EXPORT CONTROL AWARENESS

1. EXPORT CONTROL AWARENESS UNIVERSITY OF IOWA Lisa Leff Assistant Director Division of Sponsored Programs Spring 2005

2. What are Export Controls • US laws that regulate the distribution of strategically important products, services, and information to foreign nationals and foreign countries. These things may be important for foreign policy reasons, as well as national security

3. Export Controls at the University of Iowa I would like to take this opportunity to encourage everyone to read the following: Message from the Vice President for Research & Export Controls: Who Should Care and Why Which provide an overview of the issue of Export Controls and can be found, along with other useful information, at: http://research.uiowa.edu/dsp/main/?get=export-controls

4. Applicability Depends On • Nature of the goods, technology, or data (actual or potential issues for economic protections or military applications) • Destination (country, organization, individual) • Intended user or suspected end use or end user

5. US Export Controls and Responsible Agencies • State Department: Controls inherently military technologies –International Traffic in Arms Regulations (ITAR) • Commerce Department: Controls “Dual-Use” technologies (primary civil use, but with military application) – Export Administration Regulations (EAR) • Treasury Department, Office of Foreign Assets Control (OFAC): Prohibits transactions with countries subject to boycotts, trade sanctions and embargoes

6. Implications of Export Laws • No effect on 90% of university research • BUT potential impact on • Ability of foreign nationals (students, faculty, visiting scholars etc.) to participate in research involving a controlled technology (primarily ITAR) • Ability to provide services (including training in the use of controlled equipment) to foreign nationals and foreign countries (ITAR, EAR, and OFAC) • Ability to send controlled equipment to foreign nationals or countries (ITAR, EAR, and OFAC)

7. EAR • Goods and related technology listed on the Commerce Control List (CCL, 15 CFR 774, Supp. 1) • Lists 10 categories for which a license is required • Materials (chemicals, microorganisms, toxins), Materials Processing, Electronics, Computers, Telecommunications, Lasers and Sensors, Navigation and Avionics, Marine, Propulsion Systems, Space Vehicles and Related Equipment

8. EAR 99 • This is an additional “catch-all” category • It covers goods/technology “subject to the EAR” as defined in 15 CFR 734.3(a) but not specifically identified on the CCL • These items may or may not require a license, depending on the destination (country and individual)

9. ITAR • Regulates Defense articles, defense services, related technical data on the US Munitions List (USML) at 22 CFR 121 • Also regulates items and technology that are “inherently military in nature” – designed to kill/defend against death in a military situation • The USML lists 21 categories which require a license • The List includes weapons, chemical and biological agents, vehicles, missiles, equipment and all satellites

10. SINCE 9/11 • The higher education community has increased its efforts to remove university research from the scope of export control regulations • There is an increasing applicability of these regulations to university research • The government has recently audited several university research programs, checking for compliance

11. Issues for University Research • The definition of “export” is expansive and includes • Transfer/disclosure outside the US to any person (including a US citizen abroad) • Transfer/disclosure in any form (verbal, written, electronic, visual) within the US to anyone not a US citizen or permanent resident (green card holder) DEEMED EXPORT RULE • ITAR also includes defense services

12. Deemed Export Rule If export controls apply and license is required - and no exemption is available - Must obtain a license before export- controlled item/information can be shared abroad or with a foreign national participating in the research on a US campus - When certain countries are involved, no license is available at all

13. More Issues • The expansion of ITAR jurisdiction to include research satellites and related technology (ITAR 2002 amendment) • Increasing application of ITAR to the life sciences • MTA’s and their issues with the application of the fundamental research exemption)

14. 2002 ITAR Amendment • Provides an exemption to US universities for certain spacecraft systems fabricated solely for research purposes, IF: • Exports are restricted to universities/research institutions in NATO or other US-allied countries, AND • All the information is in the public domain (defined in 22 CFR 120.11)

15. Effect of the 2002 Amendment • Does not expand the scope of existing fundamental research exemption under ITAR, since public domain information is already outside of ITAR scope • Appears to require a license for information in the public domain (outside ITAR scope) for exports to countries outside NATO or US allies • Effectively, no reliable authority for proceeding without a license in the area of satellite research

16. Dissemination of Information • The regulations prohibit the disclosure of controlled technical information by any method to a foreign national in the U.S. or abroad without a license from Commerce or State • Methods of disclosure include • Fax • Telephone discussions • E-mail communications • Computer data disclosure • Face-to-face conversations • Training sessions • Tours which involve visual inspections

17. Other Examples of Restrictions • Conferences where previously unpublished research will be presented (web-based, abroad or in the US) • Meetings where unpublished research will be discussed (web-based, abroad, or in the US) • Teaching foreign collaborators how to use items in research (defense service) • Transfers of research equipment abroad

18. No License Requirements for Dissemination of Information IF • An exemption/exclusion applies • Public domain (ITAR)/ Publicly available (EAR) • Educational Exemption (ITAR, EAR) • Fundamental Research Exemption (ITAR, EAR) • Bona fide/full time Employment Exclusion (ITAR only)

19. Public Domain/Publicly Available • ITAR definition of public domain: information which is published and generally accessible to the public through (among other things) fundamental research • EAR: publicly available technology and software is outside the scope of the controls

20. Exclusion Inapplicable • To equipment or encrypted software • If there is a reason to believe the information will be used for Weapons of Mass Destruction (WMD) • Where the US government has imposed access and dissemination controls as a condition of funding (ITAR)

21. Educational Instruction Exemption • Generally, a license is not needed for classroom/lab teaching to foreign nationals in US Universities • When sharing “information concerning general scientific, mathematical, or engineering principles commonly taught in universities or information in the public domain” with foreign nationals (EAR) • ITAR specifically removes “information concerning general scientific, mathematical, or engineering principles commonly taught in schools, colleges and universities or information in the public domain” from its definition of “technical data” • Students in degree programs, using controlled equipment to conduct research need to be registered for a research credit class

22. Fundamental Research Exemption • EAR 15 CFR 734.8 • Basic and applied research in science and engineering, where the resulting information is ordinarily published and shared broadly within the scientific community • Distinguished from proprietary research and industrial development, the results of which are ordinarily restricted for proprietary reasons or national security reasons

23. Fundamental Research Exemption • ITAR 22 CFR 120.11 • Public domain: information which is published and which is generally accessible to the public • Through fundamental research; basic and applied research in science and engineering at accredited institutions of higher education in the US where the resulting information is ordinarily published and shared broadly within the scientific community

24. Common Elements of FRE – ITAR/EAR • Exclude from export controls the disclosure of information resulting from fundamental research to foreign nationals • Exclusion is lost when university accepts restrictions on the publication of results restrictions on foreign national participation in research • Exclusion is not applicable to a sponsor’s existing proprietary information • Applies only to the transfer/disclosure of information (not to physical objects or defense services) • Applies only to disclosures in the US at accredited institutions of higher learning

25. The Fundamental Research Exemption is Destroyed (EAR & ITAR) When • The University accepts ANY contract clause that: • Forbids the participation of foreign nationals; • Gives the sponsor the right to disallow publications resulting from the research; or • Otherwise functions to restrict participation in research and/or access to and disclosure of research results

26. FRE – EAR and ITAR Compared • ITAR: applies to information “which is published” and generally accessible/available to the public • EAR: applies to information “which is publicly available”

27. FRE – EAR and ITAR Compared • EAR: Exclusion is not lost where university accepts temporary publication delay for prepublication review for proprietary/patent purposes • ITAR: does not contain this language, so there is ambiguity about whether the safe haven is available

28. FRE – EAR and ITAR Compared • EAR: exclusion is not lost in a federally-funded project where university accepts specific national security controls, so long as controls are not violated in exporting the information • ITAR: exclusion is lost in federally funded projects where such restrictions are accepted

29. Fundamental Research Exemption Violation • “Side deals” between a PI and Sponsor effectively destroy the Fundamental Research Exemption and also violate University policy. See University Operations Manual, II-27.2, Principles Governing Restricted-Access Research

30. University Strategy • Protect the fundamental research exemption by eliminating contractual clauses that destroy our ability to claim the exemption in the first place.

31. Employment Exemption • A license is not required when sharing controlled technical data with a foreign national who • Is not a national of an embargoed country; • Is a full-time bona fide U of Iowa employee; • Has a permanent address in the U.S. while employed at the U of Iowa; and • Is advised IN WRITING not to share covered technical data with any other foreign nationals without government approval.

32. ITAR Employee Exemption Problems • Visa restrictions may require holder to maintain a foreign residence • Researcher may not have full-time employee status (ie students and some post-docs)

33. Providing Services to Foreign Nationals • ITAR and EAR prohibit assisting and training foreign nationals anywhere with designing, developing, using, testing, etc. controlled equipment without a license from Commerce or State • Example: Fermenters that have a capacity of at least 20 liters

34. Export Controlled Equipment NO Exclusions • While there are no clear exclusions or safe harbors from the requirement to obtain a license for foreign nationals to use controlled equipment, … • The University believes the Education Exemption applies if the foreign national student uses the equipment as part of a program of instruction

35. Providing Services Under OFAC • OFAC prohibits providing services to countries subject to U.S. sanction programs, boycotts, etc., without a license • Providing Services includes: • Conducting surveys and interviews in boycotted countries • Providing marketing, business, editing services to persons in boycotted countries

36. Providing Services Continued • Creating new information materials at the request of persons in a boycotted country • Engaging the services of persons in a boycotted country to develop new information materials • Working directly or indirectly with persons in a boycotted country to import into or export from the US publication services, INCLUDING editing services • Web-based conferences and presentations

37. Countries under Boycotts • Recent Examples: The Balkans, Cuba, Iran, Iraq, Libya, Liberia, Sudan, Syria, North Korea • For a full, up to date listing, visit the OFAC website: http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html

38. License Required to Ship Controlled Equipment out of the US - ITAR • A license is required to ship ITAR controlled equipment to ANY foreign country • There are very few exclusions or exceptions • It can take months to obtain a license from State • Please notify DSP as early as possible

39. Shipping Equipment Continued - EAR • A license may be required to ship equipment out of the US under the EAR depending on whether the equipment is controlled, where it is being sent, and whether an exception applies. • NOTE: A license may be required to ship software out of the US! • The process to classify equipment under the EAR is tedious, detailed and very time consuming. Contact DSP early!

40. Shipping Equipment Continued • There is a presumption under OFAC laws that any and all equipment shipments and service provisions to countries subject to US sanctions/boycotts or persons in those countries is ILLEGAL • Examples of currently embargoed countries: Balkans, Burma, Cuba, Iran, Iraq, Libya, Liberia, Sudan, Syria, Zimbabwe

41. Laptop Exception • Faculty who want 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” and is under the control of the UIowa faculty member (15 CFR Part 740.9) • This exception does NOT apply to embargoed countries

42. Administrative Penalties for EAR and ITAR Noncompliance • Termination of export privileges under EAR and ITAR • Suspension and/or debarment from government contracting (EAR and ITAR) • Voluntary disclosures of violations serve as a “mitigating factor” in determining penalties

43. Penalties for EAR Violations • Criminal – for Willful Violations • Up to $1 Million for the University or company • Up to $250K per violation for individuals and/or up to 10 years in prison • Civil • Up to $12k per violation for individuals and the University or company

44. Penalties for ITAR Violations • Criminal – Willful Violations • Up to $1 Million for the University or Company • Up to $1 Million per violation for individuals and/or up to 10 years in prison • Civil Violations: • Up to $500k per violation for individuals and the University or company

45. Penalties for OFAC Violations • Criminal – Willful Violations: • Fine of no more than $1 M for companies • Fine of no more than $100k for individuals (including corporate officers) and/or 10 years in prison • Civil Penalties: • Fine of up to $55k for each violation by any person

46. Proposal Stage Red Flags • 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? Is the RFP marked “Export Controlled”? Is the Sponsor demanding pre-approval rights over publications or the participation of foreign national students?

47. IF YES • The U of Iowa must make a determination as to possible license requirements – Contact Lisa Leff/DSP • Note 1: If a license is needed, the application takes a great deal of time and effort from both the faculty member and DSP and can be in process for months • Note 2: These regulations apply to ALL activities, not just sponsored projects

48. REMEMBER KEEP IT EXEMPT! -NO restricted publication clauses -NO side deals -NO restrictions on foreign national participation CONSIDER THE IMPACT IF YOUR RESEARCH INVOLVES AN EMBARGOED COUNTRY CONTACT DSP AS SOON AS AN EQUIPMENT ISSUE ARISES Questions? Lisa Leff at 5-2120 Additional U of Iowa Export Control Information can be found at http://research.uiowa.edu/dsp/main/?get=export-controls These slides were developed with the assistance of Grainne Martin, General Counsel’s office and previously prepared material from MIT and NCURA presentations