Office of Grants and Contracts

Export Control

Basic Guidelines and

Updated Information on

Export Control Issues

What Is Export Control?

• Regulatory scheme to control the transfer of U.S. Technology to foreign entities

• Purpose: to protect national security, to further U.S. Policy, to protect short supplies

• Includes licensing procedures to allow sales and transfers of technology

• Imposes stiff civil and criminal sanctions for violations of export control laws

What Regulations Govern Export Control?

• ITAR: International Traffic in Arms Regulations

Administered by State Department

Applies to military technology, including items on U.S. Munitions List

• EAR: Export Administration Regulations

Administered by Commerce Department

Applies to “dual-use” technology, including items on Commerce Control List

What Regulations Govern Export Control?

• OFAC Sanction Regulations:

Administered by Treasury Department

Applies to a variety of transactions with certain foreign countries and officials, including financial transactions, contracts, travel arrangements and educational and research programs

What Is an Export?• Sending or taking a controlled article out of the

U.S.• Transferring a controlled article to a foreign

government (e.g., embassy, trade mission) within the U.S.

• Performing a “defense service” (e.g., training) for a foreign person, whether in the U.S. or abroad.

• Disclosing (including oral or visual disclosure) technical data to a foreign person, whether in the U.S. or abroad (a “deemed” export).

What Is a “Deemed” Export?

• Release of controlled technology (including source code) to a foreign person within the U.S.

• Such release is “deemed” to be an export to the home country of the foreign person.

• “Release” can include oral communication of information, visual observation of technology, physical or electronic access to technology, use of technology, and any other form of technology transfer.

Who or What Is a “Foreign Person”?

• Any natural person who is not– A U.S. citizen by birth– A naturalized U.S. citizen, including those with

dual citizenship– A lawful permanent resident of the U.S.– A “protected individual” (political refugee)

• Any foreign corporation or other business entity• Any foreign government or governmental agency

or subdivision

What exports are authorized?

• An export of a controlled item for which a license has been obtained.

• An export of a controlled item which is specifically permitted without a license.

• An export of an item which is exempt or excluded from export control regulation.

Export Control Exemptions

• Public domain or published information exemption

• Teaching exemption• Fundamental research exemption• Full-time employee exemption (ITAR only)• Various specific exemptions under ITAR or

EAR

Public Domain Exemption

• Information in the “public domain” is not controlled under ITAR or EAR, even if it otherwise is included in the USML or CCL

• “Public domain” means published and generally accessible to the public through– Sales at bookstores and newsstands– Subscriptions to periodicals and journals– Library materials– Releases at open conferences and meetings– Publicly available patents

Teaching Exemption

• Information released by instruction in catalog courses and associated teaching laboratories of academic institutions not subject to EAR

• Information concerning general scientific, mathematical or engineering principles commonly taught in schools, colleges and universities not subject to ITAR

• Exemption does not apply to encryption software

Fundamental Research Exemption

• Basic and applied research in science and engineering at accredited institutions of higher learning in the U.S.

• Where the resulting information is ordinarily published (actually published under ITAR) and shared broadly within the scientific community.

• Distinguished from research the results of which are restricted for proprietary reasons or specific U.S. government access and dissemination controls.

Full-Time Employee Exemption

• Available under ITAR only• Release of unclassified information to

foreign persons in the U.S. exempt if:– Full-time, bona fide university employee– Permanent abode in U.S. during employment– Not a national of an embargoed country– Institution informs employee in writing of

export control restrictions

Export Control ConsiderationsBasic Approach

• Full compliance with export control laws• Assurance that, to the maximum extent

possible, instruction and research can be conducted openly and without restriction as exempt teaching or fundamental research

• Preservation of ability to undertake classified research and other activities in a secure environment

Export Control ConsiderationsSpecific Factors

• Nature and Subject of work • Involvement of foreign nationals • Publication restrictions• Access and dissemination controls• Information provided by sponsor• Information about research equipment• Services provided in connection with research• Physical exports

Nature of Work

• Basic research– Systemic study directed toward greater

knowledge or understanding of the fundamental aspects of phenomena and of observable facts without specific applications toward processes or products in mind.

Nature of Work

• Applied research– Systemic study to gain knowledge or

understanding necessary to determine the means by which a recognized and specific need may be met.

Nature of Work

• Development– Systemic application of knowledge toward the

production of useful materials, devices, and systems or methods, including design, development, and improvement of prototypes and new processes, to meet specific requirements.

Subject of WorkArticles and Information Controlled

under the EAR

• “Dual Use” items (Commodities, software and technology with both civilian and military applications) included on the CCL

• CCL items classified by ECCN • Export controls on specific ECCN’s are

– Reason specific, – Country specific, and– End use and end-user specific

Subject of WorkCCL Categories

• 0: Nuclear materials, facilities and equipment

• 1: Materials, chemicals, microorganisms and toxins

• 2: Materials processing

• 3: Electronics

• 4: Computers

Subject of WorkCCL Categories Continued

• 5: Telecommunications and information security

• 6: Lasers and sensors• 7: Navigation and avionics• 8: Marine• 9: Propulsion systems, space vehicles and

related equipment• EAR 99

Subject of WorkArticles and Information Controlled

Under ITAR

• Defense Articles included on USML

• Defense Services related to Defense Articles

• Technical Information related to Defense Articles

Subject of WorkDefense Articles Controlled Under ITAR

• Specifically designed, developed, configured adapted or modified for a military application, and– Does not have predominant civil applications, and

– Does not have performance equivalent to those of an

article used for civil applications; or

• Specifically designed, developed, configured, adapted or modified for a military application, and has significant military or intelligence applicability such that control is necessary.

Subject of WorkUSML Categories

I Firearms, Close Assault Weapons, Combat Shotguns

II Guns and ArmamentIII Ammunition/OrdnanceIV Launch Vehicles, Guided Missiles, Ballistic

Missiles, Rockets, Torpedoes, Bombs and MinesV Explosives and Energetic Materials, Propellants,

Incendiary Agents and their ConstituentsVI Vessels of War and Special Navy EquipmentVII Tanks and Military VehiclesVIII Aircraft and Associated Equipment

Subject of WorkUSML Categories Continued

IX Military Training Equipment

X Protective Personnel Equipment

XI Military Electronics

XII Fire Control, Range Finder, Optical and Guidance and Control Equipment

XIII Auxiliary Military Equipment

XIV Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment

XV Spacecraft Systems and Associated Equipment

Subject of WorkUSML Categories Continued

XVI Nuclear Weapons, Design and Testing Related Items

XVII Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated

XVIII Directed Energy Weapons

XIX [Reserved]

XX Submersible Vessels, Oceanographic and Associated Equipment

XXI Miscellaneous Articles

Involvement of Foreign Nationals

• Many foreign faculty members are either naturalized citizens or permanent residents

• Most foreign students are neither naturalized citizens nor permanent residents

• Exclusion of foreign persons from research activities is problematic– Discrimination, privacy and competence issues– Legal issues– Does not prevent access to research data

in non-secure facilities

Publication Restrictions

• Fundamental Research exemption not applicable if: – Publication is prohibited

– Indefinite prepublication review or review for purposes other than protecting proprietary information is required

– Confidentiality provisions restrict publication

• Temporary prepublication review to

protect proprietary information is ok

Contractual Publication Restrictions

• DFAR 242-204-7000:“Contractor shall not release to anyone outside the Contractor’s organization any unclassified information, regardless of the medium, pertaining to any part of this contract or any program related to this contract.”

• ARL 52.005-4401Includes references to “non-releasable unclassified information” and a requirement to “confer and consult” prior to release of information

Access and Dissemination Controls

• Fundamental research exemption will not apply if:– Research is sponsored by U.S. government, and– Specific access and dissemination controls

protecting research information are applicable• Access and Dissemination controls include:

– Security classification required for personnel or information

– Restrictions on use of foreign personnel– Publication restrictions

Contractual Foreign Personnel Restrictions

• AFMCFAR 5352.227-9000“The Contractor shall notify the Contracting Officer and obtain written approval of the Contracting Officer prior to assigning or granting access to any work, equipment, or technical data generated or delivered under this contract to foreign persons or their representatives.”

• DOD SBIR Solicitation“If the offeror proposes to use foreign national(s) …as key personnel, the following information should be provided: Individual’s full name, date of birth, place of birth, nationality,…visa information, port of entry, type of position …and copy of visa ….”

Information Provided by Sponsor

• Fundamental research not affected by sponsor-imposed use restrictions on information it provides for research purposes if publication of research results remains unrestricted

• Fundamental research exemption will not apply if sponsor imposes restrictions which prohibit publication of information provided for research purposes

Services Provided in Connection with Research

• A “defense service” under ITAR includes instruction or training provided to foreign persons in the U.S. regarding the design, development, engineering, manufacture, assembly, testing and use of defense articles

• A license (TAA) to provide instruction to foreign persons regarding a defense article is required even if all of the information provided results from fundamental research and is in the public domain

Export Licenses

• A license may be required if:– Transfer of controlled technical information or

technology to a foreign person or entity is contemplated

– A Defense Service is to be provided– An actual physical export of a controlled article

will occur– A licensing exemption is not available

Export LicensesEAR Licensing

• Administered by Bureau of Industry and Security, Department of Commerce

• Electronic (SNAP System) and paper applications accepted

• Additional documentation required for “Deemed Export” applications

Export LicensesITAR Licensing

• Administered by Directorate of Defense Trade Controls, State Department

• Registration and annual fee required for export privileges, including licensing

• Electronic (DTrade System) license applications for physical exports, deemed exports, and TAA’s

Export LicensesShipping Licensed Articles

• Shipments of merchandise out of the U.S. which are subject to export licenses require a Shipper’s Export Declaration (SED).

• An electronic system (AESDirect) is used to file SED’s for licensed shipments.

• SED’s require information on points of export and import, foreign consignees, merchandise value, licensing details, etc.

Export Control Penalties and Enforcement

• Denial of export privileges

• Civil penalties up to $500,000 for each violation

• Criminal penalties up to $1,000,000 for each violation

• Imprisonment up to 10 years

Export ControlPenalties and Enforcement

Dr. Thomas Butler, Texas Tech University: Reported that 30 vials of plague bacteria were missing and presumably stolen from his lab. Investigation revealed that Dr. Butler had illegally exported the bacteria to Tanzania.

The Penalty: Sentenced to two years in prison and resigned from Texas Tech.

Export ControlPenalties and Enforcement

Suntek Microwave: Failed to obtain export licenses for shipments of detector log video amplifiers to a Chinese company, and failed to acquire deemed export licenses for Chinese nationals employed at Suntek.

The Penalty: Suntek assessed a $275,000 administrative penalty and $339,000 criminal fine. CEO sentenced to 12 months imprisonment and $187,000 administrative penalty.

Export ControlPenalties and Enforcement

Atmospheric Glow Technologies: University of Tennessee professor failed to obtain licenses to provide controlled data to Chinese and Iranian nationals employed by his company.

The penalty: Convicted on 18 counts of conspiracy and Arms Control Act violations. Sentenced to 4 years in prison.

Overriding Research Considerations

• National Security concerns

• Public Safety Concerns

• Development of Weapons of Mass Destruction

NMSU Export Control Compliance

• Export Control Website– http://research.nmsu.edu/export.html

• Export Control Policy/Technology Control Plan

• Export Control Procedures

• Export Control Forms

• Export Control Training

NMSU Export ControlProcedures

• Pre- and Post-Award Screening by College Research Centers and OGC

• Negotiation of restrictive contract clauses

• Consultation with Export Control Officer

• Special arrangements for export controlled projects

• Licensing for physical exports