Oh sure, not exporting weapons technology to China is clear enough—but what about exporting electronics research into the heads of Chinese students studying in America? University compliance officers are increasingly confronting that challenge, and the answers aren't easy.
To stay on the right side of export-control law, universities must navigate a series of detailed and often-confusing rules and regulations designed to protect cutting-edge technology from decamping to foreign countries. Inconsistencies in export laws make compliance particularly challenging.
“There are different definitions in the various regulatory regimes. There are different licensing procedures and different licensing entities,” says Peter Dunn, associate vice president of research at Purdue University. “It's just a very difficult environment to master and to be sure you're complying with.”
“Universities are probably in the most difficult export-compliance position, because so many different individuals and so many different schools are often involved in various types of research at the same time,” says Steven Brotherton, a partner at the law firm Fragomen.
Most concerning to university compliance officers are so-called “deemed” exports—the transfer of information or technology to U.S.-based students or faculty who are foreign nationals. The idea is that the release of sensitive technical data to a foreign national is deemed to be an export to that individual's home country, once that person returns home.
For example, imagine presenting previously unpublished scientific work at a conference where foreign nationals might be in the audience, or visits to a research lab by foreign scholars. Do you need an export license for those “goods”? Well, maybe. “It doesn't need to be a physical item that leaves U.S. borders to be considered an export,” says Edward O'Callaghan, a partner with the law firm Nixon Peabody.
Universities in particular share information with each other (that's what education is, after all), which is inherently more difficult to control than physical exports. “There are more challenges in constructing a compliance program when you're not focused on the export of goods, using IT and other systems for shipping,” says Beth Peters, a partner with Hogan Lovells.
Compliance with deemed-export rules is getting harder, partly because of a rise in foreign students at U.S. universities. Recent data from the Council of Graduate Schools finds that applications from prospective international students into U.S. graduate schools rose to 9 percent in the last two academic years, double the 4 percent gain seen in the 2008-2009 academic year.
Additionally, new certification requirements issued in February by the U.S. Citizenship and Immigration Services raise expectations of compliance with U.S. export laws. All employers filing for visa status on a Form I-129 on behalf of foreign nationals must certify that they have reviewed U.S. export laws, and have made a determination as to whether an export control license is required to release any controlled technology or technical data to the foreign national.
“Universities are probably in the most difficult export-compliance position, because so many different individuals and so many different schools are often involved in different types of research at the same time.”
—Steven Brotherton,
Partner,
Fragomen
The new certification rules also require employers to attest that foreign nationals will not be exposed to covered technologies without first obtaining an export license. “Every university needs to take these issues seriously as part of their overall compliance programs,” says Mark Barnes, chief research compliance officer for Harvard University.
Exclusions Apply
Certain research conducted in the United States may qualify as “fundamental,” which would exempt it from U.S. export controls laws. For a university like Purdue and many others, a vast majority of research falls under this category. “We sometimes will accept terms in contracts that fund our research that include requirements for approval of publications by the sponsor before they are published,” Dunn says. “In those cases the results of that research do not satisfy the fundamental research definition.”
Exclusions also apply if the technical data is already publicly available, which is often the case. Such exclusions might not apply, however, if researchers sign side agreements that contain publication restrictions or restrictions on who may participate in the research.
For example, Purdue sometimes receives confidential or proprietary information from a sponsor, or may need to exchange materials or data with individuals in foreign countries. “Of course, we need to review all of those situations to see if any export restrictions apply to those exchanges,” Dunn says. “When we determine that we can engage in an activity that is subject to an export control restriction, we'll establish a technology control plan to manage that activity.”
If the university does receive confidential information, companies collaborating with the university should ensure that the contractual provision regarding publication and the rights to publish information are clearly stated. “Excellent communication can avoid a number of problems and pitfalls,” says Peters.
One difficulty, Dunn says, is that many of today's technologies are still subject to U.S. export laws even though they are no longer proprietary to the United States. “The reasons for them to initially be regulated have changed,” he says.
For example, some technology that is still subject to export laws is now freely available in commerce around the world. “So the extra requirements to identify them and manage the restrictions really are quite frustrating since they can be purchased outside the United States,” Dunn adds.
Imposing Controls
Universities can take several measures to ensure they do not run afoul of export laws. For many schools, that involves training their professors and students on complying with the rules.
STEEP PENALTIES
In general, products that have either commercial uses or dual use—both civil and military applications—are enforced by the Export Administration Regulations (EAR), which are enforced by the Department of Commerce. Products that have been designed, developed, or modified specifically for military use are regulated under the International Traffic in Arms Regulations (ITAR), enforced by the Department of State.
High-risk areas that are more likely to trigger export control requirements than others include:
Engineering
Space sciences
Computer Science
Biomedical research with lasers
Research with encrypted software
Research with controlled chemicals, biological agents, and toxins.
The consequences for non-compliance include steep penalties for individual researches and the university. Fines can run as high as $250,000 per civil violation under EAR, or $500,000 under ITAR. Willful violations can lead to fines of up to $1 million and imprisonment up to 20 years under EAR, or 10 years under ITAR. Most significantly, universities that run afoul of the rules can also face potential debarment from federal contracts—an outcome little short of disastrous for most academic research centers.
—Jaclyn Jaeger
At Harvard, professors are educated “through talks and outreach from central administration staff and schools' senior staff who are knowledgeable in this area,” Barnes says. Additionally, post-doctorate and graduate students are educated via a course in “Responsible Conduct of Research,” which includes a component on export controls.
Purdue has also developed a general presentation for faculty and staff about export regulations and current research activities that may fall under the scope of the laws, Dunn says.
Dean Boyd, a spokesman for the Department of Justice's National Security Division warns that the agency “continues to pay attention to any willful criminal violations of U.S. export laws, regardless of the particular sector in which they may occur.”
In a first-of-its-kind case to highlight the consequences of violating export laws in a university setting, retired University of Tennessee Professor Reece Roth was sentenced earlier this year to four years in prison on charges of fraud, conspiracy, and violation of export controls laws. According to the charges, Roth shared restricted military information with research assistants from China and Iran while under a contract with the U.S. Air Force.
In the event that a university uncovers an export violation, Brotherton's advice is to stop the activity, analyze what happened, and then determine corrective actions. “Drill down to find out the root cause of the issue, and make sure you implement a process to fix it,” he says.
The Justice Department also encourages entities to consider voluntary self-disclosure with either the Commerce Department, or the State Department, depending on the violation. “Each of the regulatory agencies in this arena have well-developed and established voluntary disclosure programs by which private industry—including university actors—are encouraged to make voluntary self-disclosures of any violations of U.S. export control laws,” Boyd says.
Dunn says universities would welcome a review and simplification of the U.S. export laws. “Anything that would harmonize the regulations, harmonize the definitions within them, simplify them, would make compliance much easier,” he says.
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