U.S. Citizenship and Immigration Services has updated Form I-129, "Petition for a Nonimmigrant Worker," which allows employers to petition for an alien to work in the United States temporarily (2-7 years) under several common work visa categories. The revised form contains a new employer certification regarding the release of export controlled technology. Starting on February 20, 2011, employers (petitioners) will need to complete a "Certification Regarding the Release of Controlled Technology or Technical Data to Foreign Persons in the U.S." In order to complete the form accurately, companies need to know if they have export controlled technical data at their U.S. facilities. If so, they need to apply for licenses (when needed) for both existing foreign national employees and personnel applying for new work visas, or they must ensure that controlled data is not released to those individuals without required licenses. Understanding this process will also help companies come into compliance with export controls that may require licenses for site visits by non-employee foreign nationals, among other controls.
The required certification covers technical data and defense services releases in the United States related to the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of items on the U.S. Munitions List (items that are specifically designed or modified for a military end-use). In addition, the certification covers releases of technical data and technical assistance related to developing, producing, or using "dual use" products described in the 10 export control categories of the U.S. Commerce Department's "Commerce Control List" (15 C.F.R. 774, Supplement 1).
The 10 CCL categories include, among other items, a wide variety of products, software and technology related to materials (certain chemicals, metals, graphite, composites, etc.), materials processing equipment of various types (certain pumps, valves, machine tools, coating equipment, etc.), a wide variety of electronics, computers, information security items, lasers and sensors, navigation and avionics, marine equipment, and aerospace and propulsion equipment. They also include unexpected items like ball bearings, stainless steel valves, life jackets, scuba masks and fins, steel plates, and many other surprising items (and associated technology).
Look around. Virtually everything you see is considered a dual use item—it could be used for a legitimate commercial end-use or could be used for a military/terrorist or proliferation end-use (e.g., a pencil could be used to write a formula used in making a chemical weapon). The key is to understand that some dual use items and associated technologies are controlled for export, but most are not.
Many companies assume, however, that their products, software and technology are not controlled, but often at least some are controlled for export. This false assumption and a resulting failure to explicitly classify products and technology creates the risk of false certifications on the I-129 form. Companies' responses to this new I-129 certification requirement present an opportunity to re-evaluate and strengthen internal controls.
Practical Steps to Comply with the New Rules:
1. Determine if you have controlled technology by first classifying products or software you produce into the applicable USML or CCL subcategory. If you have an existing export product classification matrix, update and double check it. Remember, virtually every physical good, software, or technology your company makes or uses to make products or provide services can be classified on these control lists—even if they are classified as "EAR99" items that can generally be exported without licenses.
A fundamental step in complying is making the export classification of your products and software systematic, explicit, and continuing.
(Do not get confused into thinking that 10 digit Schedule B or Harmonized Tariff Schedule headings are export control classification numbers—they are not. Even some freight forwarders do not understand this distinction.)
2. After you have identified controlled products and software, identify the technology associated with those products (for articles covered by the CCL, the "how to" information required to develop, produce or use those items that are controlled for export). Then classify that technology under the USML or CCL—both have explicit subcategories to classify technology. These determinations should be entered on a product and technology export control matrix. A spreadsheet is an excellent tool for compiling this information.
This classification process should be systematic and should involve personnel who are intimately familiar with the USML and the CCL and with your company's products. Typically, a team that includes engineers or product specialists, the individuals responsible for export compliance, and outside counsel is needed to conduct this classification process efficiently.
One of the key steps in this process is determining what information is publicly available or considered to be "in the public domain" according to applicable regulatory language. Such information is not controlled for export. Moreover, even if it is not public, not all production information is necessarily controlled for export. Some information is common to making a controlled and an uncontrolled product. That information may not be controlled for export. It may well be that only the information required to transform a non-controlled product into a controlled category is controlled for export.
The process of parsing the technology associated with your products to determine what is truly controlled and what is not is a subtle process that requires experience with the regulations and classification. It is important to conduct this process carefully, however, because the consequences of misclassification are significant. One fundamental classification error can result in multiple export violations if technology that is controlled is improperly released over and over again.
3. Next, check for technology controls that are associated with a product that is not controlled. For example, certain special deposition technologies (methods of depositing materials on substrates—chemical vapor deposition is one example) are controlled for export, but the final product of that process may not be controlled for export.
4. If the process seems too big—you have tens or hundreds of thousands of line items and technology items to classify—consult with an experienced export compliance attorney who can help you attack the classification process in an efficient way.
5. Label your controlled data and segregate it via storage on dedicated servers, through password protection or via other means if needed.
6. Determine if non-U.S. persons at your facility need deemed export licenses for release of controlled data. Most USML technical data requires an export license for release. Not all dual use technology, however, requires a deemed export license. Determining who needs a deemed export license for dual use technology requires an analysis of the technology control category, the reason for control of that technology assigned by the Department of Commerce, and the nationality of the individual. Unless this process is also conducted explicitly and systematically, errors could be made.
7. Complete I-129 forms as appropriate. Note that the I-129 certification requirement only applies to certain visa categories at this time. As discussed, conducting the classification process needed to make accurate certifications on the I-129 form may reveal other export licensing requirements.
8. If you discover the company has released controlled technical data to a non-U.S. person that required a license, think carefully through your next steps and consult with a qualified export compliance attorney. Under U.S. export control rules, penalties for a single unlawful release of controlled technology can lead to fines of up to $1,000,000 and imprisonment—irrespective of the I-129 certification process.