On February 16, 2023, the Department of Justice (DOJ) and Commerce Department announced the creation of the Disruptive Technology Strike Force with a mission to prevent nation-state “adversaries” from acquiring “disruptive” technologies. The strike force will be co-led by Assistant Attorney General Matthew Olsen of the DOJ’s National Security Division (NSD) and Assistant Secretary for Export Enforcement at the Commerce Department’s Bureau of Industry and Security (BIS) Matthew Axelrod, and will bring together the DOJ’s NSD, BIS, the Federal Bureau of Investigation, Homeland Security Investigations, and 14 US Attorneys’ Offices in 12 metropolitan regions.
The strike force’s mandate, and remarks by Deputy Attorney General Lisa Monaco announcing the new initiative, illustrate the US government’s continuing focus on protecting sensitive data and “disruptive” technologies, as well as the regulatory and enforcement tools that the US government has used and will continue to use to prevent the acquisition, use, and “abuse” of “disruptive” technologies by autocratic governments to commit human rights abuses and seek strategic advantage vis-à-vis the United States.
Following the significant regulatory changes implemented by BIS over the course of the past year, especially those targeting exports of “disruptive” technologies to China and Russia, the creation of the strike force signals that administrative and criminal enforcement of the new rules is a priority for the US government. The increased coordination and resources of the strike force will likely lead to heightened scrutiny of key industries and expanded outreach by law enforcement, a surge in interdictions of outbound exports from the US involving “disruptive” technologies, and an overall increase in active investigations of suspected export control violations. In view of this enforcement risk, US and non-US companies that play any role in the export, production, or supply of “disruptive” technologies subject to US jurisdiction should consider whether to reassess the state of their export controls and economic sanctions compliance program.
As explained by Deputy Attorney General Monaco, the strike force was established to coordinate the US government’s response to the acquisition and “abuse” of “disruptive” technologies by nation-state “adversaries” to enhance their military capabilities, surveil domestic populations, censor and repress opposition movements, and commit human rights abuses. In particular, the DOJ’s announcement focused on the acquisition and “abuse” by nation-state “adversaries” of technologies related to supercomputing and exascale computing, artificial intelligence, advanced manufacturing equipment and materials, quantum computing, and biosciences. Deputy Attorney General Monaco explained that governments such as China, Russia, Iran, and North Korea acquire and “abuse” these technologies through cyber theft, evasion of US sanctions and export controls, and exploitation of foreign investment in the United States as well as outbound investment by companies located in the United States and allied countries.
Strike Force’s Enforcement Mandate
The DOJ’s announcement highlights how the strike force will act to prevent nation-state “adversaries” from acquiring “disruptive” technologies and causing harm to US national security. In particular, the strike force’s work will include:
- investigating and prosecuting criminal violations of US export laws;
- enhancing administrative enforcement of US export controls;
- fostering partnerships with the private sector;
- leveraging international partnerships to coordination law enforcement actions and disruption strategies;
- utilizing advanced data analytics and all-source intelligence to develop and build investigations;
- conducting regular trainings for field offices; and
- strengthening connectivity between the strike force and Intelligence Community.
The creation of the Disruptive Technology Strike Force illustrates a continued focus on maintaining and refining the United States’ and allies’ military-technological edge over nation-state “adversaries,” as reflected in the White House’s 2022 National Security Strategy. The strike force’s mandate reflects the Biden Administration’s prioritization of aggressive enforcement of US export controls and sanctions, including through multilateral engagement and enforcement actions, where feasible.
Importantly, the creation of the strike force, especially when considered alongside other recent programs and initiatives such as BIS’s revamped administrative enforcement program and the creation of the Task Force KleptoCapture and the REPO task force, reinforces BIS’s and DOJ’s view of export controls “success” as encompassing interagency and international cooperation and enforcement, as well as a wider array of tools and objectives (e.g., not just guilty pleas and convictions, but also civil forfeiture and information-sharing with foreign partners). These programs and initiatives reflect a continuing effort by the US government to distinguish between routine compliance matters, which can often be fast-tracked and resolved through warning letters or no-action letters, and more serious cases that have the potential to cause significant national security harm, which are developed through a more robust investigative process that may include intelligence-gathering and intelligence sharing, as well as interagency and international cooperation, and are more likely to result in criminal prosecution. By contrast, the heightened threat of criminal prosecution may ultimately hinder the strike force’s goal of fostering deeper partnerships with the private sector, as key industry participants may be less inclined to invite site visits from BIS and DOJ or engage in proactive information sharing. Companies that receive such requests should evaluate them carefully and make a clear-eyed assessment of how best to engage with the strike force, if at all, on a voluntary basis.
New Regulatory Tools on the Horizon
Beyond the landmark new export controls issued by BIS on October 7, 2022, discussed in detail in our previous blog post, the Commerce Department has also relied on so-called Section 1758 controls to impose export controls on emerging and foundational technologies, including semiconductor and gas turbine engine technologies, dual-use biotoxins, and software specially designed to automate the analysis of geospatial imagery. BIS has also proposed controls on 14 general categories of emerging technologies that are essential to the national security of the United States, including biotechnology, artificial intelligence and machine learning technology, advanced computing technologies, and advanced surveillance technologies, among others. It is important to note that key aspects of these potential Section 1758 controls remain ill-defined, such as how to develop and implement controls around artificial intelligence (AI), which the 2022 Annual Threat Assessment of the US Intelligence Community identified as a threat to US military power. While we expect that BIS will continue to make use of Section 1758 controls to prevent the export or re-export of “disruptive” technologies to nation-state “adversaries,” BIS may continue to struggle to define the scope of controls relating to the proposed categories of emerging technologies.
Notably, the Deputy Attorney General also noted that the US government is “exploring how to monitor the flow of private capital in critical sectors and ensure that our own “outbound investment” in dual-use technology doesn’t provide our “adversaries” with a national security advantage.” This language suggests the US government is continuing its reported efforts to develop a regulatory framework on outbound investments, often referred to as “reverse CFIUS” or “outbound CFIUS”, to preclude investments that would afford nation-state “adversaries” access to “disruptive” technologies that would threaten US national security or technological leadership. An executive order is reportedly being drafted to establish such an outbound investment regulatory framework, although the precise substance and timing of this effort remains in question.