The U.S. Commerce Department could place limits on which companies can sponsor H-1B and O-1A visas. Commerce is evaluating designating artificial intelligence, biotechnology, and other categories as “emerging technologies” that will be subject to export controls. That could pose challenges for tech startups founded by international entrepreneurs or those employing—or looking to employ—foreign talent.

If your company falls into a proposed area of “emerging technology,” and you have employees on H-1B, L-1, O, E-1 and E-2 visas, it’s crucial to retain them by starting the green card process as quickly as possible. If you don’t, you may have to obtain a tricky deemed export license, lay them off, or face criminal sanctions, depending on the scope of any rule that comes to pass.

The federal government controls the export of sensitive technology, such as weapons, telecommunications, and encryption software, for national security reasons. Currently, most tech companies do not have to contend with export controls. That’s because their technology is not on one of the government’s control lists. However, that will soon change.

 

Deemed Exports

Commerce’s Bureau of Industry and Security (BIS) recently sought comments on the criteria that should be used for identifying emerging technologies that are essential to national security and should be classified as “deemed exports.” The request for comments came in advance of issuing a proposed rule.

A “deemed export” refers to technology released to a foreign national within the U.S. or sent out of the country. If the technology is seen or worked on by a foreign national, the technology is deemed to be exported to that person’s country of citizenship. BIS can require a license for the deemed export due to national security concerns.

BIS is evaluating emerging technology to add to export control lists “without impairing national security or hampering the ability of the U.S. commercial sector to keep pace with international advances in emerging fields.” How they will come down on defining “emerging technology” remains to be seen.

 

Emerging Technologies

BIS has identified 14 categories for possible designation as emerging technologies:

1. Biotechnology, such as nanobiology, synthetic biology, genomic and genetic engineering, and neurotech.
2. Artificial Intelligence (AI) and machine learning technology, such as neural networks and deep learning, evolution and genetic computation, reinforcement learning, computer vision, expert systems, speech and audio processing, natural language processing, planning, audio, and video manipulation technologies, AI cloud technologies, and AI chipsets.
3. Position, navigation, and timing technology.
4. Microprocessor technology, such as systems-on-chip and stacked memory on a chip.
5. Advanced computing technology, such as memory-centric logic.
6. Data analytics technology, such as visualization, automated analysis algorithms, and context-aware computing.
7. Quantum information and sensing technology, such as quantum computing, quantum encryption, and quantum sensing.
8. Logistics technology, such as mobile electric power, modeling and simulation, total asset visibility, and distribution-based logistics systems.
9. Additive manufacturing, such as 3D printing.
10. Robotics, such as micro-drone and micro-robotic systems, swarming technology, self-assembling robots, molecular robotics, robot compilers, and smart dust.
11. Brain-computer interfaces, such as neural-controlled, mind-machine, director neural, and brain-machine interfaces.
12. Hypersonics, such as flight-control algorithms, propulsion technologies, thermal protection systems, and specialized materials.
13. Advanced Materials, such as adaptive camouflage, functional textiles, and biomaterials.
14. Advanced surveillance technologies, such as faceprint and voiceprint technologies.

 

What Does This Mean?

I talked with Jeff Farrah, general counsel of the National Venture Capital Association (NVCA), about the issue. He recently wrote an article for TechCrunch on the topic.

A large tech company might be able to set up an internal “wall” or “screen” that would prevent a foreign national from seeing or working on emerging technologies. However, a startup that only works on AI or biotech likely does not have that ability. And often, technology companies large and small sponsor foreign nationals because they need the best and the brightest talent to work specifically on these emerging technologies.

Depending on how this plays out, tech companies working in the areas of “emerging technology” may have to obtain a deemed export license to sponsor and employ a foreign national. It also remains to be seen whether the U.S. government would grant a license to companies for employees from specific countries, such as China.

In its comment to BIS in January, NVCA warned that:

• An overly broad definition of emerging technologies could have “devastating consequences” to innovation in the U.S. and the economy.
• The 14 technology categories are widely used across many tech companies and “a broad set of controls could sweep in many unintended target companies and technologies.”
• Investing in emerging tech companies in the U.S. relies largely on the ability to hire international talent and sell products to commercial markets worldwide. Rules that “prevent U.S. companies from accessing that talent and those markets,” could force venture capital to “redirect to innovators in other nations.”

 

Civil and Criminal Penalties

Companies and individuals face a host of civil and criminal penalties for violating export regulations for emerging technologies. Civil penalties include fines and denial of export privileges.

Criminal penalties for individuals include up to $1 million in fines and up to 10 years in prison. In addition, items may be seized and subject to forfeiture.

 

Bottom Line: Start the Green-Card Process Now

If your company falls into one of these proposed areas of “emerging technologies,” and you have individuals working on these technologies who are on nonimmigrant visas, get them a green card as quickly as possible to avoid dealing with obtaining a deemed export license when a rule comes to fruition. The deemed export rule does not apply to green card holders.

At some point, BIS will publish a proposed rule in the Federal Register, which will be open for public comment. We urge you to take a look at the proposal and weigh in during that public comment period.

Reach out to us if we can assist you in identifying the best option that fits your circumstances. We’re available to have a conversation and help you identify what needs to be done.