United States Export Control Laws and University Research: Balancing National Security Requirements with Research and Academic Freedom.

United States Export Control Laws andUniversity Research:

Balancing National Security Requirements with Research and

Academic Freedom

OUTLINE

• Purpose of Regulations• Why Do Universities Have Issues?• Overview of Basic Regulations:

• International Traffic in Arms Regulations (ITAR)• Export Administration Regulations (EAR)

• Differences Between ITAR and EAR• Key Issues for Universities:

• Public Domain• Deemed Exports • Fundamental Research Exemption• Troublesome Clauses

OUTLINE (cont.)

• Research Applications• Government Agencies Export Control Audits• Determining the Need for a License• The EAR Process• License or Exception under EAR• Sanctions for Noncompliance• University/Principal Investigator Responsibilities

Information compiled from documents provided by Oklahoma State University, Arnold and Porter and Massachusetts Institute of Technology

PURPOSE OF REGULATIONS

• Implement foreign policy goals and objectives• Prevent terrorism• Restrict exports of goods and technology that could contribute

to U.S. adversaries’ military potential• Restrict exports of goods and technology that could damage the

vitality and critical interests of the U.S. economy• Prevent proliferation of weapons of mass destruction (chemical,

biological, nuclear)

WHY DO UNIVERSITIES HAVE ISSUES?

• EXPORT REGULATIONS ARE THE LAW OF THE LAND AND MUST BE FOLLOWED!

• Culture of free and open exchange and sharing• Culture of nationality blindness• Institutions generally decentralized and ill-adapted to

controls and restrictions• Regulations are complex, frequently changed• Obtaining required licenses is time consuming and

interrupts research

UNIVERSITY ISSUES (cont)

• 9/11 changed EVERYTHING - including how the government looks at export controls

• Departments of State/Commerce/DOD/Energy auditing universities for export control policies

• The intersection of cutting-edge science, technology and engineering research with foreign policy, national and homeland security

• The evolving role of the research university (global in scope, multidisciplinary, changing innovation role)

UNIVERSITY ISSUES (cont)

• Growing government perception that universities “are not serious” about export control compliance and are misusing the fundamental research exemption

• Corporate complaints that universities “aren’t playing by the same rules” with competitive implications

• GAO Report (2002) severely criticized Commerce’s oversight of “deemed exports”, especially with foreign nationals from India, Pakistan, China, Russia and Israel

OVERVIEW OF BASIC REGULATIONS

• WHAT IS AN EXPORT?– Physical shipment of goods or items– Electronic or digital transmission of goods or

items– Release of specific technical data to any

foreign national– Use by a foreign national of any covered

technology

BASIC REGULATIONS (cont.)

• Export controls require either a license or applicable exemption and cover:– Any item in U.S. trade (hardware, software, technology,

information)– U.S. items wherever located, even internationally– Have broad coverage and limited exclusion– “Deemed exports” (access to an export controlled

item/defense article/defense service by foreign national in U.S.)

– Most high-technology and military items, and associated technology


• Excludes– Items in the public domain– Artistic or non-technical publications (maps, children’s

books, sheet music, calendars, film)– Fundamental Research (basic and applied research in

science and engineering without restrictions on publications or specific access controls on foreign national participation)


• International Traffic in Arms Regulations (ITAR) – 22 CFR Parts 120 - 130)– U.S. Munitions List (USML) contains the military items,

the defense articles (including technical data which, unlike EAR, encompasses software) and services (furnishing technical services assistance, including design, engineering and use of defense articles) which are controlled

– Based primarily on whether an article or service is deemed to be military in character


– Includes space related technology and research, with increasing extension to other university research areas (e.g., nanotechnology, new materials and sensors, life sciences)

– Licensing handled by the Directorate of Defense Trade Controls (DDTC)


U.S. Munitions List: 22 CFR 121.1

I. Firearms, Close Assault Weapons and Combat

Shotguns, Guns and Armament

II. Artillery Projections

III. Ammunition/ordinance

IV. Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines

V. Explosives and Energetic Materials, Propellants & Incendiary Agents

VI. Vessels of War & Special Naval Equipment


VII. Tanks & Military VehiclesVIII. Aircraft & Associated EquipmentIX. Military Training EquipmentX. Protective Personnel EquipmentXI. Military ElectronicsXII. Fire Control, Range Finder, Optical &

Guidance & Control EquipmentXIII. Auxiliary Military Equipment


XIV. Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment

XV. Spacecraft Systems & Associated Equipment

XVI. Nuclear Weapons, Design & Testing Related Items

XVII. Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated


XVIII. Directed Energy Weapons (lasers, pulsed power, etc.)

XIX. ReservedXX. Submersible Vessels, Oceanographic &

Associated Equipment

XXI. Miscellaneous Articles


Technical Data• Information which is required for the design,

development, production, manufacture, assembly, operation, repair, testing, maintenance, or modification of defense articles; classified information related to defense articles; information covered by an invention secrecy order; software directly related to defense articles


• Export Administration Regulations (EAR)(15 CFR Parts 730-774)-The Commerce Control List (CCL) contains “dual use” commodities, (capable of both military or commercial use) technology, and software subject to the EAR; identified by an Export Classification Control Number (ECCN)

- Licensing handled by Bureau of Industry and Security (BIS), formerly Bureau of Export Administration (BXA)

• The inherent capabilities and design, not the end use, determines whether the item falls under the ITAR or the EAR


Commerce Control List (EAR)Ten Specific Categories:0. Nuclear Materials, Facilities and Equipment, and Miscellaneous1. Material, Chemicals, “Microorganisms” and Toxins2. Materials Processing, i.e., making plastics, metals3. Electronics Development4. Computer (development and programs)5. Telecommunications and Information Security6. Sensors and Lasers7. Navigation and Avionics8. Marine9. Propulsion Systems, Space Vehicles and Related Equipment


Department of Treasury Office of Foreign Assets Control (OFAC) - Economic sanctions focus on end-user or country rather than the technology and may limit transfer of technology/assistance to OFAC’s list of embargoed countries

• Prohibitions on trade with countries such as Iran, Cuba– Limitations on activities in certain areas of countries

or with certain non-state actors• OFAC prohibits payments or providing “value” to

nationals of sanctioned countries and to specified entities even if the country is not subject to sanctions (ex. Baathists in Iraq)


• Separate prohibitions under the ITAR and EAR– ITAR proscribed list/sanctions (e.g., Syria)– EAR restricts exchanges with some entities

and universities in India, Israel, Russia, etc., because of proliferation concerns

– May need EAR or ITAR license before activity approved

DIFFERENCES BETWEEN ITAR AND EAR

ITAR• covers military items (munitions/defense articles)• Includes most space related technologies due to

application to missile technology• Includes technical data related to defense articles and

services (furnishing technical assistance including design, engineering and use of defense articles)

• Very strict, not much latitude, few exemptions


EAR

• Regulates “dual use” items = 10 CCL categories of different technologies (equipment, tests, materials, software and technology)

• Regulates items designed for commercial purposes but that can have military applications (computers, pathogens, civilian aircraft, etc.)

• Covers goods, test equipment, materials and the technology (technical data and technical assistance) and software

• Covers “re-export” of foreign commodities incorporating U.S. origin controlled items outside the U.S.

• DOC easier to work with—more exemptions available


• ITAR proscribed list/sanctions (the T-7s: Cuba, Iran, Libya, North Korea, Syria, Sudan [Iraq now excluded])

• Differ on “ordinarily publishable” (EAR) vs. “published” (ITAR)

KEY ISSUES FOR UNIVERSITIES

• Public Domain• “Deemed” Exports• Fundamental Research Exemption• Troublesome Clauses

KEY ISSUES FOR UNIVERSITIES

Public Domain• Broadest exclusion under EAR and ITAR - it allows deemed

export or export without controls• Preconditions:

– No equipment or encrypted software involved– No reason to believe information will be used for

Weapons of Mass Destruction (“WMD”)– U.S. government has not imposed any access and

dissemination controls as a funding condition– No side deals

KEY ISSUES FOR UNIVERSITIES (cont.)

Public Domain (cont.)• Includes information that is published and generally available to

the public:– Through sales at bookstands and stores– Through subscriptions available without restrictions– At libraries open or available to the public– Through published patents– Through unlimited distribution at a conference, meeting

seminar, trade show, generally accessible to the public in the U.S. where notes can be taken (ITAR) - or also abroad only if EAR.


Public Domain (cont.)

– Includes technology and software that are educational and released by instruction in catalog courses and associated labs and Universities

– Generally accessible free websites


Deemed Exports

• Export controls cover transfers of goods and technology within the U.S. to a foreign national who is not a U.S. citizen or permanent resident (“green card” holder)– Applies to technology transfers under the EAR and

ITAR’s technical data and defense services– Unless the fundamental research exemption applies, a

university’s transfer of controlled technology to a non-permanent resident foreign national may be controlled and/or prohibited


Deemed Exports (cont.)– Non-immigrant visa holders must satisfy

export controls (license may be required)– Applies to research assistants, students,

visiting foreign researchers, U.S. citizens visiting a foreign country

– Does not apply to U.S. citizens or permanent residents (“green card”)

• Examples - Visual inspection, E-mails, oral exchanges of information


NATIONAL SECURITY DECISION DIRECTIVE (NSDD -189)

• Fundamental research means basic and applied research in science and engineering, the results of which ordinarily are published and shared broadly within the scientific community, as distinguished from proprietary research and from industrial development, design, production and product utilization, the results of which ordinarily are restricted for proprietary or national security reasons.


NSDD-189

• To the maximum extent possible, the products of fundamental research should remain unrestricted. Where national security requires control, the mechanism for control of information generated during federally-funded research in science, technology and engineering at colleges, universities and laboratories is classification.


University Research• Research conducted by scientists, engineers or

students at a university normally will be considered fundamental research

• University based research is not considered “fundamental research” if the university or its researchers accept (at the request, for example, of an industrial sponsor) other restrictions on publication of scientific and technical information resulting from the project or activity.


University Research (cont.)Scientific and technical information resulting from the research will nonetheless qualify as fundamental research once all such restrictions have expired or have been removed.

ITAR AND THE FUNDAMENTAL RESEARCH EXEMPTION

• Fundamental research exemption recognized, but limited, given jurisdiction over goods and technologies designed to kill

• Covers information which “is published and which is generally accessible or available to the public” through a number of mechanisms including:– Unrestricted publications

ITAR AND THE FUNDAMENTAL RESEARCH EXEMPTION

– Fundamental research in science and engineering at an accredited institution of higher learning in the U.S. where the information is ordinarily published and shared broadly in the scientific community

– Excludes information restricted for proprietary reasons or by specific government access and dissemination controls

– Excludes research abroad by Americans

EAR AND THE FUNDAMENTAL RESEARCH EXEMPTION

• Exemptions significantly broader than ITAR– Brief period for prepublication review solely for

inadvertent release of proprietary material or for patentable information does not trigger license

– Prepublication review by a corporate sponsor or other restrictions on the publication of scientific and technical information generally invalidates the exemption

– Access and dissemination controls normally do not trigger license as long as university follows national security controls imposed in the award

• Some technologies (advanced encryption) ineligible for fundamental research exemption and require licenses

TROUBLESOME CLAUSES

• Major issue for research awards—can invalidate the Fundamental Research Exemption.

• COGR/AAU reported to the White House Office of Science and Technology Policy (OSTP) that “troublesome clauses restricting publication and participation by foreign nationals in research awards continued to be a significant problem for universities” (UT OSP participated in study)

http://www.aau.edu/research/Rpt4.8.04.pdf

http://www.aau.edu/research/Rpt4.8.04.pdf

RESEARCH APPLICATION

• Software development– Software that is provided to the public for free may not

require licenses, but proprietary software of controlled technology could require licensing

– Encryption technology could require licenses or could be prohibited for transfers to certain foreign nationals/countries

– Temporary transfer of research equipment abroad• Scientific equipment (GPS, etc.) carried to certain

destinations for research may require authorization (e.g., Iran, Syria, China, etc.)


• Government awards may limit access by foreign nationals– for any foreign nationals working on the project– determining whether a restriction is a “specific access and

dissemination control” under the ITAR (which would invalidate the fundamental research exemption) particularly problematic

• Restrictions on certain foreign nationals: Agencies may preclude or limit access by foreign nationals to research based on the export control laws

– May require prior approval – Under ITAR, no license available if a foreign national is from an

embargoed country


• Corporate awards may limit access by foreign nationals– Proprietary restrictions or restrictions on publication by

corporate award may invalidate fundamental research– Includes MTAs, Non-disclosure agreements– OSP tries hard to remove restrictive clauses from

agreements!!!!• Conferences

– Potential restrictions on participants– Inability to co-sponsor with certain countries or groups (e.g.,

restrictions on co-sponsoring conference with Iranian government)

• Transfer of defense services– Potential license requirements for work with foreign nationals

GOVERNMENT AGENCIES EXPORT CONTROL AUDITS

• Major research universities audited on export control policies

• Inspector Generals of DOD, Commerce, Energy, State released Report: “Interagency Review of Foreign National Access to Export-Controlled Technology in the United States”

• Key findings– Policies regarding unclassified export-controlled technology

are inadequate– Foreign nationals are working with critical technology and

information without authorization/export licenses– Universities apply exemptions too broadly and Report

seriously questions a) public domain/publication exemption (e.g. “published or will be published” is inadequate),


– b) fundamental research exemption (definition too vague and universities applying this exemption to almost all research when a growing amount doesn’t qualify; believes standard should be the nature of the research, not whether research can be published); c) educational exemption for information released as instruction in catalog - listed courses and associated teaching labs (questions desirability and notes that controls are placed on same information if released to foreign national in private sector or on campus outside a class or associated lab);


d) Questions desirability of exemption for foreign nationals with Permanent Resident Status and urges policy requiring the individual to renounce citizenship of other country to qualify for exemption

– Focused attention on use by foreign nationals of equipment, research tools, computers, etc., and associated technology during conduct of fundamental research and concluded use of research equipment, and technology associated with it, requires license for foreign national even if research based around it qualifies for the fundamental research exemption


- a paradigm change in position with major implications for university compliance and administrative burden, as would either require export licenses for foreign nationals working with controlled equipment or restrict them from access to such equipment


• New DFAR requirements urged to be implemented to include:

• Coverage of all export-controlled technology

• Require the identification of all export-controlled technology, foreign national restrictions and licensing requirements

• Identify vulnerabilities and countermeasures to protect all export-controlled technology


• Require adoption of certain identification and work place segregation requirements for foreign nationals, provide export compliance training, undertake annual self-assessments, and require explicit statements of compliance with all applicable federal export control laws.


– Modify the DFARs in the following ways:• A required DFAR export control clause will be in all

grants and contracts, requiring the university to:– Comply with all applicable federal export

regulations and DoD guidance re: export-controlled technology and technical data;

– Incorporate an export control compliance clause in all subcontracts that involve any export-controlled technology;


–Conduct initial and periodic training re: export control compliance for all employees with access to export-controlled technology; and

–Perform periodic self-assessments to ensure compliance with all export control laws and regulations

• Bottom Line: Export control compliance for research will increase considerably

DETERMINING IF A LICENSE IS NEEDED

QUESTIONS TO ASK:1. What is the nationality of researchers

INCLUDING both Professors and Research Assistants (grad students/post-docs)?

2. Will the results be publicly available? 3. Will there be restrictions?

a) on publicationsb) on accessc) on disseminationd) on proprietary information


QUESTIONS TO ASK:

5. Will I be receiving any restricted information?

6. Destination: Is the research going overseas to a foreign company, government or individual?

7. What do the end-users intend to do with the research results?


STEPS TO TAKE:

– Classify the technology or goods involved (ITAR, EAR, OFAC, other?)

– Determine if license is needed for the technology/end user/end use

– Determine if license exemption is available (public domain, fundamental research, EAR exemption from CCL, etc.)


– Determine whether embargoes, prohibited parties, or destinations are involved

– If no exemptions, determine what kind of license is needed

• Technical Assistance Agreement• DSP-5 • Deemed Export License (EAR)• License


WEBSITES:–Embargoed Country List:

http://www.access.gpo.gov/bis/ear/pdf/746.pdf

(if embargo exists, license required)–Denied Person List:

http://www.bxa.doc.gov/DPL/thedeniallist.asp

(if prohibited user, export prohibited)–Munitions List:

http://www.access.gpo.gov/nara/cfr/waisidx_02/22cfr121_02.html (if on the munitions list, license probably required)

http://www.access.gpo.gov/bis/ear/pdf/746.pdf

http://www.bxa.doc.gov/DPL/thedeniallist.asp

http://www.access.gpo.gov./nara/cfr/waisidx_02/22cfr121_02.html


LICENSING THE TECHNOLOGY–Apply promptly, licensing can take months!!

• UT-OSP website export control links: http://www.utexas.edu/research/osp/export_control.pdf

• ITAR (State) requirements available athttp://www.pmdtc.org

• EAR (Commerce) requirements available at http://www.bis.doc.gov

• OFAC (Treasury) requirements available http://www.treas.gov/offices/eotffc/ofac/

http://www.utexas.edu/research/osp/export_control.pdf

http://www.pmdtc.org/

http://www.bis.doc.gov/

http://www.treas.gov/offices/eotffc/ofac/

THE EAR PROCESS - IF EAR APPLIES, WHAT NEXT?

•STEP 1: PI must review the Commerce Control List (Part 774) to classify the type of technology or science being developed by determining the ECCN – Export Control Classification Number•http://w3.access.gpo.gov/bis/ear/ear_data.html

http://w3.access.gpo.gov/bis/ear/ear_data.html


COMMERCE CONTROL LIST (Part 774)

•Contains lists of items subject to licensing authority of BIS•Each entry is called Export Control Classification Number (ECCN)

(Five alpha-numeric characters)

Items listed in terms of technical parameters


ECCN BREAKDOWNEXAMPLE: 3D101

•3 – Category•D – Product Group•1 – Reason for Control•0 – Relates to Reasons for Control•1 – Used for Numerical Ordering


TEN CATEGORIES IN THE CCL(0 - 4)

•0. Nuclear Materials, Facilities & Equipment & Miscellaneous•1. Materials, Chemicals, Microorganisms & Toxins•2. Materials Processing•3. Electronics Design, Development and Production•4. Computers


TEN CATEGORIES IN THE CCL(5 - 9)

•5. Telecommunications & Information Security•6. Sensors and Lasers•7. Navigation and Avionics•8. Marine (ships & vessels)•9. Propulsion Systems, Space Vehicles and Related Equipment


PRODUCT GROUPS UNDER EACH CATEGORY

•A = Equipment, Assemblies & Components•B = Test, Inspection and Production Equipment•C = Materials•D = Software•E = Technology


FINDING THE ECCN

•Review general characteristics (technical parameters) of items (research) to arrive at Category and Product Group

•Match characteristics of item with ECCN and subparagraph

•HINT: Check the CCL alphabetical index


GENERAL PROHIBITIONS, PART 736

•STEP 2: Check General Prohibitions

•Prohibit certain exports, re-exports, and other conduct, without a license, license exception or determination that no license is required•General Prohibitions 1-10 apply to items having a specific ECCN•General Prohibitions 4-10 apply to items that are EAR99 (not found on the CCL)


GENERAL PROHIBITIONS 1-3

Apply only if your item is classified under an ECCN:• Export and re-export of controlled items to listed

countries• Re-export and export from abroad of foreign-made items

incorporating more than a de minimis amount of controlled U.S. content (Parts and Components Re-exports)

• Re-export and export from abroad of the foreign-produced direct product of U.S. technology and software


GENERAL PROHIBITIONS 4-10

Apply if your item is classified under a specific ECCN or is “EAR 99” (items not found on the CCL- usually no license required)

•Engaging in actions prohibited by a denial order (check denied persons list)•Export or re-export to prohibited end-uses or end users•Export or re-export to embargoed or special destinations•Support of proliferation activities


GENERAL PROHIBITIONS,Continued

• Intransit shipments and items to be unladen from vessels or aircraft

• Violation of any order, terms, and conditions of a license or License Exception

• Proceeding with transactions with knowledge that a violation has occurred or is about to occur

If Prohibitions don’t apply, look for Exceptions

LICENSE OR EXCEPTION UNDER EAR?

• STEP 3: Try to find the exception!

• Using the CCL check reasons for control: Look at the “Reason for Control” section directly under the category heading and License Requirements.-- e.g.: Reason for control: NS, MT, AT

• Match specific controls to Country Chart column

• Look for an “X” in Commerce Country Chart (Part 738, Supp. 1)


• If an “X” is present, look under the “License Exceptions” category below the “Control(s)” section

• If no license exception available, license must be obtained (which can take months to process)


REASON FOR CONTROL• AT= Anti-Terrorism• CB= Chemical & Biological weapons• CC= Crime Control• CW=Chemical Weapons Convention• EI = Encryption Item• FC=Firearms Control• MT=Missile Technology• NP=Nuclear Proliferation• NS=National Security• RS=Regional Stability• SI=Significant Item• SS=Short Supply• UN=United Nations• XP=Computers

COMMON LICENSE EXCEPTIONS

• LVS – Limited Value Shipments–Pertains to Country Group B–Identified by “LVS: $(value)” on the CCL (e.g.: LVS: $5000)

• GBS – Country Group B–Identified by “GBS: Yes” on the CCL

• CIV – Civil End-Users–Pertains to Country Group D-1–Identified by “CIV: Yes” on the CCL–National Security controlled items only

COMMON LICENSE EXCEPTIONS

• TSR – Restricted Technology and Software –Pertains to Country Group B–Identified by “TSR: Yes” on the CCL– National Security Controlled Items only–Written Assurance – Letter can be written stating software will not be released to nationals of certain country groups (e.g. D:1 and E:2)

SANCTIONS FOR NONCOMPLIANCE

• ITAR–Criminal: Up to $1 million per violation and 10 years imprisonment–Civil: seizure and forfeiture of article, revocation of exporting privilege, up to $500,000 fine per violation

SANCTIONS FOR NONCOMPLIANCE

• EAR– Criminal: $50K to $1 million or 5 times value of export, whichever is greater, per violation, 10 years imprisonment–Civil: revocation of exporting privilege, fines $10K-$120K per violation

• OFAC–Criminal: up to $1 million per violation and 10 years imprisonment–Civil: $12 K to $55 K per violation

UNIVERSITY/PRINCIPAL INVESTIGATORRESPONSIBILITIES

• PI should review research program for potential EAR/ITAR issues - don’t wait until the contract arrives!

• Classify research - find ECCN (EAR) and/or check Munitions List (ITAR)

• If you are planning to hire a foreign national, check the regulations to see if a license may be required for your research

• At the contract stage, OSP will check for restrictive clauses that would eliminate the Fundamental Research Exemption

UNIVERSITY/PRINCIPAL INVESTIGATORRESPONSIBILITIES

• Document exemptions• Records must be kept 5 years (license valid 2

years)• Notify OSP if a license is required BEFORE

project begins--process can take 2-6 months or longer!

• Violations are civil and criminal---Fines and jail time!!!

United States Export Control Laws and University Research: Balancing National Security Requirements with Research and Academic Freedom.

Documents

export regulations

university research

interrupts research

covered technology slide

export control policies

export control compliance

restrictions regulations

nuclear slide