at the intersection of export control regulations and employment discrimination law

At the Intersection of Export ControlRegulations and EmploymentDiscrimination LawDebra Burken

I. INTRODUCTION

Assume that Technology University hires as a professor in its Engineering

Department a Chinese national who is on an H-1B visa1 and in the process

of applying for permanent residence. Faculty in the department are work-

ing on improving inertial navigations systems under a government grant.

Because that technology is subject to control under domestic export con-

trol regulations, unless what the Chinese faculty member is working on is

in the public domain, a license is required to release the requisite technical

data to him. But because technology transfers with military applications to

China are prohibited, such a license will not be issued. Therefore, unless

r 2008, Copyright the AuthorJournal compilation r 2008, Copyright the Author

565

American Business Law JournalVolume 45, Issue 3, 565–610, Fall 2008

nProfessor, Western Carolina University. B.A., M.P.A., J.D., University of Texas, Austin.

1H-1B visa status is a nonimmigrant classification that permits foreign professionals to enterthe United States on a temporary basis to work in their field of expertise. Individuals workingunder H-1B visas may be employed for as long as three years initially with extensions notexceeding three years. The visa is designed for foreign nationals performing services in aspecialty occupation (e.g., physicians, professors, engineers, computer systems analysts andprogrammers) which require either a baccalaureate or higher degree or a required license,other official permission to practice a professional occupation, or the equivalency of a degreeor certification as acquired through a combination of education, training, and/orexperience. U.S. Department of Homeland Security, Characteristics of Specialty Occu-pation Workers (H-1B): Fiscal Year 2003, http://www.uscis.gov/files/article/FY03H1BFnlCharRprt.pdf (last visited Mar. 24, 2008). For an overview of the H-1B visa program, includ-ing a discussion of the changes made by 1990 legislation, see Brian John Halliday, In Order toHire the Best Person for the Job, We Have to Do What?: A Look at the H-1B Visa Program: The Short-Term Solution for Continued American Competitiveness in the Global High-Technology Marketplace, 11J.L. & PUB. POL’Y 33 (1999); Leah Phelps Carpenter, Comment, The Status of the H-1B Visa in TheseConflicting Times, 10 TULSA J. COMP. & INT’L L. 553 (2003).

http://www.uscis.gov/files/article/FY03H1BFnlCharRprt.pdf







the university is convinced that the data he needs fall under an exemption

for fundamental research, the Chinese professor must be excluded from

participation in the project. If the university erroneously concludes that

the exemption applies, it could lose millions of dollars in future federal

grants and face penalties as well.

Regulation of so-called ‘‘deemed exports’’ under U.S. law impacts the

employment of foreign nationals. But do such restrictions adversely affect

the conditions of the employment of foreign national employees in an im-

permissible discriminatory manner? Title VII of the Civil Rights Act of

1964 makes it an unlawful employment practice for an employer to fail to

hire, to discharge, limit, segregate, or classify any individual in a discrim-

inatory manner or to otherwise discriminate as to compensation, terms,

conditions, or privileges of employment, because of the individual’s na-

tional origin. This prohibition embraces foreign nationals working in the

United States for covered employers, regardless of their citizenship or

work authorization. Further, the Immigration Reform and Control Act of

1986 prohibits employers from discriminating against certain classes of

foreign nationals authorized to work in the United States with respect to

hiring, referral, or discharge because of citizenship status. These laws are

aimed at eliminating arbitrary discrimination based on stereotypical con-

clusions instead of performance criteria.

Nevertheless, regulations designed to preclude the exportation of

sensitive information seem to inject a degree of arbitrariness into the

classes of persons who are prohibited from receiving what is considered

sensitive information. Federal laws regulate the distribution of strategically

important products, services, and information to foreign nationals and

countries in the interest of national security. Such a regulatory scheme

necessarily must balance the desire for free trade and globalization, which

is required for economic growth, with the increasingly important need to

maintain national security. But given their propensity to affect adversely

the conditions of employment of some foreign nationals working in the

United States, should they also balance the need to protect persons from

stereotypical discrimination?

This article considers this potential for conflict, as well as the role

national security justifications play in resolving the issue. Part II addresses

the overall export control environment for U.S. businesses, describing the

applicable international accords and domestic statutes controlling exports.

Parts III and IV delve into the various and overlapping domestic regula-

tions in the area. Part V briefly summarizes relevant employment law

566 Vol. 45 / American Business Law Journal

principles. Once the legal background has been laid, Part VI then discusses

the intersection of these opposing legislative goals, arguing that national

security and global economic growth on the one hand and equal oppor-

tunity in employment on the other are not mutually exclusive. Part VII

concludes with a recommendation that pending changes in deemed export

licensing regulations be sensitive to preserving another critical American

value: equality in employment.

II. THE ENVIRONMENT OF EXPORT CONTROLS

Control of sensitive exports from the United States is governed by both

international accords and federal law. These next sections elucidate the

overarching rubric and goals of regulations affecting U.S. business prac-

tices.

A. The International Environment

Formal international and domestic export restrictions for both weaponry

and technology with the potential for military applications have been in

place for decades.2 The United States is a party to a number of multilateral

nonproliferation regimes.3 Today, the primary international framework

for export controls of weapons and associated technology that affects U.S.

interests is the Wassenaar Arrangement (WA).4 This association of forty

2For an excellent overview and historical examination of the structure of export control re-gimes, see Peter Swan, A Road Map to Understanding Export Controls: National Security in aChanging Global Environment, 30 AM. BUS. L.J. 607 (1993).

3These include the Nuclear Suppliers Group, a group of thirty-nine member states that seeksto curb the proliferation of nuclear weapons through the implementation of guidelines tocontrol nuclear and nuclear-related exports, see Nuclear Suppliers Group, http://www.nuclearsuppliersgroup.org/ (last visited Mar. 23, 2008); the Missile Technology Control Regime, con-sisting of thirty-four partners which apply a common export policy to a common list of con-trolled items, including all key equipment and technology needed for missile development,production, and operation, see The Missile Technology Control Regime, http://www.mtcr.info/english/index.html (last visited Mar. 23, 2008); and The Australia Group, consisting of thirty-eight participating countries which have agreed though their export policies to thwart theacquisition of chemical and/or biological weapons by certain states and terrorists desiring thatcapability, see The Australia Group, http://www.australiagroup.net/en/index.html (last visitedMar. 23, 2008).

4The WA is the successor to the former Coordinating Committee on Export Controls (Co-Com) the export control regime of the Cold War era that disbanded after the fall of the Soviet

2008 / Export Control Regulations and Employment Discrimination Law 567

participating states5 was established in 1996 ‘‘to contribute to regional and

international security and stability, by promoting transparency and greater

responsibility in transfers of conventional arms and dual-use goods and

technologies, thus preventing destabilising accumulations.’’6 The primary

goals of the WA are to contribute to regional and international security and

stability, to complement and reinforce the existing control regimes for

weapons of mass destruction and their delivery systems, to use export

controls as a means to combat terrorism, and to promote transparency and

greater responsibility in transfers of conventional arms as well as goods

and technologies that have both strategic or military uses in addition to

civilian applications.7 Under the WA the ultimate decision to transfer or

deny transfer of any item is the responsibility of participating states, as is

the responsibility through their national policy choices ‘‘to ensure that

transfers of these items do not contribute to the development or enhance-

ment of military capabilities which undermine these goals, and are not di-

verted to support such capabilities.’’8 Some have criticized the WA’s

Union. For a discussion of the genesis of the WA, see http://www.wassenaar.org/introduction/origins.html (last visited Mar. 23, 2008). In light of new risks to regional and internationalsecurity and stability, former members of CoCom began exploring the feasibility of establish-ing a new multilateral arrangement, which eventually culminated in the WA. Id. For a his-torical perspective on the emergence of the WA, see Kenneth A. Dursht, Note, FromContainment to Cooperation: Collective Action and the Wassenaar Arrangement, 19 CARDOZO L. REV.1079 (1997) (supporting its potential to be ‘‘the model for global cooperation in a new era where

the strategic goal is engagement, and not containment’’).

5Participating states include Argentina, Australia, Austria, Belgium, Bulgaria, Canada,Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New Zealand,Norway, Poland, Portugal, Republic of Korea, Romania, Russian Federation, Slovakia, Slov-enia, South Africa, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, and theUnited States. WA, Introduction, http://www.wassenaar.org/introduction/index.html (last vis-ited Mar. 23, 2008) [hereinafter WA Introduction].

6Id.

7WA, Overview, http://www.wassenaar.org/introduction/overview.html (last visited Mar. 23,2008). Additionally, the WA is not directed against any state or group of states. Id.

8WA Introduction, supra note 5. The participating states, however, agreed to maintain nationalexport controls on listed items as implemented by national legislation; to be guided by agreed-upon best practices, guidelines, or elements as established by the WA; to report on transfersand denials of specified controlled items to destinations outside the WA; and to exchangeinformation on sensitive dual-use goods and technologies. How does the Wassenaar Arrange-ment work?, http://www.wassenaar.org/introduction/howitworks.html (last visited Mar. 23,2008).


deferral of that judgment to the participating states as less effective than

the more containment-focused pre–Cold War export control treaties to

which the United State was a party.9

In addition to the WA and other multilateral nonproliferation treaties

to which the United States is a party, the Export Control and Related Bor-

der Security Assistance program is a U.S. initiative managed by the De-

partment of State’s Bureau of International Security and Nonproliferation,

which is aimed at improving the export control systems of other countries

to ‘‘prevent proliferation of weapons of mass destruction, their missile de-

livery systems, conventional weapons, and related items by assisting for-

eign governments to establish and implement effective export control

systems that meet international standards.’’10

While these international accords collectively strive to impede the

availability to rogue states and terrorists of weapons, as well as technology

with potential military applications, this goal cannot be accomplished with-

out vigilance being exercised independently by individual nations. As a

leader in the development of weaponry and corresponding technology, the

administration of export controls in the United States, then, is of critical

importance.

B. The Domestic Environment

Included among the goals of the domestic export control system are the

limitation of access to the most sensitive U.S. technology and weapons for

national security reasons, the promotion of regional stability, the preven-

tion of the proliferation of weapons and technologies to supporters of in-

9See Antonia Alice Badway, Controlling the Export of Dual-Use Technology in a Post-9/11 World, 18TRANSNAT’L LAW., 431, 435–37 (2005); Michael D. Klaus, Dual-Use Free Trade Agreements: TheContemporary Alternative to High-Tech Export Controls, 32 DENVER J. INT’L L. & POL’Y 105, 115–16

(2003). See also Jamil Jaffer, Strengthening the Wassenaar Export Control Regime, 3 CHI. J. INT’L L.

519 (2002) (asserting that the Wassenaar nations must implement a system of controls that is more

effective than the system currently in place in order to address the proliferation of dual-use tech-

nologies); Nicole Day, Note, The Canadian Connection: Why the State Department Is Ignoring aLoophole in the Arms Export Control Act, 28 GA. J. INT’L & COMP. L. 171 (1999) (identifying struc-

tural problems that impede the effectiveness of Wassenaar as a multilateral arms control regime).

10The Export Control and Related Border Security Assistance (EXBS) Program, http://www.exportcontrol.org/index.php/pagetype/htmlpage/id/1371.html (last visited Mar. 24,2008). The Web site for the EXBS program (www.exportcontrol.org) has a wealth of re-sources concerning export controls, their legal framework, and best practices for complianceprograms.


ternational terrorism, and compliance with international commitments.11

The federal government historically has treated the enforcement of inter-

national trade and security restrictions seriously; however, the war on ter-

rorism, coupled with the strengthening and commensurate enforcement

of corporate ethics and liability laws, are responsible for an increased in-

tensity of monitoring efforts.12 While agencies within the Departments of

State and Commerce primarily are responsible for implementing and

managing the current export control laws,13 the Department of Treasury

also enforces economic and trade sanctions in furtherance of foreign policy

and national security through its Office of Foreign Assets Control

(OFAC).14 OFAC administers economic sanctions, which prohibit eco-

nomic interaction with targeted countries such as Burma (Myanmar),

Cuba, Iran, Sudan, Libya, North Korea, and Syria, as well as any dealings

with designated individuals and entities, such as parties affiliated with a

sanctioned country or government, parties connected to terrorist activities,

and parties connected to the international narcotics trade.15

11Overview of the U.S. Export Control System, http://www.exportcontrol.org/index.php/pagetype/htmlpage/id/2081.html (last visited Mar. 24, 2008).

12Harry L. Clark & Sanchitha Jayaram, Intensified International Trade and Security Policies CanPresent Challenges for Corporate Transactions, 38 CORNELL INT’L L.J. 391, 393 (2005).

13See infra Parts III and IV. For an overview of the regulatory environment for export con-trols, see Andrew Doornaert, Export Controls of the U.S. Government: Scope and Legal Challenges,MICH. BAR J., Dec. 2005, at 28–31; John R. Liebman & Kevin J. Lombardo, A Guide to ExportControls for the Non-Specialist, 28 LOY. L.A. INT’L & COMP. L. REV. 497 (2006); Michael J. Meagher,

Heads Up: Complying with Export Control Laws, BOSTON BAR J., May/June 2002, at 14–15.

14For a discussion of the role of OFAC in export controls, see Terrence J. Lau, Caveat Emptor:Lessons from Volkswagen’s Lemon Purchase, 12 CURRENTS INT’L TRADE L.J. 3 (2003); Terence J. Lau,Triggering Parent Company Liability under United States Sanctions Regimes, 41 AM. BUS. L.J. 413

(2004). Other agencies involved in export regulation include U.S. Customs and the Department of

Defense. Some commentators have argued that split enforcement and oversight authority for ex-

port regulations results in an unwieldy licensing system, which should be replaced by a system in

which licensing responsibility and enforcement jurisdiction is centralized. Jere W. Morehead &

David A. Dismuke, Export Control Policies and National Security: Protecting U.S. Interests in the NewMillennium, 34 TEX. INT’L L.J. 173 (1999). See also Nathan T.H. Lloyd, Note, Rebuilding a BrokenRegime: Restructuring the Export Administration Act, 37 VAND. J. TRANSNAT’L L. 299 (2004) (arguing

that oversight for dual-use exports should be vested in the Department of Homeland Security).

15Additionally, the property of certain persons or entities from other countries with ques-tionable domestic or foreign policies, such as The Congo, Belarus, The Cote d’Ivoire, Zim-babwe, and the Balkans, may be frozen from time to time, and trading privileges suspended.OFAC Sanctions Programs, http://www.ustreas.gov/offices/enforcement/ofac/programs/index.shtml (last visited Mar. 24, 2008).


Thus, the goal of the export control system is to deny adversaries

access to U.S. defense technology while ensuring cooperation with allies

and coalition partners and scrutinizing potential defense exports for their

effect on regional stability.16 Arguably, at least with respect to dual-purposeexports, that is, those items with both civilian and military applications, the

complex federal regulatory scheme puts American businesses at a com-

petitive disadvantage with European competitors, which face less stringent

controls and which can export goods more promptly.17 Some commenta-

tors contend that the complex system is in need of an overhaul.18 While

compliance is costly19 and export controls complicate corporate transac-

tions in several ways,20 nevertheless, U.S. suppliers and others21 must be

vigilant and exercise responsibility in the exportation of goods and services

in the interest of national security, and it is the collective goal of these re-

spective agencies to ensure that result.

16Defense Trade Controls Overview, http://pmddtc.state.gov/docs/defense_trade_overview_2006.pdf (last visited May 11, 2007) [hereinafter DDTC Overview].

17Badway, supra note 9, at 452–54; R.Aylan Broadbent, U.S. Export Controls on Dual-Use Goodsand Technologies: Is the High Tech Industry Suffering?, 8 CURRENTS INT’L TRADE L.J. 49 (1999).

18Ronald J. Sievert, Urgent Message to CongressFNuclear Triggers to Libya, Missile Guidance toChina, Air Defense to Iraq, Arms Supplier to the World: Has the Time Finally Arrived to Overhaul theU.S. Export Control Regime?FThe Case for Immediate Reform of Our Outdated, Ineffective, and Self-Defeating Export Control System, 37 TEX. INT’L L.J. 89 (2002) (detailing reforms needed to make the

export control system more effective). Some authors advocate the elimination of the current

transaction-based approval program in favor of regional- or partner-based trade agreements.

Gregory W. Bowman, Emails, Servers and Software: U.S. Export Controls for the Modern Era, 35GEO. J. INT’L L. 319 (2004). See also Klaus, supra note 9 (critiquing the current system as it relates

to the explosive high-tech industry developing in China).

19Costs include the expenses involved in inventorying the equipment and technology subjectto the regulations, as well as in applying for export licenses. Benjamin Carter Findley, Revi-sions to the United States Deemed-Export Regulations: Implications for Universities, University Research,and Foreign Faculty, Staff and Students, WIS. L. REV. 1223, 1267 (2006).

20Examples include: (1) necessitating export licenses and other export approvals as well as theneed for amended or new ITAR registrations which require government approval; (2) re-quiring notifications regarding certain types of corporate transactions involving ITAR-regis-tered companies and often State Department reviews of transactions to verify whether or not aparty is a reliable exporter; (3) triggering more intensive scrutiny of compliance records inassessing whether the proposed transaction would threaten the national security, particularlywith companies that generate sensitive export-controlled technology; and (4) recognizingsuccessor liability for export control violations committed by the acquired entity before theacquisition. Clark & Jayaram, supra note 12, at 398.

21See infra note 27.


III. THE INTERNATIONAL TRAFFIC IN ARMSREGULATIONS (ITAR)

The federal Arms Export Control Act (AECA),22 and regulations promul-

gated thereunder, are one of the two major sets of governmental regula-

tions that control exports. The workings of the AECA and ITAR, which

together create a complex set of legal requirements, as well as the critical

‘‘deemed export’’ rule thereunder, and any relevant exemptions available

to employers of foreign nationals are discussed next.

A. Controlled Items and Licensing

The ITAR, which primarily address the import and export of defense-

related trade and technology transfers, are administered by the State

Department’s Bureau of Political Military Affairs’ Directorate of Defense

Trade Controls (DDTC).23 The DDTC requires a license for export of any

item on the AECA’s ‘‘munitions list.’’24 The twenty-one categories of items

controlled by way of the munitions list are inherently military in character

and include equipment, software, and military electronics, as well as chem-

ical and biological agents.25 There is also a catch-all category for items that

are not specifically enumerated in other categories of the munitions list,

but which have substantial military application and have been designed

or modified for military purposes, including technical data and defense

services that are directly related to the defense articles specifically enu-

22Pub. L. No. 90-629, 82 Stat. 1320 (1976), codified at 22 U.S.C. § 2778(a)(1) (2006). Thisauthority subsequently was delegated to the Secretary of State by Executive Order. ExecutiveOrder 11,958, 42 Fed. Reg. 4311 (Jan. 18, 1977). The implementing regulations for the stat-ute may be found at 22 C.F.R. §§ 120–130 (2006).

2322 C.F.R. §§ 120–130 (2006).

2422 U.S.C. § 2297(a) (2006). The munitions list is set forth in the Code of Federal Regula-tions. 22 C.F.R. § 121 (2006). The munitions list is similar to the control lists of mostother significant arms-exporting countries, although the munitions list contains some itemsthat other countries do not generally control as defense articles, such as commercial com-munications satellites, their parts, components, and technology. DDTC Overview, supranote 16.

2522 C.F.R § 120.1 (2006). There is no requirement that a defense article must be in workingcondition to be on the munitions list, as the regulations contemplate export for repair. UnitedStates v. Fu Chin Chung, 931 F.2d 43 (11th Cir. 1991) (cathode assembly).


merated.26 An exporter27 who is uncertain as to whether or not an item or

service is covered by the munitions list, may make a commodity jurisdiction

request to the DDTC for a determination if a license for exportation is

needed.28

Because it is the technology that necessitates control, items are in-

cluded on the munitions list based on their capability to be used for mil-

itary purposes, and not whether or not the intended use of the article after

2622 C.F.R § 120.1 (2006) (Category 21). While all prohibited items may not be named withcomplete specificity, the statute and its implementing regulations have withstood vaguenesschallenges. See, e.g., United States v. Lee, 183 F.3d 1029 (9th Cir. 1999) (holding that theregulations, which are aimed at a narrow group of persons, sufficiently put exporters onnotice to consult the applicable regulations and the appropriate government agency to resolveany ambiguity); United States v. Sun, 278 F.3d 302 (4th Cir. 2002) (determining that themeaning of ‘‘scrap exemption’’ was not unconstitutionally vague as applied to defendants);United States v. You-Tsai Hsu, 364 F.3d 192 (4th Cir. 2004) (concluding that the requiredfinding of knowingly and willfully vitiates vagueness concerns, as innocent exporters wouldnot be covered).

27As originally enacted, the AECA imposed licensing and registration requirements only onindividuals engaged in the business of manufacturing, exporting, or importing munitions listarticles and services. In 1996 Congress expanded the scope of the AECA’s registration andlicensing requirements to cover persons engaged in the business of brokering activities withrespect to the manufacture, export, import, or transfer of munitions list articles and services.The legislation now covers ‘‘every person . . . who engages in the business of brokering ac-tivities with respect to the manufacture, export, import, or transfer of ’’ the articles and ser-vices on the munitions list. 22 U.S.C. § 2778(b)(1)(A)(ii)(I) (2006). The regulations for theregistration and licensing of brokers are contained in Part 129 of the ITAR. 22 C.F.R. §§129.1–129.10 (2006). For a discussion of the 1996 legislation, see Elise Keppler, Comment,Preventing Human Rights Abuses by Regulating Arms Brokering: The U.S. Brokering Amendment to theArms Export Control Act, 19 BERKELEY J. INT’L L. 381 (2001) (advocating the adoption of effective

local, regional, and international implementation mechanisms to fortify the legislation). More-

over, now any activities that facilitate manufacturing, exporting, importing, or brokering of con-

trolled goods and services, such as financing and transporting, are subject to regulation, 22 U.S.C.

§ 2778(b)(1)(A)(ii)(II) (2006). And, the statute applies to all persons subject to U.S. jurisdiction, 22

C.F.R. § 129.3(a) (2006). Persons who abandon their legal permanent residence status, even

without administrative action, are not subject to the amendment. United States v. Yakou, 428

F.3d 241 (D.C. Cir. 2005). For a discussion of the case, see Marcy L. Busch, The D.C. CircuitReview July 2004-July 2005: Recent Decisions of the District of Columbia Circuit: Foreign Affairs, 74GEO. WASH. L. REV. 810 (2006).

2822 U.S.C. § 120.4 (2006). That determination, as well as the inclusion of any item or serviceas being on the munitions list, is within the State Department’s discretionary authority; theAECA explicitly bars judicial review of the designation of an item as a defense article on themunitions list. Id. § 2778(h). See also U.S. Ordnance, Inc. v. U.S. Dep’t of State, 432 F. Supp. 2d94 (D.D.C. 2006) (holding that the court did not have jurisdiction to review the denial of theplaintiff ’s license applications because the Department’s actions fell within its discretionaryauthority).


export is for military or civilian purposes.29 To improve accountability, the

AECA provides for end use monitoring of defense articles and defense

services.30 In conjunction with the statute’s directive to monitor high-risk

exports ‘‘whose diversion or other misuse could have significant conse-

quences,’’31 the ITAR provide that the policy of the State Department is ‘‘to

deny licenses and other approvals for exports and imports of defense ar-

ticles and defense services, destined for or originating in . . . Belarus, Cuba,

Iran, Libya, North Korea, Syria and Vietnam.’’32 Likewise, ‘‘the same pol-

icy applies to countries with respect to which the United States maintains

an arms embargo,’’ such as Burma, China, Haiti, Liberia, Somalia, and

Sudan.33 Therefore, export licenses will not be granted if the end user

resides in these countries. That refusal to license is extremely important

for foreign national employees under deemed export principles, as dis-

cussed subsequently.

B. Export, Deemed Export, and Reexport

Under the ITAR, export is defined as, inter alia, (1) sending or taking a

defense article out of the United States in any manner, (2) transferring

registration, control, or ownership, (3) disclosing (including oral or visual

disclosure) or transferring technical data to a foreign person, whether in

the United States or abroad, or (4) performing a defense service for a for-

eign person, whether in the United States or abroad.34 Thus, in addition to

the physical exportation of a defense article,35 the ITAR cover the perfor-

29DDTC Overview, supra note 16.

3022 U.S.C. § 2785(a)(1) (2006).

31Id. § 2785(b)(1).

3222 C.F.R. § 126.1(a) (2003).

33Id. The State Department maintains a current list of embargoed countries. Directorate ofDefense Trade Controls, Embargoed Countries, http://pmddtc.state.gov/country.htm (last vis-ited Mar. 24, 2008).

3422 C.F.R. § 120.17 (2006). Export does not include the ‘‘mere travel outside of the UnitedStates by a person whose personal knowledge includes technical data.’’ Id.

35The AECA defines defense article as including ‘‘(A) any weapon, weapons system, munition,aircraft, vessel, boat, or other implement of war, (B) any property, installation, commodity,material, equipment, supply, or goods used for the purposes of making military sales, (C) anymachinery, facility, tool, material, supply, or other item necessary for the manufacture, pro-duction, processing, repair, servicing, storage, construction, transportation, operation, or use


mance of a defense service, such as furnishing of assistance or training to

foreign persons either abroad or in the United States36 or the provision of

controlled technical data to foreign persons either abroad or in the United

States.37 Importantly, technical data under these regulations include clas-

sified information relating to defense articles, certain software, and infor-

mation ‘‘required for the design, development, production, manufacture,

assembly, operation, repair, testing, maintenance or modification of de-

fense articles.’’38 Examples of this latter type of information could include

blueprints, drawings, photographs, plans, instructions, and documenta-

tion.39

In addition to requiring a license for the original exportation of

technical data, the ITAR also prohibit the reexport of technical data with-

out DDTC approval,40 defining reexport as ‘‘the transfer of defense arti-

cles or defense services to an end use, end user or destination not

previously authorized.’’41 While predictably the regulations require ex-

port licenses for the traditional transfer of defense articles, less intuitive is

of any article listed in this paragraph, and (D) any component or part of any article listed inthis paragraph . . .’’ 22 U.S.C. § 2794(3) (2006).

3622 C.F.R. § 120.9 (2006). The term defense service is defined under the regulations as ‘‘(1)The furnishing of assistance (including training) to foreign persons, whether in the UnitedStates or abroad in the design, development, engineering, manufacture, production, assem-bly, testing, repair, maintenance, modification, operation, demilitarization, destruction, pro-cessing or use of defense articles; (2) The furnishing to foreign persons of any technical datacontrolled . . . whether in the United States or abroad; or (3) Military training of foreign unitsand forces, regular and irregular, including formal or informal instruction of foreign personsin the United States or abroad or by correspondence courses, technical, educational, or in-formation publications and media of all kinds, training aid, orientation, training exercise, andmilitary advice.’’ Id.

37Id. § 120.10.

38Id. The definition does not include ‘‘information concerning general scientific, mathematicalor engineering principles commonly taught in schools, colleges and universities or informa-tion in the public domain,’’ nor does it include ‘‘basic marketing information on function orpurpose or general system descriptions of defense articles.’’ Id.

39Id.

40The regulations provide that ‘‘technical data authorized for export may not be reexported,transferred or diverted from the country of ultimate end-use or from the authorized foreignend-user (as designated in the license or approval for export) or disclosed to a national ofanother country without the prior written approval of the Office of Defense Trade Controls.’’Id. § 125.1(c).

41Id. § 120.19.


the fact that the regulations also require licenses for the disclosure of tech-

nical data to a foreign person, or for the performance of a defense service

for a foreign person in the United States, under what is commonly re-

ferred to as the ‘‘deemed export’’ rule.42 That rule would treat the dis-

closure of controlled technical data to a foreign person (like a foreign

national engineer), for example, in the course of the person’s employment

as an export for which a license first must be obtained.43

Under these regulations, foreign person means anyone who is not a

citizen, a lawful permanent resident (green card holder), a refugee, or al-

ien granted asylum, as well any foreign corporation, business association,

partnership, trust, society, or any other entity not incorporated or orga-

nized to do business in the United States.44 As such, the category includes

lawfully admitted workers and students on approved visas. The one em-

ployee exemption permits the disclosure of unclassified technical data

without a license to foreign nationals who are bona fide and full-time reg-

ular employees of U.S. institutions of higher learning.45 However, this ex-

ception is inapplicable to employees who are foreign nationals of countries

to which defense exports are prohibited,46 that is, Belarus, Cuba, Iran,

Libya, North Korea, Syria, Vietnam, Burma, China, Haiti, Liberia, Soma-

lia, and Sudan.47

42For a discussion of the deemed export rule with exemplary applications, see Brian F. Walsh& David M. Dunbar, Deemed Exports of Technology, CHI. B. ASSOC. REC., Feb.-Mar. 1997, at 46–49.

43Other examples include a foreign national witnessing any demonstration or briefing or us-ing controlled equipment in a corporate research laboratory, U.S. employees of foreign sub-sidiaries sending nonpublic information (i.e., information not in the public domain) tothemselves via e-mail while overseas, and industrial scientist-employees of corporations sub-mitting articles for peer review abroad if the corporation retains proprietary rights to keep theinformation private. Rowena Rege, Universities Should Implement Internal Control Programs toMonitor Compliance with Export Control Laws, 35 J.L. & EDUC. 199, 212 (2006).

4422 C.F.R § 120.16 (2006).

45Id. § 125.4 (b)(10). The exemption only applies if the employee’s permanent abode through-out the period of employment is in the United States and the institution informs the individualin writing that the technical data may not be transferred to other foreign persons without theprior written approval of DDTC. Id. § 125.4 (b)(10)(i) & (iii). The exemption also may notapply to graduate students or postdoctoral researchers because they may not be consideredfull-time regular university employees.

46Id. § 125.4(b)(10)(ii).

47Id. § 126.1(a).


The presumption under the deemed export rule is that the foreign

national ultimately will return to the home country, thus the information,

in effect, will be exported. Under deemed export principles, the licensing

requirement applies whether or not the technical data that is to be dis-

closed or used in the performance of a defense service is in the public

domain.48 Presumably, then, the disclosure even of technical data in the

public domain to a foreign national may require a license. Moreover, the

deemed export rule prohibits all employers, even those which do not ex-

port defense articles in the normal course of business, from transferring

controlled technical data to a non-U.S. person within the United States

without the written authorization of the State Department.49 And, under

the reexport restrictions, the disclosure of technical data to a foreign na-

tional residing in a country to which the information was originally trans-

ferred could require additional written permission. Thus, for example, if a

U.S. corporation exported licensed technical data to Germany, and it was

disclosed to a Libyan national in the German facility, then the end use

could be deemed a reexport for which permission should be obtained.50

However, several exemptions discussed in the next section may apply.

C. Exemptions

The AECA and the ITAR provide exemptions from the licensing require-

ment for certain transactions, making it legal to transmit defense articles

abroad that are expressly exempt from the statutory prohibition. For ex-

ample, the ‘‘official use’’ and ‘‘foreign assistance’’ exemptions eliminate the

license requirement for the temporary export of defense articles, including

technical data or the performance of a defense service, for official use by a

48Id. § 124.1(a). This restriction is analogous to the prohibition on exporting defense itemsavailable in the public domain unless a license is obtained. See infra note 54 and accompanyingtext.

49DDTC Overview, supra note 16.

50Walsh & Dunbar, supra note 42, at 47–48. In order to comply with the ITAR’s deemedexport regulations, employers must complete a DSP-5 form for employment authorization, atechnical assistance agreement if the employee is to receive a defense service and, in mostcases, a nondisclosure agreement, Directorate of Defense Trade Controls, Notice: Licensing ofForeign National Employment in the United States, http://www.pmddtc.state.gov/docs/Foreign_National_Employment.doc (last visited Mar. 24, 2008). The license, if granted, isvalid for a period of time equal to the date of the foreign national’s work visa or the standardperiod of four years, whichever is lesser. In cases in which the visa exceeds four years, ap-plication may be made for renewal of the license. Id.


U.S. government department or agency or for carrying out authorized

foreign assistance or sales programs.51

In an effort to ensure that the government cannot overly restrict access

to information,52 another significant exemption applies to technical data that

is already in the public domain.53 The public domain exemption, however,

does not apply to items such as firearms or weapons on the munitions list;

the government may still preclude their export, even though such items

might be available to the public in the United States.54 Put another way,

physical shipment of items on the munitions list will always require a license.

The ‘‘public domain’’ exemption under the ITAR applies to information that

is published and that is generally accessible or available to the public by one of

several listed means, such as through sales, subscriptions, library facilities,

patents, and distribution at public forums, such as seminars or exhibitions.55

Fundamental research is also exempt. However, the ITAR distin-

guishes basic and applied research in science and engineering, that which

5122 U.S.C. § 2778(b)(2) (2006). The ITAR reflect the statutory exemption and further pro-vide that the exemption ‘‘applies only when all aspects of a transaction (export, carriage, anddelivery abroad) are effected by a United States Government agency, or when the export iscovered by a United States Government Bill of Lading.’’ 22 C.F.R § 126.4(a). Notably, thedefendants in the Iran-Contra controversy, which involved alleged covert governmental armssales to Iran in violation of export control laws, unsuccessfully offered this exemption as adefense. United States v. Durrani, 835 F.2d 410 (2d Cir. 1987) (speculating that neither ex-emption applies to a private individual who has not obtained a government bill of lading).

52See United States v. Edler Indus., Inc., 579 F.2d 516, 521 (9th Cir. 1978) (concluding that theFirst Amendment does preclude controlling the exportation of technology, although the reg-ulations grant a public availability defense, subject to certain conditions).

53For a discussion of the recurrence of the public domain concept in various aspects of the law,both inside and outside the contours of intellectual property, see Edward Lee, The Public’sDomain: The Evolution of Legal Restraints on the Government’s Power to Control Public Access ThroughSecrecy or Intellectual Property, 55 HASTINGS L.J. 91 (2003).

54See United States v. Wu, No. 93-5800, 1995 U.S. App. LEXIS 7970 (4th Cir. Apr. 11, 1995)(recognizing that the shipment of night vision devices without an export license to the People’sRepublic of China violates the AECA, even though such devices are available to the public inthe United States).

5522 C.F.R § 120.11 (2006). Presumably, generally accessible information does not fall into thepublic domain exception unless it is also published and a part of one of the enumerated cat-egories. United States v. Hoffman, Nos. 92-50299, 1993 U.S. App. LEXIS 30604 (9th Cir. Oct.6, 1993). The parameters of this category are not always clear. See Colonial Trading Corp. v.Dept of Navy, 735 F. Supp. 429 (D. D.C. 1990) (holding that data packages released by theNavy for the purpose of receiving competitive bids on spare parts for a torpedo does notconstitute a release of the information into the public domain).


culminates in the results being published and shared broadly within the

scientific community, from research the results of which are restricted for

proprietary reasons, or in accordance with specific U.S. government access

and dissemination controls.56 In other words, if the research results are

proprietary or subject to restrictions on dissemination, then a license is

required for their export, which includes, of course, disclosure to a foreign

national as a deemed export.

To further clarify, the regulations provide that university research

will not be considered fundamental research and hence exempt from the

ITAR licensing requirements, if the university or its researchers accept any

restriction on publication of the scientific and technical information re-

sulting from the project or activity, or if the research is funded by the gov-

ernment, and specific access and dissemination controls protecting the

information are applicable.57 For example, university-conducted research

will not qualify for exemption if a manufacturer reviews the research prior

to its publication to ensure that its proprietary rights will not be compro-

mised or if it reserves the right to withhold publication if the results are

undesirable.58 Consequently, if foreign nationals were working on the pro-

ject, export licenses would need to be obtained for pertinent technical data

to be disclosed to them. Because the penalties for violating the regulations

are substantial, and also can result in the loss of federal grants and con-

tracts,59 compliance with licensing requirements is of critical importance.60

5622 C.F.R § 120.11(a)(8) (2006). Thus, even university research is not exempt if there arerestrictions on publication resulting from the project or if it is governmentally funded and specificaccess and dissemination controls protect the information resulting from the research. Id.

57Id. § 120.11(8). For a comprehensive discussion of export controls in the university envi-ronment, see Findley, supra note 19. See also Council on Government Relations, Export Con-trols and Universities: Information and Case Studies (2004), http://www.cogr.edu/docs/export%20controls.pdf (last visited Mar. 24, 2008).

58Rege, supra note 43, at 211–15. The EAR permit limited review to determine patent vio-lations and proprietary infringements. 15 C.F.R. §§ 734.8(b)(1) & 734.8(d)(1).

59Criminal penalties include fines of up to $1,000,000 and imprisonment for ten years. 22U.S.C. § 2778(c) (2006). Civil penalties may be assessed up to $500,000 for each violation. 22U.S.C. § 2780 (2006). Additionally, violators may be debarred from exporting defense articlesand technical data, or from furnishing defense services for which a license or approval isrequired, for an appropriate period of time as determined in State Department proceedings.22 C.F.R § 127.7 (2006).

60For an example of a comprehensive model compliance program for companies that includesappropriate forms and lists specific red-flag alerts to heed at critical processing points, see


IV. EXPORT ADMINISTRATION REGULATIONS (EAR)

The other major set of federal export control regulations is the EAR. Un-

like the ITAR, which only regulate articles, technology, and services related

to defense, the EAR are concerned with ‘‘dual use’’ items, that is, goods

and technology that are primarily commercial, not military in nature, but

which may have a dual militaristic use, for instance mirror lasers.61 The

Bureau of Industry and Security (BIS) within the U.S. Department of

Commerce oversees the administration of the EAR, which were promul-

gated pursuant to the Export Administration Act of 1979 (EAA).62 Al-

though the EAR apply primarily to dual-use items, they also apply to some

items that have solely civil uses.63

One of the more controversial applications of these regulations con-

cerns encryption software.64 The EAR require licensing for encryption

items because they ‘‘can be used to maintain the secrecy of information,

and thereby may be used by persons abroad to harm U.S. national security,

Tara L. Dunn, Surviving United States Export Controls Post 9/11: A Model Compliance Program,DENV. J. INT’L L. & POL’Y 33 (2005). The DDTC also provides guidelines for a complianceprogram, suggesting that companies develop operational compliance programs, which in-clude manuals that articulate the processes to be followed in implementing the companyprogram. Directorate of Defense Trade Controls, Guidelines for DDTC Registered Exporters/Manufacturers Compliance Program, http://www.pmddtc.state.gov/compliance.htm (last vis-ited Mar. 24, 2008).

61United States v. Spawr Optical Research, Inc., 864 F.2d 1467 (9th Cir. 1988).

62Pub. L. 96-72, 93 Stat. 503 (codified as amended at 50 U.S.C. app. §§ 2401–2420 (1996)).The EAA expired August 21, 2001. See BIS, Streamlining and Strengthening Export Controls,http://www.bis.doc.gov/eaa.htm (last visited Mar. 24, 2008). However, the regulations haveremained in force through a series of executive orders issued pursuant to the InternationalEmergency Economic Powers Act. International Emergency Economic Powers Act of 1977,Pub. L. 95–223, 91 Stat. 1626 (codified as amended at 50 U.S.C. §§ 1701–1707 (2005)). In anattempt to enact a permanent law, the Bush administration proposed the Export EnforcementAct of 2007, which would reauthorize the EAA for five years and increase penalties for vi-olations substantially. Additionally, the bill would provide the Commerce Department’s Spe-cial Agents with statutory overseas investigative authority and expanded undercoverauthorities, make permanent provisions protecting confidential business information, andexpand the list of criminal violations upon which a denial of export privileges may be based.BIS, Press Release, Administration Proposes Bill to Enhance Export Control EnforcementAuthorities (Apr. 24, 2007), http://www.bis.doc.gov/news/2007/eea04252007.htm.

6315 C.F.R. § 730.3 (2007).

64Id. §§ 740.13 & 740.17.


foreign policy and law enforcement interests.’’65 In fact, the regulation of

encryption technology has been challenged on First Amendment grounds

as an unconstitutional infringement of free speech.66 While the Sixth Cir-

cuit held that computer source code is protected by the First Amendment

as an expressive means for the exchange of information and ideas about

computer programming,67 the EAR nonetheless have been upheld to date in

this context.68 Like the ITAR, the EAR contemplate the issuance of licenses

as a means of controlling export of sensitive items and technology. Details of

the EAR licensing scheme, its deemed export doctrine, and relevant excep-

tions to the regulations are discussed in the subsections that follow.

A. Controlled Items and Licensing

The export of items and technology subject to the EAR require an appli-

cation to BIS for a license.69 Comparable to the munitions list, the EAR

provide a list of items and technology subject to control, the ‘‘commerce

control list,’’ which classifies items into ten broad categories and five prod-

uct groups.70 Items are given an Export Control Classification Number

65Id. § 742.15. Jurisdiction over commercial encryption products was officially transferredfrom the State Department to the Commerce pursuant to Executive Order No. 13026 (Nov.15, 1996).

66Karn v. United States Dep’t of State, 925 F. Supp. 1 (D.D.C. 1996); Junger v. Daley, F. Supp.2d 708 (N.D. Ohio 1998); Bernstein v. Dept. of Commerce, No. C 95-0582 MHP, 2004 U.S.Dist. LEXIS 6672 (N.D. Cal. April 19, 2004). For a discussion of these cases, see NormanAndrew Crain, Bernstein, Karn, and Junger: Constitutional Challenges to Cryptographic Regulations,50 ALA. L. REV. 869 (1999).

67Junger v. Daley, 209 F.3d 481 (6th Cir. 2000). For a discussion of the case, see Recent Case,Junger v. Daley,, 209 F.3d 481 (6th Cir. 2000), 114 HARV. L. REV. 1813 (2001). For a comparison of

the regulation of encryption as expression in the United States and Canada of the issue, see Alex

Colangelo, & Alana Maurushat, Exploring the Limits of Computer Code as a Protected Form of Ex-pression: A Suggested Approach to Encryption, Computer Viruses, and Technological Protection Mea-sures, 51 MCGILL L.J. 47 (2006).

68Policy changes in 2004 simplified license exceptions in certain circumstances with respect toencryption commodities. BIS, Commercial Encryption Export Controls, http://www.bis.doc.gov/encryption/default.htm (last visited Mar. 24, 2008). Additionally, export of encryptionproducts is permitted to some members of the European Union and their trading partners.Matthew Crane, U.S. Export Controls on Technology Transfers, DUKE L. & TECH. REV. 30 (2001).

6915 C.F.R. § 730.7 (2007).

70Those categories are (0) Nuclear Materials, Facilities, and Equipment (and miscellaneousitems); (1) Materials, Chemicals, Microorganisms, and Toxins; (2) Materials Processing; (3)


(ECCN), based on their category and product group, which describes the

particular item or type of item and shows the controls placed on that

item.71 Items that fall under Commerce Department jurisdiction and are

not listed on the control list are designated as EAR99, a catch-all category.72

Whether or not a license is needed is determined by the item’s ECCN

as well as the export’s destination.73 If exporters are unsure about whether

or not a commodity is subject to the jurisdiction of the Commerce De-

partment’s export licensing authority, or an item’s classification, they may

make a Commodity Jurisdiction request or a Commodity Classification

request to the BIS.74 Such a determination is essentially final, as judicial

review is prohibited.75

Electronics; (4) Computers; (5) Telecommunications and Information Security; (6) Sensorsand Lasers; (7) Navigation and Avionics; (8) Marine; and (9) Propulsion Systems, Space Ve-hicles, and Related Equipment. The groups into which the items in the ten categories areclassified are: (1) Systems, Equipment and Components; (2) Test, Inspection, and ProductionEquipment; (3) Material; (4) Software; and (5) Technology. 15 C.F.R. at § 774.1 pt. 1 (2006)(Categories 0–9 & Supp. 2).

71BIS, Introduction to Commerce Department Export Controls, http://www.bis.doc.gov/licensing/exportingbasics.htm (last visited Mar. 24, 2008). Exporters may request BIS to as-sist in determining the ECCN for their exports if they are unclear as to the classification. BIS,How to Request an Export Control Classification Number (ECCN) (2006), http://www.bis.doc.gov/licensing/bis_eccn.pdf.

7215 C.F.R. pt. 774 (2006). Typically low-technology consumer goods, EAR99 items generallyship under the designation ‘‘NLR’’ (No License Required), unless the proposed export is to anembargoed country, to an end user of concern, or in support of a prohibited end use. BIS, AFrequently Asked Questions Guide to Export Licensing Requirements for Commercial Items,http://www.bis.doc.gov/exportlicensingqanda.htm (last visited Mar. 24, 2008).

73See 15 C.F.R. §§ 738.1–738.4 & Supp. 1 (2007) (chart of countries).

74If a license is needed, application may be made online. BIS, Simplified Network ApplicationProcess Redesign (SNAP-R), http://www.bis.doc.gov/snap/index.htm (last visited Mar. 24,2008).

7550 U.S.C. app. § 2412(a) (1996). Other determinations, however, are subject to limited ju-dicial review, such as the existence of liability for the imposition of civil penalties and the denialof export privileges. 50 U.S.C. app. § 2412(c)(3) & (d)(3) (1996). See Moller-Butcher v. U.S.Dep’t. of Commerce, 12 F.3d 249 (D.C. Cir. 1994) (concluding that EAA clearly limits judicialreview to questions concerning liability which resulted in the imposition of a sanction and notthe appropriateness of the sanction); Westphal v. U.S. Dep’t. of Commerce, 18 F.3d 950 (D.C.Cir. 1994) (holding that whether there was good cause to reopen the administrative recordafter a default judgment was entered is not a question concerning liability and hence notsubject to judicial review). For a discussion of the judicial review and other narrow exceptionsto its preclusion, see Dean A. Pinkert & Thomas D. Blanford, Judicial Review of Export ControlDeterminations, 26 BROOK. J. INT’L L. 843 (2001).


B. Export, Deemed Export, and Reexport

Under the EAR, export means ‘‘an actual shipment or transmission of

items out of the United States’’ as well as a ‘‘release of technology or soft-

ware subject to the EAR to a foreign national in the United States.’’76 The

release of technology or software is defined as occurring through visual

inspection of U.S. origin equipment and facilities by foreign nationals, oral

exchanges of information in the United States or abroad, or the application

to situations abroad of personal knowledge or technical experience ac-

quired in the United States.77 Further, the term technology is defined as

‘‘specific information necessary for the development, production, or use of

a product.’’78 Similar to the ITAR, this specific information includes tech-

nical data like blueprints, diagrams, and formulae, as well as technical as-

sistance, which may include instruction, consulting services, and the

transfer of technical data.79

The EAR, like the ITAR, recognize deemed export principles, be-

cause, in addition to the physical transmittal of control list items, the re-

lease of technology or software also is deemed to be an export to the home

country of the foreign national and hence subject to licensing require-

ments.80 Therefore, for example, the employment training of foreign na-

tional employees in the United States could require the employer to obtain

a license before the educational materials are released, depending on the

nature of the information and the foreign national’s citizenship. Under the

EAR, foreign nationals are considered to be citizens of their most recent

country of citizenship or permanent residence for licensing purposes.81

7615 C.F.R. § 734.2(b)(1) (2007).

77Id. § 734.1(b)(3).

7815 C.F.R. pt. 772 (2007). Development is further defined as relating ‘‘to all stages prior toserial production, such as: design, design research, design analyses, design concepts, assemblyand testing of prototypes, pilot production schemes, design data, process of transformingdesign data into a product, configuration design, integration design, layouts.’’ Id. Production‘‘means all production stages, such as: product engineering, manufacture, integration, as-sembly (mounting), inspection, testing, quality assurance.’’ Id.

79Id.

8015 C.F.R. § 734.1 (b)(2)(ii) (2007). See also Bowman, supra note 18, at 338–40 (discussingdeemed exports under the EAR).

81BIS, Questions and Answers to Supplement Clarification of Deemed Export Related Regula-tory Requirements, http://www.bis.doc.gov/deemedexports/deemedexportssupplementqa.htm


Also like the ITAR, the deemed export rule under the EAR does not apply

to persons lawfully admitted for permanent residence or to persons pro-

tected under the Immigration and Naturalization Act,82 that is, refugees or

aliens granted asylum.83

Applications for export licenses for foreign nationals whose employ-

ment duties involve goods, software, or technology subject to the EAR re-

quire a letter of explanation and the individual’s resume, in addition to the

completed basic form.84 If approved, the license granted is not a blanket

one, but rather only for the controlled technologies specified.85 If the for-

eign national’s responsibilities should then require access to controlled

technologies other than those authorized by the initial license, another

export license application would be required.86 Further, The BIS may at-

tach certain conditions to the approval of a license, for example, the denial

of access to certain technologies, such as controlled optical computer tech-

nology, neural network technology, or spread spectrum technology.87

While licenses are required for the release to foreign nationals of technol-

ogy or software included on the control list, EAR99 (the so-called ‘‘catch-

all’’ category) technology requires a deemed export license only in limited

circumstances, such as the release of certain information to a Cuban or

Iranian national, because those countries are embargoed.88

In 2006 the BIS processed 865 deemed export license applications,

an increase of twenty percent over the previous year.89 Most applications

(last visited Mar. 24, 2008) [hereinafter Clarification]. Foreign nationals with dual citizenshipare considered citizens of their most recent country of citizenship or residency as well. Id.

8215 C.F.R. § 734.1(b)(2)(ii) (2007).

838 U.S.C. § 1324b(a)(3) (2006).

84BIS, Guidelines for Preparing Export License Applications Involving Foreign Nationals,BIS, http://www.bis.doc.gov/deemedexports/foreignnationals.pdf (last visited Mar. 23, 2008).

85Id.

86Id.

87Id.

8815 C.F.R. § 746.2–746.3 (2007). Also, a violation could occur if the release of EAR99 tech-nology was made with knowledge that it was to be reexported to a foreign national for whom alicense is required. Id. § 764.2.

89BIS, Bureau of Industry and Security Annual Report Fiscal Year 2006, http://www.bis.doc.gov/news/2007/annreport06/bis07_all.pdf (last visited Mar. 24, 2008) [hereinafter BIS AnnualReport 2006].


involved the release of technology associated with the electronics (semi-

conductor manufacturing), telecommunications, computer, and aerospace

industries, and almost sixty percent of the deemed export licenses pro-

cessed were for Chinese foreign nationals.90

Not all interactions by foreign nationals with EAR-controlled items,

technology, and software will require a license. As previously noted, tech-

nology is defined under the EAR as ‘‘specific information necessary for the

development, production, or use of a product.’’91 Within that definition of

technology, the term ‘‘use’’ is defined as that information necessary for

‘‘operation, installation (including on-site installation), maintenance

(checking), repair, overhaul and refurbishing.’’92 Thus, the deemed ex-

port rule does not regulate the operation of the controlled equipment by a

foreign national, but rather the release of specific information to a foreign

national of export-controlled use technology.93 The technology necessary

merely to operate the export-controlled equipment is not a release of use

technology; therefore, no deemed export license requirement is trig-

gered.94

Like the ITAR, the EAR also control reexports of items included

on the control list, including technology and software transfers.95 Reex-

port means ‘‘an actual shipment or transmission of items subject to the

EAR from one foreign country to another foreign country; or release

of technology or software subject to the EAR to a foreign national outside

the United States.’’96 Thus, for example, a separate license would be re-

quired for the release of controlled technical data to a Chinese national

working in Germany, the country for which the original license was

90Id. Other foreign nationals for whom deemd export licenses were approved included India(13 percent), Iran (7 percent), Russia (2 percent), Germany (2 percent), and the UnitedKingdom (1 percent). Id.

9115 C.F.R. pt. 772 (2007).

92Id.

93Clarification, supra note 81.

94Id.

95For an overview of issues pertaining to reexports, see BIS, Guidance of the CommerceDepartment’s Reexport Controls, http://www.bis.doc.gov/licensing/bis_reexport_controls.pdf(last visited Mar. 24, 2008).

9615 C.F.R. § 734.2(b)(4) (2007).


obtained.97 Comparable to the ITAR, the EAR also are concerned with end

use and end users, that is, persons abroad who receive and ultimately use

the exported or reexported items.98 End-use checks are conducted

through the BIS Sentinel Program, part of the BIS Office of Export En-

forcement, which investigates end users of controlled commodities to de-

termine compliance with license conditions.99

C. Exceptions

There are several exceptions to the licensing requirements of the EAR.100

No license is required for the export of public information and software.101

Information is considered public, or a part of the public domain, for ex-

ample, if it is ‘‘generally accessible to the interested public in any form

. . .’’102 Educational information also may be considered public information

and hence not subject to licensing requirements, if ‘‘it is released by in-

struction in catalog courses and associated teaching laboratories of aca-

demic institutions,’’103 which also includes some publicly available

educational technology and software.104

97For an overview of these rather complicated issues, see BIS, ‘‘Deemed Export’’ Questionsand Answers, http://www.bis.doc.gov/deemedexports/deemedexportsfaqs.htm (last visitedMar. 24, 2008).

9815 C.F.R. pt. 772 (2007). The end user ‘‘is not a forwarding agent or intermediary, but maybe the purchaser or ultimate consignee.’’ Id.

99BIS, Export Enforcement, http://www.bis.doc.gov/complianceandenforcement/enforcementhome.htm (last visited Mar. 24, 2008). Additionally, Export Control Officers at key U.S.embassies also conduct end use checks to ensure that U.S. dual-use goods are used in accor-dance with U.S. export control laws and regulations. Id.

100In addition to the main categories of exemptions, the EAR also provide for comprehensivelicenses for multiple exports and reeexports, as well as special exemptions for some encryp-tion exports. Bowman, supra note 18, at 341–43.

10115 C.F.R. § 734.7(a)(1) (2007).

102Id. § 734.7(a). Examples include information in periodicals, books, print, electronic, or anyother media available for general distribution to any member of the public; informationavailable at public libraries; patents and published patent applications available at any patentoffice; and information released at open conferences, meetings, seminars, trade shows, orother open gatherings. Id. § 734.7(a)(1)–(4). What is considered public information with re-spect to patents and patent applications is further clarified in the EAR. Id. § 734.10.

103Id. § 734.9.

104Id. § 734.3(b)(3)(iii).


Thus, there are many similarities between the EAR exceptions and

the ITAR exemptions, including an exception for fundamental re-

search.105 Fundamental research qualifying for this exception from licens-

ing may occur at universities, federal agencies, or in corporate settings.106

The EAR define fundamental research as ‘‘basic and applied research in

science and engineering, where the resulting information is ordinarily

published and shared broadly within the scientific community,’’ as distin-

guished from ‘‘proprietary research and from industrial development, de-

sign, production, and product utilization, the results of which ordinarily

are restricted for proprietary reasons or specific national security rea-

sons.’’107 University-based research normally will be considered funda-

mental research unless the research results are subject to prepublication

review.108 Like the ITAR, research will not qualify for the exception if the

university or its researchers accept restrictions on publication of scientific

and technical information resulting from the project or activity.109 Simi-

larly, research conducted by scientists or engineers in a business setting will

be considered fundamental research ‘‘to the extent that the researchers are

free to make scientific and technical information resulting from the re-

search publicly available without restriction or delay based on proprietary

concerns or specific national security controls . . .’’110

In sum, then, as long as research results are not shielded from public

access in either the university or corporate setting, it is not subject to the

EAR licensing requirements, and foreign national employees need not be

licensed prior to the release of such information to them. As a practical

matter, though, much research in the private sector will be of a proprietary

105In the ITAR fundamental research is included under the public domain exception and isnot a distinct category, as in the EAR.

106The fundamental research exception under the EAR also includes publicly available tech-nology and software that ‘‘arise during, or result from, fundamental research.’’ 15 C.F.R. §734.3(b)(3)(ii) (2007).

107Id. § 734.8(a).

108Id. § 734.8(b)(1). Prepublication review by a sponsor is permitted to ensure that the pub-lication would not inadvertently divulge proprietary information or to ensure that publicationwould not compromise patent rights. Id. § 734.8(b)(2)–(3). The ITAR have no such caveat.

109Id. § 734.8(b)(5).

110Id. § 734.8(d)(1). Prepublication review, however, is permissible if it is limited to ensuringthat the publication would not compromise rights in proprietary information or patent rights.Id. § 734.8(d)(2)–(3). Again, the ITAR have no such caveat.


nature and thus subject to these licensing requirements. Foreign national

employees engaged in such endeavors would be subject to deemed export

license requirements. An employer’s failure to comply can prove costly in

terms of criminal and civil penalties,111 as well as in being subject to having

export privileges denied either as a sanction for a violation or as a pro-

tective administrative measure.112

V. EMPLOYMENT LAW

Let us now return to our Chinese engineering professor, hired by the hy-

pothetical Technical University. Export controls prohibit him from work-

ing on the government grant project investigating inertial navigation

systems, unless that project qualifies as fundamental research, or he is li-

censed, which is unlikely because he is a national of an embargoed country

and the project has military applications. As a result, this individual, law-

fully employed here and presumably hired due to his ability to contribute

in a meaningful way to the development of important scientific knowledge,

will be singled out from his American faculty peers and subject to disparate

treatment in the employment context. Speaking to this issue, Title VII of

the Civil Rights Act of 1964 and the Immigration Reform and Control Act

of 1986 are addressed next.

A. Title VII of the Civil Rights Act of 1964

Title VII of the Civil Rights Act of 1964 makes it unlawful for employers

‘‘to fail or refuse to hire or to discharge any individual or otherwise to

discriminate against any individual with respect to his compensation,

terms, conditions, or privileges of employment’’ or ‘‘to limit, segregate,

or classify his employees or applicants for employment in any way which

would deprive or tend to deprive any individual of employment oppor-

tunities or otherwise adversely affect his status as an employee’’ on account

11115 C.F.R. § 764.3(a)(2) (2006).

112Id. § 764.3(b)(1)–(2). For example, BIS may ‘‘issue an order temporarily denying exportprivileges when such an order is necessary in the public interest to prevent the occurrence ofan imminent violation.’’ Id. § 764.6(c). Persons and entities denied exporting privileges areplaced on the Denied Persons List. BIS, The Denied Persons List, http://www.bis.doc.gov/dpl/thedeniallist.asp (last visited Mar. 24, 2008). Further, the EAR also prohibit some transfers byother persons to those who have been denied exporting privileges. 15 C.F.R. § 736.2(b)(4)(ii).


of race, color, religion, sex, or national origin.113 In addition to illegal dis-

crimination based on disparate treatment, 114 also potentially actionable

under Title VII is the creation of a hostile working environment based on

national origin.115

Although there is no specific definition of national origin under the

Act,116 the term has been interpreted to prohibit discrimination only based

on an individual’s country of origin or ancestry, although arguably it

should embrace expressly ethnicity, so as to curb sufficiently the invidious

discrimination the legislation was designed to prevent.117 In 1973, the Su-

preme Court in Espinoza v. Farah Manufacturing Company118 interpreted the

11342 U.S.C. § 2000e-2(a) (2006). The Act covers employers whose business affects interstatecommerce and who employ fifteen or more persons for twenty or more weeks a year. Id. §2000e(b).

114For a prima facie discrimination case based upon disparate treatment, generally the em-ployee must allege and prove by circumstantial evidence that (1) s/he was a member of aprotected class; (2) s/he suffered an unfavorable or adverse employment decision; (3) s/he wasqualified to assume or retain the position; and (4) the employer did not treat race, gender,national origin, age, or disability neutrally in making the decision. McDonnell Douglas Corp.v. Green, 411 U.S. 792, 802 (1973).

115See, e.g., Miller v. Kenworth of Dothan, Inc., 277 F.3d 1269 (11th Cir. 2002); McCowan v.All-Star Maintenance, Inc., 273 F.3d 917 (10th Cir. 2001); Kang v. U. Lim America, Inc., 296F.3d 810 (9th Cir. 2002); Cerros v. Steel Techs., 288 F.3d 1040 (7th Cir. 2001).

116In fact there is little legislative history concerning the provision, and there has been lesslitigation concerning that prohibition in Title VII than either race or sex. Eugenio AbelleraCruz, Note, Unprotected Identities: Recognizing Cultural Ethnic Divergence In Interpreting Title VII’s‘‘National Origin’’ Classification, 9 HASTINGS WOMEN’S L.J. 161, 176 (1998).

117Juan F. Rerea, Ethnicity and Prejudice: Reevaluating ‘‘National Origin’’ Discrimination UnderTitle VII, 35 WM. & MARY L. REV. 805 (1994) (asserting that the term should embrace the pro-

tection of ethnic traits or ethnicity from discrimination in light of increasing ethnic diversity in the

workplace). The demarcation between discrimination based upon ethnicity as opposed to ancestry

is often blurred. See St. Francis Coll. v. Al-Khazraji, Aka Allan, 481 U.S. 604, 614 (1987) (‘‘the

line between discrimination based on ‘ancestry or ethnic characteristics,’ . . . and discrimination

based on ‘place or nation of . . . origin,’ is not a bright one.’’) (Brennan, J., concurring). The Equal

Employment Opportunity Commission (EEOC) considers employment discrimination against a

national origin group as including discrimination based on ethnicity; discrimination against any-

one who does not belong to a particular ethnic group; discrimination against an individual be-

cause of physical, linguistic, and/or cultural characteristics closely associated with a national

origin group; and discrimination against an individual based on the employer’s belief that the

individual is a member of a particular national origin group. EEOC Compliance Manual, Section

13: National Origin Discrimination, http://www.eeoc.gov/policy/docs/national-origin.html (last

visited Mar. 24, 2008) [hereinafter EEOC Compliance Manual Section 13].

118414 U.S. 86 (1973).


term national origin to refer ‘‘to the country where a person was born, or,

more broadly, the country from which his or her ancestors came.’’119 Hence,

the prohibition in Title VII as interpreted did not include discrimination

based on citizenship,120 even though EEOC guidelines at the time assumed

that the Act prohibited such discrimination.121 For discrimination based on

citizenship under Title VII to be actionable, then, plaintiffs would have to

establish that any type of discriminatory treatment linked to citizenship was

a pretext for discriminating on the basis of national origin.122

Current EEOC guidelines provide: ‘‘In those circumstances, where

citizenship requirements have the purpose or effect of discrimination

against an individual on the basis of national origin, they are prohibited

by Title VII.’’123 The Guidelines define national origin discrimination as

‘‘including, but not limited to, the denial of equal employment opportunity

because of an individual’s, or his or her ancestor’s, place of origin; or be-

cause an individual has the physical, cultural or linguistic characteristics of

a national origin group.’’124 As such, the EEOC considers suspect certain

employer practices that discriminate on the basis of a foreign accent, the

inability to communicate well in English, or the location (foreign or do-

mestic) of the training or education of the employee or prospective em-

119Id. at 88. The plaintiff had alleged discrimination on the grounds that she had been re-jected for employment because of her Mexican citizenship. Id. at 87.

120Id. at 88.

121Id. at 92.

122Fredric J. Bendremer & Lisa A. Heiden, Unfair Immigration-Related Employment PracticesProvision: A Modicum of Protection Against National Origin and Citizenship Status Discrimination, 41U. MIAMI L. REV. 1025, 1035 (1987). In the absence of direct evidence of discrimination, plaintiffs

may establish their prima facie cases by circumstantial evidence, after which the burden shifts to

the defendant-employer to show that there was a nondiscriminatory reason, or legitimate factors,

for the adverse employment decision, after which the burden then shifts back to the employee to

prove that the alleged nondiscriminatory justification was merely a pretext for discrimination.

Tex. Dep’t of Cmty. Affairs v. Burdine, 450 U.S. 248, 252–54 (1981).

12329 C.F.R. § 1606.5(a) (2006).

124Id. § 1606.1 (2006). The EEOC also scrutinizes cases in which equal employment oppor-tunities have been denied for reasons grounded in national origin considerations, ‘‘such as (a)marriage to or association with persons of a national origin group; (b) membership in, orassociation with an organization identified with or seeking to promote the interests of nationalorigin groups; (c) attendance or participation in schools, churches, temples or mosques, gen-erally used by persons of a national origin group; and (d) because an individual’s name orspouse’s name is associated with a national origin group.’’ Id.


ployee.125 Of particular relevance to the employment of foreign nationals,

the EEOC presumes that a workplace rule requiring employees to speak

only English at all times violates Title VII.126

There are two exceptions to Title VII’s antidiscrimination provisions

that are of significance to persons alleging discrimination based on national

origin. The Act declares that it is not an unlawful employment practice to

employ individuals ‘‘on the basis of his religion, sex, or national origin in

those certain instances where religion, sex, or national origin is a bona fide

occupational qualification reasonably necessary to the normal operation of

that particular business or enterprise . . . .’’127 However, the EEOC cautions

that this exception should be strictly construed.128 Title VII also includes a

proviso based on national security concerns:

It shall not be an unlawful employment practice for an employer to fail orrefuse to hire and employ any individual for any position, for an employer todischarge any individual from any position . . . if the occupancy of such posi-tion, or access to the premises in or upon which any part of the duties of suchposition is performed or is to be performed, is subject to any requirementimposed in the interest of the national security of the United States under anysecurity program in effect129 [such as restrictions on the transfer of technologyto foreign nationals from certain countries].130

125Id. § 1606.6(b) (2006).

126Id. § 1606.7(a) (2006). English-only rules have been addressed in the literature. See, e.g.,Raechel L. Adams, Comment, English-Only in the Workplace: A New Judicial Lens Will ProvideMore Comprehensive Title VII Protection, 47 CATH. U. L. REV. 1327 (1998); James Leonard, Bilin-gualism and Equality: Title VII Claims for Language Discrimination in the Workplace, 38 U. MICH.

J.L. REFORM 57 (2004); Cristina M. Rodriguez, Language Diversity in the Workplace, 100 NW. U. L.

REV. 1689 (2006).

12742 U.S.C. § 2000e-2(e) (2006).

12829 C.F.R. § 1606.4 (2006).

12942 U.S.C. § 2000e-2(g) (2006). That proviso acts as an affirmative defense to a charge ofdiscrimination and permits employers to deny employment to individuals who do not fulfillthe national security requirements for the position, such as having the requisite securityclearances. EEOC, Notice: Policy Guidance on the use of the national security exception con-tained in § 703(g) of Title VII of the Civil Rights Act of 1964, as amended, http://www.eeoc.gov/policy/docs/national_security_exemption.html (last visited Feb. 2, 2008). SeeMolerio v. F.B.I., 749 F.2d 815 (D.C. Cir. 1984) (upholding the FBI’s refusal to hire an ap-plicant with relatives in Cuba for a special agent position because he could not get top secretsecurity clearance).

130EEOC Compliance Manual Section 13, supra note 117.


Both of these provisos are of significance to employers of foreign nationals

in settings in which their employment responsibilities involve technology

controlled by the EAR or the ITAR.

B. Immigration Reform and Control Act of 1986 (IRCA)

While the Supreme Court did not interpret Title VII as incorporating

discrimination based on citizenship, subsequent legislation made such dis-

crimination illegal. The IRCA131 makes it ‘‘an unfair immigration-related

employment practice for a person or other entity to discriminate against

any individual . . . with respect to the hiring, or recruitment or referral for

a fee, of the individual for employment or the discharging of the individual

from employment’’ because of the individual’s national origin, or with re-

spect to both permanent and temporary residents, because of such indi-

vidual’s citizenship status.132

In addition to expressly prohibiting employment discrimination

based on citizenship, the IRCA also extends Title VII’s goal of proscrib-

ing national origin discrimination.133 The threshold for Title VII coverage

is fifteen or more employees for twenty or more weeks a year.134 Because

the IRCA is applicable to employers who employ four or more persons,135

it operates to extend Title VII’s prohibition against national origin dis-

crimination to employers with between four and fourteen employees.136

The Department of Justice’s Office of Special Counsel for Immigration-

Related Unfair Employment Practices is responsible for enforcing the

131Pub. L. No. 99-603, §§ 101-407, 100 Stat. 3359.

1328 U.S.C. § 1324b(a)(1) (2006). For a historical and constitutional analysis of the legislation’santidiscrimination provisions, see Michael A. Scaperlanda, The Paradox of a Title: Discriminationwithin the Anti-Discrimination Provisions of the Immigration Reform and Control Act of 1986, WIS L.REV. 1043 (1988). The IRCA was passed in part out of concern that provisions of Title VIIproviding for employer sanctions for hiring undocumented workers would result in increasedincidence of discrimination against both legal and illegal immigrants. See Linda Sue Johnson,Comment, The Antidiscrimination Provision of the Immigration Reform and Control Act, 62 TUL. L.REV. 1059, 1071–83 (1988) (discussing the need for the antidiscrimination provisions).

133Tudoriu v. Horseshoe Casino Hammond, No. 2:04 CV 294, 2006 U.S. Dist. LEXIS 24043,at n5 (N.D. Ind. Mar. 21, 2006).

13422 U.S.C. § 2000e-1(b) (2006).

1358 U.S.C. § 1324b(a)(2)(A) (2006).



IRCA.137 Comparable to Title VII’s national security caveat, citizenship

status discrimination that is otherwise required to comply with a law, reg-

ulation, executive order, or government contract is exempt from the

IRCA.138

VI. THE INTERSECTION OF OPPOSING GOALS

Although these two legislative objectives are in conflict, the following sub-

sections reveal that the statutes themselves are not technically opposed.

Instead, the regulatory environment appears to be driving either discrim-

inatory employment practices or disregard of the deemed export rules by

employers. While some amount of disparate treatment is constitutionally

permissible especially in the name of national security, excess discrimina-

tory effect is suspect as a policy choice, particularly given the possibility of

its amelioration as discussed below.

A. The Practical Conflict and a Reconciliation

Title VII and the IRCA seek to make discrimination in employment based

on arbitrary stereotypes illegal. The goal of the export control regime en-

compassed by the EAR and ITAR is to advance national security by the

protection of sensitive technology, the acquisition of which by certain

countries or groups could have devastating effects on U.S. interests. This

latter goal is realized, at least in part, by the restriction of information to

certain persons based solely on their citizenship.

Because of the arms embargo, our Chinese professor, or to use an-

other example, engineers who are Iranian nationals legally working for

defense contractor(s) in this country, will not be allowed access to certain

information in their employment relationship simply because they are

Chinese or Iranian, and not because of any known security threat or be-

cause of an inability to perform the job responsibilities adequately. Certain

other foreign nationals, from countries not subject to arms embargoes,

137There is a Memorandum of Understanding between this division and the EEOC, whichoutlines the respective responsibilities and jurisdiction. Memorandum of Understanding Be-tween The Equal Employment Opportunity Commission and The Office of Special Counselfor Immigration Related Unfair Employment Practices, http://www.eeoc.gov/policy/docs/oscmou.html (last visited Mar. 24, 2008).

1388 U.S.C. § 1324b(a)(2)(C) (2006).


may be entitled to access to that same information, but only if the employer

can obtain a license or the information is exempt from such a requirement

under the ITAR or the EAR.139

Assuming these foreign nationals were to be denied access to the in-

formation necessary for them to fulfill their employment dutiesFwhether

in the private sector or an academic settingFthen certainly such a con-

straint would affect the terms and conditions of their employment. Argu-

ably, their opportunities for advancement would be stifled by this

limitation as well, in comparison to those of their colleagues. This reality

conflicts with the goal of equal employment opportunities guaranteed by

civil rights legislation to these temporary immigrant workers. In effect,

they would be subject to disparate treatment based on their nationality.140

Furthermore, given the stiff penalties for noncompliance with export

control legislation, employers are admonished to establish a compliance

system for monitoring the export of controlled items, including the

deemed export of controlled technology to individuals.141 One means of

ensuring that only individuals who are not subject to export controls will

have access to controlled data is to establish a badge/classification system,

which indicates to employees whether or not they can share technical data

with an individual without risking a violation of the deemed export rule.142

Such a system, while effective for minimizing export controls, certainly has

the effect of limiting, segregating, or classifying employees based on their

possession of an export license, the granting of which is inextricably linked

to their citizenship and national origin. Yet under antidiscrimination laws,

employers may not assign applicants or employees to certain positions

based on national origin nor limit promotional opportunities based on

national origin.143

139For an explanation of to whom these restrictions apply, see supra notes 32–33 and 73.

140That is, employees could establish that they were members of a protected class, sufferedadverse employment actions, were nevertheless qualified, and national origin was not treatedneutrally in these actions. See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973)(establishing a prima facie case for disparate treatment). Under EEOC Guidelines the nexusbetween national origin and the adverse treatment should be sufficiently intertwined so as tomake them protected employees in this scenario. 29 C.F.R. § 1606.5(a) (2006).

141See, e.g., Doornaert, supra note 13; Meagher, supra note 13, Rege, supra note 43.

142Dunn, supra note 60.



Because it involves more effort and resources to monitor compliance

or, alternatively, to apply for licenses for deemed exports, as a practical

matter, employers may choose not to hire potential employees for whom a

license would be required, assuming qualified persons existed in the do-

mestic labor pool. But our civil rights legislation prohibits hiring, promo-

tion, and assignment decisions that are based on national origin, and the

EEOC takes the position that foreign nationals are covered by the EEO

statutes when they apply for U.S.-based employment from outside the

United States.144 If employers instead had a company policy that did not

support the application for deemed export licenses, such a policy would

also conflict with equal opportunity objectives by resulting in disparate

treatment. Because civil rights legislation also recognizes disparate impact

discrimination,145 even a neutral policy that denied employment to all ap-

plicants for whom any licensures or certifications were required by law

could violate principles of equality.146

In an effort not only to ensure equal opportunity in the workplace

more adequately, but also to tap needed foreign talent, employers could

apply for a deemed export license so that foreign national employees

would have access to technology commensurate with resident coworkers.

However, statistics on the number of deemed export licenses for which

application has been made in the last couple of years suggest that employ-

ers do not take this route.147

A substantial number of H-1B visa approvals are in the computer and

engineering areas, occupational fields in which such licenses likely would

be required, particularly given that most of the beneficiaries of such visas

144Id.

145‘‘The Title VII principles of disparate treatment and adverse impact equally apply to na-tional origin discrimination.’’ 29 C.F.R. § 1606.2 (2006).

146The disparate impact theory of discrimination permits plaintiffs to establish that seeminglyneutral criteria used by an employer may be an invidious form of discrimination because itdisproportionately impacts protected persons. See Griggs v. Duke Power Company, 401 U.S.424 (1971) (recognizing that unintentional discrimination through the utilization of objectivecriteria that adversely impact protected classes may be in violation of Title VII).

147In 2005 the BIS closed out 707 deemed export license applications, a decrease of almostthirty percent from Fiscal Year 2004. BIS, Bureau of Industry and Security Annual ReportFiscal Year 2005, http://www.bis.doc.gov/news/2006/annualreport/bis_annualreportcomplete05.pdf (last visited Mar. 24, 2008).


were from India and China.148 The immigration statistics available for H-

1B visa approvals in years 2002 and 2003 establish that almost fifty percent

of the approved applications were for employment in computer-related

occupations and occupations in architecture, engineering, and surveying,

with India and China together representing about forty-four percent of

the beneficiaries.149 In 2002, H-1B visas were either initially approved or

continued for 18,841 Chinese nationals150; that year the BIS granted 310

deemed export licenses for China.151 In 2003, H-1B visas were either ini-

tially approved or continued for 20,063 Chinese nationals152; that year the

BIS granted 313 deemed export licenses for China.153 These statistics

seem incongruent154 unless an overwhelming number of the Chinese na-

tionals employed are either working in nontechnical, nonscientific areasFwhich seems counterintuitive because proof of professionalism and exper-

tise is required in order to obtain such temporary employmentFor they

are all working on materials subject to the fundamental research155 or

public domain exceptions156 to the regulations. The other possibility is that

employers simply do not comply with the requirements, perhaps because

of a lack of knowledge.157

148U.S. Department of Homeland Security, Characteristics of Specialty Occupation Workers(H-1B): Fiscal Year 2003, http://www.uscis.gov/files/article/FY03H1BFnlCharRprt.pdf (lastvisited Mar. 24, 2008) [hereinafter Characteristics].

149Id.

150Id.

151BIS, Annual Report for the Fiscal Year 2002, Chapter 2: Export Licensing, http://www.bis.doc.gov/news/2003/annualreport/chapter2p.pdf (last visited Mar. 24, 2008).

152Characteristics, supra note 148.

153BIS, Annual Report Fiscal Year 2003, Chapter 2: Export Licensing, http://www.bis.doc.gov/news/2004/03annualrept/index.htm#Chap2 (last visited Mar. 24, 2008).

154China was selected for comparison because, as an embargoed country for the export ofmilitary weapons and technology, the ITAR would necessitate a license, and as a more scru-tinized country under the EAR, a license likely would be required as well for technologytransfers with potential military applications.

155See supra notes 56–58 and accompanying text.


157Recognizing the need to educate employers, the BIS targeted outreach to industry, aca-demia, and government research institutions, which presumably was one factor resulting in an


In some cases, even if employers applied for deemed export licenses,

such licenses would not be granted. With respect to munitions technology

transfer under the ITAR, policy dictates that licenses should be denied to

certain countries, such as Belarus, Cuba, Iran, Libya, North Korea, Syria,

and Vietnam158 and, commensurately, their foreign nationals, as well as

countries and their foreign nationals subject to an arms embargo such as

Burma, China, Haiti, Liberia, Somalia, and Sudan.159 It is also possible that

either the DDTC or BIS would approve a license only for limited or certain

classes of unclassified information, or subject to conditions concerning the

authorization of access, and at any rate certainly only for transfers or re-

leases specifically provided for in the application and no more.160 There

seems to be no question that a failure to hire foreign nationals for whom

licenses had not been approved would not violate Tile VII, because re-

quiring employees to be able to access requisite technology in their job

functions could be viewed as a bona fide occupational requirement.161

Thus, while the goals of equal employment opportunities seemingly

conflict with current regulations of deemed exports, the laws themselves

do not necessarily conflict. Although U.S. export laws restrict the transfer

of technology to foreign nationals from certain countries, employer actions

taken pursuant to requirements under U.S. export laws do not violate Title

VII,162 according to the EEOC’s interpretation of Title VII’s national se-

curity proviso.163 Presumably the national security proviso of the IRCA

increase of twenty percent of deemed export applications from 2005 to 2006. BIS AnnualReport 2006, supra note 89.

15822 C.F.R. § 126.1(a) (2003).

159Id.


161A good faith occupational qualification is exempt from Title VII’s provisions, even thoughit may discriminate against protected classes. 42 U.S.C. § 2000e-2(e) (2006). See also Dothard v.Rawlinson, 433 U.S. 321 (1977) (discussing minimum height and weight requirements di-rectly linked to the sex of the prison guard as bona fide occupational qualifications with re-spect to the use of women guards in contact positions in maximum-security malepenitentiaries).

162Title VII contains a national security exception to its antidiscrimination mandates. See supratext accompanying notes 129–30.

163EEOC Compliance Manual Section 13, supra note 117 (referencing the Web site of the BIS).


would be similarly interpreted.164 Moreover, the deemed reexport of con-

trolled technology to foreign nationals most certainly would not violate

U.S. civil rights statutes,165 because individuals who are not U.S. citizens

are not protected if employment is outside the United States.166 Thus, at

least statutorily, the balance has been stuck in favor of protecting against a

perceived threat to national security, even though the classification based

on the specific citizenship of an individual is generalized to the generic

threat presumed to be posed by the individual’s homeland. Like most na-

tional security issues, the deference presumptively paid to the executive

branch with respect to the classification of suspect countries, and in par-

ticular with respect to the licensing decisions of both the Departments of

State and Commerce, is substantial and seemingly unwavering.167

B. Constitutional Analysis

While civil rights legislation does not seem to preclude disparate treatment

in employment of foreign nationals under export control regulations, are

such export regulations unconstitutional because of this potential effect on

employment? The Fourteenth Amendment to the United States Constitu-

tion provides in pertinent part that ‘‘all persons born or naturalized in the

United States, and subject to the jurisdiction thereof, are citizens of the

United States and of the State wherein they reside . . . No state shall . . .

deny to any person within its jurisdiction the equal protection of the

164An exception to the Act’s antidiscrimination provisions provides that ‘‘discrimination be-cause of citizenship status which is otherwise required in order to comply with law, regulation,or executive order, or required by Federal, State, or local government contract, or which theAttorney General determines to be essential for an employer to do business with an agency ordepartment of the Federal, State, or local government.’’ 8 U.S.C. § 1324b(a)(2)(C) (2006).

165A deemed reexport of technology would occur with the release of technology or software toa foreign national outside the United States, or the transfer of defense articles or services to anunauthorized end user, such as a foreign national overseas for whom a license had not beenapproved. See supra Parts III.B and IV.B.

166Shekoyan v. Sibley Int’l, 409 F.3d 414 (D.C. Cir. 2005) (holding that Title VII does notextend extraterritorially to persons who are not an American citizens, even if they are lawfulpermanent residents). See also EEOC Manual Section 13, supra note 117. In contrast, U.S.citizens are protected by Title VII when employed overseas by a U.S. company. The CivilRights Act of 1991 amended the definition of employee to include U.S. citizens employedabroad within the protection of Title VII. Pub. L. No. 102-166, 105 Stat. 1071 (1991) (codifiedat 22 U.S.C. § 2000e-1(f) (2006)).

167See supra notes 28 & 74–75 and accompanying text.


laws.’’168 Lawfully admitted resident aliens are considered persons under

the Fourteenth Amendment.169

The Supreme Court reviews laws that treat persons unequally with

strict scrutiny if they involve suspect classifications based on immutable

traits, such as race.170 Some classifications of permanent residents based on

alienage also have been treated with heightened judicial scrutiny, 171 be-

cause aliens as a class ‘‘are a prime example of a ‘discrete and insular’ mi-

nority.’’172 On the other hand, not all statutory exclusions of aliens must

‘‘clear the high hurdle of ‘strict scrutiny,’ because to do so would ‘obliterate

all the distinctions between citizens and aliens, and thus depreciate the

historic values of citizenship.’’’173 In particular, the Court’s scrutiny is less

demanding with respect to matters firmly within a state’s constitutional

prerogatives, such as the appointment of persons to the state police

force.174 In such instances ‘‘the State need only justify its classification by

a showing of some rational relationship between the interest sought to be

protected and the limiting classification.’’175

The Court has distinguished permanent resident status from non-

immigrant status in its Equal Protection analysis as well.176 For example,

neither illegal immigrants nor their children are considered a suspect class

168U.S. CONST. amend XIV.

169Yick Wo v. Hopkins, 118 U.S. 356 (1886).

170Regents of University of California v. Bakke, 438 U.S. 265 (1978).

171See, e.g., Graham v. Richardson, 403 U.S. 365 (1971) (applying strict judicial scrutiny tostrike state laws denying resident aliens disability benefits); Exam. Bd. Eng’rs v. De Otero, 426U.S. 572 (1975) (applying strict judicial scrutiny to strike state laws preventing resident aliensfrom obtaining engineering licenses); Nyquist v. Mauclet, 432 U.S. 1 (1977) (applying closejudicial scrutiny to strike state laws preventing permanent resident aliens from receiving statefinancial assistance for higher education).

172United States v. Carolene Products Co., 304 U.S. 144, 152–53 n.4 (1938).

173Foley v. Connelie, 435 U.S. 291, 296 (1977) (internal citation omitted).

174Id. at 292.

175Id. at 296. See also Cabell v. Chavez-Salido, 454 U.S. 432 (1982) (upholding state statuterequiring peace officers, including deputy probation officers, to be U.S. citizens). But see In reGriffiths, 413 U.S. 717 (1973) (holding that a state law barring resident aliens from admissionto the bar violated the equal protection clause of the Fourteenth Amendment).

176For a discussion of this distinction, see Gerald Rosberg, Strangers to the Constitution: Immi-grants in American Law: Discrimination Against the ‘‘Nonresident’’ Alien, 44 U. PITT. L. REV. 399(1983).


under the Fourteenth Amendment.177 Neither has the Supreme Court

expanded the suspect classification or its strict scrutiny analysis to legally

admitted nonimmigrant aliens, nor considered them to be a quasi-sus-

pect class to which classifications would be subject to some form of in-

termediate scrutiny.178 Most recently, the Fifth Circuit in LeClerc v. Webb,applying a rational basis review, upheld a Louisiana Supreme Court Rule

which rendered nonimmigrant aliens ineligible to sit for the state bar,

concluding that ‘‘the level of constitutional protection afforded nonim-

migrant aliens is different from that possessed by permanent resident

aliens.’’179

Further, the deference the Court pays to matters firmly within a

state’s constitutional prerogatives under the Fourteenth Amendment ex-

tends to congressional prerogatives under the Fifth Amendment’s Due

Process Clause.180 This deference, though not absolute, is paid in part be-

cause the Court recognizes that the federal government exercises substan-

tial plenary control over naturalization and immigration.181 Federal

authority to regulate the status of aliens derives from constitutional

sources, including its power to establish a uniform rule of naturaliza-

tion,182 its power to regulate commerce with foreign nations,183 and its

177Plyler v. Doe, 457 U.S. 202 (1982) (applying a modified rational basis review to state statutepermitting the withholding of funds from local school districts for the education of childrennot legally admitted).

178LeClerc v. Webb, 419 F.3d 405, 419 (5th Cir. 2006).

179Id. at 410. For a critique of the case, see Recent Case, LeClerc v. Webb, 419 F.3d 405 (5th Cir.2005), 119 HARV. L. REV. 669 (2005); Kathleen Ann Harrison, Note, LeClerc v. Webb: RationalScrutiny Analysis of Equal Protection Claims by Nonimmigrant Aliens, 25 MISS. C. L. REV. 273 (2006).

180See Mathews v. Diaz, 426 U.S. 67 (1976) (upholding a federal law granting Medicare ben-efits to certain resident citizens sixty-five years of age and older, but denying eligibility tocomparable aliens unless they had been admitted for permanent residence and had resided inthe United States for at least five years).

181See Hampton v. Mow Sun Wong, 426 U.S. 88 (1976) (holding that the Civil Service Com-mission’s regulation generally barring resident aliens from employment in the federal com-petitive civil service unconstitutionally deprived lawfully admitted resident aliens of libertywithout due process of law under the Fifth Amendment). For a discussion of this plenarypower, see Kif Augustine-Adams, Immigration and Civil Rights After September 11: The Impact onCalifornia: The Plenary Power Doctrine After September 11, 38 U.C. DAVIS L. REV. 701 (2005).

182U.S. CONST., art. I, § 8, cl. 4.

183Id. art. I, § 8, cl. 3.


broad authority over foreign affairs.184 The Court recognizes the preem-

inent role of the federal government with respect to the regulation of al-

iens: ‘‘The Federal Government has broad constitutional powers in

determining what aliens shall be admitted to the United States, the pe-

riod they may remain, regulation of their conduct before naturalization,

and the terms and conditions of their naturalization.’’185 Thus, judicial

review of immigration legislation is limited, as Congress has substantial

legislative power over such issues as the admission of aliens and the power

to expel or exclude them, given the political nature of these issues and the

degree of sovereign immunity characteristic of such political questions.186

These principles of deference would likely render the deemed export

regulations constitutional as applied to nonimmigrant aliens, notwith-

standing their impact on the conditions of employment for foreign na-

tionals. Admittedly, in the exercise of its broad power over immigration

and naturalization, ‘‘Congress regularly makes rules that would be unac-

ceptable if applied to citizens.’’187 The conclusion that such rules are con-

stitutional is buttressed by the fact that national security justifications are

advanced in support of their validity. Indeed, in balancing concerns for

national security against First Amendment free speech issues, a federal

district court upheld the ITAR’s content-neutral source code for encryp-

tion software provision in light of the power of the federal government to

control the export of defense articles, and concluded that, on balance, the

regulation was narrowly tailored to further a significant governmental in-

terest in preventing the proliferation of cryptographic products.188 Al-

though the deemed export regulations under the ITAR and the EAR most

likely do not violate current civil rights laws and/or the Constitution as in-

terpreted to date, are they good policy choices?

C. Policy Considerations

The regulation of deemed exports results from a concern that temporary

workers in technical fields will take sensitive information with them that

184Toll v. Moreno, 458 U.S. 1, 10 (1982).

185Takahashi v. Fish & Game Comm’n, 334 U.S. 410, 419 (1948).

186Fiallo v. Bell, 430 U.S. 787, 793 (1977).

187Mathews v. Diaz, 426 U.S. 67, 80 n.4 (1976).

188Karn v. United States Dep’t of State, 925 F. Supp. 1, 11 (D.D.C. 1996).


will ultimately compromise national security interests. At the same time,

the adherence to that presumption may have consequences even in the

absence of violating any laws.

1. Reduced Global Competitiveness and Adverse Effect on National Security

Restrictions on the sharing of research results and collaboration among

scientists worldwide actually may undermine critical security goals.189 Fur-

ther, some commentators argue that, in order to be competitive, U.S. firms

must recruit talented, knowledgeable employees from a global market-

place, and nonimmigrant foreign nationals help to fill that void.190 In this

race for global talent, the United States must compete to attract and retain

successful highly skilled emigrants, and citizenship is one carrot to be dan-

gled.191 Certainly, the potential, realistic adverse employment conse-

quences associated with the treatment of foreign nationals under

deemed export regulations is a disincentive to become a player on the

American team.192 Much of this talent is needed for both university re-

search programs and industries on the cutting edge of exactly what it is

that export controls regulate, that is, high-tech scientific advancements.

2. Expansion of the Deemed Export Licensing Regime

Instead of initiating policies designed to compete more aggressively in

luring foreign talent, the Department of Commerce has considered revis-

189Barry Kellman, Regulation of Biological Research in the Terrorism Era, 13 HEALTH MATRIX 159

(2003) (admonishing that protective measures must be implemented in a rational and specifically

tailored way, with substantial input from reputable scientists).

190Hyacinth Leus, Practice Tips: Using the H-1B Visa to Fill Staffing Needs with Foreign Profes-sionals, LOS ANGELES LAW., Oct. 2000, at 24. But see Norman Matloff, On the Need for Reform of theH-1B Non-Immigrant Work Visa in Computer-Related Occupations, U. MICH. J.L. REFORM 815(2003) (asserting that the need is perceived, not real).

191Ayelet Shachar, The Race for Talent: Highly Skilled Migrants and Competitive Immigration Re-gimes, 81 N.Y.U.L. REV. 148 (2006).

192Some commentators have critiqued current immigration policy in general for H-1B spe-cialty workers as being potentially exploitive. Yan Chen, Comment, An Examination on Reg-ulating the Employment of Foreign Skilled Workers in the United States, 6 U. PA. J. LAB. & EMP. L. 179(2003); Todd H. Goodsell, Comment, On the Continued Need for H-1B Reform: A Partial, StatutorySuggestion to Protect Foreign and U.S. Workers, 21 BYU J. PUB. L. 153 (2007); Sabrina Underwood,

Note, Achieving the American Daydream: The Social, Economic, and Political Inequalities Experiencedby Temporary Workers under the H-1B Visa Program, 15 GEO. IMMIGR. L.J. 727 (2001).


ing policy to expand the coverage of application requirements for deemed

export licenses. Concerned that current regulations did not adequately

protect the seeping of technology through foreign national disclosures, the

BIS, in its 2004 Annual Report, determined to ‘‘examine deemed export

rules and conduct outreach with universities and other research-based

entities to ensure sensitive technology is protected and to revise, if needed,

the rules for technology transfers to foreign nationals in the academic

community.’’193 In a proposed 2005 ruling, the BIS sought comment that

would have substantially modified the landscape of deemed export appli-

cations by changing the definition of use of technology to include operation

aspects.194 This change would have required a license of foreign nationals

who operate controlled equipment if the export of the equipment to their

country of citizenship required a license, even if the foreign national was

engaged in fundamental research, which is exempt.195 Because of a record

number of comments, the BIS put the rulemaking process on hold and

instead formed the Deemed Export Advisory Committee to evaluate cur-

rent deemed export policy and to make recommendations to the Secretary

of Commerce.196

The Advisory Committee issued its Report in December 2007, re-

jecting those proposed changes and recommending instead an overall re-

vamping of the deemed export regulatory regime.197 The Report

193BIS, Fiscal Year 2004 Annual Report, Chapter 1: Export Control Policy and Regulations,http://www.bis.doc.gov/News/2005/04AnnualRept/Chapters1to7.htm#ch1 (last visited Mar.24, 2008).

194Currently for licensing purposes under the EAR, the term use in the phrase ‘‘specific in-formation necessary for the . . . use of a product’’ does not encompass the actual operation ofcontrolled equipment. See supra notes 80–81 and accompanying text.

195For a thorough discussion of the proposed changes, see Findley, supra note 19, at 1253–57.

196BIS Annual Report 2006, supra note 89. Critics of the proposed changes argued that theirimplementation would dramatically limit the fundamental research exclusion and mandatethe processing of thousands more deemed export licenses. A predictable consequence wouldbe a decline in the number of foreign researchers and students pursuing their research in-terests in the United States, given increased compliance costs for universities and the addi-tional roadblocks for foreign nationals. Public comment noted the adverse effect thesechanges would have on the ability to recruit and retain foreign students and researchers,who are vital to the success of U.S.-based research programs. Findley, supra note 19, at 1258–66.

197BIS, The Deemed Export Rule in the Era of Globalization, http://tac.bis.doc.gov/2007/deacreport.pdf (last visited Feb. 24, 2008) [hereinafter Deemed Export Rule Report].


identified several shortcomings with the current program, suggesting, for

example, that the control list is too all-encompassing, that the regulations

are excessively complex and often vague, that the current deemed export

regulations have become increasingly irrelevant to the prevailing global sit-

uation, and that organizations appear to be unaware of them anyway.198 The

Report recommended replacing the current deemed export licensing pro-

cess with a simplified new process and extending the educational outreach

program currently conducted by the BIS to help assure that all parties po-

tentially subject to licensing are familiar with those rules.199 Subsequently,

the BIS announced that it intended to use the Advisory Committee’s Report

as a basis for reforming current deemed export policy.200

The Report accurately concluded that the current regulatory regime

actually undermines national security, while also compromising the country’s

competitiveness in scientific and engineering endeavors. For the past two de-

cades, two thirds of Ph.D.s in engineering granted by U.S. universities were

awarded to noncitizens,201 who under deemed export rules could be barred

from participating in vital projects.202 Aside from concerns that are motivated

by national self-interest in attracting the best and the brightest, another

downside to the current policy centers on efficacy shortcomings. For example,

the Report noted that there is nothing to preclude a citizen or lawful perma-

nent resident from emigrating either permanently or temporarily, in which

case technology would be exported in the absence of a license anyway.203

198Id. at 15–19.

199Id. at 20.

200BIS, Press Release, U.S. Commerce Department Announces Steps to Implement DeemedExport Advisory Committee Recommendations (Feb. 6, 2008), http://www.bis.doc.gov/news/2008/deac_rec02062008.html.

201Deemed Export Rule Report, supra note 197, at 12. The Report indicated that over half ofthe 2006 graduating engineers in the United States holding doctorates and 45% of Ph.D.s inthe physical sciences, computer sciences, and life sciences were foreign born, with one thirdbeing from India, China, or the Philippines. One third of the engineers and scientists withterminal degrees working in the United States are from India and China. Id. at 66.

202The Report observed that the nation could miss out on scientific or technological breakthrough discovered by foreign national students, researchers, or workers: ‘‘These foreignnationals are not infrequently the best, and occasionally the only, candidates available to fill thevoids left by United States citizens who are increasingly foregoing studies in science andtechnology for pursuing of higher paying professions.’’ Id. at 35. As a consequence the nationcould be at risk from both a national security and competitiveness perspective. Id.

203Id. at 17.


Moreover, the premise on which deemed exports restrictions are

based, that is, that the foreign national will repatriate resulting in an export

of technology, may not be accurate in a substantial number of cases.204

Although the focus of deemed export restrictions is nonimmigrant aliens

in most cases, or students, a majority of these foreign nationals seek U.S.

citizenship, in which case they would not be returning home for employ-

ment.205 Immigration law permits persons admitted into the United States

by virtue of an H-1B visa to pursue avenues to attain legal permanent

resident status while holding the H-1B visa through employer sponsor-

ship.206 Further, under the ITAR, export does not include the ‘‘mere travel

outside of the United States by a person whose personal knowledge in-

cludes technical data.207 Yet ironically, the potential for such movement

apparently is why a deemed export license is required for foreign nationals

who receive technical information while in the United States.208

Other realities also call into question the effectiveness of deemed ex-

port rules. The BIS declares that, of the 1,423 license applications for dual-

use exports to China processed in 2006, only 45 were denied.209 The ap-

proval rate for deemed exports is even higher, as statistics suggest a re-

jection rate of about one percent.210 Such statistics necessarily question the

necessity and merits of existing deemed export rules, especially because

compliance with the complicated system of controls administered by the

DDTC and BIS is anything but intuitive. For example, determinations as

to whether or not proposed releases or transfers of information fall into the

204The Report noted that pre-graduation surveys of students suggest that they planned to stayin the United States after graduation, although the trend seems to be reversing. Id. at 66.

205From one half to two thirds of H-1B immigrants intend to stay, although the system cannotabsorb the number of individuals who desire permanent status. Susan Martin et al., U.S. Im-migration Policy: Admission of High Skilled Workers, 16 GEO. IMMIGR. L.J. 619, 633–34 (2002).

2068 U.S.C. § 1184 (2006).

20722 C.F.R. § 120.17 (2006).

208The Report acknowledged the difficulty in risk-managing security given travel and com-munication capabilities: ‘‘In today’s post-Cold War globalizing, Internet-connected world,knowledge is a commodity that is exceptionally difficult to control if for no other reason thanthat it can be stored in the human brain, and humans are becoming increasingly mobile.’’Deemed Export Rule Report, supra note 197, at 56.

209BIS, U.S. China Export Control Policy, http://www.bis.doc.gov/news/2007/dualuseexportchina_files/frame.htm (last visited Mar. 24, 2008).

210Findley, supra note 19, at 1273 n.374 (citing BSI Final Inspection Report No. IPE-16176).


fundamental research/public domain exceptions or instead require a li-

cense are exceedingly complex.211 Statistics seem to suggest that, while the

approval rate for deemed export licenses is high, the application numbers

are less than what might be expected,212 suggesting that employers are

either disregarding the requirements, are unaware of them, or perhaps do

not understand them fully.

The Report acknowledged the likelihood of such shortcomings, not-

ing that ‘‘academic and industrial organizations appear to be unaware of

the Deemed Export rules or to have found means to conduct their affairs

without being subject to them,’’ as statistics establish that only about 900

deemed export license requests are submitted annually with fifty-four

percent being submitted by just three companies.213 Such ignorance, by

definition, results in a failure to comply and thus undermines the system of

controls. Furthermore, the Report detailed that over the past five years the

rejection rate for deemed export licenses was less than one percent and

that there has been only one case of a violation brought to trial because of

the difficulty of establishing proof for a conviction.214

In partial response to such deficiencies, the Advisory Committee rec-

ommended the establishment of a category of ‘‘Trusted Entities’’ involving

both academia and industry that voluntarily elect to qualify for special,

streamlined treatment in the processing of deemed export license appli-

cations by meeting certain specified criteria. Individuals then could move

within the bounds of such a qualified entity without the need for separate

deemed export licenses, providing they signed nondisclosure agreements

and that the disclosed information is unclassified and without a ‘‘truly sig-

nificant military consequence.’’215 If a firm or academic institution qualifies

as a Trusted Entity, it may make a self-determination of the appropriateness

or need for a license application by implementing a seven-step process that

211See supra Parts III.C and IV.C.


213Deemed Export Rule Report, supra note 197, at 81.

214Id. at 16–17.

215Id. at 21. The proposed criteria an organization must meet to qualify as a trusted entityinclude demonstrating a history of responsible conduct with regard to export control matters,conducting training to assure awareness of relevant rules and regulations, self-processing li-cense needs, reporting periodically on actions taken, reporting immediately any detected vi-olations or deviations, and being subject to annual audit and requalification. Id. at 29.


considers such factors as the individual’s loyalty if tied to a country of con-

cern, the classification of the information by the military, the significance of

the potential military application, the accessibility of the knowledge else-

where, the likelihood of adverse military or commercial impacts if the license

is denied, and the classification of the activity as fundamental research.216

While the Committee’s critique of the current system is accurate, and

its recommendations represent an avenue for improvement, is there a

preferable alternative?

3. Immigration Screening Rather than Deemed Export Licensing

Rather than relying on employers to obtain licenses after the fact, a better

policy would require licensing approval prior to employment, as part of

the immigration process. One commentator advocated the use of the visa

evaluation process for screening potential researchers, because the high

approval rate for deemed export license approvals indicates that the Im-

migration and Naturalization Service (INS) is performing their reviews

adequately, making the ‘‘BIS review . . . little more than a costly and in-

convenient formality.’’217 Consolidation of effort rather than duplication of

effort is certainly a preferable approach. Comparable to the Committee’s

suggested blanket license approval within a Trusted Entity, the categories

should be expanded so that supplemental reviews based on changes in job

expectations would be unnecessary.218 Moreover, the wisdom of attaching

conditions to the granting of a license should be evaluated critically, be-

cause the BIS currently is either unable to, or chooses not to, perform any

sort of enforcement function on compliance with those conditions.219

The Advisory Committee conceded that other treaty allies rely largely

on their visa issuance processes, intelligence information, and commercial

intellectual property controls.220 However, it rejected reliance on either a

216Id. at 25.

217Findley, supra note 19, at 1273.

218See supra notes 84–87 and accompanying text. The Advisory Committee suggested thatorganizations qualified as Trusted Entities could transfer ‘‘people, knowledge and equipmentwithin the boundaries of the qualified entity based on a self-assessment of suitability for li-censing with input from appropriate government agencies.’’ Id. at 93.

219Findley, supra note 19, at 1273.

220Deemed Export Rule Report, supra note 197, at 7.


security classification system to determine whether or not a technology is

releasable or on the visa-granting system to determine whether or not a

foreign national should be approved for a license.221 It did so out of con-

cerns that the personnel supporting the visa processing system are not

‘‘equipped to make judgments as to the commercial and security implica-

tions of fast-changing leading-edge scientific and technologic advance-

ments over a broad spectrum of disciplines’’ and the fear that such

authority would further burden ‘‘an already challenged visa processing

system.’’222

4. Balancing Equality and Security

Contemplated reforms of deemed export rules not only should examine

whether or not the current system is functioning properly so as to min-

imize leaks of sensitive technology, but also should appreciate the goal of

equal opportunities in employment. If employees were screened and ap-

propriately licensed prior to the commencement of the employment rela-

tionship, there would be less potential for disparate treatment or

segregation based on a lack of security clearances inextricably tied to na-

tional origin or citizenship. If licenses were granted at the visa stage, the

process also could consider the likelihood of approval for any pending

application for permanent residence status as well, as the ultimate return

to one’s homeland is the fear motivating deemed export rules in the first

place.

However, some foreign nationals would be unable to obtain the re-

quired license at any stage because they are from countries to which certain

dual-use or munitions technology may not be exported.223 In other words,

Chinese nationals and others, Iranians for example, could access only in-

formation subject to recognized exemptions.224 Nevertheless, perhaps the

reasonableness and feasibility of granting a license, at least in those cases in

which an application for permanent residence status is pending and likely

221Id. at 31.

222Id. at 31–32.


224For a discussion of the ITAR’s exceptions, see supra Part III.C. For a discussion of the EAR’sexemptions, see supraPart IV.C.


to be approved, could be explored with respect to such individuals as a

part of the employment process.

Certainly the Advisory Committee’s assessment that the present sys-

tem is in need of serious reform is meritorious. However, the reliance pri-

marily on self-regulation by industry and educational institutions could be

problematic.225 Educational outreach to ensure compliance would have to

be substantial.226 The current compliance void suggested by the number of

deemed export applications would seem to counsel against permitting the

regulated to regulate themselves without a more definitive sense of what

they are supposed to regulate. Moreover, while the drive for a competitive

edge inspires industry to guard intellectual property, it is not entirely clear

that the same competitive edge might not result in the sacrifice of security

for profits in some cases.227

Furthermore, while the Report proposes narrowing the category of

technical data for which licenses must be obtained to that information

classified by the military and to truly significant military applications, that

category for which applications must be denied will continue to exist.228

The breadth of that category will be defined by the definition of ‘‘signifi-

cant,’’ which could be fairly encompassing as a practical matter, ranging

from microwave technology to global positioning systems to lasers.229 The

225To begin with, presumably those entities that do not qualify for Trusted Entity status wouldstill be saddled with the current dysfunctional, less streamlined approach.

226The report recommends increasing the use of interactive, Web-based self-teaching pro-grams to familiarize those impacted with the regulatory regime. Deemed Export Rule Report,supra note 197, at 23.

227Consider the number of companies that have been fined for export violations recently. In2006 civil penalties amounted to $22 million. Previous fines assessed for violations of theAECA and ITAR include: the Boeing Company ($15 million), EDO Corporation ($ 2.5 mil-lion), General Motors/General Dynamics ($20 million), Goodrich/L3 ($7 million), HughesElectronics ($32 million), ITT ($8 million), L3 Communications Corporation ($1.5 million),Lockheed-Martin ($3 million), Loral ($20 million), and Raytheon ($25 million). DDTC Over-view, supra note 16.

228The Advisory Report in essence recommended that the deemed export regulations striveto build ‘‘high walls around small fields.’’ Deemed Export Rule Report, supra note 197, at 27.

229The Advisory Report suggested emphasizing the critical aspects of technologies that couldproduce truly major threats, for example, ‘‘certain aspects of nuclear weapon related tech-nology, toxic biologicagents, chemical warfare related agents, cryptography,’’ along with ‘‘afew contemporary, pivotal technological breakthroughsFsuch as night vision, stealth, ad-vanced composites and electronic countermeasures.’’ Id. at 91.


employment conditions for those individuals denied access will be affected,

prompting the question, why have they been granted visas in the first

place? Ultimately, a coordinated governmental approach, which involves

the Departments of Commerce, State, and Defense and the INS, along

with the intelligence community, seems preferable to a self-regulated in-

dustry gatekeeper, particularly if some sort of preliminary approval for

permanent residency can become a part of the construct for licensing when

appropriate.

VII. CONCLUSION

Indisputably, protecting both Americans and global citizens from the

threat posed by terrorists and rogue states is of paramount importance.

The regulations discussed, while complicated, are designed to assure that

munitions, as well as dual-use items and technology, do not fall into the

wrong hands. To this end, the efforts of both the DDTC and BIS are highly

commendable. Undeniably, the technology and science to which export

controls apply are testaments to the incredible advancements of the last

century. Hopefully, the legal and regulatory system can match such devel-

opments, and a mature system of rules can evolve, one that protects both

national security interests and the important goal of equal opportunities in

the employment marketplace. After all, nonimmigrant foreign nationals

are employed in part to assist in the efforts of domestic employers, uni-

versities, and government contractors to attain national security goals. If

changes can be made in the deemed export license process so as to pre-

serve equal opportunities in employment for foreign nationals involved in

the technology sector without compromising national security, such re-

forms should be sensitive to achieving that objective. It is hoped that the

BIS and DDTC will consider fairness in employment along with the goals

of enhancing homeland security and strengthening economic competitive-

ness. Security and equality as twin objectives in an export control program

are not necessarily mutually exclusive.


at the intersection of export control regulations and employment discrimination law

Documents