Questions And Answers with Gary Endelman
How should you prepare your multi-national client to comply with Deemed Export rules?
How should you prepare your multi-national client to comply with Deemed Export rules?
Our old friend, the dull, drab, mundane I-129 workhorse petition is changing. It is getting a whole new look. Cast your eyes down to Section 6 that mandates compliance with "deemed export" statutes governing the release of controlled technology or technical data to foreign persons in the USA. What does it say?
With respect to the technology or technical data the petitioner will release or otherwise provide access to the beneficiary, the petitioner certifies that it has reviewed the Export Administration Regulations (EAR) and the International Traffic in Arms regulations (ITAR) and has determined that:
A license is not required from either the U.S. Department of Commerce or the U.S. Department of State to release such technology or technical data to the foreign person; or
A license is required from the U.S. Department of Commerce and/or the U.S. Department of State to release such technology or technical data to the beneficiary and the petitioner will prevent access to the controlled technology or technical data to the beneficiary until and unless the petitioner has received the required license or other authorization to release it to the beneficiary.
The petitioner must check one of the above boxes on the form.
- What do I have to confirm? This is the first question any large or even small employer will have.
Answer: That you have studied the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations(ITAR) to determine under what circumstances technology or technical data can be released to the alien worker. Based upon such review, you must certify that, either a license is not required from the U.S. Department of Commerce or Department of State, or, should a license be necessary, you must promise to prevent the alien worker from gaining access to the controlled technology or data unless and until it is obtained.
- The coverage of Deemed Export applies to "foreign persons" Your client's HR staff wants to know who they are. Foreign Persons are:
- Not U.S. Citizens
- Not Legal Permanent Residents ("green card" holders)
- Not Protected Persons as defined under special provisions of U.S. law (refugees or asylees, or 8 USC § 1324b)
- By contrast, it can include F-1 students, H-1B temporary workers, Trade Nafta, and L- 1 intracompany transferees to name but a few common examples . For I-129 sponsorship purposes, certification of compliance, as noted above, extends to H1B, L-1, )-1 and H1B-1.
- How do I know where to look?Their next question.
Answer: The export of defense and military-related technologies are listed on the U.S. Munitions List,(http://www.pmddtc.state.gov/regulations_laws/itar.html) or 22 CFR 121.1. For the rest, make the EAR's Commerce Control List(http://www.bis.doc.gov/policiesandregulations/ear/) your favorite bed-time reading. Links to the CCL are also posted by Stanford University. See http://www.stanford.edu/dept/DoR/exp_controls/lists.html#ccl ITAR rules are found at 22 CFR 120-130 and EAR can be perused at 15 CFR 770-774. Detailed guidance on ITAR criteria shaping the release of controlled technical data can be enjoyed at http://www.pmddtc.state.gov.faqs/license_foreignpersons.html. In general, an export license is a mandatory condition precedent to exposing ITAR technological data to a foreign national. See 22 CFR 123.1 and 124.1. Due to arms embargo or similar restrictions, such data transfer may be prohibited to certain nationalities, including China, Burma, Liberia and the Sudan. See 22 CFR 126.1. A very helpful webpage is maintained by the Bureau of Export Administration, Office of Chemical and Biological Controls and Treaty Compliance http://www.bis.doc.gov/deemedexports/foreignationals.pdf
Uncle Sam's concern with controlled technology is nothing new; it long pre-dates 9/11.
- Which government agency regulates the export of so-called "dual use" technologies with potential military and commercial applications?
Answer: Bureau of Industry and Security in the Department of Commerce (BIS)
- Which countries are most likely to be impacted by "deemed export" laws?
Answer: China, Cuba, Iran, North Korea, Sudan and Syria. Russia and China are in a secondary tier of concern. Wait, there is more! While we are moving somewhat outside the realm of I-129 Certification, all US employers have to be mindful of our friends at the Office of Foreign Asset Controls who go by the wonderful acronym "OFAC". These guys adminster and enforce economic and trade sanctions that the United States has imposed either unilaterally or through adherence to international agreements. A list of countries currently subject to boycott programs are available at http://www.ustreas.gov/offices/enforcement/lists/.
- If I have to apply for an export license, how do I do it?
Answer: Apply online from the Commerce Department (www.bis.doc.gov/snap/pinsnapr.htm) You can also call (202)482-3332 and ask for Form BIS-748P. Also take a look at http://www.bis.doc.gov/licensing/applying4lic.htm
For military technology, apply through the State Department(http://www.pmddtc.state.gov/licensing/index.html). Within the vast confines of Foggy Bottom, it is the Directorate of Defense Trade Controls(DDTC) that administers the Munitions List and administers ITAR release permissions. Instructions for completion of the Form DSP-5 Application, Request for Permanent Export of Unclassified Defense Articles and Related Unclassified Technical Data can be found at http://pmdtc.org/docs/DSP_5_guidelines.pdf .
In all likelihood, most immigration lawyers will not need to acquire an intimate knowledge of ITAR. ITAR covers a "defense article" or "defense service". What is that you ask? The answer can be found in ITAR Section 120.3:
An article or service may be designated or determined in the future to be a defense article (see §120.6) or defense service (see §120.9) if it:
(a) Is specifically designed, developed, configured, adapted, or modified for a military application, and
(i) Does not have predominant civil applications, and
(ii) Does not have performance equivalent (defined by form, fit and function) to those of an article or service used for civil applications; or
(b) Is specifically designed, developed, configured, adapted, or modified for a military application, and has significant military or intelligence applicability such that control under this subchapter is necessary.
The intended use of the article or service after its export ( i.e. , for a military or civilian purpose) is not relevant in determining whether the article or service is subject to the controls of this subchapter. Any item covered by the U.S. Munitions List must be within the categories of the U.S. Munitions List. The scope of the U.S. Munitions List shall be changed only by amendments made pursuant to section 38 of the Arms Export Control Act (22 U.S.C. 2778).
Not many of those, right? What about something that potentially has both military and commercial applications? Well, friends, this is known in the trade as "dual use " technology. What does that mean? Look at Part 772 of the EAR is:
Dual-use-Items that have both commercial and military or proliferation applications. While this term is used informally to describe items that are subject to the EAR, purely commercial items are also subject to the EAR (see §734.2(a) of the EAR).
- What does it mean to "export" technology anyway?
Answer: Make 15 CFR 734.2(b)(1) your constant companion . You can either physically send the technology to the foreign country of concern or allow the release of such information to an alien from that country who is in the USA. Either one is an "export". It is the latter situation that gives rise to the felicitous phrase "deemed export". Specific information on how the EAR regulates the release of controlled technology to foreign persons can be absorbed at www.bis.doc.gov/deemedexports , Hiring a foreign national and placing that person in a role that allows or requires direct responsibility for "dual use" technology may be sufficient cause to trigger the need for an export control license.. 15 CFR 734.2(b)(2)(ii). If you cannot ship the technology to the person's country of citizenship without a license, the that same level of government permission is required for the individual employee.
- How do I know if the technology is being "released"?
Answer: It can be communicated orally to the alien worker or he/she can inspect it visually under the guidance of someone with knowledge of it. Even talking about it can be a release! Even an email, or a gift, even an exchange of academic information between teacher and students ! No money has to change hands.See 15 CFR 734.2(b)(3); EAR 734.2(b)(3); 22 CFR 120.17(4).
- What is "technology"?
Answer: "Technology" means information required for the development, production or use of a product. See EAR 772.
- What if I send the technology to a safe country, an ally, who, in turns, sends it to a country of concern? Not my problem, right?
Answer: Could well be, my friend. This is known in the trade as "deemed re-export" and can get you into big trouble, especially if you know this is going to happen. See EAR 734.2(b)(4). A cogent discussion of "deemed re-export" can also be found at "Deemed Export Questions and Answers, No.13" available at http://www.bis.gov/deemedexports/deemedexportsfaqs.html
- Where do I look to find out how the BIS classifies technology?
Answer: Hunt for the Export Control Classification Number(ECCN). Some companies list this on their website. If not, you can always look on the CCL. 15 CFR 774, Supp. 1: EAR 774( online at www.access..gpo.gov/bis.ear/ear_data.html#ccl - cast your eye down to Part 774)
- What is the technology is not on the CCL?
Answer: Then the ECCN is "EAR 99" and you do not need a license unless you are sending it to an embargoed country or a banned end-user. See EAR 744 for caution on "end-user".
- Is there some way to see if there is a relationship between the alien's home country and the reason for control of the technology in question?
Answer: Yes, ponder the Commerce Country Chart at EAR 738, Supplement No. 1 ( http://www.access.gpo.gov/bis/ear/pdf/738spir.pdf)
- Are there any exceptions to the deemed export rule?
Answer:Yes, there are a few. If the technology is not "controlled technology" that does not trigger any national security or foreign policy anxiety or sensitivity; if the technology is in the public domain or the result of fundamental research; if the alien in question has been granted US citizenship, lawful permanent residence, asylee or refugee status. See "Deemed Export Questions and Answers, No. 6" available at http://www.bis.doc/deemedexports/deemedexportsfaqs.html Note that per 8 USC 1324b(a)(3)- that this exception does not apply to a lawful permanent resident who fails to apply for naturalization within six months of becoming eligible to do so; an exporter who has been granted an exception pursuant to EAR 740. For scholars at universities, there is the "basic research" exemption. See "Preparing For the Deemed Export Attestation on the New Form I-129" http://www.nafsa.org/resourcelibrary/default.aspx?id=2361 . Research that is proprietary or designed for commercial exploitation is not fundamental. By contrast, research that is intended for publication in a peer-reviewed journal is so classified, even if eventually turned down. See "Deemed Export Questions and Answers, No. 15" available at http://www.bis.doc.gov/deemedexportsfaq.html
Interestingly, no license exception if allowed for an alien with an expired visa: 15 CFR 740.5 (b)(2) :" (2) Visa Status. Deemed exports under License Exception CIV are not authorized to foreign nationals in an expired visa status. It is the responsibility of the exporter to ensure that, in the case of deemed exports, the foreign national maintains a valid U.S. visa, if required to hold a visa from the United States."
- What are the penalties for violation of Deemed Export rules?
Answer: Both civil and potentially criminal fines as set forth at http://www.bis.doc.gov/complianceandenforcement/othereetopics.htm#penalties .
"When the EAA is in effect, criminal penalties can reach 20 years imprisonment and $1 million per violation. Administrative monetary penalties can reach $11,000 per violation, and $120,000 per violation in cases involving items controlled for national security reasons. When the EAA is in lapse, the criminal and administrative penalties are set forth in the International Emergency Economic Powers Act (IEEPA).
On October 16, 2007, President Bush signed into law the International Emergency Economic Powers (IEEPA) Enhancement Act, Public Law No. 110-96, amending IEEPA section 206. The Act enhances criminal and administrative penalties that can be imposed under IEEPA and also amends IEEPA to clarify that civil penalties may be assessed for certain unlawful acts. Criminal penalties can reach $1,000,000 and 20 years imprisonment per violation and the administrative penalties can reach the greater of $250,000 per violation or twice the amount of the transaction that is the basis of the violation. "
In addition, an alien who attempts to "violate or evade" such rules is facing permanent inadmissibility pursuant to INA 212(a)(3)(A)(i)(II).
- What if I do not know that the alien will export the technology to a country that requires a license? Does lack of actual or constructive knowledge help?
Answer: Sorry friend. This is strict liability territory. See William Henry Humble III, "Basics of the Deemed Export Rule" Note 15. http://www.ilw.com/articles/2008,1111-humble.shtm
- If I sell controlled microprocessor technology, what should I do before allowing a foreign national access ?
Answer: File a Foreign National Review Request to the BIS as required by 15 CFR 740.5(d).
- What if the alien was born in one country but has subsequently obtained permanent resident or naturalized citizen status in another?
Answer: Follow the "last in time" rule. It is the most recent status that governs, not the original country of birth. So, for example, if some one was born in India but thereafter became a permanent resident of the United Kingdom, allowing access to controlled technology is determined by the degree to which such technology or technological data can be exported to the United Kingdom. See "Deemed Exports Questions and Answers, No.6- 11" available at http://www.bis.doc.gov/deemedexports/deemedexportsfaqs.html .
- How do I know if encryption software is governed by deemed export rules?
Answer: Easy. Look at the encryption chart at http://www.bis.doc.gov/encryption/tech.htm . Authorization is required if a US employer or US employee provides technical assistance to foreign nationals using source code. See " Deemed Export Questions and Answers, No. 17" available at http://www.bis.doc.gov/deemedexports/deemedexportsfaqs.html
- What if our university has foreign nationals working on US government-sponsored research projects?
Answer: The EAR treats government sponsored research much like corporate research. It can be proprietary or fundamental. To know which, train your magnifying glass on the fine print in Sections 734.8 and 734. 11of the EAR. See also "Deemed Exports Questions and Answers No. 23" available at http://www.bis.doc.gov/deemedexports/deemedexportsfaqs.html
- What practical tips can I give my client who is applying for a visa to the USA to avoid problems with export controls ?
Answer: Follow the sage counsel posted on the web site of the US Embassy in Tel Aviv, Israel which applies generally, not just to Israelis. See http://israel.usembassy.gov/publish/mission/consular2/technical.html . If your client is coming to work on a US government sponsored project, they should have a copy of that contract and , if possible, a letter affirming the employer's contractual arrangement from the Defense Contract Management Agency. Provide the Consulate in a short and direct letter relevant technical information concerning the proposed consultation, conference or work assignment. Apply several months in advance and refrain from purchasing nonrefundable tickets. The Consulate will want to know if the visa applicant will have to controlled technology; what access they will have to source code of any potentially controlled technology; what access they will have to any internal research documentation relating to the development of controlled technology. All these should be dealt with in advance and addressed in the visa package, if only on a supporting basis should a request for same be made during or after the visa interview.
Consider the following specific suggestions but be sure to adapt them to the needs and culture of your client.
- http://www.bis.doc.gov/complianceandenforcement/unauthorizedparties.htm Has the US government identified the alien as a restricted party whose name shows up on any list of past violators? If so, the hiring process should immediately be put on hold until appropriate legal counsel can be obtained
- Has the alien previously worked for employers in other countries that might be of concern to the US government? If so, does the alien still have ties with such entities? No offer of employment should be extended without a comprehensive check of prior employment history.
- Prepare a Deemed Export Questionnaire for the employer to use when evaluating the possibility for problems. This can help the employer identify potential issues of concern and indicate the need for more in-depth analysis.
- Put in place quality controls. As a condition of hire, for example, create for your employer client an enforceable non-disclosure agreement, that the foreign national must sign in which he/she promises not to disclose any proprietary information or technical data that should be subject to deemed export during the course and scope of employment absent prior written company approval.
- Work with your client to prepare and conduct internal export compliance audits on a regular basis
- If there is any question as to whether a particular technology is controlled by or subject to the CCL, obtain a formal classification ruling from the BIS.
- Maintain and update a list of all controlled technology that the employer possesses, how this is classified and what countries require control over the release of such technology. This should include a list of all jobs at the company that require or permit access to controlled technology. Put in place and periodically revise a thorough training program for HR and line managers to make 100% certain that no foreign national will deployed or transferred into a position that allowed access to controlled technology without prior deemed export compliance review.
- Create a sign-off form for your employer to use when deciding in each instance whether the foreign national should be hired.
- Make sure that all concerned parties do not, even for short periods, take laptops, Blackberrys, cell phones and similar devices into embargoed countries.
- Violations of deemed export can take place not only on the job but in the course of doing business with customers, consultants, contractors, and other similar partners. Put in place controls that would apply in these situations as well.
- Control and compile a list of any equipment/products used by foreign nationals to do their jobs that might implicated Deemed Export concerns such as chemicals, high speed computers, software source code or telecommunications equipment.
- Implement a robust program of deemed export compliance for all employees and make successful completion of same a required objective used to evaluate employee performance and calculate raises, bonuses and baseline employee compensation.
- Compile a list of all US government projects/contracts on which foreign nationals subject to deemed export regulations are assigned on a regular or substantial basis. Particular concern should be devoted to any such relationships with the Defense Department or that otherwise have national security implications.
- Instruct all employees subject to deemed export controls not to take any company-issued laptops, smart phones or similar technology to Iran, Syria or other US sanctioned countries.
- If the alien worker's job changes in a material way, the supervising manager must contact legal counsel without delay to consider possible remedial action.
- Incorporate questions on export controls into the employer's basic job application so that the issue can be dealt with up front before any offer of employment is made. Keep it simple and do not ask for more information than is necessary. It is critical that these questions be asked of all job applicants to avoid charges of discrimination. It is entirely legitimate for a company to decide not to hire applicants whose employment might trigger deemed export concerns so long as this policy is consistently and uniformly applied rather than on an ad hoc basis. That is where you can get into trouble.
- Do not use information collected to make export control determinations for any other purpose. This must be made clear to the foreign national when the questions are asked.
Nothing in this article is legal advice and it cannot be relied on in any specific case.
Copyright 2011 Gary Endelman
We encourage immigration professionals, including HR professionals, to send in any questions they may have on immigration law and policy email@example.com with "Gary Endelman" in the subject line. Mr. Endelman will answer selected questions in Immigration Daily on a regular basis.
About The Author
Gary Endelman obtained a B.A. in History from the University of Virginia, a Ph.D. in United States History from the University of Delaware, and a J.D. from the University of Houston. From 1985 to 1995, he worked at Tindall & Foster. From 1995 to 2011, he has worked as the in-house counsel for BP America Inc. and BP handling all U.S. immigration matters. Dr. Endelman is Board Certified in Immigration and Nationality Law from Texas Board of Legal Specialization. He is a frequent speaker and writer on immigration related topics including a column on immigration law. He served as a senior editor of the national conference handbook published by the American Immigration Lawyers Association (AILA) for a decade. In July 2005, Dr. Endelman testified before the United States Senate Judiciary Committee on comprehensive immigration reform. Dr. Endelman is the author of SOLIDARITY FOREVER: ROSE SCHNEIDERMAN AND THE WOMEN'S TRADE UNION MOVEMENT published in 1978 by Arno Press. He can be reached at firstname.lastname@example.org.
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.
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