Many companies routinely apply for, and receive, export licenses to cover foreign nationals working on encryption source code and object code in U.S. facilities. Based on our research, this practice may be unnecessary; we have concluded that export licenses are not required to provide encryption source code and object code to foreign nationals in the United States.

If you are currently applying for licenses to allow foreign employees access to encryption source or object code, it may be possible to end the practice. Circumstances may differ, however, so it is important to make that determination based on your company's position (for example, the analysis is different if the relevant source code is subject to non-encryption Commerce Department export restrictions). In addition, although we were able to obtain some informal conformation of our view from an Administration official familiar with the issue, there are some modest ambiguities in the applicable regulations. Especially for companies that have an established practice of applying for such licenses, it may be imprudent simply to cease the practice without documenting the authority for this change.

When all is said and done, however, companies now obtaining licenses for their workers in the U.S. may benefit substantially from adopting a less conservative view of the regulations. Given the complexities of applying for and obtaining even routine licenses, minimizing the number of license requests could cut costs and project delays substantially.

Please let us know if you would like to explore this issue further.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information please contact L. Benjamin Ederington on Tel: + 202-429-6411, Fax: 202-429-3902 or E-mail: bedering@steptoe.com