Balancing National Security and Employment Discrimination (or Not)

By Dan Cadman on August 31, 2018

As reported by Law360 (partially behind a paywall), the Justice Department has settled an employment discrimination suit filed by an individual. The article says in part:

Clifford Chance US LLP has agreed to pay a $132,000 penalty to resolve a claim that it unlawfully discriminated against non-U.S. citizens and dual citizens by refusing to staff them for a client project, the U.S. Department of Justice announced on Wednesday.

The department said there was evidence indicating that from March to July 2017, the U.S. arm of the London-based global giant had violated anti-discrimination provisions of the Immigration and Nationality Act, or INA, by terminating three employees and refusing to consider eligible job candidates for 36 document-review roles because of their citizenship status.


Clifford Chance told investigators that it had placed a citizenship-based staffing restriction on a specific document-review project because it believed it was required by the International Traffic in Arms Regulations, or ITAR, which in certain circumstances requires only a "U.S. person" to review highly sensitive materials.

The department concluded that the firm had misunderstood its obligations under the ITAR and that the regulations did not excuse discrimination on the basis of immigration status or nationality, according to the announcement.

I was intrigued and dug in a little bit to find out about ITAR and its companion program EAR (Export Administration Regulations). According to the Government Relations LLC website:

ITAR (International Traffic in Arms Regulations) and the EAR (Export Administration Regulations) are export control regulations run by different departments of the US Government. Both of them are designed to help ensure that defense related technology does not get into the wrong hands. An export license is a general term for both ITAR and EAR controlled items in which the US Government has granted permission to transport or sell potentially dangerous items to foreign countries or parties.

ITAR is the more stringently regulated program according to the same website, which goes on to say that ITAR:

was written for articles ... specifically designed or otherwise intended for military end-use [that] are enumerated on the United States Munitions List (USML) or the Missile Technology Control Regime (MTCR) Annex ... and therefore controlled by International Traffic in Arms Regulations (ITAR) which is administered by the Directorate of Defense Trade Controls (DDTC) at the State Department. Items, services, and information are all covered by the ITAR regulations. The most controlled items are Significant Military Equipment (SME) which have "capacity for substantial military utility or capability" such as tanks, high explosives, naval vessels, attack helicopters, etc.

This is clearly a matter of significant national security interest, given hostile foreign governments' constant interest in procuring advanced lethal U.S. military technology (or stealing the technical details to reproduce it).

So why was it wrong for the Clifford Chance firm, which has a sensitive contract with the U.S. government to vet applications for licenses to procure or transfer such technology, to insist on hiring only U.S. citizens for the task of reviewing the applications? That must involve ensuring that an application isn't an arms-length (pardon the pun) transfer using straw firms and cutouts linking back to, say, the Chinese Ministry of State Security or People's Liberation Army. It would probably also involve knowing something about the technical details of many secret U.S. technologies to determine exactly how much is at risk in the event a license is granted.

It turns out that the rules and policies involving the hiring of individuals to do contractual ITAR review work are, in my humble opinion, flawed, because they go beyond U.S. citizens and instead make use of the phrase "U.S. persons", which by law includes not only citizens but lawful permanent resident aliens (LPRAs, i.e., green card holders).

Well, so be it. I can see why in some instances that might be so — we have many close allies, such as the British and Canadians, with whom we routinely share secrets and military technologies. But what about LPRAs from nations known to insert sleeper agents into the United States to steal secrets and siphon off technology? (Readers interested in knowing how much time, effort, and money is invested by foreign governments in doing this should pick up a copy of Spy Schools by Daniel Golden.)

But it gets worse, because the ITAR rules go even further, citing a provision in the Immigration and Nationality Act (INA), 8 U.S.C. Section 1324b(a)(3), which addresses the work eligibility of "protected individuals", who include aliens granted status as refugee or asylees. In other words, by incorporating this provision of the INA by reference, the ITAR regulations have opened the door to hiring individuals about whom we know almost nothing to vet our most closely guarded military and technological secrets.

Time and again we have seen evidence that Homeland Security officials, while doing their best, make egregiously bad decisions in granting refuge or asylum to individuals who later prove to be national security threats. (See, for instance, here, here, here, and here.)

Guess who conducts investigations into violations of ITAR regulations by entities who unlawfully transfer military materials, equipment, or technology? That would be the National Security Division of the Department of Justice, which asserts:

Foreign governments and other non-state adversaries of the United States are engaged in an aggressive campaign to acquire superior technologies and commodities that are developed, manufactured, and controlled in, and by, the United States. Such acquisitions — when conducted in contravention of U.S. law and policy — undermine the comparative and competitive advantages of U.S. industries and warfighters and, consequently, the national and economic security of the United States. ... Thwarting these unlawful efforts is a top priority for the National Security Division (NSD) of the Department of Justice (DOJ).

Now, guess who prosecuted the case against Clifford Chance for erring on the side of national security in its hiring practices? Why, that would be the Civil Rights Division of the very same Justice Department. I am left wondering how it is that the left and right hands of a single department are so uncoordinated.

More importantly, how is it that the multiplicity of cabinet-level departments (State, Defense, Commerce, Energy, Justice, and Homeland Security, at a minimum) involved in ITAR and EAR processes permit this? Why, in the first instance, were the ITAR regulations written as they are, and why they have never been amended to at least eliminate the possibility of hiring refugees and asylees to do such sensitive work?

It's easy to do — and, ironically, it's the attorney general who has the authority to do it. The very same provision of the INA that defines "protected individuals" also provides exemptions from the penalties against discriminating on the basis of citizenship, under this circumstance:

[D]iscrimination because of citizenship status which is otherwise required in order to comply with law, regulation, or executive order, or required by Federal, State, or local government contract, or which the Attorney General determines to be essential for an employer to do business with an agency or department of the Federal, State, or local government. (8 U.S.C. Section 1324b(a)(2)(C).) [Emphasis added.]