• Deemed Export Rule: Certification Regarding the Release of Controlled Technology or Technical Data to Foreign Nationals in the United States
  • December 9, 2010
  • Law Firm: Waller Lansden Dortch Davis LLP - Nashville Office
  • On December 23, 2010, U.S. Citizenship and Immigration Services (USCIS) will introduce an updated version of Form I-129, Petition for Nonimmigrant Worker. By and large, the publication of a new form typically generates little fanfare, but the updated form in this instance includes several important changes, not the least of which is a new requirement directing employers sponsoring H-1B, L-1, and O-1 non-immigrants to certify their compliance with the release of controlled technology or technical data to foreign nationals in the United States (a/k/a “deemed export” rule). 

    The “deemed export” rule governs the release of controlled technology or technical data to foreign nationals in the United States. Where a technology is controlled, the employer may be required to obtain a U.S. export license before the foreign worker can be granted access to the technology in question.

    To certify that a license is not required in order to release controlled technology or technical data to a foreign national, the employer must carefully review the Bureau of Industry and Security’s Commerce Control List (CCL) and the Directorate of Defense Trade Controls’ U.S. Munitions List (USML). Employers must classify their own technology and technical data in the CCL or USML or conclude that their technology or technical data does not appear on either list. Employers should not underestimate the commitment in time and resources that will be required to review the CCL and USML. While the lists, not surprisingly, identify a wide range of defense-related components as controlled technology, they also identify certain types of cameras, machine tools and even protective shoes among restricted technology.

    The new Form I-129 requires employers to certify that they have reviewed the list of controlled technologies and technical data from the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR). With regard to technology or technical data that an employer intends to release to a foreign national, the new Form I-129 also requires the employer to certify that an export license is not required, or that a license is required and will be obtained before the employer releases the controlled technology to the foreign national.

    In addition to classifying their own technology and technical data, employers are required to classify technology or technical data generated by third parties (i.e., customers, vendors, etc.), but that is in the possession of the employer and may be accessible to the foreign employee.  This means employers may have to obtain export classification information from third parties or obtain export classification guidance or rulings from the government, which could be time consuming.

    Because USCIS has offered little guidance regarding deemed export licensing requirements, employers should review their export control compliance processes as soon as possible or develop and implement a strategic plan to comply with the new certification requirements. Employers would be best served to: 

    • Develop a system for identifying positions that involve access to controlled technology or technical data

    • Determine the level of export control compliance internally and establish a mechanism for making certifications in the future

    • Develop language in offer letters and/or modify the hiring process to make employment contingent upon the employer’s ability to obtain deemed export licenses, if applicable

    • Provide training and education internally on deemed export requirements to managers, Human Resources professionals and personnel involved with visa processing for foreign employees

    • Develop a procedure for notifying the Human Resources Department of any foreign employees for whom an export license is required

    It is not clear at this time how this new certification requirement will be enforced by USCIS. USCIS could conceivably refer some of the certifications to the Bureau of Industry and Security’s Office of Export Enforcement (OEE) or USCIS may verify these certification themselves during on-site fraud or audit investigations. While the underlying deemed export rule remains unchanged by the new certification requirement, this will be the first time that employers sponsoring H-1B, L-1 or O-1 nonimmigrant workers will be required to formally certify (under penalty of perjury) their compliance with the deemed export licensing requirements to USCIS.