On January 13, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced controls on advanced computing integrated circuits (ICs) and certain closed artificial intelligence (AI) model weights. “To strengthen U.S. security and economic strength,” the Biden-Harris administration released an Interim Final Rule (IFR) titled “Framework for Artificial Intelligence Diffusion.” The rule aims to balance national security interests with the promotion of AI innovation and responsible diffusion of technology. Below, we delve into the specifics of what items are controlled, the destinations affected, and the exceptions and authorizations provided under this new rule.

Effective Date & Comment Period

The IFR was technically effective immediately on January 13, 2025. However, compliance with the new requirements is not mandatory until May 15, 2025, giving companies time to familiarize themselves with the changes. BIS is accepting comments on the revisions and additions in this rule until May 15, 2025. The immediately effective and meaningful changes are the modifications to the Commerce Control List (CCL).

Controlled Items

The new export controls focus on two primary categories: (1) advanced computing ICs and (2) AI model weights. These items are classified under specific Export Control Classification Numbers (ECCNs), including 3A090.a and 4A090.a and items in the corresponding .z ECCNs, and new created ECCN 4E091.

  • ECCN 3A090.a controls integrated circuits with one or more digital processing units having either: (1) a ‘total processing performance’ of 4800 or more; or (2) a ‘total processing performance’ of 1600 or more and a ‘performance density’ of 5.92 or more.
  • ECCN 4A090.a controls computers, “electronic assemblies,” and “components” containing integrated circuits, any of which meets or exceeds the limits in 3A090.a. ECCN 4A090.b controls computers, “electronic assemblies,” and “components” containing integrated circuits, any of which meets or exceeds the limits in 3A090.b.
  • New ECCN 4E091: Controls model weights of certain advanced closed-weight AI models. Model weights are numerical parameters within an AI model that help determine the model’s outputs in response to inputs. This control applies to AI models trained using computational power of 1026 or more computational operations.

This IFR updates foreign direct product rules (FDPR) for these items. BIS expanded the country and destination scope of controls on ECCN 3A090.a and 4A090.a items and the advanced computing FDPR to apply worldwide, replacing specific country group references with the term “worldwide” and specifying that foreign-produced items destined for or incorporated into non-EAR99 parts, components, computers, or equipment are covered globally. Additionally, the rule creates a new FDPR that applies these controls to certain model weights produced abroad using advanced computing chips made with U.S. technology or equipment.

Destination Controls

The rule introduces a three-tier country classification system, each with different levels of restrictions for the advanced AI chips:

  1. Generally Unrestricted Countries: This list includes 18 U.S. allies. These countries are:
    • Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, South Korea, Spain, Sweden, Taiwan, and the United Kingdom.
  2. Completely Restricted Countries: These are countries identified in Country Group D:5 of Supplement No. 1 to Part 740 of the Export Administration Regulations (EAR), which are subject to a U.S. arms embargo, and Macau. The full list includes:
    • Afghanistan, Belarus, Burma, Cambodia, Central African Republic, China (including Macau), Cuba, Democratic Republic of the Congo, Eritrea, Haiti, Iran, Iraq, Lebanon, Libya, Nicaragua, North Korea, Russia, Somalia, South Sudan, Sudan, Syria, Venezuela, and Zimbabwe.
  3. Countries Subject to “Limited Quantities”: All other countries fall under this category.

Exceptions & Authorizations

To ensure that the new controls do not disrupt innovation or supply chains, the rule includes several exceptions and authorizations:

  • License Exception Artificial Intelligence Authorization (AIA) / Exceptions for Certain Allies and Partners: Permits the export, reexport, or transfer (in-country) of advanced computing chips and otherwise controlled closed AI model weights without an authorization. This exception applies to a set of allies and partners (the Generally Unrestricted Countries listed above), as well as companies headquartered in the United States and these allies and partners. However, this exception does not cover exports to arms-embargoed countries.
  • Exception for Open AI Models: Models with widely available model weights (i.e., open-weight models) are not subject to controls. Additionally, the model weights of closed models that are less powerful than the most advanced open-weight models, even if they exceed the 1026 threshold, are not controlled.
  • License Exception Advanced Compute Manufacturing (ACM) / Exceptions for Supply Chains: Allows for the export, reexport, or transfer (in-country) of advanced computing chips, without an authorization, for the purposes of development, production, and storage of these chips, except to arms-embargoed countries. This license exception builds on the Temporary General License from October 2023 rule to prevent disruption of supply chains.
  • License Exception Low Processing Performance (LPP) / Low Volume Exception: Allows limited amounts of computing chips to flow globally, except to arms-embargoed countries.
  • Data Center Validated End User (VEU) Program: This program is bifurcated into:
    • Universal VEUs (UVEU): Provides U.S. and certain allied and partner country entities with the opportunity to obtain a single authorization that will allow the company to build data centers around the world without additional authorizations, except in arms-embargoed countries.
    • National VEUs (NVEU): Provides entities headquartered outside arms-embargoed countries the opportunity to obtain an authorization that will allow the company to build data centers in specified locations without additional authorizations, except in arms-embargoed countries.

By implementing a comprehensive framework that includes specific controls, destination restrictions, and various exceptions, BIS aims to protect U.S. national security while fostering global AI innovation. Compliance with most portions of the new rule is required by May 15, 2025, and interested parties may submit public comments until that date.

On January 15, 2025, the Department of Commerce’s inflation-adjusted civil monetary penalties for 2025 went into effect. The adjustments, which the Department of Commerce (“Commerce”) published in the Federal Register on December 30, 2024, update the penalty rates for violations of laws and regulations enforced by the agency and its bureaus. 

While over 40 civil monetary penalty levels have been adjusted, the following are highlighted because of their central importance to trade compliance:

  • False Claims Act violation: minimum penalty increased to $14,308, and the maximum penalty increased to $28,619.
  • Bureau of Economic Analysis:
    • International Investment and Trade in Services Act; failure to furnish information: minimum penalty increased to $5,911, and the maximum penalty increased to $59,114.
  • Bureau of Industry and Security:
    • International Emergency Economic Powers Act (IEEPA): maximum penalty increased to $377,700.
    • Export Control Reform Act of 2018 (ECRA): maximum penalty increased to $374,474.
  • Census Bureau:
    • Collection of Foreign Trade Statistics maximum daily delinquency to report penalty increased to $1,740, and the maximum penalty per violation increased to $17,412.
  • International Trade Administration:
    • Foreign Trade Zone: maximum penalty increased to $3,650.

On January 16, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule prohibiting the sale and importation of connected vehicles incorporating certain hardware and software components (or those components sold separately) with a sufficient nexus to the People’s Republic of China (PRC) or Russia. The new prohibitions go into effect on March 17, 2025.

BIS’s action follows its proposed rule released in September 2024. Unlike the proposed version, the final rule excludes from the scope of the prohibitions any vehicle with a gross vehicle weight rating (GVWR) of over 10,000 pounds. BIS warned, however, that this was simply due to the complexity of the commercial vehicle supply chain, and that it intends to issue a separate rulemaking addressing the national security risks presented in the commercial vehicle supply chain, “including trucks and buses,” in the near future.

The final rule prohibits (i) the importation of vehicle connectivity system hardware (or vehicles containing such hardware) and (ii) the importation and sale of vehicles that contain vehicle connectivity system or automated driving system software with sufficient nexus to the PRC or Russia. According to BIS’s press release, vehicle connectivity systems covered by the rule include “telematics control units, Bluetooth, cellular, satellite, and Wi-Fi modules.” As such, any software-enabled or programmable hardware component that directly enables the function of and is directly connected to vehicle connectivity systems would be covered by the prohibitions. The final rule would also prohibit transactions involving any “covered software,” which encompasses software-based components enabling the function of vehicle connectivity systems or automated driving systems at the vehicle level, to the extent such covered software has a sufficient nexus to China or Russia.

Notably, the final rule also prohibits manufacturers of connected vehicles who are owned by, controlled by, or subject to the jurisdiction or direction of the PRC or Russia, from knowingly selling in the United States any connected vehicles that incorporate vehicle connectivity system hardware or covered software, regardless of whether such software or hardware components were designed or developed by a person with sufficient nexus to the PRC or Russia.

BIS’s prohibition of the sale and importation of covered software takes effect with Model Year 2027. Hardware-related prohibitions will take effect with Model Year 2030, or January 1, 2029 for units without a model year. To facilitate compliance with the rules, BIS requires importers and manufacturers to submit annual declarations of conformity to the BIS. The final rule allows BIS to issue general authorizations for certain type of transactions. Regulated parties can also seek specific authorizations from BIS to engage in transactions otherwise prohibited by the final rules or advisory opinions for BIS to address the legality of prospective transactions.

On January 17, 2025, the Department of State’s Directorate of Defense Trade Controls (DDTC) published an Interim Final Rule that will amend §§ 121.0 and 121.1 of the International Traffic in Arms Regulations (ITAR) by revising certain U.S. Munitions List (USML) definitions, adding new definitions, and updating certain parts of the USML under categories II, IV, V, VII through XIV, and XIX through XXI. These amendments will take effect on September 15, 2025.

While the revisions are detailed and require close review, when applicable to manufactures and exporters of the covered items, software or technical data, amendments of note are:

  • USML category VII is revised to further clarify the universe of “ground vehicles” described, but with no change to the scope of controls. 
  • USML category VIII for aircraft and related articles is revised under VIII(h) for parts, components, accessories, attachments and associated equipment and systems to further clarify and delineate DDTC’s intent around control of covered items. This includes when items from paragraph (h)(1) based solely on their subsequent use in aircraft included in USML Category XXI or in foreign advanced military aircraft (newly defined in this rulemaking) may be released from this paragraph. 
  • USML category X for personal protective equipment is revised to describe and cover exoskeletons under development for Department of Defense (DoD). This category is also being revised to align body armor protection levels with the most recent NIJ standards.
  • USML Category XI regarding military electronics is revised to reflect that certain anti-jam antennas no longer provide a critical military advantage, with increasing commercial utilization applicable to civil GPS resiliency. In doing so, DDTC will remove certain Controlled Reception Pattern Antennas for Position, Navigation, and Timing from this category to facilitate civil global navigation resiliency.
  • USML category XIV, covering toxicological and chemical agents, is revised to include additional nerve agents and a defoliants.
  • USML Category XIX for gas turbine engines is revised to add specific DoD-funded aircraft engines in development that provide a critical military or intelligence advantage, as well as their specially designed parts, components, accessories, and attachments.
  • USML Category XX covering submersible vessels is amended to control two new classes of uncrewed, untethered vessels and vehicles that provide a critical military advantage – specifically, those equipped with anti-recovery features, and larger systems with significant range or endurance.

This Interim Rule also addresses several typographical errors, updates language, and provides clarification under various other USML categories.

The Interim Rule also provides details on how the revisions will impact reexports/retransfers, Technical Assistance Agreements (TAAs), Manufacturing License Agreements (MLAs) and other reporting requirements. DDTC notes that consistent with prior revisions of USML categories, additional guidance that addresses specific licensing scenarios will be provided on its website.

With these revisions, DDTC notes that items removed from a USML paragraph by this Interim Rule may still be described in other USML paragraphs, or may become subject to the export licensing jurisdiction of the Department of Commerce pursuant to the Export Administration Regulations (EAR) and falling under the Commodity Control List (CCL). If there are questions as to jurisdiction, exporters should evaluate the control status of their item and, as necessary, submit a commodity jurisdiction (CJ) request. 

For any items that will move from jurisdiction under the ITAR to the EAR, current holders of DDTC licenses, agreements or other approvals can continue operating under the existing authorizations, or seek new licenses from the Department of Commerce’s Bureau of Industry and Security (BIS). For exporters who wish to export under the EAR as soon as possible for items moving from the USML to the CCL, a license application may be submitted immediately after the publication of the BIS final rule adding such items to the CCL. During the transition period, license applications will be accepted by both DDTC and BIS for items moving from the USML to the CCL. Note, however, that BIS will not issue approved licenses for such items until on or after the effective date of this rule – September 15, 2025.

DDTC is accepting public comment on this Interim Final Rule until March 18, 2025. Comments must be submitted via the Federal eRulemaking Portal at: https://www.regulations.gov under Docket No. DOS–2024–0047. Comments may also be submitted via email to DDTCPublicComments@state.gov, with commenting parties including RIN 1400–AF42 in the subject line of the email message. For this rulemaking, DDTC is not only seeking broad public comments on the revisions described, but has also provided nine specific questions on which it is seeking comment on changes to several USML categories, as well as whether there are items, services or technical data closely related to these revisions that warrant ITAR control, or that would now be under ITAR control but have been in normal commercial use.

On January 17, 2025, Customs and Border Protection (CBP) announced a Notice of Proposed Rulemaking (NPRM) intended to tighten the de minimis duty exemption for certain low-value shipments entering the United States.  Under the proposed rule, merchandise subject to specific trade and national security actions would no longer qualify for the de minimis exemption and certain shipments claiming this exemption will be required to provide the 10-digit Harmonized Tariff Schedule of the United States (HTSUS) classification for the imported low-value merchandise.  

The NPRM focuses on national security tariffs imposed under Section 232 of the Trade Expansion Act of 1962, safeguard tariffs imposed under Section 201 of the Trade Act of 1974, and unfair trade tariffs imposed under Section 301 of the Trade Act of 1974.  The proposed changes would make certain products ineligible for the de minimis exemption, which currently allows goods valued at $800 or less to enter the country without paying duties or certain taxes. Importers of such goods would have to pay both the standard duties and any additional duties imposed pursuant to trade and national security actions.  CBP estimates that 77 percent of shipments in fiscal year 2023 claiming the administrative exemption would have been assessed additional duties under these actions had they not claimed the exemption.  CBP in the NPRM notes that merchandise subject to an absolute or tariff-rate quota, whether the quota is open or closed, and merchandise subject to antidumping (AD) and countervailing duties (CVD) are not eligible for this exemption.  In requiring the 10-digit HTSUS classification, CBP states that the proposed rule “is likely to improve CBP’s ability to accurately identify the contents of a shipment claiming the administrative exemption even if it does not contain goods subject to an ad valorem tariff as a result of a trade or national security action.”

CBP notes that “over the last 10 years, the number of shipments entering the United States claiming the administrative exemption has increased significantly, from approximately 139 million a year to over one billion a year”, and that this significant increase has created challenges to CBP’s “effective enforcement of U.S. trade laws, health and safety requirements, intellectual property rights, and consumer protection rules.”  Low-value shipments have become an avenue to import illicit goods and have impacted the enforcement of the identified trade and national security actions.  This NPRM would exclude merchandise subject to ad valorem tariffs imposed under Section 232, 201, or 301 from eligibility for the exemption under Section 321(a)(2)(C) of the Tariff Act of 1930, as amended.  According to CBP, this proposed rule is consistent with the purpose of Section 321(a) and is necessary to protect tariff revenue since the duties collected under these national security and trade actions are typically significantly higher than the regular rates of duties that would apply under the exemption.  It would also serve to prevent unlawful importations related to health and safety requirements, intellectual property rights, and consumer protection rules.

The NPRM includes international mail in the scope, but CBP notes that unique considerations are necessary for any applicability of these restrictions and requirements to be placed on such mail shipments.  The U.S. Postal Service (USPS) has committed to provide comments as part of the rulemaking record, and CBP invites public comment on this topic to determine whether there are sufficient reasons why postal shipments can and should be treated differently.  This aspect of the NPRM will be addressed as the rulemaking proceeds.

CBP is requesting public comments on this NPRM until March 24, 2025.  Comment must be submitted via the Federal eRulemaking Portal at https://www.regulations.gov under Docket No. USCBP–2025–0003.

See also Thompson Hine Update of January 14, 2025, for a separate but related rulemaking pertaining to other proposed modifications to the process for entry of certain low-value (i.e., de minimis) shipments into the United States.

On January 16, 2025, the Office of the U.S. Trade Representative (USTR) released its report and findings in the Section 301 investigation of China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance, concluding that China’s targeted dominance in these sectors is unreasonable and burdens or restricts U.S. commerce, and is thus “actionable” under Section 301 of the Trade Act of 1974.  This investigation delved into the acts, policies, and practices of China in the maritime, logistics, and shipbuilding sector. Section 301 allows the United States to respond to unreasonable or discriminatory foreign government practices that burden or restrict U.S. commerce.  While finding China’s behavior is actionable, the USTR deferred what further actions, if any, to take to subsequent proceedings.

In releasing the report, Ambassador Katherine Tai said: “Beijing’s targeted dominance of these sectors undermines fair, market-oriented competition, increases economic security risks, and is the greatest barrier to revitalization of U.S. industries, as well as the communities that rely on them. These findings under Section 301 set the stage for urgent action to invest in America and strengthen our supply chains.” A forthcoming Federal Register Notice of Determination notes that the investigation determined:

  • China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance is unreasonable because: it displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition; and it creates dependencies on China, increasing risk and reducing supply chain resilience. China’s targeting for dominance also is unreasonable because of China’s extraordinary control over its economic actors and these sectors.
  • China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance burdens or restricts U.S. commerce by: undercutting business opportunities for and investments in the U.S. maritime, logistics, and shipbuilding sectors; restricting competition and choice; creating economic security risks from dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy; and undermining supply chain resilience.

The determination is accompanied by a comprehensive report, which is available here.

For more background information on this investigation filed in March 2024 by five national labor unions, see Thompson Hine’s Bulletin of April 23, 2014, and past Updates of April 17, 2024 and March 13, 2024.

On January 14, 2025, the Department of Homeland Security (DHS) announced the addition of 37 companies based in China to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List, bringing the total number of entities on the UFLPA Entity List to nearly 150 entities. 

According to a press release by DHS, the entities added include globally recognized companies that mine and process Xinjiang’s critical minerals, that grow Xinjiang cotton and manufacture textiles for global export, and that manufacture inputs for solar modules with polysilicon made in Xinjiang.

Effective January 15, 2025, U.S. Customs and Border Protection (CBP) will apply a rebuttable presumption that goods produced by the named 37 entities will be prohibited from entering the United States as a result of the companies’ activities, either sourcing materials from the XUAR or working with the government of Xinjiang to recruit, transport, transfer, harbor, or receive Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the XUAR.

For general background information on the Uyghur Forced Labor Prevention Act (UFLPA), see Thompson Hine’s International Trade Update of June 2022.

Separately, the Office of the U.S. Trade Representative (USTR) published its first-ever “Trade Strategy to Combat Forced Labor.”  The strategy sets forth a comprehensive approach to using trade tools to combat forced labor. The document outlines a number of goals and priority actions that USTR indicates it has achieved during the President Joseph Biden’s administration, as well as areas for potential future action.  The strategy involves four goals: (i) developing an equitable trade policy through inclusive processes; (ii) fully utilizing all available trade tools to combat forced labor; (iii) developing and implementing innovative trade tools to combat forced labor; and (iv) increasing multilateral engagement with trading partners to combat forced labor.  Each goal lists priority actions and the strategy document concludes with the following:

[This strategy] is a key piece of USTR’s broader worker-centered trade policy. Our past trade policy was based on the notion that as trade liberalized, everyone would prosper and that improvements for working people would follow. However, without creating guard rails to ensure that trade was in fact benefiting everyday people, the trading system created a race to the bottom that rewarded worker exploitation, including forced labor. USTR is keen to learn from lessons of the past, and we continue to press forward on a trade policy for the future – one that benefits workers, not just as consumers in the global economy, but as individuals whose labor makes the global trading system possible, and addresses the use of forced labor as unfair competition for businesses.

Noting that the United States cannot “do this alone” the USTR asks all of trading partners “to heed this clarion call to combat forced labor.”  A copy of the Forced Labor Trade Strategy is available here.

The Department of the Treasury’s Office of Foreign Asset Controls (OFAC) has issued further sanctions (see also January 15, 2025 Thompson Hine Update) to address Russia’s continued efforts to evade U.S. sanctions.   OFAC noted in a press release that this latest action “targets a sanctions evasion scheme established between actors in Russia and [China] payments for sensitive goods.  Significantly, OFAC has also redesignated a number entities so that transactions involving such previously designated entities could now trigger secondary sanctions.

Additions to the SDN List

This round of designations and additions to the Specially Designated Nationals (SDN) List includes more than 150 entities and individuals, including numerous companies in Russia’s defense industry and those supporting its military industrial base, as well as other companies across multiple countries that continue to support Russia’s efforts to evade U.S. sanctions.  For specific and detailed identifying information on each of the above entities and persons, see here.

As a result of these OFAC actions, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50% or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

Increasing Secondary Sanctions Risk for Transactions with Certain Russian Entities

Perhaps most importantly, the Department of the Treasury has also taken actions that could trigger secondary sanctions risks for foreign persons and financial institutions that engage in transactions with previously designated Russian entities.  Specifically, OFAC has re-designated pursuant to Executive Order (EO) 13662 almost 100 entities already designated under to EO 14024.  As a result of these entities’ designation under EO 13662, foreign persons, including foreign financial institutions, that knowingly facilitate significant transactions for or on behalf of any of these entities could be subject to mandatory secondary sanctions under the Ukraine-/Russia-related sanctions program. 

For a list of entities being designated pursuant to E.O. 13662 for operating in the financial services sector of the Russian economy, please see OFAC Annex 1.  

For a list of entities being designated pursuant to E.O. 13662 for operating in the energy sector of the Russian Federation economy, please see OFAC Annex 2.

For a list of entities being designated pursuant to E.O. 13662 for operating in the defense and related materiel sector of the Russian Federation economy, please see OFAC Annex 3.

As a result of the above actions OFAC has issued several General Licenses:

On January 15, 2025, the Department of Commerce’s Bureau of Industry and Security (BIS) issued two Final Rules adding 27 companies to the Entity List. 

In the first Final Rule, BIS added 16 entities under the destinations of China (14) and Singapore (2).  These entities are being added to the Entity List due to their involvement in supporting or directly contributing to the development of advanced computing integrated circuits (ICs) that further China’s development of advanced weapons systems, weapons of mass destruction, and high-tech surveillance applications, and because these entities supply Chinese public security end users and pose a risk of diversion to Huawei, an entity on BIS’ Entity List. 

In the second Final Rule, BIS added 11 entities under the destination of China.  According to BIS, these entities were added since they advance China’s military modernization through the development and integration of advanced artificial intelligence research.  In a press release, BIS specifically stated that, one of these entities “was added for its involvement in development of lithography technology for advanced-node fabrication facilities in China. This technology will enable indigenous production in China of advanced integrated circuits for military end-use.”  

Both rules are effective as of January 16, 2025.  The Entity List identifies entities for which there is reasonable cause to believe that the entities present a high diversion risk, have been involved, are involved, or pose a significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the United States. The Entity List specifies the license requirements that BIS imposes on each listed entity. Such license requirements are independent of, and in addition to, license requirements imposed elsewhere in the EAR. For these 16 entities, a license is required from BIS for all items subject to the Export Administration Regulations (EAR). License applications will be reviewed under a presumption of denial. 

For the changes being made in this Final Rule, shipments of items removed from eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR) as a result of this regulatory action that were en route aboard a carrier to a port of export, reexport, or transfer (in-country), on January 16, 2025, pursuant to actual orders for export, reexport, or transfer (in-country) to or within a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export, reexport, or transfer (in-country) without a license (NLR) before February 15, 2025. Any such items not actually exported, reexported or transferred (in-country) before midnight, on February 15, 2025, require a license in accordance with this Final Rule.

On January 10, 2025, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) targeted significant entities involved in Russia’s oil production, maritime insurers, maritime oil tankers, and other entities and persons engaged in Russia’s energy sector. According to an OFAC press release, the sanctions block two major Russian oil producers, over 180 oil-carrying vessels (many of which are part of the “shadow fleet,” opaque traders of Russian oil), Russia-based oilfield service providers, and Russian energy officials. The Department of State also took parallel steps to reduce Russia’s energy revenues by sanctioning and blocking two active liquefied natural gas projects, a large Russian oil project, and third-country entities supporting Russia’s energy exports.

Treasury Determination Prohibiting the Provision of U.S. Petroleum Services to Russia

Treasury Secretary Janet Yellen issued two determinations impacting Russia’s energy sector. Pursuant to Executive Order (EO) 14024, the secretary issued a Determination that sanctions were warranted and shall apply to Russia’s energy sector effective on January 10, 2025. Secretary Yellen also issued a second Determination that places the following prohibitions on Russian petroleum services: “The exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of petroleum services to any person located in the Russian Federation.” This second determination does allow for limited services, including certain services related to the maritime transport of crude oil and petroleum products of Russian origin, provided that such products are purchased at or below the relevant determined Russia price caps. See past Thompson Hine Updates regarding this topic – December 5, 2022January 2, 2024 and February 7, 2024 – for additional background. The prohibitions covered by the second determination will be effective on February 27, 2025.

OFAC issued a new determination pursuant to E.O. 14071 prohibiting the provision of U.S. petroleum services to persons located in the Russian Federation, cutting off Russia’s access to U.S. services related to the extraction and production of crude oil and other petroleum products. The prohibition takes effect beginning at 12:01 a.m. eastern standard time on February 27, 2025.

Sanctions on Significant Russia Oil and Petroleum Industry Sector Entities and Persons

OFAC sanctioned and placed on the Specially Designated Nationals (SDN) List over 200 individuals, entities and vessels, including significant oil producers and exporters, related subsidiaries, Russia’s state-owned shipping company, more than 180 vessels, major insurance providers, and traders in Russian oil, oilfield service providers, and oil company executives.

For specific and detailed identifying information on each of the above entities and persons, see OFAC’s Additions to the SDN List.

As a result of these OFAC actions, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50% or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

OFAC Russia General Licenses and FAQs

With these significant new sanctions on Russia, OFAC has also issued new Russia-related General Licenses (GL) Numbers 117 to 121 and revised several others. See OFAC’s Russian Harmful Foreign Activities Sanctions web page.

Furthermore, OFAC has issued five new Russia-related Frequently Asked Questions (FAQs 1213 – 1217), and amended 14 Russia-related Frequently Asked Questions (FAQs 967, 976, 977, 978, 999, 1011, 1012, 1017, 1117, 1126, 1182, 1183, 1201, and 1203).

State Department Sanctions and Designations

In a concurrent action, the State Department sanctioned and designated for the SDN List nearly 80 individuals and entities that are significant operators of Russian crude oil production and liquified natural gas projects. For additional information on these sanctions, please see the State Department Fact Sheet.