Doing No Harm but Exporting Without Appropriate License Can Violate Regulations – Duane Morris Life Sciences Law

By Brandon A. Chan, Ph.D., and Brian Goldstein

On June 24, 2024, the Department of Commerce’s Bureau of Industry and Service (BIS) imposed an administrative penalty on Indiana University (IU) as part of a settlement agreement following IU’s discovery and self-disclosure to BIS that its Bloomington Drosophila Stock Center engaged in the export of materials that violated the Export Administration Regulations. IU’s violations stemmed from its export of biological and genetic material without the proper license under the BIS.

The exports at issue involved genetically modified drosophila expressing transgenes that encode a component of the toxin ricin known as ricin toxin A chain. Drosophila, or the fruit fly, is a common model organism in genetic research because of its simple genetic makeup that consists of only four chromosomes and a short life cycle allowing for rapid reproduction for studies. Ricin is a ribosome inactivating protein that halts protein synthesis to produce its toxic effects. The toxin is comprised of two separate protein chains, the ricin toxin A chain and the ricin toxin B chain. By themselves, ricin toxin A chain and ricin toxin B chain are harmless; both components must be present in the form of a heterodimeric complex to exhibit toxicity. However, exports of ricin and its subunits ricin toxin A chain and ricin toxin B chain are regulated under the Australia Group to mitigate against proliferation of chemical and biological weapons, and thus fall under the Commerce Control List.

The Proposed Charging Letter cited 42 export shipments of the genetically modified drosophila classified under Export Classification Control Number (ECCN) 1C353.b.2 (until April 2, 2018) and 1C353.a.3 to countries listed on the Commerce Country Chart under CB Column 1 relating to Chemical and Biological Weapons. Because each destination country was listed under the CB Column 1, pursuant to 15 C.F.R. § 742.2(a)(1)(ii), a license is required for the export of genetic elements (i.e. ECCN 1C353) that encode for toxins and their subunits identified under ECCNs 1C351.d.14 and .15. Ricin is specifically named in ECCN 1C351.d.14. See Commerce Control List, Category 1 – Special Materials and Related Equipment, Chemicals, “Microorganisms” and “Toxins.”

Under the terms of the settlement agreement: i) IU is subject to a suspended denial of its export privileges for ECCNs 1C351, 1C353 and 1C354 for one year; ii) IU must train the appropriate personnel in export compliance; iii) IU must deliver a presentation as to the circumstances of the instant violations and self-disclosure on export controls of biological materials to stock center directors and at the Association of University Export Control Officers conference or another related forum.

The suspended denial of export privileges for ECCNs 1C351, 1C353 and 1C354 may be modified or revoked if IU commits another violation or fails to comply with the terms of the settlement agreement. Revocation of the suspension of the denial would prevent IU from applying for, obtaining or using a license for the export of items under ECCNs 1C351, 1C353 and 1C354; prevent IU from partaking in deals or the handling of items designated as ECCNs 1C351, 1C353 and 1C354; and benefitting from transactions involving items designated as ECCNs 1C351, 1C353 and 1C354.

This recent incident demonstrates the importance of understanding the nature of any exported genetic material despite the genetic material and the encoded material ultimately being harmless. Export of genetic material falling under, currently, ECCN 1C353.a.3, even if the genetic material encodes for a harmless substance, such as ricin toxin A chain, to destination countries listed under the CB Column 1 without the appropriate license is still a violation. Universities, research institutions, stock centers, or other exporters who engage the export of biological and genetic should take heed to understand the background and make up of its exports regardless of whether the genetic material or encoded material is harmless and apply for and obtain the necessary licenses for exporting the material. The last thing a world renowned research university wants is to be accused of engaging in the proliferation of chemical and biological weapons via the export of benign genetic material without the appropriate license.

The full order, terms of the settlement agreement, and Proposed Charging Letter are publicly available from the Department of Commerce.