How to Use This Book Notice
PERSONS attempting to find a motive in this narrative will be prosecuted; persons attempting to find a moral in it will be banished; persons attempting to find a plot in it will be shot.
BY ORDER OF THE AUTHOR, Per G.G., Chief of Ordnance. Mark Twain, Huckleberry Finn, Preface
Like Mark Twain’s tongue-in-cheek description of his epic work,1 this book contains neither a motive, nor a moral, nor a plot. The authors’ intention—and expectation—is that those working with or studying the U.S. government’s export control and economic sanctions programs will employ it as a reference work.
This work offers several features that the official regulations do not.
• Although the book roughly follows the order of the regulations, it does not do so slavishly. Where an agency’s regulations are relevant to one another but are located in different parts of the Code of Federal Regulations, for example, we have attempted to discuss them together or at least to include helpful cross-references.
• Where regulations of one agency are relevant to those of another, we have sought to point out the connections.
• The authors’ collective professional experience dealing with the laws and regulations covered in this volume totals more than seven decades advising private clients about them, plus eighteen years as government officials responsible for administering them. Accordingly, the volume includes some anecdotes, hints, and reflections about how their application in practice sometimes can differ from what their literal wording might appear to require.
It’s important to underscore that this book does not purport to offer legal advice. Rather, it is intended as a tool for those seeking to improve their understanding and interpretation of U.S. laws and policies, and to comply with what can be a complicated, perplexing system of laws and regulations, administered by a host of agencies whose perspectives and goals sometimes may be inconsistent with one another.
Moreover, the book does not address every aspect of every regulation within its scope. It should be used as a companion to the regulations rather than as a substitute for them. In addition to the text of this work, the user should review the actual regulations,
1 Ernest Hemingway declared that “[a]ll modern American literature comes from one book by Mark Twain called ‘Huckleberry Finn.’ * * * [I]t’s the best book we’ve had. All American writing comes from that. There was nothing before. There has been nothing as good since.” Ernest Hemingway, The Green Hills of Africa (1935).
as well as updates to the law and policy made after this book’s cutoff date to ensure compliance with the law.
The appendices of earlier editions of this work included textual excerpts from various agency regulations. Today these rules are readily available online. Moreover, some are amended frequently. Accordingly, we have not included any in this fourth edition.
URLs for the U.S. Code and the Code of Federal Regulations, at locations that normally reflect changes within a matter of days, are:
• U.S. Code: https://uscode.house.gov/browse.xhtml
• Code of Federal Regulations: https://www.ecfr.gov/cgi-bin/ECFR?page=browse
Public Laws enacted since 1995 can be found at:
• https://www.govinfo.gov/app/collection/PLAW
Websites for the agencies whose export controls are addressed in this book are:
• Commerce/BIS: https://www.bis.doc.gov/
• State/DDTC: https://www.pmddtc.state.gov/ddtc_public
• Treasury/OFAC: https://home.treasury.gov/policy-issues/office-of-foreign-assetscontrol-sanctions-programs-and-information
• Nuclear Regulatory Commission: https://www.nrc.gov/
• Department of Energy: https://www.energy.gov/
Introduction
United States export controls and economic sanctions have a long history. An early example occurred in October 1774, when the First Continental Congress adopted articles of association that included two commitments. One, effective immediately, was not to import goods from Great Britain. A second, to take effect a year in the future if certain objectionable British laws and practices remained in force, was not to export goods to Great Britain.1 Fighting between British and American troops commenced in April 1775 and the export control commitment took effect September 10 of that year.2 After the federal government began operations under the Constitution, statutes restricting arms exports3 and authorizing the president to impose embargoes4 were enacted as early as 1794.
This book addresses the four U.S. export licensing regimes that are most likely to be of interest to an exporter: controls on (1) “dual use” (i.e., having recognized civilian and military applications5) goods, software, and technology,6 (2) defense items,7 (3) nuclear equipment and radioactive materials,8 and (4) nuclear technology.9 “Dual use” goods
1 1 Journals of Congress 75, 77 (Oct. 20, 1774), http://memory.loc.gov/cgi-bin/ampage?collId=lljc&fileN ame=001/lljc001.db&recNum=81&itemLink=r?ammem/hlaw:@field(DOCID+@lit(jc00137))%230010080 &linkText=1 (last visited June 27, 2020).
2 Federation of American Scientists, “Export Control Provisions,” at 1 (Oct. 12, 1998), http://www.fas.org/ nuke/control/export/provisions.htm (last visited June 27, 2020).
3 Act of May 22, 1794, ch. 33, 1 Stat. 369. A statute permitting licensing of such exports “in cases connected with the security of the commercial interest of the United States, and for public purposes only,” was approved by President George Washington the following year. Act of March 3, 1795, ch. 53, 1 Stat. 444.
4 Act of June 4, 1794, ch. 41, 1 Stat. 372.
5 See 15 C.F.R. § 730.3 (2020).
6 These controls are administered by the U.S. Department of Commerce under the Export Control Reform Act of 2018, 50 U.S.C. §§ 4801-4852 (2018 & Supp. I 2019) (ECRA), and the Export Administration Regulations, 15 C.F.R. pts. 730-774 (2020) (the EAR).
7 These items are referred to as “defense articles and defense services.” At one time all such items were controlled by the Department of State. As a result of the Obama administration’s Export Control Reform (ECR) initiative, however, control of these items now is divided. Less significant military items are controlled by the Commerce Department, under the Export Administration Regulations, 15 C.F.R. pts. 730-774 (2020), while military end items and more significant parts, components, and technology are controlled by the Directorate of Defense Trade Controls (DDTC), U.S. Department of State, under sections 38 and 39 of the Arms Export Control Act, 22 U.S.C. §§ 2778-2779 (2018), and the International Traffic in Arms Regulations (the ITAR), 22 C.F.R. pts. 120-130 (2020).
8 These are regulated by the U.S. Nuclear Regulatory Commission under the Atomic Energy Act of 1954, 42 U.S.C. §§ 2011–2297g-4 (2018), and implementing regulations, 10 C.F.R. pt. 110 (2020). As a general rule, this regime applies to items inside the containment vessel of a nuclear reactor as well as to nuclear material. Nuclear commodities not subject to this regime are controlled under the Export Administration Regulations.
9 This is regulated by the U.S. Department of Energy under the Atomic Energy Act of 1954, 42 U.S.C. §§ 2011–2297g-4 (2018), and implementing regulations, 10 C.F.R. pt. 810 (2020).
U.S. Export Controls and Economic Sanctions. Eric L. Hirschhorn, Brian J. Egan and Edward J. Krauland, Oxford University Press. © Oxford University Press 2022. DOI: 10.1093/oso/9780197582411.001.0001
include not only sophisticated items such as computers but also such commonplace goods as hammers, nails, and shoelaces.
The volume also addresses the major economic sanctions currently imposed by the United States.10 These are primarily administered by the Office of Foreign Assets Control, U.S. Department of the Treasury.
At least twenty other licensing regimes apply to exports from the United States. This figure excludes situations where exports of an item are prohibited outright, with no provision being made for licensing.11 Also excluded are instances where exports must be supported by specified documentation but do not require the approval of a federal agency12 and instances where export inspection by the U.S. government is available as a service but is not required.13
Federal export licensing regimes beyond those for dual use, defense, and nuclear items cover exports of controlled substances and precursor chemicals,14 medical devices that do not meet U.S. standards,15 hazardous wastes,16 hazardous substances,17 technologies used to produce ozone-depleting substances,18 technical data exported as part of applications for foreign patents,19 certain watercraft not controlled under the Export Control Reform Act or the International Traffic in Arms Regulations,20 animals for export,21 natural gas,22 electric power,23 endangered fish, wildlife, and plants,24 migratory birds,25 bald and golden eagles,26 Antarctic mammals, birds, and plants,27
10 See 31 C.F.R. pts. 500-598 (2019).
11 E.g., 16 U.S.C. §§ 3371–3378 (2018) (export of illegally possessed fish, wildlife, and plants); 18 U.S.C. § 842(m) (2018) (export of plastic explosives not containing detection agents); 18 U.S.C. § 553 (2018) (exports of stolen vehicles); 21 U.S.C. §§ 381(e), 382 (2018) (drugs not approved by Food and Drug Administration); 21 U.S.C. § 843(a)(9) (2018) (export of items intended for use in manufacturing illegal chemical substances); 21 U.S.C. § 863(a)(3) (2018) (export of drug paraphernalia).
12 E.g., 19 U.S.C. §§ 1646b-1646c (2018) (export of used self-propelled vehicles); 19 C.F.R. §§ 192.1-192.4 (2018) (same); 31 U.S.C. § 5316 (2018) (monetary instruments exceeding $10,000 in value).
13 E.g., 7 U.S.C. § 7759(f)(2) (2018) (authorizing Department of Agriculture to inspect plants and plant products offered for export); 7 C.F.R. pt. 353 (2020) (establishing the USDA export inspection program).
14 Controlled by the Drug Enforcement Administration, U.S. Department of Justice, under the Controlled Substances Import and Export Act. 21 U.S.C. §§ 951-971 (2018); 21 C.F.R. pts. 1312-1313 (2020).
15 Controlled by the Food and Drug Administration under the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 381(e)(1), (2) (2018).
16 Controlled by the Environmental Protection Administration under the Resource Conservation and Recovery Act of 1976. 42 U.S.C. § 6938 (2018); 40 C.F.R. §§ 262.83 (2020).
17 Controlled under the Toxic Substances Control Act, 15 U.S.C. § 2611 (2018).
18 42 U.S.C. § 7671m(c)(1) (2018).
19 These are administered by the Patent and Trademark Office, U.S. Department of Commerce. 35 U.S.C. §§ 181–188 (2018); 37 C.F.R. pt. 5 (2020).
20 Controlled by the Maritime Administration, U.S. Department of Transportation, under the Shipping Act of 1916. 46 U.S.C. § 56101 (2018).
21 Controlled by the U.S. Department of Agriculture. 7 U.S.C. § 8304 (20018).
22 Controlled by the Federal Energy Regulatory Commission (FERC) and the Energy Department’s Economic Regulatory Administration (ERA). 15 U.S.C. §§ 717(b), 717b (2018); see Big Bend Conservation Alliance v. Federal Energy Regulatory Comm’n, 896 F.3d 418 (D.C. Cir. 2018) (noting coverage of facilities construction for the export of natural gas as well as exports of natural gas itself).
23 Controlled by FERC and ERA under the Federal Power Act. 16 U.S.C. § 824a(e) (2018).
24 Controlled by the Fish and Wildlife Service (FWS), U.S. Department of the Interior, under the Endangered Species Act of 1973. 16 U.S.C. §§ 1531-1544 (2018).
25 Controlled by the FWS under the Migratory Bird Treaty Act of 1918. 16 U.S.C. §§ 703-712 (2018).
26 Controlled by the FWS under the Act for the Protection of Bald and Golden Eagles of 1940. 16 U.S.C. §§ 668-668d (2018).
27 Controlled by the National Science Foundation under the Antarctic Conservation Act of 1978. 16 U.S.C. §§ 2401-2413 (2018).
Antarctic marine living resources,28 illegally taken wildlife,29 raw ivory,30 items said to contain substances derived from tigers or rhinoceroses,31 and five-cent and one-cent coins.32
28 Controlled by the Commerce Department under the Antarctic Marine Living Resources Convention Act of 1984. 16 U.S.C. §§ 2431-2444 (2018).
29 Controlled under the Lacey Act Amendments of 1981. 16 U.S.C. § 3372(a) (2018).
30 Controlled under the African Elephant Conservation Act. 16 U.S.C. § 4223(2) (2018).
31 Controlled under the Rhinoceros and Tiger Conservation Act of 1988. 16 U.S.C. § 5305a (2018).
32 31 C.F.R. pt. 82 (2020); see 31 U.S.C. § 5111(d) (2018).
Goods, Software, and Technology
A. Definitions
B. Coverage of the EAR
C. Export Control Compliance and Antidiscrimination Rules 18
D. Information Disclosure 21
IV. The Ten General Prohibitions of the Export Administration Regulations 22
A. General Prohibition One—Exports and Reexports 22
B. General Prohibition Two—Parts and Components Reexports 22
C. General Prohibition Three—Exports of Foreign-Made Products That Employ U.S.-Origin Technology 23
D. General Prohibition Four—Violating Denial Orders 23
E. General Prohibition Five—Prohibited End Use or End User 23
F. General Prohibition Six—Embargoed Destinations 24
G. General Prohibition Seven— Proliferation Activities by U.S. Persons 24
H. General Prohibition Eight—In-Transit Restrictions 25
I. General Prohibition Nine—Violation of Orders, License Terms, or License Conditions 25
J. General Prohibition Ten—Acting with Knowledge of a Violation 25
V. The Twenty-Nine-Step Program: Determining the Regulatory Requirements for an Export or Reexport 25
A. Steps 1 through 6—Is the Item or Transaction Subject to the EAR? 26
B. Steps 7 through 19—Do Any of the General Prohibitions Apply? 39
1. Steps 7 through 9—Classification, Ultimate Destination, Reason
Control, and the Commerce
How to Determine Whether a License Is Required
c. Self-Classification vs. Classification by the Commerce Department 44
2. Steps 10 and 11— Foreign Made Items and the De Minimis Rule 44
3. Step 12— Persons Denied Export Privileges 46
4. Step 13— Prohibited End Uses and End Users 46
a. Nuclear End Uses
b. Missile End Uses
c. Chemical and Biological Weapons End Uses
d. Other Restricted End Uses 49
e. “Is Informed”
f. The Entity List and General Orders
g. Terrorist End Users
h. Parties Sanctioned Under Other Regulatory Regimes 50
i. Other Restricted End Users 51
j. The Unverified List 51
5. Step 14— Embargoed Destinations 52
6. Step 15— Activity of U.S. Persons 52
7. Step 16— In-Transit Restrictions 53
8. Step 17— Orders, Terms, and Conditions Imposed Under the Export Administration Regulations 54
9. Step 18— “Know Your Customer”; Knowledge That Violation About to Occur 54
10. Step 19— Re-Review of General Prohibitions 55
C. Steps 20 through 26—If the Item Requires a License, Is a License Exception Available? 55
1. General Rules for License Exceptions 55
2. Shipments of Limited Value (License Exception LVS) 57
3. Shipments to Country Group B (License Exception GBS) 58
4. Civil End Users and End Uses (License Exception CIV) 58
5. Restricted Technology and Software (License Exception TSR) 58
6. Computers (License Exception APP) 59
7. Encryption (License Exception ENC) 60
8. Temporary Exports and Reexports (License Exception TMP) 63
a. Temporary Imports, Exports, and Reexports 63
b. Exports of Items Temporarily in the United States 65
c. Beta Test Software 66
9. Servicing and Replacement of Parts and Equipment (License Exception RPL) 66
10. Governments, International Organizations, Chemical Weapons Convention Inspections, and the International Space Station (License Exception GOV) 68
11. Unrestricted Technology and Software (License Exception TSU) 69
12. Strategic Trade Authorization (License Exception STA) 70
13. Aircraft, Vessels, and Spacecraft (License Exception AVS) 72
14. Permissive Reexports (License Exception APR) 72
15. Agricultural Commodities to Cuba (License Exception AGR) 73
16. Other License Exceptions (BAG, CCD, GFT, and SCP) 74
D. License Applications 74
E. Steps 27 through 29—Export Documentation, Recordkeeping, and Other Requirements 75
1. Export Documentation 75
a. Step 27—Electronic Export Information (EEI) Filing
to the Automated Export System (AES) 75
b. Step 28—Destination Control Statement 76
c. Other Reporting and Documentation 77
VI. Types of Controls—Licensing Policies 79
A. “CCL-Based” Controls 79
B. Controls Based upon End User and End Use 88
C. Embargoes and Other Special Controls 89
D. Short Supply Controls 94
VII. Export Licenses, Classifications, and Advisory Opinions— Preparation, Filing, and Processing 94
A. Commodity Jurisdiction, Classification, Advisory Opinion, and VEU Requests 96
B. Export and Reexport License Applications 98
C. Filing of Applications and Classification Requests 104
D. Processing of Applications and Issuance of Licenses 104
E. Special Comprehensive License 107
F. Special Iraq Reconstruction License 107
G. Validated End User Program 107
VIII. Violations and Penalties 108
A. Violations 108
B. Voluntary Disclosure of Suspected Violations 112
C. Penalties 115 1. Civil and Administrative 115 2. Criminal 116
IX. Investigations and Enforcement Proceedings 120
A. Investigations 120
B. Resolution Prior to Formal Proceeding 121
C. Formal Civil Proceedings 121
D. Temporary Denial Orders 122
X. Foreign Availability Determinations 123
I. Introduction
U.S. government controls on exports of “dual use” items—those having potential military or similar applications as well as commercial applications1 have been in effect continuously since 1942.2 During much of this period the controls have existed under the Export
1 See Export Control Reform Act of 2018, Pub. L. No. 115-232, § 1742(2), 132 Stat. 2208 (defining “dualuse” as meaning useful for military, terrorism, weapons of mass destruction, or law enforcement purposes, as well as for civilian applications).
2 Act of June 30, 1942, ch. 461, 56 Stat. 463. Previous statutes included the Neutrality Act, 1935, ch. 837, 49 Stat. 1081, which focused on large items such as military aircraft, the Act of May 1, 1937, ch. 146, 50 Stat. 121, the Act of Nov. 4, 1939, ch. 2, 54 Stat. 4, the Act of June 26, 1940, ch. 431, 54 Stat. 611, the Act of Aug. 27, 1940, ch. 695, 54 Stat. 866, the Act of Nov. 17, 1941, ch. 473, 55 Stat. 764, and the Act of Feb. 21, 1942, ch. 104, 56 Stat. 95.
Administration Act of 1979 (EAA)3 and its predecessors. Significant revisions of this line of statutes occurred in 1949,4 1962,5 1969,6 1979,7 1985,8 and 1988.9 The EAA lapsed seven times between its enactment in 1979 and its replacement in 2018, with the longest lapse— seventeen years—beginning in August 2001.10 In each instance when the EAA was not in force, its controls were continued by the President relying on his emergency powers under the International Emergency Economic Powers Act (IEEPA),11 with violations subject to IEEPA rather than the EAA. This practice consistently was upheld by the courts.12
The pattern of EAA lapses and interstitial use of IEEPA to fill the resulting gaps largely ended with the enactment of the Export Control Reform Act of 2018 (ECRA) in August 2018.13 Unlike the EAA, ECRA does not have an expiration date, so—except for three unrepealed sections of the EAA14 the decades-long pattern of EAA lapses and gap-filling using IEEPA is over.
A number of other statutes support or have supported various aspects of dual-use export controls. Some are general in character,15 some target particular countries,16
3 Pub. L. No. 96-72, 93 Stat. 503 (originally codified at 50 U.S.C. App. §§ 2401–2420 (2000) (expired Aug. 20, 2001; repealed in part Aug. 13, 2018)). In December 2015 the appendix to title 50 of the U.S. Code was eliminated. At that time—and despite its having lapsed fourteen years earlier—the EAA was reclassified to 50 U.S.C. §§ 4601–4623. All but three provisions of the EAA formally were repealed with the enactment of the Export Control Reform Act of 2018. Export Control Reform Act of 2018, Pub. L. No. 115-232, § 1766(a), 132 Stat. 2232, as amended by Consolidated Appropriations Act, 2019, Pub. L. No. 116-6, § 205, 133 Stat. 13, 47677 (2019) (codified at 50 U.S.C. §§ 4801-4852).
4 Export Control Act of 1949, ch. 11, 63 Stat. 7.
5 Act of July 1, 1962, Pub. L. No. 87-515, 76 Stat. 127.
6 Export Administration Act of 1969, Pub. L. No. 91-184, 83 Stat. 841.
7 Export Administration Act of 1979, Pub. L. No. 96-72, 93 Stat. 503.
8 Export Administration Amendments Act of 1985, Pub. L. No. 99-64, 99 Stat. 120.
9 Export Enhancement Act of 1988, Pub. L. No. 100-418, §§ 2401–2431, 2444–2446, 102 Stat. 1325, 1347–62, 1366–70.
10 See Act of Nov. 13, 2000, Pub. L. No. 106-508, 114 Stat. 2360 (reviving EAA until Aug. 20, 2001). Earlier lapses of the EAA were from September 30 to October 1, 1983, October 14 to December 5, 1983, March 30, 1984 to July 12, 1985, September 30, 1990 to March 27, 1993, June 30 to July 5, 1994, and August 20, 1994 to November 13, 2000.
11 50 U.S.C. §§ 1701–1706 (2018); see, e.g., Exec. Order No. 12730, 55 Fed. Reg. 40373 (1990), 3 C.F.R., 1990 Comp., p. 305 (continuing EAR in force under IEEPA); Exec. Order No. 12923, 59 Fed. Reg. 34551 (1994) (same); Exec. Order No. 12924, 59 Fed. Reg. 43437 (1994), 3 C.F.R., 1994 Comp., p. 917 (same); Exec. Order No. 13222, 66 Fed. Reg. 44025 (Aug. 22, 2001), 3 C.F.R., 2001 Comp., p. 783 (same).
12 E.g., United States v. Zhi Yong Guo, 634 F.3d 1119, 1121-22 (9th Cir. 2011); United States v. Spawr Optical Research, Inc., 685 F.2d 1076, 1081 (9th Cir. 1982); Bernstein v. United States Dep’t of State, 974 F. Supp. 1288, 1299–1300 (N.D. Calif. 1997).
13 Export Control Reform Act of 2018, Pub. L. No. 115-232, §§ 1741-1781, 132 Stat. 2208-38, as amended by Consolidated Appropriations Act, 2019, Pub. L. No. 116-6, § 205, 133 Stat. 13, 476-77 (2019) (codified at 50 U.S.C. §§ 4801-4852).
14 The ECRA provision repealing the EAA excludes sections 11A, 11B, and 11C, which relate to sanctions for proliferators. ECRA § 1766(a), 132 Stat. 2232. The President has continued to rely on his IEEPA emergency powers to keep these authorities in effect. Id. § 1766(b); see, e.g., Notice of August 14, 2019, 84 Fed. Reg. 41881 (Aug. 15, 2019) (continuing national emergency in force). As of the close of 2020, the only sanctions in force under these three provisions of the EAA were imposed by the State Department against two North Korean entities. See Imposition of Missile Proliferation Sanctions on Two North Korean Entities, 83 Fed. Reg. 4536 (Jan. 31, 2018); email from Matthew Borman, Deputy Assistant Secretary for Export Administration, U.S. Department of Commerce, to Eric Hirschhorn (Aug. 15, 2019).
15 E.g., § 5(a) of the United Nations Participation Act of 1945, 22 U.S.C. § 287c(a) (2018) (authorizing President to implement actions mandated by the U.N. Security Council). This statute is part of the basis for the sanctions regime for North Korea, see 31 C.F.R. authority note prec. § 510.101 (2019), as well as the nowterminated U.S. embargoes against Libya, see Exec. Order No. 12543, 51 Fed. Reg. 875 (1986), 3 C.F.R., 1986 Comp. p. 181, Serbia (Kosovo), see Exec. Order No. 13088, 63 Fed. Reg. 32109 (June 12, 1998), 3 C.F.R., 1998 Comp. p. 191, UNITA (Angola), see Exec. Order No. 13098, 63 Fed. Reg. 44771 (Aug. 20, 1998), 3 C.F.R., 1998 Comp. p. 206, and Iraq, see Exec. Order No. 12724, 55 Fed. Reg. 33089 (1990), 3 C.F.R., 1990 Comp. p. 297.
16 E.g , Iran-Iraq Arms Non-Proliferation Act of 1992, as amended, Pub. L. No. 102-484, §§ 1601–608, 106 Stat. 2571, as amended (codified at 50 U.S.C. § 1701 n.); 22 U.S.C. § 2370(a)(1), (y) (2006) (provision of Foreign Assistance Act of 1961 authorizing trade embargo against Cuba).
one targets a particular commodity (high performance computers),17 and still others— including the three sections of the EAA that were not repealed by ECRA—target particular activities.18 Controls under these laws generally have been implemented by the same Commerce Department regulations that implement the EAA and IEEPA.
Many defense items, which by definition are not dual-use but solely for military use, now are subject to Commerce Department export controls. The Export Control Reform (ECR) initiative begun by the Obama administration transferred many lower-level defense items, mostly parts and components, from State Department to Commerce Department jurisdiction. These items now are subject to the EAR and appear on the Commerce Control List (CCL).19 They no longer are subject to the Arms Export Control Act (AECA)20 or the International Traffic in Arms Regulations (ITAR),21 though the State Department is authorized to license their export if they are part of a mixed order with ITAR-controlled items.22
II. Overview of the Export Administration Regulations
Exports of most commercial items, dual-use items, and military items that have been transferred from State to Commerce Department jurisdiction are governed by the Export Administration Regulations (EAR).23 The EAR are administered by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce,24 which maintains a current version of the EAR online at https://www.bis.doc.gov/index.php/regulations/ export-administration-regulations-ear.
The EAR, which occupy about eight hundred pages in the Code of Federal Regulations, are excruciatingly complex. This is due largely to a policy preference for allowing license-free treatment of less sensitive items when destined for friendly foreign countries and appropriate end uses. That requires multiple distinctions among items with differing technical levels of capability and destinations with differing levels of diversion risk. By contrast, the State Department’s ITAR are considerably shorter, require a license for almost every item appearing on the U.S. Munitions List (USML), and contain relatively few exceptions to the licensing requirement.25
17 National Defense Authorization Act for FY 1998, Pub. L. No. 105-85, §§ 1211, 1213, 111 Stat. 1932 (1997), as amended by Strom Thurmond National Defense Authorization Act for Fiscal Year 1999, Pub. L. No. 105-261, § 1524, 112 Stat. 2180 (1998) (codified at 50 U.S.C. § 2404 n.).
18 E.g , 22 U.S.C. § 2799aa-1 (2018) (countries developing or testing nuclear weapons); 22 U.S.C. §§ 5603–5605 (2018) (countries using chemical or biological weapons). The unrepealed provisions of the EAA relate to violations of multilateral national security export controls, 50 U.S.C. § 4611 (2018), multilateral missile proliferation controls, id. § 4612, and chemical and biological weapons controls, id. § 4613.
19 15 C.F.R. pt. 774, supp. 1 (2020).
20 22 U.S.C. §§ 2778-2779 (2018).
21 22 C.F.R. pts. 120-130 (2020).
22 Exec. Order No. 13637, second § 5(a), 78 Fed. Reg. 16129, 16131 (2013), 3 C.F.R., 2013 Comp. p. 226; see 15 C.F.R. § 734.3(e) (2019) (recognizing this authorization). EAR items licensed by the State Department under this provision remain subject to EAR jurisdiction, not ITAR jurisdiction. Exec. Order No. 13637, second § 5(b), 78 Fed. Reg. 16129, 16131 (2013), 3 C.F.R., 2013 Comp. p. 226.
23 15 C.F.R. pts. 730–774 (2020). The EAR were rewritten in 1996. 61 Fed. Reg. 12714 (Mar. 25, 1996). Part 760 of the EAR contains one of the two U.S. regimes governing compliance with international boycotts not sanctioned by the United States. 15 C.F.R. pt. 760 (2020); see I.R.C. § 999 (2018).
24 See 15 C.F.R. § 730.1 (2020). Prior to April 2002, BIS was known as the Bureau of Export Administration (BXA).
25 See 22 C.F.R. pts. 120–130 (2020). The ITAR, which occupy about 170 pages in the Code of Federal Regulations, are discussed more fully at pages 125–194 of this book. To be sure, many practitioners consider the ITAR to be as complex as the EAR, even though the former are shorter.
The EAR cover not only exports from the United States but also reexports of “U.S.origin” items from other countries, transfers within other countries, sales of many foreign-made products containing U.S.-origin components or technology or derived from certain U.S.-origin equipment or technology, and disclosures of U.S.-origin technology to foreign nationals (even if occurring within the United States).26 Prior to enactment of ECRA,27 which has no expiration date, the EAR were continued in force when the EAA lapsed by the use of presidential emergency declarations under IEEPA.28
Controls imposed by the EAR fall into four general categories—national security, foreign policy, non-proliferation of weapons of mass destruction, and “short supply.”29 The national security category covers items “that would make a significant contribution to the military potential of any other country or combination of countries that would prove detrimental to the national security of the United States.” These typically are items employing sophisticated technology or encryption.30 The foreign policy category includes exports to “terrorist-supporting” countries,31 crime control equipment,32 items that could affect the stability of geographic regions of concern,33 and items controlled in fulfillment of international obligations (e.g., U.N. embargoes).34 The non-proliferation category comprises items relating to weapons of mass destruction— nuclear weapons, missiles, and chemical and biological weapons.35 The few remaining short supply controls, which limit the export of specified items that are in short supply in the United States, apply to certain petroleum products, western red cedar, and horses exported by sea. They appear in part 754 of the EAR.36
In addition to controlling items because of their inherent characteristics or potential, the EAR impose controls because of the nature of the intended end user and end use. Most notably, all items subject to the EAR that are destined for disfavored end uses namely, (1) the development or manufacture, in specified countries, of nuclear weapons,37 missiles,38 chemical or biological weapons;39 (2) specified cameras for military use;40 (3) items for military end use in Russia, China, or Venezuela;41 or (4) certain
26 15 C.F.R. § 730.5 (2020), as amended by 85 Fed. Reg. 29852 (May 19, 2020).
27 Export Control Reform Act of 2018, Pub. L. No. 115-232, §§ 1741-1781, 132 Stat. 2208-38, as amended by Consolidated Appropriations Act, 2019, Pub. L. No. 116-6, § 205, 133 Stat. 13, 476-77 (2019) (codified at 50 U.S.C. §§ 4801-4852).
28 E.g., Exec. Order No. 12924, 59 Fed. Reg. 43437 (1994), 3 C.F.R., 1994 Comp., p. 917 (continuing EAR in force under IEEPA).
To the extent permitted by law, the provisions of the Export Administration Act of 1979, as amended, and the provisions for administration of the Export Administration Act of 1979, as amended, shall be carried out under this order so as to continue in full force and effect and amend, as necessary, the export control system heretofore maintained by the Export Administration Regulations issued under the Export Administration Act of 1979, as amended.
Id. § 1. The Commerce Department had a stated policy of “conforming actions under the Executive Order [continuing the EAR under IEEPA] to those under the EAA, insofar as appropriate.” 64 Fed. Reg. 1121 (Jan. 8, 1999).
29 15 C.F.R. § 730.6 (2020); id. pt. 742.
30 See 15 C.F.R. §§ 742.4, 742.15 (2020).
31 15 C.F.R. §§ 742.8–742.10, 742.19 (2020).
32 15 C.F.R. § 742.7 (2020), as amended by 85 Fed. Reg. 63009 (Oct. 6, 2020), and id. 63010.
33 15 C.F.R. § 742.6 (2020), as amended by 85 Fed. Reg. 83769 (Dec. 23, 2020).
34 15 C.F.R. § 742.1(b)(2) (2020).
35 15 C.F.R. §§ 730.6, 742.2 (chemical/biological), 742.3 (nuclear), 742.5 (missile) (2020).
36 15 C.F.R. pt. 754 (2020).
37 15 C.F.R. § 744.2 (2020).
38 15 C.F.R. § 744.3 (2020).
39 15 C.F.R. § 744.4 (2020).
40 15 C.F.R. § 744.9 (2020), as amended by 85 Fed. Reg. 4177 (Jan. 23, 2020).
41 15. C.F.R. § 744.21 (202c), as amended by 85 Fed. Reg. 83797-98 (Dec. 23, 2020).
microprocessors for military use42 require licenses for export, reexport, and, in some instances, in-country transfer.
The EAR also control exports to disfavored end users namely, (1) weapons proliferators,43 (2) designated terrorists and terrorist organizations,44 (3) designated former Iraqi government officials,45 (4) military end users in China, Russia, or Venezuela,46 (5) persons sanctioned under certain statutes other than ECRA,47 or otherwise sanctioned by the State Department,48 and (6) persons on the “Entity List.”49 The Entity List, which appears as a supplement to part 744 of the EAR,50 comprises non-U.S.
entities for which there is reasonable cause to believe, based on specific and articulable facts, that the entity has been involved, is involved, or poses a significant risk of being or becoming involved in activities that are contrary to the national security or foreign policy interests of the United States.51
Items subject to the EAR and specified on the Entity List may not be transferred to a listed entity, or in a transaction in which a listed entity is a party, without a license from BIS, and no license exceptions are available in such instances.52
The “Unverified List” comprises firms whose bona fides the U.S. government hasn’t been able to verify but that are not accused of any wrongdoing.53 If an entity appears on this list, U.S.-origin items may be provided to them, but only after they certify their identity and related information and, among other things, agree to be subject to postshipment inspection at the U.S. government’s request.54
Another list of disfavored end users is the Denied Persons List (Denial List, or DPL), which comprises individuals and entities deprived of some or all U.S. export privileges as the result of findings that they have violated, or imminently may violate, the EAR.55
Also—and importantly—“United States persons” (i.e., United States citizens, residents, and firms, as well as anyone physically present in the United States) may not transfer any
42 15 C.F.R. § 744.17 (2020). This applies to microprocessors having a processing speed of 5 GFLOPS or more and an arithmetic logic unit with an access width of 32 bit or more. Id. An exemplary list of microprocessors subject to this restriction appears as a supplement to part 744. 15 C.F.R. pt. 744, supp. 1 (2020).
43 15 C.F.R. § 744.8 (2020).
44 15 C.F.R. §§ 744.12-744.14 (2020).
45 15 C.F.R. § 744.18 (2020).
46 15 C.F.R. § 744.21 (2020), as amended by 85 Fed. Reg. 23459 (Apr. 28, 2020) (adding coverage of military end users in China) and 85 Fed. Reg. 83797-98 (Dec. 23, 2020).
47 15 C.F.R. § 744.19 (2020). These include the Iran-Iraq Arms Nonproliferation Act of 1992, id. § 744.19(a), the Iran, North Korea, and Syria Nonproliferation Act, id. § 744.19(b), and the Iran Sanctions Act of 1996, id. § 744.19(e).
48 15 C.F.R. § 744.20 (2020).
49 15 C.F.R. §§ 744.11, 744.16 (2020), as amended by 85 Fed. Reg. 51337 (Aug. 20, 2020).
50 15 C.F.R. pt. 744, supp. 4 (2020).
51 Id. § 744.11(b). In one instance, Congress has imposed additional conditions on the removal of a specific company from the Entity List. National Defense Authorization Act for Fiscal Year 2020, Pub. L. No. 116-92, § 1260I, 133 Stat. 1687 (2019) (imposing specified preconditions on removal of Huawei Technologies Co. Ltd. and its affiliates from Entity List). Whether that action is an unconstitutional bill of attainder remains to be seen. See U.S. Const. art. I, § 9, cl. 3 (“No Bill of Attainder . . . shall be passed [by Congress]”); Lovett v. United States, 328 U.S. 303 (1946) (holding statute that denied salary to three named government officials to be bill of attainder).
52 Id. § 744.11(a), as amended by 85 Fed. Reg. 51337 (Aug. 20, 2020). License exceptions are discussed at pages 55 through 74 infra
53 15 C.F.R. § 744.15 (2020).
54 Id. § 744.15(b).
55 U.S. Dep’t of Commerce, BIS Denied Persons List, https://www.bis.doc.gov/index.php/policy-guidance/ lists-of-parties-of-concern/denied-persons-list (last visited July 4, 2020). The DPL is discussed at pages 115–116 infra
item—even one located abroad and not of United States origin—known to be destined for specified nuclear weapons, missile, chemical weapons, or biological weapons uses.56
If a commodity, software, or technology is “subject to the EAR” (a concept discussed later), its export, reexport, or transfer to a given destination and end user either (1) does not require a license from the Commerce Department, which is the case for most items going to most countries, (2) requires a license but is eligible for a “license exception,” or (3) requires a license and is not eligible for a license exception.
Importantly, the fact that a particular item requires a license for export to a particular country does not mean that the export is forbidden. What it does mean is that the would-be exporter must apply for a license, which may or may not be granted. The authors have seen many instances in which even sophisticated parties don’t appreciate this distinction and pass up potential export sales that likely would have been licensed.
Part 732 of the EAR57 summarizes the steps needed to determine whether a transaction is subject to the EAR and, if so, whether a license is required. The obligations of the U.S. exporter (or other U.S. party) under the EAR depend upon the answers to five questions:
• What is the item to be exported, with a particular focus on the capability, use(s) intended by the designer or manufacturer, and technical characteristics of the item?
• To what country is the item ultimately being shipped?
• Who will be the end user of the item?
• To what use will the item be put?
• Finally, even if the U.S. party is not engaging in an export or reexport, is that party assisting a prohibited end use or end user?58
An exporter must go through as many as twenty-nine steps to determine and carry out its EAR obligations.59 Steps 1 through 6 determine whether the item or transaction in question is subject to the EAR.60 Steps 7 through 19 determine whether the transaction is subject to any of the EAR’s ten general prohibitions.61 Steps 20 through 26 determine whether any “license exceptions” apply to the transaction.62 Steps 27 through 29 relate to export formalities and recordkeeping requirements.63
III. Scope of the Export Administration Regulations
A. Definitions
Most definitions of EAR terms appear in section 772.1. Although a glossary of terms appears at the back of this book (pages 391 through 408), several are sufficiently important to merit discussion here.
56 15 C.F.R. § 744.6 (2020).
57 15 C.F.R. pt. 732 (2020).
58 15 C.F.R. §§ 732.1(b), 736.2(a) (2020).
59 15 C.F.R. pt. 732 (2020). These steps are described at pages 25 through 78 infra
60 15 C.F.R. § 732.2 (2020).
61 15 C.F.R. § 732.3 (2020). The general prohibitions are set out fully in part 736 of the EAR.
62 15 C.F.R. § 732.4 (2020).
63 15 C.F.R. § 732.5 (2020).
1. “Subject to the EAR” This phrase defines the items and transactions that are subject to the regulatory jurisdiction of BIS.64 In general, the phrase includes items in the United States (regardless of their place of origin),65 “U.S.-origin” items wherever located,66 foreign-made items that incorporate more than a specified percentage of U.S.-origin content,67 some foreign-made “direct products” of U.S.-origin technology or software,68 and some commodities that are products of a facility outside the United States that’s a direct product of specified U.S.-origin technology or software.69 The more highly controlled items subject to the EAR appear on the CCL.70 Items subject to the EAR but not listed on the CCL are classified as “EAR99.”71
In most cases, items subject to other U.S. export control regimes are not subject to the EAR and vice versa.72 These typically are defense items controlled by the Department of State under the International Traffic in Arms Regulations,73 items and transactions controlled by the Department of the Treasury under the foreign assets control regulations,74 certain nuclear commodities controlled by the Nuclear Regulatory Commission,75 nuclear weapons–related technology controlled by the Department of Energy,76 technology in patent applications,77 and items that are exported under the Foreign Military Sales program.78
Information that doesn’t come within the definition of “technology” is not subject to the EAR.79 A number of additional categories of information are not “subject to the EAR” even if they come within the definition of “technology.” These are discussed more fully at pages 29–34 and include published information,80 information arising during or resulting from fundamental research,81 data released in an academic institution’s “catalog course or associated teaching laboratory,”82 information in patents and patent applications that isn’t otherwise restricted,83 “non-proprietary system descriptions,”84 and specified telemetry data.85
64 15 C.F.R. § 734.2(a) (2020).
65 15 C.F.R. § 734.3(a)(1) (2020).
66 15 C.F.R. § 734.3(a)(2) (2020).
67 15 C.F.R. § 734.3(a)(3) (2020).
68 15 C.F.R. § 734.3(a)(4) (2020).
69 15 C.F.R. § 734.3(a)(5) (2020).
70 15 C.F.R. § 734.3(c) (2020). The CCL is supplement 1 to part 774 of the EAR.
71 Id.
72 15 C.F.R. § 734.3(a)(2) (2020).
73 See 15 C.F.R. § 734.3(b)(1)(i) (2020). These controls are discussed at pages 125–196 of this book.
74 See 15 C.F.R. § 734.3(b)(1)(ii) (2020). These controls are discussed at pages 197–368 of this book.
75 See 15 C.F.R. § 734.3(b)(1)(iii) (2020). These controls are discussed infra at pages 369–379.
76 See 15 C.F.R. § 734.3(b)(1)(iv) (2020). These controls are discussed infra at pages 379–388.
77 See 15 C.F.R. § 734.3(b)(1)(v) (2020). These controls are administered by the U.S. Patent and Trademark Office.
78 See 15 C.F.R. § 734.3(b)(1)(vi) (2020).
79 15 C.F.R. § 734.3, n. to ¶ (b)(3) (2020). Such information may be subject to part 760 of the EAR, which addresses antiboycott compliance, however. Id.
80 15 C.F.R. § 734.3(b)(2), (b)(3)(i) (2020).
81 15 C.F.R. § 734.3(b)(3)(ii) (2020).
82 15 C.F.R. § 734.3(b)(3)(iii) (2020). The institution needn’t be located in the U.S. Revisions to Definitions in the Export Administration Regulations, Frequently Asked Questions, Not Subject to the EAR: Information released by Instruction in a Catalog Course or Associated Teaching Laboratory of an Academic Institution (§ 734.3(b)(3)), FAQ 1.5 (eff. Sept. 1, 2016), https://www.bis.doc.gov/index.php/ documents/ compliance- training/ export- administration- regulations- training/ 1554- ear- definitions- faq/ file (last visited July 4, 2020).
83 15 C.F.R. § 734.3(b)(3)(iv) (2020).
84 15 C.F.R. § 734.3(b)(3)(v) (2020).
85 15 C.F.R. § 734.3(b)(3)(vi) (2020). The data covered by this provision are specified in note 2 to category 9.E. of the Commerce Control List, 15 C.F.R. pt. 774, supp. 1 (2020).
Encryption source code appearing in a published book is not subject to the EAR.86 The same source code appearing on an electronic medium is subject to the EAR, unless it is classified to Export Control Classification Number (ECCN) 5D002 and has been notified to BIS and the National Security Agency pursuant to section 742.15(b) of the EAR.87
For the most part, items that contain nothing of U.S. origin are subject to the EAR only when being exported from the United States.88 Unless their export license or authorization provides otherwise, the subsequent reexport of non-U.S.-origin items by a non-U.S. person is not subject to the EAR,89 but misrepresentation of an item’s ultimate destination at the time when the item is exported from the United States is a violation of the EAR.90 Importantly, the EAR provide expressly that “if neither your item nor activity is subject to the EAR, then you do not have any obligations under the EAR and you do not need to review other parts of the EAR,”91 except possibly its antiboycott provisions, which appear in part 760.92
2. “Item” “Item” is a collective term that means commodities, software, and technology.93 At times, individual elements like “software” may be mentioned in the EAR independently of the collective term.94
3. “Technology” “Technology” means “[i]nformation necessary for the ‘development,’ ‘production,’ ‘use,’ operation, installation, maintenance, repair, overhaul, or refurbishing (or other terms specified in ECCNs on the CCL that control ‘technology’) of an item.”95 It “may be in any tangible or intangible form, such as written or oral communications, blueprints, drawings, photographs, plans, diagrams, models, formulae, tables, engineering designs and specifications, computer-aided design files, manuals or documentation, electronic media or information revealed through visual inspection.”96
“Development” takes in “all stages prior to serial production,”97 while “production” means “all production stages, such as: product engineering, manufacture, integration, assembly (mounting), inspection, testing, [and] quality assurance.”98 “Use” is “[o]peration, installation (including on-site installation), maintenance (checking), repair, overhaul and refurbishing.”99 “Use” is present only if all six of these elements are
86 15 C.F.R. § 734.3, n. to ¶¶ (b)(2) & (b)(3) (2020).
87 Id.; 15 C.F.R. §§ 734.17(b)(2), 742.15(b) (2020).
88 See 15 C.F.R. § 734.3(a)(1) (2020) (by implication). An exception is certain items manufactured abroad in plants whose major components are of U.S. origin. 15 C.F.R. § 734.3(a)(4)-(5) (2020).
89 15 C.F.R. § 734.3(a)(1)-(2) (2020) (by implication); telephone conference between Daniel Cook, Director, Regulations Branch, Office of Technology and Policy Assessment, U.S. Dep’t of Commerce, and co-author Eric Hirschhorn (Feb. 11, 1988); letter from Douglas R. Brown, Director, Chemical & Biological Controls Division, Ofc. of Nonproliferation and Treaty Compliance, BIS (July 13, 2006) (copy in possession of authors).
90 15 C.F.R. § 764.2(g)(1)(ii)-(iii) (2020), as amended by 85 Fed. Reg. 73416 (Nov. 18, 2020).
91 15 C.F.R. § 734.1(a) (2020).
92 15 C.F.R. § 734.1(b) (2020); see id. pt. 760.
93 15 C.F.R. § 772.1, definition of “item” (2020).
94 Id
95 15 C.F.R. § 772.1, definition of “technology” (2020) (emphasis added).
96 Id. n. 1.
97 15 C.F.R. § 772.1, definition of “development” (2020). The definition includes as examples “design, design research, design analyses, design concepts, assembly and testing of prototypes, pilot production schemes, design data, process of transforming design data into a product, configuration design, integration design, layouts.” Id.
98 15 C.F.R. § 772.1, definition of “production” (2020).
99 Id., definition of “use.”
found,100 but if a particular ECCN specifies one or more of the six individually, then only the mentioned elements need be present.101
Although the definition of “technology” is broad, it does not cover all information and indeed doesn’t even cover all information relating to controlled commodities. For example, information on the “basic function or purpose of an item” does not constitute “technology” for purposes of the EAR.102 Similarly, “[a] technical specification that conveys size, weight and performance requirements and does not include ‘build-toprint technology’ ” likely would not constitute “technology.”103 With the exception of EAR99 technology, which in most cases is not controlled at all, the EAR control only information that is “required” for the development, production, or use of items on the CCL,104 and “required” means “only that portion of ‘technology’ or ‘software’ which is peculiarly responsible for achieving or exceeding the controlled performance levels, characteristics or functions.”105
4. “Export” Except for certain encryption software, “export” means not only the physical transmission of an item out of the United States106 or giving remote access to technology to someone abroad107 but also “releasing or otherwise transferring ‘technology’ or source code (but not object code) to a foreign person in the United States.”108
The last aspect of “export” is known as the “deemed export rule.”109 For purposes of the EAR, a “foreign person” is
[a]ny natural person who is not a lawful permanent resident of the United States, citizen of the United States, or any other protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any corporation, business association, partnership, trust, society or any other entity or group that is not incorporated in the United States or organized to do business in the United States, as well as international organizations, foreign governments and any agency or subdivision of a foreign government (e.g., diplomatic mission).110
100 Revisions to Definitions in the Export Administration: Frequently Asked Questions, Definition of Technology Q. 1 (eff. Sept. 1, 2016), https://www.bis.doc.gov/index.php/documents/compliance-training/ export-administration-regulations-training/1554-ear-definitions-faq/file (last visited July 4, 2020).
101 15 C.F.R. § 772.1, n. to definition of “use” (2020).
102 Revisions to Definitions in the Export Administration: Frequently Asked Questions, Definition of Technology Q. 2 (eff. Sept. 1, 2016), https://www.bis.doc.gov/index.php/documents/compliance-training/ export-administration-regulations-training/1554-ear-definitions-faq/file (last visited July 4, 2020).
103 Id. Q. 4.
104 15 C.F.R. pt. 774, supp. 2, ¶ 1 (2020) (General Technology Note). The General Technology Note applies to all ECCNs, whether or not they expressly mention it. Letter from Eileen M. Albanese, Act’g Director, Ofc. of Exporter Services, BIS (Mar. 25, 2014), https://www.bis.doc.gov/index.php/documents/advisory-opinions/ 906-final-technology-definition-advisory-opinion-redacted/file (last visited July 4, 2020).
105 15 C.F.R. § 772.1, definition of “required” (2020).
106 15 C.F.R. § 734.13(a)(1) (2020).
107 Revisions to Definitions in the Export Administration: Frequently Asked Questions, Activities That Are Not Exports, Reexports, or Transfers Q. 10 (eff. Sept. 1, 2016), https://www.bis.doc.gov/index.php/ documents/compliance-training/export-administration-regulations-training/1554-ear-definitions-faq/file (last visited July 4, 2020).
108 15 C.F.R. § 734.13(a)(2) (2020).
109 Id
110 15 C.F.R. § 772.1, definition of “foreign person” (2020).
The relationship between the deemed export rule and federal antidiscrimination law is complex and in some respects ambiguous. For a discussion of this issue, see pages 18–21.
Unclassified111 technology and software that are sent, taken, or stored outside the United States are excluded from the definition of “export” if they are secured using endto-end encryption112 that meets the standards prescribed by section 734.18(a)(5) of the EAR and are not “intentionally” stored113 in Russia or a country subject to a U.S. arms embargo (i.e., included in EAR Country Group D:5114).115 This carveout also applies where a U.S. national located abroad is the sole recipient of the data.116
Technology and software are “released” for export by visual inspection by foreign nationals, by oral exchanges of information with foreign nationals, and by causing the release of encrypted technology or software through the use of “access information”117 (e.g., decryption keys, network access codes, and passwords).118 Note, however, that “[m]erely seeing an item briefly is not necessarily sufficient to constitute a release of the technology required . . . to develop or produce it.”119
At one time, the “release” definition included “[t]he application to situations abroad of personal knowledge or technical experience acquired in the United States” even if not observed by a foreign national.120 This provision, which effectively outlawed activity that did not transfer any technology, was removed when the definition was revised in 2016 as part of the Export Control Reform initiative.121 Now, a service performed on behalf of a foreign national that doesn’t transfer technology is not an export unless it violates the proliferation-related controls in part 744 of the EAR or the restrictions on dealing with denied parties under part 764.122
111 In this context, “unclassified” refers to the fact that the technology or software has not been classified under the U.S. government’s system for classifying national security information. See Exec. Order No. 13526, 3 C.F.R., 2009 Comp., p. 298, 75 Fed. Reg. 707 (Jan. 5, 2010).
112 “End-to-end encryption” is “(i) the provision of cryptographic protection of data such that the data is not in unencrypted form between an originator (or the originator’s in-country security boundary) and an intended recipient (or the recipient’s in-country security boundary), and (ii) the means of decryption are not provided to any third party. The originator and the recipient may be the same person.” 15 C.F.R. § 734.18(b) (2020). Put slightly differently, it is “cryptographic protection of data such that the data are not in unencrypted form between the originator or the originator’s in-country security boundary and an intended recipient or the recipient’s in-country security boundary.” Revisions to Definitions in the Export Administration: Frequently Asked Questions, Activities That Are Not Exports, Reexports, or Transfers Q. 6 (eff. Sept. 1, 2016), https:// www.bis.doc.gov/index.php/documents/compliance-training/export-administration-regulations-training/ 1554-ear-definitions-faq/file (last visited July 4, 2020). Data lose their eligibility for this carve-out if they are decrypted while in transit between the relevant security boundaries. Id. Q. 8.
113 Data that are in transit via the internet “are not deemed to be stored.” 15 C.F.R. § 734.18, n. 1 to ¶ (a)(5) (iv) (2020).
114 15 C.F.R. pt. 740, supp. 1 (2020).
115 15 C.F.R. § 734.18(a)(5) (2020).
116 Revisions to Definitions in the Export Administration: Frequently Asked Questions, Activities That Are Not Exports, Reexports, or Transfers Q. 9 (eff. Sept. 1, 2016), https://www.bis.doc.gov/index.php/documents/ compliance-training/export-administration-regulations-training/1554-ear-definitions-faq/file (last visited July 4, 2020).
117 15 C.F.R. § 734.15 (2020).
118 15 C.F.R. § 772.1, definition of “access information” (2020).
119 Revisions to Definitions in the Export Administration: Frequently Asked Questions, Release Q. 3 (eff. Sept. 1, 2016), https://www.bis.doc.gov/index.php/documents/compliance-training/export-administrationregulations-training/1554-ear-definitions-faq/file (last visited July 4, 2020).
120 15 C.F.R. §§ 734.2(b)(3)(iii), 770.3(d)(1) (2016).
121 See 81 Fed. Reg. 35604 (2016).
122 Revisions to Definitions in the Export Administration: Frequently Asked Questions, Definitions of Export and Reexport Q. 1 (eff. Sept. 1, 2016), https://www.bis.doc.gov/index.php/documents/
The deemed export rule does not apply to the mere use of hardware123 or object code software124 by a foreign national unless controlled technology is transferred thereby. More generally, affording a foreign person access to controlled items doesn’t constitute an export or deemed export unless technology is actually “released.”125
Encryption object code and source code software is considered to have been “exported” not only when actually sent out of the United States126 or transferred to a foreign embassy or affiliate within the United States127 but also when it is downloaded to locations outside the United States128 or made
available for transfer outside the United States, over wire, cable, radio, electromagnetic, photo optical, photoelectric or other comparable communications facilities accessible to persons outside the United States, including transfers from electronic bulletin boards, Internet file transfer protocol and World Wide Web sites, unless the person making the “software” available takes precautions adequate to prevent unauthorized transfer of such code.129
Such “precautions” should include “such measures as” ensuring that the system receiving a transfer doesn’t have a government domain (e.g., .mil or .gov),130 notifying transferees that the software is subject to the EAR,131 and requiring each transferee to acknowledge that the software is not intended for a government end user and is subject to the EAR.132
Note that “[f]or encryption items, the deemed export rules apply only to deemed exports of technology and to deemed reexports of technology and source code. There are no deemed export rules for transfers of encryption source code to foreign nationals in the United States.”133
Interestingly, the fact that making encryption software available for downloading from abroad constitutes an “export” doesn’t necessarily make such an action an EAR violation. A 2009 BIS advisory opinion that as of the close of 2020 remains posted on the BIS website states that
compliance-training/export-administration-regulations-training/1554-ear-definitions-faq/file (last visited July 4, 2020). The removal of the old standard was intentional. See 81 Fed. Reg. 35591-92 (2016) (noting exclusion of services from EAR unless related to proliferation activities or in violation of denial orders). Mention of the standard in the current version of § 770.3(d)(1)(ii) of the EAR reflects a drafting oversight that BIS plans to correct. Exchange of emails between co-author Eric Hirschhorn and Hillary Hess, Director, Regulations & Policy Division, BIS (June 29 and July 1, 2019).
123 Letter from Alexander Lopes Jr., Director, Deemed Exports and Electronics Div., BIS, at 2 (Dec. 16, 2004).
124 15 C.F.R. § 734.13(a)(2), (b) (2020) (by implication).
125 Revisions to Definitions in the Export Administration: Frequently Asked Questions, Release Q. 1 (eff. Sept. 1, 2016), https://www.bis.doc.gov/index.php/documents/compliance-training/export-administrationregulations-training/1554-ear-definitions-faq/file (last visited July 4, 2020).
126 15 C.F.R. § 734.17(a)(1) (2020).
127 15 C.F.R. § 734.17(a)(2) (2020).
128 15 C.F.R. § 734.17(b)(1) (2020).
129 15 C.F.R. § 734.17(b)(2) (2020).
130 15 C.F.R. § 734.17(c)(1) (2020).
131 15 C.F.R. § 734.17(c)(2) (2020).
132 15 C.F.R. § 734.17(c)(3) (2020).
133 U.S. Dep’t of Commerce, BIS Encryption FAQ 17, https://www.bis.doc.gov/index.php/all-articles/15policy-guidance/encryption/560-encryption-faqs#3 (last visited July 4, 2020).
