Transcript Export Control Act - Office of Research and Economic Development

EXPORT COMPLIANCE
Export Compliance Awareness
Graduate Program Directors
March 26 meeting Room 411 College Avenue Student
Center
Robert Phillips
Rutgers Export Compliance Officer
3/26/2014
Some History
1774- The First Continental Congress convened in Carpenter's Hall in
Philadelphia and the following December the Congress declared the
importation of British goods to be illegal. Twelve months later the
Congress outlawed the export of goods to Great Britain, thus establishing
the first American export controls.
1940-Congress passes the Export Control Act, forbidding the exporting of
aircraft parts, chemicals, and minerals without a license. This prohibition
was a reaction to Japan's occupation of parts of the Indo-Chinese coast.
1976- The Arms Export Control Act –gives the President the authority to
control the import and export of defense articles and defense services.
1979- The Export Administration Act -legal authority to the President to
control U.S. exports for reasons of national security, foreign policy, and/or
short supply.
2001-Patriot Act- Post 9/11
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Why Rutgers Why Now ?
• Following the events of 9-11, the Federal government has increasingly
viewed export control regulations as a means to potentially guard against
terrorism and other threats. As a result, there is renewed focus on
compliance and enforcement of these regulations, in particular at
universities.
• Foreign governments are targeting universities to “obtain restricted
information or products.
– FBI said in a 2011 report.
• The number of voluntary disclosures by industry and academia is
increasing 10 percent a year
– State Department official.
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What are the Export Control Laws?
• U.S. federal government laws and regulations that require review
and in some cases federal agency approval prior to the export of
items, commodities, technology, software or information to foreign
countries, persons and entities (including universities).
• Exporters obligation to determine the applicable export control
regulations and to apply those regulations to the export
transaction.
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What is an Export
• Any oral, written, electronic or visual disclosure, shipment, transfer or
transmission outside of the United States to anyone, including a U.S.
citizen, of any commodity, technology (information, technical data, or
assistance) or software/codes.
• Any oral, written, electronic or visual disclosure, transfer or transmission
of a commodity, technology or software/codes to a non-U.S. entity or
individual, wherever located (even to a foreign professor/student at The
University).
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Also an Export
• Deemed Export– "Deemed Export" is a term used by the Commerce Department. An
export of technology or source code is "deemed" to take place when it
is released to a foreign national within the United States.
– Although the State Department does not use this term, but rather
includes this concept in its definition of export, Rutgers University will
use the term "deemed export" when discussing access by foreign
nationals to controlled information within the United States, without
regard to which agency may have cognizance over the transaction.
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Also an Export
• Re-export-shipment or transmission of an item subject to the EAR
from one foreign country (i.e., a country other than the United
States) to another foreign country.
• A reexport also occurs when there is “release” of technology or
software (source code) subject to the EAR in one foreign country to
a national of another foreign country.
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Foreign National
• The term "foreign national" refers to everyone other than a U.S.
citizen, a permanent resident alien, and certain "protected
individuals" (refugees and those with asylum), it includes any
company not incorporated in the United States.
• For purposes of Export Controls, individuals on a visa (including
foreign visiting faculty) are considered foreign nationals.
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Export Laws and Rutgers
• Majority of research not impacted
• But potential impact on:
– Ability of foreign students to participate in research involving a
controlled technology
– Ability to provide services (including training in the use of controlled
equipment) to foreign nationals
– Ability to send controlled equipment, faculty and students to foreign
countries
– Ability to publish and perform open research
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Who Controls Exports?
• There are three federal government agencies responsible for
implementing the export control regulations:
– Commerce Department: “Dual-Use” technologies (primary
civil use and some military) -- Export Administration
Regulations (EAR)
– State Department: Inherently military technologies-International Traffic in Arms Regulations (ITAR)
– Treasury Department, Office of Foreign Assets Control
(OFAC): Prohibits transactions with countries subject to
boycotts, trade sanctions, embargoes
• Enforcement is grounded in voluntary compliance, in essence an
honor system.
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Exports on Campus
• Foreign Nationals
– All transactions with a foreign national ON CAMPUS is to
be “DEEMED” as an export.
– “USE” of High Tech Equipment
– Research
– Dealing with entities on U.S. Government lists
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Exports off Campus
• Travel
– You are the exporter
– Includes Hand Carry
– Collaboration with foreign persons, companies and
Universities
– International
• Fax, e-mail, phone call, cloud, discussions
– TRANSHIPMENTS!
– Dealing with entities on U.S. Government lists
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Exclusions, Exceptions and Exemptions
• Exclusion-Not Subject to EAR or ITAR regulations.
• Exception-Authorization to export items subject to the EAR without
obtaining an export license.
• Exemption-Permit the permanent or temporary export or
temporary import of defense articles and technical data by U.S.
persons in lieu of obtaining a U.S. license from the U.S. Department
of State.
• If your research/project does not meet the requirements of an
Exclusion, Exceptions and Exemptions will be reviewed on a case by
case basis.
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Exclusions
• Fundamental Research
– 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 and
from industrial development, design, production, and product
utilization, the results of which ordinarily are restricted for proprietary
or national security reasons.
• Public Domain
– Publicly accessible through books, periodicals (hardcopy or electronic)
and generally distributed media, unrestricted subscriptions and
websites that are free (or available for less than
production/distribution costs), libraries, patents or open (published)
patent applications, release at open conferences, seminars and trade
shows.
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Exclusions
• Educational Information
– Instructional content of curriculums for all students, including foreign
nationals, that exist in general science, math and engineering
principles commonly taught through courses, and associated teaching
laboratories. Must be listed in course catalogs.
• Employment
– An ITAR license not required for colleges and universities to share
information in the U.S. with a foreign person if that person:
– Is a bona fide employee of the university — full time with benefits
– Is not a national from an embargo country
– Resides at a permanent address in the U.S. while employed
– And, is advised in writing not to share covered technical data with any
other foreign nationals without government approval.
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University Strategy
• Protect fundamental research exclusion by
eliminating contractual clauses that deny our ability
to claim the exclusion.
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What is not covered
• ITAR Controlled Hardware, Technology or Services.
• EAR controlled equipment:
• Equipment classified under EAR:
– Rutgers will NOT disclose technology necessary for the
"development," "production," or "use" of High Tech or experimental
equipment.
• New definition of “use” – must meet ALL SIX of the following
activities:
– Operation
– Installation
– Maintenance
– Repair
– Overhaul
– Refurbishing
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The Following may deny “Fundamental Research”
• Forbids the participation of foreign nationals
• Restrictions on the publication of the results of the project
• Any agreements outside original
– Non-disclosure agreement or acceptance of export-controlled
information
• The agreement requires sponsor approval prior to publication
– Sponsor “Review” vs. “Approval”
– Okay to review and comment up to 60 days, but not approve
• The government contract involves an ITAR project with access and
dissemination of information controls
• There is a transfer of defense services
– Potential license requirements for work with foreign nationals
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Non-Disclosure Agreement (NDA)
• NDA’s containing a confidentiality clause may not
compromise the Fundamental Research clause.
– If the purpose of the NDA is to safeguard proprietary
background information and in no way restricts research
results.
• BUT
– If the purpose of the NDA is also to safeguard export
controlled information, we need to determine
classification (EAR/ITAR) and the extent to which the
project can be performed with either no transfer of
controlled data or restrictions on transfer of controlled
data to Foreign Nationals.
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Red Flags
 Does the Project involve
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Export Control Clause
Access to location
Publication Restrictions (Approval Needed)
Foreign National Restrictions
Confidential Research
Shipping Equipment to a Foreign Country
Collaboration with Foreign Colleagues Abroad
Classified/Sensitive Matter
Software, Controlled Chemicals, Bio-Agents
Use for Weapon of Mass Destruction
Item or Software Modified for Military Use
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Penalties
• 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
• Bass-Pro - $510K for shipping guns without a license
• Dr. Thomas Butler, Texas Tech – 2 years in prison for making
fraudulent claims and unauthorized exports (plague bacteria)
• ITT fined $100M for exporting night vision materials without
license
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Penalties
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OFAC
– Criminal: $50K TO $10M per violation and 10 to 30 years imprisonment
– Civil: $11K to $1M per violation
– Example
• Augsburg College, Minneapolis, MN fined $9,000 for 4 trips to Cuba;
attorney negotiated reduction in fine from $36,000
• Sep 2009 - Thermon Manufacturing, San Marcos, Texas, fined $14,613 for
three shipments to Sudan. Fine significantly reduced because they
disclosed to OFAC
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 (Univ. TN) convicted on 9/3/08 and recently sentenced to
four years
• Raytheon fined $25M
• Hughes Electronics and Boeing Satellite Systems - $32M
• Boeing - $4.2M
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• Lockheed Martin - $13M
Penalties
MOST RECENT
3-18-14
University OF Michigan Medical Researcher Prosecuted for
Sending Medical Device to Iran
http://www.exportlawblog.com/archives/5871
5-2-13
UMass Lowell Fined For Entity List Violations
http://www.exportlawblog.com/archives/5070
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Penalties
• Adding insult to injury
– Termination of export privileges (EAR and ITAR)
– Suspension and/or debarment from government
contracting (EAR and ITAR)
• Don’t let this happen to you:
– http://vpr.rutgers.edu/export.php#happen
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Lets review
Q: Are export controls at a University something new?
A: No, but focus on compliance of export controls has been increased
since 9-11 (pg 2 &3).
Q: I have a foreign national at Rutgers working on research, is that an
export?
A: Yes, this is called a deemed export (pg 6), but remember not all
exports are controlled, you may be covered under an exclusion (pg
19).
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Lets review
Q: I am giving a presentation in China next week.
A: You may be covered by an exclusion or exception (pg 19). You can
review the Rutgers International Travel Module or contact the
Rutgers Export Control Officer.
Q: The presentation is at Beijing University of Aeronautics and
Astronautics, I see they are on the consolidated list you have on
page 17. What should I do?
A: Beijing University of Aeronautics and Astronautics is on the BIS
Entity List (EL). You still maybe may covered by an exclusion (pg 19),
this will probably require a review by the Rutgers Export Control
Officer.
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Lets review
Q: My research is covered under the Fundamental Research exclusion
but I have foreign nationals using the Blue-Gene/P, IBM super
computer. Should I be concerned?
A: The Blue-Gene/P is controlled by the EAR. As long as the technology
disclosed to the foreign national does not meet the EAR definition
(pg 23), you remain under the Fundamental Research exclusion.
Q: I am working on a sub-contract to a NASA grant, what issues might I
have?
A: With any agreement you want to keep within the Fundamental
Research guidelines. NASA also has other restrictions that pertain
to the Chinese Government and Chinese Entities. You may want to
review: NASA Funding Restrictions with Chinahttp://vpr.rutgers.edu/export.php
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Contact
• Rutgers Export Compliance Officer (RECO), Robert Phillips, is
available to meet with individuals or groups to provide
assistance, training or explain the regulations as they may be
applicable to the work being done.
• He can be reached at 848-932-4522, or via email at
[email protected]
• The Export Compliance website:
– http://vpr.rutgers.edu/export.php
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