Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations 35809

3. The publication of August 25, 1997,

which was the subject of FR Doc. 97–

22378 issuing the Reporting and

Procedures Regulations, is corrected as

follows. On page 45104 in the third

column, § 501.803 is corrected to read as

follows:

§ 501.803 Amendment, modification, or

revocation.

Except as otherwise provided by law,

the provisions of each part of this

chapter and any rulings, licenses

(whether general or specific),

authorizations, instructions, orders, or

forms issued thereunder may be

amended, modified or revoked at any

time.

Dated: June 26, 1998.

R. Richard Newcomb,

Director, Office of Foreign Assets Control.

Approved: June 26, 1998.

Elisabeth Bresse,

Acting Assistant Secretary (Enforcement).

[FR Doc. 98–17539 Filed 6–30–98; 4:04 pm]

BILLING CODE 4810–25–F

DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 538

Sudanese Sanctions Regulations

AGENCY: Office of Foreign Assets

Control, Department of the Treasury.

ACTION: Final rule.

SUMMARY: The Office of Foreign Assets

Control of the U.S. Department of the

Treasury is issuing the Sudanese

Sanctions Regulations to implement the

President’s declaration of a national

emergency and imposition of sanctions

against Sudan.

EFFECTIVE DATE: July 1, 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/

515–1387 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 November 3, 1997, the President

issued Executive Order 13067 (62 FR

59989, Nov. 5, 1997), declaring a

national emergency with respect to ‘‘the

policies and actions of the Government

of Sudan,’’ and invoking the authority,

inter alia, of the International

Emergency Economic Powers Act (50

U.S.C. 1701–1706). The order blocks all

property and interests in property of the

Government of Sudan, its agencies,

instrumentalities, and controlled

entities, including the Central Bank of

Sudan, that are in the United States, that

are or hereafter come within the United

States, or that are or hereafter come

within the possession or control of U.S.

persons, including their overseas

branches; and orders other specific

sanctions against Sudan. The order also

authorizes the Secretary of the Treasury,

in consultation with the Secretary of

State and, as appropriate, other

agencies, 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

Sudanese Sanctions Regulations (the

‘‘Regulations’’).

Section 538.201 of the Regulations,

implementing section 1 of Executive

Order 13067 (the ‘‘Executive Order’’),

blocks all property and interests in

property of the Government of Sudan,

its agencies, instrumentalities, and

controlled entities, including the

Central Bank of Sudan, that are in the

United States, that hereafter come

within the United States, or that are or

hereafter come within the possession or

control of U.S. persons, including their

overseas branches. As interpreted by

§ 538.305 of the Regulations, § 538.201

also blocks all property and interests in

property of persons determined by the

Secretary of the Treasury, in

consultation with the Secretary of State,

to be owned or controlled by, or to be

acting on behalf of, the Government of

Sudan. Persons coming within any of

these categories are called specially

designated nationals (‘‘SDNs’’). Section

538.204 of the Regulations,

implementing section 2(a) of the

Executive Order, generally prohibits the

importation into the United States of

goods or services of Sudanese origin.

Section 538.205 of the Regulations,

implementing section 2(b) of the

Executive Order, generally prohibits the

exportation or reexportation to Sudan of

goods, technology or services from the

United States, by a U.S. person, or

requiring the issuance of a license by a

Federal agency. Section 538.206 of the

Regulations, implementing section 2(c)

of the Executive Order, prohibits the

facilitation by a U.S. person of the

exportation or reexportation of goods,

technology or services to or from Sudan.

Section 538.207 of the Regulations,

implementing section 2(d) of the

Executive Order, prohibits the

performance by any U.S. person of any

contract, including a financing contract,

in support of an industrial, commercial,

public utility, or governmental project

in Sudan. Section 538.208 of the

Regulations, implementing section 2(e)

of the Executive Order, prohibits the

grant or extension of credits or loans by

any U.S. person to the Government of

Sudan. Section 538.209 of the

Regulations, implementing section 2(f)

of the Executive Order, prohibits

transactions relating to the

transportation of cargo to or from

Sudan. Pursuant to section 3 of the

Executive Order, § 538.211 of the

Regulations exempts certain

transactions from the prohibitions of the

Executive Order and Regulations.

Transactions otherwise prohibited

under this part but found to be

consistent with U.S. policy may be

authorized by a general license

contained in subpart E or by a specific

license issued pursuant to the

procedures described in subpart D of

part 501 of 31 CFR chapter V. Penalties

for violations of the Regulations are

described in subpart G of the

Regulations.

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
35810 Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations

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 Regulations are being issued

without prior notice and public

comment procedure pursuant to the

APA. Pursuant to the Paperwork

Reduction Act of 1995 (44 U.S.C. 3507),

the collections of information contained

in the Regulations have been submitted

to and approved by the Office of

Management and Budget (‘‘OMB’’)

pending public comment and has been

assigned control number 1505–0169. 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.

Other collections of information

related to the Regulations are contained

in part 501 of this chapter (the

‘‘Reporting and Procedures

Regulations’’). Pursuant to the

Paperwork Reduction Act of 1995 (44

U.S.C. 3507), the collections of

information in part 501 have been

approved by the Office of Management

and Budget (‘‘OMB’’) under control

number 1505–1604.

The new collections of information in

the Regulations are contained in

§§ 538.506 and 538.521. Section

538.506(d) imposes a reporting

requirement in lieu of specific licensing

for performance of certain trade

transactions pursuant to contracts

entered into prior to November 4, 1997.

This information will be used to

determine whether persons subject to

the Regulations are in compliance with

the applicable requirements, and to

determine whether and to what extent

civil penalty or other enforcement

action is appropriate.

Section 538.521 requires

nongovernmental organizations

involved in humanitarian or religious

activities in Sudan to obtain a

registration number to engage in

transactions otherwise prohibited by the

Regulations. This information will be

used to register applicants as

nongovernmental organizations and to

determine whether persons subject to

the Regulations are in compliance with

the applicable requirements.

The Regulations do not provide for

confidential treatment of reports

submitted pursuant to §§ 538.506 and

538.521. However, it is the policy of the

Office of Foreign Assets Control to

protect the confidentiality of

information in appropriate cases

pursuant to the exemptions from

disclosure provided under the Freedom

of Information Act (5 U.S.C. 552) and

the Privacy Act (5 U.S.C. 552a).

The likely respondents and record

keepers are humanitarian organizations,

business organizations, and financial

institutions.

The estimated total annual reporting

and/or recordkeeping burden: 100

hours.

The estimated annual burden per

respondent/record keeper varies from 1–

3 hours, depending on individual

circumstances, with and estimated

average of 2 hours.

Estimated number of respondents

and/or record keepers: 50.

Estimated annual frequency of

responses: 1.

Comments are invited on: (a) whether

this collection of information is

necessary for the proper performance of

the functions of the agency, including

whether the information has practical

utility; (b) the accuracy of the agency’s

estimate of the burden of the collection

of information; (c) ways to enhance the

quality, utility, and clarity of the

information to be collected; (d) ways to

minimize the burden of the collection of

information on respondents, including

through the use of automated collection

techniques or other forms of information

technology; and (e) estimated capital or

start–up costs and costs of operation

maintenance, and purchase of services

to provide information.

Comments concerning the above

information, the accuracy of estimated

average burden, and suggestions for

reducing this burden should be directed

to the Office of Management and

Budget, Paperwork Reduction Project,

control number 1505–0169,

Washington, DC 20503, with a copy to

the Office of Foreign Assets Control,

U.S. Department of the Treasury, 1500

Pennsylvania Ave., NW–Annex,

Washington, DC 20220. Any such

comments should be submitted not later

than August 31, 1998. Comments on

aspects of the Regulations other than

those involving collections of

information should not be sent to the

OMB.

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.

For the reasons set forth in the

preamble, 31 CFR part 538 is added to

read as follows:

PART 538—SUDANESE SANCTIONS

REGULATIONS

Subpart A—Relation of This Part to Other

Laws and Regulations

Sec.

538.101 Relation of this part to other laws

and regulations.

Subpart B—Prohibitions

538.201 Prohibited transactions involving

blocked property.

538.202 Effect of transfers violating the

provisions of this part.

538.203 Holding of funds in interest–bearing

accounts; investment and reinvestment.

538.204 Prohibited importation of goods or

services from Sudan.

538.205 Prohibited exportation and

reexportation of goods, technology, or

services to Sudan.

538.206 Prohibited facilitation.

538.207 Prohibited performance of contracts.

538.208 Prohibited grant or extension of

credits or loans to the Government of

Sudan.

538.209 Prohibited transportation–related

transactions involving Sudan.

538.210 Evasions; attempts; conspiracies.

538.211 Exempt transactions.

Subpart C—General Definitions

538.301 Blocked account; blocked property.

538.302 Effective date.

538.303 Entity.

538.304 General license.

538.305 Government of Sudan.

538.306 Information and informational

materials.

538.307 Interest.

538.308 License.

538.309 Person.

538.310 Property; property interest.

538.311 Specific license.

538.312 Sudanese origin.

538.313 Transfer.

538.314 United States.

538.315 United States person; U.S. person.

538.316 U.S. financial institution.

Subpart D—Interpretations

538.401 Reference to amended sections.

538.402 Effect of amendment.

538.403 Termination and acquisition of an

interest in blocked property.

538.404 Setoffs prohibited.

538.405 Transactions incidental to a licensed

transaction.

538.406 Exportation of services; performance

of service contracts; legal services.

538.407 Facilitation by a United States

person.

538.408 Offshore transactions.

538.409 Transshipments through the United

States prohibited.

538.410 Imports of Sudanese goods from

third countries; transshipments.

538.411 Exports to third countries;

transshipments.

538.412 Operation of accounts.

538.413 Funds transfers.

538.414 Loans or extensions of credit.

538.415 Payments involving Sudan.

538.416 Payments from blocked accounts to

U.S. exporters and for other obligations

prohibited.
Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations 35811

Subpart E—Licenses, Authorizations, and

Statements of Licensing Policy

538.501 Effect of license or authorization.

538.502 Exclusion from licenses and

authorizations.

538.503 Payments and transfers to blocked

accounts in U.S. financial institutions.

538.504 Entries in certain accounts for

normal service charges authorized.

538.505 Provision of certain legal services to

the Government of Sudan, persons in

Sudan, or benefitting Sudan.

538.506 30–day delayed effective date for

pre–November 4, 1997 trade contracts

involving Sudan.

538.507 Reexports by non–U.S. persons.

538.508 Certain payments by the Government

of Sudan of obligations to persons within

the United States authorized.

538.509 Certain services relating to

participation in various events

authorized.

538.510 Importation and exportation of

certain gifts authorized.

538.511 Accompanied baggage authorized.

538.512 Transactions related to

telecommunications authorized.

538.513 Transactions related to mail

authorized.

538.514 Certain transactions related to

patents, trademarks and copyrights

authorized.

538.515 Certain imports for diplomatic or

official personnel authorized.

538.516 Diplomatic pouches.

538.517 Allowable payments for overflights

of Sudanese airspace.

538.518 Household goods and personal

effects.

538.519 Aircraft and maritime safety.

538.520 Extensions or renewals of loans and

credits.

538.521 Registration of nongovernmental

organizations.

538.522 Transactions related to U.S. citizens

residing in Sudan.

Subpart F—Reports

538.601 Records and reports.

Subpart G—Penalties

538.701 Penalties.

538.702 Prepenalty notice.

538.703 Response to prepenalty notice;

informal settlement.

538.704 Penalty imposition or withdrawal.

538.705 Administrative collection; referral to

United States Department of Justice.

Subpart H—Procedures

538.801 Procedures.

538.802 Delegation by the Secretary of the

Treasury.

Subpart I—Paperwork Reduction Act

538.901 Paperwork Reduction Act notice.

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

50 U.S.C. 1601–1651, 1701–1706; E.O. 13067,

62 FR 59989, 3 CFR, 1997 Comp., p. 230.

Subpart A—Relation of This Part to

Other Laws andRegulations

§ 538.101 Relation of this part to other

laws and regulations.

(a) This part is separate from, and

independent of, the other parts of this

chapter with the exception of part 501

of this chapter, the recordkeeping and

reporting requirements and license

application and other procedures of

which apply to this part. 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. No license or authorization

contained in or issued pursuant to any

other provision of law or regulation

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

§ 538.201 Prohibited transactions

involving blocked property.

(a) Except as authorized by

regulations, orders, directives, rulings,

instructions, licenses, or otherwise, no

property or interests in property of the

Government of Sudan, that are in the

United States, that hereafter come

within the United States, or that are or

hereafter come within the possession or

control of U.S. persons, including their

overseas branches, may be transferred,

paid, exported, withdrawn or otherwise

dealt in.

(b) Unless otherwise authorized by

this part or by a specific license

expressly referring to this section, the

transfer (including the transfer on the

books of any issuer or agent thereof),

disposition, transportation, importation,

exportation, or withdrawal of, or the

endorsement or guaranty of signatures

on, or otherwise dealing in any security

(or evidence thereof) registered or

inscribed in the name of the

Government of Sudan, and held within

the possession or control of a U.S.

person is prohibited, irrespective of the

fact that at any time (either prior to, on,

or subsequent to the effective date) the

registered or inscribed owner thereof

may have, or appears to have, assigned,

transferred, or otherwise disposed of

any such security.

(c) When a transaction results in the

blocking of funds at a financial

institution pursuant to this section and

a party to the transaction believes the

funds have been blocked due to

mistaken identity, that party may seek

to have such funds unblocked pursuant

to the administrative procedures set

forth in § 501.806 of this chapter.

§ 538.202 Effect of transfers violating the

provisions of this part.

(a) Any transfer after the effective

date, which is in violation of any

provision of this part or of any

regulation, order, directive, ruling,

instruction, license, or other

authorization hereunder and involves

any property or interest in property

blocked pursuant to § 538.201 is null

and void and shall not be the basis for

the assertion or recognition of any

interest in or right, remedy, power or

privilege with respect to such property

or property interests.

(b) No transfer before the effective

date shall be the basis for the assertion

or recognition of any right, remedy,

power, or privilege with respect to, or

interest in, any property or interest in

property blocked pursuant to § 538.201,

unless the person with whom such

property is held or maintained, prior to

such date, had written notice of the

transfer or by any written evidence had

recognized such transfer.

(c) Unless otherwise provided, an

appropriate license or other

authorization issued by or pursuant to

the direction or authorization of the

Director of the Office of Foreign Assets

Control before, during, or after a transfer

shall validate such transfer or render it

enforceable to the same extent that it

would be valid or enforceable but for

the provisions of the International

Emergency Economic Powers Act, this

part, and any regulation, order,

directive, ruling, instruction, or license

issued hereunder.

(d) Transfers of property which

otherwise would be null and void or

unenforceable by virtue of the

provisions of this section shall not be

deemed to be null and void or

unenforceable as to any person with

whom such property was held or

maintained (and as to such person only)

in cases in which such person is able to

establish to the satisfaction of the

Director of the Office of Foreign Assets

Control each of the following:

(1) Such transfer did not represent a

willful violation of the provisions of this

part by the person with whom such

property was held or maintained;

(2) The person with whom such

property was held or maintained did not

have reasonable cause to know or

suspect, in view of all the facts and

circumstances known or available to

such person, that such transfer required
35812 Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations

a license or authorization by or pursuant

to this part and was not so licensed or

authorized, or if a license or

authorization did purport to cover the

transfer, that such license or

authorization had been obtained by

misrepresentation of a third party or the

withholding of material facts or was

otherwise fraudulently obtained; and

(3) The person with whom such

property was held or maintained filed

with the Office of Foreign Assets

Control a report setting forth in full the

circumstances relating to such transfer

promptly upon discovery that:

(i) Such transfer was in violation of

the provisions of this part or any

regulation, ruling, instruction, license,

or other direction or authorization

hereunder; or

(ii) Such transfer was not licensed or

authorized by the Director of the Office

of Foreign Assets Control; or

(iii) If a license did purport to cover

the transfer, such license had been

obtained by misrepresentation of a third

party or the withholding of material

facts or was otherwise fraudulently

obtained.

Note to paragraph (d): The filing of a

report in accordance with the provisions of

paragraph (d)(3) of this section shall not be

deemed evidence that the terms of

paragraphs (d)(1) and (2) of this section have

been satisfied.

(e) Unless licensed or authorized

pursuant to this part, any attachment,

judgment, decree, lien, execution,

garnishment, or other judicial process is

null and void with respect to any

property or interest in property blocked

pursuant to § 538.201.

§ 538.203 Holding of funds in interest–

bearing accounts; investment and

reinvestment.

(a) Except as provided in paragraphs

(c) or (d) of this section, or as otherwise

directed by the Office of Foreign Assets

Control, any U.S. person holding funds,

such as currency, bank deposits, or

liquidated financial obligations, subject

to § 538.201(a) shall hold or place such

funds in a blocked interest–bearing

account located in the United States.

(b)(1) For purposes of this section, the

term blocked interest–bearing account

means a blocked account:

(i) In a federally–insured U.S. bank,

thrift institution, or credit union,

provided the funds are earning interest

at rates which are commercially

reasonable; or

(ii) With a broker or dealer registered

with the Securities and Exchange

Commission under the Securities

Exchange Act of 1934, provided the

funds are invested in a money market

fund or in U.S. Treasury Bills.

(2) For purposes of this section, a rate

is commercially reasonable if it is the

rate currently offered to other depositors

on deposits or instruments of

comparable size and maturity.

(3) Funds held or placed in a blocked

account pursuant to this paragraph (b)

may not be invested in instruments the

maturity of which exceeds 180 days. If

interest is credited to a separate blocked

account or sub–account, the name of the

account party on each account must be

the same.

(c) Blocked funds held in instruments

the maturity of which exceeds 180 days

at the time the funds become subject to

§ 538.201 may continue to be held until

maturity in the original instrument,

provided any interest, earnings, or other

proceeds derived therefrom are paid

into a blocked interest–bearing account

in accordance with paragraph (b) or (d)

of this section.

(d) Blocked funds held in accounts or

instruments outside the United States at

the time the funds become subject to

§ 538.201 may continue to be held in the

same type of accounts or instruments,

provided the funds earn interest at rates

which are commercially reasonable.

(e) This section does not create an

affirmative obligation for the holder of

blocked tangible property, such as

chattels or real estate, or of other

blocked property, such as debt or equity

securities, to sell or liquidate such

property at the time the property

becomes subject to § 538.201. However,

the Office of Foreign Assets Control may

issue licenses permitting or directing

such sales in appropriate cases.

(f) Funds subject to this section may

not be held, invested, or reinvested in

a manner which provides immediate

financial or economic benefit or access

to the Government of Sudan or its

entities, nor may their holder cooperate

in or facilitate the pledging or other

attempted use as collateral of blocked

funds or other assets.

§ 538.204 Prohibited importation of goods

or services from Sudan.

Except as otherwise authorized, the

importation into the United States,

directly or indirectly, of any goods or

services of Sudanese origin, other than

information or informational materials,

is prohibited.

§ 538.205 Prohibited exportation and

reexportation of goods, technology, or

services to Sudan.

Except as otherwise authorized, the

exportation or reexportation, directly or

indirectly, to Sudan of any goods,

technology (including technical data,

software, or other information) or

services from the United States or by a

United States person, wherever located,

or requiring the issuance of a license by

a Federal agency is prohibited, except

for information or informational

materials or donations of articles

intended to relieve human suffering,

such as food, clothing, and medicine.

§ 538.206 Prohibited facilitation.

Except as otherwise authorized, the

facilitation by a United States person,

including but not limited to brokering

activities, of the exportation or

reexportation of goods, technology, or

services from Sudan to any destination,

or to Sudan from any location, is

prohibited.

§ 538.207 Prohibited performance of

contracts.

Except as otherwise authorized, the

performance by any United States

person of any contract, including a

financing contract, in support of an

industrial, commercial, public utility, or

governmental project in Sudan is

prohibited.

§ 538.208 Prohibited grant or extension of

credits or loans to the Government of

Sudan.

Except as otherwise authorized, the

grant or extension of credits or loans by

any United States person to the

Government of Sudan is prohibited.

§ 538.209 Prohibited transportation–

related transactions involving Sudan.

Except as otherwise authorized, the

following are prohibited:

(a) Any transaction by a U.S. person

relating to transportation of cargo to or

from Sudan;

(b) The provision of transportation of

cargo to or from the United States by

any Sudanese person or any vessel or

aircraft of Sudanese registration; or

(c) The sale in the United States by

any person holding authority under 49

U.S.C. subtitle VII of any transportation

of cargo by air that includes any stop in

Sudan.

§ 538.210 Evasions; attempts;

conspiracies.

Any transaction by any 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. Any

conspiracy formed for the purpose of

engaging in a transaction prohibited by

this part is prohibited.

§ 538.211 Exempt transactions.

(a) Personal Communications. The

prohibitions contained in this part do

not apply to any postal, telegraphic,

telephonic, or other personal
Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations 35813

communication, which does not involve

the transfer of anything of value.

(b) Information and informational

materials. (1) The importation from any

country and the exportation to any

country of information or informational

materials as defined in § 538.306,

whether commercial or otherwise,

regardless of format or medium of

transmission, are exempt from the

prohibitions and regulations of this part.

(2) This section does not authorize

transactions related to information and

informational materials not fully created

and in existence at the date of the

transactions, or to the substantive or

artistic alteration or enhancement of

informational materials, or to the

provision of marketing and business

consulting services. Such prohibited

transactions include, without limitation,

payment of advances for informational

materials not yet created and completed,

provision of services to market, produce

or co–produce, create or assist in the

creation of information and

informational materials, and payment of

royalties to the Government of Sudan or

a person in Sudan with respect to

income received for enhancements or

alterations made by U.S. persons to

information or informational materials

imported from the Government of

Sudan or a person in Sudan.

(3) This section does not authorize

transactions incident to the exportation

of software subject to the Export

Administration Regulations, 15 CFR

parts 730–774, or to the exportation of

goods, technology or software for use in

the transmission of any data. The

exportation of such items to the

Government of Sudan or to Sudan is

prohibited, as provided in §§ 538.201

and 538.205.

(c) Travel. The prohibitions contained

in this part do not apply to transactions

ordinarily incident to travel to or from

any country, including exportation or

importation of accompanied baggage for

personal use, maintenance within any

country including payment of living

expenses and acquisition of goods or

services for personal use, and

arrangement or facilitation of such

travel including non–scheduled air, sea,

or land voyages.

(d) Official Business. The prohibitions

contained in this part do not apply to

transactions for the conduct of the

official business of the Federal

Government or the United Nations by

employees thereof.

(e) Journalistic activity. The

prohibitions contained in this part do

not apply to transactions in Sudan for

journalistic activity by persons regularly

employed in such capacity by a news–

gathering organization.

Subpart C—General Definitions

§ 538.301 Blocked account; blocked

property.

The terms blocked account and

blocked property shall mean any

account or property subject to the

prohibition in § 538.201 held in the

name of the Government of Sudan or in

which the Government of Sudan has an

interest, and with respect to which

payments, transfers, exportations,

withdrawals, or other dealings may not

be made or effected except pursuant to

an authorization or license from the

Office of Foreign Assets Control

authorizing such action.

§ 538.302 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. EST,

November 4, 1997.

§ 538.303 Entity.

The term entity means a partnership,

association, trust, joint venture,

corporation, or other organization.

§ 538.304 General license.

The term general license means any

license or authorization the terms of

which are set forth in this part.

§ 538.305 Government of Sudan.

The term Government of Sudan

includes:

(a) The state and the Government of

Sudan, as well as any political

subdivision, agency, or instrumentality

thereof, including the Central Bank of

Sudan;

(b) Any entity owned or controlled by

the foregoing;

(c) Any person to the extent that such

person is, or has been, or to the extent

that there is reasonable cause to believe

that such person is, or has been, since

the effective date, acting or purporting

to act directly or indirectly on behalf of

any of the foregoing; and

(d) Any other person determined by

the Director of the Office of Foreign

Assets Control to be included within

paragraphs (a) through (c) of this

section.

Note to § 538.305: Please refer to the

appendices at the end of this chapter for

listings of persons determined to fall within

this definition who have been designated

pursuant to this part. Section 501.807 of this

chapter sets forth the procedures to be

followed by persons seeking administrative

reconsideration of their designation, or who

wish to assert that the circumstances

resulting in the designation are no longer

applicable.

§ 538.306 Information and informational

materials.

(a)(1) For purposes of this part, the

term information and informational

materials means publications, films,

posters, phonograph records,

photographs, microfilms, microfiche,

tapes, compact disks, CD ROMs,

artworks, and news wire feeds, and

other information and informational

materials.

(2) To be considered informational

materials, artworks must be classified

under chapter subheading 9701, 9702,

or 9703 of the Harmonized Tariff

Schedule of the United States.

(b) The term information and

informational materials with respect to

U.S. exports does not include items:

(1) That were, as of April 30, 1994, or

that thereafter become, controlled for

export pursuant to section 5 of the

Export Administration Act of 1979, 50

U.S.C. App. 2401–2420 (the ‘‘EAA’’), or

section 6 of the EAA to the extent that

such controls promote nonproliferation

or antiterrorism policies of the United

States.

(2) With respect to which acts are

prohibited by 18 U.S.C. chapter 37.

§ 538.307 Interest.

Except as otherwise provided in this

part, the term interest when used with

respect to property (e.g., ‘‘ an interest in

property’’) means an interest of any

nature whatsoever, direct or indirect.

§ 538.308 License.

Except as otherwise specified, the

term license means any license or

authorization contained in or issued

pursuant to this part.

§ 538.309 Person.

The term person means an individual

or entity.

§ 538.310 Property; property interest.

The terms property and property

interest include, but are not limited to,

money, checks, drafts, bullion, bank

deposits, savings accounts, debts,

indebtedness, obligations, notes,

guarantees, debentures, stocks, bonds,

coupons, any other financial

instruments, bankers acceptances,

mortgages, pledges, liens or other rights

in the nature of security, warehouse

receipts, bills of lading, trust receipts,

bills of sale, any other evidences of title,

ownership or indebtedness, letters of

credit and any documents relating to

any rights or obligations thereunder,

powers of attorney, goods, wares,

merchandise, chattels, stocks on hand,

ships, goods on ships, real estate

mortgages, deeds of trust, vendors’ sales

agreements, land contracts, leaseholds,
35814 Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations

ground rents, real estate and any other

interest therein, options, negotiable

instruments, trade acceptances,

royalties, book accounts, accounts

payable, judgments, patents, trademarks

or copyrights, insurance policies, safe

deposit boxes and their contents,

annuities, pooling agreements, services

of any nature whatsoever, contracts of

any nature whatsoever, and any other

property, real, personal, or mixed,

tangible or intangible, or interest or

interests therein, present, future or

contingent.

§ 538.311 Specific license.

The term specific license means any

license or authorization not set forth in

this part but issued pursuant to this

part.

§ 538.312 Sudanese origin.

The term goods or services of

Sudanese origin includes:

(a) Goods produced, manufactured,

grown, extracted, or processed within

Sudan;

(b) Goods which have entered into

Sudanese commerce;

(c) Services performed in Sudan or by

a person ordinarily resident in Sudan

who is acting as an agent, employee, or

contractor of the Government of Sudan

or of a business entity located in Sudan.

Services of Sudanese origin are not

imported into the United States when

such services are provided in the United

States by a Sudanese national employed

or resident in the United States.

(d) The term services of Sudanese

origin does not include:

(1) Diplomatic and consular services

performed by or on behalf of the

Government of Sudan;

(2) Diplomatic and consular services

performed by or on behalf of the

Government of the United States.

§ 538.313 Transfer.

The term transfer means any actual or

purported act or transaction, whether or

not evidenced by writing, and whether

or not done or performed within the

United States, the purpose, intent, or

effect of which is to create, surrender,

release, convey, transfer, or alter,

directly or indirectly, any right, remedy,

power, privilege, or interest with respect

to any property and, without limitation

upon the foregoing, shall include the

making, execution, or delivery of any

assignment, power, conveyance, check,

declaration, deed, deed of trust, power

of attorney, power of appointment, bill

of sale, mortgage, receipt, agreement,

contract, certificate, gift, sale, affidavit,

or statement; the making of any

payment; the setting off of any

obligation or credit; the appointment of

any agent, trustee, or fiduciary; the

creation or transfer of any lien; the

issuance, docketing, filing, or levy of or

under any judgment, decree,

attachment, injunction, execution, or

other judicial or administrative process

or order, or the service of any

garnishment; the acquisition of any

interest of any nature whatsoever by

reason of a judgment or decree of any

foreign country; the fulfillment of any

condition; the exercise of any power of

appointment, power of attorney, or

other power; or the acquisition,

disposition, transportation, importation,

exportation, or withdrawal of any

security.

§ 538.314 United States.

The term United States means the

United States, its territories and

possessions, and all areas under the

jurisdiction or authority thereof.

§ 538.315 United States person; U.S.

person.

The term United States person or U.S.

person means any United States citizen,

permanent resident alien, entity

organized under the laws of the United

States or any jurisdiction within the

United States (including foreign

branches), or any person in the United

States.

§ 538.316 U.S. financial institution.

The term U.S. financial institution

means any U.S. entity (including foreign

branches) that is engaged in the

business of accepting deposits, making,

granting, transferring, holding, or

brokering loans or credits, or purchasing

or selling foreign exchange, securities,

commodity futures or options, or

procuring purchasers and sellers

thereof, as principal or agent; including,

but not limited to, depository

institutions, banks, savings banks, trust

companies, securities brokers and

dealers, commodity futures and options

brokers and dealers, forward contract

and foreign exchange merchants,

securities and commodities exchanges,

clearing corporations, investment

companies, employee benefit plans, and

U.S. holding companies, U.S. affiliates,

or U.S. subsidiaries of any of the

foregoing. This term includes those

branches, offices and agencies of foreign

financial institutions which are located

in the United States, but not such

institutions’ foreign branches, offices, or

agencies.

Subpart D—Interpretations

§ 538.401 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.

§ 538.402 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, affect any act done or omitted

to be done, or any civil 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

continue and may be enforced as if such

amendment, modification, or revocation

had not been made.

§ 538.403 Termination and acquisition of

an interest in blocked property.

(a) Whenever a transaction licensed or

authorized by or pursuant to this part

results in the transfer of property

(including any property interest) away

from the Government of Sudan, such

property shall no longer be deemed to

be property in which the Government of

Sudan has or has had an interest unless

there exists in the property another

interest of the Government of Sudan, the

transfer of which has not been effected

pursuant to license or other

authorization.

(b) Unless otherwise specifically

provided in a license or authorization

issued pursuant to this part, if property

(including any property interest) is

transferred or attempted to be

transferred to the Government of Sudan,

such property shall be deemed to be

property in which there exists an

interest of the Government of Sudan.

§ 538.404 Setoffs prohibited.

A setoff against blocked property

(including a blocked account), whether

by a U.S. bank or other U.S. person, is

a prohibited transfer under § 538.201 if

effected after the effective date.

§ 538.405 Transactions incidental to a

licensed transaction.

Any transaction ordinarily incident to

a licensed transaction and necessary to

give effect thereto is also authorized,

except a transaction by an unlicensed

Sudanese governmental entity or

involving a debit to a blocked account

or a transfer of blocked property not

explicitly authorized within the terms of

the license.
Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations 35815

§ 538.406 Exportation of services;

performance of service contracts; legal

services.

(a) The prohibition on the exportation

of services contained in § 538.205

applies to services performed on behalf

of the Government of Sudan, or where

the benefit of such services is otherwise

received in Sudan, when such services

are performed:

(1) In the United States;

(2) By a U.S. person, wherever

located;

(3) By an entity located in the United

States, including its overseas branches;

or

(4) Outside the United States by an

individual U.S. person ordinarily

resident in the United States.

(b) The benefit of services performed

anywhere in the world on behalf of the

Government of Sudan, including

services performed for a controlled

entity or agent of the Government of

Sudan, is presumed to be received in

Sudan.

(c) The prohibitions contained in

§§ 538.201 and 538.207 apply to

services performed by U.S. persons,

wherever located:

(1) On behalf of the Government of

Sudan;

(2) With respect to property interests

of the Government of Sudan; or

(3) In support of an industrial,

commercial, public utility or

governmental project in Sudan.

(d) Example: U.S. persons may not,

without specific authorization from the

Office of Foreign Assets Control,

represent an individual or entity with

respect to contract negotiations, contract

performance, commercial arbitration, or

other business dealings with the

Government of Sudan. See § 538.505 on

licensing policy with regard to the

provision of certain legal services.

§ 538.407 Facilitation by a United States

person.

(a) The prohibition contained in

§ 538.206 against facilitation by a

United States person of the exportation

or reexportation of goods, technology, or

services between Sudan and any

destination (including the United

States) bars any unlicensed action by a

U.S. person that assists or supports

trading activity with Sudan by any

person. Facilitation of a trade or

financial transaction that could be

engaged in directly by a U.S. person or

from the United States consistent with

the prohibitions, general licenses and

exemptions contained in this part is not

prohibited. Activity of a purely clerical

or reporting nature that does not further

trade or financial transactions with

Sudan or the Government of Sudan is

not considered prohibited facilitation.

For example, reporting on the results of

a subsidiary’s trade with Sudan is not

prohibited, while financing or insuring

that trade or warranting the quality of

goods sold by a subsidiary to the

Government of Sudan constitutes

prohibited facilitation.

(b) To avoid potential liability for U.S.

persons under this part, a U.S. parent

corporation must ensure that its foreign

subsidiaries act independently of any

U.S. person with respect to all

transactions and activities relating to the

exportation or reexportation of goods,

technology, or services between Sudan

and any other location including but not

limited to business and legal planning;

decision making; designing, ordering or

transporting goods; and financial,

insurance, and other risks. See § 538.505

with respect to exports of, inter alia,

certain legal services benefitting Sudan.

(c) No U.S. person may change its

policies or operating procedures, or

those of a foreign affiliate or subsidiary,

in order to enable a foreign entity

owned or controlled by U.S. persons to

enter into a transaction that could not be

entered into directly by a U.S. person or

from the United States pursuant to this

part.

(d) No U.S. person may refer to a

foreign person purchase orders, requests

for bids, or similar business

opportunities involving Sudan or the

Government of Sudan to which the

United States person could not directly

respond as a result of the prohibitions

contained in this part.

§ 538.408 Offshore transactions.

(a) The prohibitions contained in

§§ 538.201 and 538.206 apply to

transactions by any U.S. person in a

location outside the United States with

respect to property in which the U.S.

person knows, or has reason to know,

the Government of Sudan has or has had

an interest since the effective date, or

with respect to goods, technology or

services which the U.S. person knows,

or has reason to know, are of Sudanese

origin or owned or controlled by the

Government of Sudan.

(b) Prohibited transactions include,

but are not limited to, importation into

or exportation from locations outside

the United States of, or purchasing,

selling, financing, swapping, insuring,

transporting, lifting, storing,

incorporating, transforming, brokering,

or otherwise dealing in, within such

locations, goods, technology or services

of Sudanese origin.

(c) Examples. (1) A U.S. person may

not, within the United States or abroad,

purchase, sell, finance, insure,

transport, act as a broker for the sale or

transport of, or otherwise deal in,

Sudanese crude oil or sugar refined in

Sudan.

(2) A U.S. person may not, within the

United States or abroad, conduct

transactions of any nature whatsoever

with an entity that the U.S. person

knows or has reason to know is the

Government of Sudan, including a

controlled entity or agent of that

Government, or which benefits or

supports the business of an entity

located in Sudan, unless the entity is

licensed by the Office of Foreign Assets

Control to conduct such transactions

with U.S. persons or the transaction is

generally licensed in, or exempted from

the prohibitions of, this part.

§ 538.409 Transshipments through the

United States prohibited.

(a) The prohibitions in § 538.205

apply to the importation into the United

States, for transshipment or transit, of

goods which are intended or destined

for Sudan, or an entity operated from

Sudan.

(b) The prohibitions in § 538.204

apply to the importation into the United

States, for transshipment or transit, of

goods of Sudanese origin which are

intended or destined for third countries.

(c) Goods in which the Government of

Sudan has an interest which are

imported into or transshipped through

the United States are blocked pursuant

to § 538.201.

§ 538.410 Imports of Sudanese goods from

third countries; transshipments.

(a) Importation into the United States

from third countries of goods containing

raw materials or components of

Sudanese origin is not prohibited if

those raw materials or components have

been incorporated into manufactured

products or otherwise substantially

transformed in a third country.

(b) Importation into the United States

of goods of Sudanese origin that have

been transshipped through a third

country without being incorporated into

manufactured products or otherwise

substantially transformed in a third

country are prohibited.

§ 538.411 Exports to third countries;

transshipments.

Exportation of goods or technology

(including technical data, software,

information not exempted from the

prohibition of this part pursuant to

§ 538.211, or technical assistance) from

the United States to third countries is

prohibited if the exporter knows, or has

reason to know, that the goods or

technology are intended for

transshipment to Sudan (including

passage through, or storage in,

intermediate destinations). The
35816 Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations

exportation of goods or technology

intended specifically for incorporation

or substantial transformation into a

third–country product is also prohibited

if the particular product is to be used in

Sudan, is being specifically

manufactured to fill a Sudanese order,

or if the manufacturer’s sales of the

particular product are predominantly to

Sudan.

§ 538.412 Operation of accounts.

The operation of an account in a

financial institution for a private

Sudanese person does not constitute the

exportation of a service to Sudan;

however, such operation may not

include the execution of transactions in

support of transactions or activities

prohibited by subpart B of this part.

§ 538.413 Funds transfers.

The transfer of funds to Sudan from

the United States does not constitute an

exportation of services pursuant to

§ 538.205.

§ 538.414 Loans or extensions of credit.

(a) The prohibition in § 538.205

applies to loans or extensions of credit

to a person in Sudan, including

overdraft protection on checking

accounts, and the unlicensed renewal or

rescheduling of credits or loans in

existence as of the effective date,

whether by affirmative action or

operation of law.

(b) The prohibition in § 538.205

applies to financial services including

loans or credits extended in any

currency.

§ 538.415 Payments involving Sudan.

Before a United States financial

institution initiates a payment subject to

the prohibitions contained in this part

on behalf of any customer, or credits a

transfer subject to such prohibitions to

the account on its books of the ultimate

beneficiary, the U.S. financial

institution must determine that the

transfer is not prohibited by this part.

§ 538.416 Payments from blocked

accounts to U.S. exporters and for other

obligations prohibited.

No debits may be made to a blocked

account to pay obligations to U.S.

persons or other persons, including

payment for goods, technology or

services exported prior to the effective

date, except as authorized pursuant to

this part.

Subpart E—Licenses, Authorizations,

and Statements of Licensing Policy

§ 538.501 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, authorizes or validates 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.

§ 538.502 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.

§ 538.503 Payments and transfers to

blocked accounts in U.S. financial

institutions.

Any payment of funds or transfer of

credit in which the Government of

Sudan has any interest, that comes

within the possession or control of a

U.S. financial institution, must be

blocked in an account on the books of

that financial institution. A transfer of

funds or credit by a U.S. financial

institution between blocked accounts in

its branches or offices is authorized,

provided that no transfer is made from

an account within the United States to

an account held outside the United

States, and further provided that a

transfer from a blocked account may

only be made to another blocked

account held in the same name.

Note to § 538.503: Please refer to § 501.603

of this chapter for mandatory reporting

requirements regarding financial transfers.

See also § 538.203 concerning the obligation

to hold blocked funds in interest–bearing

accounts.

§ 538.504 Entries in certain accounts for

normal service charges authorized.

(a) U.S. financial institutions are

hereby authorized to debit any blocked

account with such U.S. financial

institution in payment or

reimbursement for normal service

charges owed to such U.S. financial

institution by the owner of such blocked

account.

(b) As used in this section, the term

normal service charge shall include

charges in payment or reimbursement

for interest due; cable, telegraph, or

telephone charges; postage costs;

custody fees; small adjustment charges

to correct bookkeeping errors; and, but

not by way of limitation, minimum

balance charges, notary and protest fees,

and charges for reference books,

photocopies, credit reports, transcripts

of statements, registered mail,

insurance, stationery and supplies, and

other similar items.

§ 538.505 Provision of certain legal

services to the Government of Sudan,

persons in Sudan, or benefitting Sudan.

(a) The provision to the Government

of Sudan, to a person in Sudan, or in

circumstances in which the benefit is

otherwise received in Sudan, of the

legal services set forth in paragraph (b)

of this section is authorized, provided

that all receipts of payment therefor

must be specifically licensed. The

provision of any other legal services as

interpreted in § 538.406 requires the

issuance of a specific license.

(b) Specific licenses may be issued, on

a case–by–case basis, authorizing

receipt, from unblocked sources, of

payment of professional fees and

reimbursement of incurred expenses for

the following legal services by U.S.

persons to the Government of Sudan or

to a person in Sudan:

(1) Provision of legal advice and

counseling to the Government of Sudan,

to a person in Sudan, or in

circumstances in which the benefit is

otherwise received in Sudan, on the

requirements of and compliance with

the laws of any jurisdiction within the

United States, provided that such advice

and counseling is not provided to
Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations 35817

facilitate transactions in violation of this

part;

(2) Representation of the Government

of Sudan or a person in Sudan when

named as a defendant in or otherwise

made a party to domestic U.S. legal,

arbitration, or administrative

proceedings;

(3) Initiation of domestic U.S. legal,

arbitration, or administrative

proceedings in defense of property

interests subject to U.S. jurisdiction of

the Government of Sudan, or of a person

in Sudan;

(4) Representation of the Government

of Sudan or a person in Sudan before

any federal agency with respect to the

imposition, administration, or

enforcement of U.S. sanctions against

Sudan; and

(5) Provision of legal services in any

other context in which prevailing U.S.

law requires access to legal counsel at

public expense.

(c) Enforcement of any lien, judgment,

arbitral award, decree, or other order

through execution, garnishment or other

judicial process purporting to transfer or

otherwise alter or affect a property

interest of the Government of Sudan is

prohibited unless specifically licensed

in accordance with § 538.202(e).

§ 538.506 30–day delayed effective date for

pre–November 4, 1997 trade contracts

involving Sudan.

(a) Pre–existing trade contracts. Trade

transactions required under a contract

entered into prior to November 4, 1997

(a ‘‘pre–existing trade contract’’),

otherwise prohibited by this part,

including the importation of goods or

services of Sudanese origin or the

exportation of goods, services, or

technology that was authorized under

applicable Federal regulations in force

immediately prior to November 4, 1997,

are authorized without specific

licensing by the Office of Foreign Assets

Control as follows:

(1) Exports or reexports are authorized

until 12:01 a.m. EST, December 4, 1997,

and non–financing activity by U.S.

persons incidental to the performance of

the pre–existing trade contract (such as

the provision of transportation or

insurance) is authorized through 12:01

a.m. EST, February 2, 1998, if the pre–

existing trade contract is for:

(i) The exportation of goods, services,

or technology from the United States or

a third country that was authorized

under applicable Federal regulations in

force immediately prior to November 4,

1997; or

(ii) The reexportation of goods or

technology that was authorized under

applicable Federal regulations in force

immediately prior to November 4, 1997.

(2) If the pre–existing trade contract is

for the importation of goods or services

of Sudanese origin or other trade

transactions relating to goods or services

of Sudanese origin or owned or

controlled by the Government of Sudan,

importations under the pre–existing

trade contract are authorized until 12:01

a.m. EST, December 4, 1997.

(3) For purposes of this section, goods

are considered to be exported upon final

loading aboard the exporting

conveyance in the country of export.

Goods are considered to be imported

upon arrival in the jurisdiction of the

country of importation.

(b)(1) Financing for pre–existing trade

contracts. In general, no financing

services prohibited by this part may be

performed after 12:01 a.m. EST,

November 4, 1997. However, letters of

credit and other financing agreements

with respect to the trade transactions

authorized in paragraph (a) of this

section may be performed according to

their terms, and may be extended or

renewed, except that:

(i) Any payment required to be made

to the Government of Sudan or any

person blocked pursuant to this part or

otherwise, including payments

authorized with respect to trade

transactions described in paragraph (a)

of this section, must be made into a

blocked account in the United States;

and

(ii) No payment may be made from a

blocked account unless authorized by a

specific license issued by the Office of

Foreign Assets Controls.

(2) Specific licenses may be issued by

the Office of Foreign Asset Controls on

a case–by–case basis to permit a U.S.

bank to debit a blocked account of the

Government of Sudan for funds held as

collateral under an irrevocable letter of

credit issued or confirmed by it, or a

letter of credit reimbursement

confirmed by it, for goods, services or

technology exported, or goods or

technology reexported, prior to 12:01

a.m. EST, December 4, 1997, directly or

indirectly to Sudan, or to third countries

for an entity operated from Sudan, or for

the benefit of the Government of Sudan.

The application for a license must:

(i) Present evidence satisfactory to the

Office of Foreign Asset Controls that the

exportation or reexportation occurred

prior to 12:01 a.m. EST, December 4,

1997; and

(ii) Include an explanation of the facts

and circumstances surrounding the

entry and execution of the export or

reexport transaction, including the

names and addresses of all Sudanese

participants in the transaction and all

Sudanese persons having an ownership

interest in the beneficiary of the letter of

credit.

(c) Blocked Government of Sudan

accounts. Nothing in this section

permits debits to a blocked account of

the Government of Sudan absent the

issuance of a specific license by Office

of Foreign Asset Controls authorizing

such a debit. The operation of an

account of the Government of Sudan in

a financial institution does not

constitute a trade transaction for

purposes of this section.

(d) Existence of contract. The

existence of a contract will be

determined with reference to the

principles contained in Article 2 of the

Uniform Commercial Code.

(e) Reporting requirement. Although a

specific license from Office of Foreign

Asset Controls is not required for any

transaction authorized in paragraph (a)

of this section, any U.S. person engaging

in a transaction described in paragraph

(a) of this section is required to report

such transaction immediately to the

Office of Foreign Asset Controls and

provide a description of the underlying

trade contract. Such reports should be

directed to the Office of Foreign Assets

Control, Attn: Compliance Programs

Division/Sudan Contracts, 1500

Pennsylvania Avenue, NW, Annex –

2nd Floor, Washington, DC 20220. Such

reports may be made by facsimile

transmission to 202/622–1657.

(f) Licensing and reporting provisions.

For provisions relating to applications

to the Office of Foreign Asset Controls

for specific licenses and reporting

requirements, see §§ 501.606 and

501.808 of this chapter.

§ 538.507 Reexports by non–U.S. persons.

(a) Goods, technology and services

subject to export license application

requirements under other United States

regulations. The reexportation to Sudan

or the Government of Sudan by a non–

U.S. person of any goods, technology or

services exported from the United

States, the exportation of which to

Sudan is subject to export or reexport

license application requirements is

authorized under this section provided

that, for reexportation of goods, the

goods:

(1) Have been incorporated into

another product outside the United

States and constitute 10 per cent or less

by value of that product exported from

a third country; or

(2) Have been substantially

transformed outside the United States.

Note to paragraph (a) of § 538.507: Goods,

technology and software of U.S. origin that

are subject to the Export Administration

Regulations (15 CFR parts 730–774) may

require specific authorization from the
35818 Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations

Department of Commerce, Bureau of Export

Administration, even though such goods

have been substantially transformed abroad.

(b) Goods, technology and services not

subject to export license application

requirements under other United States

regulations. The reexportation to Sudan

or the Government of Sudan by a non–

U.S. person of any goods, technology or

services of U.S. origin, the exportation

of which to Sudan is not subject to any

export license application requirements

under any other United States

regulations, is authorized under this

section. However, the reexportation by

non–U.S. persons of U.S.–origin goods,

technology or software classified as

EAR99 under the Export Administration

Regulations (15 CFR parts 730–774) may

require specific authorization from the

Department of Commerce, Bureau of

Export Administration.

§ 538.508 Certain payments by the

Government of Sudan of obligations to

persons within the United States

authorized.

Specific licenses may be issued on a

case–by–case basis to permit the transfer

of funds after the effective date by,

through, or to any U.S. financial

institution or other U.S. person not

blocked pursuant to this chapter, from

a non–blocked account outside of the

United States, solely for the purpose of

payment of obligations of the

Government of Sudan to persons or

accounts within the United States,

provided that the obligation arose prior

to the effective date, and the payment

requires no debit to a blocked account.

§ 538.509 Certain services relating to

participation in various events authorized.

The importation of Sudanese–origin

services into the United States is

authorized where such services are

performed in the United States by a

Sudanese national who enters the

United States on a visa issued by the

State Department for the purpose of

participating in a public conference,

performance, exhibition or similar

event, and such services are consistent

with that purpose.

§ 538.510 Importation and exportation of

certain gifts authorized.

The importation into the United

States of Sudanese–origin goods, and

the exportation from the United States

of goods, is authorized for goods sent as

gifts to persons provided that the value

of the gift is not more than $100; the

goods are of a type and in quantities

normally given as gifts between

individuals; and the goods are not

controlled for chemical and biological

weapons (CB), missile technology (MT),

national security (NS), or nuclear

proliferation (NP)(see Commerce

Control List, 15 CFR part 774 of the

Export Administration Regulations).

§ 538.511 Accompanied baggage

authorized.

(a) Persons entering the United States

directly or indirectly from Sudan are

authorized to import into the United

States Sudanese–origin accompanied

baggage normally incident to travel.

(b) Persons leaving the United States

for Sudan are authorized to export from

the United States accompanied baggage

normally incident to travel.

(c) For purposes of this section, the

term accompanied baggage normally

incident to travel includes only baggage

that:

(1) Accompanies the traveler on the

same aircraft, train, or vehicle;

(2) Includes only articles that are

necessary for personal use incident to

travel, are not intended for any other

person or for sale, and are not otherwise

prohibited from importation or

exportation under applicable United

States laws.

§ 538.512 Transactions related to

telecommunications authorized.

All transactions with respect to the

receipt and transmission of

telecommunications involving Sudan

are authorized. This section does not

authorize the provision to the

Government of Sudan or a person in

Sudan of telecommunications

equipment or technology.

§ 538.513 Transactions related to mail

authorized.

All transactions by U.S. persons,

including payment and transfers to

common carriers, incident to the receipt

or transmission of mail between the

United States and Sudan are authorized,

provided that mail is limited to personal

communications not involving a transfer

of anything of value.

§ 538.514 Certain transactions related to

patents, trademarks and copyrights

authorized.

(a) All of the following transactions in

connection with patent, trademark,

copyright or other intellectual property

protection in the United States or Sudan

are authorized:

(1) The filing and prosecution of any

application to obtain a patent,

trademark, copyright or other form of

intellectual property protection;

(2) The receipt of a patent, trademark,

copyright or other form of intellectual

property protection;

(3) The renewal or maintenance of a

patent, trademark, copyright or other

form of intellectual property protection;

and

(4) The filing and prosecution of

opposition or infringement proceedings

with respect to a patent, trademark,

copyright or other form of intellectual

property protection, or the entrance of a

defense to any such proceedings.

(b) This section authorizes the

payment of fees currently due to the

United States Government, or of the

reasonable and customary fees and

charges currently due to attorneys or

representatives within the United

States, in connection with the

transactions authorized in paragraph (a)

of this section. Payment effected

pursuant to the terms of this paragraph

may not be made from a blocked

account.

(c) This section authorizes the

payment of fees currently due to the

Government of Sudan, or of the

reasonable and customary fees and

charges currently due to attorneys or

representatives within Sudan, in

connection with the transactions

authorized in paragraph (a) of this

section.

(d) Nothing in this section affects

obligations under any other provision of

law.

§ 538.515 Certain imports for diplomatic or

official personnel authorized.

All transactions ordinarily incident to

the importation of any goods or services

into the United States destined for

official or personal use by the

diplomatic missions of the Government

of Sudan to the United States and to

international organizations located in

the United States are authorized,

provided that such goods or services are

not for resale, and unless such

importation is otherwise prohibited by

law.

§ 538.516 Diplomatic pouches.

All transactions in connection with

the importation into the United States

from Sudan, or the exportation from the

United States to Sudan, of diplomatic

pouches and their contents are

authorized.

§ 538.517 Allowable payments for

overflights of Sudanese airspace.

Payments to Sudan of charges for

services rendered by the Government of

Sudan in connection with the overflight

of Sudan or emergency landing in

Sudan of aircraft owned by a United

States person or registered in the United

States are authorized.

§ 538.518 Household goods and personal

effects.

(a) The exportation from the United

States to Sudan of household and

personal effects, including baggage and

articles for family use, of persons
Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations 35819

departing the United States to relocate

in Sudan is authorized provided the

articles included in such effects have

been actually used by such persons or

by family members accompanying them,

are not intended for any other person or

for sale, and are not otherwise

prohibited from exportation.

(b) The importation of Sudanese–

origin household and personal effects,

including baggage and articles for family

use, of persons arriving in the United

States is authorized; to qualify, articles

included in such effects must have been

actually used abroad by such persons or

by other family members arriving from

the same foreign household, must not be

intended for any other person or for

sale, and must not be otherwise

prohibited from importation.

§ 538.519 Aircraft and maritime safety.

Specific licenses may be issued on a

case–by–case basis for the exportation

and reexportation of goods, services,

and technology to insure the safety of

civil aviation and safe operation of

U.S.–origin commercial passenger

aircraft, and to ensure the safety of

ocean–going maritime traffic in

international waters.

§ 538.520 Extensions or renewals of loans

and credits.

(a) Specific licenses may be issued on

a case–by–case basis for rescheduling

loans or otherwise extending the

maturities of existing loans, and for

charging fees or interest at commercially

reasonable rates in connection

therewith, provided that no new funds

or credits are thereby transferred or

extended to Sudan or the Government of

Sudan.

(b) Specific licenses may be issued on

a case–by–case basis, at the request of

the account party, for the extension or

renewal of a letter of credit or a standby

letter of credit issued or confirmed by a

U.S. financial institution.

§ 538.521 Registration of

nongovernmental organizations.

(a) Registration numbers may be

issued on a case–by–case basis for the

registration of nongovernmental

organizations involved in humanitarian

or religious activities in Sudan,

authorizing transactions otherwise

prohibited by this part, including the

exportation of goods and services to

Sudan and the transfer of funds to and

from Sudan for the purpose of relieving

human suffering.

(b) Applications for registration must

include the name and address of the

organization’s headquarters; the name,

title, and telephone number of a person

to be contacted in connection with

registration pursuant to this section; the

organization’s local address in Sudan

and name if different; and a detailed

description of its humanitarian or

religious activities and projects in

Sudan. Applications should be

submitted to the Compliance Programs

Division, Office of Foreign Assets

Control, U.S. Department of the

Treasury, 1500 Pennsylvania Avenue,

NW, Annex, Washington, DC 20220.

(c) Applicants conducting

transactions pursuant to this section

should reference the registration

number on all funds transfers, and all

purchase, shipping, and financing

documents.

§ 538.522 Transactions related to U.S.

citizens residing in Sudan.

U.S. persons are authorized to engage

in transactions in Sudan ordinarily

incident to the routine and necessary

maintenance and other personal living

expenses of U.S. citizens who reside on

a permanent basis in Sudan.

Subpart F—Reports

§ 538.601 Records and reports.

For additional provisions relating to

records and reports, see subpart C of

part 501 of this chapter.

Subpart G—Penalties

§ 538.701 Penalties.

(a) Attention is directed to section 206

of the International Emergency

Economic Powers Act (the ‘‘Act’’)(50

U.S.C. 1705), 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 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 statement or

representation 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 five years,

or both.

(d) Violations of this part may also be

subject to relevant provisions of other

applicable laws.

§ 538.702 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
35820 Federal Register / Vol. 63, No. 126 /Wednesday, July 1, 1998 /Rules and Regulations

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

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

§ 538.801 Procedures.

For license application procedures

and procedures relating to amendments,

modifications, or revocations of

licenses; administrative decisions;

rulemaking; and requests for documents

pursuant to the Freedom of Information

and Privacy Acts (5 U.S.C. 552 and

552a), see subpart D of part 501 of this

chapter.

§ 538.802 Delegation by the Secretary of

the Treasury.

Any action which the Secretary of the

Treasury is authorized to take pursuant

to Executive Order 13067 (3 CFR, 1997

Comp., p. 230), and any further

Executive orders relating to the national

emergency declared with respect to

Sudan in Executive Order 13067, 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

§ 538.901 Paperwork Reduction Act notice.

The information collection

requirements in §§ 538.506 and 538.521

have been approved by the Office of

Management and Budget (‘‘OMB’’) and

assigned control number 1505–0169.

For approval by OMB under the

Paperwork Reduction Act of other

information collections relating to

recordkeeping and reporting

requirements, to licensing procedures

(including those pursuant to statements

of licensing policy), and to other

procedures, see § 501.901 of this

chapter. An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless it displays a valid control

number assigned by OMB.

Dated: June 18, 1998.

R. Richard Newcomb,

Director, Office of Foreign Assets Control.

Approved: June 25, 1998.

James E. Johnson,

Assistant Secretary (Enforcement),

Department of the Treasury.

[FR Doc. 98–17538 Filed 6–29–98; 8:51 am]

BILLING CODE 4810–25–F

DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 117

[CGD08–98–036]

RIN 2115–AE47

Drawbridge Operation Regulation;

Lake Pontchartrain, LA

AGENCY: Coast Guard, DOT.

ACTION: Temporary rule.

SUMMARY: The Coast Guard is

temporarily changing the regulation for

the operation of the draws of the Greater

New Orleans Expressway Commission

causeway, north bascule spans across

Lake Pontchartrain between Metairie,

Jefferson Parish and Mandeville, St.

Tammany Parish, Louisiana. From July

6, 1998 through November 10, 1998, the

draws will remain closed to navigation

Monday through Saturday except for

September 5, 6, 7, 24, 25, 26, 27, 28 and

29, 1998 and October 10, 11 and 12,

1998. During these closure periods there

will be crane barges under the bridge to

support equipment. On Sundays and on

September 5, 6, 7, 24, 25, 26, 27, 28 and

29, 1998, October 10, 11 and 12, 1998,

the draws will open on signal if at least

three hours notice is given. In the event

of an approaching tropical storm or

hurricane, the draw will return to

normal operation within 12 hours and

the channel cleared of all construction

equipment. This temporary rule is

issued to allow for cleaning and

painting of the bascule structure, an

extensive but necessary maintenance

operation.

DATES: This temporary rule is effective

from July 6, 1998 through November 10,

1998.

ADDRESSES: Unless otherwise indicated,

documents referred to in this notice are

available for inspection or copying at

the office of the Eighth Coast Guard

District, Bridge Administration Branch,