## Facts

- Federal Express Corporation (FedEx) is a global common carrier shipping millions of packages daily to more than 200 countries and territories.
- The Department of Commerce, through the Bureau of Industry and Security (BIS), administers the Export Administration Regulations (EAR) under the Export Control Reform Act of 2018 (ECRA).
- The EAR restrict exports, reexports, and transfers of certain items and limit transactions involving designated foreign persons and entities (including those on the Entity List).
- FedEx alleged that, because it typically does not open or inspect packages and often lacks knowledge of their contents, the EAR effectively exposed it to liability for transporting prohibited items or shipping to restricted recipients without knowledge.
- FedEx asserted a disparity between its exposure and its customers’ exposure, contending customers would face penalties only if they acted with knowledge while FedEx could be penalized for “unwitting” carriage.
- FedEx sought declaratory and injunctive relief, claiming (1) the regime violated substantive due process by imposing an effectively strict-liability burden on a carrier and (2) Commerce exceeded ECRA authority by implementing such a scheme.
- The government moved to dismiss under Federal Rule of Civil Procedure 12(b)(6).

## Issues

1. Whether the challenged export-control regulations violated the Fifth Amendment’s substantive due process guarantee by being arbitrary or irrational as applied to a common carrier allegedly exposed to liability without knowledge of shipment contents or recipients.
2. Whether Commerce exceeded its statutory authority under ECRA by promulgating and enforcing EAR provisions that allegedly impose effectively strict-liability obligations on common carriers.

## Decision

- The court granted the government’s Rule 12(b)(6) motion and dismissed the complaint in full.
- On substantive due process, the court applied rational-basis review and held FedEx failed to plausibly allege that the regulatory scheme was arbitrary, irrational, or conscience-shocking.
- The court held that export controls advancing national security and foreign-policy interests are legitimate governmental objectives and the regulations were rationally related to those objectives.
- On statutory authority, the court held ECRA grants Commerce broad power to create and maintain licensing and enforcement systems and to issue necessary regulations, and the challenged obligations fell within that grant.
- The court rejected the claim that ECRA’s mental-state gradations for penalties barred civil enforcement tied to non-knowing violations of regulatory duties.
- The court concluded FedEx’s disagreement with the severity or policy design of the regime did not establish ultra vires agency action.

## Legal Principles

- Economic regulation that does not burden a fundamental right is reviewed under rational-basis scrutiny; it is upheld if rationally related to legitimate governmental interests.
- National security and foreign-policy objectives support robust export-control regulation and justify imposing compliance duties on intermediaries involved in export transactions.
- ECRA confers broad rulemaking and enforcement authority on Commerce to implement export controls, including defining compliance obligations for parties participating in export supply chains.
- Statutory references to mental states for penalty gradations do not necessarily preclude civil liability based on violations of regulatory duties that can occur without actual knowledge of every transaction detail.
- A plaintiff must plausibly identify a clear statutory conflict or plainly unlawful agency action to state an ultra vires claim; generalized objections to regulatory burden are insufficient.

## Conclusion

The court dismissed FedEx’s constitutional and statutory challenges, holding that the export-control framework was rationally related to legitimate national-security goals and that Commerce acted within ECRA’s broad authority in imposing compliance obligations that could expose carriers to civil enforcement despite limited knowledge of package contents.


Federal Express Corp. v. U.S. Dep’t of Com., 486 F. Supp. 3d 69 (D.D.C. 2020)