Office of Research Services 14/20/2007 Export Controls: What Are They and Why Do They Matter? Office of Research Services Donald T. Deyo, Esq. Director,

Office of Research Services Office of Research Services 114/20/20074/20/2007

Export Controls: What Are Export Controls: What Are They and Why Do They They and Why Do They

Matter?Matter?

Office of Research ServicesOffice of Research Services

Donald T. Deyo, Esq.Donald T. Deyo, Esq.Director, Corporate ContractsDirector, Corporate Contracts

Clifford K. Weber, Esq.Clifford K. Weber, Esq.Associate Director, Corporate ContractsAssociate Director, Corporate Contracts

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Export Controls – Goals for TodayExport Controls – Goals for Today

• Broad understanding of export controls – what Broad understanding of export controls – what they arethey are

• Why export controls are importantWhy export controls are important

• What questions you need to ask or issues you What questions you need to ask or issues you need to think about in completing transmittal need to think about in completing transmittal forms for new projectsforms for new projects

• Whom to ask for advice in ORSWhom to ask for advice in ORS

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Export Controls – What?Export Controls – What?• Regulations promulgated by various federal agencies under Regulations promulgated by various federal agencies under

federal law to restrict, limit, curtail, or prevent exports of federal law to restrict, limit, curtail, or prevent exports of certain items to certain countries or individualscertain items to certain countries or individuals

– Export Administration RegulationsExport Administration Regulations (EAR) Department of (EAR) Department of Commerce, Bureau of Industry and Security (BIS)Commerce, Bureau of Industry and Security (BIS)

– International Traffic in Arms RegulationsInternational Traffic in Arms Regulations (ITAR) (ITAR)

Department of State, Directorate of Defense Trade Control Department of State, Directorate of Defense Trade Control (DDTC)(DDTC)

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Export Controls –Other Departments Export Controls –Other Departments and Agenciesand Agencies

• U.S. Treasury, Office of Foreign Assets Control U.S. Treasury, Office of Foreign Assets Control (OFAC) – Administers and enforces economic and (OFAC) – Administers and enforces economic and trade sanctions and the Specially Designated trade sanctions and the Specially Designated Nationals (SDN) and Blocked Persons List, including Nationals (SDN) and Blocked Persons List, including transactions and transfers of assets transactions and transfers of assets

• Nuclear Regulatory Commission, Office of Nuclear Regulatory Commission, Office of International Programs – administers regulations International Programs – administers regulations related to nuclear materials related to nuclear materials

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Export Controls – Other Agencies and Export Controls – Other Agencies and DepartmentsDepartments

• DEA – controlled substances and chemicalsDEA – controlled substances and chemicals

• EPA - wasteEPA - waste

• FDA – drugs and medical devicesFDA – drugs and medical devices

• Energy – nuclear and fossil fuelsEnergy – nuclear and fossil fuels

• Interior - wildlifeInterior - wildlife

• Defense – defense technologiesDefense – defense technologies

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• Ancient – blockades- surrounding the enemy; prevent Ancient – blockades- surrounding the enemy; prevent acquisition of aid, materials, support, and necessities acquisition of aid, materials, support, and necessities to sustain the enemyto sustain the enemy

• American – Revolution; 1775American – Revolution; 1775

• Modern – WWI and WWIIModern – WWI and WWII

• Today - Prevent acquisition of WMD; curtail and Today - Prevent acquisition of WMD; curtail and prevent export of technologies potentially useful to prevent export of technologies potentially useful to military adversaries and terroristsmilitary adversaries and terrorists

Export Controls – HistoryExport Controls – History

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Export Controls – Why Do They Export Controls – Why Do They MatterMatter

• War? Military Technology? Manufacturer?War? Military Technology? Manufacturer?• Significant developments in technology occur Significant developments in technology occur

everyday in Universitieseveryday in Universities• Technologies increasingly may have dual uses Technologies increasingly may have dual uses

– example - chemicals and pesticides– example - chemicals and pesticides• Where is access to technology easier and more Where is access to technology easier and more

open– through corporations, through military, open– through corporations, through military, or through universities?or through universities?

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Export Controls – Why Do They Export Controls – Why Do They MatterMatter (2) (2)

• Black marketBlack market

• WMD Programs – university trained scientists WMD Programs – university trained scientists and engineersand engineers

• Post 9/11 WorldPost 9/11 World

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Export Controls – Why Do They Export Controls – Why Do They Matter (3)Matter (3)

• Regulatory Environment Regulatory Environment • Federal fundingFederal funding• Health Care and Medical CentersHealth Care and Medical Centers• Clinical researchClinical research• Bayh-DoleBayh-Dole• Grant managementGrant management• Cutting edge research and technologies of concernCutting edge research and technologies of concern• Globalization of researchGlobalization of research• Balance of open, free society with technology access and Balance of open, free society with technology access and

proliferation proliferation

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Export Controls – Why Do They Export Controls – Why Do They Matter (4)Matter (4)

– Advanced technologies which are increasingly developed Advanced technologies which are increasingly developed at Universities subject of export controlsat Universities subject of export controls

– Export Controls applicable to research fields (not Export Controls applicable to research fields (not traditionally associated with the “military”) traditionally associated with the “military”)

1)1) life sciences (biological agents and toxins)life sciences (biological agents and toxins)2)2) Materials science and engineeringMaterials science and engineering3)3) Computer science (encryption technology)Computer science (encryption technology)– Increased “globalization” of University ResearchIncreased “globalization” of University Research– University Research dependency on Federal funding with University Research dependency on Federal funding with

increased compliance requirementsincreased compliance requirements

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Export Controls – What MattersExport Controls – What Matters

• TechnologiesTechnologies

• PeoplePeople

• CountriesCountries

• Publication – freedom to publishPublication – freedom to publish

• Our own campus and laboratoriesOur own campus and laboratories

• *** *** Law Changes and EvolvesLaw Changes and Evolves – example 20 – example 20 years ago versus nowyears ago versus now

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Export Controls – U.S. Department Export Controls – U.S. Department of Commerceof Commerce

• Enforced by the Department of Commerce Enforced by the Department of Commerce through its Export Administration Regulations through its Export Administration Regulations (EAR). List of controlled technologies is (EAR). List of controlled technologies is found in 15 CFR 774, Supplement I, and found in 15 CFR 774, Supplement I, and referred to as the Commodity Control List referred to as the Commodity Control List (CCL). Technologies with both commercial (CCL). Technologies with both commercial and military applications (chemicals, satellites, and military applications (chemicals, satellites, software, etc.)software, etc.)

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Export Controls – U.S. State DepartmentExport Controls – U.S. State Department

• ITARITAR: Enforced by the Department of State under : Enforced by the Department of State under the International Traffic in Arms Regulations (ITAR). the International Traffic in Arms Regulations (ITAR). For a list of controlled technologies see 22 CFR For a list of controlled technologies see 22 CFR 121.1. The controlled technologies are defense 121.1. The controlled technologies are defense articles and related data and listed as the Munitions articles and related data and listed as the Munitions Control List (MCL). Examples would be explosives, Control List (MCL). Examples would be explosives, rocket systems, etc. rocket systems, etc.

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Export Controls – Treasury Export Controls – Treasury DepartmentDepartment

• U.S. Treasury, Office of Foreign Assets Control U.S. Treasury, Office of Foreign Assets Control (OFAC) – Administers and enforces economic and (OFAC) – Administers and enforces economic and trade sanctions and the Specially Designated trade sanctions and the Specially Designated Nationals (SDN) and Blocked Persons List, including Nationals (SDN) and Blocked Persons List, including transactions and transfers of assets transactions and transfers of assets

• List of countries changes – examples – Burma, Cuba, List of countries changes – examples – Burma, Cuba, Iran, Iraq, North Korea, Sudan, ZimbabweIran, Iraq, North Korea, Sudan, Zimbabwe

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Export Controls - Related LawsExport Controls - Related Laws

- USA Patriot Act of 2001- USA Patriot Act of 2001

- Public Health Security and Bioterrorism Preparedness and Response Act of - Public Health Security and Bioterrorism Preparedness and Response Act of 2002 2002

• Restrictions on possession, use and access to biological agents, toxins and Restrictions on possession, use and access to biological agents, toxins and delivery systemsdelivery systems

• Persons defined as “restricted” cannot work with covered materials. Persons defined as “restricted” cannot work with covered materials. Information on these matters and how researchers at Penn need to comply Information on these matters and how researchers at Penn need to comply is available from Penn’s Office of Environmental Health & Radiation is available from Penn’s Office of Environmental Health & Radiation Safety (EHRS)Safety (EHRS)

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Export Controls – So What?Export Controls – So What?

• Foreign researchers and students in the U.S. (including at Penn!) or anyone outside the U.S. who participates in such research

• The sharing of research results with persons who are not U.S. citizens or permanent residents

• “Export” is defined very broadly as any oral, written, electronic or visual disclosure, shipment, transfer or transmission of a commodity, technology or software/codes. Note: Server access could be an export!

How do these laws impact research at Penn?

Export Control Laws are laws which prohibit the unlicensed “export” of certain controlled technologies for reasons related to national security, treaty compliance, and trade agreement. If Penn research involves these controlled technologies, Penn may be required to get U.S. government approvals before allowing:

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Export Control Laws and Export Control Laws and Research at PennResearch at Penn

• Export Controls present a challenge to the Export Controls present a challenge to the Penn research community Penn research community

• Export Controls are the law of the landExport Controls are the law of the land

• Failure to comply carries heavy fines and Failure to comply carries heavy fines and possible imprisonment possible imprisonment

• Compliance is not easy because export Compliance is not easy because export controls are complicated and confusingcontrols are complicated and confusing

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Export Control Laws and Export Control Laws and Research at PennResearch at Penn

General Rule: General Rule: Penn, its faculty, and employees Penn, its faculty, and employees may not export to some entities certain may not export to some entities certain materials and information without a license materials and information without a license from the U.S. Government, unless an exception from the U.S. Government, unless an exception appliesapplies

Fortunately, the majority of research at Penn Fortunately, the majority of research at Penn will be covered under an exception to the ECL will be covered under an exception to the ECL requirements. What are the exceptions?requirements. What are the exceptions?

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Export Control Laws and Export Control Laws and Research at PennResearch at Penn

EXCEPTIONS TO Export Controls::

PUBLIC DOMAIN: publicly available information that:• is already published or will be published• results from “fundamental research”• is educational in nature (instructional courses and labs)• included in certain patent applications

FUNDAMENTAL RESEARCH: exception that will cover most research at Penn.

• Basic or applied research in science or engineering• at an accredited institution of higher learning in the U.S. • resulting information is ordinarily published and shared broadly in the scientific

community

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Export Control Laws and Export Control Laws and Research at PennResearch at Penn

BUT, University research BUT, University research will not qualifywill not qualify as fundamental as fundamental research if the university accepts research if the university accepts anyany restrictions on restrictions on publication of the information resulting from the research, publication of the information resulting from the research, other than:other than:

1. limited prepublication reviews by research sponsors to 1. limited prepublication reviews by research sponsors to prevent inadvertent divulging of proprietary information prevent inadvertent divulging of proprietary information provided to the researcher by the sponsorprovided to the researcher by the sponsor

2. limited review to ensure publication will not compromise 2. limited review to ensure publication will not compromise patent rights of the sponsorpatent rights of the sponsor

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• Contracts and Grants Impacted by Export Controls– Important Federal funding opportunities (Homeland

Security, Cybersecurity) directly linked to Export Controls

– Terms and conditions restricting access by foreign nationals or removing research from fundamental research exemption

– Contract requirements form Corporate Sponsors on Export Controls

– Tech Transfer Issues: disclosure/licensing of technologies to foreign nationals and material transfer agreements

Export Control Laws and Export Control Laws and Research at PennResearch at Penn

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Export Control Laws and Export Control Laws and Research at PennResearch at Penn

• Summary: Summary: – Review of what are the issuesReview of what are the issues

– ORS Web site ORS Web site

– Call usCall us• Don Deyo – (215) 573-9970Don Deyo – (215) 573-9970

• Cliff Weber – (215) 898-9984Cliff Weber – (215) 898-9984