TO: All University Faculty
FROM: James V. Maher
DATE: October 26, 2004
SUBJECT: Federal Government Regulatory Alert:The Export of University Goods, Technologies and Information
With homeland security a major priority over the past three years, the federal government has, not surprisingly, increased substantially its scrutiny of university compliance with federal regulations controlling the export of goods, technologies and information. In response, the University of Pittsburgh recently reviewed its own policies and practices with regard to the export regulations and is in the process of developing new procedures and educational training to aid in compliance here.
I am writing to make you aware of our recent and ongoing efforts and, at the same time, to urge you to seriously consider the following regulatory alert and its implications for you and your research efforts. Please note that the federal penalties for noncompliance apply not only to the University but to individual faculty members as well, and can be quite severe.
For many years, the University has been subject to two sets of federal export control regulations. The U.S. Department of Commerce administers the Export Administration Regulations (EARs), and the U.S. Department of State administers the International Traffic in Arms Regulations (ITARs). Both sets of regulations restrict the export of certain goods, technologies and information, and both federal departments maintain lists of items that are restricted from export, as well as specific countries that may be banned from receiving such goods from the United States. Special licenses must be obtained before such items are permitted to be exported.
Many of the items on both lists are considered dual-use items, which means they could be used for both military and non-military purposes. Many of those same items, such as GPS technology and fermenters for biological research, are commonly used in university research. Many biological and chemical materials were added to the restricted list following the anthrax attacks on U.S. government office buildings.
Moreover, “export” doesn’t just mean the physical shipment of goods to a foreign country. Under EARs and ITARs, an entity might export a regulated item simply by disclosing specific information or providing specific services to foreign nationals in academic and research settings on campus, such as to foreign students or visiting faculty. This is known in legal terms as a “deemed export.”
As part of the long-existing guidelines, the regulatory agencies have always made available broad exceptions to these legal restrictions for fundamental research conducted in university-based research programs. While the definitions of fundamental research vary slightly between EARs and ITARs, both define it as any basic or applied research at an accredited institution of higher learning where the results ordinarily are published or otherwise disseminated broadly in the scientific community. As such, export licenses in the past have not been required for the deemed export of data generated by such fundamental research on campus. However, the research exception has been available only if no restrictions exist on the release of the research data, except for brief delays to permit the filing of patent applications. Confidentiality provisions, exclusions of foreign students, agreements to allow the sponsor to pre-review or edit the results, or any other language in the sponsored-research contract that permits the sponsor to withhold the results of the research have resulted in the research falling outside of this exception. For many years our University, along with almost all major research universities, has refused to accept research contracts from agencies that would remove our fundamental research exemption. While the federal agencies that have traditionally tried to make us accept such contracts have almost always retreated from this position when challenged in the past, and we had not, until very recently, lost any grants by refusing to accept ITARS contract language, the post-9/11 climate has changed, placing us and our fellow research universities in a very difficult position.
Given the current emphasis on homeland security, the federal government has substantially increased its scrutiny of university compliance with export control regulations. Additional scrutiny now includes the following:
• an increased insistence on specific export control language in government and industry contracts and a refusal to recognize the fundamental research exception;
• insistence on “No Foreign Nationals” clauses in contracts, clauses which would require universities to restrict the access of non-U.S. citizens for certain projects; and
• an increase in random inspections by representatives of both the state and commerce departments (Carnegie Mellon University recently faced such a random inspection, and several other universities were cited for inadequate oversight of export-related issues).
In addition to EARs and ITARs, the U.S. Treasury Department Office of Foreign Assets Control (OFAC) maintains both its own list of foreign countries against which the United States has issued economic or trade sanctions, and lists of suspected terrorists, drug traffickers or others engaged in illicit activities. OFAC has the authority to control transactions with any of the
persons or countries on its list and even seize the U.S.-based assets of entities on the list. The agency has become more active lately in examining transactions with charitable organizations which the United States suspects of supporting terrorism. As a result, a number of foundations and other grant-making organization are beginning to require a certification from universities stating that they do not conduct business with any country or person on the OFAC list.
New Compliance Plans
As a result of the scrutiny, the University of Pittsburgh has begun a process to develop a coherent compliance plan that will include clear policies on what kinds of export-control clauses it will accept in sponsored research contracts or foundation grants. Keep in mind that “No Foreign Nationals” clauses impose stringent obligations on the University which restrict access to laboratories and research data. Thus, such clauses generally are not consistent with the University’s policies on openness in research and non-discrimination and will not be accepted. The University also plans to develop the following:
• training programs for faculty, staff, and students to explain where export-control regulations apply;
• a submission checklist which principal investigators and/or departmental administrators must complete when submitting a research proposal, so that the Office of Research can flag research projects where the fundamental research exception may not be available or where equipment, materials, or software may be shipped out of the country as part of a research collaboration; and
• instructions from the Purchasing Department for faculty and staff about purchasing materials that may be shipped directly from the supplier to locations overseas or from overseas suppliers into the United States. Since federal import/export regulations are complex and voluminous, the Purchasing Department has engaged an import/export broker to help the University determine on a case-by-case basis whether the materials are restricted for import or export, and, if not, assist the University and supplier in compliance and licensing requirements.
As we move forward with our plans and begin to develop compliance programs for the University, we will seek your comments and feedback on these issues. We look forward to working with you in the future on formulating more definitive plans.