The primary United States regulations controlling export activities are the International Traffic in Arms Regulations (ITAR), the Export Administration Regulations (EAR), and the foreign asset control regulations.
If an activity is controlled under the export regulations, then a license or other approval is needed from the relevant agency unless an exemption applies. Even if approval is not needed, there might be requirements for government review prior to conduct of the activity, for giving notice to the government or for keeping special records. Also, if an activity is controlled, there likely will be restrictions as to who can participate in the activity.
There are potentially severe civil and criminal penalties, including fines and imprisonment, for violating the export laws. Both the organization and the individuals involved are subject to these penalties.
ITAR is administered by the Office of Defense Trade Controls in the U.S. Department of State, and is defined at 22 CFR Parts 120-130, implementing the Arms Export Control Act, 22 USC 2778. The United States Munitions List (USML) is at the heart of ITAR. ITAR only controls exports and services that relate to items on the USML or other items specifically designed or produced for defense applications. The items and services generally are for military applications and are referred to as "defense articles" and "defense services. " Spacecraft systems and associated equipment are also on the USML (Category XV), even though they might be for civilian use only and are not developed or used for defense applications.
The EAR is administered by the Bureau of Industry and Security in the U.S. Department of Commerce and is defined at 15 CFR Chapter VII, Subchapter C, Parts 730-774. The EAR implements by Presidential order under other law the Export Administration Act, 50 USC 2401-2420, which Act on occasion has been allowed to expire. The EAR generally controls exports and other activities that relate to items on the Commerce Control List (CCL). The CCL, though, is very broad; it includes a catchall category designated EAR99 that covers everything not expressly listed elsewhere. Technologies controlled by the EAR often are referred to as "dual use," indicating that they are not specifically developed or manufactured for military use and might be useful for either military or non-military (civilian) applications. The EAR also applies to some items that have solely civilian use.
The Office of Foreign Assets Control (OFAC) in the U.S. Department of the Treasury administers the foreign asset control regulations, which are defined at 31 CFR Parts 500-598. According to OFAC, its mission is to administer and enforce economic and trade sanctions based on U.S. 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. The regulations administered by OFAC include controls with regard to specific individuals, specific organizations and certain countries.
Among the activities controlled by OFAC are those related to editing papers submitted by foreign nationals for publication in journals. The Institute for Electrical and Electronic Engineers (IEEE) has made available at its web site some history and documents, including an OFAC opinion, regarding this issue.
Some items might be covered by more than one regulation and agency. For example, when one is considering a specific export activity that is controlled under the EAR or ITAR, one also should check to make sure that the intended recipient is not on the list of Specially Designated Nationals and Blocked Persons at the OFAC web site. It is also possible that a given technology is controlled by more than one regulation. In addition, some military articles might be covered only by the EAR and not ITAR, such as certain military transport vehicles.
Under both EAR and ITAR, transferring information ("technical data" or "technology"), a physical item or a computer program to a foreign country is an "export". This includes making technical data and computer software available over the Internet. Providing controlled information to a foreign person even if the person is in the United States would also be deemed to be an export of that information. A "deemed export" might take place verbally, in writing or by allowing a foreign person access to physical items, such as equipment or devices, or computer software from which the person can obtain the controlled information by inspection or use.
Under ITAR, technical data includes information which is required for the design development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles (Note: this includes civilian space articles on the USML); classified information relating to defense articles and defense services; information covered by an invention secrecy order; and software directly related to defense articles. It does not include basic marketing information on function or purpose or general system descriptions.
Under EAR, technology includes specific information necessary for the development, production or use of a product. The information takes the form of "technical data" or "technical assistance".
The export regulations have a number of special rules for computer software. Under ITAR, certain software might expressly be listed on the USML. Other software might be controlled because it relates to the design process, operation, maintenance or other activities specifically related to USML articles.
Each category of technology in the EAR CCL has a special subcategory for computer software, with its own special rules. The EAR also has special rules for mass-market software. In addition, the EAR has some extensive rules for software (generally referred to as "encryption software") that performs security functions or uses such functions performed by other software or equipment.
The export regulations also control certain services (e.g., "defense services" under ITAR), even if all of the information used or transferred in association with the services is publicly available and not otherwise controlled under the regulations. For the most part, such controlled services have to do with assistance for military or space activities, assistance with encryption commodities or software, or assistance to embargoed countries.
The export regulations have a variety of exclusions and exemptions. For universities, an important exclusion is for publicly available information. The definitions of the excluded publicly available information are fairly similar for EAR and ITAR, but do have some differences. Under both ITAR and the EAR, if information meets the respective definition for the given regulation, the information is not subject to nor controlled at all by that regulation. Note, though, that even though the information itself may not be subject to export control, the activity for which it is used might still be controlled - such as a defense service under ITAR or a service to an embargoed country.
Under ITAR, the exclusion for publicly available information is made indirectly, by specifying that such information is not included in the definition of "technical data," as that term is used with regard to the controls under ITAR. ITAR references publicly available information as being "public domain." The term "public domain" under ITAR does not mean dedicated to the public, which is the definition under intellectual property law. Under the EAR, the exclusion for publicly available information is more directly and expressly made.
Under ITAR, public domain means information which is published and which is generally accessible or available to the public:
(i) The University or its researchers accept other restrictions on publication of scientific and technical information resulting from the project or activity, or
(ii) The research is funded by the U.S. Government and specific access and dissemination controls protecting information resulting from the research are applicable.
ITAR also expressly excludes from the definition of "technical data," and thus from control, information concerning general scientific, mathematical or engineering principles commonly taught in schools, colleges and universities.
In addition, ITAR specifically exempts from the requirement of a license 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:
Further, ITAR includes an exemption from the licensing requirement for certain items and defense services for space applications by accredited U.S. institutions of higher learning when the items or services are for fundamental research and are for organizations in certain countries, such as those belonging to NATO.
The following items are not subject to the EAR:
"Fundamental research" is defined in the EAR as basic and applied research in science and engineering, where the resulting information is ordinarily published and shared broadly within the scientific community; as distinguished from proprietary research and from industrial development, design, production, and product utilization, the results of which ordinarily are restricted for proprietary reasons or specific national security reasons. Research conducted by scientists, engineers or students at a university (defined as an accredited institution of higher education in the United States) normally will be considered fundamental research.
Information received by researchers from others, such as sponsors, typically would not be publicly available, and often is the subject of a non-disclosure agreement or research contract provision. Information transferred from a business entity to researchers is not eligible for the "fundamental research" exclusion where the parties have agreed that the business entity may withhold from publication some or all of the information so provided. Such proprietary information would therefore typically be controlled under the export regulations. The fact that such received information might be controlled generally would not affect the exception for information resulting from fundamental research. If access to and use of the controlled information is essential to performance of certain tasks, though, there might be constraints on participation in the project by foreign nationals resulting from export law constraints on access to the received, controlled information.
Prepublication review by a sponsor of university research solely to insure that the publication would not inadvertently divulge proprietary information that the sponsor has furnished, or to temporarily delay publication to ensure that publication would not compromise patent rights, does not change the status of the research as fundamental research.
The basic provisions regarding the involvement of foreign nationals in research activities that may be subject to export control is found in section 52.215-9530 of the Federal Acquisition Regulations (FAR) which states:
(a) The parties acknowledge that technical data generated under this contract may be subject to export control, including disclosure to foreign nationals/representatives, whether such data is provided orally or in written form. The contractor agrees to obtain written approval from the Contracting Office (PCO) before assigning any foreign national/representative to perform work under the contract or before granting foreign nationals or their representatives access to data related to the following items/subject matter, whether such data is provided by the Government or generated under this contract.
The foreign national clause has two parts: (1) an "advisory warning" that the research may involve technical data which may be subject to export control regulations; and (2) the responsibility of the contractor to obtain permission from the contracting officer before assigning any foreign national to work on the project or to have access to certain data. This clause alerts the contractor to its duty to protect information subject to current export laws and regulations. It also gives the contracting officer the opportunity to object if the contractor may constructively export militarily critical technology by providing such data to foreign nationals. The federal government, not a particular contractor, determines generally what data are sensitive and require protection from unauthorized export. However, the exporter must make an individual determination of whether a particular export involves such data and thereby requires an export license.
The University has taken exception to the inclusion of restrictions on the access by foreign nationals on three basic grounds:
Compliance with Export Regulations and ITAR
The response from federal sponsors to these arguments has been that the critical issue is not the use of the foreign nationals clause, but whether the University intends to comply with applicable export control laws and regulations. The federal government must determine what data are sensitive and is the enforcer of regulations to protect unauthorized export of such data. Therefore, a federal agency is well within its authority to require that foreign nationals at least be identified prior to the agency's disclosure of technical data to the University or prior to funding of projects which would generate export controlled technical data. For a federal agency to do otherwise could be construed as an implicit authorization to export such data at least to foreign nationals involved with the research.
While the federal government has the authority to propose any requirement or provision as a condition of a contract, such conditions that would violate a constitutional right of a contractor are not valid or enforceable. This limitation on the government power is particularly relevant in the case of any limits that may be imposed on the publication of unclassified information. In addition, federal agencies should not impose restrictions that are inconsistent with stated Administration and Congressional policies. Nevertheless, the bargaining leverage of a federal agency often is formidable and to resist the imposition of unacceptable terms may require considerable determination on the part of university negotiators.
A report prepared in 1987 by the Association of American Universities entitled, National Security Controls and University Research: Information for Investigators and Administrators, provides a discussion of the options open to the investigator and university in the negotiation of unwanted or unacceptable contractual conditions. Such restrictions often are incorporated as "agency boilerplate" and may not be applicable to the specific research effort under consideration. Therefore, requesting the agency to conduct a policy level review may result in the withdrawal of certain inconsistent conditions. In the case of restrictions that are "passed through" by industry sponsors, an agency review at the policy level may provide some relief from the terms and conditions imposed and accepted in the prime contract. A clear definition of the portion of the prime contract to be conducted by the university as a subcontractor may also allow the industry sponsor to exclude these provisions as being inapplicable to the subcontract.Contract negotiators at the University of Michigan are versed in the pursuit of these options. However, failing to persuade the sponsoring agency to eliminate an undesirable contractual condition, the University is presented with a choice: to accept the condition; or to refuse it and withdraw its proposal from further consideration. As the AAU report suggests: "In the end, the protection of a free flow of scientific information will depend on the willingness of the investigator and the university to refuse restrictions that they consider unreasonable."
The issues of export controls and limitations on the involvement of foreign nationals can be separated from the concerns that surround the pursuit of classified research. The foreign nationals clause can be applied when there is no issue of classified materials, either as input to or as output of a project.Provisions in a recent RFP from the Air Force illustrate this point. The research envisioned under this project will not involve any classified materials. However, the Air Force reserved the right to a 10-day review period prior to the contractor "assigning or granting access to a foreign national to any work, equipment or technical data generated or delivered in performance of this contract." The authority for this requirement derives from the Arms Export Control Act and the Export Administration Act and relates to the need to apply for an export license under certain circumstances. It should be noted that the restriction placed on the foreign national of assignment or access to "work or equipment" generated or delivered in the performance of the contract is broader than the restrictions imposed by the export regulations.
If, at the outset, the University accepts the "advisory warning" that technical data involved in the research may be subject to export control regulations, then it also accepts the possibility that during the course of the project all or a portion of the research may be subject to the limitations that apply to the assignment of foreign nationals. The determination that the University must comply with these restrictions could arise from a sponsor "review" of reports and proposed publications just as easily as it could from the requirement of written approval prior to the publication of results or the hiring of foreign nationals. The recourse in either case would be to terminate the University's involvement in that portion of the research project to avoid the publication of the technical data. Another option would be to seek an export license. Several major research universities are exercising this option with some apparent success.
Should the review indicate that the sponsor does not consider the publication to be restricted, however, the University may chose to proceed with publication or involvement of foreign nationals. In this case, the University would not have reason to believe that export of technical data was restricted.
If the University contractually agrees to publication restrictions or to restrict involvement of foreign nationals, however, the University could be subject to an action for breach of contract if it undertook to publish the findings of the research or involve foreign nationals in the research. The potential for a breach of contract exists, in fact, even if the export regulations are not applicable.
In accordance with the Regents' Policy Concerning Research Grants, Contracts, and Agreements (as detailed in Appendix C), the acceptability of the restrictions is to be determined based on reasonableness. Provided the University is not restrained from disclosing the existence of the contractual document, the identity of the sponsor, or the nature and scope of the proposed research, reasonable publication delays or prior review requirements can be accepted. Acceptance is determined ultimately by the Vice President for research based on information provided by the principal investigator, the relevant department chair or unit director, and the dean.
Limitations on access by foreign nationals imposed under export control regulations are a direct consequence of federal law. Therefore, the issue of unreasonable restrictions on publication or dissemination seems moot. Research of interest to and being funded by DOD agencies is a more likely candidate for export and foreign nationals restrictions. It may be reasonable to accept research support from an agency which imposes such restrictions, however, if the research is of sufficient scientific merit and alternate funding sources are unavailable.The experience of some faculty members has shown that publications of academic or theoretical interest are often authorized by sponsors despite clauses which threaten to blanket the research in a cloak of export control and foreign nationals restrictions. While the sponsor--a federal agency or industrial contractor--may feel the need for such terms and conditions in the contractual agreement with the University at the outset of the research, specific findings may be evaluated and exempted from such restrictions.
If the sponsor exercises further restrictions on the publication of these data or on the access to the research by foreign nationals, then the University may elect to decline or terminate the agreement if these restrictions are deemed unreasonable under the circumstances. Any agreement which goes beyond these basic parameters--which specifically indicates that the technical data shall be subject to export control and/or reserves sponsor approval for the hiring of foreign nations--must be evaluated on a case-by-case basis through established procedures.
Reviewed: December 2004
Contact Jeff Busch, Export Compliance Manager, or Sharyn Sivyer for further information regarding security clearances, classified document control, foreign visitor information, security inspections, and so forth.
Contact info updated: February 2012