UMass Amherst Export Control Seminar

1. Liz Rodriguez Associate Counsel University of Massachusetts November 18th, 2009 UMass AmherstExport Control Seminar

9. Purposes of E/C Law • Advance Foreign Policy Goals • Restrict Exports of Goods and Technology that could Lend a Military Advantage to our Adversaries • Prevent Proliferation of Weapons of Mass Destruction • Prevent Terrorism • Fulfill International Trade Obligations • Balance These Objectives Against Impact on U.S. Economy including on R&D

10. Export • Send or Take a Controlled Item Outside of the United States • Release of Controlled Item to a Foreign National WITHIN the United States Unlawful to Export a Controlled Item Without a License or under Exemption or Exception

11. Deemed Export • Release Within U.S. • Technology, information and data or software source code, or providing technology training or services (including about a machine or equipment) • Subject to EAR or ITAR • Deemed to Country of Citizenship or Residency • Foreign Nationals – excludes U.S. Permanent Resident (green card holder) and persons with refugee, asylum or other protected status • Where No License Exemption or Exception Applies

13. High Risk Disciplines • Engineering • Astronomy • Computer Science • Polymer Science & Engineering

14. High Risk Disciplines • Government Contract/Subcontract with U.S. Military Agencies • Corporate Sponsors Include Defense Contractors • Foreign Corporate and Government Sponsors

15. Key Regulations - ITAR Military Items (and Space) • Regulated by the State Department • International Traffic in Arms Regulations • U.S. Munitions List (USML) • National Security • Not only Sensitive or Classified Items MILITARY

16. Key Regulations - EAR Dual-Use Items • Regulated by the Commerce Department • Export Administration Regulations (EAR) • Commerce Control List (CCL) • ECCNs, including EAR99 • Commercial Items with possible Dual Uses • Balance foreign availability, commercial and research objectives with national security • Lists to Check http://www.bis.doc.gov/complianceandenforcement/liststocheck.htm

17. ITAR/EAR DIVIDE Encryption items. The phrase encryption items includes all encryption commodities, software, and technology that contain encryption features and are subject to the EAR. This does not include encryption items specifically designed, developed, configured, adapted or modified for military applications ( including command, control and intelligence applications) which are controlled by the Department of State on the U.S. Munitions List.

18. Key Regulations - OFAC Embargoed Countries and Sanctioned Persons • Regulated by the Treasury Department • Office of Foreign Assets Control (OFAC) • Embargoed Countries • SDN List of Sanctioned Persons • Prohibits Payments • Includes terrorists, terrorist organizations, drug traffickers

19. Embargoed/Sanctioned Countries as of November 2009 Cuba, Iran, North Korea, Sudan, Syria Others: http://www.access.gpo.gov/bis/ear/pdf/746.pdf Embargoed for Defense Articles and Services: http://www.pmddtc.state.gov/embargoed_countries/index.html Examples: Afghanistan, Burma, Belarus, Lebanon, North Korea Arms Embargo to China - Includes Space MUST SECURE A LICENSE FIRST!

20. Severe Penalties against Institutions and Individuals • Penalties for ITAR Violations (each, per violation): • Criminal (Entities): Up to $1M • Criminal (Individuals): Up to $1M / 10 years prison • Civil Fines: Up to $500K and Forfeitures • Penalties for EAR Violations (each, per violation): • Criminal (Entities): Up to $1M • Criminal (Individuals): Up to $1M / 20 years prison • Civil Fines: $250K

21. Severe Penalties against Institutions and Individuals (cont’d) • Penalties for OFAC violations (per violation): • Criminal (Entities): Up to $1M • Criminal (Individuals): Up to $1M / 20 years prison • Civil Fines: $250K • Institution also subject to administrative penalties: • Termination of export privileges (EAR and ITAR); • Suspension and/or debarment from government contracting (EAR and ITAR)

22. Behind Bars A federal jury found University of Tennessee professor emeritus J. Reece Roth guilty of 18 charges involving the Arms Export Control Act. Roth repeatedly allowed two foreign national graduate students access to information on a military project and he took data about it to China in May 2006. On July 1, 2009, a federal judge ordered Professor Roth to serve four years behind bars for his handling of restricted air force technology.

24. Controlled Item? Four Step Process • Determine ECCN Using CCL Part 774 & Check for License Exceptions • Check Country Chart • Check General Prohibitions for End-Uses, including for EAR99 Items • Check EAR & OFAC Lists for End-Users, including for EAR99 Items Items Not Specified by an ECCN are “EAR99”

25. Using the CCL • Commerce Control List Part 774 • 10 Categories of Items • Each Category Organized into 5 Groups (A) Systems, Equipment, and Components (B) Test, Inspection and Production Equipment (C) Materials (D) Software (E) Technology - information (aka technical data and technical assistance) about “development”, “production”, or “use” of a product • Each Item Designated by an ECCN e.g., 3A981 • End-User Certificate for Foreign Sponsors

26. Red Flags • Know Your Customer and End-Uses – such as research collaborators in foreign countries • Sponsor Letters – “vet” who you are sponsoring before you assist them in securing any visa • Sponsors with unusual requests, such as large batches of highly regulated and potentially hazardous materials • Requests from persons in U.S. to ship abroad, or with phone numbers or addresses outside of the US • Requests from Sponsors for materials outside their general business area

27. EAR & ITAR License Exemptions • Public Domain • Education Exclusion • Fundamental Research

28. License Exemptions Public Domain EAR/ITAR/OFAC Information that IS published AND generally accessible to the public, including: • Items Available through newsstands, bookstores, Internet, subscriptions, mail order • Libraries • Published Patent Applications and Patents • Conferences, Meetings, Seminars in the U.S. Generally Accessible to the Public • Fundamental Research PUBLIC DOMAIN = NOT SUBJECT TO EAR / ITAR

29. License Exemptions Education Exclusion EAR/ITAR • EAR does not apply to instruction in catalog courses and associated teaching laboratories of universities • DOES NOT EXCLUDE CERTAIN ENCRYPTION SW15 cfr 734.9 • ITAR does not apply to technical data (information) that only describes general scientific, mathematical or engineering principles commonly taught in universities • DOES NOT EXCLUDE TEACHING ABOUT SPECIFIC TECHNICAL DATA OR ANY MANIPULATION OF DEFENSE ARTICLE • NOTE: ITEMS IN PUBLIC DOMAIN ARE NOT SUBJECT TO ITAR

30. Fundamental Research ExclusionNSDD-189 (1985) Fundamental research means BASIC and APPLIED RESEARCH in science and engineering at Universities, 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 reason.

31. Fundamental Research Exclusion (FRE) ..no restrictions on publication of research results ..no access or dissemination controls on the results of the research (normally seen as restrictions/ approvals of foreign nationals working on project) ..does not apply to advanced encryption ..does not apply to defense article itself

32. Laboratory Service Contracts • Purchase Orders From Recharge Centers • Right to Publish? • Are you receive Materials from Sponsor? • Using Modified Equipment with Unpublished User Manuals? • Using Proprietary Technology? Unpublished Protocol? Process not covered by Patent? • No Protection Under FRE • Supplier Classification of Materials

33. Fundamental Research ExclusionEAR Guidance For dual-use items, the EAR provides guidance and greater flexibility than ITAR for FRE • Permits prepublication delay by sponsor to prevent inadvertent release of sponsor proprietary information and to file for patent protection • FRE applies to work under U.S. government grant involving EAR controlled information even if there are access and dissemination controls provided that university follows the national security controls See Dept. of Commerce FAQs: Suppl 1 Part 734

34. Proprietary Information - EAR BIS policy is that information an organization or individual withholds from publication is subject to the EAR. Trade secrets fall within the scope of EAR and may require license before release to a foreign national. If preexisting technology, subject to the EAR, is the basis of a research endeavor, it may be necessary to receive a license before involving foreign nationals in that research.

35. Proprietary Machines There are few exclusions that cover foreign national access to defense articles or company proprietary machines with unpublished use manuals. Open Source Software Software development for research purposes or intended to be open-sourced results in publicly available software, assuming encryption restrictions do not apply.

36. Nondisclosure / ConfidentialityAgreements If you enter into a confidentiality or nondisclosure agreement which restricts your ability to publish research results, the project may cease to qualify for the fundamental research exclusion Exchange of controlled items under a confidentiality or nondisclosure agreement, for example during the proposal stage, does not qualify for fundamental research exclusion.

37. Strategies • Avoid Signing Confidentiality Agreements • Avoid Accepting Company Proprietary Items or Information • Buy commercially available materials rather than Company provided materials • Refuse Publication Restrictions • Ask Sponsors to Omit Controlled Items from UMass Portion of Subcontract - DARPA • Notify OGCA of any Red Flags – Knowledge of Violation is about to occur?

38. Shipping Materials or Technology Abroad • Use 4 Step Process to Classify the Item under EAR • Is it Specifically Designed, Configured, Modified or Adapted for a Military or Space Application? If so, ITAR may apply • Any Red Flags – Do you suspect any Proliferation Activities such as activities relating to proliferation of nuclear, chemical or biological weapons, missiles or weapons of mass destruction? • Need to make an AES filing DOUBLE CHECK--HAVE YOU CHECKED THE LISTS!!

39. Automated Export System (AES) • AES electronic filing (formerly, the Shipper’s Export Declaration paper filing) is required for shipments such as: • transactions authorized under an export license, such as a shipment to an OFAC embargoed country • All commodities shipped under NLR or a license exception if the value is greater than $2,500 • Online Training EAR Training - Module 6

40. Travel Abroad • Exemptions may apply to cover export of controlled items (commodities, software, materials, information) abroad, but planning is required to identify the exemptions • Temporary licenses (TMP) may apply for items that will be carried with you and returned to U.S. • Guidelines for Securing a License are Available for Travel to Certain Countries, such as Cuba • There may be Approved Travel Companies that can assist to secure a license

41. Running a Tight Ship (ITAR) Practices to Ensure Compliance • What U.S. Origin Defense Articles (items or technical data) are developed or received by your laboratory and how do you track it? • What U.S. Origin technical data related to defense articles are developed or received by your laboratory and how do you track it?

42. Bona Fide EmployeeExclusion (ITAR) The exclusion under ITAR 125.4(b)(10) allows a bona fide University Full Time Foreign National Employee to have access to unclassified technical data, but the employee must: • Must live in U.S. • Cannot be a national from a proscribed country under ITAR 126.1 and • Must be notified in writing not to transfer data to other foreign nationals

43. Resources Commerce Department (EAR) Online Training http://www.bis.doc.gov/seminarsandtraining/seminar-training.htm Determining ECCN http://www.bis.doc.gov/licensing/exportingbasics.htm EAR Definitions http://www.access.gpo.gov/bis/ear/pdf/772.pdf

44. Federal Agencies & Statutes State Department – International Traffic in Arms Regulations (ITAR) • Applies to Defense Articles and Defense Services • ITAR Regulations http://www.pmddtc.state.gov/regulations_laws/itar_consolidated.html • Items listed on United States Munitions List (USML) http://www.pmddtc.state.gov/regulations_laws/documents/consolidated_itar/2009/Part_121.doc • Includes Space-related Technology Due to Nexus to Missile Applications Commerce Department – Export Administration Regulations (EAR) • Bureau of Industry and Security (BIS) http://www.bis.doc.gov/ • Commercial Items Determined to Have Potential for “Dual-Use” • Items listed on the Commerce Control List (CCL) and EAR99 “catch-all” Treasury Department - Office of Foreign Assets Control (OFAC) • Trade sanctions, embargoes, restrictions on certain end-users • Sanctions on terrorists, terrorist organizations, narcotics king pins Others: Nuclear Regulatory Commission; Department of Energy, Department of Homeland Security; Customs; Immigration and Naturalization Service

45. Commerce Control ListEAR Categories • 0-Nuclear Materials, Facilities & Equipment (and Miscellaneous Items) • 1-Materials, Chemicals, Microorganisms, and Toxins • 2-Materials Processing • 3-Electronics Design, Development and Production • 4-Computers • 5-Telecommunications and Information Security • 6-Sensors and Lasers • 7-Navigation and Avionics • 8-Marine • 9-Propulsion Systems, Space Vehicles and Related Equipment

46. U.S. Munitions ListITAR Categories • I - Firearms, Close Assault Weapons and Combat Shotguns • II- Guns and Armament • III- Ammunition/Ordnance • IV- Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines • V- Explosives and Energetic Materials, Propellants, Incendiary Agents and Their Constituents • VI- Vessels of War and Special Naval Equipment. • VII- Tanks and Military Vehicles • VIII-Aircraft and Associated Equipment • IX- Military Training Equipment • X- Protective Personnel Equipment

47. U.S. Munitions List(cont’d) • XI- Military Electronics • XII- Fire Control, Range Finder, Optical and Guidance and Control Equipment • XIII- Auxiliary Military Equipment • XIV-Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment • XV- Spacecraft Systems and Associated Equipment • XVI- Nuclear Weapons, Design and Testing Related Items • XVII- Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated • XVIII-Directed Energy Weapons • XIX- Reserved • XX- Submersible Vessels, Oceanographic and Associated Equipment • XXI- Miscellaneous Articles