On November 7, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Venezuela-related General License 8O︎, extending authorization until May 9, 2025 for certain activities previously authorized under General License 8N. General License 8O︎ authorizes the continuation of transactions and activities “ordinarily incident and necessary to the limited maintenance of essential operations, contracts, or other agreements,” that:

  1. are for safety or the preservation of assets in Venezuela;
  2. involve Petróleos de Venezuela, S.A. (PdVSA) or any entity in which PdVSA owns, directly or indirectly, a 50% or greater interest; and
  3. were in effect prior to July 26, 2019, for the following entities and their subsidiaries:
    • Halliburton
    • Schlumberger Limited
    • Baker Hughes Holdings LLC
    • Weatherford International, Public Limited Company

The term “safety or the preservation of assets” covers transactions and activities necessary “to ensure the safety of personnel, or the integrity of operations and assets in Venezuela; participation in shareholder and board of directors meetings; making payments on third-party invoices for transactions and activities authorized” under this general license (or prior to April 21, 2020, if such activity was authorized at that time) as well as “payment of local taxes and purchase of utility services in Venezuela; and payment of salaries for employees and contractors in Venezuela.” The general license authorizes such activities involving PdVSA and the other listed entities through 12:01 a.m. EST, May 9, 2025.

As with past extensions, General License 8O︎ does not authorize any activities related to Venezuelan-origin petroleum or petroleum products; the provision or receipt of insurance or reinsurance for such products; the design, construction or work on wells or other facilities or infrastructure in Venezuela; contracting any additional personnel or services (except as required for safety); or the payment of any dividends to PdVSA. Further, this General License does not authorize transactions related to the export or re-export of diluents to Venezuela; the issuance of any loans to, or accrual of additional debt by, or subsidization of PdVSA; or any transactions otherwise prohibited by OFAC’s Venezuela Sanctions Regulations (31 C.F.R. part 591) or with any blocked persons other than those identified in this General License.

Effective November 7, 2024, General License 8O︎ replaces and supersedes General License 8N.

On November 7, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued General License (GL) 5Q, “Authorizing Certain Transactions Related to the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or After March 7, 2025,” which continues to delay U.S. persons’ ability to enforce bondholder rights to the CITGO shares serving as collateral for the Petróleos de Venezuela, S.A. (PdVSA) 2020 8.5% bond until on or after March 7, 2025. The previous deadline had been November 12, 2024. Effective November 7, this General License replaces GL 5P.

With this revised General License, U.S. persons remain prohibited from engaging in any transactions related to the sale or transfer of CITGO shares in connection with the PdVSA 2020 8.5% Bond unless specifically authorized by OFAC. In FAQ 595, OFAC continues to note a favorable licensing policy toward those seeking to apply for a specific license in an effort to reach an agreement on proposals to “restructure or refinance payments due to the holders of the PdVSA 2020 8.5% bond.” 

On October 30, 2024, the Departments of the Treasury, State and Commerce undertook further sanctions against “enablers of Russia’s military-industrial base.” In total, the actions taken by the Office of Foreign Assets Control (OFAC) and the Bureau of Industry and Security (BIS) sanction over 300 individuals and entities involved in supplying Russia with advanced technology and equipment to continue its war against Ukraine. In addition, OFAC has designated more than 150 Russia-based defense and related materiel, technology, manufacturing, and aerospace companies that procure or produce finished military products or key components, precursors, and machinery for Russia’s war effort. According to related press releases, these actions “continue to demonstrate the importance of preventing the use of U.S.-origin and U.S.-branded products by Russia’s defense industrial base.” Deputy Secretary of the Treasury Wally Adeyemo stated, “we are unyielding in our resolve to diminish and degrade Russia’s ability to equip its war machine and stop those seeking to aid their efforts through circumvention or evasion of our sanctions and export controls.”

OFAC and State Actions

Treasury’s OFAC has sanctioned 275 individuals and entities involved in supplying Russia with advanced technology and equipment an involved in sanctions evasion networks across 17 jurisdictions, including India, the People’s Republic of China (PRC), Switzerland, Thailand, and Türkiye. In addition OFAC has designated over 150 domestic Russian importers and producers of key inputs and other materiel for Russia’s military-industrial base. The Department of State has also sanctioned parties in multiple third countries, several senior Russian Ministry of Defense officials and defense companies, and those that support the development of Russia’s future energy production and exports. State also imposed sanctions on several China-based companies exporting dual-use goods that fill critical gaps in Russia’s military-industrial base as well as entities and individuals connected to the Belarus/Lukashenka regime’s support for Russia’s defense industry. All of these individuals and entities have been placed on OFAC’s Specially Designated Nationals (SDN) List. For additional details and identifying information see here (OFAC) and here (State Department).

As a result, 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.

In addition, has issued several amended and new Russia-related General Licenses

  • Russia-related General License 8K, “Authorizing Transactions Related to Energy,” extending energy related transactions with the listed Russian entities until April 30, 2025.
  • Russia-related General License 25G, “Authorizing Transactions Related to Telecommunications and Certain Internet-Based Communications,” adding additional entities that are not authorized under this general license.
  • Russia-related General License 110, “Authorizing the Wind Down of Transactions Involving Certain Entities Blocked on October 30, 2024,” with a wind down deadline of no later than December 14, 2024.
  • Russia-related General License 111, “Authorizing Certain Transactions Related to Debt or Equity of, or Derivative Contracts Involving, Certain Entities Blocked on October 30, 2024,” with a wind down deadline of no later than December 14, 2024.
  • Russia-related General License 112, “Authorizing Civil Aviation Safety and Wind Down Transactions Involving Shaurya Aeronautics Private Limited,” with a wind down deadline of no later than December 14, 2024.

Certain transactions under each of these general licenses remain unauthorized and therefore each requires close analysis.

BIS Actions

BIS has issued a Final Rule adding 40 foreign entities and four addresses to the Entity List in connection with their support for the Russia’s war in Ukraine, and has tightened restrictions on 49 foreign entities that were already on the Entity List to address their procurement of high-priority U.S.-branded microelectronics and other items on behalf of Russia. These entities are located in the China, India, Malaysia, Russia, Singapore, Türkiye, Estonia, Finland, the United Arab Emirates (UAE), and the United Kingdom (UK). The additions are intended to combat the diversion of U.S.-origin or U.S.-branded products to Russia through third countries. Other additions include military end-users in Russia and companies involved in Russia’s chemical and biological weapons program. As for the four addresses being added to the Entity List, they are corporate secretary addresses in Hong Kong that have been associated with the significant transshipment of sensitive items to Russia and are linked to entities whose activities risk violating BIS controls. The Entity List (supplement no. 4 to part 744 of the EAR) identifies entities and addresses for which there is reasonable cause to believe they 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. Parties on the Entity List are subject to individual licensing requirements and, for these entities, BIS will now have a “policy of denial” for issuing any licenses. 

BIS has also issued a Final Rule imposing additional restrictions on the export of 9 chemical precursors used to produce riot control agents (RCAs) and chemical weapons used on the battlefield against Ukraine in violation of treaty commitments. BIS notes that “[a]lthough these chemical precursors have mostly commercial uses, Russia’s use of riot control agents as a method of warfare and the use of chemical weapon chloropicrin against Ukraine has raised concerns about Russia’s further production and weaponization of these chemicals. It is important to ensure that none of these items falls into Russia’s hands for misuse.” 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 action that were en route aboard a carrier to a port of export, reexport, or transfer (in-country), on November 1, 2024, 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), provided the export, reexport, or transfer (in-country) is completed no later than on November 1.

Both of these Final Rules are effective as of November 1, 2024.

On November 7, 2024, the Committee on Foreign Investment in the United States (CFIUS), in coordination with the Department of Defense (DoD), issued a Final Rule that expanded its ability to review certain real estate transactions by foreign persons near more than 60 military bases and installations across 30 states. In addition, CFIUS’s jurisdiction over eight existing military installations already subject to CFIUS review will be expanded. U.S. Treasury Secretary Janet L. Yellen stated in a press release that, “This final rule will significantly increase the ability of CFIUS to thoroughly review real estate transactions near bases and will allow us to deter and stop foreign adversaries from threatening our Armed Forces, including through intelligence gathering.” This action finalizes CFIUS rulemaking from July 2024 and resulted from DoD’s risk and national security assessment of its military installations. See Thompson Hine Update of July 10, 2024.

The final rule enhances CFIUS’s authorities through the following key changes:

  • Expands CFIUS’s jurisdiction over certain real estate transactions to include those within a one-mile radius around 40 additional military installations;
  • Expands CFIUS jurisdiction over certain real estate transactions to include those within a 100-mile radius around 19 additional military installations;
  • Expands CFIUS’s jurisdiction over certain real estate transactions between 1 mile and 100 miles around eight military installations already listed in the regulations;
  • Makes technical changes by updating the names of 14 military installations already listed in the regulations to better assist the public in identifying the relevant sites; and
  • Make technical changes by updating the locations of seven military installations already listed in the current regulations to better assist the public in identifying the relevant sites.

CFIUS’s jurisdiction over real estate transactions, pursuant to the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), allows CFIUS to review the purchase or lease by, or concession to, a foreign person of real estate in the United States that is in close proximity to a military installation or another facility or property of the U.S. government that: (i) is sensitive for reasons relating to national security; (ii) could reasonably provide the foreign person the ability to collect intelligence on activities being conducted at such an installation, facility, or property; or (iii) could otherwise expose national security activities at such an installation, facility, or property to the risk of foreign surveillance. For additional background see Thompson Hine Update of January 22, 2020.

As noted in the July 2024 Proposed Rule, this Final Rule also amends the definition of the term “military installation” by adding: (i) Space Force bases, stations, and major annexes thereof, containing satellite, telemetry, tracking, or commanding systems; (ii) clarifying text to cover major Army depots, arsenals, and military terminals, as well as Marine Corps installations, logistics battalions, and support facilities.

This Final Rule does not apply retroactively to any transaction for which (1) the completion date is prior to the effective date of this Final Rule; or (2) the parties to the transaction have executed, prior to the effective date, a binding written agreement, or other binding document, establishing the material terms of the transaction. This Final Rule is effective on December 9, 2024.

On October 31, 2024, the Department of Homeland Security (DHS) announced that effective November 1, 2024, four textile Chinese entities have been added to the UFLPA Entity List. These entities have been determined by DHS to be facilities and entities that source material from the Xinjiang Uyghur Autonomous Region or from persons working with the government of Xinjiang or the Xinjiang Production and Construction Corps for purposes of the ‘‘poverty alleviation’’ program or the ‘‘pairing-assistance’’ program or any other government labor scheme that uses forced labor. See DHS press release for more details on these companies.

As a result of their listing on the UFLPA Entity List, goods produced by these entities will be presumed to be made by forced labor and subject to detention under the Uyghur Forced Labor Prevention Act. DHS Secretary Alejandro N. Mayorkas stated that “[o]ur Department will continue to aggressively enforce the Uyghur Forced Labor Prevention Act and, in doing so, we stand up for human rights, safeguard a free and fair marketplace, and hold perpetrators accountable.”

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

On October 17, 2024, the Commerce Department’s Bureau of Industry and Security (BIS) released three rules—one Final Rule, one Interim Final Rule, and one Proposed Rule—to reduce controls on a variety of less sensitive space-related items, thereby ensuring the U.S. space industrial base remains globally competitive while also bolstering the U.S. international space partnerships. Concurrently, the State Department’s Directorate of Defense Trade Controls (DDTC) issued a Proposed Rule to complement the BIS Proposed Rule. All four rules stem from the December 2023 meeting of the National Space Council within the Executive Office of the President, which crafts space policy and strategy to advance U.S. leadership in space while protecting U.S. national security and foreign policy interests.

The Final Rule

Effective October 23, 2024, the Final Rule published by BIS amends export control policy to maintain “regional stability” by exempting Canada, Australia, and the United Kingdom from the worldwide license requirement to export or reexport spacecraft and related items classified under sections of Export Control Classification Number (ECCN) 9A515 and ECCN 9E515—items that involve remote sensing or space-based logistics, assembly, or servicing. As the Final Rule explains, this carve-out is intended to facilitate greater space-related collaboration with Canada and AUKUS, the trilateral security partnership between Australia, the United Kingdom, and the United States.

The Final Rule is the latest change to U.S. export control policy easing trade barriers previously faced by Australia and the United Kingdom. BIS implemented an interim final rule in April 2024 easing licensing requirements for exporting, reexporting, or transferring (in-country) defense-related dual-use items to or within AUKUS so the security pact’s member countries would enjoy the same licensing treatment enjoyed by Canada (see Update of April 18, 2024), and DDTC instituted a similar interim final rule in August 2024 so AUKUS would benefit from a license exemption covering defense articles akin to the licensing carve-out provided to Canada (see Update of September 16, 2024).

The Interim Final Rule

The Interim Final Rule (IFR) amends the Export Administration Regulations (EAR) in four major ways. First, it overhauls the layout of ECCN 9A515, which controls “spacecraft and related commodities.” For example, the IFR downgrades the “reasons for control” for certain items classified under that ECCN. In particular, items classified under ECCN 9A515.x will now be controlled for National Security Column 2 (NS2) and Regional Stability Column 2 (RS2) purposes, which are much less restrictive policy control categories than the prior NS1 and RS1 reasons. However, the IFR notes, certain items presently classified under ECCN 9A515.x that do not warrant such a downgrade will be reclassified under a new ECCN, 9A515.w, or moved altogether to ECCN 9A004.y. As noted by a subsequent press release, these various downgrades will remove “license requirements for exports of certain spacecraft components to over 40 allies and partners worldwide, reducing licensing requirements for the least sensitive components for most destinations, and broadening license exceptions to support additional National Aeronautics and Space Administration (NASA) cooperative programs.”

The IFR also adds portions of ECCNs 9D515 and 9E515 to the list of items the EAR identifies as exempt from its regulatory scope. Consequently, certain space-related software and technology will not be subject to the EAR when shared (“released”) in furtherance of a “standards-related activity.” As the IFR acknowledges, failing to allow U.S. participation in the development of international standards related to these software and technologies “would be detrimental and counterproductive to U.S. commercial spacecraft development and national security interests [because it] would cede the development of international standards to foreign actors that may not only disregard U.S. commercial and national security interest, but actively work to destabilize them.”

Third, the IFR expands the scope of License Exception GOV, which authorizes exports and reexports of certain items without prior authorization from BIS if sent for “international nuclear safeguards,” “U.S. government agencies or personnel,” “agencies of cooperating governments,” “international inspections under the Chemical Weapons Convention,” and “the International Space Station.” Specifically, the IFR adds that exporters can avail themselves of License Exception GOV when exporting or reexporting items pursuant to a “Space Act Agreement” to which NASA is a party.

The final major change implemented by the IFR addresses the export implications related to a new phenomenon for the aerospace community: launching items from floating platforms or facilities in international waters, which the IFR surmises “will likely increase in the future.” Accordingly, the IFR amends the EAR’s control policy on end-user and end-use “[r]estrictions on certain exports to and for the use of certain foreign vessels or aircraft” with a new descriptive note. This note seeks to clarify that a shipment or transmission of items to a launch platform or facility in international waters does constitute an “export” or “reexport,” and specifically to the country or countries (of the person) that own, control, or operate the platform or facility.

Although the IFR goes into effect October 23, 2024, BIS seeks public comments to further clarify and refine space-related revisions to the EAR. Comments must be received no later than November 22, 2024, and should be filed using the federal rulemaking portal (www.regulations.gov) under Docket BIS-2024-0031, and refer to RIN -694-AJ87 in all comments.

BIS Proposed Rule

The Proposed Rule promulgated by BIS updates various phrases espoused in certain ECCNs to clarify their scope, especially to conform to the changes of the DDTC Proposed Rule, which demotes certain space-related items from U.S. Munitions List to the Commerce Control List. 

In addition, the BIS Proposed Rule introduces a new license exception: the Commercial Space Activities License Exception (License Exception CSA). This new license exception would authorize exports, reexports, and transfers (in-country) that are entirely within the scope of an “official space agency program,” meaning—at least for the present moment—NASA’s Lunar Gateway program, NASA’s Mars Sample Return program, the Nancy Grace Roman Telescope program, the Orion spacecraft program, the Commercial Low Earth Orbit Development program, and the Habitable Worlds Observatory program. Standard export control restrictions—e.g., the items cannot be sent to a proscribed end-destination or end-user, or for a proscribed end-use— continue to apply.

Comments on the BIS Proposed Rule must be received no later than November 22, 2024. Comments may be submitted electronically via the Federal government eRulemaking portal at https://www.regulations.gov. Electronic submission of comments should be posted on Docket ID: BIS-2018-0029, and refer to RIN 0694-AH66 in all comments.

DDTC Proposed Rule

The Proposed Rule released by DDTC in concert with BIS suggests two major updates to the International Traffic in Arms Regulations, which governs the export, reexport, and transfer (in-country) of military items.

First, the DDTC Proposed Rule advocates updating U.S. Munitions List (USML) Categories IV (Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines) and XV (Spacecraft and Related Articles). While some of these revisions add to both categories, this Proposed Rule primarily removes certain space-related defense articles “that no longer warrant designation on the USML”; according to DDTC, these items—for example, spacecraft capable of docking with or refueling other spacecraft, providing life sustaining operations as space stations or space hotels, or catching and removing space debris—are more appropriately governed by the EAR as dual-use items. In fact, to underscore the changes to USML Category IV, the DDTC Proposed Rule also recommends changing the category name to: “Launch Vehicles, Rocket Systems, and Other Weapons (e.g., Bombs, Torpedoes, and Mines).”

The DDTC Proposed Rule also recommends adding four new licensing exemptions “to promote U.S. industrial base participation in civil space activity commensurate with [U.S.] national security and foreign policy goals.” The first license exemption would authorize certain transfers of defense articles and defense services when conducted entirely within the scope of “an official U.S. government agency space program.” The second license exemption would authorize certain transfers of defense articles and defense services “supporting space launches,” such as certain transfers of electrical connectors and the transmission of space launch vehicle telemetry and radiofrequencies. The third license exemption would authorize certain transfers of “manned spacecraft for space tourism or in support of fundamental research,” so long as those spacecrafts are limited to suborbital trajectories and do not result in the transferring of the spacecraft’s ownership or control to a foreign person. And, finally, the fourth license exemption would authorize certain transfers of defense articles when they are incorporated into spacecraft that are subject to the EAR.

Comments on the DDTC Proposed Rule must be received no later than November 22, 2024. Comments may be submitted electronically via the Federal government eRulemaking portal (https://www.regulations.gov) under Docket No. DOS-2024-0035. Alternatively, comments can be sent to DDTC via email at DDTCPublicComments@state.gov that includes “RIN 1400-AE73” in the subject line of the email.

On October 21, 2024, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a Final Rule adding 26 companies to its Entity List for activities contrary to U.S. national security and foreign policy for alleged violations of export controls, involvement in weapons programs of concern, and evasion of U.S. sanctions and export controls on Russia and Iran. The 26 new entries are from: the People’s Republic of China (6), Egypt (1), Pakistan (16), and the United Arab Emirates (UAE) (3). The reasons for the listing are as follows:

  • Nine of the Pakistani entities were added for acting as front companies and procurement agents for a previously identified company added to the Entity List in 2014. The remaining seven Pakistani entities were added for contributions to Pakistan’s ballistic missile program.
  • The three entities under the destination of the UAE and one under the destination of Egypt were added for acquiring and attempting to acquire U.S.-origin parts to evade U.S. sanctions and export controls imposed on Russia.
  • The six entities under the destination of China were added for acquiring U.S.-origin items in support of that country’s military modernization, dilatory and evasive conduct during end-use checks, and procurement of U.S.-origin items for Iran’s weapons of mass destruction and unmanned aerial vehicle (UAV) programs.

Additional identifying information on each of these entities is available here. 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 26 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 October 23, 2024, 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 November 22, 2024. Any such items not actually exported, reexported or transferred (in-country) before midnight, on November 22, 2024, require a license in accordance with this Final Rule.

On October 15, 2024, the Office of the United States Trade Representative (USTR) announced that it has opened a process for interested parties to request that certain machinery from China be temporarily excluded from Section 301 duties in the “Investigation of China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation”. Upon concluding its statutorily-mandated four-year review of the China Section 301 tariffs, President Joseph Biden directed the USTR to establish a product exclusion process for machinery from China used in domestic manufacturing and to prioritize exclusions for certain solar manufacturing equipment from China. See Thompson Hine Update of September 16, 2024. Consistent with the President’s direction, the current product exclusion process covers particular machinery from China used in domestic manufacturing classified within a subheading under Chapters 84 and 85 of the Harmonized Tariff Schedule of the United States (HTSUS). A list of eligible subheadings at Appendix E of the September 18, 2024 USTR Federal Register notice appears here.

As of October 15, 2024, the USTR has opened an electronic portal (https://comments.ustr.gov) for accepting exclusion requests under the docket, “Temporary Exclusions for Machinery Used in Domestic Manufacturing,” at USTR–2024–0020. The deadline for submitting exclusion requests is March 31, 2025. Each request must identify a particular product and provide both supporting data and a rationale for the requested exclusion. The USTR will evaluate each request on a case-by-case basis, considering the stated rationale for the exclusion, whether the exclusion would undermine the objective of the Section 301 investigation, and whether the request adequately defines the product.

Upon submission, other interested parties may file responses to individual exclusion requests within 30 days after the exclusion request is posted on the USTR’s online portal. Any replies to such responses are due the later of 15 days after the posting of a response, or 15 days after the closing of the 30-day response period. Any approved exclusion will be effective starting from the date of publication of the exclusion determination in the Federal Register and will extend through May 31, 2025. The USTR is accepting exclusion requests on a rolling basis and will periodically announce decisions on pending requests.

Further details on the exclusion process, the specific information to be entered on the exclusion request form, and the manner in which to respond to any exclusion requests are fully set forth in the USTR’s announcement.

On October 11, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it was expanding sanctions on Iran’s petroleum and petrochemical sectors in response to Iran’s October 1 attack on Israel. The Secretary of the Treasury has identified the petroleum and petrochemical sectors of the Iranian economy pursuant to a Determination under section 1(a)(i) of Executive Order (E.O.) 13902, which allows Treasury to identify and impose sanctions on key sectors of Iran’s economy.

OFAC and the Department of State have designated and placed on the Specially Designated Nationals (SDN) List 16 entities in multiple jurisdictions and identified 23 vessels as blocked property for their involvement in shipments of Iranian petroleum and petrochemical products. Many of these designations involve what OFAC has identified as “a network of illicit shipping facilitators in multiple jurisdictions which, through obfuscation and deception, load and transport Iranian oil for sale to buyers in Asia.” For additional identifying details on these entities and vessels see here.

As a result, 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.

Key Notes:

  • The final rule took effect September 16. It codifies the series of “policy memoranda” BIS began issuing in 2022 to clarify the agency’s evolving attitude toward voluntary self-disclosures, which in turn aimed to encourage companies, universities and individuals to engage in the process after believing a violation of the Export Administration Regulations, or any order, license, or authorization issued thereunder, had been violated.
  • The final rule also updates the BIS Penalty Guidelines for the first time since June 2016, thus modifying how BIS calculates and applies penalties for export control violations.
  • The changes to the BIS Penalty Guidelines confer greater discretion to BIS in enforcement proceedings, signifying the agency’s renewed aggressive posture to clamp down on export control violations.

On September 12, 2024, the Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule revising the voluntary self-disclosure provisions and penalty guidelines of the Export Administration Regulations (EAR). The revisions to the voluntary self-disclosure (VSD) process modify the regulations about conduct that constitutes a violation of the EAR and the possible sanctions for such violations by incorporating the three policy memoranda BIS has announced every year beginning in 2022. The three memoranda have: (1) highlighted BIS’s desire to focus its limited resources on addressing more serious export control violations; (2) introduced mechanisms for exporters to more easily submit VSDs; and (3) expanded incentives for exporters who choose to submit a VSD. (For additional background information regarding these policy memoranda see April 25, 2023 Update and January 31, 2024 Update.) The revisions also update Supplement No. 1 to Part 766 of the EAR entitled “Guidance on Charging and Penalty Determinations in Settlement of Administrative Enforcement Cases,” (BIS Penalty Guidelines) by granting greater latitude to BIS when calculating and imposing penalties in administrative cases in response to an apparent export control violation. Both revisions under the September 12 final rule took effect September 16, 2024.

View the entire client update in HTML or PDF format.