Maintaining Academic Freedom in a Secure Environment: An Introduction to Export Controls

1. Maintaining Academic Freedom in a Secure Environment: An Introduction to Export Controls Christopher Hanifin, Deputy Counsel Office of General Counsel and Secretary 518-434-7045 Chris.hanifin@rfsuny.org

2. Topics • Overview • Basic regulations • Impact on research • Licenses • Penalties • References and helpful links

3. What are U.S. Export Controls? • U.S. export controls restrict the export of goods and technology to non-U.S. concerns with national security impacts • Limitations on exports to foreign countries • Limitations on foreign national use and access in the U.S. • Covers any item in U.S. trade (goods, technology and information) • Excludes patents and patent applications, artistic or non-technical publications • Excludes technology in the public domain

4. What exactly is an export? • Sending or taking a defense article out of the U.S. in any manner • Transfer of ownership or control of any aircraft, vessel or satellite to a foreign person • Disclosure or transfer of any defense article to any foreign government in the U.S. • Disclosure or transfer of covered technical data to a foreign person in the U.S. or abroad • Performing a defense service on behalf of or for the benefit of a foreign person in the U.S. or abroad.

5. Who is Involved in Export Controls? • Primary export control regulations • Under three different federal agencies • Department of Commerce via the Export Administration Regulations (the “EAR”) • Department of State via International Traffic in Arms Regulations (the “ITAR”) • Department of Treasury via Office of Foreign Assets Control (the “OFAC”) • Each has different implementation and enforcement criteria • Affect research on sponsored programs that cross national boundaries or involve international collaboration or cooperation

6. What do Export Controls Cover? • The EAR and ITAR cover almost every field of science and engineering • Prohibit unlicensed export of certain commodities, materials, information, technologies or software/codes for various government purposes • Advancing U.S. foreign policy goals • Restricting exports that could contribute to the military potential of adversaries • Preventing the proliferation of weapons of mass destruction (nuclear, biological, chemical, etc.) • Preventing terrorism or fulfilling US international obligations.

7. What is covered? (con’t) • The EAR regulates the export and re-export of most commercial items • The EAR is administered by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). The EAR has specific requirements regarding the exportation of technology and other research from the U.S. • The EAR has important considerations when dealing with research and the exporting of such technology and other valuable commodities

8. What is covered? (con’t) • The ITAR controls the export and temporary import of defense articles and defense services covered by the United States Munitions List (USML) • It has among its primary missions: • taking final action on license applications for defense trade exports and • handling matters related to defense trade compliance, enforcement, and reporting • ITAR has important considerations when dealing with research and the exporting of such technology and other valuable commodities

9. What is covered? (con’t) • The OFAC regulations administer and enforce economic and trade sanctions • Based on U.S. foreign policy and national security goals • Target foreign countries, terrorists, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction

10. The Rules For Exports • Export Controls: Require exporters to obtain U.S. government approval through an “export license” before export or disclose to foreign nationals • Exemption for “Fundamental Research” • Fundamental research is basic and applied research in science and engineering conducted at an accredited university in the U.S. • The resulting information is ordinarily published and shared broadly within the scientific community (excluding encryption software) • Generally, colleges and universities can use the fundamental research exemption provided there are no: • Restrictions on access to or dissemination of the research or information • “Pass through” export control requirements from a sponsor • Restrictions placed on foreign nationals concerning the research

11. “Deemed Exports” and “Dual Use” • Deemed Exports are exports of technology that take place when released to a foreign national within the U.S. • Visual inspection • Exchanged orally • Available by practice or application under supervision (e.g., training) • Sometimes the biggest risk to researchers • Dual Use items include exports that have both commercial and military applications • e.g., GPS equipment (see 15 CFR 738.2(a))

12. Why are Export Controls Important? • Following 9/11 terrorist attacks, the export control laws and regulations became more prominent • University compliance came into focus because of the intersections of cutting-edge science, technology, and engineering research with national security, foreign policy and homeland security • The RF and SUNY are affected by the export control laws and regulations and must assure compliance • Faculty, Researchers, Administrative staff • Export controls impact a broad area of university research, and there are severe penalties that apply to individuals who are not in compliance

13. Research Impacts • Export control regulations affect all research, and potentially instruction • most of the research conducted by the RF and SUNY is “fundamental research” and is exempt from export controls • There are instances when research is export controlled, and those cases may increase with the federal government's extended funding for homeland security research

14. Does my research needs a license? • Determine whether the exporter is subject to U.S. jurisdiction • U.S. universities are subject to U.S. jurisdiction as are any foreign nationals in the U.S. • Overseas operations may be subject to U.S. jurisdiction • Classify the technology or goods involved • (i.e., subject to State Department ITAR controls, Commerce Department EAR controls or other controls) • Determine if a license is needed for the particular technology and particular end-use and end-user • Determine whether any license exemptions or exceptions are available • E.g., public domain, fundamental research, etc.

15. What if I need a License? • The ITAR require the RF (for sponsored program research) and SUNY (for non- sponsored program research) to designate an "empowered official" who is authorized to sign and process ITAR license applications • The EAR does not have a formal requirement to the same effect but, as a matter of "best practice" and adequate internal controls, the Commerce Department recommends that universities and companies have such a person to ensure coordination and compliance • Essentially treat like ITAR in most respects

16. The Process • The steps: • PI discovers need for export and assesses need for license • PI consults with local sponsored program office (for decentralized) or Office of Sponsored Program Services (OSPS) (for centralized) • Sponsored program office (for decentralized) or OSPS (for centralized) submits a recommendation for or against licensure to the EO • EO considers the application and recommendation and, if approved, seeks legal and business review from central office • Upon approval and successful review, EO submits the license to the reviewing authority (State or Commerce) with a copy to Office of General Counsel and Secretary • EO is the final signatory authority for all license applications under RF policy and federal regulation (22 C.F.R. Section 120.25)

17. The Penalties • Sanctions • Severe criminal and civil penalties for individual noncompliance • Governmental sanctions for institution violation • In addition, imposes the potential loss of exporting privileges, and loss of federal funds at the institutional and individual levels • Criminal penalties $50-100K for EAR and up to $1M for ITAR • Civil Penalties loss of export privileges and fines of $10-120K per violation

18. Conclusion • Ensure the principal investigator identifies and determines if his/her research project is subject to the regulations • Ensure, to the maximum extent possible, that the research being performed is able to qualify as fundamental research • If so, no licenses are required • If not, determine whether the item requires a license, and begin the process to obtain one.

19. References • The Export Administration Act of 1979 (50 U.S.C.2401-2420) U.S. Department of Commerce • The Arms Export Control Act (22 U.S.C. 2778) U.S. Department of State • EAR Regulations at 15 CFR 730-774; ITAR Regulations at 22 CFR 120-130 • OFAC Regulations at 31 CFR 500

20. Helpful Links • http://www.bxa.doc.gov/licensing/exportingbasics.htm • http://www.bxa.doc.gov/licensing/facts1.htm • http://www.pmdtc.org/docs/agbook.pdf • http://www2.rfsuny.org/comply/controls/index.htm