A federal judge for the U.S. District Court for the District of Columbia dismissed FedEx Corporation’s challenge to the U.S. Department of Commerce’s (Commerce) Export Administration Regulations (EAR). Specifically, FedEx challenged the EAR requirements for global couriers to either verify the contents of its packages or to cease business with certain foreign entities, such as Huawei Technologies Co. Ltd., which FedEx described as departmental overreach that infringed upon its Fifth Amendment right to due process.
U.S. District Judge John D. Bates disagreed with FedEx’s assessment of the EAR’s impact on liberty, declaring that “unlike potentially one-off consumers, common carriers are repeat players with the institutional knowledge and scale to navigate the EAR, thus it is reasonable that common carriers might be held to a higher standard.” According to Judge Bates, Commerce adequately demonstrated that the EAR is “rationally related to a legitimate government interest,” which satisfied the Fifth Amendment due process clause. Judge Bates recognized the merit of the fundamental question raised in the complaint—whether the EAR is stricter than necessary to protect national security—but concluded that the court did not need to decide that issue “because FedEx abandons its initial framing of the ultra vires claim in its opposition brief…” Judge Bates’ ruling further solidifies the expectation that large global companies which are more experienced in international trade regulations may be held to a higher standard of compliance under the EAR.
We encourage clients and companies with questions or concerns regarding the EAR to contact Cortney Morgan or Grant Leach of Husch Blackwell’s Export Controls & Economic Sanctions team.