U.S. Export Controls: Background
Concerns about the inappropriate transfer of new information, technologies, and products with military applications outside the U.S. led to the passage of laws in the late 1970's that control exports of selected technologies and products. The three relevant statutes are: Section 38 of the Arms Export Control Act (22 USC 2778); the Export Administration Act of 1979 (50 USC app. 2401 - 2420); and the International Emergency Economic Powers Act (50 USC 1701 - 1706)
Implementing regulations for the Arms Export Control Act are found in the International Traffic in Arms Regulations (ITAR) at 22 CFR 120-130 administered by Department of State. Implementing regulations for the other two statutes are found in the Export Administration Regulations (EAR) at 15 CFR 730-774 administered by the Department of Commerce.
ITAR
The scope of the ITAR is “defense articles and defense services.” A defense article is any item appearing on the U.S. Munitions List (§ 121.1) and a defense service is essentially the furnishing of technical assistance, training, or technical data related to defense articles. While the munitions list is rather lengthy, a practical definition can be gleaned from § 120.3: An article or service may be designated or determined in the future to be a defense article (see § 120.6) or defense service (see § 120.9) if it:
(a) Is specifically designed, developed, configured, adapted, or modified for a military application, and
(i) Does not have predominant civil applications, and
(ii) Does not have performance equivalent (defined by form, fit and function) to those of an article or service used for civil applications; or
(b) Is specifically designed, developed, configured, adapted, or modified for a military application, and has significant military or intelligence applicability such that control under this subchapter is necessary.
The intended use of the article or service after its export (i.e., for a military or civilian purpose) is not relevant in determining whether the article or service is subject to the controls of this subchapter.
Thus, if a university technology is not “specifically designed, developed, configured, adapted, or modified for a military application” – regardless of the use to which the technology may later be put – it would not be subject to the ITAR.
There are some things that by their very nature are considered “defense articles.” Basically this is anything relating to nuclear, biological, or chemical weapons. Thus, for example, nerve agents such as sarin are on the list without any “military application” qualifiers. So any research involving sarin is automatically assumed to be research subject to ITAR.
Aside from this, the only other possible application of ITAR to university researchers is through the explicit terms of a grant or contract (typically DoD or flow-thru from DoD) or other agreement such as a non-disclosure agreement. If we accept a contract that stipulates that the work or the results (or the information received) require an export license to “export” the technology, then we would have to obtain such a license from the State Department before “exporting” that technology. Note that this is different from accepting a clause in an agreement that stipulates that the University will abide by ITAR. Such a clause is innocuous because we always have to follow federal regulations but those regulations are often self-deleting.
Export normally involves sending something physical overseas. But in certain cases exchanges of information subject to ITAR with “foreign persons” (even if in the U.S.) constitutes export of the technology. A foreign person is defined in § 120.16:
Foreign persons means any natural person who is not a lawful permanent resident as defined by 8 U.S.C.1101(a)(20) or who is not a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any foreign corporation, business association, partnership, trust, society or any other entity or group that is not incorporated or organized to do business in the United States, as well as international organizations, foreign governments and any agency or subdivision of foreign governments (e.g. diplomatic missions).
However, there is an exemption in § 125.4(b)(10) for:
Disclosures of unclassified technical data in the U.S. by U.S. institutions of higher learning to foreign persons who are their bona fide and full time regular employees. This exemption is available only if:
(i) The employee's permanent abode throughout the period of employment is in the United States;
(ii) The employee is not a national of a country to which exports are prohibited pursuant to § 126.1 of this subchapter; and
(iii) The institution informs the individual in writing that the technical data may not be transferred to other foreign persons without the prior written approval of the State Department's Directorate of Defense Trade Controls.
[The prohibited countries are Afghanistan, Angola, Belarus, Burma, China, Cuba, Democratic Republic of the Congo, Haiti, Iran, Iraq, Liberia, Libya, North Korea, Rwanda, Somalia, Sudan, Syria, and Vietnam.]
There is also an exemption for information that arises through scientific research conducted at a university unless that information is controlled by the ITAR and has been developed under a sponsored agreement and the sponsor has imposed a publication restriction other than the customary review for disclosure of proprietary information or has imposed a publication delay other than the customary one for determination of patentability.
In summary, an export license under ITAR would only be required if:
(A) the technology is a defense article on the munitions list and is to be sent to a foreign country;
or
(B) the technology is technical data directly related to a defense article and is to be released to a “foreign person” other than a University employee (unless that employee is a national of one of the prohibited countries) and
(1)is (a) provided to the university by an external sponsor and (b) explicitly requires an export license;
or
(2) is (a) developed under a sponsored agreement, and (b) subject to publication restrictions other than normal reviews.
EAR
The Export Administration Act of 1979 authorized the President to regulate exports of civilian goods and technologies (equipment, materials, software, and technology, including data and know-how) that have military applications (dual-use items). Such controls have traditionally been temporary, and when it has lapsed, the President has declared a national emergency and maintained export control regulations under the authority of an executive order.
The items so designated constitute the United States Commerce Control List (CCL) and are regulated through the U.S. Department of Commerce, Bureau of Industry and Security (15 CFR 730-774).
The CCL covers a wide range of scientific activities. Thus, for example, if an investigator creates a vaccine that has a military application, it would be “subject to the EAR.” All this means, though, is that if any such item is to be exported—i.e., shipped or transmitted outside the U.S.—then an export license for the shipper is required from the Department of Commerce unless an exception applies.
§ 740 of the EAR discusses license exceptions. The one most likely to apply to the university is § 740.9, Temporary Imports, Export, and Reexports (TMP). Typically this applies to commodities and software that either must be returned as soon as practicable (but in any event shorter than a year in most cases) or are destroyed after use.
The EAR also includes a category called “deemed export,” which is defined as the “release of technology or software [on the CCL] to a foreign national in the United States” (§ 734.2(b)(1)) unless it is “publicly available” but not related to advanced encryption techniques. Note that the CCL is intended to cover dual-use technology. Thus the “deemed export” rules would not apply to technology that has only civilian use.
“Technology” in this context is defined as “specific information necessary for the development, production, or use of a [dual-use] product” (e.g., blueprints, diagrams, manuals, etc.), usually referred to as technical data or technical assistance.
A foreign national is defined in the same way as in the ITAR—for our purposes, neither citizen nor permanent resident. There is no exemption for foreign national who are university employees.
Technology and software arising out of university research are generally considered “publicly available” unless there are publication restrictions similar to those discussed above in the ITAR section, or it is advanced encryption software specifically listed on the CCL. Patented technology or software is generally considered to be publicly available.
In summary, an export license under EAR would only be required if:
(A) the item is not technical data or software but is on the CCL and has a military application and is to be shipped or transmitted to a foreign country and an export license exception is not available;
or
(B) the item is unpatented technical data or software on the CCL and has a military application and is to be transmitted to a foreign country or released to a foreign national in the U.S. and
(1)is (a) provided to the university by an external sponsor and (b) explicitly requires an export license under the terms of an agreement with that sponsor;
or
(2) is (a) developed under a sponsored agreement and (b) subject to publication restrictions other than normal reviews;
or
(3) is advanced encryption software specifically listed on the CCL.
Penalties for Non-Compliance
Both ITAR and EAR authorize stiff penalties for violations and non-compliance and include the following administrative, civil, and criminal options.
ITAR
- Administrative debarment 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.
- Civil penalties not exceed $500,000 for each violation involving controls imposed on the export of defense articles and defense services.
- Criminal penalties not to exceed $1,000,000 for each violation, imprisonment not more than 10 years, or both for transactions with countries supporting acts of international terrorism under Sec. 2780.
EAR
- Individual criminal penalties for willful violations of up to $250,000 or imprisonment for up to ten years, or both, for each violation.
- Individual criminal penalties for knowing violations of up to the greater of $50,000 or five times the value of the exports or imprisonment for up to five years, or both, for each violation.
- Corporate criminal penalties for willful violations of up to the greater of $1,000,000 or five times the value of the exports for each violation.
- Corporate criminal penalties for knowing violations of up to the greater of $50,000 or five times the value of the exports for each violation.
- Administrative penalties for each violation, including denial of export privileges, exclusion from practice, and/or the imposition of a fine of up to $12,000 for each violation, except that the fine for violations involving items controlled for national security reasons is up to $120,000 for each violation.
Concerns about the inappropriate transfer of new information, technologies, and products with military applications outside the U.S. led to the passage of laws in the late 1970's that control exports of selected technologies and products. The three relevant statutes are: Section 38 of the Arms Export Control Act (22 USC 2778); the Export Administration Act of 1979 (50 USC app. 2401 - 2420); and the International Emergency Economic Powers Act (50 USC 1701 - 1706)
Implementing regulations for the Arms Export Control Act are found in the International Traffic in Arms Regulations (ITAR) at 22 CFR 120-130 administered by Department of State. Implementing regulations for the other two statutes are found in the Export Administration Regulations (EAR) at 15 CFR 730-774 administered by the Department of Commerce.
ITAR
The scope of the ITAR is “defense articles and defense services.” A defense article is any item appearing on the U.S. Munitions List (§ 121.1) and a defense service is essentially the furnishing of technical assistance, training, or technical data related to defense articles. While the munitions list is rather lengthy, a practical definition can be gleaned from § 120.3: An article or service may be designated or determined in the future to be a defense article (see § 120.6) or defense service (see § 120.9) if it:
(a) Is specifically designed, developed, configured, adapted, or modified for a military application, and
(i) Does not have predominant civil applications, and
(ii) Does not have performance equivalent (defined by form, fit and function) to those of an article or service used for civil applications; or
(b) Is specifically designed, developed, configured, adapted, or modified for a military application, and has significant military or intelligence applicability such that control under this subchapter is necessary.
The intended use of the article or service after its export (i.e., for a military or civilian purpose) is not relevant in determining whether the article or service is subject to the controls of this subchapter.
Thus, if a university technology is not “specifically designed, developed, configured, adapted, or modified for a military application” – regardless of the use to which the technology may later be put – it would not be subject to the ITAR.
There are some things that by their very nature are considered “defense articles.” Basically this is anything relating to nuclear, biological, or chemical weapons. Thus, for example, nerve agents such as sarin are on the list without any “military application” qualifiers. So any research involving sarin is automatically assumed to be research subject to ITAR.
Aside from this, the only other possible application of ITAR to university researchers is through the explicit terms of a grant or contract (typically DoD or flow-thru from DoD) or other agreement such as a non-disclosure agreement. If we accept a contract that stipulates that the work or the results (or the information received) require an export license to “export” the technology, then we would have to obtain such a license from the State Department before “exporting” that technology. Note that this is different from accepting a clause in an agreement that stipulates that the University will abide by ITAR. Such a clause is innocuous because we always have to follow federal regulations but those regulations are often self-deleting.
Export normally involves sending something physical overseas. But in certain cases exchanges of information subject to ITAR with “foreign persons” (even if in the U.S.) constitutes export of the technology. A foreign person is defined in § 120.16:
Foreign persons means any natural person who is not a lawful permanent resident as defined by 8 U.S.C.1101(a)(20) or who is not a protected individual as defined by 8 U.S.C. 1324b(a)(3). It also means any foreign corporation, business association, partnership, trust, society or any other entity or group that is not incorporated or organized to do business in the United States, as well as international organizations, foreign governments and any agency or subdivision of foreign governments (e.g. diplomatic missions).
However, there is an exemption in § 125.4(b)(10) for:
Disclosures of unclassified technical data in the U.S. by U.S. institutions of higher learning to foreign persons who are their bona fide and full time regular employees. This exemption is available only if:
(i) The employee's permanent abode throughout the period of employment is in the United States;
(ii) The employee is not a national of a country to which exports are prohibited pursuant to § 126.1 of this subchapter; and
(iii) The institution informs the individual in writing that the technical data may not be transferred to other foreign persons without the prior written approval of the State Department's Directorate of Defense Trade Controls.
[The prohibited countries are Afghanistan, Angola, Belarus, Burma, China, Cuba, Democratic Republic of the Congo, Haiti, Iran, Iraq, Liberia, Libya, North Korea, Rwanda, Somalia, Sudan, Syria, and Vietnam.]
There is also an exemption for information that arises through scientific research conducted at a university unless that information is controlled by the ITAR and has been developed under a sponsored agreement and the sponsor has imposed a publication restriction other than the customary review for disclosure of proprietary information or has imposed a publication delay other than the customary one for determination of patentability.
In summary, an export license under ITAR would only be required if:
(A) the technology is a defense article on the munitions list and is to be sent to a foreign country;
or
(B) the technology is technical data directly related to a defense article and is to be released to a “foreign person” other than a University employee (unless that employee is a national of one of the prohibited countries) and
(1)is (a) provided to the university by an external sponsor and (b) explicitly requires an export license;
or
(2) is (a) developed under a sponsored agreement, and (b) subject to publication restrictions other than normal reviews.
EAR
The Export Administration Act of 1979 authorized the President to regulate exports of civilian goods and technologies (equipment, materials, software, and technology, including data and know-how) that have military applications (dual-use items). Such controls have traditionally been temporary, and when it has lapsed, the President has declared a national emergency and maintained export control regulations under the authority of an executive order.
The items so designated constitute the United States Commerce Control List (CCL) and are regulated through the U.S. Department of Commerce, Bureau of Industry and Security (15 CFR 730-774).
The CCL covers a wide range of scientific activities. Thus, for example, if an investigator creates a vaccine that has a military application, it would be “subject to the EAR.” All this means, though, is that if any such item is to be exported—i.e., shipped or transmitted outside the U.S.—then an export license for the shipper is required from the Department of Commerce unless an exception applies.
§ 740 of the EAR discusses license exceptions. The one most likely to apply to the university is § 740.9, Temporary Imports, Export, and Reexports (TMP). Typically this applies to commodities and software that either must be returned as soon as practicable (but in any event shorter than a year in most cases) or are destroyed after use.
The EAR also includes a category called “deemed export,” which is defined as the “release of technology or software [on the CCL] to a foreign national in the United States” (§ 734.2(b)(1)) unless it is “publicly available” but not related to advanced encryption techniques. Note that the CCL is intended to cover dual-use technology. Thus the “deemed export” rules would not apply to technology that has only civilian use.
“Technology” in this context is defined as “specific information necessary for the development, production, or use of a [dual-use] product” (e.g., blueprints, diagrams, manuals, etc.), usually referred to as technical data or technical assistance.
A foreign national is defined in the same way as in the ITAR—for our purposes, neither citizen nor permanent resident. There is no exemption for foreign national who are university employees.
Technology and software arising out of university research are generally considered “publicly available” unless there are publication restrictions similar to those discussed above in the ITAR section, or it is advanced encryption software specifically listed on the CCL. Patented technology or software is generally considered to be publicly available.
In summary, an export license under EAR would only be required if:
(A) the item is not technical data or software but is on the CCL and has a military application and is to be shipped or transmitted to a foreign country and an export license exception is not available;
or
(B) the item is unpatented technical data or software on the CCL and has a military application and is to be transmitted to a foreign country or released to a foreign national in the U.S. and
(1)is (a) provided to the university by an external sponsor and (b) explicitly requires an export license under the terms of an agreement with that sponsor;
or
(2) is (a) developed under a sponsored agreement and (b) subject to publication restrictions other than normal reviews;
or
(3) is advanced encryption software specifically listed on the CCL.
Penalties for Non-Compliance
Both ITAR and EAR authorize stiff penalties for violations and non-compliance and include the following administrative, civil, and criminal options.
ITAR
- Administrative debarment 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.
- Civil penalties not exceed $500,000 for each violation involving controls imposed on the export of defense articles and defense services.
- Criminal penalties not to exceed $1,000,000 for each violation, imprisonment not more than 10 years, or both for transactions with countries supporting acts of international terrorism under Sec. 2780.
EAR
- Individual criminal penalties for willful violations of up to $250,000 or imprisonment for up to ten years, or both, for each violation.
- Individual criminal penalties for knowing violations of up to the greater of $50,000 or five times the value of the exports or imprisonment for up to five years, or both, for each violation.
- Corporate criminal penalties for willful violations of up to the greater of $1,000,000 or five times the value of the exports for each violation.
- Corporate criminal penalties for knowing violations of up to the greater of $50,000 or five times the value of the exports for each violation.
- Administrative penalties for each violation, including denial of export privileges, exclusion from practice, and/or the imposition of a fine of up to $12,000 for each violation, except that the fine for violations involving items controlled for national security reasons is up to $120,000 for each violation.