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3/31/2015
University as a Regulatory Minefield:
Squaring National Security with
Intellectual Freedom
Richard L. Matheny III
Chair, National Security & Foreign Trade Regulation
rmatheny@goodwinprocter.com, 202-346-4130
Kevin J. Licciardi
University Counsel, Princeton University
licciard@princeton.edu, 609-258-2500
April 2, 2015
What does “university” mean and what are its goals?
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The original Latin word "universitas" refers in general to "a number
of persons associated into one body, a society, company,
community, guild, corporation, etc.”
› A “community of masters and scholars.”
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Academic freedom.
› The oldest university, the University of Bologna, adopted an academic
charter, the Constitutio Habita, in 1158 or 1155, guaranteeing the right
of a traveling scholar to unhindered passage in the interests of
education.
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What are the goals of export controls & sanctions?
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Protect US national security: “Keeping the most sensitive goods out
of the most dangerous hands.”
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Implement US foreign policy by attempting to persuade, condition
behavior of foreign actors, or curtail certain activities.
› Iran’s nuclear ambitions
› Russia’s aggression in Ukraine
› But also, e.g., general license for personal internet comm’s
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Meet international treaty and other obligations
› United Nations Security Council
› Wassenaar Arrangement
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Political posturing in Congress
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Their goals are largely antithetical
The University
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“The whole”
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Advancing science
Diversity
Bringing many disparate
viewpoints together
Unhindered research
Academic freedom
Openness
US export / sanctions laws
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Controls, regulations
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Nationality, borders
Ask for permission first
Be careful who you are
dealing with
Technology is dangerous
National security
Fear
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The University is a target-rich environment
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USG grants, funded research, cooperation with military industrial
complex
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New technologies with uncertain, unexpected end-uses
Travel
› Visiting scholars, students
› Study abroad
› Laptops carrying sensitive technology
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Dispersed, decentralized control structure—or, “herding cats”
Constant turnover of students, teachers, subject matter
Spirit of openness, sharing, academic freedom
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Foreign governments seeking technology….
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What are the legal frameworks and
regulatory concepts confronting the
university?
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What are the U.S. export controls & sanctions?
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Office of Foreign Assets Control (Treasury) – economic
sanctions on persons, entities, countries, regimes:
› Crimea, Cuba, Iran, North Korea, Sudan, Syria
› “Specially Designated Nationals,” others
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Bureau of Industry & Security (Commerce), Export
Administration Regulations – “dual-use” items/technologies:
› Lasers, encryption, high-speed computers, specialty metals,
machine tools, avionics, valves, and on and on.
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Directorate of Defense Trade Controls (State), International
Traffic in Arms Regulations – military items & technologies:
› Fighter jets, weaponry, military electronics, etc.
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Each of these regimes also controls “technology”
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In the university, the currency of the realm is not goods, it is
INFORMATION, TECHNOLOGY.
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Why do we control it?
› “Give a man a fish and you feed him for a day; teach a man
to fish and you feed him for a lifetime.” - Maimonides
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But this is a very hard thing to control the export of technology.
› E-mail discussions, research collaboration, papers, blueprints,
specifications, test results, site visits, phone-calls, videoconferences,
late nights at the bar after the international conference….
› All present risks that controlled technology will be unlawfully transferred
to a foreign national without a license authorizing it.
› The “deemed export.”
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Export Controls and U.S. Visas
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Classifying the technology under the relevant laws
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OFAC – 31 C.F.R. Parts 500-598
EAR – 15 C.F.R. Parts 730-774
› Commerce Control List
› ECCN, “EAR99”
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ITAR – 22 C.F.R. Parts 120-130
› U.S. Munitions List
› “Defense service” can include assistance to a foreign person even if no
controlled technology at issue.
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NISP Operating Manual – classified work
DOE Regulations – 10 C.F.R. Parts 110 & 810
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“Fundamental research”
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Export controls exclude “fundamental research.”
› “Basic and applied research in science and engineering where the
resulting information is ordinarily published and shared broadly within
the scientific community.”
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What is not “fundamental research”?
› Research restricted for proprietary reasons, specific U.S. Government
access and dissemination controls, or other sponsor publication
restrictions.
› Multiple, nuanced exceptions to all of the above.
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ITAR requires fundamental research be at “accredited institutions of
higher learning in the U.S.” (i.e., on campus), but EAR does not.
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Bottom Line: Ask for advice if dealing with classified inputs, USG or
private sponsors, foreign collaboration, or pre-publication review.
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First Amendment / the “Berman Amendment”
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Presidential authority to restrict exports does not apply to
“information or informational materials”
› “[N]o embargo may prohibit or restrict directly or indirectly the import or
export of information that is protected under the First Amendment to the
U.S. Constitution.” 1994 House Conference Report.
› Includes publications, films, posters, artwork, electronic media, news
wire feeds, CD-ROMs, and digital downloads.
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But OFAC interprets this exception narrowly to exclude:
› Transactions related “to the substantive or artistic alteration or
enhancement of informational materials, or to the provision of marketing
and business consulting services,” such as editing and manuscript
preparation.
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How do these tensions manifest in
the university setting?
Professor Roth – University of Tennessee
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Emeritus Professor of Electrical Engineering, 30 years teaching,
former NASA scientist.
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Convicted by a jury in 2008 on 18 counts relating to ITAR violations:
› Disclosure of plasma technology to Chinese and Iranian nationals;
carrying laptop with controlled technology to China.
› Research re. plasma-guidance system for an unmanned drone aircraft.
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Had been warned re controlled nature of the technology, and the risks
inherent in disclosing to foreign nationals.
Sentenced to four years in prison.
Limits of the “fundamental research” exemption + EGO.
Dangers of willful noncompliance!
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Iranian Students at UMass Amherst
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2012 law requires State Dept. and Dept. of Homeland Security to
deny visas and exclude from the United States
› Iranian citizens seeking “to participate in coursework at an institution of
higher education…to prepare…for a career in the energy sector of Iran
or in nuclear science or nuclear engineering or a related field in Iran.”
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On February 6, 2015, UMass Amherst announces policy to “no
longer admit Iranian national students to specific programs.”
› Policy announcement acknowledges “conflict[] with our institutional
values and principles” but emphasizes that “we must adhere to the
law…and ensure that we are in compliance.”
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Spurs pushback, negative press, and public disagreement by State
Dept. officials.
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Policy reversed two weeks later.
Dangers of over-compliance!
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Technical violations at UMass Lowell
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In 2007, UMass Lowell’s Center for Atmospheric Research exported
an atmospheric testing device and related antennae and cables to
the Pakistan Space and Upper Atmosphere Research Commission
(SUPARCO).
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Items designated “EAR99” (not subject to export controls), but
SUPARCO was listed on the Commerce Department’s “Entity List.”
› Items could have been legally exported if UMass Lowell had received a
license.
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In March 2013, UMass Lowell agrees to settlement including
$100,000 fine (waived if no further violations during two-year
probationary period).
Dangers of technical noncompliance!
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A day in the life of Princeton
University’s Counsel. . . .
What are some resources and best
practices for universities to manage
these risks?
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What to do?
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Conduct a risk assessment, including ITAR, EAR, OFAC, and NRC
perspectives. Do this periodically, as laws and facts change.
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Make somebody responsible! (And make everyone involved.)
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Consider establishing relationships with:
Have that person develop or enhance an export + sanctions
compliance program that is uniquely tailored to the risks facing your
institution.
› Your peers at other schools.
› Groups: Association of University Export Control Officers
› Your regulator (DDTC, BIS, OFAC), if appropriate.
› A good outside counsel, for when things go wrong, or you need
expertise or an independent perspective.
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Questions?
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