U.S. Export Control Compliance Certification Requirement on Visa Applications Addresses the Deemed Export RuleOctober 2013 – Advisories
We all know that U.S. export control compliance requirements can have far reaching impacts. Surprising to some, however, is the extent to which the requirements can extend to every facet of an organization’s administrative structure. Witness, for example, the U.S. Citizenship and Immigration Services’ (USCIS) requirement that employers who wish to submit a Petition for a Nonimmigrant Worker certify under penalty of perjury their compliance with U.S. export control laws and regulations. The certification requirement appears in Form I-129. Responsibility for completing the form typically falls upon human resources personnel, who are often not trained on export control compliance requirements.
A portion of Form I-129 requires employers to certify that they have (a) reviewed the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR), (b) determined whether a license or other authorization is or is not required before the foreign employee can have access to controlled products or technology, and (c) if a license or authorization is required, prevent the foreign employee from obtaining access to the controlled products or technology until the required license or authorization has been obtained. The terminology used in the form is often foreign to HR personnel, as is the analysis required to ensure that the proper certification is made.
It is generally well recognized that an export occurs when an item or related technology / technical data is physical transferred outside the United States. Less well recognized is the so-called “deemed export” rule. The new certification requirement goes to the heart of the rule, and makes it critically important that employers of foreign nationals understand and comply with U.S. export control laws and regulations, including the deemed export rule, before they complete the certification and risk perjury.
Under the deemed export rule, the release of “technology” or “technical data” (each term is specifically defined in the EAR and the ITAR, respectively) to a foreign national within the United States constitutes an “export” of that technology or technical data to the home country of the foreign national. Such releases can be subject to U.S. Government export licensing or approval requirements under the EAR or the ITAR, and an unauthorized release to a foreign national within the United States constitutes an export violation. The term “release” is broadly defined and can occur through a variety of means, including visual inspection of a product, instruction in its design, use or maintenance, access to computer networks, and verbal exchanges. A “foreign national” for these purposes is anyone who is not a U.S. citizen, a permanent resident (i.e., aliens possessing a valid Form I-551 or “green card”), or a so-called protected individual (generally, an individual here on asylum or similar special status). Anyone holding a temporary visa (B, E, F, H-1B, H-3, J-1, L-1, etc.) is treated as a foreign national for these purposes.
U.S. employers have always been required to comply with the “deemed export” rule. The Form I-129 certification requirement does not change the rule in any way. However, making the certification may prove challenging for employers who wish to hire foreign nationals. And the venue for making the certification increases the need to ensure that all necessary facets of an organization’s administrative subject have the requisite knowledge. Making inaccurate certifications can expose employers to liability for making false statements to the U.S. government, as well as liability for any underlying export control violations.
All employers, particularly those that may be required to make future certifications, are encouraged to review their export compliance programs and compliance status in order to ensure that procedures exist for accurately determining (a) whether their products (and equipment) and related technology and technical data are controlled by the EAR or the ITAR, and (b) whether their foreign national employees (current or future) require access to controlled technologies and technical data. In addition, procedures must exist for ensuring that any necessary U.S. Government licenses or approvals are obtained in a timely manner. Employers should also consider including language in offer letters that clearly indicate that employment is subject to first obtaining required export control licenses.
By signing Form I-129, employers grant USCIS the authority to perform audits. Therefore, it is possible that USCIS or other Federal agencies acting on their behalf may appear at an employer’s doorstep to confirm certifications made on the new form. Civil penalties ranging from fines to loss of export privileges, as well as criminal penalties, have been imposed on companies and individual corporate personnel involved in export violations. Moreover, foreign nationals who participate in an export violation may face exclusion or deportation. Penalties of perjury for false certifications, even if unintentional, now get added to the mix.
Noncompliance with the deemed export rule is pervasive. For instance, the U.S. government has reported that just 44 businesses were responsible for submitting 80% of the deemed export license applications during FY2008, despite the fact that hundreds, perhaps thousands, of U.S. companies and institutions conducted operations subject to the rule. In light of the U.S. Government’s renewed enforcement focus and the potential for severe penalties for violations, companies and institutions can no longer afford to ignore the deemed export rule.
For questions regarding the information contained in this G&S advisory or for help with export control compliance, please contact your usual Goulston & Storrs attorney or any of the attorneys identified below:
This advisory should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and any specific legal questions you may have.
Pursuant to IRS Circular 230, please be advised that, this communication is not intended to be, was not written to be and cannot be used by any taxpayer for the purpose of (i) avoiding penalties under U.S. federal tax law or (ii) promoting, marketing or recommending to another taxpayer any transaction or matter addressed herein.
© 2013 Goulston & Storrs PC All Rights Reserved