Sponsored Projects Compliance Certification Program

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Sponsored Projects Compliance Certification
Program

• U.S. Export Control Laws and Research At Penn

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Sponsored Projects Compliance Certification
Program

• Welcome to the University of Pennsylvanias
  Sponsored Projects Compliance Certification
  Program. The Program is designed to facilitate
  compliance with sponsored programs administrative
  requirements by addressing concepts critical to
  proper management.
• This module examines the various federal laws and
  regulations governing export controls and the
  conduct of University research.

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Export Control Laws and Research at Penn

• What are the Export Control Laws?
• Export Control Laws are laws which prohibit the
  unlicensed export of certain controlled
  technologies to foreign persons for reasons of
  national security and trade protection
• Export is defined very broadly to include an
  oral or written disclosure of information, visual
  inspection, or actual shipment outside the U.S.
  of technology, software/code or equipment to a
  foreign person
• Any method of disclosure may apply email,
  telephone, websites, tours, training sessions

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Export Control Laws and Research at Penn

• What is meant by a Foreign Person?
• Any Foreign Government
• Any Foreign Corporation or group that is not
  currently incorporated in the United States or
  organized to do business in the United States
• Anyone who is not a lawful permanent resident of
  the United States.

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Export Control Laws and Research at Penn

• What are the various regulations governing
  Export Control Laws (ECLs)?
• Export Administration Regulations (EARs)
• International Traffic in Arms Regulations (ITARs)
• Office of Foreign Assets Control (OFAC)

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Export Control Laws and Research at Penn

• What are the Goals of Export Control Laws?
• Prevent Terrorism
• Curtail export of technologies that assist the
  military potential of adversaries
• Compliance with Trade Agreements
• Prevent development of nuclear, chemical and
  biological weapons

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Export Control Laws and Research at Penn

• Required Reading for all faculty and
  administrators at the University of Pennsylvania
• Memorandum from the Vice Provost for Research and
  Senior Vice President and General Counsel
  entitled A Reminder to Researchers and
  Administrators Regarding Federal Export Control
  Laws
• Provides an overview of the issue of Export
  Controls
• Available at ORS website with other information
  http//www.upenn.edu/researchservices/exportcontro
  ls.html

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Export Control Laws and Research at Penn

• Federal Agencies with oversight of Export Control
  Laws
• Department of State ITAR- technologies with
  inherently military properties
• Department of Commerce EAR technologies with
  dual uses but primarily commercial
• Department of the Treasury OFAC prohibits
  transactions of value with certain countries and
  individuals

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Export Control Laws and Research at Penn

• EAR
• Enforced by the Department of Commerce through
  its Export Administration Regulations (EAR).
  Primarily covers technologies and technical
  information with both commercial and military
  applications, the so called dual use
  technologies (chemicals, satellites, software,
  computers, etc.)
• Lists of controlled technologies are found in 15
  CFR 774, Supplement I, referred to as the
  Commodity Control List (CCL)
• List available on ORS website

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Export Control Laws and Research at Penn

• ITAR
• Enforced by the Department of State under the
  International Traffic in Arms Regulations (ITAR).
  Exporters of defense services or related
  technical data are required to register with the
  federal government and may need export licenses.
• Controlled technologies of an inherently military
  nature defense articles, defense services and
  related technical data listed on the Munitions
  Control List (MCL). Examples would be explosives,
  rocket systems, military training equipment, etc.
  
• For a list of controlled technologies see 22 CFR
  121.1.
• List available on ORS website

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Export Control Laws and Research at Penn

• The Office of Foreign Assets Control ("OFAC") of
  the US Department of the Treasury administers and
  enforces economic and trade sanctions against
  targeted foreign countries, terrorists,
  international narcotics traffickers, and those
  engaged in activities related to the
  proliferation of weapons of mass destruction.
• Regulations target specific nations in
  controlling significant financial transactions or
  services. Countries currently sanctioned are the
  Balkans, Burma, Cuba, Iran, Iraq, Liberia,
  Libya, North Korea, Sudan, Syria, and Zimbabwe.
• http//www.treas.gov/offices/enforcement/ofac/

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Export Control Laws and Research at Penn

• Examples of prohibited activities in boycotted
  countries monitored by OFAC
• Conducting surveys and interviews
• Engaging the services of persons to develop new
  informational materials or support of research
  activities (i.e., just hiring Iranians to work on
  an archeological site may be prohibited!)
• Providing marketing and business services

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Export Control Laws and Research at Penn

• How do these laws impact research at Penn?
• If Penn research involves these controlled
  technologies, Penn may be required to get
  government approval (a license) before allowing
• Certain foreign researchers and students in the
  U.S. (including on campus at Penn ) or foreign
  persons outside the U.S. from participating in
  research involving the controlled technologies
• The sharing of research results with foreign
  persons
• Providing training and other services to foreign
  persons
• Sending equipment or software outside the U.S.

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Export Control Laws and Research at Penn

• Why increased concern with impact of ECLs on
  University research?
• Advanced technologies developed at universities
  may be subject to ECLs
• ECLs are applicable to research fields not
  traditionally associated with the military such
  as life sciences materials (biological agents and
  toxins) and computers (encryption technology)
• University research reliance on Federal funding
  with increased compliance requirements
• Increased globalization of University research

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Export Control Laws and Research at Penn

• Why Is this issue important?
• Export Control Laws (ECLs) present a challenge to
  the Penn research community
• ECLs are the law of the land and apply to all
  research activities
• Failure to comply carries heavy fines and
  possible imprisonment
• Compliance is not easy because ECLs are
  complicated and confusing
• Federal Government has increased enforcement and
  investigations of universities since 9/11/2001

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Export Control Laws and Research at Penn

• General Rule Penn, its faculty, and employees
  may not export to foreign persons certain
  materials and information without a license from
  the U.S. Government, unless an exclusion applies.
• Fortunately, the majority of research at Penn
  will be covered under an exclusion to the ECL
  requirements. What are the exclusions?

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Export Control Laws and Research at Penn

• EXCLUSIONS TO ECLS
• A. PUBLIC DOMAIN EXCLUSION 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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Export Control Laws and Research at Penn

• EXCLUSIONS TO ECLS
• B. EDUCATION EXCLUSION
• ITAR No export controls associated with
  information (but not technology and materials)
  which is general scientific, mathematical or
  engineering principles commonly taught in . . .
  universities.
• EAR exclusion for educational information
  released by instruction in catalog courses and
  associated teaching laboratories. So, in
  general, no need for a license to share
  information as part of a regular course being
  taught at Penn.

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Export Control Laws and Research at Penn

• EXCLUSIONS TO ECLS (cont.)
• C. EMPLOYMENT EXCLUSION license is not needed to
  share information subject to export control laws
  if the foreign national is/has
• A full-time, employee of Penn
• Not a national of certain countries
• A permanent address in the U.S. while employed at
  Penn

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Export Control Laws and Research at Penn

• EXCLUSIONS TO ECLS (cont.)
• D. FUNDAMENTAL RESEARCH EXCLUSION (FRE) will
  cover most research at Penn
• Basic or applied research in science or
  engineering
• at an accredited institution of higher learning
  in the U.S.
• resulting information is ordinarily published and
  shared broadly in the scientific community

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Export Control Laws and Research at Penn

• EXCLUSIONS TO ECLS (cont.)
• BUT, University research will not qualify as
• FUNDAMENTAL RESEARCH if the university accepts
  any restrictions on the publication of
  information resulting from the research, other
  than limited prepublication reviews by research
  sponsors to
• Prevent inadvertent divulging of proprietary
  information provided to the researcher by the
  sponsor
• Insure that publication will not compromise
  patent rights of the sponsor

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Export Control Laws and Research at Penn

• EXCLUSIONS TO ECLS (cont.)
• The FUNDAMENTAL RESEARCH EXCLUSION (FRE) would be
  destroyed by a contract clause that
• Gives a sponsor a right to approve publications
• Forbids the participation of foreign nationals in
  the research effort
• These limitations are applicable to any sponsor,
  whether federal, private or not-for-profit

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Export Control Laws and Research at Penn

• SHIPPING EQUIPMENT OUTSIDE THE UNITED STATES
• If equipment is subject to ITAR regulations, a
  license is required from the Department of State
  to ship to any foreign nation. A license can
  take a long time to obtain so plan ahead!
• If equipment is subject to EAR regulations, the
  necessity of license is dependent on the facts
• where it is being shipped and,
• do any exceptions apply
• Plan ahead and notify ORS as soon as possible.
• It is illegal for equipment to be shipped to a
  country subject to sanctions/embargo under OFAC

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Export Control Laws and Research at Penn

• EXCLUSIONS TO ECL Shipping License
• Under an exception to the need for a license
  (exception for temporary export), a researcher
  may be able to take a laptop out of the country
  for use in fundamental research, provided the
  laptop does not leave the control of the faculty
  researcher
• Note This exception does not apply to OFAC
  embargoed countries!!

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Export Control Laws and Research at Penn

• EQUIPMENT USE EXCLUSIONS?
• There are no express exclusions that allow
  foreign persons to use controlled equipment
  without a license.
• -Universities maintain that if controlled
  equipment is used in most research, such use
  would be covered by the Fundamental Research
  Exclusion. If controlled equipment is used in a
  program of study, the Education Exclusion would
  apply.
• These interpretations are being questioned by
  the Federal Government.

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Export Control Laws and Research at Penn

• How are Contracts and Grants Impacted by ECLs?
• Important Federal funding opportunities (Homeland
  Security, NSF, NIH, DOD) directly linked to ECLs
• Terms and conditions restricting access by
  foreign nationals or removing research from
  fundamental research exclusion
• Contract requirements from Corporate Sponsors on
  ECLs
• Tech Transfer Issues disclosure/licensing of
  technologies and material transfer agreements to
  foreign nationals

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Export Control Laws and Research at Penn

• Contracts and Grants Impacted by ECLs What
  should one pay attention to? Proposals and
  contracts where
• There is a shipment of equipment to a foreign
  country
• Training or collaboration with foreign nationals
• Any work with or travel to an OFAC controlled
  country
• Any reference to export controlled technologies
  in the award

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Export Control Laws and Research at Penn

• What changes does Penn need to make in
  contracts and grants?
• Removing from any award terms and conditions that
  limit the right to publish or present research
  results
• Removing from any award terms or conditions that
  limit access or participation in the research to
  foreign nationals

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Export Control Laws and Research at Penn

• Caution! Faculty, staff and students may be held
  personally liable for violations of EAR and ITAR
  in the conduct of their research in addition to
  any liability attaching to the University of
  Pennsylvania
• Penalties for unlawful disclosure or export of
  export controlled information are very high fines
  (millions of dollars) and possibly imprisonment.

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Case Study 1

• A Professor of Engineering has developed a
  website containing technical information related
  to high-tech communications technologies with
  possible military applications. The website may
  only be accessed through a secured connection
  requiring a password supplied by the Professor.
  Several researchers in Norway, South Africa and
  Turkey have access to the website. The website
  is
• Not subject to export control laws since only
  researchers in Norway, South Africa and Turkey
  have access and none of these countries is
  regarded as an embargoed country.
• Subject to export control laws since the
  technical information relates to communication
  technology with possible military applications.
  Such technical information is always subject to
  export controls.
• Subject to export controls since it allows access
  to export controlled information by foreign
  nationals.
• Not subject to export controls since there is no
  actual export involved, there is no actual
  transfer of information.

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Case Study 1 Analysis

• Export, as used in the regulations, does not
  have the common dictionary definition, and has an
  expansive meaning. Instead, export generally
  means (1) actual shipment of covered goods or
  information outside the U.S. (2) the electronic
  or digital transmission of covered goods or
  information outside the U.S. and (3) release or
  disclosure, including verbal disclosures or
  visual inspections, of any covered technology,
  software or technical data to any foreign
  national, whether in the U.S. or abroad. This is
  a summary of a complicated definition, which is
  set forth at 15 CFR 734.2, and can be found at
  http//www.access.gpo.gov/bis/ear/pdf/734.pdf .
• Is incorrect since the definition would apply to
  any foreign national, not just those in an
  embargoed country.
• Is incorrect since technical information related
  to communication technology with possible
  military applications is not always subject to
  export controls (for example, if it were in the
  public domain).
• Is the correct answer.
• Is incorrect since the definition of export
  applicable to export control laws is not just the
  transfer of an actual thing but even just
  transfer of information. Access to a website is
  an export.

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Case Study 2

• A researcher in the Department of Chemistry is
  working on organic compounds that have possible
  applications as toxins. The research leading to
  the characterization of these organic compounds
  is supported by a grant from the NSF. The
  researcher asks for your recommendations on
  sending draft manuscripts describing the organic
  compounds to foreign researchers outside the U.S.
  for comment. Sending draft manuscripts
• Would be subject to export control concerns only
  because research results are being sent outside
  of the U.S.
• Would be subject to export control concerns since
  it involves research on organic compounds with
  possible applications as toxins.
• Would not be subject to export control concerns
  since, even if it involves research on organic
  compounds with possible applications as toxins,
  since the research was supported by NSF, a
  federal funding agency, the research would
  automatically be defined as fundamental.
• Would not be subject to export control concerns
  since, even if it involves research on organic
  compounds with possible applications as toxins
  and the research was supported by NSF, since the
  research results area being sent to foreigners
  only to allow them to comment on a proposed
  publication, a scholarly activity.

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Case Study 2 Analysis

• a) Is incorrect since research results being sent
  outside the U.S. only does not make them subject
  to export controls. For example, information
  resulting from research qualifying for the
  fundamental research exclusion may be sent
  outside the U.S.
• b) Is the correct answer since possible
  applications as toxins suggests a technology with
  potential terrorist applications.
• c) Is incorrect since Federal agencies may and do
  fund research subject to export controls.
• d) Is incorrect. The facts indicate that export
  controlled information is being sent to foreign
  nationals. A benign intent is not part of the
  analysis.

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Case Study 3

• A Professor of Art History is seeking to travel
  to Iran in order to engage in an archeological
  dig. None of the equipment she is taking is
  listed on any export controlled list. The
  findings of the archeological dig will be
  published and widely available. Which of the
  following is a true statement?
• The Professor will need to obtain a license to
  travel to Iran and engage in research activities
  there since Iran is a sanctioned country. The
  Professors activities will involve payment of
  funds to Iranian citizens.
• The Professor will not need to obtain a license
  since the research activities involve fundamental
  research and the results may be published and
  made publicly available.
• The Professor will need to obtain a license since
  she will be traveling and doing research outside
  the United States, and this is true regardless of
  the country involved.
• Archeology is clearly an area of research
  unrelated to any of the issues associated with
  export controls and a license will not be
  necessary.

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Case Study 3 Analysis

• The correct answer is a)  OFAC (Office of
  Financial Assets Control)
• The mission of OFAC is to administer and enforce
  economic and trade sanctions based on US foreign
  policy and national security goals against
  targeted foreign countries, terrorists,
  international narcotics traffickers, and those
  engaged in activities related to the
  proliferation of weapons of mass destruction.
• OFAC prohibits payments or providing value to
  nationals of sanctioned countries/activities.
  Iran is such a country.

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Case Study 4

• The following contract clause appears in a
  research contract from DOD for a faculty
  researcher at Penn. The work covered by the
  contract is basic research in a scientific field.
  
• DOD CONTRACT CLAUSE
• Disclosure of Information
• University shall not release to anyone outside
  the Universitys organization any unclassified
  information, regardless of medium (e.g., film,
  tape, document), pertaining to any part of this
  contract or any program related to this contract,
  unless
• The contracting Officer has given prior written
  approval or
• The information is otherwise in the public domain
  before the date of release.
• Requests for approval shall identify the specific
  information to be released, the medium to be
  used, and the purpose for the release. The
  University shall submit its request to the
  Contracting Officer at least 45 days before the
  proposed date for release.
• Which of the following is a correct statement
  about the contract clause?
• Since this contract involves work that would
  qualify for the fundamental research exclusion,
  we do not need to be concerned with the impact of
  the clause the research by definition is not
  subject to export control concerns.
• Any contract involving funding from DOD would
  necessarily involve the potential for research
  with military applications. Hence, we do not need
  to consider the clause the research by
  definition is subject to export control concerns.
• The clause would be a restriction on publication,
  removing the research from a fundamental
  classification and hence would be subject to
  export control concerns.
• Since the clause only requires the submission of
  the request for approval to publish 45 days
  before the proposed date of release, the delay on
  publications is small and, accordingly, the
  clause does not raise any concerns relating to
  export control compliance.

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Case Study 4 Analysis

• The publication clause seeks to control any
  unclassified information that DOD believes may be
  sensitive and inappropriate for release to the
  public. Any publication of research results
  would require prior approval from DOD. Thus,
  even though the research would qualify as
  fundamental research, the exclusion is destroyed
  by the publication restrictions. Transfer of
  research results to foreign nationals would
  require a license.
• Is incorrect since the publication restrictions
  destroy the application of the Fundamental
  research exclusion.
• Is incorrect since DOD contracts may involve
  research not subject to export controls.
• Is the correct answer.
• Is incorrect because publication requires prior
  approval, even if the time need to obtain
  approval is only 45 days.

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Case Study 5

• Small startup company receives a SBIR grant from
  the Army. As part of the planned research, the
  company will be working under a subcontract with
  a Penn PI on some research. The research may be
  properly characterized as basic and applied
  research in engineering. As part of the work,
  the company will be providing technical data
  subject to export controls. You are working on a
  subcontract to the grant for a PI. The
  subcontract contains the following language
• Non disclosure
• There shall be no dissemination or publication,
  except within and between the Company and Penn,
  of information furnished to Penn by Company
  pursuant to this contract without prior written
  approval of the Company. Information subject to
  this clause shall be clearly marked as
  proprietary or export-controlled.
• Which of the following statements is true
• This research project is subject to export
  controls since export controlled information is
  being provided to the PI by the Company.
• If the SBIR grant is funded through the Army,
  there is clearly the potential for military
  applications of research results, regardless of
  the language in the clause, and the proposal is
  subject to export controls.
• This research project is not subject to export
  controls since any export controlled information
  being provided to the PI by the Company could not
  appear in any publications by the PI without
  Companys prior written permission.
• None of the above.

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Case Study 5 Analysis

• The information generated by the University will
  not be subject to publication restrictions. The
  information may be released to the public domain.
  Since it is basic /applied research, the work
  qualifies for the fundamental research exclusion.
  The technical data provided by the Company,
  subject to export controls above, is Company
  proprietary information which may be removed
  after Company review of publications.
• c) Is the correct answer.

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Case Study 6

• A PI at Penn is working with the South Korean
  Ministry of Science on research supported by
  NASA. The PI is developing instrumentation that
  will be placed on a satellite. The results of
  the research will be publicly available and
  published. The contracts with NASA and the South
  Korean Ministry of Science covering the research
  state that all parties will comply with export
  control laws. The research is basic and no
  restricted information will be received by the
  Penn PI.
• Which of the following statements is correct?
• Since the research is fundamental and no
  publication restrictions apply, Penn will not
  need to apply for a license from the federal
  government to send the instrumentation from Penn
  to South Korea.
• The instrumentation involves equipment that will
  be sent into space. Hence, it is covered by ITAR
  and a license will be necessary to ship the
  instrumentation to South Korea, even if the
  research leading to the instrumentation qualifies
  for the fundamental research exclusion.
• Even though the research is fundamental and no
  restrictions apply, Penn will need to apply for a
  license from the federal government to send the
  instrumentation from Penn to South Korea since
  South Korea is a foreign nation.
• None of the above

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Case Study 6 Analysis

• Even though the project qualifies as fundamental
  research and the technical information / research
  results will be widely published, since the facts
  describe the transfer of an actual physical piece
  of equipment that will be launched into Space,
  the instrumentation will automatically be subject
  to export controls under ITAR.
• The correct answer is b.

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Case Study 7

• You have prepared a research proposal in response
  to a solicitation. One condition in the
  solicitation is a requirement that only citizens
  of the United States may participate in the
  conduct of the research funded under the
  proposal. Which of the following is a correct
  statement?
• The requirement limiting participation to U.S.
  citizens means that the research could be subject
  to export controls and the research proposal
  should be carefully reviewed to ensure that Penn
  and the PI can comply with the export control
  laws or modify the research proposal to remove
  export controls as a concern.
• The condition only involves hiring and
  participation on the research funded under the
  proposal at Penn. This is work in the United
  States and there is nothing to indicate that any
  sort of export will take place, and as such,
  the research proposal does not need to be
  carefully reviewed for compliance with export
  control laws.
• The question of whether careful review is needed
  to ensure compliance with export controls depends
  on the nature of the funding agency. If a
  private sponsor, such as a commercial
  corporation, there is need to review carefully
  for compliance with export control laws. If the
  funder is the federal government, the proposal is
  automatically exempt from export control laws.
• None of the above.

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Case Study 7 Analysis

• The correct answer is a.
• The solicitation condition is of concern and
  needs to be carefully reviewed to ensure
  compliance with export controls. Because
  participation and access to research results are
  restricted (based on country of citizenship), the
  research proposal would not qualify for the
  fundamental research exclusion and would be
  subject to export controls. Another concern from
  a policy point of view would be differential
  treatment of students and employees at Penn based
  on country of citizenship and that also would be
  unacceptable.
• b) is incorrect. Even for research activities on
  campus and even if no specific export is
  contemplated, limiting access and participation
  in the research based on country of citizenship
  would remove the research proposal from the
  fundamental research exclusion.
• c) is incorrect because the nature of the Sponsor
  is not relevant to the analysis. The
  solicitation contains an access control. If the
  University decides to accept the award, the
  fundamental research exception will not apply.

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Case Study 8

• A faculty member in Chemistry is teaching a
  junior level course required to obtain a B.A.
  degree in chemistry. The course covers in part
  discussion on the handling and disposition of
  nuclear materials as part of the course
  materials. Several students of foreign
  nationality are enrolled in the class.
• Which of the following is a true statement?
• Since the course involves instructions on nuclear
  materials and has enrolled foreign students, the
  faculty member needs to get a license from the
  federal government to conduct the course.
• Although the course involves instructions on
  nuclear materials and has enrolled foreign
  students, the faculty member does not needs to
  get a license from the federal government to
  conduct the course since it would falls within
  the teaching exclusion to export control
  compliance.
• Since the course involves instructions on nuclear
  materials, the requirement of whether or not the
  faculty member needs to get a license from the
  federal government to conduct the course is
  dependent on the actual foreign nationality of
  the enrolled students. For example, a student
  from N. Korea would necessitate a license to be
  enrolled in the course.
• None of the above.

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Case Study 8 Analysis

• The correct answer is b).
• The teaching or education exclusion to ITAR
  exempts information which is general scientific,
  mathematical or engineering principles commonly
  taught in . . . universities. A closely-related
  EAR exclusion concerns educational information
  released by instruction in catalog courses and
  associated teaching laboratories. Generally,
  this teaching exclusion does not apply to
  non-public domain information and certain
  information deemed classified or sensitive by the
  federal government.
• b) is incorrect because instruction on nuclear
  materials is in a standard course described in
  the catalog.
• c) is not correct. The teaching or
  education exclusion applies to general course
  work regardless of the nationality of students
  enrolled, unless a specific OFAC concern is
  triggered. This would not be the case for course
  materials already in the public domain.

46
Export Control Laws and Research at Penn

• Thank you for your help in ensuring compliance
  with Export Control Laws at the University of
  Pennsylvania.
• Please contact ORS (Donald Deyo, Esq., extension
  3-9970) with any questions or for assistance.
• Please click here to test yourself on Export
  Controls