Download Report

3/31/2015
University as a Regulatory Minefield:
Squaring National Security with
Intellectual Freedom
Richard L. Matheny III
Chair, National Security & Foreign Trade Regulation
[email protected], 202-346-4130
Kevin J. Licciardi
University Counsel, Princeton University
[email protected], 609-258-2500
April 2, 2015
What does “university” mean and what are its goals?

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.”

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.
Goodwin Procter LLP
1
3/31/2015
What are the goals of export controls & sanctions?

Protect US national security: “Keeping the most sensitive goods out
of the most dangerous hands.”

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

Meet international treaty and other obligations
› United Nations Security Council
› Wassenaar Arrangement

Political posturing in Congress
Goodwin Procter LLP
Their goals are largely antithetical
The University



“The whole”




Advancing science
Diversity
Bringing many disparate
viewpoints together
Unhindered research
Academic freedom
Openness
US export / sanctions laws



Controls, regulations




Nationality, borders
Ask for permission first
Be careful who you are
dealing with
Technology is dangerous
National security
Fear
Goodwin Procter LLP
2
3/31/2015
Goodwin Procter LLP
The University is a target-rich environment

USG grants, funded research, cooperation with military industrial
complex


New technologies with uncertain, unexpected end-uses
Travel
› Visiting scholars, students
› Study abroad
› Laptops carrying sensitive technology



Dispersed, decentralized control structure—or, “herding cats”
Constant turnover of students, teachers, subject matter
Spirit of openness, sharing, academic freedom
Goodwin Procter LLP
3
3/31/2015
Foreign governments seeking technology….
Goodwin Procter LLP
What are the legal frameworks and
regulatory concepts confronting the
university?
4
3/31/2015
What are the U.S. export controls & sanctions?

Office of Foreign Assets Control (Treasury) – economic
sanctions on persons, entities, countries, regimes:
› Crimea, Cuba, Iran, North Korea, Sudan, Syria
› “Specially Designated Nationals,” others

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.

Directorate of Defense Trade Controls (State), International
Traffic in Arms Regulations – military items & technologies:
› Fighter jets, weaponry, military electronics, etc.
Goodwin Procter LLP
Each of these regimes also controls “technology”

In the university, the currency of the realm is not goods, it is
INFORMATION, TECHNOLOGY.

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

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.”
Goodwin Procter LLP
5
3/31/2015
Export Controls and U.S. Visas
Goodwin Procter LLP
Classifying the technology under the relevant laws


OFAC – 31 C.F.R. Parts 500-598
EAR – 15 C.F.R. Parts 730-774
› Commerce Control List
› ECCN, “EAR99”

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.


NISP Operating Manual – classified work
DOE Regulations – 10 C.F.R. Parts 110 & 810
Goodwin Procter LLP
6
3/31/2015
“Fundamental research”

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.”

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.

ITAR requires fundamental research be at “accredited institutions of
higher learning in the U.S.” (i.e., on campus), but EAR does not.

Bottom Line: Ask for advice if dealing with classified inputs, USG or
private sponsors, foreign collaboration, or pre-publication review.
Goodwin Procter LLP
First Amendment / the “Berman Amendment”

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.

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.
Goodwin Procter LLP
7
3/31/2015
How do these tensions manifest in
the university setting?
Professor Roth – University of Tennessee

Emeritus Professor of Electrical Engineering, 30 years teaching,
former NASA scientist.

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.



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!
Goodwin Procter LLP
8
3/31/2015
Iranian Students at UMass Amherst

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.”

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.”

Spurs pushback, negative press, and public disagreement by State
Dept. officials.

Policy reversed two weeks later.
Dangers of over-compliance!
Goodwin Procter LLP
Technical violations at UMass Lowell

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).

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.

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!
Goodwin Procter LLP
9
3/31/2015
A day in the life of Princeton
University’s Counsel. . . .
What are some resources and best
practices for universities to manage
these risks?
10
3/31/2015
What to do?

Conduct a risk assessment, including ITAR, EAR, OFAC, and NRC
perspectives. Do this periodically, as laws and facts change.


Make somebody responsible! (And make everyone involved.)

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.
Goodwin Procter LLP
Questions?
11