The broad set of U.S. export controls announced in the aftermath of Russia’s latest aggression in Ukraine make a key distinction between the treatment of exports to Russia and the release of information to Russian nationals in the United States. This differentiation between direct exports and “deemed exports” is not always made in U.S. export control provisions; its effect here exempts many instances of deemed exports from the broad new export measures. Thus, Russian foreign nationals who are employees of companies in the United States can continue to access information in the United States that is newly controlled for actual export to Russia.

The Bureau of Industry and Security (BIS) in the U.S. Department of Commerce is responsible for the Export Administration Regulations (EAR), which govern certain activities including direct exports from the United States to foreign countries of items, equipment, materials, software, and technology described on the Commerce Control List (“CCL”) by Export Control Classification Numbers (ECCNs), or contained in a catch-all category of EAR99. “Technology” has a specialized meaning and refers to certain types of information, including information necessary for the development, production, use, operation, installation, maintenance, repair, overhaul, or refurbishing of items on the CCL. Certain items cannot be exported to certain destinations without first obtaining authorization from BIS by applying for an export license.

In addition to controls on direct exports from the United States to foreign countries, BIS also controls re-exports (when items subject to the EAR, including U.S. origin items, are sent from one foreign country to another), and in-country transfers (when an item subject to the EAR is transferred to a different party in the same foreign country). The EAR also address certain other types of activities, including deemed exports, which occur when technology or source code is released to a foreign national within the United States. Deemed exports are generally considered to be exports to that person’s country of nationality if those persons are not U.S. citizens, permanent residents, or persons granted status as protected individuals. (There is an exception in place for foreign nationals involved in fundamental research to receive technology, as well as other exceptions like information contained in patent applications and published software and technology.)

Unless one of these exceptions applies, if a license would be required to export technology to a foreign country, then a license will generally also be required for that same technology to be released to a national of that country, even when that person is physically located in the United States. Because technology is essentially information, it can come in a variety of forms, including blueprints, drawings, photographs, models, tables, engineering designs, specifications, or even written or oral communications. This means a deemed export restriction can require a U.S. company to obtain an export license for a foreign national to access the information or have conversations necessary to do their job, if that job involves information controlled for export to that person’s country of nationality.

Despite BIS’s general treatment in the EAR of deemed exports in the same manner as direct exports, last week’s package of U.S. export controls against Russia contained an exception for deemed exports for the broadest set of restrictions announced in the new package. Among other measures, broad categories of products, software, and technology (in CCL Categories 3 through 9) were newly prohibited from export and re-export to, and in-country transfer in, Russia—measures designed to impede the Russian defense, aerospace, and maritime sectors. These expansive export control provisions, however, exclude deemed exports and deemed reexports.

The following example illustrates the impact of this exception. ECCN 9A990 controls certain types of tractors and diesel engines not elsewhere specified in the CCL, such as diesel engines for trucks and tractors having over a certain threshold of horsepower. ECCN 9E990 controls technology not elsewhere specified in the CCL for the development, production, or use of such ECCN 9A990 equipment. Because this type of diesel engine is specified in an ECCN in Categories 3 through 9, the diesel engine controlled by ECCN 9A990 and the associated technology described by ECCN 9E900 now require a license to be obtained from BIS before any export or re-export to, or in-country transfer within, Russia can occur. The effect of the deemed export exclusion in the new set of regulations is that, absent any other relevant restrictions, a Russian national located in the United States who works with that sort of controlled technology can continue to have access to it without the company needing to have to obtain a deemed export license.

With respect to the export restrictions already in place for the Crimea region of Ukraine, and the new export restrictions announced for the so-called Donetsk People’s Republic (DNR) and Luhanks People’s Republic (LNR) regions of Ukraine, deemed exports apply, but only the nationality of the person is considered for purposes of deemed exports. Nationality is determined through accepted methods such as inspecting a passport. For example, if a foreign national in the United States were a Ukrainian national, the U.S. entity seeking to release technology to that person would identify that person to be of Ukrainian nationality, and would not use any information about the region that person is from for purposes of determining deemed export restrictions. Other existing deemed export restrictions do remain in place with respect to Russian nationals in the United States, but the new broad restrictions on ECCNs in Categories 3 through 9 do not apply to deemed exports.

In this manner, these new export restrictions reflect BIS’s policy determination that deemed exports to Russian nationals in the United States should be treated separately from those broad export restrictions designed to impede large portions of Russian industry itself.