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Deemed Exports & the New Certification Requirement

January 28, 2011

Deemed Exports & the New Certification Requirement, Effective 2/20/2011

The new certification requirement on page 5 of the revised Form I-129 (at part 6, page 5) is quite burdensome. It will require increased due diligence and compliance efforts on the part of US employers who employ foreign workers, or who place foreign students as interns or trainees.

Under both the Export Administration Regulations of the US Department of Commerce (“EAR”), and the International Traffic in Arms Regulations of the US Department of State (“ITAR”), a broad array of technologies are controlled, some of them quite common. These technologies will be “deemed exported”, triggering the requirement for an export license, if the technology or technical data relating to it is released domestically to a foreign national present in the United States, other than a Lawful Permanent Resident or asylee. Release of any controlled technical data to non-immigrant workers – such as those in H, L, E or O visa status – or to non-immigrant students, interns or trainees in F, J or M visa status – may trigger the obligation for the company to obtain an export license before releasing any such data to the foreign national.

Fines for export control violations – such as a release of any controlled technical data to a foreign national which requires an export license – start at $250,000 per violation, with no upper limit. Some violations entail criminal penalties as well.

These “export control” regulations can apply to service companies whose operations are domestic, which are not subcontractors for the US military or its suppliers, and do not manufacture anything. Even small firms that have internal staff or Information Technology consultants developing software applications must check these regulations carefully to ensure that they are in full compliance, before signing the Certification on page 5 of the Form I-129. At least four of the ten categories under the Export Administration Regulations contain listed items which may have broad civilian application in innocent end uses, particularly by IT workers and management consultants – Computers, Telecommunications, Information Security, and Sensors. The nature of end use does not preclude a listed technology from requiring an export license. For example, while there is a general license exception (i.e. no export license is required) for commercially-available mass-market software, this exception does not apply to portions of the software covered under Information Security regulations, relating to encryption technologies – such as Windows Internet security software for more recent OS versions, Vista and Windows 7. A determination as to whether an export license is required in a given case may depend on the intended and/or actual end-use, applicability of the underlying reasons for control of the technology, and the nationality or citizenship of the person(s) to whom it will be released.

Any release of specific information about or containing a controlled technology to a foreign national in the US may be a deemed export of that technology. A “release” of data means the information is available visually or verbally, and may include casual verbal discussion by others that can be overheard by the foreign national, exposure of technical documents left out in the open in a room to which the foreign national has access, or any information on a computer system or downloadable via link to which the foreign national has access. In most cases where a license is required, the export license must be specific to the controlled technologies to be released, and also to the named foreign national.

The citizenship of the foreign national comes into play, so compliance determinations must be made on an individual basis. A controlled technology that does not ordinarily require an export license may nonetheless require one if it is to be released to a citizen of certain “bad actor” countries, such as Cuba, Iran, North Korea, Syria or Sudan.

Compliance with EAR and ITAR should not be news to any companies that consciously engage in export business, nor to manufacturers who have sold parts or supplies to military contractors or subcontractors. However, the new certification requirement for all I-129 visa petitions will entail huge “new” due diligence responsibilities for those US employers not accustomed to thinking of themselves as “exporters”. All such organizations will now have to undertake to research, monitor and ensure their own ongoing compliance under the export regulations of the Department of Commerce & the Department of State in order to employ foreign workers.

An update was published following a March USCIS teleconference with the Department of Commerce, including contacts for further questions.


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