Tab D

UNITED STATES DEPARTMENT OF COMMERCE
Bureau of Export Administration
Washington, D C 20230

January 29, 1997

    Gino Scarselli, Esq.
    664 Allison Drive
    Richmond Heights, Ohio  44142-2904

         Re:  January 2, 1997 Letter on Behalf of Peter D. Junger

    Dear Mr. Scarselli:

    Mr. Anthony J. Coppolino of the Department of Justice has
    forwarded to us a copy of your January 2, 1997 letter to him
    raising various questions concerning the application of the
    Export Administration Regulations ("EAR") on encryption software
    and technology to your client, Prof. Peter D. Junqer.

    As you may know, on November 15, 1996, President Clinton issued
    Executive Order 13026 (and a related Presidential memorandum)
    directing that export licensing controls on certain encryption
    products, including software, designated under Category XIII(b)
    of the United States Munitions List ("USML"), 22 C.F.R. Part 121,
    be transferred to the export licensing jurisdiction of the
    Department of Commerce under the Commerce Control List ("CCL")
    and EAR.1

    On December 30, 1996, the Departments of Commerce and State
    published regulations, effective on publication, implementing the
    President's policy and transferring export licensing jurisdiction
    over encryption commodities and software (including source code),
    and related technical data, from the State Department to the
    Commerce Department.  61 Fed. Reg. 68572 et seq. and 68633
    (December 30, 1996).  Accordingly, the Department of Commerce is
    now the licensing authority for the export of most encryption
    items, including software.2

    Please be advised that the EAR establishes administrative
    procedures by which the public can obtain advice on the
    applicability of the EAR in various cases.  Section 748.3 of the
    EAR establishes the administrative procedures for obtaining a
    Commodity Classification or an Advisory Opinion as to the
    ____________________

         1  61 Fed. Reg. 12714 et seq. (March 25, 1996), as amended
    by the interim rule at 61 Fed. Reg. 68572 et seq. (December 30,
    1996) (to be codified at 15 C.F.R. Part 730, et seq.).

         2 The Department of State retains licensing jurisdiction
    over military cryptographic items and software.  See 61 Fed. Reg.
    at 68633 (amending 22 C.F.R. § 121.1, Category XIII(b)).

                                    2

    application of the EAR to the export of items or other
    activities.  See 61 Fed. Reg. 12812-13 (March 25, 1996) (to be
    codified at 15 C.F.R. § 748.3).  Because you have not provided
    BXA with specific information concerning any export activities
    that Prof. Junger seeks to engage in, BXA lacks the necessary
    information to enable it to respond to the questions raised in
    your letter.  Based on the information in your letter, we are
    also unable to provide you with either a Commodity Classification
    determination regarding the possible application of the EAR to
    any software or other items Prof. Junger may wish to export or,
    if it is determined that those activities are subject to the EAR,
    an Advisory Opinion whether a license is required, or likely to
    be granted.

    We can, however, provide you with some guidance in response to
    your letter regarding the scope of the encryption controls
    administered by the Department of Commerce pursuant to the
    regulations issued on December 30, 1996.  This information will
    assist you in determining whether the EAR apply to Prof. Junger
    and, if it does, whether a license is required for any of his
    export activities.  Otherwise, we will be pleased to review
    either a Classification request or a request for an Advisory
    Opinion that includes the information set forth in Section 748.3
    of the EAR, such as the actual software he may wish to export.

    By way of background, in carrying out its responsibilities
    regarding the transfer of certain encryption products from State
    export licensing controls to Commerce, Commerce imposed national
    security and foreign policy controls (~EI" for encryption items)
    on certain information security items and equipment,
    cryptographic devices, software and components specifically
    designed or modified therefor, and related technology.  See
    Section 742.15 of the EAR, 61 Fed. Reg. at 68580 (to be codified
    at 15 C.F.R. § 742.15).  In order to export encryption items
    subject to EI controls, including software, a license application
    must be submitted to the Commerce Department, which will grant or
    deny the application based on a case-by-case determination of
    "whether the export * * * is consistent with U.S. national
    security and foreign policy interests."  Section 742.15(b) of the
    EAR, 61 Fed. Reg. at 68581 (to be codified at 15 C.F.R.
    § 742.15(b)); see also Section § 742.15(b)(4)(ii) of the EAR, 61
    Fed. Reg. at 68582 (to be codified at 15 C.F.R.
    § 742.15(b)(4)(ii)).3
    ____________________

         3 Encryption software in either source code and "machine"
    or object code form, is regulated under ECCN 5D002, not ECCN
    5E002.  ECCN 5E002 concerns encryption technology as defined in
    Part 772 of the EAR, 61 Fed. Reg. 12925-37, as amended by 61 Fed.
    Reg. 68585-86 (to be codified at 15 C.F.R. Part 772), not
    encryption software.  See 61 Fed. Reg. at 68586-87.  Certain                                                     (continued...)
                                                       (continued...)

                                    3

    In order to assist you in reviewing Prof. Junger's circumstances,
    which, as we understand it, involve teaching a class on computers
    and the law and, in connection therewith, posting encryption
    software on the Internet, note that the provisions of the EAR
    distinguish for export control purposes between encryption
    software (including source code and "machine" or object code) and
    encryption technology.  The EAR define the export of encryption
    software subject to EI controls to mean an actual shipment or
    transfer out of the United States or to a foreign embassy or
    affiliate of a foreign government in the United States.  See
    Section 734.2(b)(9)(i)(A) and (B) of the EAR, 61 Fed. Reg. 68578
    (to be codified at 15 C.F.R. § 734.2(b)(9)(i)(A) and (B)).
    Accordingly, in response to your inquiries, the distribution of
    encryption software subject to EI controls to students in a class
    in the United States, including foreign students, is not an
    export under the EAR.  However, such software would be subject to
    the provisions of the EAR and could not be exported from the
    United States by any person, including any foreiqn student who
    receives such software in the United States, without a license
    from the Bureau of Export Administration.

    You also inquired about other non-software information that might
    be distributed in Prof. Junger's class.  Technology subject to
    the EAR is defined in Part 772 of the EAR (Definitions).  61 Fed.
    Reg. 12925-37, as amended by 61 Fed. Reg. 68585-86 (to be
    codified at 15 C.F.R. Part 772).  However, information which is
    released by instruction in catalog courses and associated
    teaching laboratories of academic institutions is not technology
    subject to the EAR.  See Sections 734.3(b)(3)(iii) and 734.9 of
    the EAR, 61 Fed. Reg. 12747-49, as  amended by 61 Fed. Reg. at
    68578-79 (to be codified at 15 C.F.R. § 734.3(b)(3)(iii) and
    § 734.9).  See also Supplement No. 1 to Part 734, Section C:
    Educational Instruction, 61 Fed. Reg. at 12751 (to be codified at
    15 C.F.R. Part 734, Supplement No.1).  Accordingly, there are no
    restrictions under the EAR to the disclosure of educational
    information distributed to students in a catalog course in the
    United States.4

    With respect to discussions with foreign academic colleagues,
    Section 744.9 of the EAR provides that no person may, without a
    ____________________

         3(...continued)
    "mass-market" encryption software may be released from "EI"
    controls if it meets certain criteria.  See Section 742.15(b)(1)
    of the EAR, 61 Fed. Reg. at 68581 (to be codified at 15 C.F.R. §
    742.15(b)(l)).

         4 Note that encryption software is controlled under ECCN
    5D002 for EI reasons and may not be exported without a license.
    Section 734.9 of the EAR, 61 Fed. Reg. at 68579 (to be codified
    at 15 C.F.R. § 734.9).

                                    4

    license from the Bureau of Export Administration, "provide
    technical assistance (including training) to foreign persons with
    the intent to aid a foreign person in the development or
    manufacture outside of the United States of encryption
    commodities and software that, if of United States origin, would
    be controlled for EI reasons under ECCN 5A002 and 5D002."
    Section 744.9 of the EAR, 61 Fed. Reg. 68584-5 (December 30,
    1996) (to be codified at 15 C.F.R. § 744.9).  However, Section
    744.9 provides further that the "mere discussion of information
    about cryptography, including, for example, in an academic
    setting, by itself would not establish the intent described in
    this section, even where foreign persons are present."  Id.  The
    purpose of this section is to provide assurance that academics
    like Prof. Junger would not be prohibited by this section from
    engaging in mere academic discussions of information about
    cryptography with foreign colleagues -- inside or outside of the
    United States.5

    You also inquired about the posting of encryption software on the
    Internet.  The EAR define the export of encryption source code
    and object code software controlled for EI reasons under ECCN
    5D002 to include downloading, or causing the download of, such
    software to locations (including electronic bulletin boards,
    Internet file transfer protocol, and World Wide Web sites)
    outside the United States, or making such software available for
    transfer outside the United States, over a variety of media,
    unless the person making the software available takes precautions
    adequate to prevent unauthorized transfer of such code outside
    the United States.  See Section 734.2(b)(9)(ii) of the EAR, 61
    Fed. Reg. at 68578 (to be codified at 15 C.F.R.
    § 734.2(b)(9)(ii)).  Thus, under the EAR, electronic transmission
    of encryption software (including source code and "machine" or
    object code) subject to EI controls by means of the Internet is
    an export under the EAR, unless the person making the software
    available takes precautions adequate to prevent unauthorized
    transfers outside the United States. See id.

    Also, in response to your inquiry, a printed book or other
    printed materials setting forth encryption source code is not
    itself subject to the EAR.  See Note to Section 734.3(b)(2) and
    (3) of the EAR, 61 Fed. Reg. at 68578 (to be codified at 15
    C.F.R. § 734.3(b)(2) and (3).6  You also inquired about whether
    ____________________

         5 Again, encryption software is controlled under ECCN 5D002
    for EI controls and may not be exported without a license.  See
    Section 734.7 and 734.8 of the EAR, 61 Fed. Reg. at 68578-79 (to
    be codified at 15 C.F.R. §§ 734.7 and 734.8).

         6 Please note that the administration continues to review
    whether and to what extent scannable encryption source or object
                                                       (continued...)

                                     5

    "books or articles" that contain encryption software are subject
    to the EAR if exported in electronic form.  We are unable to
    respond to your inquiry because you have not adequately described
    the nature of the material Prof. Junger proposes to export.  If
    encryption software subject to EI controls, in source code or
    object code form, is transmitted abroad in an electronic form, it
    would be subject to EAR licensing requirements.  See Section
    734.2(b)(9)(ii) of the EAR, 61 Fed. Reg. at 68578 (to be codified
    at 15 C.F.R § 734.2(b)(9)(ii)).  However, theoretical information
    or academic discussions of cryptography--as distinct from
    encryption programming language that could itself ultimately be
    executed on a computer to encrypt information--would not fall
    within the definition of cryptographic software subject to the
    EAR.  See Part 772 of the EAR, 61 Fed. Reg. 12925-37, as amended
    by 61 Fed. Reg. 68S85-86 (to be codified at 15 C.F.R. Part 772).
    If you have a question regarding whether a particular item in
    electronic form that contains encryption software is subject to
    the EAR, the only way that we would be able to make that
    determination is if you submit the item for a Commodity
    Classification or Advisory opinion in accordance with the
    requirements of Section 748.3 of the EAR.

    Please contact us if we can be of further assistance to you or if
    you want to obtain a Commodity Classification or Advisory opinion
    under Section 748.3 of the EAR.

    Sincerely,

    [Signature]

    James A. Lewis
    Director
    Office of Strategic Trade
     and Foreign Policy Controls

    _____________________

           6(...continued)
    code in printed form should be subject to the EAR and reserves
    the option to impose export controls on such software for
    national security and foreign policy reasons.