WEBVTT 00:00:00.000 --> 00:00:01.940 The views expressed in this podcast are solely 00:00:01.940 --> 00:00:04.599 our own. This information is provided for your 00:00:04.599 --> 00:00:07.480 convenience. It does not constitute legal advice, 00:00:07.660 --> 00:00:10.160 nor does it create an attorney client relationship. 00:00:10.400 --> 00:00:13.339 Prior results do not guarantee similar outcomes. 00:00:13.679 --> 00:00:31.010 This is attorney advertised. Enjoy. Hi, welcome 00:00:31.010 --> 00:00:34.090 again to Red Flags Rising. My name is Mike Huneke. 00:00:34.189 --> 00:00:37.109 I'm a partner at Morgan Lewis and Bockius LLP. 00:00:37.869 --> 00:00:40.289 in their International Trade and National Security 00:00:40.289 --> 00:00:44.750 Practice Group. Today is Friday, June 19th, 2026, 00:00:44.969 --> 00:00:47.490 just after 1 p .m. U .S. Eastern. With me, as 00:00:47.490 --> 00:00:50.270 always, is my great friend and the founder and 00:00:50.270 --> 00:00:53.450 chief solutions officer of Red Flags Rising Solutions 00:00:53.450 --> 00:00:56.210 LLC, Brent Carlson. Brent, how are you doing 00:00:56.210 --> 00:00:58.469 today? Excellent, Mike. Great to be back here 00:00:58.469 --> 00:01:00.289 talking to some important developments that are 00:01:00.289 --> 00:01:03.670 going through the export controls world and the 00:01:03.670 --> 00:01:07.079 world of geopolitics that drives it. Absolutely, 00:01:07.200 --> 00:01:09.620 Brent. And this is a bit of a retake on our part. 00:01:09.659 --> 00:01:13.180 We thought we had the AI diffusion topic mastered 00:01:13.180 --> 00:01:15.819 a few weeks ago, and it turns out we didn't. 00:01:15.900 --> 00:01:18.980 There were some developments the day of recording 00:01:18.980 --> 00:01:21.540 that we decided needed to be updated. And then, 00:01:21.560 --> 00:01:23.319 frankly, we just decided enough had happened 00:01:23.319 --> 00:01:26.159 in the past two weeks to do a reset, take a fresh 00:01:26.159 --> 00:01:28.519 look, if you will, at the topic of the AI diffusion 00:01:28.519 --> 00:01:31.950 rule. Is it dead? Is it alive? What happened 00:01:31.950 --> 00:01:36.329 to the intent to rescind that was announced previously? 00:01:36.549 --> 00:01:38.689 And where are we today? And what this shows in 00:01:38.689 --> 00:01:40.730 these latest developments over the AI diffusion 00:01:40.730 --> 00:01:43.409 rule and that guidance that came out of BIS on 00:01:43.409 --> 00:01:46.849 May 31st is that there is a lot of movement going 00:01:46.849 --> 00:01:49.090 on in the backfield. There is a lot of pressure 00:01:49.090 --> 00:01:52.239 that's building in Congress for action. In the 00:01:52.239 --> 00:01:54.659 world of geopolitics, that's all moving around 00:01:54.659 --> 00:01:56.480 there too. All these factors together are creating 00:01:56.480 --> 00:01:59.640 a perfect storm where we're going to see a lot 00:01:59.640 --> 00:02:02.760 more in the export controls world, not even on 00:02:02.760 --> 00:02:05.180 the horizon, but imminently. Absolutely. So we've 00:02:05.180 --> 00:02:07.879 got actions in Congress. Lots to talk about there. 00:02:08.039 --> 00:02:11.259 I think 22 individual bills were voted out of 00:02:11.259 --> 00:02:14.139 committee in the House not that long ago to join 00:02:14.139 --> 00:02:16.419 several other key pieces of legislation that 00:02:16.419 --> 00:02:18.360 were already pending before one House or the 00:02:18.360 --> 00:02:20.680 other. These laws could dramatically increase 00:02:20.680 --> 00:02:22.939 penalties. They could increase the statute of 00:02:22.939 --> 00:02:25.539 limitations. They could require certain controls 00:02:25.539 --> 00:02:28.520 on certain items. Lots to unpack there. And then, 00:02:28.539 --> 00:02:31.479 Brent, we had new guidance from BIS on a Sunday, 00:02:31.659 --> 00:02:35.259 May 31st, related to... the AI diffusion rule. 00:02:35.500 --> 00:02:38.020 And then we had an is informed letter issued 00:02:38.020 --> 00:02:41.800 to a major AI company on June 12th. There's just 00:02:41.800 --> 00:02:44.340 a lot of different things going on here. As you've 00:02:44.340 --> 00:02:47.479 said many times quite well, Brent, you have geopolitical 00:02:47.479 --> 00:02:50.580 pressures affecting national political pressures, 00:02:50.680 --> 00:02:53.020 driving enforcement priorities for the regulators. 00:02:53.300 --> 00:02:55.479 We're seeing all of that play out right in front 00:02:55.479 --> 00:02:57.400 of us in real time. Brent, why don't we unpack 00:02:57.400 --> 00:02:59.759 these developments and maybe let's start with 00:02:59.759 --> 00:03:02.300 the legislative activity because to me, part 00:03:02.300 --> 00:03:05.199 of the value proposition of compliance is determined 00:03:05.199 --> 00:03:08.080 by the potential fines, the potential consequences 00:03:08.080 --> 00:03:10.759 of non -compliance, many of these laws would 00:03:10.759 --> 00:03:13.919 impact that. So what do we see in the recent 00:03:13.919 --> 00:03:15.639 bills that were enacted and some other pieces 00:03:15.639 --> 00:03:18.340 of legislation out there? Yeah, you bet. So these 00:03:18.340 --> 00:03:20.120 all cleared the House Foreign Affairs Committee. 00:03:20.360 --> 00:03:23.460 They may be taken up for a vote or may be included 00:03:23.460 --> 00:03:26.240 in the National Defense Authorization Act this 00:03:26.240 --> 00:03:28.400 year. So we might see them come through before 00:03:28.400 --> 00:03:30.469 the end of the year. There's some big changes 00:03:30.469 --> 00:03:33.689 coming down the road that, again, reinforce the 00:03:33.689 --> 00:03:36.729 message that there's a lot of focus on export 00:03:36.729 --> 00:03:39.250 controls, in strengthening them, making them 00:03:39.250 --> 00:03:42.349 more effective, and quite honestly, giving more 00:03:42.349 --> 00:03:44.610 tools for enforcement. Right off the top, there's 00:03:44.610 --> 00:03:47.210 one where maximum penalties would be increased 00:03:47.210 --> 00:03:49.069 to four times the value of the transactions, 00:03:49.210 --> 00:03:52.330 or $1 .2 million per violation, whichever is 00:03:52.330 --> 00:03:54.270 greater. Currently, it's twice the value of the 00:03:54.270 --> 00:03:56.449 transaction, so that can add up very quickly. 00:03:56.569 --> 00:03:58.349 There's another bill that increases the statute 00:03:58.349 --> 00:04:00.219 of limitations. for export control violations 00:04:00.219 --> 00:04:02.960 up to 10 years, and then another bill that creates 00:04:02.960 --> 00:04:06.020 a dedicated export controls whistleblower program. 00:04:06.300 --> 00:04:09.319 So we're seeing a lot more tools and firepower 00:04:09.319 --> 00:04:11.180 that's going to be added to the export controls 00:04:11.180 --> 00:04:13.259 enforcement side. Brent, with some very high 00:04:13.259 --> 00:04:16.339 -profile prosecutions being unsealed recently 00:04:16.339 --> 00:04:18.879 and very high -profile defendants being arrested, 00:04:19.199 --> 00:04:22.000 members of Congress have already pointed to those 00:04:22.000 --> 00:04:24.740 indictments and those arrests as support for 00:04:24.740 --> 00:04:27.920 the bills that they're championing and for Congress. 00:04:28.079 --> 00:04:30.160 to take some action. So certainly, at least in 00:04:30.160 --> 00:04:32.319 the current environment, we expect that Congress 00:04:32.319 --> 00:04:35.399 will continue to be pushing on this legislation. 00:04:35.740 --> 00:04:38.639 These were overwhelmingly bipartisan in terms 00:04:38.639 --> 00:04:40.879 of the support. Some of these were like 44 to 00:04:40.879 --> 00:04:44.009 0. The most contested one was 36 to 8. So it's 00:04:44.009 --> 00:04:46.709 like these things are not real items of contention. 00:04:46.810 --> 00:04:48.730 If you go back to the Senate side, you can see 00:04:48.730 --> 00:04:53.029 Senators Warren and Banks or Senator Cotton all 00:04:53.029 --> 00:04:55.110 joining together for this message. One of the 00:04:55.110 --> 00:04:57.509 themes here that's reflected in this strong bipartisan 00:04:57.509 --> 00:05:00.350 support across both the House and the Senate 00:05:00.350 --> 00:05:02.990 is you see a lot of people that are frustrated 00:05:02.990 --> 00:05:06.129 with export controls and the perception that 00:05:06.129 --> 00:05:07.930 they haven't been as effective as they should 00:05:07.930 --> 00:05:10.009 be. Now you're seeing people looking for solutions. 00:05:10.250 --> 00:05:12.230 It's important. to kind of look at where things 00:05:12.230 --> 00:05:15.870 are at. On the administrative side, BIS is really 00:05:15.870 --> 00:05:18.990 looking to find its footing. There has been pressure 00:05:18.990 --> 00:05:21.750 on BIS to step things up for a very long time. 00:05:21.889 --> 00:05:23.970 Of course, there's going to be some disruption 00:05:23.970 --> 00:05:28.410 in any organization when it's looking to regain 00:05:28.410 --> 00:05:30.790 its footing on whatever mission it's on. But 00:05:30.790 --> 00:05:32.649 then look at what's happening on the enforcement 00:05:32.649 --> 00:05:36.769 side, and you can see a steady uptake. In 2024, 00:05:38.060 --> 00:05:41.920 there were $16 million in enforcement penalties. 00:05:42.259 --> 00:05:45.500 Compared to 2025, you see 324. A lot of those 00:05:45.500 --> 00:05:47.560 cases were carried over from the prior administration 00:05:47.560 --> 00:05:49.379 to the current administration. It's not like 00:05:49.379 --> 00:05:51.160 the current administration came in and then dropped 00:05:51.160 --> 00:05:53.439 these cases. Again, look at the signals coming 00:05:53.439 --> 00:05:57.759 from BIS. It's less in these long, complex rules 00:05:57.759 --> 00:06:00.100 and more on enforcement actions. So I think it's 00:06:00.100 --> 00:06:01.839 very important to be reading those settlement 00:06:01.839 --> 00:06:03.860 agreements in these enforcement actions because 00:06:03.860 --> 00:06:06.519 that is where the signals from BIS are going 00:06:06.519 --> 00:06:09.000 to be coming from. Absolutely. And look, David 00:06:09.000 --> 00:06:11.819 Peters is a former DOJ prosecutor. He's going 00:06:11.819 --> 00:06:14.600 to be speaking through his charging. He's going 00:06:14.600 --> 00:06:16.319 to be speaking through the decisions that they 00:06:16.319 --> 00:06:18.439 bring. I think that's the ball to keep your eye 00:06:18.439 --> 00:06:21.939 on. What's really in focus here are data centers 00:06:21.939 --> 00:06:25.620 and AI broadly. AI runs on data centers. The 00:06:25.620 --> 00:06:28.420 crux of this thing is not just that, the future 00:06:28.420 --> 00:06:31.939 of modern warfare revolves around AI and how 00:06:31.939 --> 00:06:34.439 that's going to be manifested in drones and in 00:06:34.439 --> 00:06:37.379 cyber weapons and developing biological weapons, 00:06:37.620 --> 00:06:39.759 you name it. It's not the future of warfare, 00:06:39.920 --> 00:06:41.699 it's the here and now. That's why this stuff 00:06:41.699 --> 00:06:43.660 is really accelerating and there's a lot of focus 00:06:43.660 --> 00:06:46.889 on it. Let's talk about that May 31st rule and 00:06:46.889 --> 00:06:48.470 how that reflects back from the AI diffusion 00:06:48.470 --> 00:06:50.910 rule. And then talk about the is informed letter 00:06:50.910 --> 00:06:53.569 that was sent just last week. I think this kind 00:06:53.569 --> 00:06:55.250 of shows some of the trends that are going on. 00:06:55.370 --> 00:06:57.589 Look, there's been a lot of effort by the administration, 00:06:57.870 --> 00:06:59.730 as we've talked about in the pod, to promote 00:06:59.730 --> 00:07:03.670 the export of the American AI stack and to help 00:07:03.670 --> 00:07:07.009 companies really place American technology and 00:07:07.009 --> 00:07:09.810 American designed items with allies and countries 00:07:09.810 --> 00:07:12.870 that are key to the current geopolitical competition 00:07:12.870 --> 00:07:15.230 that's going on. A very important development 00:07:15.230 --> 00:07:17.050 in this respect at the end of the last administration 00:07:17.050 --> 00:07:19.389 was the AI diffusion rule. We've talked about 00:07:19.389 --> 00:07:22.009 that in detail in an earlier podcast from last 00:07:22.009 --> 00:07:25.250 year. That rule rather ambitiously didn't entirely 00:07:25.250 --> 00:07:28.470 scrap the prior controls. Far from it. It tried 00:07:28.470 --> 00:07:31.750 to really meld them into what was essentially 00:07:31.750 --> 00:07:34.230 a global rationing system, very similar to what 00:07:34.230 --> 00:07:36.490 the Allied powers ended up doing in World War 00:07:36.490 --> 00:07:38.670 I when they got frustrated and realized that 00:07:38.939 --> 00:07:41.759 Ship -by -ship end -user verifications for coal 00:07:41.759 --> 00:07:44.120 and other inputs for steel were not really that 00:07:44.120 --> 00:07:46.839 effective, and they were relying on self -certification, 00:07:47.019 --> 00:07:48.899 so what good were they anyway? Instead, they 00:07:48.899 --> 00:07:51.560 knew what the level of steel -related imports 00:07:51.560 --> 00:07:53.779 into the Netherlands and Switzerland, who were 00:07:53.779 --> 00:07:56.439 neutral in that war, were pre -war, and they 00:07:56.439 --> 00:07:58.160 felt comfortable that if at least they could 00:07:58.160 --> 00:08:01.500 keep Germany's wartime production capped at what 00:08:01.500 --> 00:08:03.680 it was at pre -war, that still would have a very 00:08:03.680 --> 00:08:06.339 significant and material impact on the German 00:08:06.339 --> 00:08:09.300 war machine, and it did. So here they tried to 00:08:09.300 --> 00:08:12.220 create that essentially for the diffusion of 00:08:12.220 --> 00:08:15.680 AI technology through a three -tiered system 00:08:15.680 --> 00:08:18.819 of countries that would allocate TPP or total 00:08:18.819 --> 00:08:21.720 processing power. This global rationing system 00:08:21.720 --> 00:08:25.259 was roundly criticized by the incoming administration. 00:08:26.160 --> 00:08:28.379 The key deadline was that although the rule, 00:08:28.500 --> 00:08:30.879 when announced by the Biden administration, was 00:08:30.879 --> 00:08:33.259 an interim final rule with immediate effect, 00:08:33.559 --> 00:08:37.179 it delayed any compliance requirement or expectation 00:08:37.179 --> 00:08:41.220 until May 15th of 2025. So it was increasing 00:08:41.220 --> 00:08:44.500 speculation leading up to mid -May of last year. 00:08:44.639 --> 00:08:46.399 What's going to happen with that rule? Are they 00:08:46.399 --> 00:08:47.919 going to keep it? Are they going to scrap it? 00:08:48.019 --> 00:08:50.899 Do I have to comply? How can I comply? How do 00:08:50.899 --> 00:08:54.179 I calculate TPP? All of these things. On May 00:08:54.179 --> 00:08:58.700 13th, by a press release, BIS announced a rescission 00:08:58.700 --> 00:09:01.480 of the Biden administration's AI diffusion rule 00:09:01.480 --> 00:09:03.899 while rolling out additional steps to strengthen 00:09:03.899 --> 00:09:06.340 export controls and semiconductors worldwide. 00:09:06.700 --> 00:09:08.580 On the one hand, they're getting rid of this 00:09:08.580 --> 00:09:11.019 global rationing system, but on the other hand, 00:09:11.019 --> 00:09:13.340 they're announcing guidance and policy documents 00:09:13.340 --> 00:09:15.480 increasing essentially due diligence expectations. 00:09:16.350 --> 00:09:18.850 The press release went on to state, the AI diffusion 00:09:18.850 --> 00:09:22.309 rule was issued on January 15th, 2025 with compliance 00:09:22.309 --> 00:09:24.269 requirements that were set to come into effect 00:09:24.269 --> 00:09:27.590 on May 15th, 2025. These new requirements would 00:09:27.590 --> 00:09:30.509 have stifled American innovation and saddled 00:09:30.509 --> 00:09:33.649 companies with burdensome new regulatory requirements. 00:09:33.850 --> 00:09:36.470 The AI diffusion rule also would have undermined 00:09:36.470 --> 00:09:38.830 U .S. diplomatic relations with dozens of countries 00:09:38.830 --> 00:09:42.379 by downgrading them to second tier status. Obviously, 00:09:42.379 --> 00:09:44.700 what we've seen since has been the prioritization 00:09:44.700 --> 00:09:47.799 of exports to the United Arab Emirates and the 00:09:47.799 --> 00:09:50.320 Kingdom of Saudi Arabia in particular. Both of 00:09:50.320 --> 00:09:52.179 those countries would not have been top tier 00:09:52.179 --> 00:09:55.059 countries under the Biden era diffusion rule. 00:09:55.200 --> 00:09:58.840 In the third paragraph, it said, BIS plans to 00:09:58.840 --> 00:10:01.659 publish a regulation formalizing the rescission 00:10:01.659 --> 00:10:04.000 and will issue a replacement rule in the future. 00:10:04.440 --> 00:10:06.980 Under Secretary of Commerce for Industry and 00:10:06.980 --> 00:10:09.519 Security Jeffrey Kessler has instructed BIS enforcement 00:10:09.519 --> 00:10:12.960 officials not to enforce the Biden administration's 00:10:12.960 --> 00:10:14.899 AI diffusion rules stating the Trump administration 00:10:14.899 --> 00:10:17.840 will pursue a bold inclusive strategy to American 00:10:17.840 --> 00:10:19.740 AI technology with trusted foreign countries 00:10:19.740 --> 00:10:21.500 around the world while keeping the technology 00:10:21.500 --> 00:10:24.019 out of the hands of our adversaries. At the same 00:10:24.019 --> 00:10:26.039 time we reject the Biden administration's attempt 00:10:26.039 --> 00:10:28.820 to impose its own ill -conceived and counterproductive 00:10:28.820 --> 00:10:31.480 AI policies on the American people. In the same 00:10:31.480 --> 00:10:34.100 breath, BIS announced guidance alerting industry 00:10:34.100 --> 00:10:36.639 to the risks of using PRC advanced computing 00:10:36.639 --> 00:10:39.259 integrated circuits, specifically mentioning 00:10:39.259 --> 00:10:41.840 chips from Huawei. It issued guidance warning 00:10:41.840 --> 00:10:44.440 the public broadly about the potential consequences 00:10:44.440 --> 00:10:46.820 of allowing US AI chips to be used for training 00:10:46.820 --> 00:10:49.200 and inference of Chinese AI models. And it issued 00:10:49.200 --> 00:10:51.679 guidance on how to protect supply chains against 00:10:51.679 --> 00:10:54.980 diversion tactics, setting out lists of red flags 00:10:54.980 --> 00:10:57.440 and due diligence questions that companies should 00:10:57.440 --> 00:11:00.139 be expected to follow and be aware of. I think 00:11:00.139 --> 00:11:02.399 where this cuts down to, though, is whether or 00:11:02.399 --> 00:11:05.059 not there is the requirement, the rule from November 00:11:05.059 --> 00:11:08.820 2023. It comes down to basically advanced computing 00:11:08.820 --> 00:11:13.039 items, the AI chips and all the electronic assemblies 00:11:13.039 --> 00:11:17.299 that go around them. These are the 3A090 items 00:11:17.299 --> 00:11:20.779 and the 4A090 items. Is a license required if 00:11:20.779 --> 00:11:24.940 we're exporting these items to these PRC companies 00:11:24.940 --> 00:11:28.909 building data centers outside of the PRC? That's 00:11:28.909 --> 00:11:30.649 what it comes down to. Where there was confusion 00:11:30.649 --> 00:11:35.889 here was that the AI diffusion rule moved that 00:11:35.889 --> 00:11:39.429 November 2023 rule from one part of the EAR to 00:11:39.429 --> 00:11:41.730 another. There's this confusion over, was this 00:11:41.730 --> 00:11:44.090 a loophole that allowed these advanced computing 00:11:44.090 --> 00:11:47.129 items to be sold to these PRC entities globally 00:11:47.129 --> 00:11:50.190 outside of China? On two different levels, the 00:11:50.190 --> 00:11:53.679 answer here is no. You see the May 31st guidance 00:11:53.679 --> 00:11:55.720 say that there always was required, but looking 00:11:55.720 --> 00:11:57.919 at this, like we've just done right here, that 00:11:57.919 --> 00:12:01.220 November 2023 rule has always been in force. 00:12:01.440 --> 00:12:04.139 The AI diffusion rule just moved from one part 00:12:04.139 --> 00:12:06.879 of the EAR to another. There's the other issue, 00:12:06.940 --> 00:12:09.039 too, where it's like the AI diffusion rule was 00:12:09.039 --> 00:12:11.940 never formally rescinded. The Government Accountability 00:12:11.940 --> 00:12:14.440 Office issued a report just a few weeks ago, 00:12:14.480 --> 00:12:16.539 just before this all came out, basically coming 00:12:16.539 --> 00:12:19.720 to that same conclusion that this rule was never 00:12:19.720 --> 00:12:22.220 officially rescinded, so these are still laws 00:12:22.220 --> 00:12:25.360 on the books. That GAO report also reflects that 00:12:25.360 --> 00:12:27.960 there is congressional scrutiny on all this as 00:12:27.960 --> 00:12:30.559 well to maintain the effectiveness of export 00:12:30.559 --> 00:12:32.789 controls. But one thing I think is really interesting 00:12:32.789 --> 00:12:35.129 in the dialogue that's been going back and forth 00:12:35.129 --> 00:12:38.350 is people calling these loopholes. I don't think 00:12:38.350 --> 00:12:40.350 there was a loophole that ever was here. If somebody 00:12:40.350 --> 00:12:42.370 thought it was a loophole, they're probably going 00:12:42.370 --> 00:12:45.490 to meet with a liability pitfall. Because another 00:12:45.490 --> 00:12:47.669 thing that I would expect looking at that May 00:12:47.669 --> 00:12:50.309 31st guidance that came out reiterating that 00:12:50.309 --> 00:12:52.629 this license requirement was still in place is 00:12:52.629 --> 00:12:55.230 enforcement activity. You know, Brent, when I 00:12:55.230 --> 00:12:57.149 was thinking about this as we were preparing 00:12:57.149 --> 00:12:59.990 for this podcast, I think a fundamental maybe 00:12:59.990 --> 00:13:02.970 gap in some people's thinking around the rescission 00:13:02.970 --> 00:13:06.370 was that it was affirmatively getting rid of 00:13:06.370 --> 00:13:09.370 a bunch of things. What it really did was reset 00:13:09.370 --> 00:13:13.429 the clock back to January 14th, 2026, plus the 00:13:13.429 --> 00:13:17.250 guidance that was added in May of 2025. And we 00:13:17.250 --> 00:13:19.830 just went back to that point. So when you talk 00:13:19.830 --> 00:13:22.679 about a rule being rescinded, And as you said, 00:13:22.740 --> 00:13:24.639 some of the rule was substantive. Some of it 00:13:24.639 --> 00:13:27.879 was structural. It just reorganized existing 00:13:27.879 --> 00:13:30.259 requirements without changing them. It just put 00:13:30.259 --> 00:13:32.600 those back. Now, part of the confusion, too, 00:13:32.659 --> 00:13:35.299 is if you were coming to this area of law and 00:13:35.299 --> 00:13:38.200 regulation new, you might reasonably think I'm 00:13:38.200 --> 00:13:40.419 going to go look at the regulations. And those 00:13:40.419 --> 00:13:42.860 didn't change. I think that was a real challenge 00:13:42.860 --> 00:13:44.960 for a lot of people. If you're in the moment 00:13:44.960 --> 00:13:47.139 just trying to pull up online, okay, what's the 00:13:47.139 --> 00:13:48.700 rule for this? What's the rule for that? There 00:13:48.700 --> 00:13:51.139 was nothing in the Federal Register that caused 00:13:51.139 --> 00:13:53.480 the Code of Federal Regulations to be actually 00:13:53.480 --> 00:13:56.159 updated, to be replaced with a placeholder, to 00:13:56.159 --> 00:13:59.559 have a flashing red light on them. Anecdotally, 00:13:59.580 --> 00:14:02.240 when companies then were looking at what would 00:14:02.240 --> 00:14:06.279 be the expectations for them to receive controlled 00:14:06.279 --> 00:14:10.500 chips, say, in 2027 at a new data center, There 00:14:10.500 --> 00:14:13.080 was a question like, what is the actual regulation 00:14:13.080 --> 00:14:16.179 going to be that we have to comply with? In practice, 00:14:16.360 --> 00:14:18.840 what was really being targeted, and frankly, 00:14:18.899 --> 00:14:20.820 what they really were saying publicly they did 00:14:20.820 --> 00:14:23.500 not like, was this global rationing system. If 00:14:23.500 --> 00:14:25.340 you look at the authorizations for some countries 00:14:25.340 --> 00:14:27.399 in the Middle East, if you look at the authorizations 00:14:27.399 --> 00:14:30.179 even for the H -200 chips, which the president 00:14:30.179 --> 00:14:33.000 said he would authorize, and then BIS explained, 00:14:33.240 --> 00:14:34.919 what is that going to look like? What are the 00:14:34.919 --> 00:14:38.230 license requirements going to be? Those specific 00:14:38.230 --> 00:14:41.669 expectations really walked and talked a lot like 00:14:41.669 --> 00:14:44.230 the expectations of the Biden -era AI diffusion 00:14:44.230 --> 00:14:46.950 rule. It just changed who was going to get to 00:14:46.950 --> 00:14:49.029 be in the top level, who was going to get to 00:14:49.029 --> 00:14:50.909 the front of the line. But the cybersecurity, 00:14:51.389 --> 00:14:54.950 physical security, KYC requirements were all 00:14:54.950 --> 00:14:57.549 there. Some of them even introduced remote access 00:14:57.549 --> 00:15:00.269 requirements, but frankly were inconsistent with 00:15:00.269 --> 00:15:03.090 how BIS has historically interpreted remote access. 00:15:03.789 --> 00:15:05.929 Now another bit of legislation that's still pending 00:15:05.929 --> 00:15:08.769 is the Remote Access Security Act, which wouldn't 00:15:08.769 --> 00:15:12.889 require BIS to impose KYC obligations on companies 00:15:12.889 --> 00:15:15.629 for remote access by customers to their data 00:15:15.629 --> 00:15:18.610 centers. But it would empower BIS to require 00:15:18.610 --> 00:15:20.549 a license for that. I was talking to one of my 00:15:20.549 --> 00:15:22.149 colleagues the other day, and he correctly pointed 00:15:22.149 --> 00:15:25.210 out if BIS hasn't wanted to find that authority 00:15:25.210 --> 00:15:27.970 for the last 15 years, why would they jump on 00:15:27.970 --> 00:15:30.830 the chance to implement rules under a clear grant 00:15:30.830 --> 00:15:32.990 of authority now? That's a fair question, but 00:15:32.990 --> 00:15:35.370 who knows? We're living in this world with a 00:15:35.370 --> 00:15:38.009 lot of things coexisting at the same time that 00:15:38.009 --> 00:15:39.889 you might not think would coexist. And one of 00:15:39.889 --> 00:15:43.409 them is this aggressive push to promote American 00:15:43.409 --> 00:15:47.909 AI exports. with this still hard -running vein 00:15:47.909 --> 00:15:52.690 of serious export controls over frontier AI capabilities. 00:15:53.129 --> 00:15:56.490 On Sunday, May 31st, in the morning, the Commerce 00:15:56.490 --> 00:15:59.350 Department issued, very unusually in terms of 00:15:59.350 --> 00:16:01.929 timing, guidance regarding enforcement of license 00:16:01.929 --> 00:16:04.429 requirements for advanced computing items for 00:16:04.429 --> 00:16:07.009 entities headquartered in country group D5M account. 00:16:07.500 --> 00:16:11.019 BIS stated they wanted to clarify that a license 00:16:11.019 --> 00:16:14.759 is required under that November 2023 rule. This 00:16:14.759 --> 00:16:17.399 rule was, quote, implemented via an end -user 00:16:17.399 --> 00:16:22.080 control in Part 744 .23A3 of the U .S. Export 00:16:22.080 --> 00:16:24.299 Controls and applied to all advanced computing 00:16:24.299 --> 00:16:27.759 items. In January of 2025, the AI diffusion rule 00:16:27.759 --> 00:16:31.799 transferred the requirement into Part 742 .6 00:16:31.799 --> 00:16:34.679 as part of the new worldwide rationing system. 00:16:35.120 --> 00:16:38.539 BIS points to its announcement in May 2025 that 00:16:38.539 --> 00:16:41.139 it would not be enforcing the AI Diffusion Rule's 00:16:41.139 --> 00:16:43.659 new compliance requirements. Then it said recently 00:16:43.659 --> 00:16:45.899 BIS has received questions as to whether the 00:16:45.899 --> 00:16:47.960 pre -existing license requirement established 00:16:47.960 --> 00:16:50.620 in November 2023 is still being enforced. The 00:16:50.620 --> 00:16:53.000 answer is yes. And that's literally what they 00:16:53.000 --> 00:16:55.460 said. It's like that short and sweet. The answer 00:16:55.460 --> 00:16:59.090 is yes. Getting right to the point. Specifically, 00:16:59.350 --> 00:17:01.950 a license requirement continues to apply to all 00:17:01.950 --> 00:17:04.049 destinations outside the United States for these 00:17:04.049 --> 00:17:06.210 advanced computing items when such items are 00:17:06.210 --> 00:17:08.390 for entities headquartered in or whose ultimate 00:17:08.390 --> 00:17:11.849 parent company is headquartered in Country Group 00:17:11.849 --> 00:17:14.809 D5 or Macau. Because this license requirement 00:17:14.809 --> 00:17:18.589 predates the AI diffusion rule, BIS's non -enforcement 00:17:18.589 --> 00:17:21.230 policy with respect to the destination -based 00:17:21.230 --> 00:17:23.009 license requirements for these advanced computing 00:17:23.009 --> 00:17:26.039 items applies only to the extent such items are 00:17:26.039 --> 00:17:28.220 not for entities headquartered in or they've 00:17:28.220 --> 00:17:30.259 ultimate care companies headquartered in country 00:17:30.259 --> 00:17:34.440 group d5 or macau so the guidance continues exporters 00:17:34.440 --> 00:17:36.839 should continue to seek bis licenses for such 00:17:36.839 --> 00:17:39.359 transactions unless a license exception is available 00:17:39.359 --> 00:17:42.440 now what's been really interesting brent is although 00:17:42.440 --> 00:17:44.140 they're stating the position that the license 00:17:44.140 --> 00:17:47.420 requirement always applied and was never under 00:17:47.420 --> 00:17:49.880 a non -enforcement policy and was never intended 00:17:49.880 --> 00:17:52.410 to be rescinded There's a bit of what you and 00:17:52.410 --> 00:17:55.289 I have called in the last couple weeks a general 00:17:55.289 --> 00:17:58.349 prohibition 10 savings clause essentially that 00:17:58.349 --> 00:18:00.569 follows in the penultimate paragraph of this 00:18:00.569 --> 00:18:03.779 guidance. Bonafide operators of data centers 00:18:03.779 --> 00:18:06.019 who are otherwise engaged in activities consistent 00:18:06.019 --> 00:18:08.900 with the EAR are not required to cease the ongoing 00:18:08.900 --> 00:18:12.400 use, storage, disposal, or servicing of advanced 00:18:12.400 --> 00:18:14.339 computing items because of this guidance until 00:18:14.339 --> 00:18:16.839 further notice from BIS. Then they have a helpful 00:18:16.839 --> 00:18:18.839 reminder at the end for information regarding 00:18:18.839 --> 00:18:20.799 the submission of voluntary self -disclosures, 00:18:20.859 --> 00:18:24.900 see 764 .5 of the EAR, and for guidance on the 00:18:24.900 --> 00:18:26.900 submission of license applications, just in case 00:18:26.900 --> 00:18:30.539 you now might need one, see Part 748. So that 00:18:30.539 --> 00:18:32.839 just shows enforcement's coming on this. Taking 00:18:32.839 --> 00:18:36.339 a step back, this reflects the changes in how 00:18:36.339 --> 00:18:39.539 BIS is operating, how the export controls world 00:18:39.539 --> 00:18:42.259 is changing, where you had this whole boatload 00:18:42.259 --> 00:18:44.279 of rules that would come out. You didn't see 00:18:44.279 --> 00:18:47.099 the enforcement activity. Now we flip that around 00:18:47.099 --> 00:18:50.259 where you see a dearth of rulemaking coming out, 00:18:50.319 --> 00:18:53.680 but you're seeing enforcement. of existing laws 00:18:53.680 --> 00:18:55.140 on the books. And I think that's what's really 00:18:55.140 --> 00:18:58.380 more important. If BIS had to get this guidance 00:18:58.380 --> 00:19:01.319 out on a Sunday, that means something somewhere 00:19:01.319 --> 00:19:05.140 is a snafu. And so they needed to jump on it. 00:19:05.240 --> 00:19:06.980 I would expect you're going to see enforcement 00:19:06.980 --> 00:19:09.220 activity coming out of this. If people thought 00:19:09.220 --> 00:19:13.000 that November 2023 rule got canceled, no way. 00:19:13.200 --> 00:19:14.819 The other thing that we don't know is whether 00:19:14.819 --> 00:19:17.119 there was some shipment coming out. the next 00:19:17.119 --> 00:19:21.240 day that maybe somebody needed commercially under 00:19:21.240 --> 00:19:23.980 a contract a clear statement from them and it 00:19:23.980 --> 00:19:26.059 was important enough that they offered to provide 00:19:26.059 --> 00:19:28.500 it. It would seem to be a big ask and a big give 00:19:28.500 --> 00:19:31.539 given the public scrutiny of it and the fact 00:19:31.539 --> 00:19:34.079 that if you look at law firm guidance around 00:19:34.079 --> 00:19:37.480 the time that the May 2025 announcements were 00:19:37.480 --> 00:19:39.920 made, people were saying, be careful, the November 00:19:39.920 --> 00:19:42.720 2023 advanced computing item controls haven't 00:19:42.720 --> 00:19:45.269 changed. That's another point to make too. Stop 00:19:45.269 --> 00:19:46.869 calling this a loophole. It's not a loophole. 00:19:47.289 --> 00:19:49.690 There never was a loophole. Even for the people 00:19:49.690 --> 00:19:52.609 that are advocating stronger export controls, 00:19:52.789 --> 00:19:54.250 they're calling it a loophole. It's not a loophole. 00:19:54.430 --> 00:19:56.750 It certainly shows enforcement's coming. It's 00:19:56.750 --> 00:19:58.509 not some announcement of some sort of amnesty 00:19:58.509 --> 00:20:00.769 program, and people should be clear about that. 00:20:01.150 --> 00:20:04.009 It is telling you that if you are an operator 00:20:04.009 --> 00:20:07.890 and you're sitting in a data center and chips 00:20:07.890 --> 00:20:11.230 that should have been licensed between May 13, 00:20:11.609 --> 00:20:15.549 2025 and May 31, 2026 are being used, stored, 00:20:15.710 --> 00:20:18.170 disposed of, or serviced, it looks like they're 00:20:18.170 --> 00:20:20.250 telling you that you don't have to stop those 00:20:20.250 --> 00:20:23.519 activities, but you may... receive further notice 00:20:23.519 --> 00:20:25.819 from them if you were sitting there today trying 00:20:25.819 --> 00:20:28.519 to rely on that paragraph to just continue business 00:20:28.519 --> 00:20:31.059 as usual until you're expressly told otherwise 00:20:31.059 --> 00:20:34.319 there's a lot of language in just that paragraph 00:20:34.319 --> 00:20:37.380 that is let's say open to interpretation and 00:20:37.380 --> 00:20:39.740 the government is very likely to interpret that 00:20:39.740 --> 00:20:42.859 language differently than my industry for example 00:20:42.859 --> 00:20:46.309 who is a bona fide operator Well, at one end 00:20:46.309 --> 00:20:48.950 of the spectrum, surely a fake data center like 00:20:48.950 --> 00:20:51.190 some that have been named in recent indictments 00:20:51.190 --> 00:20:53.630 and sealed against individuals would not be bona 00:20:53.630 --> 00:20:56.170 fide, I think, in anyone's eyes. But is a bona 00:20:56.170 --> 00:20:58.730 fide operator a subsidiary of a Chinese company? 00:20:58.869 --> 00:21:01.809 Is a bona fide operator somebody who was set 00:21:01.809 --> 00:21:05.589 up specifically to sidestep the direct export 00:21:05.589 --> 00:21:08.609 controls imposed in October of 2022 and October 00:21:08.609 --> 00:21:12.529 of 2023? Bias might well say no. So there's some 00:21:12.529 --> 00:21:15.869 ambiguity there. Just moving a few words down 00:21:15.869 --> 00:21:19.069 in that savings clause, otherwise engaged in 00:21:19.069 --> 00:21:22.589 activities consistent. They may give you a pass 00:21:22.589 --> 00:21:26.430 for during that year violating the specific November 00:21:26.430 --> 00:21:29.769 2023 controls. But as you and I have pointed 00:21:29.769 --> 00:21:31.829 out, Brent, in the context of the affiliates 00:21:31.829 --> 00:21:34.490 rule and other specific focused regulations. 00:21:35.390 --> 00:21:37.630 None of these things have changed the broader 00:21:37.630 --> 00:21:40.289 anti -evasion, anti -diversion framework that 00:21:40.289 --> 00:21:42.710 has existed for years. General Prohibition 10, 00:21:42.869 --> 00:21:45.549 for example, but also the catch -all provisions, 00:21:45.750 --> 00:21:48.529 including as to supercomputers. In particular, 00:21:48.609 --> 00:21:50.869 that would apply likely to many data centers. 00:21:51.069 --> 00:21:52.750 You need to be able to show you're otherwise 00:21:52.750 --> 00:21:55.700 compliant with that. and to the extent the november 00:21:55.700 --> 00:21:59.319 2023 rule is viewed by bas as really trying to 00:21:59.319 --> 00:22:02.259 expressly close a loophole you know there's some 00:22:02.259 --> 00:22:04.660 interpretation that bs might take of those words 00:22:04.660 --> 00:22:06.740 that again would be different than industry might 00:22:06.740 --> 00:22:09.799 then you're not required to cease certain activities 00:22:09.799 --> 00:22:11.559 but when you're talking about ceasing ongoing 00:22:11.559 --> 00:22:14.440 activities i think as any business would then 00:22:14.440 --> 00:22:17.039 immediately ask, well, what does that mean? Does 00:22:17.039 --> 00:22:19.960 that mean that if I have a master services agreement 00:22:19.960 --> 00:22:22.319 or a framework agreement under which I'm doing 00:22:22.319 --> 00:22:24.539 all these different things, can I continue to 00:22:24.539 --> 00:22:27.400 take on new projects under this overall framework 00:22:27.400 --> 00:22:30.220 agreement? Can I sign a whole new framework agreement 00:22:30.220 --> 00:22:33.369 with the same customer? You can very well see, 00:22:33.410 --> 00:22:35.890 Brent, a lot of companies, again, using the language 00:22:35.890 --> 00:22:38.470 of this penultimate savings clause, having a 00:22:38.470 --> 00:22:40.849 lot of operational questions about what does 00:22:40.849 --> 00:22:43.769 this mean in terms of contracts, purchase orders, 00:22:44.089 --> 00:22:47.009 invoicing, exports. That's where BIS is hoping 00:22:47.009 --> 00:22:48.890 you'll come to them and talk to them. I think 00:22:48.890 --> 00:22:51.630 it would be very risky for anyone just to... 00:22:52.009 --> 00:22:55.210 haphazardly continue business as normal if you're 00:22:55.210 --> 00:22:57.990 in a data center if the november 2023 rules apply 00:22:57.990 --> 00:23:00.849 to you it'll be very risky to continue business 00:23:00.849 --> 00:23:03.910 as usual yeah actually looking at this that paragraph 00:23:03.910 --> 00:23:07.349 right before the very end that is an invitation 00:23:07.349 --> 00:23:12.029 for anyone who may have made a mistake and not 00:23:12.029 --> 00:23:15.690 fully realized that that november 2023 advanced 00:23:15.690 --> 00:23:18.029 computing rule was still in effect throughout 00:23:18.029 --> 00:23:21.829 all this to come to BIS first before BIS comes 00:23:21.829 --> 00:23:23.950 to them. What's important to also understand 00:23:23.950 --> 00:23:27.609 here is that what this means is that as of June 00:23:27.609 --> 00:23:31.789 1st, there's no more excuses. BIS might have 00:23:31.789 --> 00:23:33.890 issued this because they saw some litigation 00:23:33.890 --> 00:23:37.349 risk to themselves if they tried to go before 00:23:37.349 --> 00:23:39.730 an administrative law judge or someone challenged 00:23:39.730 --> 00:23:41.829 their interpretation before a district court 00:23:41.829 --> 00:23:46.000 for that period from May 13th to May 31st. But 00:23:46.000 --> 00:23:48.259 because this guidance was issued on Sunday, May 00:23:48.259 --> 00:23:51.460 31st, as of June 1st, that rule, to the extent 00:23:51.460 --> 00:23:54.019 it was ever gone, and BS is saying it was not, 00:23:54.220 --> 00:23:57.539 snaps back. Immediate impact, immediate effect. 00:23:58.079 --> 00:24:00.720 So Brent, there were some other important developments. 00:24:00.779 --> 00:24:04.440 On Friday, June 12th, in the evening, it was 00:24:04.440 --> 00:24:06.519 publicly reported that... Commerce Secretary 00:24:06.519 --> 00:24:09.039 Howard Lutnick issued an misinformed letter to 00:24:09.039 --> 00:24:12.019 one of the big AI model developers, essentially 00:24:12.019 --> 00:24:14.700 shutting down some of their latest models. Why 00:24:14.700 --> 00:24:16.519 don't you walk us through what happened and what 00:24:16.519 --> 00:24:19.339 are we thinking about what this means for, frankly, 00:24:19.440 --> 00:24:21.750 even other companies? Yeah, so this is another 00:24:21.750 --> 00:24:24.950 big shock, but it's a big change in the world 00:24:24.950 --> 00:24:27.430 of export control. So on Friday, June 12th, Commerce 00:24:27.430 --> 00:24:30.230 Secretary Lutnick issued his informed letter 00:24:30.230 --> 00:24:32.970 to this large AI model company that informed 00:24:32.970 --> 00:24:35.109 them that an export license is required for the 00:24:35.109 --> 00:24:38.250 export, re -export, transfer in -country, including 00:24:38.250 --> 00:24:41.869 deemed exports and deemed re -exports of their 00:24:41.869 --> 00:24:44.970 latest models to all destinations worldwide and 00:24:44.970 --> 00:24:47.789 to all foreign persons, as defined in the EAR. 00:24:48.069 --> 00:24:50.420 The company then took the immediate step. where 00:24:50.420 --> 00:24:52.880 they took down access to those models. There's 00:24:52.880 --> 00:24:55.420 been a lot of discussion on this in terms of 00:24:55.420 --> 00:24:59.700 how BIS is approaching some of these export controls 00:24:59.700 --> 00:25:03.480 toward implications for cloud computing, software 00:25:03.480 --> 00:25:06.259 access, and the Deem exports. But one thing I 00:25:06.259 --> 00:25:09.940 think that was interesting is that the reason 00:25:09.940 --> 00:25:11.880 given in the letter... It was, quote unquote, 00:25:12.180 --> 00:25:15.420 there is an unacceptable risk of use in or diversion 00:25:15.420 --> 00:25:18.420 to a military intelligence end use or military 00:25:18.420 --> 00:25:20.880 intelligence end user. And really what this comes 00:25:20.880 --> 00:25:24.839 down to, these AI systems are not at the future 00:25:24.839 --> 00:25:27.420 of modern warfare. They're the here and now. 00:25:27.880 --> 00:25:30.819 The key takeaways are that these geopolitical 00:25:30.819 --> 00:25:33.220 drivers, which drive national security, which 00:25:33.220 --> 00:25:34.940 drive new laws, regulations, and enforcement 00:25:34.940 --> 00:25:38.440 priorities, then really have to then push companies 00:25:38.440 --> 00:25:41.980 to maintain effective compliance programs that 00:25:41.980 --> 00:25:44.779 are flexible and forward -looking for these things. 00:25:44.839 --> 00:25:47.670 Because we're now in a situation where... these 00:25:47.670 --> 00:25:50.849 items, these advanced computing items that revolve 00:25:50.849 --> 00:25:53.890 around the rapidly advancing AI capabilities 00:25:53.890 --> 00:25:56.390 cuts right to the core of national security, 00:25:56.670 --> 00:25:57.890 not just for the United States, but everybody 00:25:57.890 --> 00:26:00.450 else out there. Your government can come in and 00:26:00.450 --> 00:26:02.849 just basically shut this down, shut down an entire 00:26:02.849 --> 00:26:05.170 business. It could be even existential for your 00:26:05.170 --> 00:26:07.450 company if you're not fully thinking through 00:26:07.450 --> 00:26:10.569 and thinking ahead on where the trends are going 00:26:10.569 --> 00:26:12.849 here. Literally, things can happen overnight 00:26:12.849 --> 00:26:15.470 and it can cut right to the company's business, 00:26:15.529 --> 00:26:17.660 the bottom line, and even... in the very existence 00:26:17.660 --> 00:26:21.640 of it. So Brent, that brings us to this episode's 00:26:21.640 --> 00:26:24.619 managing up. What is your managing up for today? 00:26:24.920 --> 00:26:26.779 Yeah, Mike, the managing up this time around 00:26:26.779 --> 00:26:30.319 is let's not ignore the gray rhinos. They are 00:26:30.319 --> 00:26:33.660 there right on the road. Let's take actions to 00:26:33.660 --> 00:26:36.500 avoid collision and protect ourselves, protect 00:26:36.500 --> 00:26:39.059 the company's officers and directors, and ultimately 00:26:39.059 --> 00:26:41.640 protect shareholder value. Well said, Brent. 00:26:41.779 --> 00:26:45.019 So not everyone listening to us might catch the 00:26:45.019 --> 00:26:47.960 gray rhino reference. It's one you've made in 00:26:47.960 --> 00:26:50.720 an earlier episode as well. This is a callback 00:26:50.720 --> 00:26:54.039 to the book The Gray Rhino, How to Recognize 00:26:54.039 --> 00:26:57.500 and Act on the Obvious Dangers We Ignore, a seminal 00:26:57.500 --> 00:27:00.119 business and crisis management book that explores 00:27:00.119 --> 00:27:03.079 why leaders and organizations frequently ignore 00:27:03.079 --> 00:27:05.720 massive, highly predictable, and high -impact 00:27:05.720 --> 00:27:09.960 threats by Michelle Wucker. We'll include, of 00:27:09.960 --> 00:27:11.799 course, a link to Michelle's book in the notes. 00:27:12.079 --> 00:27:14.720 That's correct. Another big fan of the book reportedly 00:27:14.720 --> 00:27:17.089 is Chinese leader Xi Jinping. So he's working 00:27:17.089 --> 00:27:19.089 on his gray rhinos too. We all have those gray 00:27:19.089 --> 00:27:21.230 rhinos. Let's not let them hit us. Let's not 00:27:21.230 --> 00:27:23.230 hit them. Well, Brent, well said. As always, 00:27:23.289 --> 00:27:26.789 that concludes this episode of Red Flags Rising. 00:27:27.049 --> 00:27:29.390 Thank you to everyone for listening and for all 00:27:29.390 --> 00:27:32.690 of you dealing with this whipsaw of regulatory 00:27:32.690 --> 00:27:35.710 change and guidance, providing guidance about 00:27:35.710 --> 00:27:38.789 prior guidance. Hang in there. You're not alone. 00:27:39.109 --> 00:27:40.809 There are a community of people dealing with 00:27:40.809 --> 00:27:43.539 all of the same problems. Feel free to reach 00:27:43.539 --> 00:27:45.660 out anytime if anyone wants to compare notes 00:27:45.660 --> 00:27:48.359 or just have either what used to be called a 00:27:48.359 --> 00:27:50.859 sanity check maybe five years ago and now is 00:27:50.859 --> 00:27:53.559 more of an insanity check. The whole point of 00:27:53.559 --> 00:27:56.740 this podcast has been to try to offer trade compliance 00:27:56.740 --> 00:27:58.779 professionals, whether you're in -house, whether 00:27:58.779 --> 00:28:02.680 you're an external advisor, some principled basis 00:28:02.680 --> 00:28:06.119 for restoring some sort of order and semblance 00:28:06.119 --> 00:28:09.059 of normalcy to your lives. We're all running 00:28:09.059 --> 00:28:10.920 around with their hair caught on fire. Every 00:28:10.920 --> 00:28:13.599 time there's an unexpected announcement, yes, 00:28:13.680 --> 00:28:15.180 there are going to be emergencies. There are 00:28:15.180 --> 00:28:17.779 going to be global events, world events that 00:28:17.779 --> 00:28:21.799 happen unexpectedly that do cause genuine emergencies. 00:28:22.240 --> 00:28:25.759 But there's also other ways to manage day -to 00:28:25.759 --> 00:28:28.339 -day life, to focus your efforts on your greatest 00:28:28.339 --> 00:28:31.500 risks, and then have a way to defend those decisions 00:28:31.500 --> 00:28:34.200 later. That's really the fundamental purpose 00:28:34.200 --> 00:28:36.140 of everything we've been doing with this podcast. 00:28:36.809 --> 00:28:38.829 We hope it's been helpful. We're always open 00:28:38.829 --> 00:28:41.390 to ideas and feedback. Feel free to provide them. 00:28:41.630 --> 00:28:44.490 You can contact us at our email addresses and 00:28:44.490 --> 00:28:47.450 websites in the show notes. Thanks, Mike. And 00:28:47.450 --> 00:28:48.750 everyone else out there, take care.