UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
(FOOTNOTES AND EXHIBITS OMITTED)
PHILIP R. KARN, JR ) 7431 Teasdale Avenue ) San Diego, California 92122 ) ) ) Plaintiff ) ) ) v. ) ) ) UNITED STATES DEPARTMENT OF STATE ) etc ) and ) Civil Action No. 95-1812-LFO ) ) UNITED STATES DEPARTMENT OF COMMERCE ) ) and ) ) WILLIAM A. REINSCH UNDERSECRETARY ) BUREAU OF EXPORT ADMINISTRATION ) U.S. DEPARTMENT OF COMMERCE ) )
In this action, on remand from the Court of Appeals, plaintiff challenges the government's policy of controlling the exportation from the United States of powerful U.S.-origin "cryptographic" software, which can be used to "scramble" text and other communications created or transmitted using a computer. Plaintiff seeks the right to distribute throughout the world, in an unrestricted fashion, a diskette containing several encryption software programs that indisputably fall within applicable licensing requirements.
The use of cryptography has historically been one of the most significant national security matters facing the United States. The United States has a critical interest in gathering intelligence information abroad for several reasons, including to learn of potentially hostile acts against the interests of the United States. The key purpose of export licensing controls on cryptographic products is to regulate the distribution abroad of powerful cryptography which, if it fell into the wrong hands, could hinder the government's ability to collect essential information. The President has specifically determined that the unrestricted export of cryptographic products, including certain software, can jeopardize this country's foreign policy and national security interests. Plaintiff asks the Court to reverse the President's judgment in this instance and permit him to market abroad a computer diskette containing some of the programs subject to licensing controls without regard to where it is going, to whom, and for what purpose.
This is the second round for this litigation in district court.
Plaintiff originally challenged the application of export licensing regulations
then-administered by the Department of State to his diskette containing
encryption software. On March 22, 1996, the Court rejected all of
plaintiff's theories in dismissing his statutory claims and entering summary
judgment for the government as to his constitutional claims. Karn
v. U.S. Department of State, 925 F.Supp. 1 (D.D.C. 1996) (Richey, J.),
remanded by 107 F.3d 923 (1997). During the pendency of plaintiff's
appeal, the regulatory policy being challenged was transferred to the licensing
jurisdiction of the Department of Commerce. Without reversing or
vacating the Court's prior decision, the Court of Appeals remanded the
case for reconsideration of the claim raised by plaintiff under the Administrative
Procedure Act, which was no longer statutorily precluded from judicial
review. This is the principal task before the Court.
Plaintiff's APA claim, which challenges the rational basis of the government's determination that his software diskette is subject to export licensing requirements, remains unreviewable. Courts have routinely held that determinations as to which items should be subject to export restrictions for national security or foreign policy reasons fall within the purview of the Executive branch because they involve policy judgments that are not susceptible to judicial review. If the court reaches the merits of plaintiff's APA claim, the regulations have a substantial rational basis and readily survive under the deferential standard of review applicable.
Plaintiff's "Amended Complaint" also raises a new statutory claim that challenges the statutory authority upon which the regulations at issue are based, the International Emergency Economic Powers Act ("IEEPA"). Judicial review of this claim is also limited. The Court may not review the President's threshold decision to utilize his authority under the IEEPA to maintain in effect the applicable regulatory provisions. Beyond this, plaintiff's contention that the IEEPA precludes export licensing controls on encryption software is without merit.
Finally, plaintiff's Amended Complaint seeks to re-open all of the constitutional issues previously rejected by the Court. As noted, the Court of Appeals did not vacate or reverse the district court's prior decision on these claims. The regulations plaintiff now challenges are, in substance, precisely the same as when the district court previously ruled. As such, the prior decision may be treated as law of the case on the constitutional issues. Should the Court choose to reconsider plaintiff's constitutional claims, they continue to lack merit.
Count I of plaintiff's Amended Complaint alleges that it is arbitrary
and capricious, and an abuse of discretion, for the Commerce Department
to subject plaintiff's diskette to export licensing requirements when,
plaintiff claims, the "identical information" is contained in the appendix
of Applied Cryptography. Am. Compl. 57. The Court previously
rejected this APA claim on the ground that the Arms Export Control Act
expressly barred judicial review of the designation of an item controlled
for export. Karn, 925 F. Supp. at 5. The matter was remanded
because no statutory preclusion of review presently applies.
The mere absence of a statutory bar to review does not mean that plaintiff may now go forward with his non-constitutional APA challenge. The decision to place encryption products, including cryptographic source code, on the CCL is beyond the reach of judicial review even in the absence of an explicit statutory bar. That decision, and related decisions regarding the scope of the restrictions on the export of encryption items, reflect delicate considerations of national security and foreign policy that are beyond the purview of the judicial branch. Several courts have refused to review the determination of whether an item should be regulated for export -- entirely apart from whether the statute precludes review.
In United States v. Martinez, 904 F.2d 601, 602 (11th Cir. 1990), the court held that the designation of an item on the USML as subject to export licensing requirements for national security reasons — in that case cryptographic devices — "possesses nearly every trait that the Supreme Court has enumerated [that] traditionally renders a question `political.'" Id. (citing Baker v. Carr, 369 U.S. 186, 217 (1962)). Accord United States v. Helmy, 712 F. Supp. 1423, 1428-30 (E.D. Cal. 1989), cert. denied, 504 U.S. 945 (1992). "No satisfactory or manageable standards exist for judicial determination of the issue. . . . ." Martinez at 602.
Questions concerning what perils our nation might face at some future time and how best to guard against those perils "are delicate, complex, and involve large elements of prophecy. They are and should be undertaken only by those directly responsible to the people whose welfare they advance or imperil. . . ." Id. (citing Chicago & Southern Air Lines [v. Waterman SS. Corp.], 333 U.S. 103, 111 (1948)).
Similarly, in United States v. Mandel, 914 F.2d 1215 (9th Cir. 1990), the court held that whether export controls must be placed on a particular item "are quintessentially matters of policy entrusted by the Constitution to the Congress and the President, for which there are no meaningful standards of judicial review." Id. at 1223 (designation of sophisticated computers on the CCL not reviewable). Accord United States v. Moller-Butcher, 560 F. Supp. 550, 553-54 (D. Mass. 1983) ("[t]he power to classify goods on the CCL -- and to restrict them for export on national security grounds -- can (and should) be turned over to the executive branch, as it has the dominant role in conducting foreign policy"). Likewise, in United States v. Bozarov, 974 F.2d 1037, 1041-45 (9th Cir. 1992), cert. denied, 507 U.S. 917 (1993), a case concerning the export of computer disc equipment, the court upheld the constitutionality of the preclusion of judicial review under the EAA, finding that the need for uniformity in the realm of foreign policy is particularly acute; it would be politically disastrous if the Second Circuit permitted the export of computer equipment and the Ninth Circuit concluded that such exports were not authorized by the [Act]. Id. at 1044. See also United States v. Spawr Optical Research, Inc., 864 F.2d 1467, 1473 (9th Cir. 1988), cert. denied, 493 U.S. 809 (1989) ("It would severely undermine the [Commerce] Secretary's authority if judges and juries in individual criminal proceedings were permitted to reverse licensing determinations" as to what items should be covered on the CCL and "it would convert the judicial system into a policy-making forum, one in which the judiciary possess significantly less expertise and resources than the Secretary").
Accordingly, under the foregoing authority, whether cryptographic software -- and in particular, plaintiff's diskette -- "belongs" on the CCL, Martinez, 904 F.2d at 601, whether such software "should have been placed" on the CCL, id. at 602, or whether there was "any basis in fact," Mandel, 914 F.2d at 1222-23, for the Secretary's decision to place such software on the CCL and subject it to export licensing, is not a justiciable question. Reduced to its essence, plaintiff asks the Court to decide what is in the national security and foreign policy interests of the United States, and render a decision contrary to the judgment of the President and Secretary of Commerce. Whether plaintiff's encryption software diskette should be licensed for export turns on discretionary assessments made by Executive branch officials as to whether the uncontrolled distribution of an item overseas might harm U.S. interests. Particularly in the area of encryption, facts and circumstances surrounding the threats faced by the United States, and its capability and judgment on how best to deal with them, are, as the President determined, among the most sensitive national security information. See E.O. 13206, § 1; Halkin v. Helms, 598 F.2d 1, 8 (D.C. Cir. 1978) (upholding state secrets privilege on information related to NSA's collection of intelligence); Martinez, 904 F.2d at 602 (neither the Court nor the parties can be "privy to reports of the intelligence services on which this decision, or decisions like it, may have been based"). Accordingly, plaintiff's remanded APA claim challenging the designation of his diskette as subject to the CCL is not subject to judicial review.
The standards for judicial review of agency action challenged
as "arbitrary and capricious" under Section 706 of the APA are well established.
First, such review is not de novo. Rather, "the focal point for judicial
review should be the administrative record already in existence, not some
new record made initially in the reviewing court." Camp v. Pitts,
411 U.S. 138, 142 (1973). "The task of the reviewing court is to
apply the appropriate APA standard of review, 5 U.S.C. § 706, to the
agency decision based on the record the agency presents to the reviewing
court." Florida Power & Light Co. v. Lorion, 470 U.S. 729, 743-44
(1985). The Court may not review the factual basis of the agency's
determination by conducting its own fact-finding proceedings. Rather,
where the record may fail to explain the basis of an agency's action, the
court should obtain from the agency, including through affidavits if necessary,
additional explanation of the reasons for the agency decision. Camp
v. Pitts, 411 U.S. at 143.
Moreover, the Court's review of the merits of the agency action is a narrow one. The APA standard of review is highly deferential and presumes the validity of the agency action. Motor Vehicle Manufacturers Ass'n v. Ruckelshaus, 719 F.2d 1159, 1164 (D.C. Cir. 1983); Troy Corp. v. Browner, 120 F.3d 277, 283 (D.C. Cir. 1997). While review should be "careful and searching," the "court is not empowered to substitute its judgment for that of the agency." Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971); see also National Treasury Employees Union v. Horner, 854 F.2d 490, 498 (D.C. Cir. 1988). Rather, the reviewing court "must defer to the agency if its action has a rational basis in the record." Overton Park, 401 U.S. at 416. As the Court of Appeals has put it: "the proper inquiry under the 'arbitrary and capricious' standard is 'whether a reasonable person, considering the matter on the agency's table, could arrive at the judgment the agency made.'" New York State Commission on Cable Television v. F.C.C., 749 F.2d 804, 813 (D.C. Cir. 1984) (citation omitted). The record of plaintiff's commodity classification request for his software diskette demonstrates a clear rational basis for the government's action.
Plaintiff claims it is irrational for the government to regulate the
export of software that is already in electronic form, such as on his computer
diskette, but not source code printed on paper. This challenge does
not go to the specific commodity classification at issue, but to
the regulations themselves, which limit licensing controls to electronic
software. Such a distinction is plainly rational, however.
Indeed, it demonstrates that the government has not over-reached in regulating
encryption software by limiting the scope of the export controls at issue.
As stated by Commerce Undersecretary Reinsch, the regulatory distinction
is based on the fact that the electronic diskette "can more readily and
easily facilitate the spread of an encryption capability abroad."
Tab 10 to Reinsch Declaration at 2.
Plaintiff argues, however, that the diskette contains the same "information" as the source codes printed in Applied Cryptography, which were not controlled for export. Tab 9 to the Reinsch Declaration at 3. Plaintiff claims that "[d]ifferences in formatting of information relate to shape, size, type-face and general make-up or arrangement" and that "[s]uch differences do not affect the content of information." Id. This contention is off-point and inaccurate. It is not the "content of information" on the diskette that is at issue, but the ease with which the software programs thereon can be executed on a computer to encrypt data. As Undersecretary Reinsch pointed out, "[t]he diskette does not contain mere 'text' that can be 'read,' but software programming instructions directed to a computer microprocessor that can, with minimal additional effort, readily enable a computer to perform a cryptographic function." Tab 10 to Reinsch Declaration. The "information" on the diskette is quite different from the text of a legal brief or journal article. The diskette contains programming instructions that can ultimately be executed by the computer's microprocessor to enable the computer to perform a technical function -- in this case to encrypt data.
Thus, the notion that the printed book and diskette contain the "same information" misses the crucial point: the diskette is far more than informational, but directly functional as well for use in programming a computer to encrypt data. Indeed, plaintiff himself has stated that the software on this diskette is provided not merely to inform people, but "for those who wish to incorporate encryption into their applications." Tab 6 to Lowell Declaration, March 9, 1994 Letter to State Department at 2. Plaintiff recognized from the beginning of this dispute that his diskette provides a practical means for actually using source codes on a computer to encrypt data.
Recognizing the functionality of the diskette, plaintiff is left to argue that printed versions of the source codes have the same functionality. Citing a declaration he filed in this case, plaintiff argued that the printed source codes can be converted into an electronic format by typing or "scanning" them into a computer through Optical Character Recognition ("OCR") technology. See Tab 9 to Reinsch Declaration and the Declaration of Philip R. Karn. But as plaintiff's own submission demonstrates, there are important differences between software in electronic and printed form, certainly enough to conclude that their different treatment is rationally based.
As Undersecretary Reinsch stated, it is far easier to use the diskette as a means of obtaining encryption software than to start with printed source code. Before printed code can be rendered functional on a computer, any number of problems must be overcome, from errors in the printed text to errors that can occur in scanning or typing the printed text into a computer. Tab 10 to Reinsch Declaration at 2; see also McNamara Decl. 13-14. The source code of a computer program must be set forth precisely in order for the program to be executed. See McNamara Decl. 13. Unless any and all errors that arise through copying the printed source code can be identified and corrected, the program will not work. Id. The process of reviewing source code to detect for errors can be painstaking and tedious, because each character and space of the code must be examined, and some source codes may be quite long and complicated. Id; see DES Source Code at Tab 18 to the McNamara Declaration. Moreover, as Undersecretary Reinsch noted, the printed source code from which the program is typed or scanned into a computer must be error or "bug" free to begin with. Tab 10 to Reinsch Declaration at 2; see also McNamara Decl. 14. Verifying the accuracy of the printed source code requires the expertise of someone familiar with the particular source code language and with the fundamentals of cryptography. McNamara Decl. 14.
Plaintiff's declaration, submitted to the Commerce Department, candidly confirms all of this. Mr. Karn states that after scanning the "TRIPLE DES" source code from the Applied Cryptography appendix into a computer, he "began correcting the scanner's many errors, such as mistaking the digit '0' for the letter 'O' or mistaking the vertical bar '|' for the letter 'I'." Karn Decl. 5. After correcting such errors, Mr. Karn states that the compiling process "immediately pointed out additional errors I had overlooked in my visual inspection so I could correct them by reference to the Book." Id. 6. Mr. Karn "also noticed several errors in the [TRIPLE DES] listing printed in the Book." Karn Decl. 6. Mr. Karn then tested the program but, "[u]nfortunately, the test did not succeed, meaning that at least one error went undetected by the compiler in either the code as printed in the Book or as scanned." Karn Decl. 7. After scrutinizing the code more closely, Mr. Karn said he found and easily corrected another error in the printed version of the source code. "However, it still did not produce correct results." Id. After another hour of searching, Mr. Karn finally located and corrected the error. Id.
In short, on five separate occasions in this process, Mr. Karn encountered and had to correct errors before getting the printed source code properly converted to electronic form. There is, moreover, no genuine dispute of material fact on this issue. The parties stipulated that scanning may not produce error-free reproductions, and that it is thereafter necessary to "debug" the code. Joint Statement Of Facts Not In Dispute 23, 29. The parties also stipulated that the time it takes to type printed code, by itself, does not measure the time needed to execute the program, since typographical errors and program "bugs" must be detected. Id 28. Finally, the parties stipulated that verifying the accuracy of the code requires someone, like Mr Karn, who is familiar with the source code and has knowledge of cryptography. Id. 24.
The parties also agree that, ultimately, the technical impediments of typing or scanning may be overcome to produce executable software. McNamara Decl. 17. But the work Mr. Karn went through, supported by his expertise and knowledge of the source code, only confirms what the district court previously found: it is much easier to insert a ready-made, error-free diskette into a computer and work from there to program the computer to encrypt, than to transform printed source code into a functioning encryption program. See Karn v. Department of State, 925 F. Supp. at 14 ("plaintiff concedes that using the source code in Part Five of Applied Cryptography to encode material takes greater effort and time than using the Karn diskette").
For these reasons, it is surely reasonable for the Commerce Department to conclude that most users would seek to obtain software in an electronic media that renders it easier to "incorporate encryption into their [computer] applications," as Mr. Karn put it, rather than to bother with the scanning or typing process (for which many users would lack the knowledge to correct errors in the code). And, it is also reasonable for the government to conclude that the greater risk of the uncontrolled distribution of encryption software worldwide, and hence the greater threat to the government's national security interests, lies with software that is already in electronic form. For these reasons, plaintiff's remanded APA claim should be rejected.
Plaintiff's second set of statutory claims were not previously litigated,
and are based on the new statute underlying the licensing controls at issue
— the International Emergency Economic Powers Act. The Amended Complaint
alleges two types of statutory violations. First, plaintiff alleges
that the "implementation of the EAR, under the auspices of the IEEPA, for
a period of more than three years is not authorized by that statute" and,
therefore, violates Section 706(2)(C) of the APA. Am. Compl.
71. Second, plaintiff claims that the IEEPA expressly precludes the
regulation of encryption software as an "informational" item. The
first claim is not reviewable and the second claim clearly meritless.
As explained above, the Export Administration Regulations generally
implement the Export Administration Act of 1979, 50 U.S.C. App. §§
2401 et seq. When the EAA has lapsed, as it presently has, the President
has issued Executive Orders under IEEPA directing that these regulations
continue in force. The EAA last lapsed on August 19, 1994,
and the President has continued the EAR in effect by Executive Order ever
since. As should be apparent, plaintiff's claim that this extension
exceeds statutory authority is directed at action taken by the President
himself. This is fatal to plaintiff's claim, for several reasons.
First, this claim is brought under the APA and the President is not an "agency" under the APA whose actions are subject to judicial review. Franklin v. Massachusetts, 505 U.S. 788, 800 (1992). Assuming "for the sake of argument that some claims that the President has violated a statutory mandate are judicially reviewable outside the framework of the APA, see Dames & Moore v. Regan, 453 U.S. 654, 667 (1981), . . . longstanding authority holds that such review is not available when the statute in question commits the decision to the discretion of the President." Dalton v. Specter, 511 U.S. 462, 474 (1994).
The IEEPA authorizes the President "to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such a threat." 50 U.S.C. § 1701(a). This includes the authority to regulate the export of items subject to the jurisdiction of United States. Id. § 1702(a)(1)(B). In a case considering the same issue present here, United States v. Spawr Optical Research, Inc., 685 F.2d 1076, 1079-1082 (9th Cir. 1982), cert. denied, 461 U.S. 905 (1983), the court refused to review the President's decision to extend the EAR based on a similar grant of authority under the Trading With the Enemy Act, 50 U.S.C. §§ 1-44 ("TWEA"). The court noted that "the statute contained no standards by which to determine whether a national emergency existed or continued," and declined to address "the declaration and duration of a national emergency" to extend the EAR. Spawr, 684 F.2d at 1080.
The practice of using TWEA and IEEPA to maintain EAR controls when the EAA lapses has occurred intermittently for nearly 30 years. As the court in Spawr noted, Congress has "not only tolerated" the practice of extending the EAR by Executive Order when the EAA lapsed, but "expressed approval" of the President's actions to maintain export regulations in this way. Spawr, 685 F.2d at 1081. As one member of Congress observed, "'[o]ne of the reasons why the Export Administration Act has been allowed to expire so many times is because there was [the TWEA] . . . .'" Spawr, 685 F.2d at 1081 (citation omitted). In enacting IEEPA, Congress reaffirmed its approval of the practice of using such emergency authority to extend the EAR when the EAA lapsed. See House Report 95-459 to H.R. 7738, Trading With the Enemy Act Reform Legislation, 95th Cong., 1st Sess. (1977) at 13. As the Supreme Court has stated:
The only aspect of plaintiff's statutory authority claim that might
be reviewable is whether export controls on cryptographic software maintained
by the Secretary of Commerce under the EAR exceed a specific provision
of the IEEPA. Plaintiff claims that export controls on his
encryption software diskette exceed statutory authority under a provision
of IEEPA that precludes the regulation of so-called "informational
materials," 50 U.S.C. § 1702(b)(3). Am. Compl.
73. This claim is without merit.
"It is axiomatic that '[t]he starting point in every case involving construction of a statute is the language itself.'" Landreth Timber Co. v. Landreth, 471 U.S. 681, 685 (1984) (quoting Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 756 (1975) (Powell, J. concurring). The first step of statutory construction is to apply the plain meaning of the statute since there is a "strong presumption that Congress expresses its intent through the language it chooses." INS v. Cardoza-Fonseca, 480 U.S. 421, 432 n. 12 (1987). If the language of a statute is clear, the court is to look no further in determining the statute's meaning. If, however, the language of the statute is unclear, the court may enlist the aid of pertinent legislative history. Environmental Defense Fund v. Reilly, 909 F.2d 1497, 1502 (D.C. Cir. 1990).
Pursuant to Section 1702(b)(3) of IEEPA, the authority under that statute does not extend to the importation or exportation of "information and informational materials," whether commercial or otherwise, regardless of format or medium of transmission, including but not limited to "publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMS, artworks, and news wire feeds." 50 U.S.C. § 1702(b)(3). Plaintiff's contention that this precludes export licensing for cryptographic software is without merit. Indeed, this very section provides that exports which are otherwise controlled for national security reasons under Section 5 of the EAA, or anti-terrorism and nonproliferation foreign policy reasons under Section 6 of that Act, 50 U.S.C. App. §§ 2404, 2405, are unaffected by the IEEPA's informational materials provision -- that is, they are not exempt from export control. In transferring encryption items to the Commerce Control List, the President expressly directed that they be subject to the requirements of both Sections 5 and 6 of the EAA. See Presidential Memo at 2, 2. Accordingly, the very "informational materials" provision on which plaintiff relies indicates that where items are subject to the requirements of both Sections 5 and 6 of the EAA, the exemption from control under IEEPA does not apply.
Beyond this, the text of Section 1702(b)(3) does not provide that any software, let alone encryption software, is encompassed by the terms of this exception. Software is a very specific type of commodity and a term of art that is well known to Congress. It is not reasonable to assume that Congress would have omitted the common terms "software" or "computer program" if it intended to preclude any regulation thereof under IEEPA. One term in Section 1702(b)(3) that could be associated with software is "CD-ROMS," which can be a medium for conveying software. But mere reference to this medium is insufficient to conclude that Congress intended to exclude all software from export controls under IEEPA, particularly in light of the separate reference to items regulated pursuant to the EAA.
Legislative history also does not indicate that software is meant to be decontrolled for export by this exemption. Rather, it reflects only a general intent that IEEPA not be used to regulate "information protected by the First Amendment." See House Conf. Rep. 103-482, 1994 U.S. Cong. & Admin. News 305, 483. The intent of the "informational materials" provision is generally "to protect the constitutional rights of Americans" to "educate themselves" about the world by communicating with people of other countries in a variety of ways, such as "sharing information and ideas" with persons around the world, "traveling abroad," and "engaging in educational, cultural, and other exchanges" with persons around the world. Id. at 482. This does not indicate any intent to exclude from export control an item so specific as software, which can have an actual technical capability to enable a computer to perform a specific function. A claim concerning statutory authority turns on what the statute actually provides, not on the post-hoc imposition of a First Amendment theory that Congress never considered.
Finally, construing this "informational materials" provision of IEEPA to preclude export controls on software would lead to "absurd or impracticable consequences." United States v. Missouri Pacific Railroad Co., 278 U.S. 269, 278 (1929); National Ass'n of Broadcasters v. F.C.C., 740 F.2d 1190, 1202 (D.C. Cir. 1984). Software has been subject to export licensing requirements for many years, including on the EAR. In addition, the EAR also regulates the export of technical information, called "technology," which is proprietary (i.e. non-public) information necessary for the development, production, and use of products controlled on the CCL. See 15 C.F.R. § 772 (definition of "technology"); 15 C.F.R. § 734.3(b)(3) (exceptions to technology controls for published information). Such technology can have profound national security and foreign policy implications (for example, information on the manufacture of nuclear facilities or super computers). Under plaintiff's theory, if cryptographic source code were deemed to be a mere "informational material," then no source code could be regulated for export under IEEPA. What is more, "technology" regulated under the EAR, which is also arguably "informational material," likewise would be precluded from export control under the IEEPA. In short, plaintiff's theory would negate significant and long-standing aspects of the U.S. export controls on software and technology. This construction is unreasonable where Congress expressly intended that IEEPA be used to extend the EAR.
Plaintiff's amended complaint raises several constitutional claims
that were previously decided by the Court. The Court of Appeals did
not reach these issues and, in remanding the case for reconsideration of
a statutory claim, did not reverse or vacate the Court's decision.
In substance, the government's determination with respect to plaintiff's
diskette is precisely the same as when plaintiff originally filed suit.
Moreover, the EAR, in pertinent part, establish the same export licensing
requirements that plaintiff originally challenged as unconstitutional.
Indeed, plaintiff conceded in the Court of Appeals that his constitutional
claims were ripe for appellate review notwithstanding the change in regulatory
Under these circumstances, there are no grounds for reconsidering the Court's prior analysis. As the Court of Appeals has put it, "the same issue presented in the same case in the same court should lead to the same result." LaShawn A., v. Barry, 87 F.3d 1389, 1393 (D.C. Cir. 1996) (original emphasis). As the Supreme Court has stated, "[i]n the absence of extraordinary circumstances, such as where the initial decision was 'clearly erroneous and would work a manifest injustice,'" courts should be loathe to reconsider prior decisions. Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817 (1988) (citations omitted). This doctrine is not a jurisdictional limitation, but does express "the practice of courts to refuse to reopen what has been decided." Messenger v. Anderson, 225 U.S. 436, 444 (1912). Accordingly, absent compelling grounds for reconsideration, the Court's prior conclusions of law should continue to apply to plaintiff's challenge to the EAR. Plaintiff should not get another "bite at the apple" on his constitutional theories for no reason other than that he wants a second opinion.
In addition, the Court of Appeals did not purport to remand all of the issues in this case with its observation that the "district court may conduct such evidentiary hearings as it deems appropriate" with respect to any disputed issues of material fact as to the application and constitutionality of the new regulations. See Feb. 13, 1997 Court of Appeals Order. This states nothing more than the general discretion a district court has in deciding any lawsuit. But the Court of Appeals' Order does not purport to supplant other applicable requirements of law. Plaintiff would still have to demonstrate that such an evidentiary proceeding is warranted. Under Fed.R.Civ.P. 56, the "mere existence of some alleged factual dispute . . . will not defeat an otherwise properly supported motion" for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original). Rather, the non-moving party "'must come forward with specific facts showing there is a genuine issue for trial.'" Bias v. Advantage International, Inc., 905 F.2d 1558, 1561 (D.C. Cir.), cert. denied, 498 U.S. 958 (1990) (citing Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986)).
In previously granting summary judgment for the government, the Court rejected plaintiff's request for an evidentiary hearing and determined that no genuine issue of material fact exists in this case. This continues to be the case. Neither plaintiff's statutory nor constitutional claims that the regulations are "irrational" are subject to an evidentiary proceeding. Moreover, many of the material facts relevant to plaintiff's claims have been stipulated to. See Defendants' Second Statement of Material Facts As To Which There Is No Genuine Issue 42-51, 53-54. Beyond this, plaintiff's desire to question the national security judgments at issue does not constitute a genuine dispute of fact, as the Court previously found. Karn, 925 F. Supp. at 11 ("plaintiff attempts to disguise a disagreement with the foreign policy judgment of the President as a factual dispute").
Defendants have already outlined above the compelling rationale
for subjecting cryptographic software to export licensing requirements:
to protect vital national security and foreign policy interests, including
the foreign intelligence-gathering capabilities of the United States.
This rationale applies with full force to cryptographic software in the
form of source code, which can be used to encrypt messages by converting
such code for execution through an automated process. As also set
forth above, it simply does not follow that the government lacks a rational
basis for regulating encryption source code in computer-ready form when
printed source code is not treated the same. Plaintiff's own declaration
provides a graphic illustration of the obstacles posed by the use of printed
source code. It is certainly reasonable for the government to conclude
that individuals and entities abroad are more likely to seek a cryptographic
capability through software already in electronic form. The government
therefore has a rational basis for believing that the unrestricted export
of cryptographic source code in electronic form poses a greater threat
to its interests than the corresponding export of published materials.
Plaintiff next claims that export licensing controls on his diskette
constitute an impermissible prior restraint on the disclosure of "ideas
and information." Am. Compl. 65. This claim is without
merit. Regulating encryption software for export bears no resemblance
to classic prior restraints. Prior restraint doctrine applies where,
as in the famous Pentagon Papers case, the government seeks to enjoin the
publication of information it believes might be harmful to security, New
York Times v. United States, 403 U.S. 713 (1970) (per curiam), or where
it seeks to disfavor or control certain ideas or information. Near
v. Minnesota, 283 U.S. 697, 711 (1931) (state officials sought to censor
a newspaper by enjoining it from publishing "scandalous and defamatory
matter," including "charges of official misconduct"). Prior restraint
theory is concerned with the free flow of pure information and ideas.
Here, in contrast, controls on the export of encryption source code are not aimed at preventing the free exchange of information and ideas about cryptography, either domestically or internationally. The EAR goes out of its way to distinguish between the export of encryption hardware and software, which have a technical capability to encrypt, and the public dissemination of information about cryptography. Information that is or will be made publicly available is not subject to the EAR's controls. See 15 C.F.R. § 734.3(b)(3). This includes publication through open symposia and conferences, fundamental academic research, and information released by instruction at academic institutions. Id. §§ 734.3(b)(3), 734.7, 734.8, 734.9. In addition, the EAR excludes books, magazines, and other printed materials on all subjects, thereby imposing no controls on the export of publications on cryptography. Id. § 734.3(b)(2). Consequently, there is a broad array of publicly exchanged information and ideas on cryptography, from textbooks, to magazine articles, to academic courses, to public symposia. McNamara Decl. 21-39 and Tabs 1-16; see also Tabs 1-21 to the Declaration of Anthony J. Coppolino. In short, the focus of the export controls at issue is not with the spread of ideas, which are widely published, but with the uncontrolled spread of items that can provide an actual capability on a computer to conceal information abroad that is vital to U.S. interests.
The last of plaintiff's constitutional theories is that export
licensing controls on his diskette violate his right to the freedom of
speech. Am. Compl. 63. Again, this claim was previously
analyzed by the Court and decided correctly. Karn, 925 F. Supp. at
9-12. The Court correctly found that "the government regulation at
issue is clearly content-neutral" and, therefore subject to intermediate
First Amendment scrutiny. See Karn, 925 F. Supp. at 10 (citing
United States v. O'Brien, 391 U.S. 367, 377 (1968)); see also Turner Broadcasting
System, Inc. v. FCC, 512 U.S. 622, 642 (1994). The government's concern
is not with the suppression of ideas, but with the proliferation of cryptographic
hardware and software that might make it easier for foreign intelligence
targets to deny the United States access to information vital to U.S. interests.
Karn, 925 F. Supp. at 10. The Court also correctly found that the
government is "not regulating the export of the diskette because of any
expressive content." Id. Whatever informative value encryption
source code may have for some, it remains a sequence of instructions
to a computer, and it is routinely written, distributed, and used for the
wholly non-expressive purpose of making a computer carry out specified
tasks — here, the task of encrypting data. Indeed, the
EAR treats encryption source code exactly like encryption object code and
hardware, which are not even arguably a means of expressing ideas about
cryptography. See 15 C.F.R. 742.15.
The Court then correctly found that export licensing controls on cryptographic source code satisfies each of the requirements of O'Brien. Karn, 925 F.Supp. at 11-12. The policy plainly "further an important or substantial governmental interest," O'Brien, 391 U.S. at 377, since the use of encryption products by foreign intelligence targets "can have a debilitating effect on NSA's ability to collect and report . . . critical foreign intelligence." McNamara Decl. 5; Karn at 11. In addition, the interests served by the EAR's export controls are "unrelated to the suppression of free expression." O'Brien at 377. Clear evidence of this lies in the fact that the government does not regulate the publication of ideas about cryptography or cryptographic software, and academic discussion. See 15 C.F.R. § 734.3(b)(3); McNamara Decl. 20-40; Tabs 1-21 to the Coppolino Declaration.
Finally, the EAR's export controls are narrowly tailored. Id. This requirement is satisfied if the government's interests "'would be achieved less effectively" or would be "more exposed to harm" absent export controls. Clark v. Community for Creative Non-Violence, 468 U.S. 288, 297 (1984); Ward v. Rock Against Racism, 491 U.S. 781, 799 (1989). The unlimited export of significant U.S.-origin encryption would surely expose the government's interests to more harm, and result in those interests being achieved less effectively. See McNamara Decl. 5 (encryption used for foreign intelligence targets can have a debilitating effect on U.S. interests).
At the same time, the government has taken care not to cast its net more widely than necessary. Export controls are targeted at precisely the activity that threatens the government's legitimate interests. First, the regulation at issue applies to actual software programs, not merely descriptions of such programs, or published books, articles, and ideas about cryptography. This "leave[s] open ample alternative channels of communication" for the exchange of information and ideas regarding cryptography. Ward, 491 U.S. at 802. Moreover, not just any type of software is regulated, but a specific kind: encryption software in electronic form. Moreover, not only must the software at issue be encryption software, but a specific type of encryption software. Only programs that have a general capability to encrypt information are at issue here. Furthermore, not every such encryption program is subject to export licensing. Finally, the regulations do not prohibit the export of encryption products altogether, but rather establish a licensing system under which exports that are consistent with our national security and foreign policy interests may go forward. See 15 C.F.R. 742.15(b). For these reasons, export controls on encryption software are narrowly tailored and easily satisfy First Amendment scrutiny.
FRANK W. HUNGER
Assistant Attorney General
WILMA A. LEWIS
Acting United States Attorney
VINCENT M. GARVEY
Deputy Branch Director
ANTHONY J. COPPOLINO
Department of Justice
Civil Division, Room 1084
901 E Street, N.W.
Washington, D.C. 20530
Tel. (Voice): (202) 514-4782
(FAX): (202) 616-8470 or 616-8460
Attorneys for the Defendants.
THOMAS C. BARBOUR
ROMAN W. SLONIEWSKY
Office of Chief Counsel for Export Administration
United States Department of Commerce
SUSAN A. ARNOLD
Office of the General Counsel
National Security Agency
United States Department of Defense