GOVERNMENT CONTROL GOVERNMENT CONTROL OF EXPORTED OF EXPORTED

TECHNOLOGY OR ITEMSTECHNOLOGY OR ITEMS

Prepared November 2005Prepared November 2005

OVERVIEW –OVERVIEW –Why do I need to Why do I need to pay attentionpay attention??

The majority of U of R’s teaching and research activities fall The majority of U of R’s teaching and research activities fall within an exclusion to the export control laws, BUT you need to within an exclusion to the export control laws, BUT you need to know how the laws and exclusions apply to your teaching or know how the laws and exclusions apply to your teaching or research so that you know when a change in circumstances can research so that you know when a change in circumstances can raise an issue.raise an issue.

Determining whether a certain project or item falls within export Determining whether a certain project or item falls within export control regulation is control regulation is fact-specificfact-specific and can change based only on and can change based only on the item or project you’re involved with.the item or project you’re involved with.

If you needed a license and failed to get one, you could be If you needed a license and failed to get one, you could be subject to individual civil and criminal penalties. subject to individual civil and criminal penalties.

The goal of the training is to sufficiently educate you so that you The goal of the training is to sufficiently educate you so that you know when to raise a “red flag” . know when to raise a “red flag” .

as to a possible export control issue and consult with the U of R as to a possible export control issue and consult with the U of R experts.experts.

When is there an “export”When is there an “export” A transfer of a specific A transfer of a specific item or piece of informationitem or piece of information to to

someone located outside of the United States – even if that someone located outside of the United States – even if that person is a U.S. citizen.person is a U.S. citizen.

The transfer of information to certain foreign nationals The transfer of information to certain foreign nationals inside the U.S. (referred to as a “inside the U.S. (referred to as a “deemed exportdeemed export”).”).

Any transaction with or the provision of services to anyone Any transaction with or the provision of services to anyone residing in certain foreign countries or individuals who are residing in certain foreign countries or individuals who are on embargo lists.on embargo lists.

Think about all the Think about all the modern methods of “transfer”modern methods of “transfer” – e-mails, – e-mails, websites, conferences, telephones and cell phones, visual websites, conferences, telephones and cell phones, visual observation (e.g. a tour through a lab).observation (e.g. a tour through a lab).

What type of export is potentially What type of export is potentially controlled/regulated – controlled/regulated –

EAREAR Export Administration Regulations Export Administration Regulations (EAR)(EAR) regulates the regulates the

export of “dual use” information and items. export of “dual use” information and items.

Dual use – legitimately commercial AND potential military Dual use – legitimately commercial AND potential military applications. applications.

The general goals of Commerce Dept.’s EAR is to curtail the The general goals of Commerce Dept.’s EAR is to curtail the export of technologies that assist the military potential of export of technologies that assist the military potential of adversaries, to comply with trade agreements (e.g. adversaries, to comply with trade agreements (e.g. chemical weapons convention) and to ensure that US trade chemical weapons convention) and to ensure that US trade is protected (prevent industrial espionage), and to prevent is protected (prevent industrial espionage), and to prevent the development of nuclear, chemical and biological the development of nuclear, chemical and biological weapons.weapons.

What type of export is potentially What type of export is potentially controlled/regulated -EARcontrolled/regulated -EAR

List of controlled technologies are found on the List of controlled technologies are found on the Commodity Commodity Control List (CCL)Control List (CCL) which is available on the ORPA website. which is available on the ORPA website.

Examples – batteries and fuel cells, cameras and optics Examples – batteries and fuel cells, cameras and optics

equipment, artificial intelligence software, certain computer equipment, artificial intelligence software, certain computer equipment, items using laser technology, certain chemicals, equipment, items using laser technology, certain chemicals, microorganisms and toxinsmicroorganisms and toxins

The list depends on interplay of type of item, reason for The list depends on interplay of type of item, reason for export control and destination country. This list is large and export control and destination country. This list is large and a bit cumbersome to manage. There is an index that helps a bit cumbersome to manage. There is an index that helps you navigate to the right place within the CCL by identifying you navigate to the right place within the CCL by identifying the “ECCN” (export control classification number). the “ECCN” (export control classification number).

What type of export is potentially What type of export is potentially controlled/regulated - ITARcontrolled/regulated - ITAR

The State Department administers International Traffic in The State Department administers International Traffic in Arms Regulations (Arms Regulations (ITARITAR).).

Regulates export of defense services, defense items and Regulates export of defense services, defense items and related technical data or information.related technical data or information.

Focus is entirely on national security and not on trade Focus is entirely on national security and not on trade protection.protection.

What type of export is potentially What type of export is potentially controlled/regulated - ITARcontrolled/regulated - ITAR

List of items or information/data about the items listed on List of items or information/data about the items listed on the the U.S. Munitions ListU.S. Munitions List (USML)(USML) which is available through which is available through the ORPA website. This list is directly related to the ORPA website. This list is directly related to technologies with obvious military application and use and technologies with obvious military application and use and is easier to navigate through.is easier to navigate through.

Examples – explosives, rocket systems, military training Examples – explosives, rocket systems, military training equipment, spacecraft and satellite equipment (even if not equipment, spacecraft and satellite equipment (even if not for military use), toxicological agents and equipment, for military use), toxicological agents and equipment, biological agents, radiological equipment including nuclear biological agents, radiological equipment including nuclear radiation detection and measurement devices, defense radiation detection and measurement devices, defense services.services.

What type of export is potentially What type of export is potentially controlled/regulated - OFACcontrolled/regulated - OFAC

Office of Financial Asset Control Office of Financial Asset Control (OFAC)(OFAC) within the within the Department of Treasury enforces economic and trade Department of Treasury enforces economic and trade sanctions against targeted foreign countries and individuals sanctions against targeted foreign countries and individuals (e.g. terrorists, drug traffickers, weapons dealers).(e.g. terrorists, drug traffickers, weapons dealers).

Regulations prohibit transactions with certain countries and Regulations prohibit transactions with certain countries and individuals who are viewed to be “our enemy”. Goal is to individuals who are viewed to be “our enemy”. Goal is to prevent $$ from getting to people/countries that are prevent $$ from getting to people/countries that are embargoed.embargoed.

The prohibitions here are much broader and include The prohibitions here are much broader and include providing any service, no matter how helpful, to people providing any service, no matter how helpful, to people within the targeted countries or the targeted individuals. within the targeted countries or the targeted individuals. Common exemptions DO NOT APPLY.Common exemptions DO NOT APPLY.

What type of export is potentially What type of export is potentially controlled/regulated - OFACcontrolled/regulated - OFAC

OFAC’s List of Sanctioned Countries and Specially OFAC’s List of Sanctioned Countries and Specially Designated Individuals is available through ORPA’s website.Designated Individuals is available through ORPA’s website.

As of November, 2005, the following countries have As of November, 2005, the following countries have sanctions imposed by the U.S. that restrict or forbid US sanctions imposed by the U.S. that restrict or forbid US citizens from rendering service to them: citizens from rendering service to them: Balkans, Burma, Balkans, Burma, Cuba, Iran, Iraq, Liberia, Libya, North Korea, Sudan, Syria Cuba, Iran, Iraq, Liberia, Libya, North Korea, Sudan, Syria and Zimbabwe.and Zimbabwe.

Sanctions/restrictions vary by country. OFAC list is Sanctions/restrictions vary by country. OFAC list is organized by country, however, so it is relatively easy to organized by country, however, so it is relatively easy to discern what restrictions apply to dealings with people or discern what restrictions apply to dealings with people or organizations in those countries.organizations in those countries.

Alphabetical list of all named individuals that are on OFAC’s Alphabetical list of all named individuals that are on OFAC’s specially designated individuals list.specially designated individuals list.

So what does this mean?So what does this mean? If U of R research or teaching activities involve these If U of R research or teaching activities involve these

export-controlled areas, U of R may be required to get a export-controlled areas, U of R may be required to get a license from the government before “exporting” the license from the government before “exporting” the controlled information or item.controlled information or item.

Failure to comply carries heavy Failure to comply carries heavy finesfines, possible , possible imprisonmentimprisonment and potential loss of research money. and potential loss of research money.

Federal Government has increased enforcement and Federal Government has increased enforcement and investigation of universities over the past few years investigation of universities over the past few years because: (i) 9/11/2001 occurred, (ii) increased globalization because: (i) 9/11/2001 occurred, (ii) increased globalization of university research activities and foreign students on US of university research activities and foreign students on US campuses, (iii) based on government audits, some campuses, (iii) based on government audits, some research universities did not have adequate measure in research universities did not have adequate measure in place to ensure compliance with export control regulations.place to ensure compliance with export control regulations.

To the Rescue . . . To the Rescue . . .

Fundamental Research ExclusionFundamental Research Exclusion• EAR definition - Basic or applied EAR definition - Basic or applied

research in science and engineering at research in science and engineering at an accredited institution of higher an accredited institution of higher education in the U.S. where the resulting education in the U.S. where the resulting information is ordinarily published and information is ordinarily published and shared broadly within the scientific shared broadly within the scientific community. (Does not apply to community. (Does not apply to encryption software)encryption software)

To the Rescue . . .To the Rescue . . .

Fundamental Research ExclusionFundamental Research Exclusion- ITAR – exclusion applies to information which is - ITAR – exclusion applies to information which is in the “public domain” “Public domain means in the “public domain” “Public domain means information which is published and which is information which is published and which is generally accessible or available to the public generally accessible or available to the public through fundamental research in science and through fundamental research in science and engineering at accredited institutions of higher engineering at accredited institutions of higher learning in the U.S. where the resulting learning in the U.S. where the resulting information is ordinarily published and shared information is ordinarily published and shared broadly within the scientific community.broadly within the scientific community.

EAR/ITAR exclusions comparedEAR/ITAR exclusions compared

EAR – applies to information which EAR – applies to information which is or will beis or will be publicly publicly available.available.

ITAR- applies to information which ITAR- applies to information which isis published and which is published and which is generally available to the public through fundamental generally available to the public through fundamental research.research.

Ambiguity, then, for ITAR controlled info during the course Ambiguity, then, for ITAR controlled info during the course of research until it is published.of research until it is published.

When will the Fundamental Research When will the Fundamental Research Exclusion Fail to Rescue me?Exclusion Fail to Rescue me?

Applies only to transfer of information within the US, not to Applies only to transfer of information within the US, not to physical items or other defense or OFAC services.physical items or other defense or OFAC services.

Actual and intended openness of research results determines Actual and intended openness of research results determines whether research is fundamental.whether research is fundamental.

Apart from Export Control Laws the policy at the University of Apart from Export Control Laws the policy at the University of Rochester is to maintain a teaching and research environment Rochester is to maintain a teaching and research environment that fosters the creation and dissemination of new knowledge. that fosters the creation and dissemination of new knowledge. This requires open research that permits the free flow of This requires open research that permits the free flow of ideas.ideas.

If the research carries restrictions onIf the research carries restrictions on• access,access,• disclosure ordisclosure or• participationparticipation• IT IS NOT FUNDAMENTAL RESEARCHIT IS NOT FUNDAMENTAL RESEARCH

Examples of RestrictionsExamples of Restrictions Contract Contract prohibits foreign nationalsprohibits foreign nationals from working on the from working on the

project,project, Contract requires Contract requires “screening” of personnel“screening” of personnel to be working to be working

on the project on the project by contract sponsor,by contract sponsor, Research results will be published only at a symposium or Research results will be published only at a symposium or

conference where there are conference where there are attendance restrictionsattendance restrictions that that could exclude foreign nationals from attending,could exclude foreign nationals from attending,

Any language in the research proposal that Any language in the research proposal that labelslabels it as it as export-controlled, classified, proprietary or secretexport-controlled, classified, proprietary or secret. . The The recent trend is for government agencies to add this type of recent trend is for government agencies to add this type of restrictive language in their grant qualifications,restrictive language in their grant qualifications,

Any language that restricts publication to certain Any language that restricts publication to certain periodicals or media that charge more than necessary to periodicals or media that charge more than necessary to cover their operating costs,cover their operating costs,

Don’t forget similar restrictions in Don’t forget similar restrictions in Non-Disclosure/Confidentiality AgreementsNon-Disclosure/Confidentiality Agreements and Material and Material Transfer Agreements.Transfer Agreements.

Examples of RestrictionsExamples of Restrictions ANY restriction on the publicationANY restriction on the publication of research results – of research results –

includes substantial time delays, reviews and approvals – includes substantial time delays, reviews and approvals – whether imposed by not-for-profit, corporate or government whether imposed by not-for-profit, corporate or government sponsors.sponsors.

• EXCEPTIONEXCEPTION EAR specifically allows universities to accept EAR specifically allows universities to accept temporary publication delay for prepublication review temporary publication delay for prepublication review only to review inadvertent disclosure of proprietary only to review inadvertent disclosure of proprietary information or to ensure that publication would not information or to ensure that publication would not compromise patent rights.compromise patent rights.

• ITAR has no similar language – so ambiguity as to ITAR has no similar language – so ambiguity as to whether this limited prepublication review is acceptable whether this limited prepublication review is acceptable to ITAR-controlled information.to ITAR-controlled information.

Accepting a Third Party’s Accepting a Third Party’s Controlled Items or DataControlled Items or Data

Fundamental research exclusion does not apply to Fundamental research exclusion does not apply to proprietary informationproprietary information that was given to the University by that was given to the University by the sponsor since it will not be part of the results of your the sponsor since it will not be part of the results of your fundamental research.fundamental research.

Need to make sure the proprietary information is Need to make sure the proprietary information is not at the not at the heart heart

of your researchof your research project and is sufficiently tangential so project and is sufficiently tangential so that it will be possible to exclude that information in your that it will be possible to exclude that information in your publication of your research results.publication of your research results.

Education ExclusionEducation Exclusion

Education ExclusionEducation Exclusion

• EAR – exclusion for “educational information” released EAR – exclusion for “educational information” released by instruction in catalog courses and associated by instruction in catalog courses and associated teaching laboratories.teaching laboratories.

• ITAR – exclusion for information (but not technology and ITAR – exclusion for information (but not technology and materials) which is “general scientific, mathematical or materials) which is “general scientific, mathematical or engineering principles commonly taught in universities.engineering principles commonly taught in universities.

Equipment Use Exclusion –Equipment Use Exclusion –The The ControversyControversy

There are no express exclusions that allow foreign persons There are no express exclusions that allow foreign persons to receive any technology or data on the to receive any technology or data on the “use” of export-“use” of export-controlled equipment on University campusescontrolled equipment on University campuses without a without a license.license.

The University maintains that if export-controlled The University maintains that if export-controlled equipment is used in most research, the technology or data equipment is used in most research, the technology or data connected with the use of the equipment would be covered connected with the use of the equipment would be covered by the Fundamental Research exclusion and/or the by the Fundamental Research exclusion and/or the Education exclusion.Education exclusion.

In a report issued by the Commerce Inspector General In a report issued by the Commerce Inspector General questioned this interpretation and suggested that a questioned this interpretation and suggested that a deemed export license was needed. The same report was deemed export license was needed. The same report was generally critical of the educational exclusions from export generally critical of the educational exclusions from export control regulations that allow universities to teach control regulations that allow universities to teach foreigners without obtaining licenses.foreigners without obtaining licenses.

Universities are working with the government to ensure Universities are working with the government to ensure that they can proceed with fundamental research without that they can proceed with fundamental research without restrictions.restrictions.

Red FlagsRed Flags Contracts or grants which require a shipment of item(s) to a Contracts or grants which require a shipment of item(s) to a

foreign country,foreign country,

Contracts or grants which involve collaboration with foreign Contracts or grants which involve collaboration with foreign nationals,nationals,

ANYTHING you’re doing that deals with an OFAC embargoed ANYTHING you’re doing that deals with an OFAC embargoed country,country,

Any reference in a contract or grant to export-controlled Any reference in a contract or grant to export-controlled information or technology,information or technology,

Any term in a contract that restricts publication research Any term in a contract that restricts publication research results.results.

Red FlagsRed Flags If one of these red flags are present, IT IS YOUR If one of these red flags are present, IT IS YOUR

RESPONSIBILITY TO CHECK THE CCL OR USML TO SEE IF RESPONSIBILITY TO CHECK THE CCL OR USML TO SEE IF THE RESEARCH PROJECT INVOLVES EXPORT-CONTROLLED THE RESEARCH PROJECT INVOLVES EXPORT-CONTROLLED INFORMATION, and to check to ensure you are not dealing INFORMATION, and to check to ensure you are not dealing with people or entities in an embargoed country. Links to with people or entities in an embargoed country. Links to the CCL, USML and OFAC Embargoed Countries list are the CCL, USML and OFAC Embargoed Countries list are posted on the ORPA website.posted on the ORPA website.

If you have trouble interpreting these lists, please call ORPA If you have trouble interpreting these lists, please call ORPA or the General Counsel’s Office and someone will assist or the General Counsel’s Office and someone will assist you.you.

We understand that export control laws and regulations are We understand that export control laws and regulations are complicated, but compliance with them is very important.complicated, but compliance with them is very important.

Big Red FlagBig Red Flag

Researchers may be held individually liable for Researchers may be held individually liable for violating export control laws or regulations in the violating export control laws or regulations in the conduct of their research.conduct of their research.

Penalties include very high fines and Penalties include very high fines and imprisonment.imprisonment.

Shipment of Physical ItemsShipment of Physical Items

The exclusions mentioned The exclusions mentioned do not applydo not apply to physical items to physical items (e.g. Fundamental Research exclusion).(e.g. Fundamental Research exclusion).

License may not be required if it falls within a more detailed License may not be required if it falls within a more detailed list of No-License-Required rules (e.g. de minimus list of No-License-Required rules (e.g. de minimus exceptions, temporary export).exceptions, temporary export).

There are a fair number of exceptions from licensing under There are a fair number of exceptions from licensing under EAR – almost none under ITAR regulations.EAR – almost none under ITAR regulations.

In general, OFAC rules trump all other export controls.In general, OFAC rules trump all other export controls.

License ConsiderationsLicense Considerations

Heightened scrutiny for shipments to certain countries.Heightened scrutiny for shipments to certain countries. Countries of Concern:Countries of Concern:

• EAR – China, former Soviet Union, Middle East countries, EAR – China, former Soviet Union, Middle East countries, India, Pakistan, Eastern Europe, North Korea, Vietnam India, Pakistan, Eastern Europe, North Korea, Vietnam (plus OFAC countries)(plus OFAC countries)

• ITAR – Afghanistan, Belarus, Ivory Coast, Cyprus, ITAR – Afghanistan, Belarus, Ivory Coast, Cyprus, Indonesia, Syria, Vietnam, China, Haiti, Rwanda, Indonesia, Syria, Vietnam, China, Haiti, Rwanda, Somalia, Yemen, Zaire (plus OFAC countries)Somalia, Yemen, Zaire (plus OFAC countries)

What if I Need a LicenseWhat if I Need a License

Not the end of the world, butNot the end of the world, but License procedure takes time License procedure takes time

• License through Commerce takes less than 6 months License through Commerce takes less than 6 months and requires modest feesand requires modest fees

• License through the State Department can take 6 License through the State Department can take 6 months or more and is more expensivemonths or more and is more expensive

• License through Treasure for OFAC license is very License through Treasure for OFAC license is very cumbersome, very investigative, and very time-cumbersome, very investigative, and very time-consuming and may not be grantedconsuming and may not be granted

Contact ORPA or the General Counsel’s office for Contact ORPA or the General Counsel’s office for assistance in obtaining the licenseassistance in obtaining the license

RecordkeepingRecordkeeping

Need records to Need records to documentdocument all shipments of items all shipments of items outside the U.S.outside the U.S.

Need records to Need records to documentdocument our treatment of our treatment of export-controlled information provided to U of R export-controlled information provided to U of R researchers by third parties.researchers by third parties.

Recordkeeping is necessary to demonstrate Recordkeeping is necessary to demonstrate compliance with the export control laws. Records compliance with the export control laws. Records must be kept for 5 years.must be kept for 5 years.

Copy of records should be forwarded to Gunta Copy of records should be forwarded to Gunta Liders at ORPA.Liders at ORPA.