Princeton University charged with 37 EAR violations

Unlicensed Exports Apply To All Foreign National Students

It’s been several years since the imprisonment of John Reece Roth, a former University of Tennessee electrical engineering professor who was convicted of conspiracy, wire fraud and fifteen (15) violations of exporting ITAR controlled defense articles.  Professor Roth was involved in a U.S. Air Force contract for the development of plasma actuators to control the flight of small, subsonic, unmanned, military drone aircraft.

During the contract, the U.S. government alleged that Professor Roth allowed two foreign national students to access export-controlled data and equipment.  They also convicted him for exporting some of this data on a trip to China.

Under the Arms Export Control Act, it is prohibited to export defense-related materials, including the technical data, to a foreign national or a foreign nation.  This case was a first-of-its-kind prosecution of a university professor for the transfer of controlled defense technology to foreign national graduate students.

How Do Universities Meet Export Compliance?

Since then, many universities have stepped up their compliance game by instituting Export Compliance Programs, while trying to manage the concept of “fundamental research” within their scientific communities.

Recently, Princeton University ran afoul of the Export Administration Regulations (EAR) for the unlicensed exports of strains and recombinant animal pathogens, which are export controlled for chemical and biological reasons, to multiple non-US universities that would have required require an export license for the specific Reason for Control.

Many university communities understand and comply with the “tangible exports” of the regulations.  This generally means the shipment of physical items outside of the United States.  However, what’s less understood (and potentially more risky) are the broader export controls, (i.e., associated agency controls), that impose restrictions on quantity, transportation, storage, and use of items whether exported or reexported outside the United States, even if the genetic materials in and of itself is not pathogenic.

While not specifically noted in the settlement, technology can and does cross borders very easily through data sharing both orally and/or visually.  When this “sharing” involves non-U.S. person export controls, whether for tangible items or intangible data, and regardless of whether it occurs within the United States or another country, the potential for export violations increases dramatically.

Princeton’s Unlicensed Exports

Princeton was charged with 37 unlicensed exports to research institutes in multiple countries.  It’s interesting to note that many of these countries are considered allies to the United States – proving that even one unlicensed export to a “friendly” country can result in a penalty.  To resolve the BIS allegations, Princeton agreed to pay a civil fine of $54,000 (double the value of the transaction involved).

While the penalty is seemingly modest in this export enforcement matter, Princeton agreed to undertake two (2) audits of its export compliance program – one that would be conducted by an outside auditor, the other can be done internally; and both of which must be accompanied by timely reports.

Additionally, Princeton must submit reports describing enhancements to its export compliance program. The imposition of these conditions by BIS and the agreement by Princeton will support the university’s ability to obtain export licenses going forward.

It’s also worth noting that Princeton was granted some leniency in the final penalty amount for cooperating with BIS and for having a comprehensive compliance program in place.

What Does The Violation Mean For Your Business?

This case, although targeted at Princeton, is a good reminder for any organization involved in R&D, scientific analysis and related products/services.  In its own words, the Office of Export Enforcement intends to leverage “its unique authorities as enforcers and regulators of the U.S. export controls” to investigate possible violations whether by a research institute or a simple company trying to export their newest innovation outside of the United States.

If your company needs help complying with U.S. and international import/export regulations, schedule a no-charge consultation with one of our team members today.

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