[CTC] Rubio moves to shield cross-border commerce issues from litigation

Mon Mar 17 12:21:03 PDT 2025

Rubio moves to shield cross-border commerce issues from litigation
By David LaRoss, Inside U.S. Trade 
March 17, 2025 at 10:26 AM

Secretary of State Marco Rubio is claiming that all federal actions on immigration and cross-border commerce are exempt from the Administrative Procedure Act’s judicial review and rulemaking standards because they are “foreign affairs” matters, a move two trade lawyers say could lead to litigation if applied to trade policy.

In a memo published in the March 14 Federal Register -- despite being dated Feb. 21 -- Rubio broadly invokes provisions in the APA that say its requirements for both formal rulemaking and judicial review of agency actions exclude “the conduct of military or foreign affairs functions.”

Citing those sections of the law, Rubio writes, “I hereby determine that all efforts, conducted by any agency of the federal government, to control the status, entry, and exit of people, and the transfer of goods, services, data, technology, and other items across the borders of the United States, constitute a foreign affairs function of the United States under the Administrative Procedure Act.”

Tim Meyer, the Richard Allen/Cravath Distinguished Professor in International Business Law at Duke University School of Law, tells Inside U.S. Trade that Rubio’s approach could allow the Trump administration to take executive action on the listed subjects without notice-and-comment rulemakings and shield whatever steps it takes from claims that they are “arbitrary and capricious” -- the APA’s standard for illegality.

Meyer said applying the foreign-affairs exemption would “insulate a lot of what they’re doing, both from procedural rulemaking, and maybe from arbitrary-and-capricious review.”

For instance, he said, U.S. Customs and Border Patrol could scrap Biden-era rule proposals aimed at reforming the de minimis system of duty-free entry for low-value shipments and enact its own reforms with no further notice or public engagement. “That’s exactly the kind of thing that’s challengeable under the APA that the administration might try to claim is now exempt,” Meyer said.

Nazak Nikakhtar, chair of the national security practice at Wiley Rein who served as an assistant Commerce secretary during Trump’s first term, wrote in a LinkedIn post that the memo is a “[v]ery interesting move by Secretary Rubio. This Federal Register Determination eliminates the [APA] process requirement for many tariff and export control actions, as well as immigration and other actions. This means the Trump Administration can regulate (e.g., restrict) cross-border transactions involving persons, goods, services, data and technology more quickly - virtually overnight.”

And she told Inside U.S. Trade in a March 14 interview, “I think that they want to be insulated from judicial review” as President Trump advances a litany of trade actions under a wide range of statutes. Trump’s first administration faced thousands of court challenges over his statutory authority to impose various tariffs, some of which are still pending on appeal.

“I think it’s a reflection of the administration wanting to move very fast,” she said, particularly in areas “where they want to engage a little bit with the element of surprise, because that’s part of foreign affairs.”

Rubio’s two-page memo emphasizes a need to combat “foreign spies, contraband, and harmful materials that flow across the border, as well as unchecked mass migration, narcotics trafficking, human smuggling and trafficking, and other destabilizing or unlawful activities, including the flow of dangerous drugs, weapons, and technology.”

While it does not mention tariffs, the letter says that “Eliminating or mitigating these threats involves visa policies, export control enforcement policies and practices, and other foreign affairs functions entrusted to me, as Secretary of State, under the Constitution, at the direction of the President, and by statute.”

And though the State Department typically does not steer trade policy, Rubio has repeatedly brought up trade barriers and deficits in meetings with his foreign counterparts. For instance, State on March 14 released a readout from a talk between Rubio and Italian Foreign Minister Antonio Tajani on the sidelines of a G7 ministers’ meeting in Canada that said the two had “reaffirmed their shared commitment to tackling a range of global challenges, including balancing trade relationships, countering authoritarianism in Venezuela, and stabilizing the situation in the Middle East.”

In response to a request for comment on plans for implementing the memo, a State Department spokesperson said only “The determination speaks for itself.”

Courts must decide exemption

Meyer said Rubio’s memo alone does not guarantee the exemption will apply because the APA “does not empower the Secretary of State to determine what is a foreign affairs issue.” Rather, courts make that decision on a case-by-case basis.

“What would happen is the administration would do something that a plaintiff would challenge … the government would come in and say ‘This isn’t subject to the APA’s rulemaking requirements because of the foreign-affairs exemption,’ and then the court would have to decide whether or not the issue is a foreign-affairs issue,” Meyer said.

Notably, the U.S. Court of International Trade held in 2022 that tariffs Trump imposed against China during his first term, under Section 301 of the Trade Act of 1974, were still subject to the APA despite the government’s claim that the exemption should cover work by the Office of the U.S. Trade Representative to craft and implement them.

In that case, a three-judge CIT panel wrote that “the court finds unconvincing the Government’s argument that USTR’s actions ‘fall squarely within the foreign affairs ... exception.’”

They added that “courts have recognized that the foreign affairs exemption does not apply simply because a rule relates to ongoing negotiations” and noted that precedent set by the U.S. Court of Appeals for the Federal Circuit, which binds CIT, says an “agency action must have ‘definitely undesirable international consequences’ to qualify for the foreign affairs exemption.” The tariff proceedings did not meet that standard, the judges held.

Further, the judges wrote that even when an action does qualify, “[w]hen invoked, the exemption ‘will be construed narrowly and granted reluctantly,’ and ‘only to the extent that the excepted subject matter is clearly and directly involved in a foreign affairs function,’” citing a 1984 CIT case known as Mast Indus v. Regan. Litigation over the first-term tariffs, known as In re: Section 301 Cases, is still pending on appeal at the Federal Circuit.

Meyer said the CIT decision shows courts are unlikely to defer to Rubio’s finding. Nikakhtar, however, said the precedent is limited. “I think that was obviously very specific to 301. I think in this case it depends on how they use it -- if they’re using it in the national security context, I think it will stand on solid ground,” she said.

“I think there’s a good chance the courts will see that how it’s used really does align with foreign policy rather than regulating trade for the sake of regulating trade.… I think the courts will be very reluctant to start splitting hairs and determine what’s foreign affairs and what’s not.”

She also said she doubted that the administration would rest its defense of such actions solely on the APA determination: “My guess is that this is to give the administration sort of a belt and suspenders, in terms of litigating trade actions.”

But even if Rubio’s exemption claim is legally uncertain, Meyer said he expects the administration to quickly apply it to a long list of executive actions on both trade and immigration.

“This is part of the ‘move fast and break things’ strategy. They don’t want to have to wait a year to implement their policy” while notice-and-comment rulemaking processes play out, he said. “They want to do it now, they want to do it fast.”

Possible candidates for that treatment in trade policy include the CBP de minimis rulemakings and planned tariffs on automobiles. Observers have predicted that Trump could use a 2019 Commerce Department report that found vehicle imports “may impair the national security” under Section 232 of the Trade Expansion Act of 1962 to justify duties on the sector, but would face litigation over that approach; the APA exemption could help fend off such lawsuits.

“It’s a little bit difficult to know whether there is something coming down the pipe that is going to be covered by this,” particularly in the trade arena, Meyer said, as “most of that memo is really about immigration.” -- David LaRoss (dlaross at iwpnews.com <mailto:dlaross at iwpnews.com>)

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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