27846 Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 /Rules and Regulations

§ 558.550 [Amended]

17. Section 558.550 Salinomycin is

amended in paragraphs (a)(1),

(d)(1)(vii)(c), (d)(1)(xv)(c), and

(d)(1)(xvi)(c) by removing ‘‘000004’’ and

adding in its place ‘‘063238’’, and in

paragraph (d)(1)(ix)(c) by removing

‘‘Nos. 000004 and 046573’’ and adding

in its place ‘‘Nos. 046573 and 063238’’.

§ 558.575 [Amended]

18. Section 558.575

Sulfadimethoxine, ormetoprim is

amended in paragraphs (a)(1) and (a)(2)

by removing ‘‘000004’’ and adding in its

place ‘‘063238’’.

§ 558.582 [Amended]

19. Section 558.582 Sulfamerazine is

amended in paragraph (a) by removing

‘‘000004’’ and adding in its place

‘‘063238’’.

§ 558.600 [Amended]

20. Section 558.600 Tiamulin is

amended in paragraph (c)(4)(ii) by

removing ‘‘000004 and 046573’’ and

adding in its place ‘‘046573 and

063238’’.

Dated: May 8, 1998.

Andrew J. Beaulieu,

Acting Director, Office of New Animal Drug

Evaluation, Center for Veterinary Medicine.

[FR Doc. 98–13161 Filed 5–20–98; 8:45 am]

BILLING CODE 4160–01–F

DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 537

Burmese Sanctions Regulations

AGENCY: Office of Foreign Assets

Control, Treasury.

ACTION: Final rule.

SUMMARY: The Office of Foreign Assets

Control of the U.S. Department of the

Treasury is issuing the Burmese

Sanctions Regulations to implement

Executive Order 13047 of May 20, 1997,

‘‘Prohibiting New Investment in

Burma.’’

EFFECTIVE DATE: May 21, 1998.

FOR FURTHER INFORMATION CONTACT:

Steven I. Pinter, Chief of Licensing, tel.:

202/622–2480, or William B. Hoffman,

Chief Counsel, tel.: 202/622–2410,

Office of Foreign Assets Control,

Department of the Treasury,

Washington, DC 20220.

SUPPLEMENTARY INFORMATION:

Electronic Availability

This document is available as an

electronic file on The Federal Bulletin

Board the day of publication in the

Federal Register. By modem, dial 202/

512–1387 and type ‘‘/GO FAC,’’ or call

202/512–1530 for disk or paper copies.

This file is available for downloading

without charge in WordPerfect 5.1,

ASCII, and Adobe AcrobatR readable

(*.PDF) formats. For Internet access, the

address for use with the World Wide

Web (Home Page), Telnet, or FTP

protocol is: fedbbs.access.gpo.gov. The

document is also accessible for

downloading in ASCII format without

charge from Treasury’s Electronic

Library (‘‘TEL’’) in the ‘‘Business, Trade

and Labor Mall’’ of the FedWorld

bulletin board. By modem, dial 703/

321–3339, and select self–expanding file

‘‘T11FR00.EXE’’ in TEL. For Internet

access, use one of the following

protocols: Telnet = fedworld.gov

(192.239.93.3); World Wide Web (Home

Page) = http://www.fedworld.gov; FTP

= ftp.fedworld.gov (192.239.92.205).

Additional information concerning the

programs of the Office of Foreign Assets

Control is available for downloading

from the Office’s Internet Home Page:

http://www.ustreas.gov/treasury/

services/fac/fac.html, or in fax form

through the Office’s 24–hour fax–on–

demand service: call 202/622–0077

using a fax machine, fax modem, or

(within the United States) a touch–tone

telephone.

Background

On May 20, 1997, the President issued

Executive Order 13047 (the ‘‘Order’’),

effective at 12:01 a.m. EDT on May 21,

1997, certifying to Congress under

section 570(b) of the Foreign

Operations, Export Financing, and

Related Programs Appropriations Act,

1997, (Public Law 104–208) (the ‘‘Act’’)

that the Government of Burma has

committed large–scale repression of the

Democratic opposition in Burma after

September 30, 1996, thereby invoking

the prohibition on new investment in

Burma by U.S. persons, contained in

that section. The President also declared

a national emergency to deal with the

threat posed to the national security and

foreign policy of the United States by

the actions and policies of the

Government of Burma, invoking the

authority, inter alia, of the International

Emergency Economic Powers Act (50

U.S.C. 1701–1706). The Order

authorizes the Secretary of the Treasury,

in consultation with the Secretary of

State, to take such actions, including the

promulgation of rules and regulations,

as may be necessary to carry out the

purposes of the Order. In

implementation of the Order, the

Treasury Department is issuing the

Burmese Sanctions Regulations, 31 CFR

part 537 (the ‘‘Regulations’’).

Section 537.201 of the Regulations

implements section 1 of the Order, and

prohibits new investment in Burma by

U.S. persons. The term new investment,

defined in section 4(d) of the Order,

means any of the following activities, if

such an activity is undertaken pursuant

to an agreement, or pursuant to the

exercise of rights under such an

agreement, that is entered into with the

Government of Burma or a

nongovernmental entity in Burma on or

after May 21, 1997:

(1) the entry into a contract that

includes the economic development of

resources located in Burma;

(2) the entry into a contract providing

for the general supervision and

guarantee of another person’s

performance of a contract that includes

the economic development of resources

located in Burma;

(3) the purchase of a share of

ownership, including an equity interest,

in the economic development of

resources located in Burma; or

(4) the entry into a contract providing

for the participation in royalties,

earnings, or profits in the economic

development of resources located in

Burma, without regard to the form of the

participation.

Section 537.202 of the Regulations

implements section 2(a) of the Order

and prohibits any approval or other

facilitation by a United States person,

wherever located, of a transaction by a

foreign person where the transaction

would constitute prohibited new

investment in Burma if engaged in by a

United States person or within the

United States.

Section 537.203 of the Regulations

implements section 2(b) of the Order

and prohibits any transaction by a U.S.

person or within the United States that

evades or avoids, or that has the

purpose of evading or avoiding, or

attempts to violate, any of the

prohibitions set forth in the Order.

The prohibitions contained in these

sections are subject to the exemption

contained in section 3 of the Order,

implemented in § 537.204 of the

Regulations, which excludes from the

new investment and facilitation

prohibitions the entry into or

performance or financing of a contract

to sell or purchase goods, services, or

technology. This exemption, however,

does not apply where the entry into

such a contract on or after the effective

date of the Order is for the general

supervision and guarantee of another

person’s performance of a contract for

the economic development of resources

located in Burma; or where such
Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 /Rules and Regulations 27847

contract provides for payment, in whole

or in part, in: (1) shares of ownership,

including an equity interest, in the

economic development of resources

located in Burma; or (2) participation in

royalties, earnings or profits in the

economic development of resources

located in Burma. Section 537.301

indicates that the term economic

development of resources located in

Burma shall not be construed to include

not–for–profit educational, health, or

other humanitarian programs or

activities. See § 537.301.

Transactions otherwise prohibited

under § 537.201 may not be authorized

unless the President, or the President’s

duly authorized designee, exercises

waiver authority provided in section

570(e) of the Act, upon a determination

and certification to Congress that

application of the waived sanction

would be contrary to the national

security interests of the United States.

Transactions otherwise prohibited

under §§ 537.202 and 537.203 but found

to be consistent with U.S. policy may be

authorized by a general license

contained in subpart E of this part or by

a specific license issued pursuant to the

procedures described in subpart C of 31

CFR part 501. Civil and criminal

penalties for violation of the Regulations

are described in subpart G.

Since the Regulations involve a

foreign affairs function, the provisions

of Executive Order 12866 and the

Administrative Procedure Act (5 U.S.C.

553)(the ‘‘APA’’) 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

As authorized in the APA, the

Regulations are being issued without

prior notice and public comment

procedure. The collections of

information related to the Regulations

are contained in 31 CFR part 501 (the

‘‘Reporting and Procedures

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

(‘‘OMB’’) under control number 1505–

0164. An adjustment to the approved

burden hours to reflect the additional

burden imposed in administering the

Regulations has been filed with OMB.

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 537

Administrative practice and

procedure, Burma, Penalties, New

investment, Reporting and

recordkeeping requirements.

For the reasons set forth in the

preamble, 31 CFR part 537 is added to

read as follows:

PART 537—BURMESE SANCTIONS

REGULATIONS

Subpart A—Relation of this Part to Other

Laws and Regulations

Sec.

537.101 Relation of this part to other laws

and regulations.

Subpart B—Prohibitions

537.201 Prohibited new investment by U.S.

persons.

537.202 Prohibited approval or other

facilitation by a U.S. person of a foreign

person’s investment.

537.203 Evasions; attempts; conspiracies.

537.204 Exempt transactions.

Subpart C—General Definitions

537.301 Economic development of resources

located in Burma.

537.302 Effective date.

537.303 Entity.

537.304 Foreign person.

537.305 General license.

537.306 Government of Burma.

537.307 License.

537.308 New investment.

537.309 Nongovernmental entity in Burma.

537.310 Person.

537.311 Resources located in Burma.

537.312 Specific license.

537.313 United States.

537.314 United States person; U.S. person.

Subpart D—Interpretations

537.401 Reference to amended sections.

537.402 Effect of amendment.

537.403 Economic development of resources

located in Burma.

537.404 Purchase of shares in economic

development projects in Burma.

537.405 Investment in entities involved in

economic development projects in

Burma.

537.406 General supervision and guarantee.

537.407 Activities under pre–May 21, 1997

agreements.

537.408 Sale or purchase of goods, services

or technology.

537.409 Approval or other facilitation of a

foreign person’s investment.

Subpart E—Licenses, Authorizations and

Statements of Licensing Policy

537.501 General and specific licensing

procedures.

537.502 Effect of license or authorization.

537.503 Exclusion from licenses and

authorizations.

537.504 Divestiture of U.S. person’s equity

investment in Burma.

Subpart F—Reports

537.601 Recordkeeping and reporting

requirements.

Subpart G—Penalties

537.701 Penalties.

537.702 Prepenalty notice.

537.703 Response to prepenalty notice;

informal settlement.

537.704 Penalty imposition or withdrawal.

537.705 Administrative collection action;

referral to United States Department of

Justice.

Subpart H—Procedures

537.801 Procedures.

537.802 Delegation by the Secretary of the

Treasury.

Subpart I—Paperwork Reduction Act

537.901 Paperwork Reduction Act notice.

Authority: 3 U.S.C. 301; 31 U.S.C. 321(b);

50 U.S.C. 1601–1651, 1701–1706; sec 570,

Pub. L. 104–208, 110 stat. 3009–166; E.O.

13047, 61 FR 28301, 3 CFR, Comp., p. 202.

Subpart A—Relation of This Part to

Other Laws and Regulations

§ 537.101 Relation of this part to other

laws and regulations.

(a) This part is separate from, and

independent of, the other parts of this

chapter. Differing foreign policy and

national security contexts may result in

differing interpretations of similar

language among the parts of this

chapter. No license or authorization

contained in or issued pursuant to those

other parts authorizes any transaction

prohibited by this part.

(b) No license or authorization

contained in or issued pursuant to this

part relieves the involved parties from

complying with any other applicable

laws or regulations.

Subpart B—Prohibitions

§ 537.201 Prohibited new investment by

U.S. persons.

Except to the extent provided in

regulations, orders, directives, or

licenses that may by issued in

conformity with section 570 of the

Foreign Operations, Export Financing,

and Related Programs Appropriations

Act, 1997 (Public Law 104–208)(the

‘‘Act’’), new investment in Burma by

United States persons is prohibited.

Note to § 537.201: Section 570 of the Act

provides that the prohibition contained in

this section may be waived, temporarily or

permanently, by the President if he

determines and certifies to Congress that the

application of this sanction would be

contrary to the national interests of the

United States. Licenses are thus not available

for purposes of authorizing transactions

prohibited under this section in the absence
27848 Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 /Rules and Regulations

of such a waiver determination and

certification to Congress.

§ 537.202 Prohibited approval or other

facilitation by a U.S. person of a foreign

person’s investment.

Except to the extent provided in

regulations, orders, directives, or

licenses that may be issued pursuant to

this part, any approval or other

facilitation by a United States person,

wherever located, of a transaction by a

foreign person where the transaction

would constitute prohibited new

investment in Burma under this part if

engaged in by a United States person or

within the United States is prohibited.

§ 537.203 Evasions; attempts;

conspiracies.

Except to the extent provided in

regulations, orders, directives, or

licenses that may be issued pursuant to

this part, any transaction by a United

States person or within the United

States that evades or avoids, or has the

purpose of evading or avoiding, or

attempts to violate, any of the

prohibitions set forth in this part is

prohibited.

§ 537.204 Exempt transactions.

Nothing in this part shall be

construed to prohibit the entry into,

performance of, or financing of a

contract to sell or purchase goods,

services, or technology, except:

(a) Where the entry into such a

contract on or after the effective date is

for the general supervision and

guarantee of another person’s

performance of a contract for the

economic development of resources

located in Burma; or

(b) Where such contract provides for

payment, in whole or in part, in:

(1) Shares of ownership, including an

equity interest, in the economic

development of resources located in

Burma; or

(2) Participation in royalties, earnings,

or profits in the economic development

of resources located in Burma.

Note to § 537.204: The term economic

development of resources located in Burma

is defined in § 537.301 to exclude not–for–

profit educational, health or other

humanitarian programs or activities.

Subpart C—General Definitions

§ 537.301 Economic development of

resources located in Burma.

The term economic development of

resources located in Burma shall not be

construed to include not–for–profit

educational, health, or other

humanitarian programs or activities.

§ 537.302 Effective date.

The term effective date refers to the

effective date of the applicable

prohibitions and directives contained in

this part which is 12:01 a.m. EDT, May

21, 1997.

§ 537.303 Entity.

The term entity means a partnership,

association, trust, joint venture,

corporation, or other organization.

§ 537.304 Foreign person.

The term foreign person means any

citizen or national of a foreign state or

any entity not organized under the laws

of the United States.

§ 537.305 General license.

The term general license means any

license or authorization the terms of

which are set forth in this part.

§ 537.306 Government of Burma.

The term Government of Burma

includes:

(a) The state and the Government of

Burma, as well as any political

subdivision, agency, or instrumentality

thereof;

(b) Any entity owned or controlled

directly or indirectly by the foregoing.

§ 537.307 License.

Except as otherwise specified, the

term license means any license or

authorization contained in this part, or

issued pursuant to the authority of this

part under procedures set forth in this

part or in subpart C of part 501 of this

chapter.

§ 537.308 New investment.

The term new investment means any

of the following activities, if such an

activity is undertaken pursuant to an

agreement, or pursuant to the exercise of

rights under such an agreement, that is

entered into with the Government of

Burma or a nongovernmental entity in

Burma on or after the effective date:

(a) The entry into a contract that

includes the economic development of

resources located in Burma;

(b) The entry into a contract providing

for the general supervision and

guarantee of another person’s

performance of a contract that includes

the economic development of resources

located in Burma;

(c) The purchase of a share of

ownership, including an equity interest,

in the economic development of

resources located in Burma; or

(d) The entry into a contract providing

for the participation in royalties,

earnings, or profits in the economic

development of resources located in

Burma, without regard to the form of the

participation.

§ 537.309 Nongovernmental entity in

Burma.

The term nongovernmental entity in

Burma means a partnership, association,

trust, joint venture, corporation, or other

organization, wheresoever organized,

that is located in Burma or exists for the

exclusive or predominant purpose of

engaging in the economic development

of resources located in Burma or derives

its income predominantly from such

economic development, and is not the

Government of Burma.

§ 537.310 Person.

The term person means an individual

or entity.

§ 537.311 Resources located in Burma.

The term resources located in Burma

means any resources, including natural,

agricultural, commercial, financial,

industrial and human resources, located

within the territory of Burma, including

the territorial sea, or located within the

exclusive economic zone or continental

shelf of Burma.

§ 537.312 Specific license.

The term specific license means any

license or authorization not set forth in

this part but issued pursuant to the

authority of this part.

§ 537.313 United States.

The term United States means the

United States, its territories and

possessions, and all areas under the

jurisdiction or authority thereof.

§ 537.314 United States person; U.S.

person.

The term United States person or U.S.

person means any United States citizen,

permanent resident alien, juridical

person organized under the laws of the

United States (including foreign

branches), or any person in the United

States.

Subpart D—Interpretations

§ 537.401 Reference to amended sections.

Except as otherwise specified,

reference to any section of this part or

to any regulation, ruling, order,

instruction, direction, or license issued

pursuant to this part shall be deemed to

refer to the same as currently amended.

§ 537.402 Effect of amendment.

Any amendment, modification, or

revocation of any section of this part or

of any order, regulation, ruling,

instruction, or license issued by or

under the direction of the Director of the

Office of Foreign Assets Control shall

not, unless otherwise specifically

provided, be deemed to affect any act

done or omitted to be done, or any civil
Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 /Rules and Regulations 27849

or criminal suit or proceeding

commenced or pending prior to such

amendment, modification, or

revocation. All penalties, forfeitures,

and liabilities under any such order,

regulation, ruling, instruction, or license

shall continue and may be enforced as

if such amendment, modification, or

revocation had not been made.

§ 537.403 Economic development of

resources located in Burma.

The term economic development of

resources located in Burma refers to

activities pursuant to a contract the

subject of which includes responsibility

for the development or exploitation of

resources located in Burma, including

making or attempting to make those

resources accessible or available for

exploitation or economic use. Examples

include contracts conferring rights to

explore for, develop, extract, or refine

petroleum, natural gas, or minerals in

the ground in Burma; contracts to take

over a mining operation in Burma;

acquire a forest or agricultural area and

exploit the timber or other crops; or

acquire land and construct and run a

hotel or factory on it. The term

economic development of resources

located in Burma is defined in § 537.301

specifically to exclude contracts for not–

for–profit educational, health or other

humanitarian programs or activities. See

also § 537.204 for the exception that

applies to the entry into, performance

of, or financing of a contract to sell or

purchase goods, services or technology.

§ 537.404 Purchase of shares in economic

development projects in Burma.

The purchase of shares, including an

equity interest, in the economic

development of resources located in

Burma, is prohibited when those shares

are purchased after the effective date

directly or indirectly from the

Government of Burma or a

nongovernmental entity in Burma,

unless purchased pursuant to an

agreement entered into prior to May 21,

1997. U.S. persons may purchase debt

instruments issued by the Government

of Burma or a nongovernmental entity

in Burma, directly or indirectly,

provided that such instruments are not

convertible into equity, and do not

provide for participation, including as

collateral or security, in royalties,

earnings, or profits in the economic

development of resources located in

Burma.

§537.405 Investments in entities involved

in economic development projects in

Burma.

(a) The purchase of shares in a third–

country company that is engaged in the

economic development of resources

located in Burma is prohibited by

§ 537.201 where the company’s profits

are predominantly derived from the

company’s economic development of

resources located in Burma.

(b) If a U.S. person holds shares in an

entity which subsequently engages

exclusively or predominantly in the

economic development of resources

located in Burma or subsequently

derives its income exclusively or

predominantly from such economic

development, the United States person

is not required to relinquish its shares,

but may not purchase additional shares.

Divestment of the shares in such an

entity to a foreign person — constituting

the facilitation of that foreign person’s

investment in Burma — is authorized

under general license pursuant to

§ 537.504.

§537.406 General supervision and

guarantee.

Section 537.201 prohibits the entry by

a U.S. person into a contract providing

for the general supervision and

guarantee of another person’s

performance of a contract that includes

the economic development of resources

located in Burma, if the U.S. person’s

contract is entered into on or after the

effective date, unless undertaken

pursuant to, or in exercise of rights

under, a pre–effective date agreement.

For the purposes of § 537.201, only the

entry into contracts for supervision and

guarantee at the top level of project

management, such as entry into a

contract with a development project’s

sponsor or owner to become a prime

contractor or general manager for a

development project, will be considered

new investment in Burma. By contrast,

subcontracts to provide goods, services,

or technology to a prime contractor or

general manager of a development

project are exempt from the prohibitions

of this part pursuant to § 537.204 unless:

(a) The functional scope of the

subcontractor’s obligations is

substantially similar to that of a prime

contractor’s or general manager’s

obligations; or

(b) The consideration for such

subcontracts includes a share of

ownership in, or participation in the

royalties, earnings or profits of, the

economic development of resources

located in Burma.

§ 537.407 Activities under pre–May 21,

1997 agreements.

(a) Activities undertaken by a U.S.

person pursuant to an agreement

entered into prior to May 21, 1997,

between the U.S. person and the

Government of Burma or a

nongovernmental entity in Burma are

not prohibited new investments, as

defined in § 537.308.

(b) A U.S. person who is a party to a

pre–effective date agreement for the

development of economic resources

located in Burma may enter into

subsequent agreements with foreign

persons where such agreements are

pursuant to, or in exercise of rights

under, the pre–effective date agreement.

The facilitation of foreign persons’

investment in Burma under these

circumstances is authorized pursuant to

the general license contained in

§ 537.504.

(c) A U.S. person may not enter into

a contract for the economic

development of resources located in

Burma after May 21, 1997, if pursuant

to, or in exercise of rights under, a pre–

effective date agreement, unless the

contractual arrangement is specifically

contemplated in the pre–effective date

agreement.

(d) The exercise of rights under pre–

effective date agreements may include

the exercise of options to extend the

contract, depending on such factors as

the degree of specificity with which the

option to extend is described in the pre–

effective date agreement, and the degree

to which the party wishing to renew can

enforce its decision to exercise the

option.

§ 537.408 Sale or purchase of goods,

services or technology.

(a) Section 537.204 exempts from any

prohibition under this part the entry

into, performance of, or financing of a

contract to sell or purchase goods,

services, or technology, except:

(1) Where the entry into a contract on

or after the effective date is for the

general supervision and guarantee of

another person’s performance of a

contract for the economic development

of resources located in Burma; or

(2) Where such contract provides for

payment, in whole or in part, in:

(i) Shares of ownership, including an

equity interest, in the economic

development of resources located in

Burma; or

(ii) Participation in royalties,

earnings, or profits in the economic

development of resources located in

Burma.

(b) Examples: The following examples

are based upon the assumption that

neither § 537.204(a) nor § 537.204(b)

applies.

(1) A U.S. person may market goods

or services in Burma through a sales

representative or sales agent, or through

a U.S. person or subsidiary established

and operating in Burma before May 21,

1997, or through any established foreign

(including Burmese) distributorship.
27850 Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 /Rules and Regulations

The U.S. person may not, however,

establish and operate a new business,

branch, office or showroom in Burma to

market such goods or services or

facilitate the establishment of a new

foreign entity to do so. This would

constitute the development of a

commercial resource.

(2) A U.S. person may rent, lease or

purchase space in existing buildings in

connection with the continued

operation of a business in operation

prior to the effective date. It may change

locations, modify and renovate existing

space and upgrade machinery or

equipment. Unless pursuant to a pre–

effective date agreement or the exercise

of specific rights under such agreement,

however, the U.S. person may not

expand its business operations by

opening additional stores, branches,

offices or showrooms beyond the

number that were in existence

immediately prior to May 21, 1997. The

U.S. person may not construct a new

commercial building to house its

business as this would constitute the

economic development of land and

commercial resources in Burma.

(3) A U.S. person involved in exempt

activities may hire and train Burmese

employees to carry out such activities.

The employment of personnel in Burma

under these circumstances is considered

the purchase of employment services

which is exempt from prohibition under

§ 537.204. Any training incidental to the

performance of the employee’s services

is likewise exempt. For example, a U.S.

person engaged in the sale of copy

machines may hire and train a Burmese

employee to carry out activities

pursuant to such sales, including office

support personnel, personnel to provide

after–sale service and maintenance in

accordance with the terms of a purchase

or lease agreement, sales representatives

and supervisory personnel. A U.S.

person may not, however, open a

business after the effective date, the

purpose of which is the sale of

vocational skills training in the

maintenance of copy machines, as this

would constitute the economic

development of human resources in

Burma.

(4) Contracts for the purchase or sale

of services incident to the registration

and renewal of patents, trademarks and

copyrights are not prohibited by this

part.

(5) A U.S. bank is allowed to provide

trade financing as a service either to the

Government of Burma or to

nongovernmental entities in Burma, but

cannot provide them loans earmarked

for economic development of resources

in Burma if loan repayment is secured

by the project. A U.S. bank can provide

development project financing as a

service, so long as the financing

instruments are not convertible into

equity, and do not provide for

participation, including as collateral or

security, in royalties, earnings, or profits

in the economic development of

resources located in Burma.

§ 537.409 Approval or other facilitation of

a foreign person’s investment.

(a) The prohibition contained in

§ 537.202 against approval or other

facilitation of a foreign person’s

investment in Burma bars any action by

a U.S. person that assists or supports a

foreign person’s activity that would

constitute prohibited new investment

under § 537.201 if engaged in by a U.S.

person. This facilitation prohibition is

subject to the exemption for trade in

goods, services and technology set forth

in § 537.204.

(b) Examples: (1) A U.S. corporation

is prohibited from brokering, financing,

guaranteeing, or approving the entry by

any foreign person, including a foreign

affiliate, into a contract for the

development of, e.g., a natural gas field,

a tourist hotel complex, or a rubber

plantation in Burma, unless pursuant to

the affiliate’s exercise of rights under an

agreement entered into prior to the

effective date. An independent U.S.

contractor, however, may perform

brokerage, financing, or guarantee

services if under a service contract

meeting the conditions of § 537.204.

(2) The sale to a foreign person of a

U.S. person’s equity or income interest

in a development project in Burma

constitutes facilitation of that foreign

person’s investment in Burma, unless

pursuant to a pre–effective date

agreement. Such a sale, however, is

authorized by general license under

§ 537.504.

(3) A U.S. national or permanent

resident alien employed in Burma or in

a third country by a foreign person may

participate in any decision–making role

in an activity by the foreign person that

includes economic development of

resources located in Burma as exempt

employment services pursuant to

§ 537.204, unless such services are

undertaken pursuant to a post–effective

date agreement between the foreign

person and the Government of Burma or

a nongovernmental entity in Burma and:

(i) involve the general supervision

and guarantee of the foreign person’s

performance of a contract for the

economic development of resources

located in Burma, or

(ii) where the individual U.S. person’s

compensation is provided for, in whole

or in part, from shares of ownership in

the development project or participation

in royalties, earnings, or profits in the

development project.

Subpart E—Licenses, Authorizations,

and Statements of Licensing Policy

§ 537.501 General and specific licensing

procedures.

For provisions relating to licensing

procedures, see subpart C of part 501 of

this chapter.

§ 537.502 Effect of license or

authorization.

(a) No license or other authorization

contained in this part, or otherwise

issued by or under the direction of the

Director of the Office of Foreign Assets

Control, shall be deemed to authorize or

validate any transaction effected prior to

the issuance of the license, unless

specifically provided in such license or

authorization.

(b) No regulation, ruling, instruction,

or license authorizes any transaction

prohibited under this part unless the

regulation, ruling, instruction, or license

is issued by the Office of Foreign Assets

Control and specifically refers to this

part. No regulation, ruling, instruction,

or license referring to this part shall be

deemed to authorize any transaction

prohibited by any provision of this

chapter unless the regulation, ruling,

instruction or license specifically refers

to such provision.

(c) Any regulation, ruling, instruction,

or license authorizing any transaction

otherwise prohibited under this part has

the effect of removing a prohibition or

prohibitions contained in this part from

the transaction, but only to the extent

specifically stated by its terms. Unless

the regulation, ruling, instruction, or

license otherwise specifies, such an

authorization does not create any right,

duty, obligation, claim, or interest in, or

with respect to, any property which

would not otherwise exist under

ordinary principles of law.

§ 537.503 Exclusion from licenses and

authorizations.

The Director of the Office of Foreign

Assets Control reserves the right to

exclude any person, property, or

transaction from the operation of any

license, or from the privileges therein

conferred, or to restrict the applicability

thereof with respect to particular

persons, property, transactions, or

classes thereof. Such action shall be

binding upon all persons receiving

actual or constructive notice of such

exclusion or restriction.

§ 537.504 Divestiture of U.S. person’s

equity investment in Burma.

Notwithstanding the prohibition in

§ 537.202 against the facilitation by a
Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 /Rules and Regulations 27851

U.S. person of a foreign person’s

investment, all transactions related to

the divestiture or transfer to a foreign

person of a U.S. person’s share of

ownership including an equity interest

in the economic development of

resources located in Burma are

authorized. U.S. persons participating in

such transactions valued at more than

$10,000 are required, within 10 business

days after the agreement is signed, to

file a report for statistical purposes with

the Office of Foreign Assets Control,

U.S. Treasury Department, 1500

Pennsylvania Avenue NW—Annex,

Washington, DC 20220.

Note to § 537.504: This authorization

includes arrangements by U.S. persons with

pre–effective date investments in Burma to

‘‘farm in’’ or sell a stake in the investment

to a foreign person. For purposes of this

section, the term farm–in arrangement is

defined to mean the sale of an equity interest

in an investment in the economic

development of resources located in Burma.

Subpart F—Reports

§ 537.601 Recordkeeping and reporting

requirements.

For provisions relating to records and

reports, see subpart B of part 501 of this

chapter.

Subpart G—Penalties

§ 537.701 Penalties.

(a) Attention is directed to section 206

of the International Emergency

Economic Powers Act (50 U.S.C. 1705)

(the ‘‘Act’’), which is applicable to

violations of the provisions of any

license, ruling, regulation, order,

direction or instruction issued by or

pursuant to the direction or

authorization of the Secretary of the

Treasury pursuant to this part or

otherwise under the Act. Section 206 of

the Act, as adjusted by the Federal Civil

Penalties Inflation Adjustment Act of

1990 (Pub.L. 101–410, as amended, 28

U.S.C. 2461 note), provides that:

(1) A civil penalty of not to exceed

$11,000 per violation may be imposed

on any person who violates any license,

order, or regulation issued under the

Act;

(2) Whoever willfully violates any

license, order, or regulation issued

under the Act shall, upon conviction, be

fined not more than $50,000, or, if a

natural person, may be imprisoned for

not more than 10 years, or both; and any

officer, director, or agent of any

corporation who knowingly participates

in such violation may be punished by a

like fine, imprisonment or both.

(b) The criminal penalties provided in

the Act are subject to increase pursuant

to 18 U.S.C. 3571.

(c) Attention is also directed to 18

U.S.C. 1001, which provides that

whoever, in any matter within the

jurisdiction of any department or agency

of the United States, knowingly and

willfully falsifies, conceals or covers up

by any trick, scheme, or device a

material fact, or makes any false,

fictitious or fraudulent statements or

representations or makes or uses any

false writing or document knowing the

same to contain any false, fictitious or

fraudulent statement or entry, shall be

fined under title 18, United States Code,

or imprisoned not more than 5 years, or

both.

(d) Violations of this part may also be

subject to relevant provisions of other

applicable laws.

§ 537.702 Prepenalty notice.

(a) When required. If the Director of

the Office of Foreign Assets Control has

reasonable cause to believe that there

has occurred a violation of any

provision of this part or a violation of

the provisions of any license, ruling,

regulation, order, direction or

instruction issued by or pursuant to the

direction or authorization of the

Secretary of the Treasury pursuant to

this part or otherwise under the

International Emergency Economic

Powers Act, and the Director determines

that further proceedings are warranted,

he shall issue to the person concerned

a notice of his intent to impose a

monetary penalty. The prepenalty

notice shall be issued whether or not

another agency has taken any action

with respect to this matter.

(b) Contents—(1) Facts of violation.

The prepenalty notice shall describe the

violation, specify the laws and

regulations allegedly violated, and state

the amount of the proposed monetary

penalty.

(2) Right to respond. The prepenalty

notice also shall inform the respondent

of respondent’s right to make a written

presentation within 30 days of mailing

of the notice as to why a monetary

penalty should not be imposed, or, if

imposed, why it should be in a lesser

amount than proposed.

§ 537.703 Response to prepenalty notice;

informal settlement.

(a) Deadline for response. The

respondent shall have 30 days from the

date of mailing of the prepenalty notice

to make a written response to the

Director of the Office of Foreign Assets

Control.

(b) Form and contents of response.

The written response need not be in any

particular form, but shall contain

information sufficient to indicate that it

is in response to the prepenalty notice.

It should contain responses to the

allegations in the prepenalty notice and

set forth the reasons why the respondent

believes the penalty should not be

imposed or, if imposed, why it should

be in a lesser amount than proposed.

(c) Informal settlement. In addition or

as an alternative to a written response

to a prepenalty notice pursuant to this

section, the respondent or respondent’s

representative may contact the Office of

Foreign Assets Control as advised in the

prepenalty notice to propose the

settlement of allegations contained in

the prepenalty notice and related

matters. In the event of settlement at the

prepenalty stage, the claim proposed in

the prepenalty notice will be

withdrawn, the respondent is not

required to take a written position on

allegations contained in the prepenalty

notice, and the Office of Foreign Assets

Control will make no final

determination as to whether a violation

occurred. The amount accepted in

settlement of allegations in a prepenalty

notice may vary from the civil penalty

that might finally be imposed in the

event of a formal determination of

violation. In the event no settlement is

reached, the 30–day period specified in

paragraph (a) of this section for written

response to the prepenalty notice

remains in effect unless additional time

is granted by the Office of Foreign

Assets Control.

§ 537.704 Penalty imposition or

withdrawal.

(a) No violation. If, after considering

any response to the prepenalty notice

and any relevant facts, the Director of

the Office of Foreign Assets Control

determines that there was no violation

by the respondent named in the

prepenalty notice, the Director promptly

shall notify the respondent in writing of

that determination and that no monetary

penalty will be imposed.

(b) Violation. If, after considering any

response to the prepenalty notice, the

Director of the Office of Foreign Assets

Control determines that there was a

violation by the respondent named in

the prepenalty notice, the Director

promptly shall issue a written notice of

the imposition of the monetary penalty

to the respondent.

(1) The penalty notice shall inform

the respondent that payment of the

assessed penalty must be made within

30 days of the mailing of the penalty

notice.

(2) The penalty notice shall inform

the respondent of the requirement to

furnish the respondent’s taxpayer

identification number pursuant to 31

U.S.C. 7701 and that such number will

be used for purposes of collection and
27852 Federal Register / Vol. 63, No. 98 /Thursday, May 21, 1998 /Rules and Regulations

reporting on any delinquent penalty

amount in the event of a failure to pay

the penalty imposed.

§ 537.705 Administrative collection;

referral to United States Department of

Justice.

In the event that the respondent does

not pay the penalty imposed pursuant to

this part or make payment arrangements

acceptable to the Director of the Office

of Foreign Assets Control within 30

days of the mailing of the written notice

of the imposition of the penalty, the

matter may be referred for

administrative collection measures by

the Department of the Treasury or to the

United States Department of Justice for

appropriate action to recover the

penalty in a civil suit in a Federal

district court.

Subpart H—Procedures

§ 537.801 Procedures.

For provisions relating to procedures,

see subpart C of part 501 of this chapter.

§ 537.802 Delegation by the Secretary of

the Treasury.

Any action which the Secretary of the

Treasury is authorized to take pursuant

to Executive Order 13047 or any further

executive orders relating to the national

emergency declared in Executive Order

13047 may be taken by the Director of

the Office of Foreign Assets Control, or

by any other person to whom the

Secretary of the Treasury has delegated

authority so to act.

Subpart I—Paperwork Reduction Act

§ 537.901 Paperwork Reduction Act notice.

For approval by the Office of

Management and Budget under the

Paperwork Reduction Act of

information collections relating to

recordkeeping and reporting

requirements, to licensing procedures

pursuant to statements of licensing

policy, and to other procedures, see

§ 501.901 of this chapter.

Dated: April 21, 1998.

R. Richard Newcomb,

Director, Office of Foreign Assets Control.

Approved: May 11, 1998.

James E. Johnson,

Assistant Secretary (Enforcement),

Department of the Treasury.

[FR Doc. 98–13477 Filed 5–18–98; 9:52 am]

BILLING CODE 4810–25–F

DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 165

[CGD01–98–041]

RIN 2121–AA97

Safety Zone; Fleet Week Air/Sea

Demonstrations, Hudson River, NY

AGENCY: Coast Guard, DOT.

ACTION: Temporary final rule.

SUMMARY: The Coast Guard is

establishing a temporary safety zone in

the Hudson River, rectangular in shape,

perpendicular to the USS INTREPID, for

air/sea demonstrations. The safety zone

is in effect from 10:30 a.m. until 12:30

p.m. on May 22, 23, and 24, and from

2:30 p.m. until 4:30 p.m. on May 22, 23,

24 and 25, 1998. This action is

necessary to provide for the safety of life

on navigable waters in the event of

aircraft problems developing during the

demonstrations. It is intended to restrict

vessel traffic in the Hudson River.

DATES: This rule is effective from 10:30

a.m. until 12:30 p.m. on May 22, 23, and

24, and from 2:30 p.m. until 4:30 p.m.

on May 22, 23, 24 and 25, 1998.

ADDRESSES: Comments may be mailed to

Commander (wob) (CGD01–98–041),

Coast Guard Activities New York, 212

Coast Guard Drive, Staten Island, New

York 10305–5005, or deliver them to

room 205 at the same address between

8 a.m. and 3 p.m., Monday through

Friday, except federal holidays.

The Waterways Oversight Branch of

Coast Guard Activities New York

maintains the public docket for this

rulemaking. Comments, and documents

as indicated in this preamble, will

become part of this docket and will be

available for inspection or copying in

room 205 at the same address between

8 a.m. and 3 p.m., Monday through

Friday, except federal holidays.

FOR FURTHER INFORMATION CONTACT:

Lieutenant (Junior Grade) A. Kenneally,

Waterways Oversight Branch, Coast

Guard Activities New York, at (718)

354–4195.

SUPPLEMENTARY INFORMATION:

Regulatory History

Pursuant to 5 U.S.C. 553, a notice of

proposed rulemaking (NPRM) was not

published for this regulation. Good

cause exists for not publishing an NPRM

and for making this regulation effective

less than 30 days after Federal Register

publication. Due to the date that

conclusive information for these events

was received, there was insufficient

time to draft and publish an NPRM. Any

delay encountered in this regulation’s

effective date would be contrary to

public interest since immediate action is

needed to close a portion of the

waterway and protect the maritime

public from the hazards associated with

these air/sea demonstrations, which are

intended for public entertainment.

Background and Purpose

The U.S. Marine Corps, Navy, and

Coast Guard hold joint air/sea

demonstrations in and over the Hudson

River in the vicinity of the USS

INTREPID Museum as a part of Fleet

Week festivities. This regulation

establishes a safety zone which includes

those waters of the Hudson River bound

by the following points: from the

southeast corner of Pier 90, Manhattan,

where it intersects the seawall,

outbound to a position at 40°46′10′′N

latitude, 074°00′13′′W longitude (NAD

1983), south to a point at 40°45′54′′N,

074°00′24′′W (NAD 1983), then inbound

to the northeast corner of Pier 83 where

it intersects the seawall. The safety zone

is in effect from 10:30 a.m. until 12:30

p.m. on May 22, 23, and 24, and from

2:30 p.m. until 4:30 p.m. on May 22, 23,

24 and 25, 1998. The safety zone

prevents vessels from transiting this

portion of the Hudson River and is

needed to protect commercial and

recreational traffic from the hazards

associated with the turbulence

generated by vertical take-off aircraft.

Vessels moored at piers within the

safety zone may remain moored for the

duration of the safety zone; however,

they will not be allowed to transit from

their moorings without permission from

the Captain of the Port, New York,

during the effective periods of the safety

zone.

Regulatory Evaluation

This final rule is not a significant

regulatory action under section 3(f) of

Executive Order 12866 and does not

require an assessment of potential costs

and benefits under section 6(a)(3) of that

Order. It has not been reviewed by the

Office of Management and Budget under

that Order. It is not significant under the

regulatory policies and procedures of

the Department of Transportation (DOT)

(44 FR 11040; February 26, 1979). The

Coast Guard expects the economic

impact of this final rule to be so

minimal that a full Regulatory

Evaluation under paragraph 10e of the

regulatory policies and procedures of

DOT is unnecessary. This finding is

based on the following: commercial and

recreational vessels navigating the

Hudson River can alter their route west

of the affected area, commercial ferries

will be allowed to transit to and from