1. Export Controls: Just the Basics How to Keep Your Faculty and Researchers out of Trouble! Kay Ellis Director, Export Control Compliance University of Arizona (520) 626-2437 ellisk@email.arizona.eduellisk@email.arizona.edu Stephen B. Hall Sr. Policy Analyst Department of Commerce Office of Exporter Services

2. University Commitment is Key! The export of certain data, technologies, software and hardware is regulated and controlled by Federal law for reasons of national security, foreign policy, prevention of the spread of weapons of mass destruction, and for competitive trade reasons. As University employees, we are required to comply with applicable export control laws and regulations.

3. We will take a look at how the regulations impact research conducted in the U.S. and abroad. We will look at export control terminology, fundamental research, technology control plans, license exceptions, travel outside the U.S., and the cost of noncompliance. Export Regulations & Terms Fundamental Research TCPs and License Exceptions Travel Outside the U.S. Cost of Noncompliance Presentation Overview

4. Export 101 Export Regulations EAR ITAR OFAC Controlled Technologies Civil Use Military or Space Applications Terms you should know Export Defense Service Foreign Person Technical Assistance Technical Data Fundamental Research Exclusion Limits Jeopardizing or losing the FRE

5. What export regulations most likely affect your research projects? EAR: Export Administration Regulations; U.S. Department of Commerce – Bureau of Industry and Security ITAR: International Traffic in Arms Regulations; U.S. Department of State – Directorate of Defense Trade Controls OFAC: U.S. Department of Treasury – Office of Foreign Assets Control

6. COMMERCIAL APPLICATIONS SPACE, ROCKETs & MILITARY APPLICATIONS Controlled Technologies

7. EAR Covers dual use items Items regulated have a commercial and a military use Covers goods, test equipment, materials and the software and technology Each item has an export control classification number (ECCN)

8. EAR Commerce Control List (CCL) Categories 0 = Nuclear materials, facilities and equipment (and miscellaneous items) 1 = Materials, Chemicals, Microorganisms and Toxins 2 = Materials Processing 3 = Electronics 4 = Computers 5 = Telecommunications and Information Security 6 = Sensors and Lasers 7 = Navigation and Avionics 8 = Marine 9 = Propulsion Systems, Space Vehicles, & Related Equipment www.access.gpo.gov/bis/ear/ear_data.html

9. STEPHEN HALL BIS, OFFICE OF EXPORTER SERVICES

10. ITAR Covers military items found on the United States Munitions List (USML) Includes most space related technologies Includes technical data related to defense articles and services Policy of denial for exports to certain countries o See 22 CFR 126.1 for up-to-date list

11. Long Reach of the ITAR ITAR also includes Civil application items adapted or modified for military application Dual-use items that contain or use ITAR controlled articles/technology Public domain info used to modify an ITAR item

12. ITAR U.S. Munitions List (USML) IFirearms, Close Assault Weapons and Combat Shotguns IIGuns and Armament IIIAmmunition/Ordnance IV Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines VExplosives and Energetic Materials, Propellants, Incendiary Agents and Their Constituents VIVessels of War and Special Naval Equipment VIITanks and Military Vehicles VIIIAircraft and Associated Equipment IXMilitary Training Equipment and Training XProtective Personnel Equipment and Shelters XIMilitary Electronics XIIFire Control, Range Finder, Optical and Guidance and Control Equipment XIIIAuxiliary Military Equipment XIVToxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment XVSpacecraft Systems and Associated Equipment XVINuclear Weapons, Design and Testing Related Items XVIIClassified Articles, Technical Data and Defense Services Not Otherwise Enumerated XVIIIDirected Energy Weapons XXSubmersible Vessels, Oceanographic and Assoc. Equipment XXIMiscellaneous Articles (Software, components, etc.) http://www.pmddtc.state.gov/regulations_laws/itar.html

13. OFAC Economic sanctions focus on end-user or country “Specially Designated Nationals List” – restricted entities and parties Providing “something of value” Most highly sanctioned countries: Cuba, Iran, North Korea, Sudan, and Syria www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx

14. What is a Restricted or Prohibited Party? U.S. Government [OFAC, BIS, State Dept.] lists of individuals & entities both in the U.S. and abroad that have committed export violations or other offenses. Financial dealings or export transactions with Restricted or Prohibited parties is prohibited. Violations are subject to severe penalties and fines. Restricted Party Screenings (RPS) recommended depending on transaction Debarred Parties Drug Traffickers Specially Designated Nationals

15. Terms: Export – what is it and how can it occur? An export is the transfer of export controlled information, technical data, technology, commodities or software Exports can occur in many ways: Email Mail, shipping Face-to-Face Visual inspection that reveals technical data Conferences Hand-carried items – laptop, memory devices Affects non-U.S. citizens working on research

16. Terms: Defense Service A defense service means the furnishing of assistance (including training) to a foreign person whether in the U.S. or abroad relative to a defense article. It also includes furnishing technical data relative to a defense article. defense article. It also includes furnishing technical data relative to a defense article.

17. Terms: Foreign Person is Defined as... Foreign Person Any person not a U.S. citizen or legal permanent resident (green card holder) Any person not granted political asylum Foreign Entity Any foreign corporation, partnership,or group not incorporated or organized to do business in the U.S. Any foreign government

18. Terms: Technical Data or Technology Technical Data or Technology is information required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of an export controlled item. The information can be in the form of blueprints, drawings, models, photographs, plans, instructions and documentation; tech data includes software related to an export controlled item

19. What’s not covered by the regulations? Information in the public domain Information excluded under the Fundamental Research Exclusion (FRE) Basic marketing descriptions Artistic or non-technical publications

20. Published information available to the public: Through sales in bookstores At public libraries Through published patents Through distribution at a conference in the U.S. Through educational materials related to catalog courses in associated labs and universities

21. Fundamental Research 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... the results of which ordinarily are restricted for proprietary or national security reasons.”

22. Limits to Fundamental Research Exclusion – Subject to Export Controls or Other Prohibitions If subject to export controls or other prohibitions: Fundamental Research does NOT cover -- Exports of Hardware, Software, Technology Financial Dealings with Prohibited Parties or Entities Export Controlled activities – “technical assistance” Other Transactions Involving Sanctioned Countries or Prohibited Parties

23. The FRE can be lost if… Sponsor approval required prior to publication Publication of the results of the project restricted Access and dissemination restrictions are in the contract (ITAR controlled)

24. Non-Sponsored Research Research projects conducted with no sponsor could have export control issues Proprietary research has export implications Foreign nationals on projects could be an issue All research projects need export control review

25. Putting it in Perspective – when is a license needed for a research project? An export license might be needed if…. The researcher plans to employ a non-U.S. citizen to work on an export controlled research project The researcher wants to collaborate with a foreign person or government

26. So now you need a License! Applying for a license takes time! Requires input from the researcher, foreign grad student, or foreign collaborator License must be in place before work begins In addition to the license, you will need a technology control plan Required export control training must be completed Agreement will not be signed until a license and/or TCP are in place and export training completed

27. Bona fide Employee Exemption (ITAR) Applies to foreign persons who are full-time regular employees (no grad students regardless of hours worked) of U.S. institutions of higher education with permanent abodes in U.S. throughout employment

28. Bona fide Employee Exemption (ITAR) Exemption ONLY applies to the specific university project personnel and not to the project sponsor or another third party!

29. Technology Control Plan (TCP) In some situations it is possible to put a TCP in place instead of applying for a license Required export control training must be completed A TCP is simply a plan that secures the project information from access by non-U.S. citizens TCP template - Export Control website: http://orcr.vpr.arizona.edu/export-control/processes http://orcr.vpr.arizona.edu/export-control/processes

30. When do you need a TCP? With a DDTC Technical Assistance Agreement (TAA) With a BIS Deemed Export license When an agreement does not allow foreign nationals When a non-disclosure agreement indicates certain controlled information will be discussed, exchanged, or stored on campus With ITAR controlled research projects In other words, in conjunction with any project or agreement that involves ITAR controlled technology, equipment or information!

31. Export Controls: Travel and Research Outside the U.S. There could be export control issues if you are – Physically taking items with you on a trip such as Laptop Encryption software products on your laptop Cell phones/PDAs Data/technology Blueprints, drawings, schematics Other “tools of the trade” Shipping items Transferring controlled information to a foreign collaborator

32. Export Controls: Travel and Research Outside the U.S. The OFAC regulations affect activities in sanctioned countries such as: Money transactions The exchange of goods and services - Affects teaching, research collaborations, programs, attending or setting up conferences Travel to the country and what you take Doing business with certain people or entities

33. What does this mean? The bad news…. An EAR, ITAR, or OFAC license could be required – it depends on: o What you are taking, o Where you are going, o Who you will be collaborating with, o And your activities in that country There are consequences if you violate the regulations!

34. What does this mean? The good news… Travel to most countries does not usually constitute an export control problem! If you do need to work with EAR export controlled information, equipment, etc., there are license exceptions that can be used Taking a “clean” laptop to most countries – no license required or exception needed o Issue if taking to Cuba, Syria, Iran, North Korea or Sudan Items, software, and presentations should be evaluated before travel

35. EAR Exceptions TMP – “tools of the trade” (UA owned laptops, equipment) BAG – baggage (personal laptops, equipment) NOTE: License exceptions not available for ITAR items or information – license required!

36. Voluntary Disclosures If you think the regulations have been violated, immediately notify the Export Control Officer It is better to self-disclose than not say anything Honest errors are acceptable but gross negligence is punishable Violations are civil and criminal---Fines and jail time!

37. The Cost of Noncompliance - OFAC Criminal: $50K TO $10M per violation and 10 to 30 years imprisonment Civil: $11K to $1M per violation Examples: 1. Augsburg College, Minneapolis, MN fined $9,000 for 4 trips to Cuba; attorney negotiated reduction in fine from $36,000 o 2. ING Bank settled for multiple violations - $619,000,000 o 3. University fined $100,000 for shipping to denied entity

38. The Cost of Noncompliance - EAR Criminal: $50K to $1 million or 5 times value of export, whichever is greater, per violation, 10 years imprisonment Civil: revocation of exporting privilege, fines $10K-$120K per violation Examples: 1. Bass-Pro - $510K for shipping guns without a license o 2. ITT fined $100M for exporting night vision materials without license 3. Dr. Thomas Butler, Texas Tech – made fraudulent claims and unauthorized exports (plague bacteria)

39. The Cost of Noncompliance - ITAR Criminal: Up to $1 million per violation and 10 years imprisonment Civil: seizure and forfeiture of article, revocation of exporting privilege, up to $500,000 fine per violation Professor Roth (University of Tennessee) convicted on 9/3/08 and sentenced to four years imprisonment

40. The Butler Case Dr. Thomas Butler, a professor at Texas Tech, reported to the FBI that 30 vials of plague bacteria were missing and presumed stolen from his lab. The investigation proved that Dr. Butler had illegally exported the plague bacteria to Tanzania without a BIS export license. He was convicted of making false and fictitious statements to the FBI and making an unauthorized export to Tanzania. Penalty: Dr. Butler was convicted of forty-seven counts of a sixty-nine count indictment that stemmed from BIS's investigation. He was sentenced to two years in prison on March 10, 2004, and fired from Texas Tech.

41. The Roth Case Professor John Roth, University of Tennessee, was convicted of illegally exporting ITAR military technical data related to a USAF contract about advanced plasma technology for use on an unmanned air vehicle. He also gave information about the technology to an Iranian and a Chinese student without a license. Roth traveled to China and presented a lecture about the technology. When he returned, the FBI confiscated his laptop and flash drive. Penalty: Dr. Roth was sentenced to 48 months in prison for violating the Arms Export Control Act by illegally exporting ITAR controlled technical information.

42. Questions?