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Jenny Urquhart, Assistant General Counsel, UNT System Office of General Counsel

Explore U.S. export control regulations governing distribution of products, services & information to foreign entities for national security. Learn about ITAR, EAR, and OFAC laws.

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Jenny Urquhart, Assistant General Counsel, UNT System Office of General Counsel

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  1. Export Controls Basics Jenny Urquhart, Assistant General Counsel, UNT System Office of General Counsel Jamie Peno, Director of Research Compliance, Office of Research Integrity & Compliance UNT Office of Research & Economic Development

  2. Topics 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 2 UNT Office of Research & Economic Development

  3. 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 3 UNT Office of Research & Economic Development

  4. 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 4 UNT Office of Research & Economic Development

  5. Purposes of the Regulations • Implement foreign policy goals and objectives • Prevent terrorism • Restrict 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) 5 UNT Office of Research & Economic Development

  6. Federal Agencies with Primary Oversight of Export 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 6 UNT Office of Research & Economic Development

  7. Federal Agency Oversight 7 UNT Office of Research & Economic Development

  8. STATE DEPARTMENT: International Traffic in Arms 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 8 UNT Office of Research & Economic Development

  9. ITAR Regulations U.S. Munitions List (USML) 22 CFR 121.1 • Firearms, Close Assault Weapons/Combat Shotguns • Guns and Armament • Ammunition • Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines • Explosives, Propellants, Incendiary Agents • Vessels of War and Special Naval Equipment • Tanks and Military Vehicles 9 UNT Office of Research & Economic Development

  10. ITAR Regulations – U.S. Munitions List (cont.) • Aircraft and Associated Equipment • Military Training Equipment and Training • Protective Personnel Equipment and Shelters • Military Electronics • Fire Control, Range Finder, Optical and Guidance and Control Equipment • Auxiliary Military Equipment • Toxicological Agents including Chemical Agents, Biological Agents, and Equipment • Space Systems and Associated Equipments 10 UNT Office of Research & Economic Development

  11. ITAR Regulations – U.S. Munitions List (cont.) • Nuclear Weapons, Design and Testing Related Items • Classified Articles, Technical Data and Defense Service not Otherwise Enumerated • Directed Energy Weapons • Reserved • Submersible Vessels, Oceanographic and Associated Equipment • Miscellaneous Articles 11 UNT Office of Research & Economic Development

  12. Plano Resident Pleads Guilty to Smuggling Night-Vision Scopes to Russia • 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 12 UNT Office of Research & Economic Development

  13. Guilty Plea in California ITAR Sting • January 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 13 UNT Office of Research & Economic Development

  14. COMMERCE DEPARTMENT: Export Administration Regulations (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 14 UNT Office of Research & Economic Development

  15. Commerce 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 15 UNT Office of Research & Economic Development

  16. Excerpt from Commerce Country Chart 16 UNT Office of Research & Economic Development

  17. Differences Between ITAR and EAR ITAR • 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 17 UNT Office of Research & Economic Development

  18. 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. 18 UNT Office of Research & Economic Development

  19. President Obama’s Proposed Reform of Export 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 UNT Office of Research & Economic Development 19

  20. NACUA Notes: International Academic 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 Exemptions • Do 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 days • Step 4: Determine if the Travel Itself is Controlled • For example, OFAC has detailed regulations regarding travel to Cuba for educational or research purposes 20 UNT Office of Research & Economic Development

  21. Deemed 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 21 UNT Office of Research & Economic Development

  22. 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 22 UNT Office of Research & Economic Development

  23. University of Tennessee Professor – 4 Year Prison Sentence • 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. 23 UNT Office of Research & Economic Development

  24. Primary Exclusions from License Requirement for Dissemination of Information • Public Domain Exclusion (ITAR, EAR) • Education Exclusion (ITAR, EAR) • Fundamental Research Exclusion (ITAR, EAR) 24 UNT Office of Research & Economic Development

  25. Public Domain Exclusion (ITAR, 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 25 UNT Office of Research & Economic Development

  26. 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 26 UNT Office of Research & Economic Development

  27. Fundamental Research Exclusion (ITAR, EAR) • 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.” 27 UNT Office of Research & Economic Development

  28. U.S. Department of Defense Memorandum on Fundamental 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 28 UNT Office of Research & Economic Development

  29. Fundamental Research Exclusion (ITAR, EAR) (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 29 UNT Office of Research & Economic Development

  30. DEPARTMENT OF THE TREASURY: Office of 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 30 UNT Office of Research & Economic Development

  31. OFAC 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/ 31 UNT Office of Research & Economic Development

  32. Lists to Check for Individuals and Entities • Denied Persons ListThe 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 ListA 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. 32 UNT Office of Research & Economic Development

  33. 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 33 UNT Office of Research & Economic Development

  34. Red 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)? 34 UNT Office of Research & Economic Development

  35. Basic Questions for Determining License Requirements • What is the item or technology? • Where is it going? • Who will receive it? • What will be the end-use? 35 UNT Office of Research & Economic Development

  36. Time Considerations for Licenses from Departments 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 36 UNT Office of Research & Economic Development

  37. Administrative Penalties for Noncompliance • 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 37 UNT Office of Research & Economic Development

  38. 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 38 UNT Office of Research & Economic Development

  39. 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 39 UNT Office of Research & Economic Development

  40. 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 40 UNT Office of Research & Economic Development

  41. H-1B Form Includes Export Controls 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) 41 UNT Office of Research & Economic Development

  42. Contact for Export Controls Questions Jamie Peno Director of Research Compliance Office of Research Integrity & Compliance Jamie.Peno@unt.edu 940-565-3941 42 UNT Office of Research & Economic Development

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