OUTLINE

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

2. 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

3. 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

4. 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)

5. 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

6. 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)

7. 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

8. 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

9. 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

10. BASIC REGULATIONS (cont.) • 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)

11. BASIC REGULATIONS (cont.) • 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

12. BASIC REGULATIONS (cont.) • 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)

13. BASIC REGULATIONS (cont.) U.S. Munitions List: 22 CFR 121.1 I. Firearms, Close Assault Weapons and Combat Shotguns, Guns and Armament • Artillery Projections • Ammunition/ordinance • Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines • Explosives and Energetic Materials, Propellants & Incendiary Agents • Vessels of War & Special Naval Equipment

14. BASIC REGULATIONS (cont.) • Tanks & Military Vehicles • Aircraft & Associated Equipment • Military Training Equipment • Protective Personnel Equipment • Military Electronics • Fire Control, Range Finder, Optical & Guidance & Control Equipment • Auxiliary Military Equipment

15. BASIC REGULATIONS (cont.) • Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment • Spacecraft Systems & Associated Equipment • Nuclear Weapons, Design & Testing Related Items • Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated

16. BASIC REGULATIONS (cont.) XVIII. Directed Energy Weapons (lasers, pulsed power, etc.) XIX. Reserved XX. Submersible Vessels, Oceanographic & Associated Equipment XXI. Miscellaneous Articles

17. BASIC REGULATIONS (cont.) 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

18. BASIC REGULATIONS (cont.) • 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

19. BASIC REGULATIONS (cont.) Commerce Control List (EAR) Ten Specific Categories: 0. Nuclear Materials, Facilities and Equipment, and Miscellaneous • Material, Chemicals, “Microorganisms” and Toxins • Materials Processing, i.e., making plastics, metals • Electronics Development • Computer (development and programs) • Telecommunications and Information Security • Sensors and Lasers • Navigation and Avionics • Marine • Propulsion Systems, Space Vehicles and Related Equipment

20. BASIC REGULATIONS (cont.) 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)

21. BASIC REGULATIONS (cont.) • 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

22. 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

23. DIFFERENCES BETWEEN ITAR AND EAR 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

24. DIFFERENCES BETWEEN ITAR AND EAR • 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)

25. KEY ISSUES FOR UNIVERSITIES • Public Domain • “Deemed” Exports • Fundamental Research Exemption • Troublesome Clauses

26. 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

27. 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.

28. KEY ISSUES FOR UNIVERSITIES (cont.) 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

29. KEY ISSUES FOR UNIVERSITIES (cont.) 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

30. KEY ISSUES FOR UNIVERSITIES (cont.) 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

31. KEY ISSUES FOR UNIVERSITIES (cont.) 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.

32. KEY ISSUES FOR UNIVERSITIES (cont.) 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.

33. KEY ISSUES FOR UNIVERSITIES (cont.) 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.

34. KEY ISSUES FOR UNIVERSITIES (cont.) 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.

35. 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

36. 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

37. 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

38. 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

39. 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.)

40. RESEARCH APPLICATION • 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

41. RESEARCH APPLICATION • 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

42. 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),

43. GOVERNMENT AGENCIES EXPORT CONTROL AUDITS • 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);

44. GOVERNMENT AGENCIES EXPORT CONTROL AUDITS 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

45. GOVERNMENT AGENCIES EXPORT CONTROL AUDITS - 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

46. GOVERNMENT AGENCIES EXPORT CONTROL AUDITS • 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

47. GOVERNMENT AGENCIES EXPORT CONTROL AUDITS • 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.

48. GOVERNMENT AGENCIES EXPORT CONTROL AUDITS • 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;

49. GOVERNMENT AGENCIES EXPORT CONTROL AUDITS • 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

50. 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 publications b) on access c) on dissemination d) on proprietary information