1. 1 Export Control Presented by Charles F. Carletta, J.D. Secretary of the Institute & General Counsel Rensselaer Polytechnic Institute Michael E. Ginsberg. J.D. Paul E. Fredette, Ph.D. Pattison, Sampson, Ginsberg & Griffin, PC 22 First Street, Troy, NY 12181 518-266-1026 mginsberg@psgglaw.com

2. 2 Export Control - Basics WhatWhyWhere

3. Criminal Enforcement Against University Professors  Dr. Thomas Butler Chief of Infectious Disease Division at Texas Tech’s Department of Internal MedicineChief of Infectious Disease Division at Texas Tech’s Department of Internal Medicine  Select Agent violations, accounting fraud  One count for transfer of plague sample to Tanzania  Penalty: 2 years in prison; fine; denial of export privileges  Fired from Texas Tech 3

4. Dr. J. Reece Roth  Professor Emeritus of U. of Tennessee, Knoxville  72 years old  18-count indictment for technology transfer to foreign nationals (Chinese FN grad. stud.)  Convicted of releasing ITAR- controlled technology to a Chinese graduate student. The release occurred in connection with an Air Force contract with his off-campus, for-profit business.  4 years jail, upon release additional 2 years supervised release 4

5. Remember : –Exporting is a privilege—not a right –Activity cannot take place until an export license is obtained or it is determined that a license is not necessary –Every situation is unique –Ignorance is not a defense U.S. federal government laws and regulations that require federal agency approval before the export of controlled items, commodities, technology, software or information to restricted foreign countries, persons, and entities (including universities) What are Export Controls? 5

6. What Is An Export?  Physical shipment of goods or items, e.g., biological and chemical samples, diagnostic and analytical instruments and tools, etc.  Electronic/digital/oral transmission/disclosure of goods, technical data or items, e.g., email, phone, fax, internet, CD, discussions, etc.;  Release of specific technical data to any foreign national, e.g., reports, drawings, specs, etc.;  Providing access to a foreign national, e.g., visiting scientist, faculty, student, post doc, etc., to any controlled product, technology. 6

7. Important Terms  Item –Commodities, software and technology.  Export –A shipment or transmission of items out of the US.  Re-export –A shipment or transmissions of items subject to the EAR from one foreign country to another foreign country.  Deemed export/re-export –Release of technology or source code to a foreign national in the US is deemed to be an export; and, the release by a foreign national to a foreign national of another foreign country is deemed to be a re-export.  CCL - Commerce Control List (15 CFR 738.2; 15 CFR 774, Supplement 1)  ECCN - Export Control Classification Number (15 CFR 738.2) 7

8. Who is a Foreign National/Person?  A person who is not  Granted permanent U.S. residence, as demonstrated by the issuance of a permanent residence card, i.e., a “Green Card”  Granted U.S. citizenship  Granted status as a “protected person” under 8 U.S.C. 1324b(a)(3), e.g., political refugees, political asylum holders, etc.  This includes all persons in the U.S. as students, business people, scholars, researchers, technical experts, etc. Foreign National is the term used by the Department of Commerce Foreign Person is the term used by the Department of State 8

9. THE BIG PICTURE  WHAT? What is the Item involved, e.g., technology parameters, functions, characteristics? What is the parameters, functions, characteristics? What is the end use? Is it “military” or “dual use”? end use? Is it “military” or “dual use”?  WHERE? What are the “destination countries”?  WHO? Who are the proposed export recipients?  HOW? How will the export occur, i.e., physical or “deemed” export? 9  Export Control Compliance Questions:

10.  U.S. Export Control Laws  Export Administration Regulations ( “ EAR ” )  International Traffic in Arms Regulations ( “ ITAR ” )  U.S. Sanctions and Economic Embargoes Primary U.S. Laws/Regulations Legal Landscape 10

11. Export Administration Regulations (EAR) Department of Commerce - Bureau of Industry and Security (BIS) 15 CFR Parts 730 - 774 Primary Licensing Agency for Dual-Use Exports International Traffic in Arms Regulations (ITAR) Department of State - Directorate of Defense Trade Controls (DDTC) 22 CFR Parts 120 - 130 Licenses Defense Articles and Services Office of Foreign Assets Control (OFAC) U.S. Depart of the Treasury 31 CFR 500 Administers Economic Sanctions (Embargoes) Primary U.S. Laws/Regulations Agencies & Jurisdictions 11

12. Export Administration Regulations (EAR) (Dual Use Items and Technology)  The Commerce Department's Bureau of Industry and Security (“BIS”) regulates exports of U.S. products, materials, technology, and software that have commercial and military applications (“dual use”). Examples: computers, electronics, chemicals.  An item is “subject to the EAR” if it has been produced in the United States or is being exported from the United States. In addition, certain foreign-made products may be deemed “subject to the EAR” on the basis of U.S.- origin content or technology. 12

13.  Administered by the Department of State’s Directorate of Defense Trade Controls ("DDTC")  Covered Items/Activities:  Export, reexport, and manufacture of defense articles;  Export and reexport—including deemed export and reexport--of technical data;  Performance of defense services for foreign persons;  Brokering activities; and  Temporary Imports of defense articles. 13 International Traffic In Arms Regulations (ITAR)

14.  Regulations administered by Treasury Department's Office of Foreign Assets Control ("OFAC").  Near-total embargoes, covering most business dealings, against Cuba, Iran, Sudan, North Korea, and Syria.  Partial embargo against Burma, limited to investment and provision of financial services.  Exception for "information and informational materials," but not if the information is subject to export controls and not for "services." 14 U.S. Economic Sanctions & Trade Embargoes (OFAC)

15. 15 OFAC Restrictions  OFAC prohibits the transfer of anything of value and the provision of services to countries subject to U.S. sanction programs, boycotts, etc. without a license.  Sanctions are complicated and vary across countries.  Examples: conducting surveys and interviews in boycotted countries; providing marketing and business services to persons in boycotted countries.

16. 16 Differences Between ITAR & 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.

17. 17 Differences Between ITAR & EAR ( cont.)  EAR:  Regulates “dual use” items = 10 CCL categories of different technologies (equipment [including test equipment], tests, materials, software and technology);  Regulates items designated 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.

18. 18 Analysis & Implications for Academic Institutions Challenges International Travel Deemed Export

19. EAR and ITAR apply Typically: Physical transfer of sensitive or controlled technologies and related technical information, including software, to persons and entities outside the U.S. Physical transfer of sensitive or controlled technologies and related technical information, including software, to persons and entities outside the U.S. Disclosure of technical data or information on sensitive or controlled technologies to foreign persons while in the U.S. These so-called “deemed exports” may include formal presentations, informal conversations, or even observations during site tours. Disclosure of technical data or information on sensitive or controlled technologies to foreign persons while in the U.S. These so-called “deemed exports” may include formal presentations, informal conversations, or even observations during site tours. Training and offering services involving sensitive or controlled technologies to foreign persons. Training and offering services involving sensitive or controlled technologies to foreign persons. 19

20. EAR - APPLICABILITY TO UNIVERSITIES  EAR applies to and involves everybody INCLUDING U.S. faculty members, foreign nationals, visiting scientists, permanent residents, staff, and students.  “Deemed exports/re-exports” may include:  Visual inspection by foreign nationals of U.S.-origin equipment and facilities;  Oral exchanges of information in the U.S. or abroad;  Application to situations abroad of personal knowledge or technical experience gained in U.S. 20

21. Export Control issues challenging universities  Currently, the use of controlled equipment is not a deemed export. Deemed exports occur only if controlled technology is transferred.  The regulatory definition of “use” is technology for operation, installation (including on-site installation), maintenance (checking), repair, overhaul and refurbishing.” *  A deemed export license may be required when the use of equipment would require access to the manufacturer’s proprietary manual, allowing the foreign person access to technology relating to operation, installation, maintenance, repair, overhaul and refurbishing. * All elements above are required for there to be controlled “use”. 21

22. 22 Why “And” in use of Controlled Equipment  REASON: “The totality of these (listed) activities would provide the foreign national with enough knowledge to replicate or improve the performance of the controlled item. As such all of the activities listed in the definition of “use” are required to trigger a license requirement.

23. Deemed Exports and Defense Services  The EAR defines a deemed export as the release of technology or source code subject to the EAR to a foreign national (no green card) in the U.S.  Applies to a foreign or visiting faculty, research assistants, and students Can affect tours of laboratoriesCan affect tours of laboratories phone calls, emails, visual inspections phone calls, emails, visual inspections  Transferring ITAR technical data to or performing a defense service (includes training) on behalf of a foreign person in the U.S. or abroad.  Does not apply to U.S. Citizens, permanent residents and those with U.S. asylum protection. 23

24. 24 Remedies Exclusions: Fundamental Research Fundamental Research Education Education Public PublicFlagsLicensing Technology Control Plan

25. Fundamental Research Exclusion (FRE) You may not need a license if…  Information (note: not items or materials) resulting from or arising during basic and applied research in science and engineering, and  Conducted at an accredited institution of “higher education” (EAR) or “higher learning” (ITAR) and  Located in the U.S. (doesn’t apply abroad), and  Where the resulting information is ordinarily published (EAR – will be published) (ITAR – already published) and shared broadly in the scientific community, and  Is not subject to proprietary or U.S. government publication or access dissemination controls e.g., a restriction on foreign national participation.e.g., a restriction on foreign national participation. 25

26. Fundamental Research Exclusion ITAR & EAR (cont.) The FRE is lost if the proposed contract or grant :  Forbids the participation of foreign nationals.  Gives the sponsor a right to approve publications resulting from the research.  Otherwise operates to forbid participation in research and/or access to and disclosure of research results.  “side deals” that may be made outside the terms of the award. 26

27. Fundamental Research Exclusion (FRE) EAR versus ITAR  Applies only to information NOT items; “ordinarily published” and “shared” as distinct from “publicly available” and “public domain” information.  FRE regulations for: EAR 15 CFR 734.8(b) EAR 15 CFR 734.8(b) ITAR 22 CFR 120.11(a)(8) ITAR 22 CFR 120.11(a)(8) 27

28. Educational Information Exclusion  Educational information is exempt from licensing requirements where the information is generally taught at U.S. universities.  The regulations differ slightly in how they define Educational Information:  ITAR general science, math and engineering  EAR information listed in course catalogues  Students using controlled equipment to conduct research should be registered for a research credit class. 28

29. Public Domain 1 & Publicly Available 2 Exclusions You may not need a license if…  Information is already published,  through specific means found in:  libraries open to the public  unrestricted subscriptions, newsstands, bookstores  published patent information  conferences, meetings, seminars and trade shows open to the public  websites accessible to the public for free and without the host’s knowledge or control of who visits. 1.ITAR 2.EAR 29

30. Export Control “Red Flags” – Reviewing Proposals and Proposed agreements Does the project involve:  Shipping equipment to a foreign country?  Collaborating with foreign colleagues in foreign countries?  Training foreign nationals to use equipment?  Working with a country subject to a US boycott?  Export control designations?  Sponsor demanding pre-approval rights over publications or the participation of foreign nationals?  Foreign sponsor?  Anything involving India and China (economic & dual use)?  NDAs & MTAs regarding disclosure of proprietary information? 30

31. Do I need to be concerned about export controls in this research? 1.Public domain, and a)No equipment, encrypted software, listed-controlled chemicals, bio-agents or toxins, or other restricted technologies are involved, and b)Information/software is already published, and c)There is no contractual restriction on export, or 2.Fundamental Research (note definitions and caveats associated with this exemption) 1.Equipment or encrypted software is involved, or 2.Technology is not in the public domain, and 3.Technology may be exposed to foreign nations (even on campus) or foreign travel is involved, and a)The equipment, software or technology is on the Commerce Control List, or b)Information or instruction is provided about software, technology, or equipment on the CCL, or c)The foreign nationals are from or the travel is to an embargoed country 4.The contract has terms e.g. a publication restriction that effect the Fundamental Research Exemption NO 1.Equipment, software, chemical, bio-agent, or technology is on the US Munitions List (ITAR), or 2.Equipment, software, chemical, bio-agent or technology is designed or modified for military use, use in outer space, or there is reason to know it will be used for or in weapons of mass destruction, or 3.Chemicals, bio-agents or toxins on the Commerce Control List are involved, or 4.The contract contains a restriction on export or access by foreign nationals YES License Will Be Required Probably (further review is required) License May Be Required 31

32. EAR: Commerce Control List (CCL)  CCL (15CFR 774, Supplement 1)  Dual use items & technology subject to EAR.  Before exporting them – must have a license,  Unless an EAR exception applies.  EAR 99: Other items/technology subject to EAR restrictions, e.g., exports to embargoed countries; restricted end uses. 32

33. License Requirements An export license is required when exporting technologies regulated by the EAR, ITAR or when engaged in activities regulated by OFAC. The following examples deserve special attention:  EAR and ITAR export licenses are not required when there are no publication, foreign national, or access and dissemination restrictions.  Shipment of covered hardware and software outside the U.S. requires a license (EAR, ITAR, and OFAC). Note: appropriate time must be allowed to obtain license prior to shipment.  Technical assistance agreements (TAAs) where U.S. citizens or permanent residents are providing training of foreign nationals where a covered technology is involved requires a license.  Acceptance of export controlled data for use by foreign national researchers in a University laboratory requires a license.  When a research agreement would carry restrictions on publications/foreign nationals, a license is required. 33

34. Licensing Requirements (cont…) You need a license if…  Controlled research equipment, biological samples, or computers with research data or encrypted or proprietary software are hand- carried or shipped abroad.  There is reason to believe the recipient/end-user is violating export laws.  You intend to share sponsor’s controlled proprietary information with a foreign national or anyone abroad.*  Defense, military, weapons, space or other dual-use technologies.  Attending conference with limited registration.  Exclusions don’t apply.  Providing anything of value to a sanctioned country/entity/individual 34 * This information may be the subject of a NDA or an MTA or non-disclosure language included in a sponsored research agreement

35. Federal Licensing Protocol When exceptions don’t apply … or dealing with sanctioned country/entity…  a license must be obtained BEFORE any deemed export, export or re-export, and  PRIOR TO undertaking the activity, including  BEFORE transfer of information sufficient to develop research proposals. 35

36. 36 Compliance Plan

37. Export Control Compliance Program  A university program starts with risk assessment:  Identify those areas of technical exposure  Know who is on campus  Know researcher’s travel plans  Know who is coming to campus  Policy & Procedures to manage and comply with EAR, ITAR, OFAC, etc.  Audit schedule & detail records kept for 5 years  Training 37

38. Export Compliance Methodology  Internal processing  Contact Empowered Officer (22CFR 120.25) for more information and to help determine  Whether export regulations apply  Jurisdiction (EAR, ITAR, OFAC)  ECCN or commodity classification  License application completed, if necessary  Technology Control Plan developed, if applicable 38

39. Methodology cont…  Check for license requirements and license exceptions  Check Country Chart, Reasons for Control, and Country Group  Check all lists  Denied Persons  Unverified  Entity  Specially Designated Nationals (SDNL)  Debarred List  Non-proliferation Sanctions  General Order 3 to Part 736  Determine whether you need a license 39

40. Technology Control Plans  Developed by the Office of General Counsel  Describes safeguards for protecting controlled technology  IT access, data access & handling and discard  Building access  Commitment in the form of compliance program.  Physical security plan – badging, access, visitor logs  Personnel screening – review of lists, background checks  Training and awareness  Corrective actions TCPs are developed to comply with Export Control Laws and are designed to restrict the use and observation of export controlled technical information, data, materials, software, or hardware by unauthorized foreign nationals. 40

41. Export Controls govern  Export control laws apply to all university activities:  Sponsored research  Traveling  Technology Transfer - IP protection & IP licensing  Purchasing  Shipping  Visitors, students, employees  Human Resources  International Affairs – VISA letter of Invitation  Encrypted software and commodities with encrypted software software  Security 41

42. Voluntary D isclosures (22 CFR 127.12)  If you realize you have violated the regulations, notify State, Commerce, or OFAC:  Procedures are spelled out in ITAR and EAR.  Honest errors are acceptable but gross negligence is punishable.  It is better to self-disclose than not say anything.  Violations are civil and criminal---Fines and jail time!!! 42

43. 43 Do’s & Don’ts Summary

44. Do’s & Don’ts – Shipping  Do NOT ship any item outside the U.S. without first checking the ITAR and EAR lists to determine if the item is controlled.  Secure license approval or verify license exception PRIOR to shipment for all controlled items. 44

45. Do’s & Don’ts – Restricted Information  Do NOT enter into secrecy agreements or otherwise agree to withhold results in project conducted at the University or that involve University facilities, students or staff.  Do NOT accept proprietary information from another that is marked “Export Controlled”. Review any Confidentiality/Non- Disclosure Agreements to insure that University and you are not assuming the burden of restricting dissemination based on citizenship status or securing licenses. 45

46. Do’s & Don’ts – Citizenship Restrictions  Do NOT provide citizenship, nationality, or visa status information for project staff to others or include such information in proposals.  Do NOT provide citizenship, nationality, or visa status information for project staff to others or include such information in proposals.  Do NOT agree to background checks or other arrangements where the external sponsor screens, clears, or otherwise approves project staff.  Do NOT agree to background checks or other arrangements where the external sponsor screens, clears, or otherwise approves project staff.  Do NOT attend meetings where foreign nationals are prohibited from attending. Do not sign the DD2345, Militarily Critical Technical Data Agreement, as a condition of attending a conference or receiving materials from the government. 46

47. Do’s & Don’ts - Travel  Do NOT travel to Cuba, Iran, North Korea, Sudan, or Syria for research or educational activities without first contacting the campus Export Control Officer to secure a license from the Office of Foreign Assets Control.  Do review equipment that you will be taking with you against export controls. A license may be required. 47

48. Do’s & Don’ts - International Travel Departments of Commerce and State have regulations that affect:  Physically taking items on a trip such as:  Laptop  Encryption products on your laptop  Blackberry (cell phone)  Data/technology  Blueprints, drawings, schematics  Other “tools of the trade”  Giving controlled technology/data to a foreign person outside the U.S. 48

49. 49 Special Rules for Laptops Laptop Exclusion:  Excluding embargoed countries, faculty who wish to take their laptops out of the country to use in a university project that qualifies as fundamental research may be able to do so under the license exception for temporary export (TMP) if the laptop meets the requirement for “tools of trade” (15 CFR 740.9(a)(2)(ii)) and is under the “effective control” (15 CFR 772.1) of the faculty member.  BUT a review must be done to ensure that the software on the laptop is not controlled,  AND the laptop is retained in ones physical possession or secure in an environment as a hotel safe, bonded warehouse or locked or guarded exhibition facility. Leaving the laptop in a hotel room while going out to dinner is not “effective control’.

50. 50  Export Control Compliance requires complying with all Laws and Regulations!  Complying with one agency does not mean complying with the other Agencies’ Laws and Regulations. Each Agency stands alone!  Evading the Laws and Regulations can be personally very expensive! Take Away

51. Special thanks is extended to the following for their assistance, discussions and permission to use their information: Jeffrey Armstrong, Rensselaer Polytechnic Institute, Stanford University, Massachusetts Institute of Technology, University of Texas at Austin, University of Tennessee, University of North Carolina Wilmington, University of Maryland, Georgia Technological Institute, University of Florida, University of New Hampshire, Michigan State University, Fischer & Associates, University of California, Virginia Polytechnic Institute. Additional Sources as internet posting and educational information: BIS, DDTC, Dept. of Treasury, COGR, AAU, NCURA, Rensselaer Polytechnic Institute, Northrop Grumman, EAR ITAR Boot Camp, Dorsey & Whitney LLP. 51

52. Websites  Bureau of Industry and Security (BIS)  http://www.bis.doc.gov/about/index.htm  http://www.bis.doc.gov/complianceandenforcem ent/emcp_guidelines.pdf  Directorate Defense Trade Controls (DDTC)  http://www.pmddtc.state.gov/index.html  Office of Foreign Assets Control (OFAC)  http://www.treas.gov/offices/enforcement/ofac/ 52

53. 53 Q & A