“U.S. Persons” Include More Than Just Citizens

What is a “U.S. Person”?  If you are hiring for ITAR-controlled programs, you need to know.

The U.S. Department of Justice recently settled a hiring discrimination investigation against a large international law firm, Clifford Chance US LLP:

The Department’s investigation determined that Clifford Chance’s unlawful practice of excluding otherwise qualified non-U.S. citizens and dual U.S. citizens from the document reviewer positions was based on the law firm’s misunderstanding of the requirements of the International Traffic in Arms Regulations (ITAR). The Department found that the law firm improperly terminated or removed three individuals from their positions based on their citizenship status.

The settlement includes a $132,000 civil penalty, lost wages, compliance training, and two years of monitoring and reporting.

The problem for Clifford Chance was that the ITAR does not require that export-controlled projects be restricted to US citizens in order to avoid unauthorized exports.

The ITAR definition of a “U.S. person,” to which a release of technical data is not an export, is:

§120.15 U.S. person.
U.S. person means a person (as defined in §120.14 of this part) who is a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any corporation, business association, partnership, society, trust, or any other entity, organization or group that is incorporated to do business in the United States. It also includes any governmental (federal, state or local) entity. It does not include any foreign person as defined in §120.16 of this part.

For individuals, including the categories in 8 U.S.C. 1324b(a)(3), U.S. persons include:

  1. US Citizens
  2. Lawful permanent residents (i.e., Green Card holders)
  3. Other narrow categories including some refugees and asylees.

Coming at it from the other side, foreign persons are defined as the inverse of US persons:

§120.16 Foreign person.
Foreign person means any natural person who is not a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) or who is not a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any foreign corporation, business association, partnership, trust, society or any other entity or group that is not incorporated or organized to do business in the United States, as well as international organizations, foreign governments and any agency or subdivision of foreign governments (e.g., diplomatic missions).

While ITAR § 120.17(a)(2) defines releasing technician data to a foreign person in the United States as a deemed export, dual U.S. citizens and permanent residents (as well as other “protected individuals”) are not foreign persons.  As U.S. persons, they would not require export authorization and should not be categorically excluded.

The Export Administration Regulations (EAR) use the same basic definitions of U.S. and foreign persons for the purposes of deemed exports (see § 734.13(a)(2) for deemed exports and Part 772 for definitions).

So next time your company has an ITAR or EAR-related job listing, keep this case in mind.  Misunderstanding the category of “U.S. persons” could lead to steep penalties and time-consuming training.

(None of the information is intended to be authoritative official or professional legal advice. Consult your own legal counsel or compliance specialists before taking actions based upon this blog or other unofficial sources.)