[Federal Register Volume 72, Number 210 (Wednesday, October 31, 2007)]
[Rules and Regulations]
[Pages 61513-61517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-21443]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Part 538


Sudanese Sanctions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Foreign Assets Control of the U.S. Department of 
the Treasury is amending the Sudanese Sanctions Regulations, 31 CFR 
part 538, to include several new provisions implementing Executive 
Order 13412 of October 13, 2006.

DATES: Effective Date: October 31, 2007.

FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance 
Outreach & Implementation, tel.: 202/622-2490, Assistant Director for 
Licensing, tel.: 202/622-2480, Assistant Director for Policy, tel.: 
202/622-4855, Office of Foreign Assets Control, or

[[Page 61514]]

Chief Counsel (Foreign Assets Control), tel.: 202/622-2410, Office of 
the General Counsel, Department of the Treasury, Washington, DC 20220 
(not toll free numbers).

SUPPLEMENTARY INFORMATION:

Electronic and Facsimile Availability

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

Background

    The Sudanese Sanctions Regulations, 31 CFR part 538 (the ``SSR''), 
were promulgated to implement Executive Order 13067 of November 3, 1997 
(``E.O. 13067''), in which the President declared a national emergency 
with respect to the policies and actions of the Government of Sudan. To 
deal with that emergency, E.O. 13067 imposed comprehensive trade 
sanctions with respect to Sudan and blocked all property and interests 
in property of the Government of Sudan in the United States or within 
the possession or control of United States persons.
    On October 13, 2006, the President signed into law the Darfur Peace 
and Accountability Act of 2006 (the ``DPAA''), which, among other 
things, calls for support of the regional government of Southern Sudan, 
assistance with the peace efforts in Darfur, and provision of economic 
assistance in specified areas of Sudan. In particular, section 7 of the 
DPAA requires the continuation of the sanctions currently imposed on 
the Government of Sudan pursuant to E.O. 13067. However, section 8(e) 
of the DPAA exempts from the prohibitions of E.O. 13067 activities or 
related transactions with respect to certain areas in Sudan, including 
Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile 
State, Abyei, Darfur, and marginalized areas in and around Khartoum.
    To reconcile sections 7 and 8(e) of the DPAA and to maintain in 
place sanctions on the Government of Sudan, the President issued 
Executive Order 13412 on October 13, 2006 (``E.O. 13412''). In E.O. 
13412, the President determined that the Government of Sudan continues 
to implement policies and actions that violate human rights, in 
particular with respect to the conflict in Darfur, and that the 
Government of Sudan plays a pervasive role in Sudan's petroleum and 
petrochemical industries, thus constituting a threat to U.S. national 
security and foreign policy.
    In light of these determinations, and in order to take additional 
steps with respect to the national emergency declared in E.O. 13067, 
section 1 of E.O. 13412 continues the blocking of the Government of 
Sudan's property and interests in property that are in or come within 
the United States, or that are in or come within the possession or 
control of United States persons. Section 2 of E.O. 13412 prohibits 
transactions by United States persons relating to the petroleum or 
petrochemical industries in Sudan, including, but not limited to, 
oilfield services and oil or gas pipelines. Both sections 1 and 2 of 
E.O. 13412 apply to the entire territory of Sudan.
    Section 4 of E.O. 13412, consistent with section 8(e) of the DPAA, 
provides that the prohibitions contained in section 2 of E.O. 13067 no 
longer apply to activities or related transactions with respect to 
Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile 
State, Abyei, Darfur, or marginalized areas in and around Khartoum, 
provided that the transactions do not involve any property or interests 
in property of the Government of Sudan. Section 4(b)(ii) of E.O. 13412 
authorizes the Secretary of State, after consultation with the 
Secretary of the Treasury, to define the geographic areas of Southern 
Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, 
Darfur, and marginalized areas in and around Khartoum for purposes of 
the order. In addition, section 6(d) of E.O. 13412 defines the term 
``Government of Sudan'' to include its agencies, instrumentalities, and 
controlled entities, and the Central Bank of Sudan, but to exclude the 
regional government of Southern Sudan.
    In accordance with E.O. 13412, the Office of Foreign Assets Control 
(``OFAC'') today is amending the SSR to add several new provisions 
implementing the provisions of E.O. 13412 discussed above. First, OFAC 
is renumbering Sec. Sec.  538.210 and 538.211 as Sec. Sec.  538.211 and 
538.212, respectively, in order to add a new Sec.  538.210. Paragraph 
(a) of new Sec.  538.210 prohibits all transactions by United States 
persons relating to the petroleum or petrochemical industries in Sudan, 
including, but not limited to, oilfield services and oil or gas 
pipelines. Paragraph (b) of Sec.  538.210 prohibits the facilitation by 
a United States person of any transaction relating to Sudan's petroleum 
or petrochemical industries.
    Second, OFAC is adding an exemption to newly renumbered Sec.  
538.212. Paragraph (g)(1) of Sec.  538.212 provides that, except for 
the provisions of Sec. Sec.  538.201-203, 538.210, and 538.211, and 
except as provided in paragraph (g)(2) of Sec.  538.212, the 
prohibitions contained in the SSR do not apply to activities or related 
transactions with respect to the Specified Areas of Sudan. This 
provision means that, subject to the new interpretive sections set 
forth below, activities and related transactions with respect to the 
Specified Areas of Sudan are no longer prohibited, unless they involve 
any property or interests in property of the Government of Sudan or 
relate to Sudan's petroleum or petrochemical industries. In addition, 
paragraph (g)(2) of Sec.  538.212 states that the exemption does not 
apply to the exportation or reexportation of agricultural commodities, 
medicine, and medical devices. Section 906 of the Trade Sanctions 
Reform and Export Enhancement Act of 2000 (Pub. L. 106-387) continues 
to impose licensing requirements on these transactions, regardless of 
the intended destination in Sudan. These licensing requirements are 
implemented in Sec. Sec.  538.523, 538.525, and 538.526.
    Third, OFAC is revising the definition of the term Government of 
Sudan contained in Sec.  538.305 to exclude the regional government of 
Southern Sudan, as set forth in section 6(d) of E.O. 13412.
    Fourth, OFAC is adding a new definitional section to identify the 
areas of Sudan that were exempted in section 4(b) of E.O. 13412 from 
the prohibitions contained in section 2 of E.O. 13067. New Sec.  
538.320 defines the term Specified Areas of Sudan to mean Southern 
Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, 
Darfur, and marginalized areas in and around Khartoum. This section 
also defines the term ``marginalized areas in and around Khartoum'' to 
refer to four official camps for internally displaced persons.
    Fifth, OFAC is adding interpretive Sec.  538.417 to clarify that 
all of the prohibitions in the SSR apply to shipments of goods, 
services, and technology that transit areas of Sudan other than the 
Specified Areas of Sudan. Section 538.417(a) provides that an 
exportation or reexportation of goods, technology, or services to the 
Specified Areas of Sudan is exempt under Sec.  538.212(g) only if it 
does not transit or transship through any area of Sudan other than the 
Specified Areas of Sudan. Section 538.417(b) provides that an 
importation into the United States of goods or services from, or 
originating in, the Specified Areas of Sudan is exempt under Sec.  
538.212(g) only if it does not

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transit or transship through any area of Sudan other than the Specified 
Areas of Sudan. Thus, imports and exports to or from the Specified 
Areas of Sudan that do not transit or transship non-exempt areas of 
Sudan are not prohibited, provided that the Government of Sudan does 
not have an interest in the transaction and the transaction does not 
relate to Sudan's petroleum or petrochemical industries. However, 
imports and exports to or from the Specified Areas of Sudan that 
involve the transiting of, or transshipment through, non-exempt areas 
of Sudan, e.g., Khartoum and Port Sudan, require authorization from 
OFAC.
    OFAC is also adding interpretive Sec.  538.418 to explain the 
prohibitions on financial transactions in Sudan. Financial transactions 
are no longer prohibited by the SSR if: (1) The underlying activity is 
not prohibited by the SSR; (2) the financial transaction involves a 
third-country depository institution, or a Sudanese depository 
institution not owned or controlled by the Government of Sudan, that is 
located in the Specified Areas of Sudan; and (3) the financial 
transaction is not routed through a depository institution that is 
located in the non-exempt areas or that is owned or controlled by the 
Government of Sudan, wherever located. However, any financial 
transactions that involve, in any manner, depository institutions that 
are located in the non-exempt areas of Sudan, e.g., Khartoum, remain 
prohibited and require authorization from OFAC.
    For example, if a financial transaction involves a branch of a 
depository institution in the Specified Areas of Sudan, but that 
depository institution is headquartered in Khartoum and requires all 
financial transactions to be routed through the headquarters or another 
branch located in the non-exempt areas of Sudan, that transaction is 
prohibited and requires authorization from OFAC.
    Finally, OFAC is amending the SSR to add three new general 
licenses, which are set forth in Sec. Sec.  538.530, 538.531, and 
538.532. Paragraph (a) of Sec.  538.530 provides that all general 
licenses issued pursuant to E.O. 13067 are authorized and remain in 
effect pursuant to E.O. 13412. Paragraph (b) of Sec.  538.530 provides 
that all specific licenses and all nongovernmental organization 
registrations issued pursuant to E.O. 13067 or the SSR prior to October 
13, 2006, are authorized pursuant to E.O. 13412 and remain in effect 
until the expiration date specified in the license or registration, or 
if no expiration date is specified, June 30, 2008. OFAC urges all 
license and nongovernmental organization registration holders to take 
note of this potentially new expiration date, which applies to all 
licenses and registrations that do not otherwise contain an expiration 
date, regardless of when they were originally issued.
    The second general license, new Sec.  538.531, authorizes otherwise 
prohibited official activities of the United States Government and 
international organizations. Subject to certain conditions and 
limitations, paragraph (a)(1) of Sec.  538.531 authorizes all 
transactions and activities otherwise prohibited by the SSR or E.O. 
13412 that are for the conduct of the official business of the United 
States Government by contractors or grantees thereof. Employees who 
engage in transactions for the conduct of the official business of the 
United States Government already are exempt from these prohibitions. 
See Sec.  538.212(e) and section 5(a) of E.O. 13412. Paragraph (a)(2) 
of Sec.  538.531 authorizes, subject to the same conditions and 
limitations as paragraph (a)(1), all transactions and activities 
otherwise prohibited by the SSR or E.O. 13412 that are for the conduct 
of the official business of the United Nations, or United Nations 
specialized agencies, programmes, and funds, by employees, contractors, 
or grantees thereof. Paragraphs (b), (c), and (d) of Sec.  538.531 set 
forth conditions and limitations on the authorizations described in 
paragraph (a).
    The third general license, Sec.  538.532, authorizes humanitarian 
transshipments of goods, technology, or services through non-exempt 
areas of Sudan to or from Southern Sudan and Darfur. This license will 
be subject to review on an annual basis. Upon completion of the annual 
review, OFAC may revoke the general license through the issuance of a 
notice in the Federal Register. If OFAC does not take any action, this 
license will remain in force.

Public Participation

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

Paperwork Reduction Act

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

List of Subjects in 31 CFR Part 538

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

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

PART 538--SUDANESE SANCTIONS REGULATIONS

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

    Authority: 3 U.S.C. 301; 31 U.S.C. 321(b); 18 U.S.C. 2339B, 
2332d; 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 106-387, 114 Stat. 
1549; Pub. L. 109-344, 120 Stat. 1869; Pub. L. 110-96, 121 Stat. 
1011; E.O. 13067, 62 FR 59989, 3 CFR, 1997 Comp., p. 230; E.O. 
13412, 71 FR 61369, October 13, 2006.

Subpart B--Prohibitions

0
2. Redesignate Sec. Sec.  538.210 and 538.211 as Sec. Sec.  538.211 and 
538.212, respectively, and add a new Sec.  538.210 to read as follows:


Sec.  538.210  Prohibited transactions relating to petroleum and 
petrochemical industries.

    (a) Except as otherwise authorized, and notwithstanding any 
contract entered into or any license or permit granted prior to October 
13, 2006, all transactions by United States persons relating to the 
petroleum or petrochemical industries in Sudan, including, but not 
limited to, oilfield services and oil or gas pipelines, are prohibited.
    (b) Except as otherwise authorized, the facilitation by a United 
States person, including but not limited to brokering activities, of 
any transaction relating to the petroleum or petrochemical industries 
in Sudan is prohibited.

0
3. Add a new paragraph (g) to newly redesignated Sec.  538.212 to read 
as follows:

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Sec.  538.212  Exempt transactions.

* * * * *
    (g)(1) Specified Areas of Sudan. Except for the provisions of 
Sec. Sec.  538.201 through 538.203, 538.210, and 538.211, and except as 
provided in paragraph (g)(2) of this section, the prohibitions 
contained in this part do not apply to activities or related 
transactions with respect to the Specified Areas of Sudan.
    (2) The exemption in paragraph (g)(1) of this section does not 
apply to the exportation or reexportation of agricultural commodities 
(including bulk agricultural commodities listed in appendix A to this 
part 538), medicine, and medical devices.

    Note to Sec.  538.212(g)(2). See Sec. Sec.  538.523, 538.525, 
and 538.526 for licensing requirements governing the transactions 
described in paragraph (g)(2) of this section.

Subpart C--General Definitions

0
4. Amend Sec.  538.305 by redesignating paragraphs (a) through (d) as 
paragraphs (a)(1) through (a)(4), respectively, redesignating the 
introductory text as paragraph (a) introductory text, revising the 
newly designated paragraph (a), and adding a new paragraph (b) to read 
as follows:


Sec.  538.305  Government of Sudan.

    (a) The term Government of Sudan includes:
    (1) The state and the Government of Sudan, as well as any political 
subdivision, agency, or instrumentality thereof, including the Central 
Bank of Sudan;
    (2) Any entity owned or controlled by the foregoing;
    (3) 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
    (4) Any other person determined by the Director of the Office of 
Foreign Assets Control to be included within paragraphs (a)(1) through 
(a)(3) of this section.
    (b) Effective October 13, 2006, the term Government of Sudan, as 
defined in paragraph (a) of this section, does not include the regional 
government of Southern Sudan.
* * * * *

0
5. Add a new Sec.  538.320 to read as follows:


Sec.  538.320  Specified Areas of Sudan.

    (a) The term Specified Areas of Sudan means Southern Sudan, 
Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur, 
and marginalized areas in and around Khartoum.
    (b) The term marginalized areas in and around Khartoum means the 
following official camps for internally displaced persons: Mayo, El 
Salaam, Wad El Bashir, and Soba.

Subpart D--Interpretations

0
6. Add a new Sec.  538.417 to read as follows:


Sec.  538.417  Transshipments through Sudan.

    (a) The exportation or reexportation of goods, technology, or 
services to the Specified Areas of Sudan is exempt under Sec.  
538.212(g) only if such goods, technology, or services do not transit 
or transship through any area of Sudan other than the Specified Areas 
of Sudan.
    (b) The importation into the United States of goods or services 
from, or originating in, the Specified Areas of Sudan is exempt under 
Sec.  538.212(g) only if such goods or services do not transit or 
transship through any area of Sudan other than the Specified Areas of 
Sudan.

    Note to Sec.  538.417. See Sec.  538.532, which authorizes 
humanitarian transshipments to or from Southern Sudan and Darfur.


0
7. Add a new Sec.  538.418 to read as follows:


Sec.  538.418  Financial transactions in Sudan.

    (a) Any financial transaction with a depository institution located 
in an area of Sudan other than the Specified Areas of Sudan, e.g., 
Khartoum, remains prohibited.
    (b) Financial transactions are no longer prohibited by this part 
if:
    (1) The underlying activity is not prohibited by this part;
    (2) The financial transaction involves a third-country depository 
institution, or a Sudanese depository institution not owned or 
controlled by the Government of Sudan, that is located in the Specified 
Areas of Sudan; and
    (3) The financial transaction is not routed through a depository 
institution that is located in an area of Sudan other than the 
Specified Areas of Sudan or that is owned or controlled by the 
Government of Sudan, wherever located.
    (c) Example. A U.S. bank is instructed to transfer funds to the 
Abyei branch of a Sudanese bank that is not owned or controlled by the 
Government of Sudan. In order for the transfer to take place, the U.S. 
bank is required to route the funds through the Sudanese bank's 
headquarters, which is located in Khartoum. Due to the routing of the 
financial transaction through Khartoum, this transaction is prohibited 
and requires authorization from the Office of Foreign Assets Control. 
However, if the U.S. bank is able to bypass the Khartoum headquarters 
and transfer the funds directly to the Abyei branch of the Sudanese 
bank, then the transaction would not be prohibited.

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

0
8. Add a new Sec.  538.530 to read as follows:


Sec.  538.530  Licenses and registrations issued pursuant to Executive 
Order 13067 or this part authorized pursuant to Executive Order 13412.

    (a) All general licenses issued pursuant to Executive Order 13067 
are authorized pursuant to Executive Order 13412 and remain in effect.
    (b) All specific licenses and all nongovernmental organization 
registrations issued pursuant to Executive Order 13067 or this part 
prior to October 13, 2006, are authorized pursuant to Executive Order 
13412 and remain in effect until the expiration date specified in the 
license or registration or, if no expiration date is specified, June 
30, 2008.

0
9. Add a new Sec.  538.531 to read as follows:


Sec.  538.531  Official activities of the United States Government and 
international organizations.

    (a) Subject to the conditions of paragraphs (b), (c), and (d) of 
this section, the following transactions are authorized:
    (1) All transactions and activities otherwise prohibited by this 
part that are for the conduct of the official business of the United 
States Government or the United Nations by contractors or grantees 
thereof; and
    (2) All transactions and activities otherwise prohibited by this 
part that are for the conduct of the official business of the United 
Nations specialized agencies, programmes, and funds by employees, 
contractors, or grantees thereof.
    (b) Contractors or grantees conducting transactions authorized 
pursuant to paragraph (a) of this section must provide a copy of their 
contract or grant with the United States Government or the United 
Nations, or its specialized agencies, programmes, and funds, to any 
U.S. person before the U.S. person engages in or facilitates any 
transaction or activity prohibited by this part. If the contract or 
grant contains any sensitive or proprietary information, such 
information may be redacted or removed from the copy given to the U.S. 
person, provided that the information is

[[Page 61517]]

not necessary to demonstrate that the transaction is authorized 
pursuant to paragraph (a) of this section.
    (c) Any U.S. person engaging in or facilitating transactions 
authorized pursuant to this section shall keep a full and accurate 
record of each such transaction, including a copy of the contract or 
grant, and such record shall be available for examination for at least 
five (5) years after the date of the transaction.
    (d) No payment pursuant to this section may involve a debit to an 
account blocked pursuant to this part.

    Note 1 to Sec.  538.531. This license does not relieve any 
persons participating in transactions authorized hereunder from 
compliance with any other U.S. legal requirements applicable to the 
transactions authorized pursuant to paragraph (a) of this section. 
See, e.g., the Export Administration Regulations (15 CFR parts 730 
et seq.).


    Note 2 to Sec.  538.531. Paragraph (e) of Sec.  538.212 exempts 
transactions for the conduct of the official business of the Federal 
Government or the United Nations by employees thereof from the 
prohibitions contained in this part.


0
10. Add a new Sec.  538.532 to read as follows:


Sec.  538.532  Humanitarian transshipments to or from Southern Sudan 
and Darfur authorized.

    The transit or transshipment to or from Southern Sudan and Darfur 
of goods, technology, or services intended for humanitarian purposes, 
through any area of Sudan not exempted by paragraph (g)(1) of Sec.  
538.212, is authorized.

    Dated: October 23, 2007.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. E7-21443 Filed 10-30-07; 8:45 am]
BILLING CODE 4811-45-P