This document summarizes key aspects of the deemed export rule as it relates to hiring foreign nationals and sharing export-controlled technology. It discusses scenarios where a deemed export license may be required and consequences for non-compliance. Specifically, it addresses questions around emailing/sharing technology with foreign colleagues, license exceptions, I-129 certifications, guidance resources, recent enforcement actions, and the benefits of voluntary self-disclosure for violations.

1. At the Intersection of Commercial Export
Controls and Hiring Foreign National
Employees: The Deemed Export Rule
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2. Disclaimer
• The information provided is believed to be accurate
as of the date of the presentation, but is subject to
change without notice
• This presentation is designed for informational
purposes only and is not intended to be, nor should it
be deemed, specific legal advice. If such advice is
required, please consult with qualified legal counsel

3. Day-to-Day Issues
• Q: Do we need an export license to send an email
with export controlled information to our [citizenship
of choice] colleague in Cincinnati?
• Q: If so, we can just let her download it from the
server without a license, right?
It depends…

4. Assumptions
• Jurisdictional analysis performed – ITAR v. EAR
• I-129 Part 6 Certification
• Export Control Classification Number (ECCN)* examples:
– 3E001 (“Technology” for the “development” or “production”
of hard disk drive manufacturing)
– 9E991 (Technology for the development or production of
aircraft parts)
– 9E980 (Technology for the development or production of
monitoring equipment, e.g., electronic bracelets)
*Commerce Control List – 15 CFR Supp. 1 to Part 774

5. The Deemed Export Rule – 15 CFR 734.2
• “Technology” subject to the EAR is “deemed”
to be exported when it is released to a foreign
national within the U.S.
• “Technology” is specific information needed to
develop, produce or use a controlled product
• Applies beyond Internet

6. The Deemed Export Rule
• Arises most often – U.S. employment of
foreign nationals
• “Foreign national” definition
• Reasons for controls and licensing policy

7. Deemed Export Scenarios
• IT staffing company compliance
• Italian aerospace engineer on H1-B
• German optics engineer on L-1
• Indian optics engineer on H1-B
• Iraqi Ministry of Oil delegation plant tour
• CWRU Engineering students plant tour
• Thin film technology PowerPoint presentation

8. I-129 Part 6 Certification
• Box 1: A license is not required from Commerce or
State to release such technology or technical data to
the foreign person; or
• Box 2: A license is required from either Commerce
or State for the release and petitioner will prevent
access to controlled technology or technical data by
beneficiary until and unless the petitioner has
received required license or other authorization…

9. Why Talk about Deemed Export Rule?
BIS FY13 Report to Congress:
• “BIS continued increasing its regulatory compliance education
programs in the critical area of deemed exports.”
• “…BIS continued to focus on the enforcement aspects of
expanded outreach and deemed export compliance involving
individuals and companies … BIS’s Office of Export
Enforcement conducted more than 843 enforcement
outreach visits [and] initiated 92 leads and cases involving
allegations of deemed export licensing violations.
-Assistant Secretary for Export Enforcement, David W. Mills

10. Is a Deemed Export License Required?
• Q: Send an email with export controlled information to
our [citizenship of choice] colleague in Cincinnati?
• Q: If so, we can just let her download it from the server
without a license, right?
• Is a License Exception available? STA*?
• Caveats: - Follow documentation requirements
- Not available for China or Russia
* 15 CFR 740.20

11. Where to Find Guidance – www.bis.gov
• Policy Guidance Tab: Deemed Exports
–Deemed Exports FAQs
http://1.usa.gov/1hsOlQm
–Guidelines for Preparing Export License
Applications Involving Foreign Nationals
http://1.usa.gov/Rm3egX

12. Consequences of Deemed Export Violations
• 2008 – California machining company; release of
technology for production of aircraft parts to Iranian
national; not VSD; $31,500 settlement
• 2012 – deemed export violation; 1 of 21 proposed
charges; released technology controlled for Crime
Control to Israeli national, without a license;
voluntary disclosure – total penalty settlement
$230,000

13. This is What $115,000 in Violations Looks Like
• February 19, 2014 – Intevac, Inc. (Santa Clara) – VSD
– Charge 1: Releasing National Security-Controlled Technology to Russian
National Employee – development and production of hard disk drives
• “Release” – technology on server; provided employee with login and
password to access server; view, print, download, create attachments
– Charges 2-4: Acting with Knowledge – 3 more releases while deemed
export license application was pending with BIS
– Charge 5: Exported NS Controlled Technology to China without license –
“export took the form of a transmission that occurred when a Chinese
national employee working at the Chinese subsidiary used a login
identification code and password … to access server” located in Santa
Clara

14. What to Keep in Mind:
Points from USG Officials at 2013 BIS Update
• Deemed exports is the fastest growing area of
export controls
• Licensing trigger: private sourcing of research
• No need to correct/update Part 6 certification – get
a license
• Time to license: 30-45 days
• Who gets deemed export licenses? Chinese –
74%, Iranians, Indians, Russians, Vietnamese
• Currently no routine information sharing

15. Points from USG Officials at 2013 BIS Update
• Ongoing training – HR must understand export
controls during hiring process
• Targets: USML to CCL
• I-129 Part 6 is “hugely useful” to show knowledge
and intent
– Do not sign unless check was actually
performed
– Resist timing pressures

16. To Disclose or not to Disclose…
Keynote Speech of David W. Mills, BIS, Assistant Secretary for
Export Enforcement, West Coast Forum, February 25, 2014:
“… on January 17, 2014, BIS reached a settlement with
Amplifier Research for a $500,000 penalty. However, BIS
suspended the civil penalty in its entirety because of the VSD
filed by Amplifier Research in 2011 detailing the actions of
Gormley and its substantial cooperation in the course of this
investigation….By filing the VSD, Amplifier Research avoided
criminal charges (against the company itself), and the
suspended fine will be waived at the end of the penalty period
provided all commitments are met.”

17. To Disclose or not to Disclose…
• Successor liability for export control violations
• C.A. Litzler Co., Inc. – April 24 BIS civil penalty
settlement - $45,000
• ALJ granted BIS motion to amend Charging Letter
under “substantial continuity” standard, finding C.A.
Litzler acquired a substantial portion of assets, as
well as services of key personnel, target ceased
operations, but continued to exist as entity post-
acquisition

18. Thank you
Jon P. Yormick
Attorney and Counsellor at Law
Law Offices of Jon P. Yormick Co. LPA
Email: jon@yormicklaw.com
Toll Free: +1.866.967.6425
Mobile: +1.216.269.5138
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