UNT Office of Research & Economic Development
Jenny Urquhart, Assistant General Counsel, UNT System Office of General Counsel
Boyd Herndon, Director of Research Compliance, Office of Research Integrity & Compliance
Export Controls BasicsExport Controls Basics
Topics to be CoveredTopics to be Covered What are export controls and their purposes? Overview of the basic regulations issued by the U.S.
Departments of State, Commerce, and Treasury Issues of concern for university researchers
♦ Deemed Exports♦ Public Domain Exclusion♦ Fundamental Research Exclusion♦ Troublesome Contract Clauses
Foreign Travel Restrictions Penalties for Noncompliance
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What is an Export?What is an Export?
The transfer of anything (including goods and know-how) to a “Foreign Person” by any means, anywhere, anytime, including on U.S. soil
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What are Export Controls?What are Export Controls? U.S. laws and regulations that govern the
distribution to foreign nationals and foreign countries of strategically important products, services and information for reasons of foreign policy and national security
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Purposes of the Regulations Purposes of the Regulations
Implement foreign policy goals and objectivesPrevent terrorismRestrict exports of goods and technology that
could contribute to U.S. adversaries’ military potential
Restrict exports of goods and technology that could damage the vitality and critical interests of the U.S. economy
Prevent proliferation of weapons of mass destruction (chemical, biological, nuclear)
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Federal Agencies with Primary Oversight of Federal Agencies with Primary Oversight of Export Control LawsExport Control Laws
Department of State – International Traffic in Arms (ITAR) - technologies with inherently military properties
Department of Commerce – Export Administration Regulations (EAR) – technologies with “dual uses” but primarily commercial
Department of the Treasury – Office of Foreign Asset Control (OFAC) – prohibits or limits transactions of value and travel with certain countries and individuals
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Federal Agency OversightFederal Agency OversightCommerce Department State Department Treasury Department
Export Administration Act
Arms Export Control Act Trading with the Enemy Act, Int’l Emergency
Economic Powers Act, & Others
Export Administration Regulations (“EAR”)
15 C.F.R. Parts 700-799
International Traffic in Arms Regulations
(“ITAR”)22 C.F.R. Parts 120-130
Iraq Sanctions Regulations, Terrorism
Sanctions Regulations, & Others
31 C.F.R. Parts 500-599
Commerce Control List U.S. Munitions List List of Specially Designated Nationals &
Blocked Persons
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STATE DEPARTMENT: International Traffic in STATE DEPARTMENT: International Traffic in Arms Regulations (ITAR) 22 CFR Parts 120 - 130Arms Regulations (ITAR) 22 CFR Parts 120 - 130
U.S. Munitions List (USML) contains the military items, the defense articles (including technical data which, unlike EAR, encompasses software) and services (furnishing technical services assistance, including design, engineering and use of defense articles) which are controlled
Based primarily on whether an article or service is deemed to be military in character
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ITAR RegulationsITAR RegulationsU.S. Munitions List (USML) 22 CFR 121.1I. Firearms, Close Assault Weapons/Combat ShotgunsII. Guns and ArmamentIII. AmmunitionIV. Launch Vehicles, Guided Missiles, Ballistic Missiles,
Rockets, Torpedoes, Bombs and MinesV. Explosives, Propellants, Incendiary Agents VI. Vessels of War and Special Naval EquipmentVII. Tanks and Military Vehicles
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ITAR Regulations – U.S. Munitions List (cont.)ITAR Regulations – U.S. Munitions List (cont.)
VIII. Aircraft and Associated Equipment IX. Military Training Equipment and TrainingX. Protective Personnel Equipment and SheltersXI. Military ElectronicsXII. Fire Control, Range Finder, Optical and Guidance and
Control EquipmentXIII. Auxiliary Military EquipmentXIV. Toxicological Agents including Chemical Agents,
Biological Agents, and EquipmentXV. Space Systems and Associated Equipments
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ITAR Regulations – U.S. Munitions List (cont.)ITAR Regulations – U.S. Munitions List (cont.)
XVI. Nuclear Weapons, Design and Testing Related Items
XVII. Classified Articles, Technical Data and Defense Service not Otherwise Enumerated
XVIII. Directed Energy WeaponsXIX. Reserved XX. Submersible Vessels, Oceanographic and
Associated Equipment XXI. Miscellaneous Articles
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Plano Resident Pleads Guilty to Smuggling Plano Resident Pleads Guilty to Smuggling Night-Vision Scopes to Russia Night-Vision Scopes to Russia
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Anna Fermanova arrested in July 2010 for attempting to smuggle night-vision rifle scopes stuffed in Ugg boots in luggage on flight to Russia
Items on U.S. Munitions list, license required to export
January 2011 – guilty plea for felony violation of Arms Export Control Act; to be sentenced in April
Fermanova outside courthouse in Brooklyn
Guilty Plea in California ITAR StingGuilty Plea in California ITAR StingJanuary 2011 – Simi Valley resident Marc
Knapp pled guilty to ITAR felonies for attempting to export to Iran an F-14 fighter jet, 5 anti-gravity flight suits, military aircraft parts and other controlled technology
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COMMERCE DEPARTMENT: COMMERCE DEPARTMENT: Export Administration Export Administration Regulations (EAR) 15 CFR Parts 730-774Regulations (EAR) 15 CFR Parts 730-774
The Commerce Control List (CCL) contains “dual use” commodities, (capable of both military or commercial use) technology, and software subject to the EAR; identified by an Export Classification Control Number (ECCN)
Licensing handled by Commerce Department’s Bureau of Industry and Security (BIS)
The inherent capabilities and design, not the end use, determine whether the item falls under the ITAR or the EAR
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Commerce Control List (CCL) CategoriesCommerce Control List (CCL) Categories Category 0 - Nuclear Materials, Facilities and Equipment and Misc. Category 1 - Materials, Chemicals, Microorganisms and Toxins Category 2 - Materials Processing Category 3 - Electronics Category 4 - Computers Category 5 - Part 1 - Telecommunications Category 5 - Part 2 - Information Security Category 6 - Lasers and Sensors Category 7 - Navigation and Avionics Category 8 - Marine Category 9 - Propulsion Systems, Space Vehicles and Related Equipment
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Excerpt from Commerce Country ChartExcerpt from Commerce Country Chart
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Differences Between ITAR and EARDifferences Between ITAR and EARITAR Defense articles: any item or technical data designated in the USML. This
term includes technical data recorded or stored in any physical form, models, mockups or other items that reveal technical data directly relating to items designated in the USML
Defense services: includes the furnishing of assistance (including training) to foreign persons, whether in the U.S. or abroad in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of defense articles
Technical data: includes information, in any form, which is directly related to the design, engineering, development, production, processing, manufacture, use, operation, overhaul, repair, maintenance, modification, or reconstruction of defense articles
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Differences Between ITAR and EAR (cont.)Differences Between ITAR and EAR (cont.)
EAR Regulates “dual use” items: 10 Commerce Control List
categories of different technologies (equipment, tests, materials, software and technology)
Regulates items designed for commercial purposes but that can have military applications (computers, pathogens, civilian aircraft, etc.)
Covers goods, test equipment, materials and the technology (technical data and technical assistance) and software
Covers “re-export” of foreign commodities incorporating U.S. origin controlled items outside the U.S.
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President Obama’s Proposed Reform of President Obama’s Proposed Reform of Export Controls Regulations - 2010Export Controls Regulations - 2010
U.S. Munitions List and Commerce Control List would be replaced with a single list of commodities & technologies, with a grouping of 3 tiers of controls based on their sensitivity
Creation of an “Export Enforcement Coordination Center” to improve coordination and eliminate duplication between federal agencies
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NACUA Notes: International Academic NACUA Notes: International Academic Travel & Export Controls (8/8/09)Travel & Export Controls (8/8/09)Step 1: Identify the Applicable Regulations
Does the traveler plan to take any controlled information or materials or send or deliver any controlled goods to non-U.S. persons outside the U.S.?
Step 2: Identify Any Applicable Exclusions or ExemptionsDo the EAR’s baggage (BAG) and temporary export (TMP)
license exemptions apply?Step 3: Obtain Any Necessary Export Licenses
Keep in mind agency processing times may exceed 30 daysStep 4: Determine if the Travel Itself is Controlled
For example, OFAC has detailed regulations regarding travel to Cuba for educational or research purposes
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Deemed ExportsDeemed Exports
Export controls cover transfers of certain goods and technology within the U.S. to anyone EXCEPT U.S. citizens or permanent residents (“green card” holder)
Applies to technology transfers under the EAR and ITAR’s technical data and defense services
Unless the fundamental research exclusion (or other exclusion) applies, a university’s transfer of controlled technology to anyone OTHER THAN a U.S. citizen or permanent resident may be controlled and/or prohibited
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Deemed Exports (cont.)Deemed Exports (cont.)
Potential recipients of controlled information in the university environment: research assistants, students, & visiting researchers who are not U.S. citizens or permanent residents
Methods of sharing include visual inspection, e-mails, oral exchanges of information
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University of Tennessee Professor – 4 Year Prison University of Tennessee Professor – 4 Year Prison SentenceSentence July 2009 – Retired Univ. of Tennessee professor Dr.
John Roth, 72, sentenced to 4 years in prison for violation of Arms Export Control Act
Convicted of exporting to China “technical data” (as defined in ITAR’s Munitions List) related to USAF research and development contract to develop plasma technology for use on an unmanned aerial vehicle (drone)
♦ U.S. government alleged that Roth did not obtain permission to take sensitive documents to China on his laptop computer and lied to the Defense Department about his employment of a Chinese foreign national and an Iranian foreign national. ♦ Both graduate research assistants were given unrestricted access to information about the technology developed for use in the Air Force drones.
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Primary Exclusions from License Requirement for Primary Exclusions from License Requirement for Dissemination of InformationDissemination of Information
Public Domain Exclusion (ITAR, EAR)
Education Exclusion (ITAR, EAR)
Fundamental Research Exclusion (ITAR, EAR)
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Public Domain Exclusion (ITAR, Public Domain Exclusion (ITAR, EAR)EAR) Export controls do not apply to information and research
results already published and publicly available from:
♦ Libraries, bookstores, or newsstands
♦ Trade shows, meetings, seminars in the U.S. open to the public
♦ Published in certain patent applications
♦ Websites accessible to the public
♦ Courses listed in a university catalog of a general nature
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Education Exclusion (ITAR, EAR)Education Exclusion (ITAR, EAR)
No license is required to share with foreign nationals “information concerning general scientific, mathematical or engineering principles commonly taught in universities or information in the public domain”
Students using controlled equipment to conduct research should be registered for a research credit class
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Fundamental Research Exclusion (ITAR, EAR)Fundamental Research Exclusion (ITAR, EAR)
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No license is required to disclose to foreign nationals information which is “published and which is generally accessible or available to the public [through, for example] fundamental research in science and engineering at universities where the resulting information is ordinarily published and shared broadly in the scientific community.”
♦ NOTE: ITAR states “published” rather than “ordinarily published.”
U.S. Department of Defense Memorandum on U.S. Department of Defense Memorandum on Fundamental Research – June 26, 2008Fundamental Research – June 26, 2008
Reaffirms that the results of fundamental research should be unrestricted with the rare exception of cases where there is a high likelihood of disclosing performance characteristics on military systems or manufacturing technologies♦ “Compelling reasons” required before DOD should place
controls on applied research performed on a university campus
Mandated broad training of relevant DOD personnel and ongoing monitoring for compliance
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Fundamental Research Exclusion (ITAR, EAR) Fundamental Research Exclusion (ITAR, EAR) (cont.)(cont.)Fundamental Research Exclusion destroyed if the
university accepts any contract/grant that:♦ Forbids the participation of foreign nationals;♦ Gives the sponsor a right to approve publications resulting
from the research; or♦ Otherwise operates to restrict participation in research
and/or access to and disclosure of research results
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DEPARTMENT OF THE TREASURY: Office of DEPARTMENT OF THE TREASURY: Office of Foreign Assets Control (OFAC)Foreign Assets Control (OFAC) Economic sanctions focus on end-user or country rather than
the technology and may limit transfer of technology or assistance to OFAC’s list of embargoed countries and specific individuals
Prohibitions on trade with countries such as Iran and Cuba
Limitations on activities in certain areas of countries or with certain non-state actors
OFAC prohibits payments or providing “value” to nationals of sanctioned countries
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OFAC SanctionsOFAC Sanctions
Afghanistan, Balkans, Belarus, Burma, Cote d’Ivoire (Ivory Coast), Cuba, Iran, Liberia, North Korea, Sudan, Syria, and Zimbabwe
For full, up to date listing, see OFAC website: http://www.treas.gov/offices/enforcement/ofac/
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Lists to Check for Individuals and Entities Lists to Check for Individuals and Entities Denied Persons List
The Commerce Department’s list of individuals and entities that have been denied export privileges. Any dealings with a party on this list that would violate the terms of its denial order is prohibited.
Unverified ListA list of parties where Commerce (BIS) has been unable to verify the end-user in prior transactions. The presence of a party on this list in a transaction is a “Red Flag” that should be resolved before proceeding with the transaction.
Entity List A list of parties whose presence in a transaction can trigger a license requirement under the EAR. The list specifies the license requirements that apply to each listed party.
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Lists to Check for Individuals and Entities (cont.)Lists to Check for Individuals and Entities (cont.)
Specially Designated Nationals ListA list compiled by Treasury Department (OFAC). OFAC’s regulations may prohibit a transaction if a party on this list is involved
Debarred ListA list compiled by the State Department of parties who are barred by §127.7 ITAR (22 CFR §127.7) from participating directly or indirectly in the export of defense articles, including technical data or in the furnishing of defense services for which a license or approval is required by the ITAR
Nonproliferation SanctionsSeveral lists compiled by the State Department of parties that have been sanctioned under various statutes
Links to the above lists are located on the U.S. Commerce Department’s Bureau of Industry and Security (BIS) website at: http://www.bis.doc.gov/complianceandenforcement/liststocheck.htm
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Red Flags for Research ProjectsRed Flags for Research Projects Does the UNT research project involve:
♦ Shipping equipment to a foreign country?♦ Collaborating with colleagues in foreign countries?♦ Foreign travel? ♦ Technology or devices for use in military, security, or
intelligence?♦ Training foreign nationals in using equipment?♦ Is the RFP marked “Export Controlled”?♦ Is the sponsor demanding restrictions on participation of
foreign nationals or pre-approval rights over publications (other than reviews for protection of the sponsor’s patents or proprietary information)?
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Basic Questions for Determining License Basic Questions for Determining License RequirementsRequirements
What is the item or technology? Where is it going? Who will receive it? What will be the end-use?
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Time Considerations for Licenses from Time Considerations for Licenses from Departments of State, Commerce & TreasuryDepartments of State, Commerce & Treasury
Average processing times♦ EAR: 45 days♦ ITAR: 90 days (but can take up to a year)♦ OFAC: 60-90 days
Validity period♦ EAR: 2 years♦ ITAR: 4 years♦ OFAC: 1 year
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Administrative Penalties for Administrative Penalties for NoncomplianceNoncompliance
Termination of export privileges (EAR and ITAR);
Suspension and/or debarment from government contracting (EAR and ITAR);
Voluntary disclosure of violations and compliance efforts serve as “mitigating factors” in deciding penalties
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Penalties for EAR Violations/Noncompliance:Penalties for EAR Violations/Noncompliance:
Criminal (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/corporations
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Penalties for ITAR Violations/Noncompliance:Penalties for ITAR Violations/Noncompliance:
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
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Penalties for OFAC Violations/Noncompliance:Penalties for OFAC Violations/Noncompliance:
Criminal (willful) violations:♦ Fine of no more than $1M for companies♦ Fine of no more than $100K for individuals
(including corporate officers) and/or 10 years imprisonment
Civil penalties:♦ Fine up to $55K for each violation by any person
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H-1B Form Includes Export H-1B Form Includes Export Controls Controls Certification by Sponsoring Entity Certification by Sponsoring Entity
Effective Feb. 20, 2011, U.S. Citizenship & Immigration Services (USCIS) form I-129 (“Petition for an Immigrant Worker”) includes sponsoring entity’s certification whether release of any controlled technology or technical data to the beneficiary will require a license from the Department of Commerce (under the EAR) or the Department of State (under the ITAR)
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Contact for Export Controls Questions Contact for Export Controls Questions
Boyd HerndonDirector of Research ComplianceOffice of Research Integrity &
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