Export Controls 101

Kristen WormanTAMUS – Assistant General Counselkworman@tamu.edu(979) 458-6124

Sean RubinoTEES – Research Compliance Officersrubino@tamu.edu(979) 458-7652

System Research Compliance Training Series

Texas A&M System Policy

• 15.02, Export Controls• Approved September 25, 2009• Policy Statement

The Texas A&M University System, its members, employees and students must comply with all United States export control laws and regulations, including those implemented by the Department of Commerce through its Export Administration Regulations (EAR) and the Department of State through its International Traffic in Arms Regulations (ITAR), as well as those imposed by the Treasury Department through its Office of Foreign Assets Control (OFAC).

What Does Export Controls Mean?

• Export controls are U.S. government regulations that govern the export of strategic technologies, equipment, hardware, software or providing technical assistance to Foreign Persons.

• Export control laws apply to all activities –not just sponsored research projects.

Purpose of Export Control Laws

The U.S. Export Control laws and regulations are intended to serve various government objectives and interests:

• Restrict export of goods and technology with military potential that may assist our enemies

• Restrict exports of goods and technology that could hamper U.S. economic vitality

• Prevent proliferation of Weapons of Mass Destruction (WMD)

• Prevent terrorism

Why should the System be concerned?

9/11 changed many things:• Top research universities became a focal

point for U.S. government export control compliance

• There is a growing intersection of cutting-edge science, technology and engineering research with national security, foreign policy and homeland security

• Role of the research university is evolving to be global in scope and multidisciplinary

• U.S. export controls can create significant tensions with university policies of non-discrimination based on nationality and a free and open campus.

What is an Export?

Any item, technology, or software that is sent from the United States to a foreign destination:

• E-mail, phone, mail, travel, package, conference presentation, Face-to-Face, visual inspection, hand carried items – laptop, memory devices

Exports in a University Setting

These items may include:• Unpublished research findings• Funds that are transferred to restricted countries,

entities or persons• Biological specimens• Chemicals• Electronics • Computers• Sensors

What is the “deemed export” rule?

• The deemed export rule states that the release of controlled technology or software to a foreign national in the United States is deemed to be an export of such technology/software to the home country of the foreign national.– Visual inspection by foreign nationals of U.S.-origin equipment

and facilities– Oral exchanges of information– Access to a computer that possesses export controlled

information/technology• Applies to research assistants, students, and visiting scholars • Does not apply to U.S. citizens, permanent residents and

those with U.S. asylum protection

Who Are U.S. Persons/Citizens?

• U.S. Citizen or National • U.S. Lawful Permanent Resident • Person Granted Asylum • Person Granted Refugee Status

"Foreign National" includes:• Persons in the U.S. in non-immigrant status (for example,

H-1B, H-3, L-1, J-1, F-1 Practical Training, L-1) • Persons unlawfully in the U.S.

Why do I Need to Comply withExport Control Regulations?

• It’s the law.• Severe criminal and civil noncompliance penalties and sanctions for

individuals as well as institutions/corporations– Up to $1M for institutions/corporations and up to $250,000 for

individuals– Up to 10 years in prison– Termination of export privileges– Suspension and/or debarment from federal

government contracting– Loss of federal funds– Dr. J. Reece Roth, University of Tennessee – charged with 15 counts

of violating the Arms Export Control Act; sentenced to 4 years in prison

– Dr. Thomas Butler, Texas Tech – 2 years in prison for making fraudulent claims and unauthorized exports (plague bacteria)

The Good News

Most of the research conducted at universities fall under the Fundamental Research Exclusion:

“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.”NSD Directive 189

Fundamental Research Exclusion

Fundamental Research Exclusion applies to information when the research is:

1. Basic or applied2. At an institution of higher learning3. In the U.S.4. No publication or access controls

exist for the activity

Other Exclusions: Public Domain

Publicly Available (EAR) and the Public Domain (ITAR) Information Exclusion:

Applies to information that is already published, not just ordinarily published (ITAR), through specified means and found in:

• Libraries open to the public, including most university libraries• Unrestricted subscriptions, newsstands, or bookstores for a

cost not exceeding reproduction and distribution costs (including a reasonable profit)

• Published patent information (does not apply to proprietary information not publicly disclosed)

Exclusions

Fundamental Research and Publicly Available/Domain Exclusions:

If universities accept restrictions on publications and/or access to, or dissemination of research results the fundamental research/publicly available/public domain exclusions are destroyed.

• Side deals with sponsors destroy exclusions• A short (30-90 days) pre-publication review period (not

approval) for patent protection or to permit a sponsor to remove inadvertently included sponsor-proprietary information does not destroy exclusions.

Export Control License

An export license is a document issued by the U.S. government (state or commerce department depending on the type of technology) which permits the export, or temporary import of defense articles or technical data or the rendering of defense services controlled under U.S. Export laws and regulations.

Most export control issues fall under thejurisdiction of three regulatory agencies

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

Department of State – Directorate of Defense Trade Controls (DDTC) -International Traffic in Arms Regulations (ITAR)

Department of Treasury -Office of Foreign Assets Control (OFAC)

Basic Regulations Export Administration Regulations (EAR)

Regulates items designed for commercial purpose but which could have military applications (computers, civilian aircraft, pathogens) Covers both the goods and the technology

Basic Regulations – EARCommerce Control List (CCL) Categories

1. Nuclear Materials, Facilities & Equipment, and Misc.2. Materials, Chemicals, Microorganisms & Toxins3. Materials Processing (i.e., making plastics, metals)4. Electronics Development5. Computer (development and programs)6. Telecommunications and Information Security7. Sensors and Lasers8. Navigation and Avionics9. Marine10. Propulsion systems, Space Vehicles and Related

Equipment

Basic Regulations :International Traffic in Arms Regulations (ITAR)

Covers military items or defense articles Regulates goods and technology designed to kill or

defend against death in a military setting Includes space related technology because of

application to missile technology Includes technical data related to defense articles

and services

Strategic Technologies-Military or Spacecraft Applications

USML Categories (The ITAR)• 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• VIII Aircraft and Associated Equipment• IX Military Training Equipment and Training• X Protective Personnel Equipment and Shelters• XI Military Electronics• XII Fire Control, Range Finder, Optical and Guidance and Control Equipment• XIV Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated

Equipment• XV Spacecraft Systems and Associated Equipment• XX Submersible Vessels, Oceanographic and Assoc. Equipment• XXI Miscellaneous Articles (Software, components, etc.)

Basic Regulations Office of Foreign Assets Control (OFAC)

Regulates the transfer of items/services of value to embargoed nations

Imposes trade sanctions, and trade and travel embargoes aimed at controlling terrorism, drug trafficking and other illicit activities

Economic sanctions focus on end-user or country Prohibits payments or providing “value” to nationals

of sanctioned countries and certain entities

Key Issue: Equipment Use

“Use” of controlled equipment by a foreign national may require a license even if Fundamental Research exclusion is applicable.

– “Use” includes the operation, installation (including on-site installation), maintenance (checking), repair, overhaul and refurbishing of an item.

– The transfer of controlled technology or source code of a controlled item to a foreign national may require a license, NOT the normal operation or use of the item or piece of equipment used to perform fundamental research or assist in classroom instruction.

Key Issue: Travel

• Taking equipment, laptops, etc., out of the country mayrequire a license– License may be required for controlled technology loaded

on laptop even though license may not be required for laptop itself.

• OFAC has restrictions • The Departments of Commerce, State, OFAC, and other

government agencies have denied entities/persons lists

Key Issue: Shipping

Shipping equipment, technology, software, computers, goods, outside the U.S. may require a license.

Key Issue: Contract Language

• Government and Corporate grants/contracts may limit access by foreign nationals– for any foreign nationals working on the project– Remember, under the ITAR, the FRE will be lost if there are

access and dissemination controls

• 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

certain restricted countries (22 CFR 126.1)

How does Export Controls Impact System members?

System members are involved in may areas of critical proprietary technology research for industry, DoD, DoE, Homeland Security, and other federal agencies.

Increased Foreign Interaction

• System members are increasing collaborations with foreign countries and foreign nationals

• Foreign travel• Foreign scholars• Large foreign national graduate student

population involved in sensitive technology-related research

Impact on Faculty

• Factor that can extend award negotiation time – may involve institutional decisions

• Factor to be considered if/when accepting another party’s information

• Likely to require additional internal review processes (Technology Control Plan)

• Time and resources – can effect project schedules – even after the award

• PIs need to be involved early

Impact on Students

• Acceptance of publication or other restrictions not only may impact international students, it could impact American students as well!

• Publication restrictions apply to the graduate and post-doctoral students just as much as the restrictions apply to faculty members.

• This includes Theses and Dissertations, which would keep a graduate student working on a Ph.D. from being able to defend and graduate if their work depended on this research.

Red Flags

Does your research project involve:• Shipping equipment to a foreign country?• Collaborating with foreign colleagues in foreign countries?• Training foreign nationals in using equipment?• Working with a country subject to a U.S. boycott?• Is the RFP marked "Export Controlled"?• Is the sponsor requiring pre-approval rights over

publications or the participation of foreign nationals?• Is your technology sensitive and possibly militarily

applicable?

Contact Information

Sean RubinoTEES Research Compliance OfficerTEES Research Services1470 William D. Fitch ParkwayCollege Station, TX 77845-4645Phone: 979.458.7652srubino@tamu.eduhttp://tees.tamu.edu/researchcompliance

Kristen WormanAssistant General CounselOffice of General CounselThe Texas A&M University System200 Technology Way, 2079College Station, TX 77845Phone: 979.458.6124kworman@tamu.eduhttp://www.tamus.edu/offices/legal/practice/institutional-compliance/export-control-regulations-and-resources/