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Deemed Export Advisory Committee of the U.S. Department of Commerce Administrative Burden of Deemed Export Compliance at universities Meeting at Georgia Institute of Technology May 2, 2007

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Title: Deemed Export Advisory Committee of the U.S. Department of Commerce Administrative Burden of Deemed Export Compliance at universities Meeting at Georgia Institute of Technology May 2, 2007


1
Deemed Export Advisory Committeeof the U.S.
Department of CommerceAdministrative Burden of
Deemed Export Compliance at universitiesMeeting
at Georgia Institute of TechnologyMay 2, 2007
David Brady Director, Export and Secure Research
Compliance Virginia Polytechnic Institute State
University dbrady_at_vt.edu May 2, 2007
2
About Virginia Tech
  • 320M/ yr research volume
  • 200M sponsored research
  • 5000 faculty, 100 foreign nationals
  • 27,350 undergraduate students, 1921 foreign
    nationals
  • 6,100 graduate students, 1,491 foreign nationals
  • 21 students from T-5 countries
  • 5,087 active sponsored research awards, gt1
    export control restricted research
  • 60 Academic units, hundreds of individual labs
    conducting research that could be subject to the
    EAR, or contain equipment and materials subject
    to the EAR

3
Virginia Tech and Deemed Exports
  • Virginia Tech recognizes that not all university
    activities are excluded from scope of the EAR
  • Virginia Tech proactively monitors activities in
    research for export control issues, and requires
    security measures when required to prevent
    violations of export regulations
  • Deemed export related compliance activities
    account for about 70-80 of the current VT
    administrative burden off export control
    compliance

4
Deemed Export Compliance in University Research
  • Research-specific deemed export compliance is
    accomplished by a series of repetitive actions
    performed with technical judgment
  • Commodity jurisdiction/classification
  • Export determination
  • License determination
  • These actions require a combination of technical
    regulatory expertise

5
Deemed Export Compliance in Research 15 CFR
734.2, 5, 8. 11
  • Current deemed export regulations assume any
    research development activities are subject to
    the EAR unless otherwise excluded
  • Requires qualitative review of research for
  • Proprietary restrictions publication/access/
    national security
  • CCL listing determination
  • producing end items other than information,
    e.g., equipment software
  • Pre-existing export controlled proprietary
    technology
  • WMD, missile, encryption technologies

6
Deemed Export Compliance-Equipment
  • Current deemed export regulations assume all
    equipment or materials are subject to the EAR
    unless excluded if they contain
  • Restrictions on license or use
  • Proprietary software
  • Encryption technology
  • Universities have open campuses, often use the
    same equipment in education and research (both
    fundamental and proprietary)much of this
    equipment is available for visual inspection by
    foreign nationals
  • Graduate researchers routinely tear equipment
    apart and rebuild with entirely different
    parts/purpose- hard to know what is regulated and
    what is not

7
Administrative Burden of Deemed Export
Compliance-Research
  • The number of such repetitive actions required to
    ensure compliance under existing regulations is
    vast
  • Proposal screening 2600 per year
  • Equipment screening 4800 per year
  • Materials screening est. 25,000 to
    gt100,000/yr
  • Contractual agreement 1,000/year
  • screening

8
Examples of common university deemed export
related activities
  • Equipment material purchase, usage disposal
  • Research agreements
  • International agreements
  • Material transfer agreements
  • Nondisclosure agreements
  • Software and other intellectual property licenses
  • International travel
  • Select biological agents
  • Contractual services agreements
  • Affiliates programs

9
Administrative Offices that deal with these
activities
  • Legal Counsel
  • Bursar
  • Purchasing
  • Fixed Asset Management
  • Travel Reimbursement
  • Environmental Health and Safety
  • Outreach and Extension
  • International Research, Education, and
    Development
  • Research Compliance
  • Provost
  • Academic Departments
  • Sponsored Programs
  • Ancillary organizations, e.g., Virginia Tech
    Intellectual Properties, Virginia Tech
    Foundation, Corporate Research Center
  • Other

10
Administrative Burden of Deemed Export Compliance
  • is growing

Note these amounts do not include faculty time
in Commodity Jurisdiction/ Classifications
11
Conclusions Recommendations
  • Full compliance with deemed export regulations
    for all CCL-listed technologies at universities
    is extremely challenging
  • The return on investment appears very low in
    policing low tech deemed export compliance
  • The regulations need to be changed to protect
    nationally significant technologies from
    disclosure while preserving the unique
    contributions research institutions provide to
    the United States

12
Conclusions Scope of the EAR
  • As it relates to deemed exports, the scope of the
    EAR is too broad
  • Commerce Control List
  • Fundamental Proprietary Research Definitions
  • Publication Restrictions
  • License requirements

13
Conclusions The Commerce Control List
  • is the problem
  • Overly broad in scope
  • Cumbersome
  • Out of date
  • Difficult to teach/learn
  • Restricts technologies that are publicly
    available worldwide
  • Has no priority- treats all regimes equally
  • Many vendors have no idea if their product is
    CCL-listed

14
Recommendations Commerce Control List
  • Deemed export regulations should restrict a few
    technologies that truly require nationwide
    protection from disclosure at universities, and
    not restrict the vast quantity of technologies
    that do not,
  • put very high walls around a very few critical
    technologies, and
  • de-emphasize those that are not state of the art
  • Deemed export regulations currently restrict vast
    quantities of low technologies to prevent access
    by a few (e.g., T-5) or many (e.g., RS) foreign
    nationals

15
Recommendations- Commerce Control List
  • De-emphasize or delete deemed exports of
    technologies to develop, produce or use
    low tech items controlled by AT, RS, CC, FC, UN
    (CCL 900-999 series) low tech /outdated tech
    controlled by NS
  • Develop a procedure to expedite removal or
    de-emphasis of technologies that are no longer
    cutting edge
  • Remove n.e.s designations wherever possible

16
Conclusions Fundamental and Proprietary Research
Definitions
  • Fundamental Research definition does not allow
    for fundamental development (see BIS Deemed
    Export FAQ22)
  • Proprietary research is not defined in the EAR
  • Proprietary research is defined in various areas
    of federal law (e.g., FOIA (5 U.S.C. 552 (b)
    (4))), but these definitions do not necessarily
    fit well to the EARs intent to regulate
    exportable products and technology

17
Conclusions Fundamental and Proprietary Research
Definitions
  • Proprietary research, as addressed in the EAR, is
    overly broad
  • Includes research on CCL-listed items that will
    not necessarily lead to an export
  • Basic research seldom yields specific
    information necessary for the development,
    production, or use of a product
  • Universities seldom develop proprietary products,
    or develop specific information that is necessary
    for the development, production or use of a
    product.
  • Industry frequently imposes proprietary
    restrictions to shield basic research areas from
    competitors- this has nothing to do with
    generating specific information necessary to
    develop, produce, or use of a product
  • Universities may unnecessarily restrict a
    research as proprietary that is not really
    subject to export regulation

18
Recommendations Proprietary Research
  • Revise fundamental research definition and
    create a restricted research definition to align
    with purpose of the EAR.
  • The primary purpose of the EAR is to regulate
    exports of
  • Products (including software)
  • Technology related to some of those products

19
Recommendations Proprietary Research
  • To implement these regulations as they relate to
    research and development- the EAR creates three
    categories
  • Fundamental research
  • Proprietary research
  • Industrial development
  • Proprietary research is overly broad, including
    research that will never produce an export
  • Industrial development is too broad, precludes
    exclusion from the scope of the EAR of
    fundamental development

20
Recommendations Fundamental Research
  • Fundamental research definition should be
    modified to accommodate, per BIS Deemed Export
    FAQ 22, allowing fundamental development
  • Suggested redefinition
  • The intent behind these rules is to identify as
    fundamental research research and development
    where the resulting information is ordinarily
    published and shared broadly within the
    scientific community.

21
Recommendations Proprietary Research
  • Consider dropping Proprietary research as a term
    used in the EAR- substitute with Restricted
    Research. If research is performed under
    restrictions, and will lead to a potential export
    of technology or source code, it is restricted
    research.
  • Suggested redefinition
  • Restricted Research is research, performed under
    publication, access, or national security
    restrictions, the results of which include
    specific information (including source code)
    necessary for the development, production, or use
    of a product subject to the Commerce Control
    List.

22
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23
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24
Conclusions Publication Restrictions
  • Publication restrictions receive too much
    emphasis-
  • Time limits may be arbitrary
  • No demonstrated link as to why a temporary period
    of nonpublication should require exclusion from
    or licensing of foreign nationals from
    proprietary research- when the intent is to
    ultimately allow publication
  • Universities are wasting time reviewing
    proprietary basic research for regulatory
    compliance/ trying to remove publication
    restrictions to ensure they can preserve
    fundamental research exclusions

25
Recommendations Publication Restrictions
  • Publication restrictions are not defined in the
    EAR
  • Time limits triggering a subject to the EAR
    review on publication restrictions are arbitrary-
    there needs to be a well understood definition of
    what constitutes a temporary delay in
    publication of the research results per 15 CFR
    734.8 and why?
  • Explain better why a publication restriction
    constitutes an export control consideration at
    all- what are you really trying to prevent from
    happening?

26
Conclusions Deemed Export Licenses
  • The deemed export license process is poorly
    suited to meet university research cycle of
    sponsored proposal and award
  • License activity at universities is a poor
    measure of university export control monitoring
    of deemed exports
  • Universities apply for few deemed export
    licenses because research is usually not
    identified as proprietary (subject to the EAR)
    until contract award- no time to get an export
    license from Commerce

27
Recommendations Deemed Export Licenses 22 CFR
124125
  • Consider use of Technology Assistance Agreements
    for deemed exports instead of licenses- meets
    same purpose as a license, but better meets
    response time needed to accommodate the
    university research cycle, and is less of an
    administrative burden (see International Traffic
    in Arms Regulations)

28
Recommendations General
  • Retain current use technology definition 15 CFR
    772.1
  • Consider Bona fide full time employee exemption
    for deemed export access to technology under
    certain conditions (like ITAR) 22 CFR
    125.4(b)(10)
  • FTE at U.S. institutions of higher learning
  • With a permanent abode in the United States
    throughout the period of employment
  • Not from an embargoed country
  • Make BIS mass market determinations publicly
    available

29
Backup Slide 1 Deemed Export Regulations 15 CFR
734.2
  • (ii) Any release of technology or source code
    subject to the EAR to a foreign national. Such
    release is deemed to be an export to the home
    country or countries of the foreign national...
    Note that the release of any item to any party
    with knowledge a violation is about to occur is
    prohibited by 736.2(b)(10) of the EAR.
  • (3) Definition of release of technology or
    software. Technology or software is released
    for export through
  • (i) Visual inspection by foreign nationals of
    U.S.-origin equipment and facilities
  • (ii) Oral exchanges of information in the United
    States or abroad or
  • (iii) The application to situations abroad of
    personal knowledge or technical experience
    acquired in the United States.

30
Backup Slide 2 Deemed Export Definitions
(General Technology Note Supp. 1 to 15 CFR
774 772.1)
  • Technology. (General Technology Note)-Specific
    information necessary for the development,
    production, or use of a product. The
    information takes the form of technical data or
    technical assistance. Controlled technology
    is defined in the General Technology Note and in
    the Commerce Control List (Supplement No. 1 to
    part 774 of the EAR).
  • EAR Definition of Use
  • Operation, installation (including on-site
    installation) maintenance (checking), repair,
    overhaul, and refurbishing.
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