AI Diffusion Confusion?

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.