IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

UNITED STATES )

)

v. ) Criminal No. xx-436-01 (JGP)

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xxxxxxxxxxxxxxx xxxxxxxxxxxxxx, )

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Defendant. )

_________________________ )

DEFENDANT'S MEMORANDUM IN SUPPORT OF HIS

MOTION TO DISMISS THE SUPERSEDING INDICTMENT

INTRODUCTION

Mr. xxxxxxxx is being prosecuted pursuant to The Export Administration Act, 50 U.S.C. App. § 2401 et seq. [the Act]. This Act sets forth a complicated framework for controlling exports of commodities and technologies to foreign countries. The Act provides for criminal penalties where an individual "knowingly violates or conspires to or attempts to violate any provision of this Act . . . or any regulation, order or license issued thereunder. . . . " 50 U.S.C. App. § 2410(a) (emphasis added). Mr. xxxxxxxx is not accused of violating any specific provision of the Act, but rather is accused of violating certain administrative regulations by exporting computers and computer spare parts to Pakistan. According to the superseding indictment, these items were expressly covered by the Commodities Control List (CCL), which is contained in 15 C.F.R. § 399, supp. no. 1 to § 399.1 (1986), and therefore, Mr. xxxxxxxx violated the Act by exporting these goods to Pakistan without first obtaining the proper authorization.

The indictment, however, suffers from numerous flaws which will be outlined in greater detail below. In short, the instant indictment charges that Mr. xxxxxxxx violated certain regulations promulgated pursuant to the Act when he allegedly diverted these goods to Pakistan. However, the regulations upon which the indictment is based were not written by Congress, but by an administrative agency. While such delegations of authority have been upheld in a variety of circumstances, the regulations must be carefully scrutinized to ensure that there has not been an unconstitutional delegation of authority from Congress to the executive branch. In this case, such scrutiny reveals that the pertinent regulations do not follow the express congressional mandates contained in the Act, and therefore, the regulations amount to the agency, and not Congress, creating legislation. Specifically, the agency in creating the CCL failed to comply with the congressional requirement that it clearly set forth the items which were subject to export controls, which in this case were the named computers and computer parts. In addition, although the Act contains other specific requirements which must be followed prior to items being subject to controls, the indictment and the underlying regulations fail to demonstrate that these specific requirements were followed with regard to the items which were supposedly shipped to Pakistan.

ARGUMENT

A. This Court must scrutinize the regulations at issue to ensure that there has not been an unconstitutional delegation of power to the executive branch.Article I, Section 1 of the United States Constitution provides that "[a]ll legislative Powers herein granted shall be vested in a Congress of the United States." From this clause, the Supreme Court "has derived the nondelegation doctrine: that Congress may not constitutionally delegate its legislative power to another branch of Government." Touby v. United States, 500 U.S. 160, 165 (1991). As the Court has noted, "'[t]he nondelegation doctrine is rooted in the principle of separation of powers that underlies our tripartite system of Government." Id. (citing Mistretta v. United States, 488 U.S. 361, 371 (1989)). Although the Court has upheld delegations which involved administrative agencies drafting regulations, the basis for these decisions rests on the fact that in making these regulations, the administrative agency did not legislate; that is, "[t]hey did not go outside of the circle of that which the act itself had affirmatively required to be done, or treated as unlawful if done. But confining themselves within the field covered by the statute, they could adopt regulations of the nature they had thus been generally authorized to make, in order to administer the law and carry the statute into effect." United States v. Grimaud, 220 U.S. 506, 518 (1911).

As a result of this doctrine, in order for Mr. xxxxxxxx to be subject to criminal penalties due to his alleged violation of administrative regulations, the Act must have imposed sufficient standards upon the Department of Commerce for drafting such regulations, see United States v. Garfinkel, 29 F.3d 451, 458 (8th Cir. 1994); those standards must have been followed by the agency, and the regulations ultimately drafted must be "confin[ed]" to "the field covered by the statute." Grimaud, 220 U.S. at 518; see Loving v. United States, 116 S. Ct. 1737, 1748 (1996). In the context of a criminal case, these requirements take on special meaning "because of the severe impact of criminal laws on individual liberty." Touby, 500 U.S. at 170 (Marshall, J., concurring). As Justice Marshall wrote, "an opportunity to challenge a delegated lawmaker's compliance with congressional directives is a constitutional necessity when administrative standards are enforced by criminal law." Id. (citations omitted). Similarly, the Tenth Circuit has noted that where "an act [is] made a crime by the executive branch under delegated authority[,] [a]ll elements of the exercise of this authority must conform strictly to the law and decisions." United States v. Spain, 825 F.2d 1426, 1429 (10th Cir. 1987). See, e.g., United States v. Caudle, 828 F.2d 1111, 1112-13 (5th Cir. 1987). Here, there are critical deficiencies with the regulations which serve as the basis for this prosecution, and accordingly, the indictment against Mr. xxxxxxxx must be dismissed.

B. The CCL, which is the administrative regulation serving as the basis for Mr. xxxxxxxx's criminal prosecution, fails to clearly set forth the goods and technologies subject to controls, contrary to the congressional mandate contained in the Act.

According to the indictment, the goods allegedly exported by Mr. xxxxxxxx were covered by the CCL no. 1565A. However, contrary to the implication in the indictment, the items supposedly exported to Pakistan are not specifically named in that portion of the CCL. Instead, this portion of the CCL, which is attached as Exhibit 1, provides an extremely technical and complicated set of criteria which governs determinations of what items do, or do not, fall within its ambit.

Regardless of the basis for invoking export controls (foreign policy or national security), Congress dictated in that statute that the Secretary of Commerce establish and maintain a control list setting forth all of the goods and technologies to which export controls applied. See 50 U.S.C. App. §§ 2404(c)(1); 2405(l). Both of these sections also require that the items which are subject to controls must be "clearly identified" on the CCL. Id. (emphasis added). Because part 1565A of the CCL fails to clearly identify the goods and technology subject to control, the regulation is unenforceable against Mr. xxxxxxxx or any other criminal defendant.

As is apparent from even a cursory review of this regulation, its convoluted and disorganized arrangement prevents individuals from prospectively determining whether a given piece of electronic equipment is subject to the regulation. 1565A does not provide a "list" of electronic equipment subject to licensing requirements as the title, Commodity Control List implies. Instead, 1565A is predominantly comprised of a series of highly technical conditions which, if fulfilled, subject a given item to licencing requirements. For example, individuals are required to determine whether the maximum bit rate per channel exceeds 19,200 bits per second and whether the given system has adaptive routing or algorithms that would permit a search for "trunk circuit" connection paths within a network. These technical evaluations are beyond the understanding of the ordinary individual and are therefore impossible for him or her to apply. Perhaps the strongest evidence of this truth is that even now, in retrospect, there is no indication of how, if at all, the items listed in the indictment meet the highly technical criteria of 1565A.

By drafting the CCL in a highly technical manner, the agency failed to meet the statutory requirement of clearly stating the goods and technology subject to control. The regulation attempts to subject lay individuals to criminal sanctions for failing to comply with its complicated and unintelligible requirements. This result was never intended by the legislature. In requiring the regulations to clearly state which goods and services are subject to licencing requirements, the legislature sought to provide fair notice to individuals of the types of technologies which must be licensed. Because the administrative agency failed to follow the legislatively imposed requirement of clarity, which would provide individuals with fair notice, 1565A is unenforceable.

C. There is no indication that the agency followed many of the other congressionally imposed pre-requisites prior to adopting its regulations.

There were a number of other pre-requisites imposed by Congress for which there is no evidence that the executive branch complied before enacting the export controls which serve as the basis for this prosecution. The Act includes different requirements for regulations which are based on national security objectives and those based on foreign policy objectives. While the instant controls are supposedly promulgated to achieve both objectives, there is no evidence that the administrative agency followed the requirements for either.

Prior to promulgating export controls for national security reasons, the following specific conditions should have been followed:

1. The Secretary of Defense was required to submit to Congress not later than 30 days after the close of each quarter of each fiscal year a written report which must, "identify each instance in which the Secretary recommended to the President that exports be disapproved and the action finally taken by the executive branch on the matter." 50 U.S.C. App. § 2403-1(e)

2. Goods and technologies placed on or taken off the CCL must be published in the Federal Register. The notice shall specify "that the revision relates to controls imposed under the authority contained in this section." § 2404(a)(2).

3 The Secretary was required to "issue regulations to carry out paragraphs (4) and (5). Such regulations shall define the term "supercomputer" for purposes of those paragraphs." § 2404(a)(6)

4. The President was required to review countries on the control list annually, and to use the statutorily specified factors in determining whether any revisions should be made to that list. § 2404(b)(1).

5. The Secretary of Defense and other departments were to identify goods and technology for inclusion on the list. Where the Secretary of Commerce concurs, the item is placed on the CCL. However, where the Secretary of Commerce and the Secretary of Defense were unable to concur, the matter should have been sent to the President for resolution. § 2404(c)(1)

6. Notice of the Secretary of Commerce's quarterly review of control list was to be published in the Federal Register, and was to include a 30 day period for comment by government agencies or private parties. § 2404(c)(3). Any revisions to the list were to be made within 30 days of the end of the review period. The Secretary was then supposed to publish in the Federal Register any revisions in the list, with an explanation of the reasons for the revisions. All goods and technology on the list shall be reviewed at least once each year. § 2404(c)(3)

7. Export controls were to expire 6 months after imposition, subject to certain exceptions. § 2404(c)(6)(A).

8. The Secretary of Defense was, not later than one year after the statute's enactment, to report to Congress on efforts by the Department of Defense to assess the impact that the transfer of goods or technology on the list of militarily critical technologies to controlled countries had had or would have on the military capabilities of those countries.

9. Where no license for a good or technology was required pursuant to § 2404(f)(1,2,3 or 4) or (h)(6), then no license could be required for a similar or less sophisticated good or technology. § 2404(f)(8).

10. Where any technical advisory committees were formed to address the issue of whether the subject computers or similar computers should be subject to export controls, § 2404(h)(1), members of the public were to be provided with "a reasonable opportunity. . . to present evidence to such committees." § 2404(h)(2). Such committees were only authorized to exist for two years, unless their termination date was expressly extended by the Secretary of Commerce. § 2404(h)(4). Also, any reports generated by such committees or by the Secretary were to be made a part of the public record. § 2404(h)(6).

Congress imposed similar requirements with regard to export controls based on foreign policy objectives:

11. Export controls were set to expire of their own accord unless extended by the President pursuant to § 2405(a)(3), and such extensions could only occur if the President made the requisite determinations set forth in § 2405(b)(1)(A-E).

12. The Secretary was required in "every possible instance" to "consult with and seek advice from affected United States industries and appropriate advisory committees. . . before imposing any export control under this section." § 2405(c)

13. Before imposing export controls, the President was to "determine that reasonable efforts had been made to achieve the purposes of the controls through negotiations or other alternative means." § 2405(e)

14. Before imposing or expanding export controls or extending such controls, the President was required to consult with Congress. § 2405(f)(1)

15. Before imposing or expanding or extending controls, the President was required to submit a report to Congress setting forth the specific information set forth in § 2405(f)(2)(A-E).

16. The aforementioned report also was to be submitted to the GAO "for the purpose of assessing the report's full compliance with the intent of this subsection." § 2405(f)(3)

17. In addition to the aforementioned written report, the Secretary of Commerce, not less than annually, was to present testimony before specified Senate and House Committees regarding the "policies and actions taken by the Government to carry out the provisions of this section." § 2405(f)(5).

18. The control list could only include items identified by the Secretary. of State, with the concurrence of the Secretary of Commerce, subject to certain procedures in case of disputes. The list was to be reviewed annually, unless it pertains to controls maintained cooperatively with other countries. § 2405(l)

19. At the same time the President imposed or expanded export controls, he had to "determine whether such export controls will apply to replacement parts for parts in goods subject to such export controls." § 2405(p).

In the instant case, there is no evidence that any of these conditions were fulfilled with regard to the specific regulations upon which this prosecution is based. Without such compliance, it is clear that the agency exceeded the scope of its delegation in drafting the regulations upon which the government now relies. In so doing, the agency assumed an unconstitutional delegation of power to legislate, a delegation carrying particularly dangerous implications in light of the criminal penalties provided in the Act.

D. Where, as here, a criminal prosecution is based on administrative regulations, the failure of the agency in drafting and enforcing such regulations to strictly comply with congressionally imposed conditions and requirements requires dismissal of the indictment.

Regardless of whether the regulations provided actual notice to potential defendants like Mr. xxxxxxxx, a failure by the agency to strictly comply with the statutory procedure renders the regulations infirm, and requires dismissal of this indictment. See United States v. Caudle, 828 F.2d 1111, 1112-13 (5th Cir. 1987). In Caudle, the defendants were prosecuted for distribution of MDMA during the time period of July 1-29, 1985, and the district court dismissed the indictment because the DEA had failed to follow the congressionally mandated procedure for placing MDMA on the list of controlled substances. Id. at 1111. The DEA had attempted to place MDMA on the temporary "schedule" of controlled substances. In order to do so, Congress had required that the Attorney General, among other things, publish a notice in the Federal Register indicating his intention to add the substance temporarily to the schedule. Pursuant to the underlying statute, 21 U.S.C. § 811(h)(1), the actual order placing the substance on the schedule could not be issued before thirty days after the publication of the aforementioned notice. With regard to the MDMA scheduling, a notice was published in the Federal Register on May 31, 1985 stating that as of July 1, 1985 MDMA would be placed on the schedule, but no separate order was ever issued thirty days after the notice. Id. at 1112.

Finding that the "DEA failed to follow the exact statutory procedure," the Fifth Circuit held that the order adding MDMA to the schedule of controlled substances was "ineffective and the indictments against the defendants were properly dismissed." Id. In so doing, the court noted that the question of whether the defendants had actual notice of the scheduling of the drug was irrelevant because

the question in [the] case [was] not whether the defendants suffered prejudice; it [was] whether the government succeeded in creating an offense. The DEA's mistaken procedure may well have provided adequate notice, but that is no guarantee that it also met whatever other goals Congress had in mind when it decided on a procedure.

Id.

Here too, contrary to the statutory requirement, the CCL fails to clearly set forth the specific items which are subject to export controls. In addition, to the extent that the specific computers and computer parts are covered by the CCL, there is absolutely no indication that the administrative agency followed the very specific, congressionally imposed requirements and conditions before placing those items on the list. Finally, Mr. xxxxxxxx's subjective belief that these computers or computer parts might have been covered by the CCL is irrelevant since the issue is "whether the government succeeded in creating an offense." Id.

CONCLUSION

In light of the breadth of the Act, it is not surprising that Congress imposed a number of conditions on the President's and the Secretary of Commerce's exercise of authority in controlling exports. Unlike most criminal statutes which set forth directly the proscribed conduct, Section 2510(a) imposes criminal sanctions for violations of regulations promulgated pursuant to the Act. However, in order for the underlying regulations to serve as the basis for a criminal prosecution, this Court must determine that the regulations promulgated by the executive branch did not exceed the scope of the lawful delegation made by Congress. In this case, the requirements and conditions imposed by Congress on the executive branch for controlling exports were not followed, and accordingly, the underlying regulations can not serve as the basis for a criminal prosecution. Thus, the indictment against Mr. xxxxxxxx, which is based entirely on those regulations, must be dismissed.

Respectfully submitted,

__________________________

A.J. Kramer

Federal Public Defender

L. Barrett Boss

Assistant Federal Public Defender

625 Indiana Avenue, N.W., Suite 550

Washington, D.C. 20004

(202) 208-7500

Counsel for Mr. xxxxxxxx