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UMass Amherst

Export Control Seminar

Liz RodriguezAssociate Counsel

University of MassachusettsNovember 18th, 2009

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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

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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

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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

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High Risk Disciplines

Engineering

Astronomy

Computer Science

Polymer Science & Engineering

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High Risk Disciplines

Government Contract/Subcontract with U.S. Military Agencies

Corporate Sponsors Include Defense Contractors

Foreign Corporate and Government Sponsors

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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

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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

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ITAR/EAR DIVIDE

Encryption items. The phrase encryption itemsincludes all encryption commodities, software,and technology that contain encryption featuresand are subject to the EAR. This does not includeencryption items specifically designed, developed,configured, adapted or modified for militaryapplications ( including command, control andintelligence applications) which are controlled bythe Department of State on the U.S. MunitionsList.

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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

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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 KoreaArms Embargo to China - Includes Space

MUST SECURE A LICENSE FIRST!

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Severe Penalties against Institutions and Individuals

Penalties for ITAR Violations (each, per violation):Criminal (Entities): Up to $1MCriminal (Individuals): Up to $1M / 10 years prisonCivil Fines: Up to $500K and Forfeitures

Penalties for EAR Violations (each, per violation): Criminal (Entities): Up to $1MCriminal (Individuals): Up to $1M / 20 years prisonCivil Fines: $250K

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Severe Penalties against Institutions and Individuals (cont’d)

Penalties for OFAC violations (per violation): Criminal (Entities): Up to $1MCriminal (Individuals): Up to $1M / 20 years prisonCivil 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)

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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.

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Controlled Item?

Four Step Process1. Determine ECCN Using CCL Part 774 & Check for License

Exceptions

2. Check Country Chart

3. Check General Prohibitions for End-Uses, including for EAR99 Items

4. Check EAR & OFAC Lists for End-Users, including for EAR99 Items

Items Not Specified by an ECCN are “EAR99”

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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

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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

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EAR & ITAR License Exemptions

Public Domain

Education Exclusion

Fundamental Research

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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

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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 SW 15 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

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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.

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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

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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

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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

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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.

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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.

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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.

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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?

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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!!

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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

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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

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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?

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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

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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

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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

Federal Agencies & Statutes

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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

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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

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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

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