OFAC and BIS Amend Sudanese Sanctions Regulations and Licensing Policy

On January 17 2017 the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) published a Federal Register Notice [82 FR 4793-4794] amending to the Sudanese Sanctions Regulations (SSR), 31 C.F.R. part 538. The regulatory amendment was implemented as a “general license” (meaning you do not have to apply for a specific license) in section 538.540 of the SSR, and authorizes U.S. persons to process transactions involving persons in Sudan; to engage in imports and exports that were previously prohibited under the SSR; and to engage in transactions involving property in which the Government of Sudan has an interest.

As a result of the amendments to the SSR:

  • All property and interests in property blocked pursuant to the SSR will be unblocked.
  • All trade between the United States and Sudan that was previously prohibited by the SSR will be authorized.
  • All transactions by U.S. persons relating to the petroleum or petrochemical industries in Sudan that were previously prohibited by the SSR will be authorized, including oilfield services and oil and gas pipelines.
  • U.S. persons will no longer be prohibited from facilitating transactions between Sudan and third countries, to the extent previously prohibited by the SSR.

In a coordinated rule change, the Department of Commerce, Bureau of Industry also amended the Export Administration Regulations (EAR) in a Final Rule published on the same day. This rule revised the policy of review for applications for licenses to export or reexport to Sudan certain items that are intended to ensure the safety of civil aviation or the safe operation of fixed-wing, commercial passenger aircraft. Such applications will now be reviewed under a general policy of approval rather than a general policy of denial.

The BIS Final Rule also revised BIS’ review policy from a general policy of denial to a general policy of approval for applications for licenses to export or reexport to Sudan certain items related to railroad construction, maintenance, and operation.

This rule change does not create any new license requirements or remove any existing license requirements for exports or reexports to Sudan and all other provisions of the EAR and Foreign Assets Control Regulations still apply.

Dept. of State 2017 Civil Monetary Penalties Inflationary Adjustment

Today the U.S. Department of State published a Final Rule adjusting the civil monetary penalties (CMP) for regulatory provisions maintained and enforced by the Department of State including the Program Fraud Civil Remedies Act of 1986 (PFCRA); Chemical Weapons Convention Implementation Act (CWC Act); and the Arms Export Control Act (AECA).

Applying the 2016 cost-of-living adjustment multiplier, the new maximum penalties under the AECA are as follows:

  • Section 38(e) is $1,111,908 per violation
  • Section 39A(c) is $808,458 per violation
  • Section 40(k) is $962,295 per violation

This final rule is effective on January 11, 2017.

BIS & DDTC Final Rules Amends EAR and ITAR for Spacecraft & Related Articles

Today the Bureau of Industry and Security (BIS) and Directorate of Defense Trade Controls (DDTC) published complementary rules (82 FR 2875 and 82 FR 2889) affecting USML Category XV and CCL Category 9, and making conforming corrections and clarifications in response to comments received on EAR and ITAR interim final rules published on on May 13, 2014 (79 FR 27417 and 79 FR 27180).

In the ITAR rule, USML Category XV, paragraphs (a)(2), (a)(10), (a)(11), (a)(12), (e)(4), (e)(5), (e)(11)(iv), (e)(12), (e)(20), and Note 3 to paragraph (a) and Note 3 to paragraph (f) are amended to better reflect the intended scope of control with regard to autonomous tracking systems, logistics, propulsion systems, cryocoolers and vibration suppression systems. Paragraphs (a)(7)(i) and (e)(2) are amended to clarify the size of the respective aperture dimension of specific electro-optical remote sensing capabilities and space qualified optics.

The EAR Final Rule changes address the movement of additional spacecraft and related items from the USML to the CCL, as a result of changes in aperture size for spacecraft that warrant ITAR control; the addition of certain “.y” items to ECCN 9A515; changes to address the movement of the James Webb Space Telescope (JWST) from the USML to the CCL; and other corrections and clarifications to the spacecraft interim final rule as described in EAR parts 740, 742, 750, and 774.

Both rules are effective January 15, 2017 and can be found here https://www.gpo.gov/fdsys/pkg/FR-2017-01-10/pdf/2016-31755.pdf and here https://www.gpo.gov/fdsys/pkg/FR-2017-01-10/pdf/2016-31751.pdf.

Welcome Back to the Compliance Assurance Blog

Dear Clients, Colleagues and friends,

It has been quite some time since we utilized our blog to provide regulatory updates, compliance insights and other “news you can use.” Although many of you have been keeping up-to-date by following us on Twitter, Export Control Reform (ECR) and recent sanctions program changes have brought about numerous regulatory changes affecting U.S. exporters and I feel it is time to reintroduce our blog to help keep readers abreast of these changes.

Writing a quick Twitter post in 140 characters or less is certainly more convenient than writing weekly blog posts but I believe that these brief blog entries will help put regulatory updates into perspective and better explain their impact on the export community.

Our blog is now an integrated part of our WeAreCompliant.com website. We hope that you find this convenient for staying connected with us for informational purposes as well as items of interest on all our social sites. Please leave us your feedback and feel free to chime in with your shared experiences on these export-related topics.