novo review. Bruesewitz v.
Wyeth LLC, 562 U.S. 223, 242 (2011). Obviously, then, the
                                  12
unenacted bill cited by the plaintiffs does not give rise to a clear
and mandatory legal command.

                         *    *        *   *

     For an agency to act ultra vires, it must transgress “clear
and mandatory” limits that Congress has imposed on its
authority. DCH Reg’l, 925 F.3d at 509 (cleaned up). The
canons invoked by the plaintiffs can resolve statutory
ambiguity in close cases, but they do not allow us to discern
any clear and mandatory prohibition on adding entities to the
List for human-rights abuses, particularly given the breadth of
section 4813(a)(16) and the deference we owe to the Executive
Branch in matters of foreign affairs. For these reasons, the
plaintiffs are unlikely to succeed on their statutory claim.

                                  C

     The plaintiffs also assert that the Department acted ultra
vires in violating its own regulations. We question whether
regulatory violations can be the subject of ultra vires review.
None of our decisions has “placed an agency’s failure to follow
its own regulations in the ‘ultra vires’ category.” Eagle Tr.
Fund v. USPS, 811 F. App’x 669, 670 (D.C. Cir. 2020).
Instead, we have described ultra vires actions as ones that
violate clear statutory provisions. See, e.g., Mittleman, 757
F.3d at 307 (judicial review “is available only to determine
whether the agency has acted ultra vires—that is, whether it has
exceeded its statutory authority” (cleaned up)). Likewise, we
have explained that for an ultra vires claim to succeed, the
agency must “plainly act[] in excess of its delegated powers,”
Nyunt, 589 F.3d at 449 (cleaned up), and that its error must be
“jurisdictional or nearly so,” Griffith, 842 F.2d at 493. Routine
regulatory violations do not plainly transgress an agency’s
jurisdictional limits.
                               13
     Moreover, the logic of Kyne does not readily extend to
regulatory claims. As explained, that case involved a non-final
order that blatantly violated the NLRA. Although the order fell
outside the judicial-review provisions of the NLRA and APA,
the Supreme Court refused to “lightly infer” that Congress had
afforded no “judicial protection of rights it confer[red] against
agency action taken in excess of delegated powers.” 358 U.S.
at 190. Likewise, we have reasoned that “[w]hen Congress
limits its delegation of power, courts infer (unless the statute
clearly directs otherwise) that Congress expects this limitation
to be judicially enforced.” Dart v. United States, 848 F.2d 217,
223 (D.C. Cir. 1988). In other words, Congress presumably
wants courts to stop agencies from ignoring specific limits that
it has imposed. This reasoning does not naturally carry over to
claims that an agency has violated its own rules.

     In any event, even assuming that ultra vires review
extends to some regulatory claims, the claim here would still
fail. The plaintiffs invoke the following regulation governing
which foreign parties may be added to the Entity List:

       Entities for which there is reasonable cause to
       believe, based on specific and articulable facts,
       that the entity has been involved, is involved, or
       poses a significant risk of being or becoming
       involved in activities that are contrary to the
       national security or foreign policy interests of
       the United States and those acting on behalf of
       such entities may be added to the Entity List
       pursuant to this section.

15 C.F.R. § 744.11(b). In adding Changji to the Entity List, the
Department stated that the company “ha[s] been implicated in
human rights violations and abuses in the implementation of
China’s campaign of repression, mass arbitrary detention,
                                14
forced labor and high-technology surveillance against
Uyghurs, Kazakhs, and other members of Muslim minority
groups” in Xinjiang. 85 Fed. Reg. at 44,159. “Specifically,”
the order went on, Changji is “engaging in activities contrary
to the foreign policy interests of the United States through the
practice of forced labor involving members of Muslim minority
groups.” Id. The plaintiffs argue that none of this shows
“specific and articulable facts” to support the listing.

     Ultra vires review presents no occasion to flyspeck an
order’s factual findings or explanation. As the Supreme Court
has explained, “[t]he Kyne exception is a narrow one,” which
does not extend to claims that an agency has engaged in “an
erroneous assessment of the particular facts” before it. Boire,
376 U.S. at 481. Similarly, we explained in Dart that ultra
vires review is limited to “‘facial’ violations” of statutes, which
“typically raise issues—unrelated to the facts of the particular
cases—that need only be resolved by the courts once.” 848
F.2d at 222. Considering the adequacy of the agency’s
explanation, or the degree of support for its factual findings,
would contravene these basic principles. It would also largely
replicate APA-style review for substantial evidence and for
arbitrariness, see 5 U.S.C. § 706(2); Motor Vehicle Mfrs. Ass’n
v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 40–44 (1983),
despite the express statutory bar on such review.

     For these reasons, the plaintiffs are unlikely to succeed on
their regulatory claim.

                                D

     Finally, the plaintiffs argue that even if they are unlikely
to succeed on the merits, they are still entitled to relief because
the other preliminary-injunction factors strongly favor them.
In the past, this Court has applied a “sliding scale” approach
under which “a strong showing on one factor could make up
                               15
for a weaker showing on another.” Sherley v. Sebelius, 644
F.3d 388, 392 (D.C. Cir. 2011). This approach is arguably in
tension with intervening Supreme Court decisions stating
without qualification that “a party seeking a preliminary
injunction must demonstrate, among other things, ‘a likelihood
of success on the merits.’” Munaf v. Geren, 553 U.S. 674, 690
(2008) (citation omitted); see also Winter, 555 U.S. at 20. In
the past, we have noted this tension but reserved the question
whether the sliding-scale approach remains valid. Archdiocese
of Wash. v. WMATA, 897 F.3d 314, 334 (D.C. Cir. 2018). We
follow the same approach here because, even under the sliding-
scale approach, the movant must raise at least a “serious legal
question on the merits.” Sherley, 644 F.3d at 398 (cleaned up).
For the reasons given above, the plaintiffs have failed to do so.

                               IV

     The plaintiffs threw “a Hail Mary pass,” Nyunt, 589 F.3d
at 449, and like many other litigants pressing ultra vires claims,
they have come up short. We affirm the denial of a preliminary
injunction.

                                                     So ordered.