Information filtration under the Export Administration Regulations
Information provides the cornerstone to the modern economy. It flows across information technology networks like water flowing down our mountains, into our streams and rivers, and out to the oceans. Within organisations, however, it may need to be dammed to restrict access and the release of export-controlled information. Jeffrey Richardson examines the benefits of `information filtration'.
T he complex process of applying the Export Administration Regulations (`EAR)' to classify
export-controlled information has long
professionals. Information filtration is
a novel methodology to better manage
this process by filtering a broad set of
information possibly subject to the
EAR and providing a clear indicator
from the outset of whether such
information is initially caught by
exceptions and exclusions of the EAR.1
The simplification resulting from
information filtration occurs because
often it is easier to apply individual
information filters broadly across an
organisation than to collect and analyse
the detailed technical information
required to compare the attributes
against classification parameters
within each candidate export control
classification number (`ECCN').2
Information filtration serves to remove
the detailed classification process from
the initial determination of whether
information is possibly subject to
common exceptions and exclusions of
the EAR, while distilling down
remaining information that merits a
more detailed classification analysis.
The information filtration structure
filters information by first applying
broad filters, and then naturally
trickling the remaining information
through narrower filters. In brief, the
filters function to collect information
subject to common exceptions and
exclusions the EAR of as follows:
3. Filter 3 Sales: this filter collects information commonly used to support an organisation's sales process;
4. Filter 4 Operations: this filter collects information minimally required to operate a properly exported item;
5. Filter 5 Technology: this filter collects information that does not qualify for the definition of technology under the EAR; and,
6. Filter 6 Required Technology: this filter collects information that does not qualify as `required' under the General Technology Note.
The information filters3 may be visualised as shown in the diagram below.
Thus, the information filtration methodology releases from detailed
classification analysis information subject to exceptions and exclusions of the EAR, and thereby avoids burdening an organisation with having to analyse complicated ECCNs for a broad set of information.
Below, we examine the application of each filter of the information filtration methodology.
Filter 1: Jurisdiction The following information is not subject to the EAR: Information4 `exclusively controlled for export or reexport by the following departments and agencies of the US Government which regulate exports or reexports for national security or foreign policy purposes'.5
To apply Filter 1, one must assess whether exclusive jurisdiction over the information lies with the following
1. Filter 1 Jurisdiction: this filter collects information subject to the exclusive jurisdiction of a US government agency other than Bureau of Industry and Security (`BIS');
2. Filter 2 Publicly Available: this filter collects information released publicly as defined under the EAR;
other departments and agencies (rather than the BIS): (i) Department of State, (ii) Treasury Department, Office of Foreign Assets Control (`OFAC'), (iii) US Nuclear Regulatory Commission (`NRC'), (iv) Department of Energy (`DOE'), (v) Patent and Trademark Office (`PTO'), and (vi) Department of Defense (`DoD')6 and Department of State Foreign Military Sales (`FMS') Program.7 If exclusive jurisdiction over the information lies with these departments and agencies rather than the BIS, then the EAR requires that the information must be analysed under the export control regulations of that department or agency, rather than analysing whether the information is subject to the EAR and the jurisdiction of the BIS.8
By way of example, information pertaining to munitions is traditionally subject to the exclusive jurisdiction of the Department of State,9 under the International Traffic in Arms Regulations (`ITAR'),10 administered by the Directorate of Defense Trade Controls, and listed on the United States Munitions List (`USML')11 because such information pertains to defence articles and defence services.
Correspondingly, OFAC generally maintains primary jurisdiction for the export of information to countries subject to US economic sanctions.12 However, in certain cases, OFAC jurisdiction must be coordinated with BIS and is not exclusive to OFAC,13 so the EAR may provide additional guidance setting forth the role of OFAC and providing details for coordination between OFAC and BIS within EAR 746 detailing Embargoes and Other Special Controls.14 As a final example, information subject to the NRC regulations that control the export of information related to nuclear reactor vessels are not subject to the EAR.16
To sum up, information under the exclusive jurisdiction of an agency other than the BIS caught by Filter 1 is not subject to the EAR.
laboratory of an academic institution; (iv) which appears in patents or open (published) patent applications available from or at any patent office; and, (v) which are non-proprietary system descriptions.17
Published information Published information designated within EAR 734.7 is not subject to the EAR, when the information is available to the public without further restrictions upon dissemination.18 Examples of published information include information available by subscription, available from a library or accessible through a public collection, distributed at a conference or trade show, posted to internet sites available to the public, or submitted to a publisher with intent that the information be made publicly available.19
Correspondingly, the physical embodiment of the information as made available through traditional media outlets are also not subject to the EAR. The EAR cites the following examples of the physical embodiment of the information not subject to the EAR:
l Prerecorded phonograph records reproducing in whole or in part, the content of printed books, pamphlets, and miscellaneous publications, including newspapers and periodicals;
l Printed books, pamphlets, and miscellaneous publications, including bound newspapers and periodicals;
l Children's picture and painting books;
l Newspaper and periodicals, unbound, excluding waste;
l Music books; l Sheet music;
l Calendars and calendar blocks, paper;
l Maps, hydrographical charts, atlases, gazetteers, globe covers, and globes (terrestrial and celestial);
l Exposed and developed microfilm reproducing, in whole or in part, the content of any of the above;
l Exposed and developed motion picture film and soundtrack; and,
l Advertising printed matter exclusively related thereto.20
The foregoing list applies literally to the physical embodiments, while the information correspondingly contained within those physical embodiments is not subject to the EAR when those physical embodiments are published.21
Fundamental research Information arising from fundamental research is not subject to the EAR. Fundamental research means `research in science, engineering, or mathematics, the results of which ordinarily are published and shared broadly within the research community, and for which the researchers have not accepted restrictions for proprietary or national security reasons'.22
Generally, fundamental research remains exempt based upon the `intent to publish' whether or not that publication is subject to a prepublication review designed to ensure that publication (i) does not compromise potential patent rights, (ii) does not inadvertently divulge the proprietary information of a research sponsor, or (iii) if the information is subject to a review by a federal agency system designed to control the release of information arising from research performed by scientists and engineers of such federal agency.23 Finally, if a decision is made to restrict information
Filter 2: Publicly Available Information Filter 2 assesses whether information is publicly available, and therefore, not subject to the EAR. Filter 2 includes information (i) which is published; (ii) which arises during, or results from, fundamental research; (iii) which is released by instruction in a catalogue course or associated teaching
Information subject to the NRC regulations that control the export of information related to nuclear reactor vessels are not subject to the EAR.
arising from fundamental research as proprietary, then the information may again be subject to the EAR.24
Instruction Information released as part of the curriculum to provide instruction for a course or an associated teaching laboratory of an academic institution is not subject to the EAR.25
Patents Information appearing in patents or open patent applications available at any patent office is not subject to the EAR. Additionally, certain detailed exclusions arise for patents involving foreign inventors and foreign filings including the following: (i) a `patent application is being sent to the foreign inventor to be executed and returned to the United States for subsequent filing in the US Patent and Trademark Office'; 26 (ii) a `patent application, or an amendment, modification, supplement or division of an application, authorized for filing in a foreign country'; 27 and, (iii) a `patent application when sent to a foreign country before or within six months after the filing of a United States patent application for the purpose of obtaining the signature of an inventor who was in the United States when the invention was made or who is a coinventor with a person residing in the United States'.28
Information appearing in patents or open patent applications covered by an invention secrecy order is not eligible for this exclusion and remains subject to the EAR.
Non-proprietary system description Information comprising a nonproprietary description of a system is not subject to the EAR.29 Nonproprietary means system information that is not privately owned or controlled, so if a non-proprietary description is not privately owned or controlled, then, essentially, the nonproprietary system information may be made publicly available.30
Under the EAR, a system means end items, equipment, parts, components, accessories, attachments, firmware, or software that operate together to perform a function.31 Further, the EAR refers to the industrial standards established by INCOSE and NASA that provide examples of when commodities and software operate
together to perform a
function as a system. 32
describes a system as
follows: `A "system" is a
construct or collection
of different elements
that together produce
results not obtainable
by the elements alone.
The elements, or parts,
can include people,
facilities, policies, and
documents; that is, all
things required to
results. The results
and performance. The
value added by the
system as a whole,
beyond that con-
by the parts, is Information appearing in patents or open patent applications available
primarily created by the at any patent office is not subject to the EAR.
relationship among the
parts; that is, how they
are interconnected. It is a way of does not disclose the detailed design,
looking at the "big picture" when production, manufacturing inform-
making technical decisions. It is a way ation, or the means of reconstruction,
of achieving stakeholder functional, of either the quoted item or
physical, and operational performance manufactured product.
requirements in the intended use
As a result, to qualify for the
environment over the planned life of comprehensive Technology and
the systems. In other words, systems Software-Unrestricted (`TSU') licence
engineering is a logical way of exception, the export of sales
information must prevent the
Thus, non-proprietary information disclosure of detailed information that
describing the interconnectedness of a would permit the recipient to reduce
system utilising end items, equipment, the exported sales information to
parts, components, accessories, production.35
attachments, firmware, or software is
To sum up, sales information caught
not subject to the EAR.
and released by Filter 3 may be
To sum up, the publicly available exported without a licence, although
information caught by Filter 2 is not such sales information remains subject
subject to the EAR.
to the EAR. 36
Filter 3: Sales Information Filter 3 captures sales information and includes data supporting a prospective or actual quotation, bid, or offer to sell, lease, or otherwise supply any item.34
Sales information may be exported provided that: (i) the sales information is customarily transmitted with a prospective or actual quotation, bid, or offer to sell, lease or supply an item in accordance with established business practice, and (ii) the sales information
Filter 4: Operations Information Filter 4 captures operations information and includes the `minimum necessary' information for the `installation, operation, maintenance (checking), or repair of those commodities or software that are lawfully exported whether under a license, license exception, or no license required'.37
The General Technology Note defines `minimum necessary'
information to include `use'
information only to the extent
`required' to ensure the safe and
efficient use of the product while
The General Technology Note
definition of `minimum necessary' is
consistent with the definition of `use',
further limiting `minimum necessary'
information to information for
installation, operation, maintenance
(checking), or repair which are each a
defined attribute (or aspect) of `use'.39
The operations information that
corresponds to lawfully exported
commodities or software may be freely
exported to the same location without
an export licence under licence
As an example of operations
information, the EAR's Commerce
Control List (`CCL') highlights that
telemetry data is not subject to
classification within Category 9,
Product Group E of the EAR.
Telemetry data is defined to include
information `transmitted to or from a
satellite or "spacecraft," whether real or
simulated, when limited to information
about the health, operational status, or
measurements or function of, or raw
sensor output from, the "spacecraft,"
"spacecraft" payload(s), or its associ-
ated subsystems or components'.41
Conceptually, such telemetry data
falls naturally within Filter 4, providing
operations information focusing on the
operational status of the satellite or
spacecraft. More pointedly, this type of
telemetry data is referred to as
`housekeeping data' and includes
`system, hardware, component
configuration, and operation status
information pertaining to temperat-
ures, pressures, power, currents, voltages, and battery charges'.42
To sum up, operations information caught and released by Filter 4 may be exported without a licence, although such operations information remains subject to the EAR.
Filter 5: Technology Filter Five focuses on determining: (i) whether information generally qualifies as technology defined under the EAR, and (ii) if the information is technology because the information generally qualifies as `use' technology, then confirm that the information satisfies all six attributes of `use'. Information that does not qualify as technology is not subject to the EAR.43
First, the EAR provides a broad description for the format requirements of information that may qualify as technology: `"Technology" may be in any tangible or intangible form, such as written or oral communications, blueprints, drawings, photographs, plans, diagrams, models, formulae, tables, engineering designs and specifications, computer-aided design files, manuals or documentation, electronic media or information revealed through visual inspection[.]'44
But the broad format description is limited by the type of information within those listed format requirements that qualify under the definition of technology: `Technology means: Information necessary for the "development," "production," "use," operation, installation, maintenance, repair, overhaul, or refurbishing (or other terms specified in ECCNs on the CCL that control "technology") of an item.'45 So the information must be necessary for the `development,'
Telemetry data, defined to include information `transmitted to or from a satellite or "spacecraft,"` is not subject to classification within Category 9, Product Group E of the EAR.
`production,' `use,' operation, installation, maintenance, repair, overhaul, or refurbishing of an item' to come within the overall definition of technology.
The last word within the technology definition, `item' means `commodities, software, and technology'.46 This means that for the information to be technology under the EAR, the information must pertain to commodities, software, or technology of an `item'. For example, a dissertation on theoretical physics may not pertain to an actual item, and thus, may not be considered technology subject to the EAR.
The additional attributes of technology including development, production, and use are further defined as follows: `Development' relates to all stages prior to serial production, such as: `design, design research, design analyses, design concepts, assembly and testing of prototypes, pilot production schemes, design data, process of transforming design data into a product, configuration design, integration design, layouts'.47
`Production' means `all production stages, such as: product engineering, manufacture, integration, assembly (mounting), inspection, testing, [and] quality assurance.'48
`Use' includes `operation, installation (including on-site installation), maintenance (checking), repair, overhaul and refurbishing.' 49
In sum, the limiting criteria for technology may be thought of as follows: (i) development as planning for serial production, (ii) production as executing serial production, and (iii) use as operation, installation, maintenance, repair, overhaul and refurbishing.50
Second, per the longstanding BIS interpretation, for information to qualify as `use' technology, the technology must support all six activities within the definition of use: operation, installation (including onsite installation), maintenance (checking), repair, overhaul and refurbishing.
`After thorough review, BIS has concluded that the existing definition of "use"in Section 772.1 of the EAR should remain in the conjunctive. As such, the word "and" is appropriate and the definition of "use" remains unchanged: All six activities in the definition of "use" must be present to
trigger a license requirement. Changing "and" to "or" in the definition, as suggested by the OIG, would lead to a situation in which mere operation of a controlled item by a foreign national could trigger the requirement for a deemed export license. Consequently, BIS has determined that revision to the existing definition would result in an expansion of deemed export license applications imposing a substantial licensing burden on the regulated community,
without a corresponding benefit to national security. Hence, the definition of "use" remains unchanged.'51
Through the foregoing analysis, BIS removed from the definition of `use' any technology not supporting all six activities within the use definition.
Conversely, the definition of `use' has a note to address the stricter policy goals of the 500 Series (space and satellite) and 600 Series (military) items transferred to the CCL through the process of Export Control Reform.52
Links and notes
1 Export Administration Regulations, 15 C.F.R. 730-774 (2016). The EAR is administered by the Bureau of Industry and Security.
2 15 C.F.R. 774, Supp. No. 1 to Part 774 -- The Commerce Control List.
3 The filters derive from sections of the EAR, but are not a linear section of the EAR. Thus, the filters are conceptual abstractions derived from the EAR, and not simply cited sections of the EAR.
4 Information is not defined within the EAR, see 15 C.F.R. 772.1 Definitions of terms as used in the Export Administration Regulations (EAR). But rather information is generally contained within the definition of Technology, Id. `Item' means `commodities, software, and technology,' each of which is also independently defined within 15 C.F.R. 772.1, Id. So when the EAR intends to refer singularly to commodities, software, or technology, the text of the EAR will use the specific reference commodities, software, or technology.
5 15 C.F.R. 734.3(b)(1)(i)-(vi) Items subject to the EAR.
6 For example, the DoD maintains jurisdiction over classified information controlled under the National Industrial Security Program, see Exec. Order No. 12,829 (6 January 1993), as amended, `National Industrial Security Program,' further amended by section 6 of Exec. Order No. 13,691, 80 Fed. Reg. 9349 (13 February 2015).
7 15 C.F.R. 734.3(b)(1)(i)-(vi) Items subject to the EAR.
9 Id. at (i).
10 International Traffic in Arms Regulations, 22 C.F.R. 120-130 (2016).
11 Id. at 121.
12 15 C.F.R. 734.3(b)(1)(ii) Items subject to the EAR.
13 See https://www.bis.doc.gov/index.php/policyguidance/country-guidance/sanctioned-destinations/iran last checked 2 February 2017.
14 15 C.F.R. 746 Embargoes and Other Special Controls.
15 10 C.F.R. 95 NRC Regulations --Facility Security Clearance And Safeguarding Of National Security Information And Restricted Data.
16 15 C.F.R. 734.3(b)(1)(iii) Items subject to the EAR.
17 15 C.F.R. 734.3(b)(3)(i) (v) Items subject to the EAR. Note under 734.3(b)(3)(vi) that qualifying telemetry data is not `publicly available,' but rather such telemetry data more closely aligns with Filter Four Operations.
18 15 C.F.R. 734.7 Published.
19 Id. at (a)(1)-(5).
20 5 C.F.R. 734.3(b)(2) Items subject to the EAR. Note.
21 But see 15 C.F.R. 734.3(b)(2) and (b)(3). Items subject to the EAR. Note to paragraphs (b)(2) and (b)(3): `A printed book or other printed material setting forth encryption source code is not itself subject to the EAR (see 734.3(b)(2)). However, notwithstanding 734.3(b)(2), encryption source code in electronic form or media (e.g., computer diskette or CD ROM) remains subject to the EAR (see 734.17)). Publicly available encryption object code `software' classified under ECCN 5D002 is not subject to the EAR when the corresponding source code meets the criteria specified in 742.15(b) of the EAR.'
22 15 C.F.R. 734.8(c) `Technology' or `software' that arises during, or results from, fundamental research.
23 Id. at (b)(3).
24 Id. at Note 2 to paragraph (a).
25 15 C.F.R. 734.3(b)(3) Items subject to the EAR.
26 15 C.F.R. 734.10 Patents.
29 15 C.F.R. 734.3(b)(3)(v) Items Subject to the EAR.
30 See Collins English Dictionary Complete and Unabridged (HarperCollins Publishers, 12th ed., 2014), http://www.thefreedictionary.com/nonproprietary (last visited Nov. 14, 2016).
31 15 C.F.R. 772.1 Definitions of terms as used in the Export Administration Regulations (EAR). System.
32 Id. Note to definition of System.
33 NASA Systems Engineering Handbook SP-2007-6105 Rev 1, 3 (2007).
34 15 C.F.R. 740.13(a) Technology and software-- unrestricted.
35 15 C.F.R. 740.13(b) Technology and software-- unrestricted.
36 The end-use, end-user and destination controls of the EAR continue to apply to information subject to the EAR.
37 15 C.F.R. 774, Supp. No. 2 to Part 774 (1). General Technology Note.
39 15 C.F.R. 772.1 Definitions of terms as used in the Export Administration Regulations (EAR). Definition of Use.
40 15 C.F.R. 740.13(a) Technology and software-- unrestricted.
41 15 C.F.R. 774, Supp. No. 2 to Part 774, Note 2 to Category 9.
43 Except for information that is subject to the EAR's antiboycott provisions. The anti-boycott provisions are designed to encourage US persons to refuse participation with foreign boycotts, such as the Arab League Boycott of Israel. 15 C.F.R. 734.4(b)(3) Note to paragraph (b)(3): `Except as set forth in part 760 of this title [Restrictive Trade Practices or Boycotts], information that is not within the scope of the definition of `technology' (see 772.1 of the EAR) is not subject to the EAR.'
44 15 C.F.R. 772.1 Definitions of terms as used in the Export Administration Regulations (EAR). Note 1 to definition of Technology.
45 Id. Definition of Technology.
46 Id. Definition of Item.
47 Id. Definition of Development.
48 Id. Definition of Production.
49 Id. Definition of Use.
51 71 Fed. Reg. 30840 (May 31, 2006) at page 30843.
52 See generally EXPORT.gov, About Export Control Reform, http://2016.export.gov/ECR/.
53 15 C.F.R. 772.1 Definitions of terms as used in the Export Administration Regulations (EAR). Definition of Use, Note.
54 15 C.F.R. 774, Supp. No. 1 to Part 774. Commerce Control List ECCN 9E619.
55 Id. Definition of Technology.
57 Id. Definition of Technology N.B.
58 15 C.F.R. 774, Supp. No. 2 to Part 774 (1). General Technology Note.
59 Id. Definition of Required.
The note allows an ECCN to list within ECCN control parameters any single element of the six activities of `use' for control by that ECCN: `If an ECCN specifies one or more of the six elements of "use" in the heading or control text, only those elements specified are classified under that ECCN.53 Therefore, generally, the ECCN control parameters must be analysed when reviewing use technology arising under 500 Series and 600 Series ECCNs.
By way of example, ECCN 9E619 controls `technology' `required' for the `development,' `production,' operation, installation, maintenance, repair, overhaul, or refurbishing of military gas turbine engines and related commodities controlled by 9A619, equipment controlled by 9B619, materials controlled by 9C619, or software controlled by 9D619.54 The foregoing provides an example of the exception to the standard BIS `use' technology requirements requiring the presence of all six activities of use. The technology controls for ECCN 9E619 provide controls for the individual use activities listed within the ECCN control parameters.
To sum up, Filter 5 catches information which is not technology under the EAR, and such information is not subject to the EAR.
Filter 6: `Required' Technology under the General Technology Note Filter 6 focuses on determining whether information that comprises technology, as defined in the EAR, further comprises controlled technology under the EAR by coming within the parameters of the General Technology Note.55 Technology outside the parameters of the General Technology Note is not controlled technology under the EAR.56 The distinction of whether the information comprises controlled technology under the EAR is complex because Filter 6 may force the beginning stages of a classification analysis.
To apply Filter 6, whether the technology satisfies the criterion as `required' under the General Technology Note57 must be determined. This is because the General Technology Note only controls the export of `technology' that is `required' for the `development', `production', or `use' of items on the Commerce Control List according to
the provisions in each Category.58 And under the EAR definition, `required' technology only refers to that portion of [the] `technology' . . . which is peculiarly responsible for achieving or exceeding the controlled performance levels, characteristics or functions of other items on the CCL.59
The implication of the term `peculiarly' is highlighted in the following example provided within the EAR definition of `required':
`Such "required" "technology" or "software" may be shared by different products. For example, assume product "X" is controlled on the CCL if it operates at or above 400 MHz and is not controlled if it operates below 400 MHz. If production technologies "A", "B", and "C" allow production at no more than 399 MHz, then technologies "A," "B", and "C" are not "required" to produce the controlled product "X". If technologies "A", "B", "C", "D", and "E" are used together, a manufacturer can produce product `X' that operates at or above 400 MHz. In this example, technologies "D" and "E" are peculiarly responsible for making the controlled product and are thus "required"
technology under the General Technology Note.'60
The example provides that `peculiarly' may be understood to mean actually responsible for achieving the controlled performance level; i.e., `required' for achieving the controlled performance level. So to analyse whether the technology is `required', first determine the specific controlled performance levels, characteristics or functions, and then, determine which portions of the technology is peculiarly responsible for achieving or exceeding the controlled performance levels, characteristics or functions. 61
To sum, Filter 6 catches and releases information satisfying the EAR definition of technology, yet is not `required' as `peculiarly' responsible for achieving or exceeding the controlled performance levels stated on the CCL, although such information remains subject to the EAR.
Conclusion Information filtration is a methodology that serves to collect a broad set of information possibly subject to the EAR and then filters and releases from
detailed classification analysis information subject to exceptions and exclusions of the EAR. Information filtration provides valuable compliance insights and assurances over this broad set of information without unnecessarily devoting valuable resources necessary for a detailed classification analysis. With the information filtration process complete, a detailed classification analysis may be the final step undertaken as necessary to determine whether the information is EAR99 or properly classified under an ECCN.
Jeffrey Richardson is a senior attorney in the Troy, Michigan office of Miller Canfield, Paddock and Stone, P.L.C. His practice involves technology, international trade regulations, trans-border commercial transactions and foreign direct investment into the United States.
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