USCIS Certification on Release of Controlled Technology or Technical Data

The U.S. Citizenship and Immigration Service’s requirement for “Certification Regarding the Release of Controlled Technology or Technical Data to Foreign Persons in the United States” will go into effect on February 20, 2011.

The certification applies to employers submitting petitions under the visa categories H-1B (specialty occupation), H-1B1 (specialty occupation professionals from Singapore or Chile), L-1 (intra-company transferees) or O-1A (extraordinary ability). The requirement will impact universities, as well as aerospace, defense, high-tech, and advanced manufacturing businesses and organizations, regardless of size.

The certification requirement was to go into effect on December 23, 2010, but has been delayed for 2 months. The so-called “Part 6” certification is found on Form I-129 (Petition for a Nonimmigrant Worker) and is aimed at enforcing the “deemed export” rule. A “deemed export” refers to the release of technology or technical data that is subject to either the U.S. Department of Commerce Export Administration Regulations (EAR) or the U.S. Department of State International Traffic in Arms Regulations (ITAR). The release of such information to a foreign national inside the U.S. is considered to be a “deemed export” to the foreign national's country of residence or, in some instances, to that person’s country of birth. A “deemed export” may be subject to an export license requirement. Making a “deemed export” without a required license is a violation of the EAR or the ITAR and is subject to administrative, civil, and even criminal penalties.

A “deemed export” can occur in many forms, including visual inspection (such as providing technical specifications, schematics, blueprints, etc.), a verbal exchange of the technology or technical data, or when the information is made available through business practices. Business meetings, conference calls, videoconferences, PowerPoint presentations, trade shows, and email exchanges all present instances in which a “deemed export” could occur.

As of February 20, employers submitting an I-129 petition under one of the covered visa categories will have to certify that: 1) it has reviewed the EAR and the ITAR; and either a) it has determined that an export license is not required for the release of technology or technical data to the beneficiary; or b) if an export license is required, that the beneficiary will not have access to the information until the employer obtains the required license.

Employers should plan now for the additional time needed to assess whether foreign national employees will have access to technology or technical data controlled under the EAR or the ITAR, determine whether an export license is required and, if so, submit a license application. In addition, employers should fully document the decision-making process so that it can be relied upon should questions arise. Failing to take these necessary steps and properly certify the I-129 petition will likely lead to entity-level administrative and civil penalties, as well as the possibility of entity-level and individual criminal penalties being imposed. If an employer becomes concerned that a violation may have already occurred, it should seek assistance to determine whether to make a voluntary self-disclosure (VSD) to all involved agencies.

DoD Issues Final Rule for Contractors Regarding Export Controls

The Department of Defense (DoD) has issued its final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to include a clause concerning contractor obligations under the ITAR and the EAR.

The final rule requires that a single clause regarding export controls be used in all solicitations and contracts, regardless of whether the contract involves export-controlled items. In addition, flowdowns are mandated at all contracting tiers.

Under the rule, “Export-controlled items” means items subject to the Export Administration Regulations (EAR) or the International Traffic in Arms Regulations (ITAR) and includes commodities, software and technology. The required clause under DFARS states “The Contractor shall comply with all applicable laws and regulations regarding export-controlled items…” The clause reiterates that compliance with export control laws and regulations exists independent of the DFARS clause.

The DoD rule does not impose new or additional obligations on contractors and simplifies contractual requirements. The flowdown requirement should serve to remind prime contractors and subcontractors of their respective export compliance obligations, including in situations involving technical data, technology or software source code governed by the “deemed export” rule where such information is released to a foreign national (who is not a “green card” holder), even if the release occurs in the U.S.