Most employers, employees and immigration lawyers are unaware of a set of rules that can create serious liability if they are ignored. They are the export licensing requirements for foreign nationals and in the post-9/11 world of immigration, they are taking on more importance. The “deemed export” regulations hold that foreign nationals who gain access to controlled technologies are equivalent to a company exporting the technology to foreign markets. This is the case even when a company does not even export actual goods or services.
The deemed export rules are administered by the US Department of Commerce (though the State Department has a separate smaller program covering international trafficking in armaments (ITAR)). The rules mainly cover the defense and high tech industries as well as various other industries that use sensitive technologies. DOC regulations on the subject are included in the Export Administration Regulations (EAR) administered by the Bureau of Industry and Security (BIS). According to the BIS, the EARs are intended for the following purpose:
- “The export control provisions of the EAR are intended to serve the national security, foreign policy, nonproliferation, and short supply interests of the United States and, in some cases, to carry out its international obligations. Some controls are designed to restrict access to dual use items by countries or persons that might apply such items to uses inimical to U.S. interests. The EAR also include some export controls to protect the United States from the adverse impact of the unrestricted export of commodities in short supply.”
DOC maintains an EAR database that has information on controlled technologies as well as well as lists of parties prohibited from exported controlled technologies due to prior violations.
What action relating to a foreign national is deemed to trigger the export control rules?
An export is defined by 15 CFR 734.2(b)(1) defines an “export” as an “actual shipment or transmission of items subject to the EAR out of the United States, or release of technology or software subject to the EAR to a foreign national in the United States.
Discussing with a foreign national in the US or a person acting on behalf of a foreign person is deemed to constitute an “export” if it reveals technical information regarding export-controlled technology.
What kinds of foreign nationals are exempt from the EAR?
For purposes of EAR and ITAR, US citizens, green card holders and asylee/refugees are US persons not subject to controls. However, if the technology is classified as well as controlled, permanent residents are deemed foreign nationals and are subject to controls. Persons in the US on non-immigrant visas are generally covered by the rules.
For dual nationals, the Commerce Department generally considers the last place of permanent residence or the last place citizenship was obtained to be the nationality for purposes of determining the country coverage under the deemed export rules.
How would technology or software be “transferred” to a foreign national?
A company must “release” a technology to the foreign national. “Release” is defined as
- Visual inspection by foreign nationals of U.S.-origin equipment and facilities;
- Oral exchanges of information in the United States or abroad; or
- The application to situations abroad of personal knowledge or technical experience acquired in the United States.
Is there special language employers need to put on documents that are deemed to discuss controlled technologies?
Yes, the following language needs to be placed on such documents:
- “WARNING – This document contains technical data whose export is restricted by the Arms Export Control Act (Title 22, U.S.C., Sec 2751, et seq.) or the Export Administration Act of 1979, as amended (Title 50, U.S.C., App. 2401 et seq.). Violations of these export laws are subject to severe criminal penalties.”
What are the penalties for violating the export control rules with respect to transferring controlled information to a foreign national?
According to the The penalty for unlawful export of items or information controlled under the ITAR is up to 2 years imprisonment, or a fine of $100,000, or both. The penalty for unlawful export of items or information controlled under the EAR is a fine of up to $1,000,000 or five times the value of the exports, whichever is greater; or for an individual, imprisonment of up to 10 years or a fine of up to $250,000 or both.
What laws cover export controls?
- Executive Order 12923 Continuation of Export Control Regulations, 30 June 1994.
- Title 22 USC 2778 et seq. – Arms Export Control Act.
- Title 50 USC 2401 et seq. – Export Administration Act of 1979 (as amended).
- Title 50 USC Appendix, Section 10 – Trading With the Enemy Act of 1917.
- Title 15 CFR Export Administration Regulations, part 770.
- Title 15 CFR part 779 Technical Data.
- Title 22 CFR (Dept. of State) Subchapter M, The International Traffic and Arms Regulation (ITAR) Part 121-130.
How do I know whether the technology with which a foreign national works requires an export license?
Under EAR, items on the Commerce Control List are covered. Stanford University has published links to the list at http://www.stanford.edu/dept/DoR/exp_controls/lists.html#ccl. The rules are complicated and companies in affected industries should carefully review the list with an attorney who has a specialized background in this area rather than relying on immigration counsel.
If a technology or software is on the Commerce Control List does it automatically trigger export control restrictions?
Not necessarily. First, not all technologies are barred from all countries. One should cross reference the Commerce Country Chart to see if a license in necessary. For example, for close allies like Australia and Japan, licenses are often not necessary. The regulations also list numerous license exceptions.
What if I am still not sure if I need an export license?
The Bureau of Industry and Security is required to provide an advisory opinion regarding whether an item or technology is subject to the EAR if so requested.
What should a company do if it turns out a foreign employee will trigger export control rules?
Assuming an employer chooses to hire the employee, it will need to secure an export license. The application process for obtaining an export license is outlined on the Bureau of Industry and Security web site at http://www.bis.doc.gov/licensing/applying4lic.htm.
How much time is needed to get an export license?
Expect the process to take at least 90 days for a Commerce Department license and 60 days for a State Department license.
What kinds of technology or software are excluded from the EAR?
With the exception of certain encryption technology and software, published and public availability technology and software are not covered by the EAR. Fundamental research, including university-based research, is also excluded under the regulations. Educational information released by instruction in catalog courses and teaching laboratories of academic institutions are excluded.
What kinds of questions should an immigration lawyer ask the employer client to determine whether export control rules may be an issue?
A lawyer should discuss what form of access a worker will have to controlled technology. Is the worker exposed to internal company research materials, does the worker participate in meetings and conference calls regarding such technology. Is the worker exposed to written communications such as emails and interoffice memoranda?
The immigration lawyer should also explore what access the worker has to the company’s server. The lawyer should discuss the possibility of limiting access to the server for employees likely to trigger export controls.
Counsel should also advise clients to list eligibility to received controlled technology as a condition of employment in order to avoid accusations of employment discrimination. Human resource personnel should also inform an applicant that information collected for export control purposes will not be used for any other purpose.