Judge, Jury, and Executioner: Why Private Parties Have Standing to Challenge an Executive Order that Prohibits ICTS Transactions with Foreign Adversaries

69 Am. U. L. Rev. 1883 (2020).

* Note & Comment Editor, American University Law Review, Volume 70; J.D. Candidate, May 2021, American University Washington College of Law; B.A., International Affairs, 2016, The George Washington University. I would like to thank Erin Downey, whose friendship and guidance were essential to the publication of this Comment. Additionally, I am grateful to Maddie Dolan for providing extensive, invaluable feedback that sharpened the piece during the editorial process. I would also like to thank all of the other Law Review editors and staff who worked on this Comment. Finally, I would like to thank my mother, Tuffy Kriegel, for her boundless love and encouragement.

On May 15, 2019, President Donald Trump, invoking his constitutional executive and statutory emergency powers, signed Executive Order 13,873, which prohibits U.S. persons from conducting information and communications technology and services (ICTS) transactions with foreign adversaries. Though the executive branch has refrained from publicly identifying countries or entities as foreign adversaries under the Executive Order, observers agree that the Executive Order’s main targets are China and telecommunications companies, namely Huawei, that threaten American national security and competitiveness in the race to provide the lion’s share of critical infrastructure to support the world’s growing 5G network.

Executive Order 13,873 raises several concerns—both broad and specifically related to the Trump Administration. In general, courts have struggled to clearly define the legal status of executive orders or the courts’ ability to review executive orders. The quasi-legislative nature of executive orders creates tension with the separation of powers principle and contributes to courts’ challenges in addressing concerns that they raise. The Trump Administration has continued a concerning trend of pursuing policy objectives through executive orders rather than through Congress in the current era of legislative gridlock. This Administration has also weaponized trade policy to accomplish national security objectives and implement a protectionist strategy that threatens the U.S.’s position as the world’s leading economy.

This Comment argues that affected parties have standing to challenge the government’s enforcement of this Executive Order against them in Article III courts in defense of their due process rights, despite language in the Order that may suggest it is exempt from judicial review. By analogizing the new interagency committee tasked with implementing Executive Order 13,873 to the Committee on Foreign Investment in the United States, this Comment uses the precedent the D.C. Circuit established in Ralls Corp. v. CFIUS to demonstrate that hypothetical U.S. person plaintiffs, who may be involved in ICTS transactions with foreign adversaries, have a due process right to notice of, access to, and the opportunity to rebut the unclassified information the government uses to justify enforcement action against them under Executive Order 13,873. This Comment concludes by synthesizing the arguments of important stakeholders who have submitted public comments on the proposed rule for enforcing the Executive Order and providing policy recommendations to improve the efficacy and fairness of the implementing regulations.

Introduction

“The example of such unlimited executive power that must have most impressed the forefathers was the prerogative exercised by George III, and the description of its evils in the Declaration of Independence leads me to doubt that they were creating their new Executive in his image.”¹ Throughout the history of the United States, Presidents have used executive orders to fill gaps in the Constitution’s allocation of power and respond to pressing challenges that require greater agility than the legislative process can achieve.² As Justice Jackson noted above, however, the Framers of the Constitution sought to avoid creating an omnipotent executive—a desire embodied in the separation of powers principle, which the Framers codified in 1789 when the Constitution became the blueprint of the U.S. government.³ The Framers rejected a form of government based on arbitrary, unchecked power consolidated in the hands of the few and applied against the many.⁴ Executive orders often contradict that ideal by empowering the President with legislative, enforcement, and judicial authority to address or resolve pertinent issues; thus, executive orders are particularly prevalent and useful in times of legislative gridlock.⁵

On May 15, 2019, President Trump signed Executive Order 13,873—“Securing the Information and Communications Technology and Services Supply Chain”—in which he directed an interagency committee, led by the Department of Commerce, to create a new framework to assess United States persons’ or entities’ information and communications technology and services (ICTS) transactions and prohibit such transactions with foreign adversaries.⁶ Many key terms in the Executive Order are defined ambiguously, and the Order lacks guidance on the framework’s implementing regulations or the relevant agencies’ roles in enforcement.⁷ The ambiguity of the Executive Order creates the potential for arbitrary enforcement because it currently does not feature procedural safeguards to stop any President, let alone one as mercurial as President Trump, from labeling countries, organizations, or individuals as “foreign adversaries” merely due to a personal rift.

Data security breach liability is one nontraditional focus of national security policy that Executive Order 13,873 may impact due to the prevalence of third-party code, which media and e-commerce companies use to control how they store data, interact with customers, and run their websites and mobile applications.⁸ Companies worry that the Executive Order’s application to third-party code may trigger the war exclusion of their cyber insurance policies—which typically do not cover loss or damage resulting from a state’s (or its agent’s) “hostile or warlike action in time of peace or war,” regardless of its cause—and, thus, result in a forfeiture of their coverage if cyberattacks on their systems occur.⁹ As foreign third-party coders account for many of the increasingly prevalent malware attacks on U.S. digital infrastructure, the Trump Administration will likely designate many third-party coders, if not their host countries at large, as foreign adversaries.¹⁰ Thus, the new committee may enforce the Executive Order against U.S. entities that use third-party coders’ services, despite the limited oversight capabilities that U.S. entities possess over the third-party coders with whom they work.¹¹ The apparent breadth of the scope of the term “foreign adversaries” in the Executive Order suggests that insurance companies could deny coverage to U.S. companies that sustain cyberattacks and receive third-party coding services from private entities operating within the jurisdiction of foreign adversaries, even if the interagency committee has not designated the third-party coders themselves as foreign adversaries.¹²

This Comment argues that parties subject to Executive Order 13,873 have standing to bring as-applied challenges to the Executive Order in Article III courts to assert their due process rights and preserve the separation of powers principle the Constitution prescribes. Additionally, this Comment uncovers the due process concerns that the Executive Order poses for affected parties. While there is precedent for allowing deliberate vagueness in executive orders concerning national security and emergencies to provide the executive branch with sufficient flexibility to respond to new threats as they emerge, Executive Order 13,873’s language does not clearly indicate the people or entities subject to its enforcement.¹³ The Executive Order fails to confine the scope of ambiguously defined critical terms, which may allow the committee to deprive affected parties of their property interests without providing adequate notice of the evidence the committee uses to justify enforcement.¹⁴

Part I of this Comment provides an overview of the separation of powers principle; the history and legal status of executive orders; the Trump Administration’s use of trade policy to serve national security ends, as well as the specifics of Executive Order 13,873; the constitutional and statutory authority on which President Trump substantiated this Executive Order; existing legislation, regulations, and agencies that operate at the intersection of national security and trade; and standing to sue in Article III courts. Part II of this Comment then analyzes standing in a hypothetical case of parties suffering a due process violation as a result of this Executive Order’s enforcement and compares the hypothetical claim with landmark standing cases to establish that parties whom this Executive Order adversely affects have justiciable due process claims against the executive branch.¹⁵ Part II also advocates for lawful, fair, and effective enforcement of the Executive Order through policy recommendations for its implementing regulations. This Comment concludes that parties subject to Executive Order 13,873 have standing to challenge its enforcement in Article III courts on due process grounds, and that judicial review is a crucial check on the executive branch’s power in support of transparency.

I. Background

President Trump found statutory and constitutional authority for Executive Order 13,873 in the National Emergencies Act¹⁶ (NEA), International Emergency Economic Powers Act¹⁷ (IEEPA), 3 U.S.C. § 301,¹⁸ and Article II of the Constitution.¹⁹ To provide context to evaluate the underlying authority for this Executive Order, this Part first examines the separation of powers principle, the distinct authorities each federal government branch possesses that are relevant to this Executive Order, and how the branches share power during national emergencies through congressional delegation of authority by statute. Second, this Part discusses the history and legal status of executive orders, examples of executive orders that have exceeded the scope of the President’s authority, and the language of Executive Order 13,873, specifically its insufficiently defined key terms. Third, this Part evaluates existing legislation and executive action at the intersection of national security and international trade and investment to highlight how the government currently regulates the space. Fourth, this Part explains the requirements for parties to achieve standing to bring a claim in Article III courts and provides cases that have developed the standing doctrine to frame the justiciability of this Executive Order.

A. The Balance of Power During National Emergencies

In the Constitution, the Framers granted distinct but sometimes overlapping authority to each branch of government. This Section focuses on the interaction between the branches when conducting foreign affairs—first, through the separation of powers principle broadly and, second, through emergency powers and statutes.

1. Separation of powers generally

The legislative branch possesses all lawmaking power pertaining to the specific issues that Article I of the Constitution identifies and can take actions “necessary and proper” to fulfill Congress’s explicit duties.²⁰ The powers of appropriating funds, “regulat[ing] Commerce with foreign Nations,” and declaring war are especially significant in the national security and international trade contexts because they represent limitations on the President’s role as the “sole organ” of foreign relations in the federal government.²¹

The only congressional delegation of authority to the executive branch explicitly mentioned in Article II concerns political appointments and the conditional waiver of advice and consent.²² Article II suggests that the President may occasionally share information with Congress—and, under extraordinary circumstances, convene Congress—to urge Members of Congress to take action on issues he deems “necessary and expedient.”²³ Although the President is the Commander-in-Chief of the Armed Forces, his ability to exercise authority in that capacity largely depends on Congress’s funding of the military and declaring war.²⁴ Additionally, despite the President’s authority to make treaties and lead the government on foreign relations, Congress’s power to regulate commerce with foreign nations highlights Congress’s role in international trade.²⁵ Presidents have found a basis for discretionary executive authority, particularly in the context of national emergencies, in the oath of office clause, and their duty to “take Care that the Laws be faithfully executed.”²⁶

The “arising under” clause in Article III suggests that the federal judicial power extends to almost all dispute resolution involving federal law; however, the questionable legal status of executive orders makes determining whether Article III courts have the power of judicial review over them complicated.²⁷ While executive orders are not expressly “Laws of the United States,”²⁸ the Supreme Court has treated executive orders that derive authority from statutes as having the “force and effect of law.”²⁹ The Supreme Court has the power to declare acts of Congress unconstitutional.³⁰ Because executive orders founded on congressional legislation have the “force and effect of law,”³¹ the power of judicial review extends to executive orders as applications of relevant acts of Congress.³² Moreover, Article III, Section 2 notes that the judicial power applies “to Controversies to which the United States shall be a Party,”³³ which could encompass litigation stemming from the executive branch’s enforcement of executive orders.³⁴

2. Emergency powers and statutes

As Youngstown Sheet & Tube Co. v. Sawyer³⁵ and Dames & Moore v. Regan³⁶ indicate, Presidents often use executive orders to declare national emergencies and invoke corresponding powers to bolster their quasi-legislative action.³⁷ Congress passed the primary emergency statutes, the NEA and IEEPA, to clarify the requirements for and limitations on congressional delegations of authority to the executive branch during national emergencies, which vague constitutional parameters and permissive common-law precedent previously governed.³⁸ In practice, both laws’ oversight mechanisms have proven inadequate to resist creeping executive discretion in declaring national emergencies and acting during them.³⁹ For the purposes of this Comment, the discussion of the emergency powers and statutes will be confined to their genesis, their impact on the separation of powers principle today, and how their application to Executive Order 13,873 compares to other situations where Presidents have used these laws as the underlying statutory authority for similar executive orders.⁴⁰

a. National Emergencies Act of 1976 (NEA)

Congress passed the NEA because of concerns that the Nixon Administration was taking advantage of obscure legislation to use non-appropriated funds for alleged emergency purposes related to military operations in Cambodia without sufficient oversight.⁴¹ The main problem with emergency statutes, including the NEA, is that they give the President broad leeway to declare a national emergency and almost unbridled authority to act in any manner he deems appropriate during that emergency to resolve the problem.⁴² The NEA sought to control the President’s authority during a national emergency by requiring him to publish the specific statutory authority he believes the government must invoke to sufficiently address the emergency at hand.⁴³ However, Congress did not include firm requirements or determining factors to guide the President when he considers declaring a national emergency because some lawmakers did not want to impede the President’s ability to swiftly respond to emergency situations.⁴⁴ Furthermore, Congress relinquished the opportunity to preempt spurious national emergencies when it imposed few requirements on the President to declare national emergencies under the NEA.⁴⁵ Additionally, Congress has seldom exercised its limited remaining authority to check the President’s power after he has invoked the NEA to declare a national emergency.⁴⁶

b. International Economic Emergency Powers Act of 1977 (IEEPA)

Congress passed IEEPA primarily to curb the President’s previously unbridled economic authority during peacetime emergencies.⁴⁷ Nonetheless, Section 203 of IEEPA empowers the President to impose controls on transactions involving foreign interests and foreign property subject to U.S. jurisdiction.⁴⁸ Executive Order 13,873’s language is very similar to that of Section 203, but the Trump Administration has extended its application to ICTS transactions.⁴⁹ Similar to the NEA, IEEPA does not contain a definition for “emergency” under the statute; however, IEEPA does provide a few preconditions to exercising IEEPA emergency powers: (1) there must be an “unusual and extraordinary threat” to the U.S.’s national security, foreign policy, or economy that stems primarily from outside the United States; (2) the President must declare a national emergency in response to that threat; and (3) the President may only exercise the relevant IEEPA powers to address the threat.⁵⁰

B. The Legal Status of Executive Orders

Presidents’ power to issue executive orders mainly stems from Congress delegating authority to the President via statute and the President invoking his independent Article II authority.⁵¹ Presidents have used executive orders to officially demarcate their positions on policy issues, restructure the executive branch, and facilitate policy reform when Congress is gridlocked.⁵²

1. Statutory checks on executive action exercised under executive orders

Executive orders are not subject to the legislative process, and the President’s actions are not subject to the Administrative Procedure Act of 1946⁵³ (APA); thus, the President has extensive freedom to issue executive orders without any procedural roadblocks.⁵⁴ Nonetheless, courts have held that executive orders possess the “force and effect of law.”⁵⁵ In Youngstown Sheet & Tube Co., the Supreme Court concluded that the President’s power is strongest when congressional authorization and intent—ideally through an explicit delegation of authority in legislation—support his actions.⁵⁶ However, more recently, courts have given the executive branch increasing deference to enforce executive orders that confer power on the executive that the legislative branch did not expressly delegate.⁵⁷ Furthermore, some courts find that executive orders generally do not create private rights of action.⁵⁸ Additionally, courts sometimes find that they cannot review presidential action stemming from a presidential directive, such as an executive order, when the statutory authority underlying the directive granted discretion to the President.⁵⁹

Although the APA does not apply directly to the President, the law may still constrain agency action pursuant to an executive order.⁶⁰ The APA stipulates rulemaking and adjudication procedures, as well as standards for judicial review of final agency actions, for all executive branch and independent agencies.⁶¹ The executive branch operates under the presumption that Congress generally prefers judicial review of administrative action, except where statutes granting the underlying authority for the administrative action in question preclude judicial review or where a law has allowed agency discretion in carrying out the administrative action.⁶² The APA permits plaintiffs to seek judicial review of agency action that “adversely affect[s] or aggrieve[s]” them.⁶³ To challenge the enforcement of an executive order under the APA in court, a plaintiff must show “(1) that the challenged governmental conduct constitutes ‘agency action’ within the meaning of the APA[;] (2) that the action is final and that there is no other adequate court remedy . . . [;] (3) that the plaintiff has standing to obtain judicial relief”; (4) that the executive order has a “delegation of authority from Congress,” indicating that the executive order has the “force and effect of law”; and (5) that the “terms and purpose” of the executive order suggest the President’s intent to create a private right of action.⁶⁴

In Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,⁶⁵ the Court held that courts should generally defer to agencies’ interpretations of the statutes that the agencies administer because agencies are more familiar with the practical implications of various statutory interpretations due to their subject-matter expertise.⁶⁶ Additionally, the Court in Chevron emphasized that agency deference promotes uniformity in the law by preventing various courts from adopting different readings of the same statute.⁶⁷ However, courts have subsequently created exceptions to Chevron deference, namely when the case concerns a constitutional question.⁶⁸ For example, the constitutional question exception would apply if a court addressed the hypothetical case regarding the Due Process Clause of the Fifth Amendment that this Comment explores.⁶⁹

2. Challenging executive orders in court

Very few executive orders have been completely overturned during the tenure of the administration that issued them.⁷⁰ The most iconic example is President Harry S. Truman’s executive order to seize American steel mills on national security grounds to keep them operating during the Korean War and prevent a nationwide strike over a wage dispute between the steelworkers and mill owners.⁷¹ Truman issued Executive Order 10,340 based on his constitutional power as President of the United States and Commander-in-Chief of the Armed Forces, which he argued allowed him to authorize the Secretary of Commerce to seize American steel mills after negotiations between the union and mill owners collapsed.⁷² The Supreme Court found Truman’s executive order unconstitutional because the President did not have the authority to intervene in a labor dispute based solely on his own constitutional power without congressional support through its delegation of authority.⁷³ Truman’s executive order also could not fall under his power as Commander-in-Chief, which does not include the authority to seize private property to resolve labor disputes and force production to continue.⁷⁴ Moreover, Truman’s executive order was legislative in nature and, thus, beyond the President’s power to advise Congress to make laws he supports or veto those with which he disagrees.⁷⁵

In 1947, Congress had previously declined to include an amendment in the Taft-Hartley Act that would have permitted emergency governmental seizures of companies during labor disputes to avoid work stoppages.⁷⁶ Given that Truman directly contradicted the will of Congress and lacked adequate constitutional authority to act in this manner as President, the Court found no support for Truman’s attempt to nullify Congress’s legislative power via executive order.⁷⁷ In his concurrence, Justice Jackson outlined a framework to assess the strength and validity of presidential power relative to three degrees of congressional support.⁷⁸ Jackson’s framework continues to provide the test through which courts analyze the President’s use of his emergency powers.⁷⁹

In Dames & Moore, the Court explained that a dearth of jurisprudence regarding the general limits of executive power within the tripartite system of government exists because the Court analyzes the particular facts surrounding each application of executive power and challenges to it on the narrowest possible grounds.⁸⁰ In the wake of the Iran hostage crisis in 1979, President Jimmy Carter declared a national emergency and signed an executive order that froze all Iranian assets subject to U.S. jurisdiction.⁸¹ The President subsequently prohibited the courts from entering any judgments against Iran but authorized select proceedings, including pre-judgment attachment.⁸² Dames & Moore’s subsidiary earned a pre-judgment attachment against the Atomic Energy Organization (AEO) for outstanding payment for part-performance when the AEO terminated the parties’ contract for the subsidiary to inspect Iran’s nuclear facilities.⁸³ However, in exchange for Iran’s release of American hostages on January 20, 1981, the United States agreed to “terminate all litigation” between the two governments or any of the countries’ nationals and resolve unsettled disputes via binding arbitration.⁸⁴ The district court granted Dames & Moore summary judgment against the AEO, but the company could not collect on its damages because of Presidents Carter’s and Reagan’s executive orders, which forced the district court to vacate the attachments pursuant to the U.S.-Iran agreement.⁸⁵ Consequently, Dames & Moore sued the President and Secretary of the Treasury to enjoin them from enforcing these executive orders, which the company argued exceeded the statutory and constitutional powers of the executive branch.⁸⁶ The Supreme Court rejected Dames & Moore’s argument, explaining that IEEPA, the Hostage Act, and the International Claims Settlement Act permitted the President to nullify the attachment, settle claims through executive agreement, and suspend unresolved claims.⁸⁷ However, the President did not have the power to suspend Americans’ litigation in American courts under the Due Process Clause because the purpose of that litigation was merely to assign liability and levy damages, neither of which concerned any particular Iranian property within U.S. jurisdiction.⁸⁸

3. Executive Order 13,873 and the Trump Administration

The defense trade is often noted as the third arm of diplomacy, along with the more traditional forms of relationships forged through political and economic partnership.⁸⁹ Accepting a realist philosophy of international affairs, much of the United States’ post-World War II clout has stemmed from the network of military equipment that connects its allies around the world, provides them with a technological advantage over their regional adversaries, and ensures their long-term dependence on the United States for their own national security.⁹⁰ Emerging technologies, like 5G infrastructure and artificial intelligence, challenge traditional notions of security threats to the point where trade policy predicated on national security is no longer the exception to the rule.⁹¹

The weaponization of trade policy has been particularly prevalent in the Trump Administration.⁹² President Trump has been quick to use trade policy to accomplish non-economic goals and embellish national security concerns to circumvent defense trade protocol and expedite the supply of arms to controversial allies.⁹³ This tactic presents a puzzling conflict within an administration that ostensibly supports small government and free markets but takes steps to significantly increase its surveillance and market-control powers.⁹⁴

Executive Order 13,873 aligns with President Trump’s protectionist trade policies in the name of “America First,” as well as his trade war with China.⁹⁵ The following excerpt from the Executive Order provides pertinent language to contextualize this Comment’s subsequent discussion of the justiciability and policy issues surrounding the Executive Order. The Executive Order prohibits:

any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service⁹⁶ (transaction) by any person,⁹⁷ or with respect to any property, subject to the jurisdiction of the United States, where the transaction involves any property in which any foreign country or a national thereof has any interest (including through an interest in a contract for the provision of the technology or service), where . . . the Secretary of Commerce . . . , in consultation with [the heads of other constituent agencies], has determined that[] (i) the transaction involves information and communications technology or services designed, developed, manufactured, or supplied, by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary;⁹⁸ and (ii) the transaction: (A) poses an undue risk of sabotage to or subversion of the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of information and communications technology or services in the United States; (B) poses an undue risk of catastrophic effects on the security or resiliency of United States critical infrastructure or the digital economy of the United States; or (C) otherwise poses an unacceptable risk to the national security of the United States or the security and safety of United States persons.⁹⁹

The broad scope of “foreign adversary” in Executive Order 13,873 suggests that the Trump Administration may be attempting to combine more traditional national security nomenclature of “foreign power” and “agent of a foreign power” into one term.¹⁰⁰ In Section 6(c) of the Executive Order, the President explicitly declares that the Executive Order does not create a private right of action for any party wishing to challenge its enforcement.¹⁰¹ Part II of this Comment argues that this clause does not preclude parties’ ability to obtain Article III standing to challenge the enforcement of this Executive Order on due process grounds.¹⁰²

C. Laws and Regulations at the Nexus of National Security and Trade

This Section highlights the major laws and regulations that govern the intersection of national security and trade policy, as well as the executive agencies that have played key enforcement roles in the space. Additionally, the examples discussed below establish the foundation for this Comment’s recommendations regarding the new framework’s implementing regulations.

1. Export control

The International Traffic in Arms Regulation (ITAR) is the main export-control regime for conventional military technology, which is classified on the United States Munitions List¹⁰³ (USML). The see-through rule for ITAR-controlled items, which are classified on the USML, provides the U.S. government with permanent, geographically limitless jurisdiction over all listed items and their components.¹⁰⁴ This system is simple, but it is inflexible and inherently inequitable because it controls too much.¹⁰⁵

The Export Administration Regulations¹⁰⁶ (EAR) focus on dual-use items, which have both civilian and military applications.¹⁰⁷ The EAR allow for control of end uses and end users, even if the law and list-based regulation cannot keep current with emerging underlying technology.¹⁰⁸ Furthermore, the EAR are much more flexible than ITAR and feature a de minimis rule when a see-through rule would be unnecessary and cumbersome.¹⁰⁹

On August 13, 2018, Congress enacted the Export Control Reform Act of 2018¹¹⁰ (ECRA) as part of the John S. McCain National Defense Authorization Act for Fiscal Year 2019¹¹¹ (NDAA). ECRA is the permanent statutory authority for the EAR.¹¹² ECRA requires the Bureau of Industry and Security to collaborate with other agencies to identify “‘emerging’ and ‘foundational’ technologies that are ‘essential to the national security of the United States’” and apply the EAR controls to them.¹¹³ ECRA allows for control of end use, end user, and destination, rather than merely the list-based technology itself, which might have non-threatening, non-military uses.¹¹⁴ Willfulness, for which there must be proof of knowledge that one’s conduct was illegal, is the mens rea for ECRA violations.¹¹⁵

2. Committee on Foreign Investment in the United States (CFIUS)

CFIUS is an interagency committee, led by the Secretary of the Treasury and comprised of the Secretaries of State, Defense, Homeland Security, Commerce, and Energy; the Attorney General; the U.S. Trade Representative; and the Director of the Office of Science and Technology Policy.¹¹⁶ CFIUS aims to both protect national security and allow desirable foreign investment into the United States.¹¹⁷ The key factor in determining whether to restrict a given transaction is whether a foreign entity has “control” over a U.S. company, demonstrated by the ability to determine, direct, or decide an important matter at a company.¹¹⁸ CFIUS may choose to review a transaction if it implicates any of the factors on the following non-exhaustive list: technology transfers, geographic proximity to military installations or government facilities, critical infrastructure, or global supply chain.¹¹⁹ CFIUS is primarily concerned with “front-door access” abuse¹²⁰ of legitimate means, such as international investment, used as a Trojan horse to gather intelligence, conduct terrorism, threaten U.S. military supremacy, or thwart counter-proliferation efforts.¹²¹

CFIUS operates in secret and with limited transparency, as it does not publish opinions or any reasoning; therefore, relevant non-government parties struggle to understand how CFIUS defines “control” in each case.¹²² Likewise, the precise definition of “national security” is unclear and frequently changes with the advent of dual-use, emerging technologies and the transformation of economic integration into a security threat.¹²³ Furthermore, extensive experience with CFIUS filings is the only way for non-government actors to find a trend regarding the common obstacles to their transactions that are eligible for CFIUS review because CFIUS does not provide filers with detailed, post-determination reasoning that justifies enforcement action.¹²⁴ The core feature of a CFIUS filing is the joint voluntary notice (JVN), which gives subject parties and CFIUS the opportunity to communicate about a transaction under review.¹²⁵ After the JVN process, CFIUS conducts a risk assessment, which consists of threat, vulnerability, and consequence, to determine whether mitigation measures or outright blocking is appropriate in a given situation.¹²⁶

The lack of clarity surrounding CFIUS review is of particular concern for small companies and startups, for whom the financial and opportunity cost of retaining a law firm to navigate this process is especially burdensome.¹²⁷ Despite CFIUS’s lack of transparency, its scope is much narrower than Section 232 of the Trade Expansion Act of 1962¹²⁸ and Section 301 of the Trade Act of 1974.¹²⁹ Moreover, entities subject to CFIUS review are quickly gaining a much clearer sense of the boundaries regarding inappropriate investment in U.S. companies, despite the enduring obscurity of CFIUS’s internal review process itself.¹³⁰

The Exon-Florio Amendment to the Omnibus Trade and Competitiveness Act of 1988¹³¹ declared that courts could not review presidential decisions to suspend or block deals.¹³² Despite this restriction on judicial review, Ralls Corporation, a Chinese-owned company, sued CFIUS to challenge CFIUS’s order compelling Ralls to postpone its wind-farm construction on land near a U.S. Navy training facility in Oregon, as well as President Barack Obama’s subsequent executive order prohibiting the acquisition of the property altogether.¹³³ The District Court for the District of Columbia dismissed the case because the court did not believe it had jurisdiction to review either the CFIUS order or the President’s veto.¹³⁴ On appeal, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) held that, although Ralls could not challenge the President’s conclusion that the transaction in question constituted a national security threat, Ralls could legitimately challenge the President’s veto for violating the company’s property interests by failing to comply with the Fifth Amendment’s due process requirements.¹³⁵

When the government deprives a party of its life, liberty, or property interests, the government must provide the affected party with notice of the official action, access to the unclassified supporting evidence, and the opportunity to rebut that evidence to satisfy due process.¹³⁶ The government failed to fulfill its due process requirements in deciding to block Ralls’s acquisition of and construction on the subject plot of land because the government did not provide any of the unclassified evidence the President used to make his decision.¹³⁷ Thus, the D.C. Circuit reversed the district court’s decision to dismiss Ralls’s challenge to the President’s veto and remanded the case to the district court to address the procedural due process question (separate from any illegitimate challenge on national security grounds).¹³⁸ The D.C. Circuit also remanded the case to the district court to determine whether CFIUS’s interim mitigation measures fell outside its authority and deprived Ralls of due process because the mitigation measures effectively prohibited the transaction—an action only within the President’s authority.¹³⁹ On August 13, 2018, Congress enacted the Foreign Investment Risk Review Modernization Act of 2018¹⁴⁰ (FIRRMA), broadening the scope of CFIUS review.¹⁴¹ FIRRMA created a formal avenue for judicial review of CFIUS determinations by requiring plaintiffs to file all legal challenges to CFIUS orders with the D.C. Circuit.¹⁴²

3. Department of State

Department of State officers overseas enforce international agreements pertaining to trade and investment.¹⁴³ These Foreign Service Officers collaborate with their counterparts stationed in Washington, D.C. to identify foreign trade barriers that fail to comply with international trade agreements.¹⁴⁴ The drafters of Executive Order 13,873 and its implementing regulations could refer to Executive Order 13,224, which includes the factors the enforcing agencies consider when deciding to label an individual or entity as a Foreign Terrorist Organization (FTO) or Specially Designated Global Terrorist (SDGT), and how that executive order delegates authority to the relevant agencies.¹⁴⁵ Executive Order 13,224 aims to deter, disrupt, and raise public awareness about the conduct that earns an individual or entity an FTO or SDGT label.¹⁴⁶

Shortly after September 11, 2001, President George W. Bush signed Executive Order 13,224 to stem the flow of financial support to persons or entities that intend to harm U.S. citizens and national security.¹⁴⁷ The Departments of State and the Treasury are both responsible for enforcement and designation, and do so in slightly different circumstances.¹⁴⁸ The Department of State designates certain entities FTOs if they qualify as foreign organizations that engage in terrorist activity.¹⁴⁹ The Department of State marks individuals or entities as SDGTs if they “have committed, or . . . pose a significant risk of committing, acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the United States.”¹⁵⁰ The Department of the Treasury can only designate SDGTs and focuses primarily on identifying those individuals who are either owned or controlled by an existing SDGT or “provide financial, material, or technological support for, or financial or other services to or in support of, such acts of terrorism.”¹⁵¹ Executive Order 13,224 features similarly vague, sweeping language and scope to Executive Order 13,873, marking another example of the deliberate ambiguity that has become the standard for executive orders related to national security to imbue the enforcement agencies with sufficient flexibility to respond to unusual and unforeseen, but covered, threats.¹⁵²

4. Department of the Treasury

In addition to collaborating with the Department of State to identify SDGTs, the Department of the Treasury plays a “substantial role regarding the negotiation, implementation, and enforcement of the financial services provisions of U.S. trade agreements.”¹⁵³ In particular, the Office of Foreign Assets Control (OFAC) enforces economic and trade sanctions against foreign entities that pose risks to the economy, foreign policy, or national security of the United States.¹⁵⁴ For example, OFAC freezes all SDGTs’ property and property interests in the United States as part of its enforcement authority under Executive Order 13,224.¹⁵⁵

D. Standing and the Justiciability Doctrine

The standing inquiry focuses on who can sue, while ripeness and mootness govern when one can sue.¹⁵⁶ To establish a court’s jurisdiction to hear a case, a plaintiff must show injury-in-fact, causation, redressability, and, if seeking injunctive relief, a non-probabilistic, “certainly impending” injury.¹⁵⁷ Article III, Section 2 “case” or “controversy” language represents the closest textual support for this doctrine and limits courts’ power by prohibiting the airing of abstract grievances in the courts without showing the aforementioned factors.¹⁵⁸ The standing doctrine serves as a limitation on judicial review to prevent the courts from encroaching on the executive branch’s discretionary enforcement authority.¹⁵⁹

Injury-in-fact is comprised of both a legal injury, which is one that is cognizable under existing doctrine, and a factual injury, which shows that the litigant before the court is the one suffering the injury.¹⁶⁰ In Lujan v. Defenders of Wildlife,¹⁶¹ animal rights activists sued the then-Secretary of the Interior for restricting the geographic scope of the Endangered Species Act to the United States and the high seas, thus ceasing federal protection of wildlife in foreign countries.¹⁶² Writing for the Court, Justice Scalia concluded that the activists did not have standing because they lacked set plans to return abroad to study endangered species and thus failed to indicate any actual or imminent harm sustained as a result of the regulatory revision.¹⁶³ The activists proposed “nexus” theories, based on their individual stakes in a collective interest, to support their standing.¹⁶⁴ Although Justice Scalia rejected these arguments as insufficiently particularized and too attenuated, Justices Kennedy and Souter, who concurred in the judgment, left open the possibility of a plausible application of these nexuses in a more appropriate case.¹⁶⁵ As Lujan exemplifies, “generalized grievance[s]” that a certain class of plaintiffs widely share typically will not satisfy the injury-in-fact requirement because the legislative process is a more appropriate forum to address policy issues than the courts.¹⁶⁶

To satisfy the causation prong of the standing test, the injury the plaintiff alleges must have resulted from the enforcement of the challenged government policy.¹⁶⁷ The causal connection cannot be too speculative.¹⁶⁸ In Linda R.S. v. Richard D.,¹⁶⁹ a mother sued a district attorney on equal protection grounds for declining to prosecute her child’s alleged father for failing to pay child support because the state statute did not require child support for “illegitimate” children.¹⁷⁰ The Court found that the mother lacked standing because she failed to show a “logical nexus” between her inability to obtain child support payments from the father and the district attorney’s decision not to enforce the statute against him.¹⁷¹ Successful enforcement of the statute against a parent who failed to make child support payments would result in incarceration, not an injunction to make the required payments.¹⁷² Furthermore, courts generally require plaintiffs to sue the worst actor, whose actions caused the injury-in-fact.¹⁷³ In Linda R.S., the alleged father would have been the worst actor and a more appropriate target of the mother’s complaint than the district attorney.¹⁷⁴

Redressability implies that judges can provide some form of relief to remedy the injury.¹⁷⁵ In Massachusetts v. EPA,¹⁷⁶ the Commonwealth of Massachusetts sought to enjoin the EPA to exercise its enforcement authority to regulate greenhouse-gas emissions, which Massachusetts claimed were causing sea-level rise that threatened its numerous coastal communities and ecosystems.¹⁷⁷ The Court concluded rising sea levels resulting from greenhouse-gas emissions had already harmed Massachusetts and would continue to do so without EPA intervention.¹⁷⁸ Therefore, Massachusetts had standing to bring action against the EPA because requiring the EPA to regulate greenhouse-gas emissions could reverse the harm already done to some degree and mitigate future harm even though the remedy could not eliminate the injury entirely.¹⁷⁹

To avoid asserting a merely probabilistic injury, a plaintiff must show that the injury will likely occur again without judicial redress and that the anticipated recurrence is neither speculative nor based on a “highly attenuated chain of possibilities.”¹⁸⁰ In Clapper v. Amnesty International USA,¹⁸¹ Amnesty International claimed future harm resulting from an “objectively reasonable lik568 U.S. 398 (2013).elihood” that the U.S. government would monitor its communications with non-U.S. persons at some point, pursuant to the government’s authority under the Foreign Intelligence Surveillance Act of 1978¹⁸² (FISA).¹⁸³ Amnesty International also submitted the costs it incurred to keep its communications with non-U.S. persons confidential as evidence of its response to the risk of future harm.¹⁸⁴ Amnesty International lacked standing because its concerns of future harm were too speculative and the organization could not “manufacture” standing by spending money in anticipation of non-imminent harm.¹⁸⁵

Third-party, or jus tertii, standing is an exception to the rule that courts only adjudicate matters concerning litigants who are before the court.¹⁸⁶ To successfully assert third-party standing, the plaintiff generally must have a special—confidential or fiduciary—relationship, such as doctor-patient or vendor-vendee, with the third party, who is not before the court and whose rights the plaintiff is asserting.¹⁸⁷ In Craig v. Boren,¹⁸⁸ the plaintiffs—a vendor and a male under the age of twenty-one—challenged an Oklahoma statute that prohibited sales of beer to males under the age of twenty-one and females under the age of eighteen, based on the assumption that males between the ages of eighteen and twenty would be more likely to drink and drive than their female counterparts.¹⁸⁹ The Court found that the vendor could assert third-party standing on behalf of her statutorily underage male customers because the statute imposed a legal duty directly on her and, thus, created a “concrete adverseness” between the vendor and the statute’s enforcement.¹⁹⁰ Furthermore, as a vendor with personal standing, the vendor also had a right to litigate the associated rights of third parties—her male customers between the ages of eighteen and twenty-one—who would sustain injury as a result of the failure of her constitutional challenge and the continued enforcement of the statute.¹⁹¹

Taken together, the foregoing laws and jurisprudence related to emergency powers, executive orders, national security and trade policy, and standing support affected parties’ ability to challenge the government’s enforcement of Executive Order 13,873 on due process grounds. The next Part explains why challengers of the Order have standing by applying existing, related precedents to two hypothetical due process claims. Additionally, the aforementioned precedents and agencies inspire the second Section of the Analysis, which concludes by offering policy recommendations for the final rule that will set the implementing regulations for Executive Order 13,873.

II. Analysis

First, this Part uses the standing requirements to evaluate the justiciability of two potential due process claims—one by a U.S.-based but foreign-adversary-controlled telecommunications provider, and one by a U.S. hospital using a foreign adversary’s groundbreaking cancer treatment machine—that the plaintiffs could bring against the executive branch to challenge a decision to implement interim mitigation measures or blocking orders pursuant to Executive Order 13,873.¹⁹² The hypothetical demonstrates the due process implications that arise under this Executive Order for entities subject to its enforcement, namely the ambiguity surrounding whether the enforcing agencies will provide notice of, access to, and the opportunity to rebut the evidence they will use to justify interim mitigation measures or blocking orders.¹⁹³ As legal analysts have noted, this Executive Order aligns with the most recent NDAA, which identifies the telecommunications industry as a major national security risk because its constituent companies both build critical infrastructure and provide services that enable the broadband technology on which contemporary society depends.¹⁹⁴ 5G networks and the Internet of Things will cause traditionally disconnected services, like healthcare, to rely on the information and communications technology and services (ICTS) supply chain and create more vulnerabilities for foreign adversaries to exploit, despite optimizing those services by arming them with exponentially faster access to exponentially more information.¹⁹⁵ This Part also explains why the separation of powers principle and the APA indicate that the Framers and Congress would advocate for judicial review of challenges to Executive Order 13,873.¹⁹⁶

Second, this Part proposes policy recommendations for designing the review framework and implementing regulations to effectively and fairly enforce Executive Order 13,873, particularly focusing on facilitating transparency and accountability with due process in mind.¹⁹⁷ The policy recommendations aim to clarify the key scope and enforcement provisions of the Executive Order, as well as foster information-sharing between the government and private sector, to preemptively resolve the due process concerns the hypothetical claim raises.

A. The Separation of Powers Principle, APA, and Standing Doctrine All Support Entities’ Ability to Challenge Unfavorable Decisions of Executive Order 13,873’s Interagency Committee in Article III Courts on Due Process Grounds.

The separation of powers principle exemplifies the Framers’ intent to prioritize liberty over “efficiency.”¹⁹⁸ The Framers strived to build protections against authoritarianism into the Constitution as they developed the structure of an “effective and accountable” American government.¹⁹⁹ While Article II grants the President the power to gather Congress and implore the legislative branch to act to address policy challenges he deems urgent, the Constitution does not expressly grant an independent, quasi-legislative capacity to the President that might have foreshadowed the advent of the executive order.²⁰⁰ The concept of executive orders and the President’s emergency powers has emerged from an acceptance of the branches’ need to share overlapping authority to optimize governance and from the ambiguous parameters the Constitution established around certain situations.²⁰¹

Some courts have found that the administrative recourse stipulated in a given executive order is the exclusive enforcement method and, thus, executive orders provide no private right of action in Article III courts.²⁰² Congress has occasionally entertained initiatives to reform the use, scope, and justiciability of executive orders.²⁰³ Proposals include statutorily extending standing to private individuals and institutional representatives, as well as removing the President’s power to declare national emergencies.²⁰⁴ FIRRMA’s delegation of a dedicated court for judicial review of CFIUS determinations offers precedent for judicial oversight in the executive branch’s trade and investment decision making process.²⁰⁵ That provision only partially checks the executive branch’s authority in conducting CFIUS reviews because concentrating the burden to evaluate relevant challenges on one court will ultimately limit such challenges due to efficiency burdens.²⁰⁶ Additionally, although stipulating a specific court to review these complaints will likely support the APA’s objectives to create a uniform interpretation of the relevant law, it also risks transforming judicial review of CFIUS determinations into a rubber-stamp process if affected parties have no meaningful way to challenge the interpretations of the only court with jurisdiction over these appeals.²⁰⁷

In Youngstown Sheet & Tube Co., the Court sought to clarify the boundaries limiting the President’s authority to act in a quasi-legislative capacity.²⁰⁸ In that case, the Court invalidated President Truman’s attempt to seize steel mills to preempt an imminent labor strike via executive order and emergency power allegedly implied in Article II of the Constitution.²⁰⁹ The Court found that not only did the President lack the statutory authority to seize the steel mills, but the legislative history of the Taft-Hartley Act also showed that Congress had flatly rejected such an application of executive power to resolve labor disputes or other domestic economic crises.²¹⁰ Neither the President’s executive power outlined in the Constitution nor established by statute authorized him to seize the steel mills; thus, Executive Order 10,340 was unconstitutional.²¹¹

In the case of Executive Order 13,873, challengers likely would not prevail on a facial attack on the Order because both an explicit congressional delegation of authority to President Trump, as well as his own executive powers, probably support it.²¹² Under the NEA and IEEPA, Congress relinquished almost all of its decision making and oversight authority during national emergencies to the President.²¹³ Additionally, unlike the attempted steel mill seizures in Youngstown Sheet & Tube Co., which concerned a domestic issue under the guise of a wartime national security threat, regulating ICTS transactions with foreign adversaries inherently implicates an international problem and the President’s Article II powers to control foreign affairs.²¹⁴ Furthermore, since many internationally-focused emergencies and presidential directives do not implicate “U.S. persons,” the prospects of achieving standing for a facial, constitutional claim are slim as constitutional protections do not extend to non-U.S. persons outside U.S. jurisdiction.²¹⁵ However, an entity within U.S. jurisdiction or classified as a U.S. person that the government accuses of violating this Executive Order would have standing to bring an as-applied challenge based on a constitutional injury, such as a due process violation resulting from the Executive Order’s enforcement without adequate procedural safeguards, as well as an appropriate, workable remedy.²¹⁶ These incremental challenges to this Executive Order would act as a check on the executive branch’s power and allow the courts to ensure the executive branch enforces this Executive Order appropriately while the American people await congressional amendments that will restore the separation of powers in the realm of national emergencies.

Affected parties could try to assert a constitutional injury-in-fact based on due process because Executive Order 13,873 prohibits any ICTS transaction between a U.S. person and “foreign adversary” that threatens the U.S. economy, intellectual property, or national security without ensuring that the government will share its unclassified rationale for impeding such an ICTS transaction.²¹⁷ Thus, the executive branch will violate due process if it enforces the Executive Order without adequate procedural safeguards pertaining to notice.²¹⁸ To succeed in a due process claim, plaintiffs must show that the government deprived them of their life, liberty, or property interests, and that the government procedures depriving those interests do not conform with the Due Process Clause of the Fifth Amendment.²¹⁹ Subject entities—such as a U.S.-based subsidiary of a foreign telecommunications provider, which the U.S. government suspects a foreign adversary controls, seeking to build critical 5G infrastructure on recently purchased land, or a hospital using a foreign adversary’s unique, innovative telehealth machine to monitor the development of patients’ cancer and receive treatment suggestions—could challenge a final blocking order from the President on due process grounds, as Ralls Corporation successfully did in its CFIUS review case.²²⁰

First, the telecommunications provider and the hospital would both have valid property interests that the executive branch would deprive them of when it enforces the Executive Order: the land and the machine, respectively.²²¹ Second, the procedural safeguards that the Secretary of Commerce promises will accompany the government’s enforcement of the Executive Order do not clearly ensure that subject entities will have adequate notice of, access to, and the opportunity to rebut the evidence against them in accordance with the Due Process Clause.²²² Thus, the hypothetical telecommunications provider and hospital satisfy the threshold requirements for a due process claim.²²³ Since the settlement between Ralls and CFIUS preempted the district court’s decision on the question of whether CFIUS’s mitigation measures violate due process for “effectively prohibiting” a transaction, which only the President may do, entities subject to the new framework may also gain traction in the courts by challenging the new interagency committee’s authority to impose mitigation measures in light of due process.²²⁴ The following subsections evaluate the justiciability of a hypothetical due process claim under a four-part standing analysis, concluding that the telecommunications provider and hospital can legitimately challenge the Executive Order’s enforcement as applied to them individually in Article III courts.²²⁵

1. Injury-in-fact

While a party would not have standing to dispute a President’s final blocking order because of broad presidential discretion on national security matters, a party has a valid claim for a due process violation if the party did not have notice of, access to, or the opportunity to rebut the unclassified evidence on which the President based his decision before he blocked the transaction.²²⁶ Unlike the plaintiffs in Lujan, who had neither plans to return abroad nor evidence that the new regulations would render them unable to study elephants, the due process violation here would be concrete and particularized because the Executive Order would deprive both the telecommunications provider and hospital of their property interests in the land and the cancer machine, respectively.²²⁷ Additionally, the injury resulting from the hypothetical due process violation would be actual or imminent because the plaintiff lacked notice of, access to, and the opportunity to rebut evidence the President used against the plaintiff to support a blocking order as due process requires.²²⁸ A clause stating that the Executive Order does not establish a private right of action against the United States also seems to be a dubious denial of process.²²⁹

Furthermore, since no court has decided whether executive agencies actually have the authority to impose interim mitigation measures, affected parties could file suit to test this issue.²³⁰ Similar to the plaintiff in Ralls Corp.—where CFIUS prohibited Ralls from building a wind farm on land the company owned near a U.S. naval facility—the telecommunications provider could point to the deprivation of its property interests resulting from the interagency committee’s interim mitigation measures, which would likely preclude the provider from attempting to put its land to the provider’s desired use by laying fiberoptic cable or building cell towers to provide underserved communities with mobile phone and broadband access.²³¹ The hospital’s case is even more severe as the hospital could argue that mitigation measures that effectively prohibit it from providing essential healthcare to its patients deprive the patients of their liberty to make personal health decisions or even of their lives if the patients die because they lack necessary care.²³² The hospital could play a similar role to that of the vendor in Craig v. Boren, where the relevant statute’s personal impact on her and her vendor-vendee relationship with her customers allowed her to assert the rights of those customers against whom the statute discriminated.²³³

2. Causation

The causation prong is straightforward on the due process claim because no investigation or subsequent mitigation measures regarding an ICTS transaction with a foreign adversary would occur pursuant to Executive Order 13,873 if the Executive Order did not exist. Therefore, the affected parties would not have been deprived of notice of, access to, or the opportunity to rebut evidence against them in the government’s decision to restrict a given transaction if there was no executive order to enforce.²³⁴ The hypothetical plaintiffs would not struggle with the causation problem that the plaintiff mother faced in Linda R.S., where the Court concluded that the government action it could enjoin would not redress the mother’s injury because she failed to sue the worst actor, her child’s biological father.²³⁵ Here, the government would be before the court, its failure to provide notice would have caused the due process violation, and a court could redress the affected parties’ injury by enjoining the government to provide that notice. Unclassified evidence that the interagency committee could share with the hypothetical plaintiffs to avoid a due process violation and help them comply with Executive Order 13,873 might include explanations of why the government found the types of information or technology that the plaintiffs shared with alleged foreign adversaries threatened national security, or why the controls or financing structures of the telecommunications provider and cancer treatment machine’s manufacturer raised concerns.²³⁶

3. Redressability

Injunctive relief against enforcement of the Executive Order, as well as damages to compensate for any economic loss resulting from the deprivation of the parties’ property interests, could redress the hypothetical due process violation.²³⁷ Additionally, a court could order the President and interagency committee to release any unclassified information on which they based a blocking order or mitigation measures.²³⁸ Similar to the relief in Ralls Corp., enjoining the President and interagency committee to provide the utmost possible transparency would cure the hypothetical due process violation by providing the telecommunications provider and hospital with an opportunity to rebut the evidence that led to unfavorable executive action against them.²³⁹ Even though the remedy in these situations would only partially redress the injury, the Supreme Court held that incomplete redress was sufficient in Massachusetts v. EPA.²⁴⁰

4. Certainly impending injury

If the hypothetical plaintiffs did not receive relief, the continued enforcement of Executive Order 13,873 would result in further due process violations as the plaintiffs would continue to lack both the evidence on which the government based unfavorable decisions and the necessary information to bring its operations into compliance with the Executive Order.²⁴¹ Unlike the Clapper and Lujan plaintiffs, whose future injuries were not “certainly impending,” both of the hypothetical plaintiffs’ businesses would suffer the effects of the due process violation immediately because both businesses would have to cease all pertinent operations without understanding potential ways to comply with Executive Order 13,873.²⁴² Thus, the hypothetical plaintiffs have established an actual, concrete, particularized injury that is “fairly traceable” to the enforcement of Executive Order 13,873, that the courts can redress, and that is more than likely to continue harming the plaintiffs without judicial intervention.²⁴³

In addition to the constitutional due process claim for which the telecommunications provider and hospital have obtained standing, the plaintiffs also have a cause of action under the APA to pursue judicial review of final agency action through the government’s enforcement of Executive Order 13,873.²⁴⁴ The hypothetical plaintiffs could show that a blocking order or mitigation measures constitute final agency action for which no alternative court remedy is available because the Executive Order does not provide a path to appeal those decisions within the executive branch.²⁴⁵ Furthermore, Congress delegated authority to the President to implement the Executive Order through the NEA and IEEPA.²⁴⁶ The final prong of a valid APA cause of action, which requires a showing of presidential intent to establish a private right of action through the text and purpose of the executive order, creates a potential conflict for litigants as the courts disagree on whether they have federal subject-matter jurisdiction over challenges to executive orders.²⁴⁷ Although courts often decline to adjudicate cases involving executive orders and explain that those grievances should be addressed to the executive branch, the separation of powers principle and Congress support Article III courts maintaining at least appellate jurisdiction over executive order cases to ensure impartiality.²⁴⁸ Despite some courts’ aversion to reviewing challenges to executive orders, other courts have stated that the President does not have the authority to declare that a private right of action does not exist regarding a particular presidential action.²⁴⁹ Additionally, the APA stipulates judicial review of agency action, except when the underlying statutory authority precludes judicial review or the action is “committed to agency discretion by law.”²⁵⁰ Because neither of those exceptions applies here, the implementing regulations for Executive Order 13,873 must include a provision that creates a path to judicial review once the affected party has exhausted the available executive branch remedies.²⁵¹

Before FIRRMA, parties wishing to challenge CFIUS’s review decisions lacked a clear opportunity to appeal outside the executive branch.²⁵² As the Ralls Corp. decision shows, courts are better equipped than the executive branch to resolve a constitutional question related to due process that arises when the executive branch restricts business conduct without providing adequate notice.²⁵³ Although the D.C. Circuit has not heard any similar appeals since FIRRMA became law, affected parties’ knowledge that they can bring their challenges to a neutral body serves as a check on executive power and may also foster trust in the efficacy of this new transactional review process.²⁵⁴ Precedent indicates that courts prefer not to hear executive order challenges and interfere with the executive branch’s domain; thus, judicial decisions requiring the Trump Administration to provide more unclassified information underpinning the enforcement of Executive Order 13,873 would clarify its boundaries upfront, support due process, and reduce litigation in the long term.²⁵⁵ The interagency committee can learn from the successes and shortcomings of previous security-trade regulations and strive for user-friendly implementing regulations that support transparency in its new framework.²⁵⁶

B. Policy Recommendation for the New Framework and Its Implementation

Uncertainty beckons the death of trade.²⁵⁷ The new interagency framework, which prohibits ICTS transactions with foreign adversaries, could negatively impact trade and investment in the United States by imposing unpredictable obstacles to trade and intruding into private business at the will of the President, thereby fomenting uncertainty and reluctance to participate in the U.S. economy.²⁵⁸ Trade policy is a key diplomatic tool, but its integration with national security policy is only appropriate in circumstances involving listed technologies or those with a specific application that threatens U.S. national security.²⁵⁹ The interagency committee charged with developing this new framework should emulate recent legislative and regulatory overhauls at the trade-security nexus, which have resulted in increased clarity regarding the scopes, targets, and enforcement methods of these policies.²⁶⁰ These reforms will enable policymakers to promote national security without neutralizing economic opportunities.

Executive Order 13,873 is primarily focused on managing global supply chain risk and preventing China from obtaining critical technologies directly or through third-party countries.²⁶¹ The key challenge is protecting what is truly sensitive to U.S. national security without suppressing wanted economic activity.²⁶² Striking that balance may prove difficult in many cases involving emerging technologies, such as artificial intelligence, autonomous vehicles, robotics, and 5G infrastructure, where that cost-benefit analysis is equivocal. In the 5G context, the U.S. government is fighting to ensure that neither the domestic buildup nor that of the United States’ allies becomes dependent on Chinese standards or technology.²⁶³ The scope of Executive Order 13,873 creates a massive opportunity for excessive government intervention into private business, which will spur an onslaught of litigation in response to the “intelligence bonanza” in the form of a list of all suppliers to, investors in, or beneficiaries of foreign adversaries that enforcement of this Executive Order will create.²⁶⁴ Clarifying the limitations on foreign involvement in U.S. ICTS transactions for private entities through judicial review of blocking orders or mitigation measures will imbue Executive Order 13,873’s new framework with transparency and credibility, which are crucial to fostering investment in the U.S. economy, without sacrificing national security.²⁶⁵

The concerns stemming from the addition of Huawei to the Bureau of Industry and Security Entity List on May 16, 2019—as a quasi-companion regulation to the Executive Order in President Trump’s ongoing trade war with China—highlight areas of needed clarification that also apply to the new framework as the drafters finalize the implementing regulations.²⁶⁶ Observers do not know how the restrictions associated with the executive action will work in practice.²⁶⁷ Stakeholders disagree as to whether a chip designed mostly within the United States would make it a U.S. product, even if it was manufactured elsewhere.²⁶⁸ Uncertainty remains regarding the ways in which the committee will manage transactions diverted to a foreign adversary from a neutral party.²⁶⁹ Discussing the Trump Administration’s trade and security policy, Kevin Wolf, a former Assistant Secretary of Commerce for Export Administration during the Obama Administration, said: “In every other administration, the entity listing was purely a tool of law enforcement and national security . . . . The thing to watch is whether this will become a tool of trade policy and used as leverage in the negotiations.”²⁷⁰ The interagency committee must design a framework and implementing regulations that do not exceed executive powers or impinge upon the rights of private parties.²⁷¹

1. Use ECRA as an example for a clear, but flexible statutory scheme to respond to unforeseen and unique situations as they emerge.

A leading cause of the decline of American innovation is the burdensome regulatory regime, which President Trump has exacerbated with protectionist measures despite his overarching deregulatory tack.²⁷² Just as understanding “control” is essential to participating in the CFIUS review process, enforcing the new framework will require the Committee to peel back the layers in individual supply and investment chains to understand who has actual control over affected parties.²⁷³ The interagency structure reflects the Administration’s focus on information-sharing and expanding access to non-public information at least among different executive agencies.²⁷⁴ However, the lack of an explicit process requiring the Committee to share the information on which the Committee bases its decision to impose mitigation measures raises due process concerns because the Committee deprives affected parties of their property interests without providing notice of, access to, or the opportunity to rebut the unclassified information undergirding the property infringement.²⁷⁵ The threat of judicial review and Article III standing might incentivize the government to be more proactive and forthcoming with its rationale for issuing mitigation measures or blocking orders for certain ICTS transactions, thus bolstering public-private communication.²⁷⁶ In situations where litigation is necessary, courts can clarify the meaning of core terms of Executive Order 13,873 through common law precedent to help private entities understand how to comply with the Executive Order and protect private parties’ due process rights by ensuring appropriate enforcement safeguards exist.²⁷⁷

While clear definitions and qualifications for terms of art are crucial for effective enforcement of and compliance with Executive Order 13,873, a flexible enforcement scheme is also important to allow for compromise with industry partners and to avoid being handcuffed by rigid language.²⁷⁸ The proposed rule offers a non-exhaustive list of “Telecommunications and Information Technology Equipment and Service Providers,” whose standard business operations fall within the scope of the Executive Order, but the implementing regulations could provide even more information to affected parties to avoid gratuitous transaction evaluations.²⁷⁹ For example, the framework could include licensing requirements to authorize transactions the Executive Order otherwise prohibits.²⁸⁰ The drafters could establish intermediate negotiation procedures to allow for risk mitigation and a more malleable application of the framework to ensure that mitigation, or even blocking, is appropriate and necessary in the given circumstances.²⁸¹ Ultimately, as the D.C. Circuit clearly stated in Ralls Corp., affected parties cannot challenge mitigation measures or blocking orders in themselves because the executive branch has broad discretion to make national security decisions; however, this reality does not foreclose affected parties’ opportunity to challenge the process that the executive branch took to arrive at its conclusions.²⁸² Moreover, implementing regulations that encourage increased collaboration between the private sector and executive branch when developing effective mitigation agreements support transparency, government accountability, and due process through information-sharing.

2. Create categories of technologies and transactions that correspond to predicted enforcement responses, similar to CFIUS.

Similar to the use of “critical technologies” in the CFIUS regulations, providing specific examples of technologies that would likely or definitely be subject to scrutiny under this new framework would put key stakeholders on notice and allow them to adjust their businesses and policies accordingly.²⁸³ Establishing a test or set of factors through the implementing regulations to help key stakeholders understand which technologies are within the scope of this framework and why would also further the due process objectives of providing adequate notice of and access to information that supports the Committee’s decisions, as well as diminish the likelihood of litigation by bolstering the capabilities of private parties to self-regulate.²⁸⁴

Under FIRRMA, “covered transactions” also include acquisitions of interests in real estate that are part of U.S. ports or near U.S. military or government facilities, as well as those that change the rights a foreign person has relative to a U.S. business and those deliberately designed to elude CFIUS’s review process.²⁸⁵ Additionally, clarifying distinctions between “controlling investments” and “other investments,” like CFIUS does, as well as the difference between active and passive investors, would alert entities to how pervasively the new Committee will investigate the funding of subject entities to enforce the Executive Order.²⁸⁶ For example, if a company knows that a certain percentage of investment from even a passive investor with a minority stake in the company will trigger review or mitigation measures under Executive Order 13,873, that company may prefer to reject that investment altogether rather than violate the Executive Order and endanger the property interests on which the company’s business depends.

3. Delegate specific authority to each of the agencies named in the Executive Order.

The interagency model consisting of both security and non-security agencies has proven effective in similar contexts, such as CFIUS review and SDGT designation, to ensure expertise and sensitivity to the various, discrete issues surrounding the complex challenges related to critical technologies.²⁸⁷ The new interagency committee should emulate CFIUS’s structural methods of disciplining its process, particularly requiring the members to reach a consensus before acting, which prevents any individual agency from using CFIUS’s authority to take an extreme position that its peers do not support.²⁸⁸

The new committee should also use Executive Order 13,224 and the multiagency process for identifying SDGTs as a model.²⁸⁹ Assigning specific enforcement responsibilities to certain agencies depending on the transaction at issue and agencies’ respective areas of expertise would also help private entities establish standing because a clear committee structure would facilitate identifying the worst actor for litigation purposes.²⁹⁰ To increase accountability and transparency, the framework’s implementing regulations should require the executive to publicly identify the list of entities it defines as “foreign adversaries” and the reasons for that determination, as the Departments of State and the Treasury do with SDGTs and FTOs.²⁹¹ Publishing such lists would explicitly warn all parties against doing business, particularly ICTS transactions, with publicly designated foreign adversaries to avoid violating Executive Order 13,873. Providing clear definitions of terms to facilitate compliance today without sacrificing adaptability for emerging challenges, designing a committee structure with well-defined roles for each constituent agency, and sharing the utmost unclassified information with partners in business and foreign governments would likely resolve the due process issues currently stemming from the Executive Order.²⁹² Consequently, proactive transparency would also benefit the executive branch by decreasing the prospects of litigation and allowing the executive branch to maintain more power to decide the types of information it wants to disclose without judicial involvement.²⁹³

Conclusion

In its current form, Executive Order 13,873 gives the federal government expansive power to interfere with all sorts of private businesses by granting the enforcement agencies the authority to subject certain technologies to the Executive Order or label entities as foreign adversaries even in the absence of an imminent national security threat when such action is merely a political convenience. Many of the businesses this Executive Order targets—including telecommunications, technology, healthcare, and financial services companies—have never had to consider national security compliance until now and are, thus, ill-equipped to do so.²⁹⁴ Experts maintain that bootstrapping national security policy into trade policy should remain an exceptional tool, reserved for situations that raise honest concerns regarding the safety and security of the American people.²⁹⁵ Additionally, when national security and trade policy converge, the government must be clearer about the scope of and rationale for such multipurpose executive action to limit uncertainty in the U.S. economy among U.S. trading partners.²⁹⁶

Executive orders are intentionally ambiguous to keep the authority they grant to the executive branch extremely broad and allow the executive branch to use its discretion when deciding whether to intervene in a non-military situation on national security grounds.²⁹⁷ Deliberate vagueness allows the executive to exercise its authority when it wants and refrain from asserting that authority when other foreign policy priorities take precedence.²⁹⁸ The executive branch likely will not enforce Executive Order 13,873 to prohibit technology transactions within the full scope that the language provides.²⁹⁹ However, as currently written, the Executive Order fails to provide potential affected parties with a reasonable opportunity to understand the conduct it prohibits as a whole. Key terms, namely “foreign adversary,” are poorly defined, which makes complying with the Executive Order or defending against enforcement difficult because parties currently have no way of confirming whether their business activity falls within the scope of the Executive Order before the government enforces it against them.

Judicial review is the most meaningful and efficient (relative to congressional action) way that individual litigants can check an abuse of executive power exercised through quasi-legislative action via executive order.³⁰⁰ Because courts treat executive orders with the “force and effect of law,” parties suffering injury as a result of Executive Order 13,873’s enforcement must have the opportunity to challenge the Executive Order before an impartial judiciary in accordance with the separation of powers principle and standing doctrine.³⁰¹ The Executive Order does not currently include any express procedural safeguards that provide affected parties with notice of, access to, and the opportunity to rebut the unclassified evidence the government gathers against them. Because the government may use that information to impose interim mitigation measures or blocking orders related to questionable ICTS transactions involving foreign adversaries, the government risks depriving affected parties of their property rights without due process. Furthermore, these affected parties have standing to sue the executive branch for due process violations when the executive branch fails to provide its rationale for enforcing the Executive Order in specific cases.³⁰² Thus, litigation and the consequential disclosure of more unclassified information will hopefully help increase executive transparency and accountability in enforcing Executive Order 13,873, ultimately lending greater integrity to the executive branch’s efforts to protect national security through trade policy without violating due process.³⁰³

Judge, Jury, and Executioner: Why Private Parties Have Standing to Challenge an Executive Order that Prohibits ICTS Transactions with Foreign Adversaries

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