Satellites to Return to Commerce?- What a Blessing

Thanks to Clif Burns, below is a link to an article referring to Rep. Ellen Tauscher who is the Obama nominee for Under Secretary of State for Arms Control and International Affairs. One of her pre-hearing answers implies that she would favor returning communication satellites to Commerce would be a big boost to space researchers and universities.

Under ITAR there are so many obstacles for investigators to overcome particularly when the project involves foreign collaborators (which almost all do in a university setting). It took me 2 months to just use the Canadian exemption to transfer technical data to a Canadian company to build a prototype for one of our space research projects. And that was just for an exemption, not a license! The paperwork alone was almost not worth the effort. So if satellites return to the CCL under Commerce the process of classification and licenses would be so much smoother and efficient, and a license may not be needed at all. Indeed this would be a blessing to export compliance officers who struggle with this issue under the ITAR.

"State Nominee Favors Return of Satellite Issues to Commerce"
From the ExportLawBlog.com Posted by Clif Burns at 6:20 pm on June 11, 2009
http://www.exportlawblog.com/archives/518

Why Should Universities Worry About Export Controls?

An article appeared this week on one of the export blogs that is relevant to universities and I thought I would share it with you.

Courtesy of Boskage Trade News, 6-10-09, http://www.boskage.com/

http://boskagetradenews.blogspot.com/2009/06/why-should-universities-worry-about.html

How to Request a Commodity Jurisdiction (CJ)

Sometimes it is difficult to determine if an item is under the jurisdiction of ITAR or EAR. For example I had a professor who wanted to ship multi-junction solar cells to a foreign country. When I researched the regulations I found that the ITAR stated in Category XV that single, dual, or triple junction solar cells were under the EAR. However, these solar cells would have four or five junctions. So are the cells under ITAR or EAR? There is no definitive answer so I had to either request a commodity classification from BIS or request a commodity jurisdiction (CJ) with the Department of State. Since the research was funded by the Air Force and may have military applications, the logical choice was the CJ. Collecting all the information for a CJ is a feat in itself since the process is designed for manufacturers and not research institutions. Below are the requirements for submitting a CJ request. The best advice I can give you if you have to do one of these is to allow plenty of lead time. It takes the DDTC about 90 days to process and issue a CJ determination.

The purpose of a commodity jurisdiction (CJ) request is to determine whether an item or service is covered by the U.S. Munitions List (USML) and therefore subject to ITAR export controls. If after reviewing the USML and other relevant parts of the ITAR, in particular ITAR §120.3 and §120.4, you are unsure of the export jurisdiction of an item or service, you should request a CJ determination. A CJ is not a license or approval to export. If you want to export your item or perform services while the CJ determination is in the review process, you must be registered and obtain the appropriate approval from DDTC prior to export.

CJ Process:
A CJ request should be submitted to DDTC in the form of a letter and supporting documents (1 original and 8 copies). To avoid your request being Returned Without Action (RWA) and to prevent delays in the interagency coordination process, you need to provide in your submission all the information requested. This information must be provided in nine complete sets.

Preparing a CJ Package: Use the following guidelines in preparing the CJ letter and supporting documentation.
1. Subject Line – On the subject line, identify the letter as a “Commodity Jurisdiction Request for [state the item and/or service].” Be as specific as possible in identifying the item (including the name of the item, the manufacturer, the model and/or part numbers) and/or service. If you are registered with DDTC as a manufacturer and/or exporter of defense articles or defense services, include your DDTC Applicant Code below the subject line.

2. Description – State what the item is, what it is a component of, what it does, how it works, and any other information that explains the item.

3. Origin of Commodity – State what the item was originally designed for and why the item was developed. State whether the item was developed, designed or modified specifically for military use, for commercial use, or both military and commercial use. Give examples of the uses for which it was developed, designed or modified. State whether or not the item was developed for any U.S. Government agency or with any U.S. Government funding. If funded by the U.S. Government, identify the agency that provided the funding and the type of funding that was provided. A brief product history is essential.

4. Current Use – Describe all current uses of the item and state whether or not the uses have changed significantly over time. Include only what the item “is used for,” rather than what it “can be used for.”

5. Special Characteristics – State any military standards or military specifications that the item is designed to meet. Be sure to specify the distinct differences between the product after it was modified or adapted for a military application and the original commercial product before changes were made.

6. Other information and attachments – Provide any other relevant information in the letter that would be helpful in making a jurisdictional determination. Include any brochure, specification sheet, marketing literature, technical data, or any other document that will assist in the determination.

Best Practices for Export Compliance in a Research Institution

Excerpt from Council on Government Relations (COGR) Export Controls Brochure

Below are some suggested practices and procedures currently in place at various institutions. These proposed practices are primarily meant to raise awareness of export control issues, facilitate the assessment of cases, and bring the appropriate university parties together as early as possible in the process.

During the proposal submission process, add questions to internal proposal routing forms inquiring of the researcher or the departmental or laboratory administrators whether:

Any restrictions are placed on publication, disclosure, dissemination, or participation by the sponsor in Requests for Proposals (RFPs) or program announcements;

The receipt of export-controlled information is expected to be furnished by others for use in the performance of this project;

Any issues regarding export control have been mentioned by the sponsor; and/or

The export of controlled technology or items is expected (shipping/transmitting).

On the part of the research administrator staff, when reviewing a proposal submitted by a researcher, the statement of work and any draft agreement or other materials provided by the sponsor should be reviewed to see if they contain any language or terms that:

Reference U.S. export regulations;

Restrict non-U.S. entity participation based on country of origin;

Prohibit access by non-U.S. citizens to project information;

Prohibit the hiring of non-U.S. citizens

Note: Export controls are laws that are in effect even if there is no sponsor specific export control language in the RFP, grant, contract, or award document.

ITAR Bona fide and full time employee exemption

Many universities can use the bona fide full time employee exemption under ITAR 125.4(b)(10) but must make sure that they follow the conditions of using this exemption. This comes in handy when you are dealing with a deemed export issue.

1) can only be applied to unclassified technical data disclosed in the U.S.
2) must be a U.S. institution of higher learning
3) the foreign person must be a bona fide full time regular employee
4) the foreign employee's must live in the U.S. while employed by the institution
5) the foreign employee cannot be a national of a proscribed country under ITAR 126.1
6) the institution must notify the foreign employee in writing that the technical data may not be transferred to other foreign nationals without the prior written approval of the DDTC

Please Note: This exemption is not available under the EAR or OFAC, only ITAR has this exemption. Make sure you check the proscribed country list as it may change and these are not the same as embargoed or sanctioned countries under OFAC. The ITAR list of proscribed countries is much longer. To comply with condition (6), I always get the signature of the foreign national employee as well as the lead investigator with a statement that they understand the conditions of the exemption and will abide by them. Remember that all documents must be maintained for 5 years per the regulations.

Department of State Registration

Did you know that universities are not required to register with the Directorate of Defense Trade Controls under ITAR 122.1 exemption 2 and 4 (see below)? However, if you need to apply for a license, or even to use the Canadian exemption you are required to register as a precondition. Registration fees at the time of this writing are $2250 per year. That is pretty steep for a university to pay if they only have an occasional ITAR item to export. This is the case in my experience where we needed to use the Canadian exemption at 126.5 to transfer some technical data specifications under one of our NASA space research projects to a company in Canada to build a prototype for the university. As the registration requirement states, you only need one occurence of exporting to be considered in the business of either manufacturing or exporting defense articles to trigger registration.

§ 122.1 Registration requirements.
(a) Any person who engages in the United States in the business of either manufacturing or exporting defense articles or furnishing defense services is
required to register with the Directorate of Defense Trade Controls. For the purpose of this subchapter, engaging in the business of manufacturing or exporting defense articles or furnishing defense services requires only one occasion of manufacturing or exporting a defense article or furnishing a defense service. Manufacturers who do not engage in exporting must nevertheless register.

(b) Exemptions. Registration is not required for:
(1) Officers and employees of the United States Government acting in an official capacity.
(2) Persons whose pertinent business activity is confined to the production of unclassified technical data only.
(3) Persons all of whose manufacturing and export activities are licensed under the Atomic Energy Act of 1954, as amended.
(4) Persons who engage only in the fabrication of articles for experimental or scientific purpose, including research and development.
[58 FR 39298, July 22, 1993, as amended at 71 FR 20540, Apr. 21, 2006]

Fundamental Research Exclusion (FRE)

You may already know that the majority of university research will fall under the Fundamental Research Exclusion (FRE), but did you know of the important differences in the definitions among the three major export control regulations: OFAC, EAR and ITAR?

Under the ITAR the definition of FRE is basic and applied research in engineering and the sciences conducted at a U.S. institution of higher education where the results are published broadly among the scientific community. This FRE definition does not allow publication restrictions or dissemination access controls (restrictions on foreign nationals from participation).

Under the EAR, FRE is basic and applied research where the results are broadly published among the scientific or public community. Note that geographic location and locus of the organization are not restricted. Additionally, dissemination access controls will not usually trigger a need for a license as long as the organization follows the security controls of the contract or agreement. Publication restrictions are not allowed except for pre-review to remove proprietary information.

Under OFAC there is no FRE. However, there is an exemption for informational materials already in existence in the public domain. Also, OFAC has stated that there are no restrictions for persons from embargoed countries to participate in federally sponsored research as long as the foreign national agrees not to transfer the research information or technology to their home country through any means including electronic, hand carrying, or phone. It is recommended when using this guidance that a signed statement from the foreign national be obtained to insure their understanding of protecting the data or technology.

What Do Universities Export?

I get this question at every conference I attend since most of the audience at an export compliance conference are corporate export officers and not from academia. The answer - almost anything from technology prototypes, to biological materials, to field research in embaroged countries. This blog will attempt to answer many of the export control regulations questions that arise in an academic research community.