What Non-Research Institutions Need
to Know About Export Controls
Carol T. Carr – Carol T. Carr, University Consulting Services
Nelson G. Dong – Dorsey & Whitney, LLP
Justin H. Smith – Washington and Lee University
THE BASICS
What are Export Controls?
• Generally speaking, “export controls” restrict:
1) business/monetary transactions with certain
countries, entities, and individuals; and
2) dissemination of certain technology and
information.
• Not limited to tangible items  “Deemed
export”
• Exclusions/Exceptions
• Licenses
U.S. Export Control Regimes
• Embargoes
Administered by: OFAC
Scope: Business/monetary transactions
• EAR – Export Administration Regulations
Administered by: BIS
Scope: “Dual use” items
• ITAR – International Traffic in Arms Regulations
Administered by: DDTC
Scope: Defense-related items
EXAMPLES OF TRIGGERS
Activities That May Trigger Export
Controls
• Dissemination of research/expertise:
–
–
–
–
To foreign nationals (within the U.S.)
In a foreign country
Subject to publication restrictions or prepublication review
Subject to access/dissemination controls
Examples:
– Prepublication review of article by corporate sponsor to
see whether to protect research results as “trade secret.”
– Presenting at a prestigious international scientific
conference where notes and recordings are not permitted.
– Consulting a “third world” manufacturer of sub-micron
devices.
Activities That May Trigger Export
Controls (cont.)
• Hiring of foreign nationals whose work will
involve access to technology or data subject to
EAR or ITAR
Examples:
– Hiring foreign national whose work will involve
research with biological reagents.
– Hiring foreign national whose work will involve
maintenance of supercomputer.
Activities That May Trigger Export
Controls (cont.)
• Travel/shipping to/from any country
Examples:
– Shipping advanced telecommunications
equipment to China for field research.
– Carrying algorithm to Balkan penninsual on a
laptop computer.
Activities That May Trigger Export
Controls (cont.)
• Business/monetary transactions
Examples:
– Donation (or payment of tuition) by someone on
prohibited list.
– Student organization humanitarian trip to Darfur.
EXCEPTIONS AND EXCLUSIONS
Public Domain/Publicly Available
• Information which is published and generally
accessible to the public through (among other
things) fundamental research.
Educational Exemption
• Generally, a license is not needed for
classroom/lab teaching to foreign nationals in
US Universities.
• Students in degree programs, using controlled
equipment to conduct research need to be
registered for a research credit class.
Fundamental Research Exclusion
• 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.
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 university employee;
– Has a permanent address in the U.S. while employed at
university; and
– Is advised IN WRITING not to share covered technical data
with any other foreign nationals without government
approval.
TMP
• The export of items, technology, commercial
software, and encryption code is subject to
export control regulations (this includes laptops,
PDAs and digital storage devices).
• The TMP exception can be used for “tools of the
trade” for a period of less than a year, but does
not apply to any EAR satellite or space-related
equipment, components, or software, or to any
technology associated with high-level encryption
products and cannot be used for travel to Iran,
Syria, Cuba, North Korea, or Sudan.
BAG
• Can be used for travel outside the U.S. when you are
taking PERSONAL items or technology that would
normally require a license from the Department of
Commerce.
For example, if you plan to take your personal laptop
rather than a university laptop when attending a
conference or conducting research abroad, and you are
taking controlled technology, software, or other
information that would require a license, the BAG license
exception is available.
What do you do if you lose them?
• Exceptions can be lost if all of the conditions
for the exception are not met. Then you are
subject to the export laws and regulations in
the same way that commercial enterprises
are.
• Importance of a compliance program for your
institution, including a risk assessment to
identify where export control issues are
arising and due diligence in managing them.
(More later)
AN ILLUSTRATIVE CASE
STUDY OF EXPORT
CONTROLS IN ACADEMIA
Nelson G. Dong
Head, National Security Law Group
Dorsey & Whitney LLP
Seattle Office
NACUA Annual Meeting
June 28, 2011
San Francisco, CA
U.S. EXPORT CONTROL REGIMES
• OFAC embargoes: Office of Foreign Assets Control
in Department of the Treasury
• International Traffic in Arms Regulations (ITAR):
Directorate of Defense Trade Controls in Department
of State
• Export Administration Regulations (EAR): Bureau
of Industry & Security in Department of Commerce
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THE CASE STUDY CONTEXT
• Modern University (MU) wants to update its
educational model for summer term studies
− MU will combine teaching scientific research
methods in a “study abroad” summer term
− MU will send faculty, students to a Spanishspeaking environment
• MU science, language faculty decide to jointly
teach 10-week program on environmental effects
of the Gulf oil spill and national government
responses in Mexico, Venezuela and Cuba
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MU PROGRAM PREPARATIONS
• MU faculty may send to their foreign colleagues:
– Faculty and student-built ocean motion sensors
– Faculty and student-created software to refine civilianlevel satellite imagery into much higher resolution images
– Faculty and student-built remotely operated underwater
submersibles to study marine life and undersea currents
• Faculty and students will also take own PCs, equipment
and instruments to help equip naval oceanographic
research vessels from Mexico, Venezuela and Cuba
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OFAC EMBARGO ISSUES
• No OFAC embargo issues for Mexico or Venezuela
• Cuban Transaction Regulations (CTR) in 31 CFR
Part 515 affect all dealings with or travel to Cuba
– Academic travel to Cuba historically difficult but new
“general license” published in January 2011
– Still CTR concerns about “services” being rendered
to Cuban government officials in MU program
– Still may be other physical “export” aspects of MU
program that bear close scrutiny under CTR
• OFAC “general license” for publishing covers any
joint academic papers from program
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ITAR ISSUES
• ITAR “fundamental research” exemption applies only in U.S.
• If any “defense articles” or “defense services” involved,
then ITAR issues raised for Mexico, Venezuela and Cuba
– Mexico might get approval from DDTC
– But “arms embargoes” and “policy of denial” against
Venezuela, Cuba under 22 CFR Section 126.1
• MU faculty collaboration with naval oceanographic vessels
from Venezuela, Cuba could be classified as “defense
services”
• Some MU technical preparations might also involve
shipment of “defense articles” to Venezuela, Cuba
– Sensors, software, submersibles
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EAR ISSUES
• Although “fundamental research” exemption in 15 CFR Part
734.8 applies only to on-campus research activities, not to
any foreign programs
• Many kinds of advanced lab or field research instruments
may be subject to EAR export controls
– Sensors, software, submersibles
• Both physical export and “deemed export” issues may be
raised by research collaborations by MU faculty
collaborations with colleagues in Mexico, Venezuela and
Cuba
– Overlap with OFAC embargo issues as to Cuba – no items
controlled by EAR can be exported to Cuba
– High levels of scrutiny even for Mexico, Venezuela under
“Country Chart” in 15 CFR Part 738
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LEGAL EXEMPTIONS AND
THE MU CASE STUDY
• OFAC embargoes: April 2011 general license for
Cuban academic travel; “information and
informational materials” exemption and
“publishing” general license for publications
• ITAR: exclusion of “fundamental research” limited
to such activity “in the U.S.” (i.e., not available for
research conducted outside U.S. territory)
• EAR: exclusion of “fundamental research” limited
to such activity “in the U.S.” (i.e., not available for
research conducted outside U.S. territory)
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POLICY AND PROCEDURES
Policy and Procedures
• Institutional Policy
• Risk Assessment and Export Management
• Website with policies and procedures
Policy Considerations
Minimum Requirements:
• Statement of Compliance with Federal laws
and regulations regarding exports
• Preservation of Fundamental Research
Exclusion
• Commitment to education and training of
university personnel
Export Management Oversight
• Risk Assessment
• Institution Overview
• Identify Responsible Parties
• Establish Standards of Due Diligence
• Audits
Export Control Website
Getting the Message out to your Audience:
• Faculty
• University Administrative Personnel
• Federal Agencies
• Potential Sponsors
Make it fit your institution
• Identify through your risk assessment your
special concerns
• Engage administrators, researchers and
senior administration
• Keep it user friendly and timely
If there’s a violation…
• Investigate internally and get all the facts.
• Voluntary Disclosure is in your institution’s
best interest.
• Consider engaging outside export counsel.
PRACTICAL TIPS
A Few Practical Tips
• Enlist the assistance of your Business Office /
Bursar and International Education Office
• Ensure Business Office / Bursar and Development
Office know to screen transactions against OFAC
list of Specially Designated Nationals (SDNs)
• Coordinate with Human Resources to ensure that
export controls analysis is conducted before
certification is made on USCIS Form I-129
A Few (More) Practical Tips
• Add export control review to your contracts
administration policy/process
• Review sources of research funding
• Watch out for any contract that specifically
mentions export controls
• Assume nothing
• Utilize FAQs
• Know what you don’t know, and whom to call for
help
OBAMA ADMINISTRATION
EXPORT CONTROL REFORMS
Nelson G. Dong
Head, National Security Law Group
Dorsey & Whitney LLP
Seattle Office
NACUA Annual Meeting
June 28, 2011
San Francisco, CA
OVERVIEW OF REFORM PROPOSALS
• Obama Administration determined in April 2010
fundamental reforms of U.S. export control system
were needed to move toward:
– Single control list
– Single primary enforcement coordination agency
– Single information technology (IT) system
– Single licensing agency
• Reform efforts originally led by Secretaries Gates
(Defense), Locke (Commerce) and Clinton (State)
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EXECUTIVE & LEGISLATIVE CHANGES
• Administration is attempting specific reforms that
can be initiated immediately and implemented
without legislation
• Administration is already consulting with key
Congressional committees to pave way for needed
legislation to complete entire its reform package
• Current concerns:
– Two of three key Administration leaders in reform
effort stepping down (Gates and Locke)
– Spotty, inconsistent Congressional support for such
reforms
– 2012 election cycle and partisan political agendas
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PHASE I
• Control List: Refine, understand, and harmonize definitions
to end jurisdiction confusion between ITAR, EAR lists;
establish new independent control criteria to be used to
screen items for control into new “tiered” control list
structure
• Licensing: Implement regulatory-based improvements to
streamline licensing processes and standardize policy and
processes to increase efficiencies
• Enforcement: Synchronize and de-conflict enforcement by
creation of an Enforcement Fusion Center among agencies
• Information Technology: Determine government-wide needs
and begin process to reduce confusion by creating single
U.S. Government (USG) point of entry for exporters
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PHASE II
• Control List: Restructure separate USML, CCL into
identical “tiered” structures; apply criteria; remove U.S.
unilateral controls as appropriate; and submit
proposals multilaterally to add or remove controls
• Licensing: Complete transition to “mirrored” control
list system and harmonize licensing to allow authorized
exports within each control tier so as to reduce license
requirements without detriment to national security
• Enforcement: Expand outreach and compliance
through primary Enforcement Fusion Center and
various agencies
• Information Technology: Transition toward single
electronic licensing system
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PHASE III
• Control List: Merge current separate USML, CCL
into a single list and implement systematic process
to keep current as merged single list
• Licensing: Implement single licensing agency
• Enforcement: Consolidate certain enforcement
activities into single Primary Enforcement
Coordination Agency
• Information Technology: Implement single,
government-wide IT system for licensing and
enforcement
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Questions?