Abbey E. Baker contributed to this article.
Human resources and U.S. export controls don’t go together, right? Don’t bet on it. If that sounds crazy to you, you might be surprised to find an export compliance requirement, which was slipped into an immigration form last year, causing a bit of confusion inside your HR department. That form is called an I-129 Petition for a Nonimmigrant Worker.
The U.S. Citizenship and Immigration Services (USCIS) requires employers petitioning for a temporary alien worker under an H-1B, H-1B1 Chili/Singapore, L-1 or O-1A visa to complete the form. A new section (Part 6) was added to the form in 2011 requiring HR managers to certify that he/she has read and complied with the deemed export rules of the Departments of Commerce and State.
Many lawyers are not familiar with export requirements, never mind busy HR managers, so this month’s column is dedicated to clarifying I-129 export compliance and tackling those FAQs I get from HR managers on a regular basis. As always, it is important to understand just what your John Hancock has you on the hook for.
The Basics of Part 6
So, what is a deemed export? The “simple” answer is it is the release of controlled technology or information to a foreign person located inside the United States that the U.S. Government (USG) considers or “deems” to be an export to the foreign national’s home country. The more complex questions are: how and when does this happen, and why does it matter? For this we’re going to have to get a little technical.
- The Department of Commerce’s Export Administration Regulations (EAR), which control dual-use and commercial items, and the Department of State’s International Traffic in Arms Regulations (ITAR), which control items designed for military use, include lists of technology and technical data that are controlled and cannot be exported without a license. When you share these controlled items with a foreigner, regardless of where he/she is located, the USG deems this to be as if you sent the information to his/her home country. The USG assumes that the foreign person could share the information with other non-U.S. persons in violation of the law. The rule is, if a license is required to export the item to a foreign country, then a license is also required to release the item to a national of that country – even when they are in the U.S.
- A release of technology or technical data can happen in many ways. Some ways are not so obvious. For example:
- telephone conversations;
- leaving blueprints, specs, or drawings out in the open;
- giving tours and trainings; or
- sending emails and faxes.
Now that we know what a deemed export is, let’s look at the I-129 form again. Part 6 of the form is a certification requiring each HR manager to sign that he/she has read the export regulations and specify whether the particular foreign national he/she is considering will have access to controlled technology. If he/she indicates “yes” on the form, than the manager must acknowledge that until a license is received the company will restrict the foreigner’s access to controlled technology. The compliance implications of this certification are that the HR manager knows:
- what technology and information is controlled;
- which projects or job descriptions utilize or involve the technology or data; and
- which foreign workers might have access to the controlled technology or data.
Most HR managers will require trainings or the assistance of an export compliance officer or outside attorney to teach them what they need to know and help document export compliance. Such documentation, including how the company determined whether a license was required, is very important and is part of the company’s compliance obligations.
New procedures need to be developed and incorporated into your compliance program and hiring procedures. This applies even when you hire temporary workers, the service that maintains the lawn outside the corporate offices, or your third-party IT help desk. These requirements are not new, but the government created Part 6 to make sure businesses are complying with the deemed export rules.
Because the I-129 petition is signed under penalty of perjury, both the person who signs the petition and the business can be criminally liable for any falsified documents. Penalties for export violations vary depending on whether the violation falls under ITAR or the EAR, but both civil and criminal penalties exist. Depending on the severity of the violation, you risk civil penalties up to $500,000 and criminal penalties up to $1 million and 20 years in prison per violation. Additional penalties include denial of export privileges.
Now that you understand the basics of Part 6 and the overall deemed export requirement, let’s delve into the details. Here are some of the frequently asked questions I hear from clients and lawyers alike. Of course these are simplified answers and export determinations turn on the specific facts of each case, so be sure to review every situation with your compliance officer or legal counsel.
Who is a foreign national?
- For deemed export issues a “foreign national” is any person who is not a U.S. citizen, a lawful permanent resident of the U.S. or a “protected person” under the Immigration and Nationality Act. A protected person includes refugees, asylees and persons granted temporary protected status.
How do you determine what country someone is from when reviewing the deemed export rules?
- The ITAR and EAR approach nationality differently. Under the EAR, nationality is determined by the last country of citizenship or permanent residency. The ITAR requires you consider all former countries of citizenship and country of birth.
When do companies have to do a review?
- Regardless of the fact that the I-129 petition only requires a review for workers applying under an H-1B, H-1B1 Chili/Singapore, L-1 or O-1A visa, companies are ALWAYS subject to export control rules and should conduct an export control review whenever a foreign national might have access to controlled items or information.
What is technology and technical data?
- The EAR uses “technology” to refer to information for the development, production or use of “dual-use” products or software. The ITAR uses “technical data” to refer to information required for the design, development, production, manufacture, assembly, operation, repair testing, maintenance or modification of defense articles. The level of control and licensing requirements depend on what the item is, the destination country, the end-user, and its end-use.
What do I need in order to do a Part 6 review?
- You need the job description, ITAR or EAR classification of the technology and information that may be transferred, and employee’s nationality.
How do I get an ITAR or EAR classification?
- There are three ways to classify. Technology about a product is controlled if the product is controlled. Products are classified by the manufacturer, government or company through self-classification. Check with your compliance officer or your legal counsel. The good news is that once a product is classified, you can rely on that classification. (You still need to perform a license determination for this particular foreign national).
Are there exclusions to the deemed export rules?
- Although defined very specifically, publically available technology or technical data in the public domain is excluded from export licensing requirements. Businesses tend to overuse this exclusion and interpret these phrases too broadly. Take care to make sure your items fit into the definitions properly and be sure to fully document your determination process. For more information on what constitutes these exclusions see section 120.11 of the ITAR and Part 743.3 of the EAR.
Remember that regardless of whether your company actually has to sign Part 6 of the I-129 petition, the export rules still apply to you.
About the Author
Doreen M. Edelman is a shareholder at Baker Donelson Bearman Caldwell & Berkowitz, P.C., in Washington, DC, where she helps clients create business solutions for international trade compliance. She has more than 20 years of experience developing compliance programs, and counseling clients on export licensing, export controls, FCPA, and Office of Foreign Assets Control (OFAC) sanction laws. Ms. Edelman also helps companies prepare global business plans and work through foreign government market regulations.