Today, U.S. Secretary of State Rubio issued public notice of his determination that the efforts of “any agency” to “control…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 (APA).
This technical designation sets the stage for potentially sweeping changes in the process by which agencies create and amend a wide variety of trade and customs regulations that “control” cross-border trade. Following Secretary Rubio’s notice, agencies such as U.S. Customs and Border Protection and the U.S. Department of Commerce could take the position that types of rules that were in the past subject to advance notice, public comment, and a lag between finalization and entry into force can now be promulgated essentially overnight.
Congress’ Default Framework for Public Participation in Agency Rulemaking
Congress passed the Administrative Procedure Act (APA) in 1946. Although amended over the years, its overall structure and purpose have remained largely consistent. When it comes to agency “rulemaking” (e.g., issuing, amending, or repealing regulations), the APA establishes a default requirement that most rules undergo a public process that begins with the publication of a proposed rule in the Federal Register and involves accepting at least thirty days of public comment on the same, and considering and addressing significant comments. These procedures are often given the shorthand “notice-and-comment.” Once the final rule is published, the APA also generally requires an additional thirty-day delay before it becomes effective. Summed up, these provisions of the APA trade speed in favor of transparency, predictability, and responsiveness to public concerns.
But the APA strictures on rulemaking do not apply universally. Since its inception, the APA has exempted two types of rules from notice-and-comment procedures. The first and most relevant here are those involving “a military or foreign affairs function of the United States.” The second type relates to rules concerning, e.g., agency management, grants, and contracts. Where such an exception applies, a regulation can be finalized without public comment, and can enter into effect immediately (even before being published in the Federal Register).
Longstanding Guardrails Frequently Applied to Trade Rules
Traditionally, the Executive Branch has seldom invoked the “foreign affairs” exception to exempt trade-related rules from undergoing notice-and-comment requirements. Put differently, the day-to-day rules that applied to U.S. agencies’ regulation of matters relating to international trade were not characterized as a “foreign affairs function” within the meaning of the APA. Agencies deeply involved in international trade, such as the U.S. Department of Commerce, U.S. Customs and Border Protection, and the U.S. International Trade Commission, have therefore regularly published proposed rules with a waiting period prior to a them entering into effect, and solicited and considered public comment on the same. (To be sure, there are preexisting exceptions in the world of trade, such as under the Export Control Reform Act and Section 232 of the Trade Expansion Act of 1962, but these tend to relate to areas that more “clearly and directly” implicate international security relations.)
The public comments provided in response have often resulted in material adjustments to the proposed rule, including the adjustment of regulatory standards, the correction of errors, and the clarification of ambiguities.
Today, however, the Secretary of State issued public notice of his determination (dated February 21, 2025) that “all efforts, conducted by any agency of the federal government, to control…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, 5 U.S.C. 553, 554.” This lays the groundwork for the Administration to assert an exemption from notice-and-comment requirements in connection with new customs and trade regulations, to the extent that the regulation “controls” cross-border trade.
It Remains to Be Seen How Broadly the Exception Will Be Invoked
The sweeping breadth of the Secretary of State’s framing of foreign affairs functions vis-à-vis trade raises the potential for overnight changes to a variety of existing trade and customs rules. But it is also possible that broad language was used to provide maximum optionality, without portending a wholesale change in existing practice. In espousing the justification for this broad invocation of the foreign affairs exception, mentions of trade-related to, e.g., “contraband,” “harmful materials that flow across the border,” “dangerous drugs, weapons, and technology,” and “export control enforcement policies and practices,” and “implementation of the Arms Export Control Act.” Thus, it is possible that the Administration might assert the exception in relation to only the foregoing issues. Even this narrower approach could, nevertheless, create uncertainty. For example, a U.S. Customs and Border Protection article published during the Biden Administration draws a connection between the importation of prohibited substances and the de minimis exception.
Moreover, eligibility for the foreign affairs exception has been litigated before federal courts. In the future, it is possible that affected parties may attempt to challenge the government’s claim that a given rule involves a foreign affairs function of the United States, if it goes materially beyond past practice. Indeed, even if the Secretary of State’s framing were accepted in its entirety, questions that may be subject to litigation remain, such as whether a regulation “controls” the “transfer of goods,” and how much “control” is needed to be a “foreign affairs function.” On the other hand, the Government may argue that a regulation found to involve a foreign affairs function should receive more deferential substantive review due to the nexus with foreign relations.
Cassidy Levy Kent regularly assists clients in ensuring compliance with existing customs and trade regulations, ascertaining the scope and applicability of trade rules, and, as appropriate, challenging or defending the regulations themselves.