[Federal Register Volume 74, Number 173 (Wednesday, September 9, 2009)]
[Rules and Regulations]
[Pages 46361-46364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-21553]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 538


Sudanese Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Department of the Treasury's Office of Foreign Assets 
Control (``OFAC'') is amending the Sudanese Sanctions Regulations by 
issuing a general license that authorizes the exportation and 
reexportation of agricultural commodities, medicine, and medical 
devices to the Specified Areas of Sudan, as well as the conduct of 
related transactions. The Specified Areas of Sudan are defined as 
Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile 
State, Abyei, Darfur, and marginalized areas in and around Khartoum. 
OFAC also is making conforming changes to the Sudanese Sanctions 
Regulations to reflect this authorization.

DATES: Effective Date: September 9, 2009.

FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance, 
Outreach and Implementation, tel.: 202/622-2490, Assistant Director for 
Licensing, tel.: 202/622-2480, Assistant Director for Policy, tel.: 
202/622-4855, Office of Foreign Assets Control, or Chief Counsel 
(Foreign Assets Control), tel.: 202/622-2410, Office of the General 
Counsel, Department of the Treasury (not toll free numbers).

SUPPLEMENTARY INFORMATION:

Electronic and Facsimile Availability

    This document and additional information concerning OFAC are 
available from OFAC's Web site (http://www.treas.gov/ofac) or via 
facsimile through a 24-hour fax-on-demand service, tel.: 202/622-0077.

Background

    The Sudanese Sanctions Regulations, 31 CFR part 538 (the ``SSR''), 
were promulgated to implement Executive Order 13067 of November 3, 1997 
(62 FR 59989, November 5, 1997) (``E.O. 13067''), in which the 
President declared a national emergency with respect to the policies 
and actions of the Government of Sudan.
    To deal with that emergency, E.O. 13067 imposed comprehensive trade 
sanctions with respect to Sudan and blocked all property and interests 
in property of the Government of Sudan in the United States or within 
the possession or control of United States persons.
    Subsequently, on October 13, 2006, the President signed the Darfur 
Peace and Accountability Act of 2006 (Pub. L. 109-344, 120 Stat. 1869) 
(``DPAA'') and issued Executive Order 13412 of October 13, 2006 (71 FR 
61369, October 17, 2006) (``E.O. 13412''). The DPAA and E.O. 13412, 
inter alia, exempt the Specified Areas of Sudan from certain 
prohibitions set forth in E.O. 13067, and define the term Specified 
Areas of Sudan to include Southern Sudan, Southern Kordofan/Nuba 
Mountains State, Blue Nile State, Abyei, Darfur, and marginalized areas 
in and around Khartoum. While E.O. 13412 exempted the Specified Areas 
of Sudan from certain prohibitions in E.O. 13067, it continued the 
country-wide blocking of the Government of Sudan's property and 
interests in property and imposed a new country-wide prohibition on

[[Page 46362]]

transactions relating to Sudan's petroleum or petrochemical industries. 
E.O. 13412 also removed the regional Government of Southern Sudan from 
the definition of the term Government of Sudan set forth in E.O. 13067. 
OFAC issued amendments to the SSR implementing E.O. 13412 on October 
31, 2007 (72 FR 61513, October 31, 2007).
    OFAC today is further amending the SSR to resolve a tension between 
E.O. 13412 and the DPAA on the one hand, and the Trade Sanctions Reform 
and Export Enhancement Act of 2000 (22 U.S.C. 7201-7211) (``TSRA'') on 
the other. Pursuant to E.O. 13412 and the DPAA, most trade and related 
activities--other than trade with the Government of Sudan or relating 
to Sudan's petroleum or petrochemical industries--are allowed with the 
Specified Areas of Sudan. These Specified Areas, however, remained 
subject to regulations promulgated pursuant to section 906(a)(1) of 
TSRA, which provides that the export of agricultural commodities, 
medicine, and medical devices to the government of a country that has 
been determined by the Secretary of State, under section 6(j) of the 
Export Administration Act of 1979, 50 U.S.C. App. 2405(j) (the 
``EAA''), to have repeatedly provided support for acts of international 
terrorism, or to any entity in such a country, shall be made pursuant 
to one-year licenses issued by the United States government.
    Because Sudan has been determined by the Secretary of State to be a 
country that has repeatedly provided support for acts of international 
terrorism pursuant to section 6(j) of the EAA, the entire country 
remained subject to TSRA's licensing requirements under the SSR. The 
overlap of TSRA with E.O. 13412 and the DPAA--as previously implemented 
in the SSR--resulted in the requirement that OFAC authorize the export 
of agricultural and medical items to the Specified Areas of Sudan, even 
though no OFAC authorization was required to export most other items to 
those areas.
    Therefore, in view of the underlying policy objectives and findings 
concerning the Specified Areas of Sudan that resulted in the 
elimination of most of the previous economic sanctions against these 
areas within Sudan, including export sanctions analogous to those 
covered by TSRA, OFAC has determined that specific licenses for TSRA-
related transactions with respect to the Specified Areas of Sudan 
should no longer be required. Instead, OFAC is authorizing such 
transactions through a general license, set forth at SSR Sec.  
538.523(a)(2), provided that such transactions do not involve any 
property or interests in property of the Government of Sudan or relate 
to the petroleum or petrochemical industries in Sudan. In accordance 
with the requirements set forth in section 906(a)(1) of TSRA, this 
general license covers exports shipped within the twelve-month period 
beginning on the date of the signing of the export contract. In 
addition, each year by the anniversary of its effective date on 
September 9, 2009, OFAC will determine whether to revoke the general 
license. Unless revoked, the general license will remain in effect. 
However, specific licenses for TSRA-related transactions with respect 
to the Government of Sudan, to any individual or entity in an area of 
Sudan other than the Specified Areas of Sudan, or to persons in third 
countries purchasing specifically for resale to the foregoing are still 
required.
    Existing prohibitions and safeguards satisfy TSRA's requirement 
that procedures be in place to deny the general license for exports to 
entities within Sudan promoting international terrorism. For instance, 
the requirement that no U.S. person engage in any transaction with 
anyone on OFAC's List of Specially Designated Nationals and Blocked 
Persons, including persons designated under the terrorism programs 
administered by OFAC, provides a mechanism for denying TSRA-related 
exports to certain entities within the Specified Areas of Sudan. In 
addition, if it deems necessary, OFAC may amend, modify, or revoke the 
new general license pursuant to Sec.  501.803 of the Reporting, 
Procedures and Penalties Regulations, 31 CFR part 501 (the ``RPPR''), 
which set forth standard reporting and recordkeeping requirements and 
license application and other procedures governing transactions 
regulated pursuant to other parts of 31 CFR chapter V. Section 538.502 
of the SSR similarly provides OFAC with the authority to exclude any 
person, property, or transaction from the operation of the general 
license or to restrict the applicability of the general license with 
respect to any persons, property, or transactions. Finally, the 
requirement that all U.S. persons maintain records of any transaction 
subject to OFAC-administered sanctions for a period of not less than 
five years pursuant to RPPR Sec.  501.601, and OFAC's authority to 
obtain these records pursuant to RPPR Sec.  501.602, allow OFAC to 
monitor activities under the general license in order to determine 
whether it should exercise these authorities.
    Those transactions now authorized by the general license set forth 
at Sec.  538.523(a)(2) of the SSR include the sale, exportation, and 
reexportation of agricultural commodities, medicine, and medical 
devices, the financing of and payment for such sales, and the brokering 
of TSRA sales. However, the transshipment or transit of TSRA-related 
exports through areas of Sudan other than the Specified Areas of Sudan, 
and any related financial transactions that are routed through 
depository institutions located in an area of Sudan other than the 
Specified Areas, remain prohibited under Sec. Sec.  538.417 and 538.418 
of the SSR.

Public Participation

    Because the amendment of 31 CFR part 538 involves a foreign affairs 
function, the provisions of Executive Order 12866 and the 
Administrative Procedure Act (5 U.S.C. 553), requiring notice of 
proposed rulemaking, opportunity for public participation, and delay in 
effective date, are inapplicable. Because no notice of proposed 
rulemaking is required for this rule, the Regulatory Flexibility Act (5 
U.S.C. 601-612) does not apply.

Paperwork Reduction Act

    The collections of information related to 31 CFR part 538 are 
contained in 31 CFR part 501 (the ``Reporting, Procedures and Penalties 
Regulations''). Pursuant to the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507), those collections of information have been approved by 
the Office of Management and Budget under control number 1505-0164. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless the collection of 
information displays a valid control number.

List of Subjects in 31 CFR Part 538

    Administrative practice and procedure, Banks, Banking, Blocking of 
assets, Exports, Foreign trade, Humanitarian aid, Imports, Penalties, 
Reporting and recordkeeping requirements, Specially designated 
nationals, Sudan, Terrorism, Transportation.

0
For the reasons set forth in the preamble, the Department of the 
Treasury's Office of Foreign Assets Control amends 31 CFR part 538 as 
follows:

PART 538--SUDANESE SANCTIONS REGULATIONS

0
1. Revise the authority citation for part 538 to read as follows:


[[Page 46363]]


    Authority: 3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 31 U.S.C. 
321(b); 50 U.S.C. 1601-1651, 1701-1706; Public Law 101-410, 104 
Stat. 890 (28 U.S.C. 2461 note); 22 U.S.C. 7201-7211; Public Law 
109-344, 120 Stat. 1869; Public Law 110-96, 121 Stat. 1011; E.O. 
13067, 62 FR 59989, 3 CFR, 1997 Comp., p. 230; E.O. 13412, 71 FR 
61369, 3 CFR, 2006 Comp., p. 244.

Subpart B--Prohibitions

0
2. Revise the note to Sec.  538.212(g)(2) to read as follows:


Sec.  538.212  Exempt transactions.

* * * * *
    (g) * * *
    (2) * * *

    Note to Sec.  538.212(g)(2): See Sec.  538.523(a)(2) for a 
general license authorizing the exportation and reexportation of 
agricultural commodities, medicine, and medical devices to the 
Specified Areas of Sudan, and the conduct of related transactions.

Subpart D--Interpretations

0
3. Amend Sec.  538.405 by revising paragraph (d) to read as follows:


Sec.  538.405  Transactions incidental to a licensed transaction 
authorized.

* * * * *
    (d) Financing of licensed sales for exportation or reexportation of 
agricultural commodities or products, medicine, or medical equipment to 
the Government of Sudan, to any individual or entity in an area of 
Sudan other than the Specified Areas of Sudan, or to persons in third 
countries purchasing specifically for resale to the foregoing. See 
Sec.  538.525.

Subpart E--Licenses, Authorizations, and Statements of Licensing 
Policy

0
4. Amend Sec.  538.523 by redesignating paragraph (a), paragraph (b), 
and the introductory text to paragraph (c) to read as follows:


Sec.  538.523  Commercial sales, exportation, and reexportation of 
agricultural commodities, medicine, and medical devices.

    (a)(1) One-year specific license requirement. The exportation or 
reexportation of agricultural commodities (including bulk agricultural 
commodities listed in appendix A to this part 538), medicine, or 
medical devices to the Government of Sudan, to any individual or entity 
in an area of Sudan other than the Specified Areas of Sudan, or to 
persons in third countries purchasing specifically for resale to the 
foregoing, shall only be made pursuant to a one-year specific license 
issued by the U.S. Department of the Treasury, Office of Foreign Assets 
Control, for contracts entered into during the one-year period of the 
license and shipped within the 12-month period beginning on the date of 
the signing of the contract. No specific license will be granted for 
the exportation or reexportation of agricultural commodities, medicine, 
or medical equipment to any entity or individual in Sudan promoting 
international terrorism, to any narcotics trafficking entity designated 
pursuant to Executive Order 12978 of October 21, 1995 (60 FR 54579, 
October 24, 1995) or the Foreign Narcotics Kingpin Designation Act (21 
U.S.C. 1901-1908), or to any foreign organization, group, or persons 
subject to any restriction for its involvement in weapons of mass 
destruction or missile proliferation. Executory contracts entered into 
pursuant to paragraph (b)(2) of this section prior to the issuance of 
the one-year specific license described in this paragraph shall be 
deemed to have been signed on the date of issuance of that one-year 
specific license (and, therefore, the exporter is authorized to make 
shipments under that contract within the 12-month period beginning on 
the date of issuance of the one-year specific license).
    (2) General license for the Specified Areas of Sudan. The 
exportation or reexportation of agricultural commodities (including 
bulk agricultural commodities listed in appendix A to this part 538), 
medicine, and medical devices to the Specified Areas of Sudan and the 
conduct of related transactions, including, but not limited to, the 
making of shipping and cargo inspection arrangements, the obtaining of 
insurance, the arrangement of financing and payment, the entry into 
executory contracts, and the provision of brokerage services for such 
sales and exports or reexports, are hereby authorized, provided that 
such activities or transactions do not involve any property or 
interests in property of the Government of Sudan and do not relate to 
the petroleum or petrochemical industries in Sudan, and also provided 
that all such exports or reexports are shipped within the 12-month 
period beginning on the date of the signing of the contract for export 
or reexport.

    Note 1 to Sec.  538.523(a)(2):  Consistent with section 
906(a)(1) of the Trade Sanctions Reform and Export Enhancement Act 
of 2000 (22 U.S.C. 7205), each year by the anniversary of its 
effective date of September 9, 2009, the Office of Foreign Assets 
Control will determine whether to revoke this general license. 
Unless revoked, the general license will remain in effect.


    Note 2 to Sec.  538.523(a)(2):  See Sec. Sec.  538.417 and 
538.418 for additional requirements with respect to transshipments 
through, and financial transactions in, Sudan.

    (b) General license for arrangement of exportation or reexportation 
of covered products. (1) With respect to sales pursuant to Sec.  
538.523(a)(1), the making of shipping arrangements, cargo inspection, 
obtaining of insurance, and arrangement of financing (consistent with 
Sec.  538.525) for the exportation or reexportation of agricultural 
commodities, medicine, or medical devices to the Government of Sudan, 
to any individual or entity in an area of Sudan other than the 
Specified Areas of Sudan, or to persons in third countries purchasing 
specifically for resale to the foregoing, are authorized.
    (2) If desired, entry into executory contracts (including executory 
pro forma invoices, agreements in principle, or executory offers 
capable of acceptance such as bids in response to public tenders) for 
the exportation or reexportation of agricultural commodities, medicine, 
and medical devices to the Government of Sudan, to any individual or 
entity in an area of Sudan other than the Specified Areas of Sudan, or 
to persons in third countries purchasing specifically for resale to the 
foregoing, is authorized, provided that performance of an executory 
contract is expressly made contingent upon the prior issuance of the 
one-year specific license described in paragraph (a)(1) of this 
section.
    (c) Instructions for obtaining one-year specific licenses. In order 
to obtain the one-year specific license described in paragraph (a)(1) 
of this section, the exporter must provide to the Office of Foreign 
Assets Control:
* * * * *

0
5. Amend Sec.  538.525 by revising paragraphs (a) introductory text and 
(b) to read as follows:


Sec.  538.525  Payment for and financing of commercial sales of 
agricultural commodities, medicine, and medical equipment.

    (a) General license for payment terms. The following payment terms 
for sales, pursuant to Sec.  538.523(a)(1), of agricultural commodities 
and products, medicine, and medical equipment to the Government of 
Sudan, to any individual or entity in an area of Sudan other than the 
Specified Areas, or to persons in third countries purchasing 
specifically for resale to the foregoing are authorized:
* * * * *
    (b) Specific licenses for alternate payment terms. Specific 
licenses may be issued on a case-by-case basis for

[[Page 46364]]

payment terms and trade financing not authorized by the general license 
in paragraph (a) of this section for sales pursuant to Sec.  
538.523(a)(1). See Sec.  501.801(b) of this chapter for specific 
licensing procedures.
* * * * *

0
6. Amend Sec.  538.526 by revising paragraph (a), the introductory text 
of paragraph (b), and paragraph (b)(2) to read as follows:


Sec.  538.526  Brokering sales of agricultural commodities, medicine, 
and medical devices.

    (a) General license for brokering sales by U.S. persons. United 
States persons are authorized to provide brokerage services on behalf 
of U.S. persons for the sale and exportation or reexportation by United 
States persons of agricultural commodities, medicine, and medical 
devices to the Government of Sudan, to any individual or entity in an 
area of Sudan other than the Specified Areas of Sudan, or to persons in 
third countries purchasing specifically for resale to the foregoing, 
provided that the sale and exportation or reexportation is authorized 
by a one-year specific license issued pursuant to Sec.  538.523(a)(1).
    (b) Specific licensing for brokering sales by non-U.S. persons of 
bulk agricultural commodities. Specific licenses may be issued on a 
case-by-case basis to permit United States persons to provide brokerage 
services on behalf of non-United States, non-Sudanese persons for the 
sale and exportation or reexportation of bulk agricultural commodities 
to the Government of Sudan, to any individual or entity in an area of 
Sudan other than the Specified Areas of Sudan, or to persons in third 
countries purchasing specifically for resale to the foregoing. Specific 
licenses issued pursuant to this section will authorize the brokering 
only of sales that:
* * * * *
    (2) Are to purchasers permitted pursuant to Sec.  538.523(a)(1); 
and
* * * * *

    Dated: September 1, 2009.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. E9-21553 Filed 9-8-09; 8:45 am]
BILLING CODE 4811-45-P