HONORABLE RICHARD A. JONES 1
14 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 15 AT SEATTLE
16 STATE OF WASHINGTON; et al., 17 Plaintiffs, Case No. 2:20-cv-00111-RAJ 18 v. ORDER GRANTING IN PART 19 PLAINTIFF STATES’ MOTION UNITED STATES DEPARTMENT OF FOR PRELIMINARY 20 STATE; et al, INJUNCTION
21 Defendants. 22 I. INTRODUCTION 23 This matter comes before the Court on the Plaintiff States’ Motion for Preliminary 24 Injunction (“Motion”). Dkt. # 55. For the reasons below, the Court GRANTS IN PART 25 the Motion. 26 27 1 II. BACKGROUND 2 Plaintiffs are seventeen States challenging companion regulations promulgated by 3 the Department of State and the Department of Commerce. This action is the latest in a 4 series of litigation over export controls on technical data related to 3-D printed firearms. 5 The Court examines the statutory framework and prior litigation before turning to its 6 analysis. 7 A. Arms Export Control Act (“AECA”) 8 The AECA regulates the export of arms, ammunition, and other military and 9 defense technology. 22 U.S.C. § 2778(a)(1). It delegates to the President the task of 10 creating the United States Munitions List (“Munitions List”), which designates certain 11 items as defense articles and defense services. Id. The term “defense articles” specifically 12 includes “technical data recorded or stored in any physical form, models, mockups or 13 other items that reveal technical data directly relating to items designated in” the 14 Munitions List. 22 C.F.R. § 120.6. Category I of the Munitions List includes “Firearms, 15 Close Assault Weapons and Combat Shotguns.” 22 C.F.R. § 121.1. “Nonautomatic and 16 semi-automatic firearms to caliber .50 inclusive,” their “components, parts, accessories 17 and attachments,” and related “technical data” are currently within Category I. Id. § 18 121.1(a), (h), (i). 19 The AECA also tasks the President with promulgating regulations for the import 20 and export of such defense articles and services. 22 U.S.C. § 2778(a)(1). The President 21 has delegated his authority to promulgate implementing regulations to the Secretary of 22 State. Those regulations, the International Traffic in Arms Regulations (“ITAR”), are 23 administered by the DDTC [Directorate of Defense Trade Controls] and its employees. 22 24 C.F.R. § 120.1(a). Under ITAR, persons who want to export items on the Munitions List 25 must first obtain a license from the Department of State (“State Department”). 26 B. Export Control Reform Act 27 The Department of Commerce (“Commerce”) regulates exports pursuant to the 1 Export Control Reform Act of 2018, 50 U.S.C. §§ 4801-52 (“ECRA”), which directs that 2 export controls be used to “further significantly the foreign policy of the United States,” to 3 “fulfill [the] declared international obligations” of the United States, or to limit exports 4 that would make a “significant contribution to the military potential of any other country 5 or . . . would prove detrimental to . . . national security.” Id. § 4811(1)(A)-(B). 6 To carry out these purposes, the ECRA directs that Commerce shall “establish and 7 maintain a list of items that are controlled”—the Commerce Control List (“CCL”)—and 8 “prohibit unauthorized exports, reexports, and in-country transfers of controlled items.” 50 9 U.S.C. § 4813(a)(1), (3). The Export Administration Regulations (“EAR”), 15 C.F.R. 10 parts 730-774, implement the ECRA, identifying the items and activities subject to the 11 jurisdiction of the EAR as well as those not subject to the EAR. The EAR’s definition of 12 “export” is comprehensive, and extends to, inter alia, “(1) An actual shipment or 13 transmission out of the United States, including the sending or taking of an item out of the 14 United States, in any manner;” or “(2) Releasing or otherwise transferring ‘technology’ or 15 source code (but not object code) to a foreign person in the United States (a ‘deemed 16 export’).” 15 C.F.R. § 734.13(a). 17 C. Prior Litigation 18 Computer software for the production of a Category I firearm or its components 19 using a 3-D printer (“3-D gun files”), such as computer aided design (CAD) files, is 20 “technical data” subject to the AECA and ITAR. Since about 2013, it had been the 21 government’s position that posting 3-D gun files on the internet was an “export” subject to 22 the AECA and ITAR. Defense Distributed, a private company with the stated objective of 23 facilitating global, unrestricted access to firearms and evading gun-safety laws, challenged 24 the government’s authority in a lawsuit filed in the United States District Court for the 25 Western District of Texas. Distributed v. U.S. Dep’t of State, C15-0372RP (W.D. Tex). 26 The company alleged that the government’s prepublication approval requirements under 27 ITAR were unconstitutionally applied to its gun-related speech. Id. Defense Distributed 1 sought an injunction so that it could post its 3-D gun files on the internet without 2 restriction to allow people to easily produce their own weapons and weapon parts using 3 relatively affordable and readily available equipment. 4 Throughout the litigation, the government argued that the export of certain Defense 5 Distributed 3-D gun files could “cause serious harm to U.S. national security and foreign 6 policy interests” that “warrant subjecting [the files] to ITAR’s export licensing regime.” 7 Dkt. # 32 at 19-20 (W.D. Tex.). The government specifically expressed that the 3-D gun 8 files could be modified to create lethal firearms that were “virtually undetectable” by 9 conventional security measures such as metal detectors. Additionally, the government 10 contended that permitting unrestricted access to the 3-D gun files on the internet would 11 increase the risk of their use in assassinations, in manufacturing spare component parts by 12 embargoed nations, terrorist groups, or guerrilla groups, or in compromising aviation 13 security overseas in a manner specifically directed at U.S. persons or interests. Id. The 14 government also argued that “the available alternatives clearly would be ineffective at 15 preventing the broad circumvention of export controls for munitions technology.” Dkt. # 16 92 at 27 (W.D. Tex.). The district court ultimately denied Defense Distributed’s motion 17 for preliminary injunction and the Fifth Circuit affirmed. Defense Distributed v. U.S. 18 Dep’t of State, 838 F.3d 451, 458 (5th Cir. 2016). The Fifth Circuit highlighted the State 19 Department’s very strong public interest in national defense and national security, noting 20 that the unregulated export of the 3-D gun files could cause permanent harm. Id. at 458. 21 In April 2018, Defense Distributed and the federal government reached a tentative 22 agreement to settle the dispute. Dkt. # 57 at 75-83. Pursuant to the settlement, the State 23 Department reversed its prior regulatory and litigation positions on publishing 3-D gun 24 files. It now agreed to (i) publish a notice of proposed rulemaking and final rule that 25 removes certain 3-D gun files from the Munitions List; (ii) announce a temporary 26 modification of the Munitions List to allow immediate distribution while the final rule was 27 in development; and (iii) issue a letter to Defense Distributed and others advising that 3-D 1 gun files were approved for public release and unlimited distribution. Id. 2 One month later, on May 24, 2018, the State Department published a notice of 3 proposed rulemaking that implicated the technical data at issue in the Defense Distributed 4 litigation. 83 Fed. Reg. 24,198 (May 24, 2018). By the proposed rule, the State 5 Department would no longer have the authority to control the export of certain 3-D gun 6 files, but instead Commerce would control such exports under a companion regulation. 7 See 83 Fed. Reg. 24,166 (May 24, 2018). During the comment period, some members of 8 the public recognized the regulation implicated 3-D gun files and raised concerns that 9 Commerce lacked authority to control the export of “published” items. Dkt. # 80-2; Dkt. 10 # 85-1, ¶ 51. They argued that these regulations would ineffectively guard against the 11 proliferation of 3-D gun files posted on the internet. Id. The public comment on the 12 proposed rules ended on July 9, 2018. The Defense Distributed settlement agreement was 13 made public the following day. As contemplated by the settlement agreement, the 14 temporary modification was published and the letter to the private defendants was issued 15 on July 27, 2018. 16 The temporary modification of the Munitions List was the subject of a 2018 lawsuit 17 filed by eight States in this Court. State of Washington v. United States Department of 18 State, No. C18-1115RSL (W.D. Wash.) (“State of Washington”). Addressing the 19 government’s jurisdictional challenges, this Court ruled that issues concerning the State 20 Department’s process for removing items from the Munitions List, its compliance with the 21 standards furnished by AECA, and the adequacy of the agency’s analysis of and 22 explanation for its decision were subject to judicial review under the Administrative 23 Procedure Act (“APA”). State of Washington, 318 F.Supp.3d 1247, 1255 (W.D. Wash. 24 2018). The Court later concluded that the government’s decision to modify the Munitions 25 List was arbitrary and capricious and procedurally improper in violation of the APA. 26 2019 WL 6892505 (W.D. Wash. Nov. 12, 2019). 27 On January 23, 2020, the State Department published its final rule revising the 1 Munitions List. 85 Fed. Reg. 3819 (Jan. 23, 2020) (“State Rule”). The State Rule 2 confirmed the removal of “all non-automatic firearms up to .50 caliber” and “related 3 technical information” from Category I. The removed items would again be subject to a 4 companion Commerce regulation. See 85 Fed. Reg. 4136 (Jan. 23, 2020) (“Commerce 5 Rule”). Collectively, the Final Rules also announced a new jurisdictional change 6 pertaining to 3-D gun files: Notwithstanding Commerce’s jurisdictional exemption for 7 “published” technology or software, it would now retain jurisdiction over files “for the 8 production of a firearm, or firearm frame or receiver” that are “made available by posting 9 on the internet in electronic format” and are “ready for insertion” in a 3-D printer or 10 similar equipment. Id. The Final Rules are set to go into effect on March 9, 2020. 11 On January 23, 2020, the States filed this lawsuit challenging the Final Rules under 12 the APA. Dkt. # 1. The States contend that the Final Rules amount to a toothless 13 prohibition on 3-D gun files that will lead to their widespread proliferation, including on 14 the internet. After amending their complaint, the States filed this motion for a preliminary 15 injunction. Dkt. # 55. On February 11, 2020, the National Shooting Sports Foundation, 16 Inc. and Fredric’s Arms & Smiths, LLC jointly moved to intervene as defendants. Dkt. # 17 63. The Court considered and granted their motion for the reasons indicated in their 18 briefing. On February 24, 2020, the federal defendants, including Commerce and the 19 State Department, and the intervenor defendants filed their oppositions. On February 27, 20 2020, the States filed their reply. Dkt. # 87. On February 28, 2020, the Court held oral 21 argument. Dkt. # 88. By March 5, 2020, the parties filed post-hearing briefing on the 22 scope of injunctive relief. Dkt. ## 89-92. The Court has considered all submissions and 23 argument to date. 24 III. LEGAL STANDARD 25 To issue a preliminary injunction, the Court must determine whether plaintiffs (1) 26 are likely to succeed on the merits of their claim; (2) are likely to suffer irreparable harm 27 in the absence of preliminary relief; (3) have shown that the balance of equities tips in 1 their favor, and (4) have shown that an injunction is in the public interest. Short v. Brown, 2 893 F.3d 671, 675 (9th Cir. 2018) (citing Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 3 7, 20 (2008)). In the alternative, “if a plaintiff can only show that there are serious 4 questions going to the merits—a lesser showing than likelihood of success on the merits— 5 then a preliminary injunction may still issue if the balance of hardships tips sharply in the 6 plaintiff’s favor, and the other two Winter factors are satisfied.” Feldman v. Ariz. Sec. of 7 State’s Office, 843 F.3d 366, 375 (9th Cir. 2016) (quoting Shell Offshore, Inc. v. 8 Greenpeace, Inc., 709 F.3d 1281, 1291 (9th Cir. 2013)) (internal quotation marks omitted, 9 emphasis in original). 10 IV. DISCUSSION 11 The States bring three claims under APA. First, they claim that the federal 12 defendants failed to abide by the APA’s notice-and-comment requirements. Second, they 13 claim that the federal defendants’ actions were “arbitrary and capricious” in failing to 14 consider relevant national security and foreign policy interests. Their final claim argues 15 that the State Rule is contrary to the AECA. 16 A. Standing 17 As they did in State of Washington, the federal defendants challenge the Court’s 18 jurisdiction over this matter. The basis for the challenge remains the same: the States 19 cannot meet prudential standing requirements and present a non-justiciable political 20 question. The Court agrees with the States that the analysis is no different here than it was 21 in State of Washington. 22 To present a justiciable case or controversy under Article III, plaintiffs must 23 demonstrate an “injury in fact” that is “fairly traceable” to the defendants’ actions and will 24 likely be redressed by a favorable decision. See Lujan v. Defenders of Wildlife, 204 U.S. 25 555, 560 (1992). In an APA action, a state alleging a procedural violation has standing if 26 there is a possibility that the relief requested will prompt the agency to reconsider the 27 decision allegedly causing harm. Mass. v. EPA, 549 U.S. 497, 517 (2007). In addition, a 1 State has a legally protectable interest if it has a sovereign, quasi-sovereign, or proprietary 2 interest that would be impacted by the litigation. Dep’t of Fair Emp’t & Hous. v. Lucent 3 Techs., 642 F.3d 728, 753 n.5 (9th Cir. 2011). 4 This Court in State of Washington ruled that the States sufficiently alleged harm to 5 their legally protectable sovereign interests under the traditional standing analysis. 6 Specifically, the Court found that the government’s alleged failure to provide notice or 7 make a reasonable evaluation of the risks and benefits of the proposed action would 8 greatly impact aviation and other security breaches, as well as gun control laws both 9 abroad and at home. 318 F.Supp.3d at 1255-56. The Court also concluded that the States 10 had standing to bring a procedural APA claim because there was a possibility that 11 compelling compliance with the specified procedures would impact the decision-making 12 process: “Forcing the federal defendants to evaluate the effect of the proposed delisting on 13 world peace, national security, and the foreign policy of the United States (factors which 14 Congress intended the President or his designee to consider) may also prompt a 15 reconsideration of the decision to remove the CAD files from the [Munitions List].” Id. 16 The federal defendants try to distinguish the States’ case for standing here but fall 17 short in doing so. They again disclaim any possible connection between a shift in the 18 government’s export-control regulations and domestic injury to States—an argument 19 made and rejected in State of Washington. 318 F.Supp.3d at 1255 (describing this 20 argument as “so myopic and restrictive as to be unreasonable”). That argument still fails 21 now as neither the global nature of the internet nor the substantial risk of harm alleged has 22 changed.1 The federal defendants also argue that, since the State Department has already 23 reconsidered its decision to remove items from Munitions List and issued final rules to 24 that effect, the States cannot show traceability. Dkt. # 82 at 32. However, claims resting 25 1 The government also contends that the States’ injury in State of Washington was based 26 on “particular files” that would produce undetectable firearms whereas the injury alleged here is not. Dkt. # 84 at 31. However, the States allege that those files and similar ones 27 will be impacted by the Final Rules. See Dkt. # 54 at ¶¶ 103, 106. 1 on a procedural injury, including failure to provide notice and comment, relax some 2 standing requirements. Ctr. for Biological Diversity v. Mattis, 868 F.3d 803, 817 (9th Cir. 3 2017). There is also little to suggest that further reconsideration could not prompt change 4 of the agency’s decisions—e.g., changing the adequacy of Commerce’s jurisdiction over 5 the 3-D gun files. See Massachusetts, 549 U.S. at 518. Accordingly, the Court finds that 6 States have shown Article III standing. 7 Plaintiffs suing under the APA must also show their interests fall “arguably within 8 the zone of interests” protected or regulated by the violated statute. Match-E-Be-Nash-She 9 Wish Band of Pottawatomi Indians v. Patchak, 567 U.S. 209, 224 (2012). This is met here. 10 The States’ interest in curbing violence, assassinations, terrorist threats, aviation and other 11 security breaches, and violations of gun control laws within their borders is at least 12 marginally related to the national security interests protected or regulated by the AECA and 13 the ECRA. 22 U.S.C. § 2778(a)(1) (declaring the security of the United States as an 14 objective underlying the AECA); 50 U.S.C. § 4811 (same as to the ECRA). 15 B. Political Question 16 While the political question doctrine raises both jurisdictional and prudential 17 concerns, “it is at bottom a jurisdictional limitation imposed on the courts by the 18 Constitution, and not by the judiciary itself.” Corrie v. Caterpillar, 503 F.3d 974, 981 (9th 19 Cir. 2007). “[J]udicial restraint in the area of foreign affairs is often appropriate because 20 such cases ‘frequently turn on standards that defy judicial application, or involve the 21 exercise of a discretion demonstrably committed to the executive or legislature.’” Harbury 22 v. Hayden, 522 F.3d 413, 419 (D.C. Cir. 2008) (quoting Baker v. Carr, 369 U.S. 186, 211 23 (1962)). 24 The Court is not persuaded that this case lies beyond judicial cognizance. The 25 federal defendants have framed this dispute as the States attacking whether a particular 26 item is on the Munition List, a matter of policy entrusted to Congress and the President. 27 Dkt. # 84 at 27 (citing United States v. Mandel, 914 F.2d 1215, 1223 (9th Cir. 1990)). 1 This is incorrect. The States again are challenging whether federal agencies complied 2 with the APA in promulgating the Final Rules. “This is neither a political question nor 3 one committed to the agency’s discretion.” State of Washington, 2019 WL 5892505, at 4 *5. 5 C. Likelihood of Success on the Merits 6 The APA sets forth the extent of judicial authority to review executive agency 7 action. Under the APA, the district court may not set aside an agency’s action unless it is 8 “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law ...” 9 5 U.S.C. § 706(2)(A); Safari Aviation Inc. v. Garvey, 300 F.3d 1144, 1150 (9th Cir. 10 2002). Review under this standard is narrow, and the court must not substitute its 11 judgment for that of the agency. Id. at 1150. 12 1. Exemptions Under the AECA and ECRA – 13 The federal defendants argue that the States cannot succeed on the merits because 14 the Final Rules are explicitly exempt from judicial review under the APA. Although the 15 APA embodies a “basic presumption of judicial review,” such review is not available “to 16 the extent that” a relevant statute precludes it, § 701(a)(1), or the agency action is 17 “committed to agency discretion by law,” § 701(a)(2). 18 The federal defendants point specifically to § 4821 of the ECRA and § 2778(h) of 19 the AECA. Section 4821(a) exempts the “functions exercised” under the ECRA from the 20 judicial review provisions of the APA. The States’ challenge to the Commerce Rule, 21 when viewed in isolation, appears to fall within this exemption. Insofar as § 4821 bars 22 judicial review of the Commerce Rule, however, the States argue that the agencies’ “joint 23 action” of removing items from the Munitions List and transferring jurisdiction to 24 Commerce is still reviewable via the State Rule.2 Dkt. # 87 at 8. This Court has 25 2 The State Department referred to the process as an ongoing interagency effort in which 26 the Department coordinated principally with the Departments of Defense and Commerce and the Department of Justice’s Bureau of Alcohol, Tobacco, Firearms and Explosives to 27 develop revisions to the Munitions List and CCL. Dkt. # 85-1 at ¶ 38. 1 acknowledged that § 2778(h)’s prohibition on judicial review does not apply to removals 2 from the Munitions List. See State of Washington, 318 F.Supp.3d at 1260 (“The decision 3 at issue here, however, is the removal of an item from the [Munitions List], which 4 Congress chose not to make unreviewable.”). Accordingly, the Court will evaluate joint 5 actions to the extent that they are reflected in the decision to remove the 3-D gun files 6 from the Munitions List. 7 2. Foreign Affairs Exemption 8 The federal defendants argue separately that the APA’s foreign affairs exemption 9 exempts the State Rule from the notice-and-comment requirement. Under the foreign 10 affairs exception, the APA’s notice-and-comment procedures do not apply “to the extent 11 that there is involved—a ... foreign affairs function of the United States.” 5 U.S.C. § 12 553(a)(1); E. Bay Sanctuary Covenant v. Trump, 932 F.3d 742, 775 (9th Cir. 2018). The 13 purpose of the exemption is to allow more cautious and sensitive consideration of those 14 matters which “so affect relations with other Governments that, for example, public rule- 15 making provisions would provoke definitely undesirable international consequences.” 16 H.Rep. No. 1980, 69th Cong., 2d Sess. 23 (1946); see also, S.Rep. No. 752, 69th Cong., 17 1st Sess. 13 (1945). Courts have required the government to do more than merely say that 18 a rule “implicates” foreign affairs and have disapproved use of the exception where the 19 Government has failed to offer evidence of consequences that would result from 20 compliance with the APA’s procedural requirements. E. Bay Sanctuary Covenant, 932 21 F.3d 742 at 776. 22 The federal defendants state that the Final Rules are part of a decade-long reform to 23 the export-control system. Since 2010, the State Department has published 26 final or 24 interim rules with the goal of removing “less sensitive items from the [Munitions List].” 25 Dkt. # 85-1 at ¶¶ 33-34. With this history, the evidence of undesirable international 26 consequence needed to invoke the foreign affairs exemption is missing. E.g., Rajah v. 27 Mukasey, 544 F.3d 427, 437 (2d Cir. 2008) (rule responding to September 11, 2001 1 attacks). “The court is simply unwilling to apply the exception without some evidence to 2 support its application.” Doe v. Trump, 288 F. Supp. 3d 1045, 1076 (W.D. Wash. 2017). 3 The federal defendants argue that 22 C.F.R. § 128.1, an AECA regulation, 4 demonstrates that the exemption applies. Section 128.1 acknowledges the Secretary of 5 State’s power under the AECA “to make decisions on whether license applications or 6 other written requests for approval shall be granted, or whether exemptions may be used,” 7 and “to revoke, suspend or amend licenses or other written approvals whenever the 8 Secretary deems such action deemed advisable.” The section goes onto say the 9 “administration” of the AECA is a foreign affairs function within the meaning of the 10 APA. Id. The federal defendants claim that removing an item from the Munitions List 11 falls within § 128.1’s purview. However, nothing in the language of § 128.1, or in the 12 AECA’s predecessor statute, supports the federal defendants’ expansive reading. See Pub. 13 L. No. 83-665, 68. Stat. 832, 848 (1954) (granting authority to designate defense articles 14 for munitions control to the President); 20 Fed. Reg. 6250, 6256 (Aug. 26, 1955) 15 (excluding the designation of such articles and subsequent registration and licensing 16 decisions from APA review). The Court concludes that the foreign affairs exception is 17 inapplicable. 18 3. Notice and Comment 19 The Court turns to whether the federal defendants complied with notice-and- 20 comment procedures in promulgating the State Rule. The APA requires an agency to 21 notify the public of—and provide the public with an opportunity to comment on—the 22 agency’s intention to change an existing regulation or to promulgate a new regulation. 23 See 5 U.S.C. §§ 553(b), 553(c), 551(5). Adequate notice is crucial to “ensure that agency 24 regulations are tested via exposure to diverse public comment,” “to ensure fairness to 25 affected parties,” and “to give affected parties an opportunity to develop evidence in the 26 record to support their objections to the rule and thereby enhance the quality of judicial 27 review.” Int’l Union, United Mine Workers of Am. v. Mine Safety & Health Admin., 626 1 F.3d 84, 95 (D.C. Cir. 2010) (citation omitted). 2 The Ninth Circuit has held that when a court considers whether an agency has 3 satisfied the APA’s notice requirement, the “essential inquiry focuses on whether 4 interested parties reasonably could have anticipated the final rulemaking from the draft 5 [proposal].” Nat. Res. Def. Council v. EPA, 279 F.3d 1180, 1186 (9th Cir. 2002). In 6 determining this, courts should consider “whether a new round of notice and comment 7 would provide the first opportunity for interested parties to offer comments that could 8 persuade the agency to modify its rule.” Id. (quoting Am. Water Works Ass’n v. EPA, 40 9 F.3d 1266, 1274 (D.C. Cir. 1994)). While a final rule need not be identical to the draft 10 proposal, it must be a logical outgrowth of the proposed rule. Id. The States argue that 11 the federal defendants gave no notice of their intent to regulate 3-D guns files. Dkt. # 55 12 at 14. Specifically, the States complain that the notices of proposed rulemaking 13 (“NPRMs”) failed to mention 3-D printed guns at all and otherwise gave no indication that 14 3-D gun files would be subject to unique jurisdiction under Commerce. Moreover, 15 because the settlement agreement with Defense Distributed was not revealed until after the 16 public comment period closed, the States argue that they were denied a right to comment 17 on the “hidden-but-intended” effect of the Rules. Id. at 14. 18 Binding case law instructs that where a final rule’s substance is “not foreshadowed 19 in proposals and comments advanced during the rulemaking,” it will not be considered a 20 “logical outgrowth” because it may catch interested parties by surprise. Nat. Res. Def. 21 Council, 279 F.3d at 1186. Prior to the publication of the Final Rules, neither agency gave 22 any indication that a specific regulation would apply to the online dissemination of 3-D 23 gun files.3 The State Department’s proposed rule only said that “removed items” would 24 be subject to controls published in Commerce’s proposed companion rule. 83 Fed. Reg. 25 3 Commerce all but acknowledges this fact in the notice of final rulemaking. 85 Fed. Reg. 26 4136, 4141–42 (explaining that the framework of Commerce’s regulations as described in the proposed rule did not “adequately address the issue of regulating the unlimited access 27 to certain files for the 3D printing of firearms”). 1 24,198-01. Commerce’s proposal confirmed “[i]tems that would move to the CCL would 2 be subject to existing EAR concepts of jurisdiction and controls related to ‘development’ 3 and ‘production,’ as well operation, installation, and maintenance ‘technology.’” 83 Fed. 4 Reg. 24,166-01 (emphasis added). The substantive change in the Final Rules—that 5 Commerce would retain now jurisdiction over 3-D gun files “made available by posting 6 on the internet” and “ready for insertion” into a 3-D printer—seemingly comes out of left 7 field. 8 The federal defendants say the State Department received an array of comments 9 about 3-D firearm files which demonstrate the public had meaningful notice of the 10 combined regulatory effect of the two rules. Dkt. # 84 at 37. This argument is blunted by 11 the fact that the NPRMs fail to mention 3-D gun files at all. See CSX Transp., Inc. v. 12 Surface Transp. Bd., 584 F.3d 1076, 1080 (D.C. Cir. 2009) (holding that a final rule 13 “violates the APA’s notice requirement where ‘interested parties would have had to divine 14 [the agency’s] unspoken thoughts’”(alteration in original) (quoting Int’l Union, United 15 Mine Workers of Am. v. Mine Safety & Health Admin., 407 F.3d 1250, 1259–60 (D.C. 16 Cir. 2005))). Additionally, the State Department’s notice of proposed rulemaking purports 17 to keep defense articles “not otherwise widely available for commercial sale” within its 18 jurisdiction while transferring to Commerce “many items which are widely available in 19 the United States and abroad.” 83 Feg. Reg. 24198-01. Omissions that would permit 20 potentially controversial subject matter to go unnoticed fail to “fairly apprise interested 21 persons of the subjects and issues before the Agency.” See Natural Res. Def. Council, 22 279 F.3d at 1186; Louis v. U.S. Dep’t of Labor, 419 F.3d 970, 975–76 (9th Cir. 2005). 23 Of course, not every violation of the APA invalidates an agency action. The failure 24 to provide notice and comment is harmless only where the agency’s mistake “clearly had 25 no bearing on the procedure used or the substance of decision reached.” Sagebrush 26 Rebellion, Inc. v. Hodel, 790 F.2d 760, 764–65 (9th Cir. 1986); see Hodge v. Dalton, 107 27 F.3d 705 (9th Cir. 1997) (rule merely made explicit what was already implicit in the 1 legislative history of the EEOC’s authority). Here, the States say they had no opportunity 2 to comment on a scheme that applies specifically to 3-D gun files, including the potential 3 public safety implications that would occur from implementing the Final Rules in their 4 current form. On the current record, the States are likely to succeed on the merits with 5 respect to their notice-and-comment claim. 6 4. Arbitrary and Capricious 7 The States allege that the federal defendant’s decision to remove 3-D gun files from 8 the Munitions List was arbitrary and capricious because the State Department failed to 9 consider the factors set forth in the AECA and/or to overrule or even address its earlier 10 findings justifying regulation of the 3-D gun files. An agency decision is “arbitrary and 11 capricious” within the meaning of the APA, 5 U.S.C. § 706(2)(A), where the agency has 12 relied on factors which Congress has not intended it to consider, entirely failed to consider 13 an important aspect of the problem, offered an explanation for its decision that runs 14 counter to the evidence before the agency, or is so implausible that it could not be ascribed 15 to a difference in view or the product of agency expertise. Motor Vehicle Mfr. Ass’n v. 16 State Farm Ins., 463 U.S. 29, 44 (1983). The Court’s scope of review is “narrow” and 17 focused on determining whether the agency “examined the relevant data and articulated a 18 satisfactory explanation for [its] decision, including a rational connection between the 19 facts found and the choice made.” Dep’t of Commerce v. New York, 139 S.Ct. 2551, 2569 20 (2019) (citing State Farm, 463 U.S. at 43 (internal quotation marks omitted)); Beno v. 21 Shalala, 30 F.3d 1057, 1074 (9th Cir. 1994). 22 In State of Washington, the Court determined that the federal defendants’ previous 23 decision to remove the 3-D gun files from the Munitions List was arbitrary and capricious. 24 The administrative record gave no indication that the State Department considered the 25 unique characteristics and qualities of plastic guns, or certain statutory requirements. 26 2019 WL 5892505 at *7. In its analysis, the Court specifically referenced the State 27 Department’s 2018 conclusion that the worldwide publication of computerized 1 instructions for the manufacture of undetectable firearms was a threat to world peace and 2 the national security interests of the United States and would cause serious and long- 3 lasting harm to its foreign policy. Id. at *9. These findings, the Court found, went 4 unaddressed by the State Department in making the change to remove 3-D gun files from 5 the Munitions List. Id. Additionally, Congress directed the agency to consider how the 6 proliferation of weaponry and related technical data would impact world peace, national 7 security, and foreign policy, but the Court found that the State Department “evaluated the 8 export controls on small caliber firearms only through the prism of whether restricting 9 foreign access would provide the United States with a military or intelligence advantage.” 10 Id. at *8. 11 The record at the time of the Final Rules demonstrates that the States have raised 12 serious questions going to the merits of their claim. The State Rule again focuses on its 13 conclusion that the 3-D gun files “do not confer a critical military or intelligence 14 advantage,” which purportedly took into account “the effect that a transfer to CCL would 15 have on national security.”4 As this Court stated previously, the agency’s determination 16 that small-caliber firearms do not provide “critical military or intelligence advantages” 17 does not explain why those previously-controlled items were removed from the list. State 18 of Washington, 2019 WL 5892505 at *8. Articles and services that provide a “military or 19 intelligence advantage” “shall be” included on the Munitions List, but they are not the 20 only items that can be included. Id. at *8 (citing 22 C.F.R. § 120.3(b)). There is evidence 21 to support the States’ contention that the federal defendants again failed to make their 22 decision based on consideration of the relevant Congressional factors, such as the impact 23 on world peace and national security. See id. 24 The same is true on the issue of whether the State Department addressed its earlier, 25 contrary findings. In mid-2018, the State Department had taken the position that 26 4 The multi-year review upon which the decision was apparently based focused on small 27 caliber firearms generally, not 3-D printed guns specifically. 1 significant national security concerns warranted subjecting 3-D gun files to ITAR. The 2 record before the Court shows no analysis addressing these findings or otherwise 3 supporting the federal defendants’ conclusion that removing the 3-D gun files is now 4 consistent with the AECA’s goals of world peace, national security, and U.S. foreign 5 policy.5 See State Farm, 463 U.S. at 46-51 (agency’s actions arbitrary and capricious 6 because the agency did not address its prior, contrary factual findings); accord Asarco, 7 Inc. v. U.S.E.P.A., 616 F.2d 1153, 1162 (9th Cir. 1980) (decision arbitrary and capricious 8 where there was evidence agency had considered issues but did so in a manner which was 9 insufficient and abstract). The federal defendants claim their position is not contrary to its 10 previous findings because they now concur with regulating the 3-D gun files, but aver that 11 it should be done by Commerce.6 Even granting this change in philosophy, there are 12 serious questions going to the merits of whether the agency action at the time was 13 arbitrary and capricious. There is little evidence in the record that explains why regulating 14 3-D gun files under ITAR is no longer necessary considering its previous findings. 15 5. Contrary to the AECA 16 The States also contend that the State Rule is contrary to the AECA’s purpose of 17
18 5 The federal defendants also assert that Commerce’s jurisdiction simply mimics what is currently the status quo under ITAR. Dkt. # 84 at 34-36. The language provided in the 19 Commerce Rule does not comport with the language from the relevant ITAR provisions 20 (even considering the “public domain” exemption) and appears narrower in scope, only excluding from § 734.7’s definition of “published” those 3-D gun files “made available by 21 posting on the internet in an electronic format and that may be directly loaded without further modification by the machine operator.” Dkt. # 54 at 28. Additionally, the States 22 allege that the Final Rules would permit the unrestricted export of published 3-D gun files 23 by means other than “posting on the internet,” which departs from the status quo under existing regulations. Dkt. # 54 at ¶11. 24 6 The federal defendants attempt to bolster their rationale in declarations opposing the 25 motion. See, e.g., Dkt. # 85-1 at ¶ 100 (referencing the enforcement resources available in Commerce Department). “However, district courts are not to rely upon litigation 26 affidavits and ‘post hoc’ rationalizations for agency action.” Presidio Golf Club v. Nat’l Park Serv., 155 F.3d 1153, 1164–65 (9th Cir. 1998); Sw. Ctr. for Biological Diversity v. 27 U.S. Forest Serv., 100 F.3d 1443, 1450 (9th Cir. 1996). 1 furthering “world peace and the security and foreign policy of the United States.” 22 2 U.S.C. §§ 2751, 2778(a)(1). “‘In order to be valid regulations must be consistent with the 3 statute under which they are promulgated.’” E. Bay Sanctuary Covenant, 909 F.3d at 4 1248. 5 In response, the federal defendants say that the AECA explicitly permits the State 6 Department to “periodically review” items on the Munitions List and remove those that no 7 longer warrant export controls. Dkt. # 84 at 43 (citing 22 U.S. 2778(f)(1)). This 8 congressional affirmation certainly supports the federal defendants’ position that the 9 actions here are “statutorily permissible.” Fox Television Stations, Inc. v. Aereokiller, 10 LLC, 851 F.3d 1002, 1013 (9th Cir. 2017). This is likely true, in particular, for the 11 categories of items that lack any recent assessment as to their national security risk and are 12 otherwise commercially available. Nonetheless, there are serious questions going to the 13 merits as applied to 3-D guns. Again, the record evidence fails to explain the deviation 14 from the State Department’s prior determination that controlling certain 3-D gun files 15 under ITAR was necessary to further world peace and national security. 16 D. Irreparable Harm 17 As they did in State of Washington, the States again submit evidence, including 18 declarations and the federal defendants’ prior findings, showing that they will likely suffer 19 irreparable injury if the technical data for designing and producing undetectable weapons 20 using a commercially-available 3-D printer become widely available on the internet. Dkt. 21 ## 56, 57. Analysis of irreparable harm is well-documented in the prior litigation. The 22 effect on nationwide public safety, law enforcement, and propriety interests as highlighted 23 in State of Washington bears repeating:
24 The instability and inaccuracy of 3D printed firearms pose 25 threats to the citizens of the plaintiff States, including both users and bystanders, while the toy-like appearance increases the risk 26 of unintentional discharge, injury, and/or death. Guns that have no identifying information, guns that are undetectable, and guns 27 that thwart the use of standard forensic techniques to link a 1 particular projectile to a particular weapon will hamper law 2 enforcement efforts to prevent and/or investigate crime within the States’ respective jurisdictions. And to the extent a State 3 itself utilizes metal detectors in its courthouses, jails, prisons, or public buildings, it will have to expend additional time or 4 money in an effort to maintain security if … every person owns 5 a plastic gun.
6 318 F.Supp.3d at 1261-62. 7 The States also provide evidence that “virtually no expertise” is required to print a 8 3-D gun even where the files reach the user in a format initially unreadable by a 3-D 9 printer. Dkt. # 56 at 5-6. Thus, it takes little to connect the removal of certain 3-D gun 10 files from the Munitions List and the likelihood of the irreparable injuries plaintiffs have 11 identified. See State of Washington, 318 F.Supp.3d 1247, 1262 (finding irreparable harm 12 because the publication of the technical data online would threaten the peace and security 13 of the communities where these guns proliferate). The federal defendants argue once again 14 that the availability of ongoing corrective relief—i.e., state and federal laws prohibiting 15 certain firearm possession and transfer—prevents finding irreparable harm. However, this 16 ignores the unique danger presented by undetectable 3-D guns as demonstrated in the 17 record. Consistent with those findings, the States have shown the likelihood of irreparable 18 harm here. 19 E. The Balance of Equities and the Public Interest 20 The final factors in the preliminary injunction analysis require considering the 21 effects of an injunction on both parties and the public. Winter, 555 U.S. at 24. When the 22 government is a party, these factors merge because the government represents the public 23 interest. Nken v. Holder, 556 U.S. 418 (2009). 24 The federal defendants argue that national security will be harmed if an injunction 25 issues because the State Department will be unable to focus its export-control resources on 26 sensitive weapons and military technology. Dkt. # 85-1 at ¶ 100. Citing two executive 27 1 branch officials, they also argue that enjoining the Final Rules would cause other harms to 2 important United States and public interests, including disruption to U.S. exporters and 3 reputational damage. Id. at ¶ 104-05; see Dkt. # 85-2 at ¶ 54. 4 Although the government undoubtedly has a “compelling” interest in national 5 security, see Haig v. Agee, 453 U.S. 280 (1981), it cannot simply rely on unspecified 6 security concerns, Ziglar v. Abbasi, 137 S.Ct. 1843, 1862 (2017). To be sure, the Final 7 Rules have yet to go into effect and allowing current regulations on 3-D gun files to stay 8 in place will, in effect, maintain the status quo. It also strains reason that an injunction 9 would create, in the government’s words, “a greater risk that these weapons could be used 10 in a manner inconsistent with U.S. national security and foreign policy interests.” Dkt. # 11 84 at 45. This is at least true when it comes to the 3-D gun files given the government’s 12 previous findings. See Trump, 284 F.Supp. 3d at 1180 (government’s own actions 13 undermined the position that the public interest will be harmed in the face of injunctive 14 relief). 15 The Court must acknowledge the grave reality that is likely to occur without 16 injunctive relief. As the agency’s specific findings in the record show, the proliferation of 17 3-D gun files on the internet likely renders ineffective arms embargoes, export controls, 18 and other measures used to restrict the availability of uniquely dangerous weapons sought 19 by those seeking to commit acts of terrorism or other serious crime—implicates serious 20 national security and public interests. See Defense Distributed, 121 F. Supp. 3d at 690 21 (acknowledging the public’s “keen interest” in restricting the export of defense articles). 22 After considering the parties’ competing interests on the issue of 3-D gun files, the Court 23 finds that the balance of equities and the public interests tip sharply in the States’ favor. 24 Feldman, 843 F.3d at 375. 25 F. Remedy 26 Having found that the States established the elements necessary for a preliminary 27 injunction, the Court turns to the scope of relief. Both the federal and intervenor 1 defendants argue that the scope of any injunction should be limited to redressing only the 2 established injuries and irreparable harms identified by the States. Both point out that the 3 contents of the Final Rules clearly reflect the agencies’ focus on countless matters 4 unrelated to 3-D printed firearms. See Dkt. # 85-1 at ¶ 98; Dkt. # 85-2 at ¶¶ 52-53. 5 Indeed, the Final Rules transfer regulatory jurisdiction over products affecting an 6 estimated 10,000 State Department licenses. 85 Fed. Reg. at 413. For example, 7 intervenors must register with DDTC and pay the $2,250 annual registration fee—even 8 though the business does not export firearms outside the United States. See Dkt. # 65 at 9 ¶¶ 6–9. 10 The Court raised concerns about the scope of relief at oral argument.7 Equitable 11 principles require that an injunction “be no more burdensome to the defendant than 12 necessary to provide complete relief to the plaintiffs.” Madsen v. Women’s Health Ctr., 13 Inc., 512 U.S. 753, 765 (1994). Following oral argument, the States narrowed their 14 request for relief in light of the parties’ discussions that a narrower injunction than the one 15 initially requested might be feasible and sufficient to prevent irreparable harm and 16 preserve the status quo with respect to the 3-D gun files. Dkt. # 89. The federal 17 defendants reiterated their position that this Court has no jurisdiction and no injunction 18 should order, but conceded it is possible to implement the Final Rules and maintain the 19 same level of regulation on the export of 3-D gun files. See Dkt. # 91. The intervenor 20 defendants, who argue that the application of the Final Rules to 3-D gun files is severable, 21 do not object to maintaining the status quo as to 3-D gun files. Dkt. # 92. 22 “Whether an administrative agency’s order or regulation is severable, permitting a 23 court to affirm it in part and reverse it in part, depends on the issuing agency’s intent.”
24 7 During oral argument, the Court also inquired about the need of a separate hearing given 25 the nationwide effect of the States’ request for a preliminary injunction. See California v. Azar, 911 F.3d 558, 583 (stating that courts “must require a showing of nationwide 26 impact” and that injunctive relief “must be narrowed to redress only the injury show as to the plaintiff states”); Stormans, Inc. v. Selecky, 586 F.3d 1109, 1140 (9th Cir. 2009). The 27 parties agreed that a separate hearing was unnecessary. 1 Davis Cnty. Solid Waste Mgmt. v. EPA, 108 F.3d 1454, 1459 (D.C. Cir. 1997) (quoting 2 North Carolina v. FERC, 730 F.2d 790, 795–96 (D.C. Cir. 1984)). There is no indication 3 in the text of the NPRMs, for example, that the regulation would not have been passed but 4 for their application to 3-D gun files, or that the regulation of 3-D gun files is so 5 “intertwined” with the effect of the Final Rules on unrelated products. See Davis Cnty., 6 108 F.3d at 1459 (vacating the EPA’s emissions standards as applied to small municipal 7 waste combustor units but leaving in place guidelines as applied to large units). By all 8 accounts, the Final Rules are part of a decade-long reform to the export-control system 9 and there is no indication, other than the Defense Distributed litigation, that any special 10 attention was paid to 3-D gun files. 11 Having considered the parties’ arguments, the Court ORDERS the following 12 injunction, which shall take effect immediately and shall remain in effect pending trial in 13 this action or further order of the Court: 14 The federal defendants and their respective officers, agents, servants, employees, 15 and attorneys, and any persons in active concern or participation with them, are 16 ENJOINED from implementing or enforcing the regulation entitled International Traffic 17 In Arms Regulations: U.S. Munitions List Categories I, II, and III, 85 Fed. Reg. 3819 (Jan. 18 23, 2020) insofar as it alters the status quo8 restrictions on technical data9 and software10 19 directly related to the production of firearms or firearm parts using a 3D-printer or similar 20 equipment. No bond shall be required. 21 22 23
24 8 In this case, the status quo preserves the restrictions on the relevant technical data and 25 software currently covered by the Munitions List and subject to ITAR control. Such items shall be maintained on the Munitions List and regulated under ITAR. This injunction is 26 not intended to modify any existing regulations. 9As defined in 22 C.F.R. § 120.10. 27 10As defined in 22 C.F.R. § 120.45. 1 V. CONCLUSION 2 For the reasons stated above, the Court GRANTS IN PART the Motion. Dkt. # 3 55. 4 Dated this 6th day of March, 2020. 5 A 6
7 The Honorable Richard A. Jones 8 United States District Judge 9
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