On August 20, 2021, President Biden signed a new Executive Order to further implement sanctions provided under the Protecting Europe’s Energy Security Act (“PEESA”) of 2019.  PEESA, which was enacted earlier this year, requires the State Department to issue a periodic report naming parties involved in the construction certain Russian energy export pipelines.  Last week’s

Today, the United States announced new targeted sanctions, export control restrictions, and an arms embargo on Russia after the poisoning and imprisonment of Russian opposition leader Alexey Navalny.  All three of the agencies with primary authority to regulate exports – the Directorate of Defense Trade Controls (DDTC) at the State Department, the Bureau of Industry

On April 28, 2020, the Department of Commerce’s Bureau of Industry Security (“BIS”) published three separate rules which, in response to the Administration’s conclusion that “civil-military integration” in China is increasing, impose significant additional restrictions on the export of dual-use items to strategic rivals including China, Russia, and Venezuela.  These rules, when implemented, will have an especially acute effect on transactions with China.  Specifically, consistent with the Administration’s conclusion that these countries present national security and other foreign policy concerns, BIS restricted exports, re-exports, and in-country transfers to these destinations by: 1) issuing a final rule expanding end-use and end-user restrictions related to China by expanding the scope of prohibitions to include “military end-users” in China and expanding the definition of “military end use”,  among other changes; 2) issuing a final rule removing a license exception that allows the export of some items to certain countries that present national security concerns, including China and Russia, provided that the end-use was civilian (license exception CIV); and 3) issuing a proposed rule narrowing the scope of a license exception that allows the re-export of some items that present national security concerns (license exception APR).

These changes, which are largely effective on June 29, 2020, will create additional hurdles in transactions with China, Russia, and Venezuela. 
Continue Reading Bureau of Industry and Security Imposes Significant Additional Restrictions on Exports to China, Russia, and Venezuela

Yesterday the U.S. government announced that it would implement new sanctions against Russia mandated under the Chemical and Biological Weapons Act of 1991 (the CBW Act) following the apparent deployment of a chemical weapon on British soil by Russia.

The first round of sanctions, which are expected to come into force on or around August 22, will prohibit many exports and reexports of goods, software, or technology to Russia controlled for national security reasons under the dual use Export Administration Regulations.  Such items include gas turbine engines, encryption items, electronics components, optical equipment, lasers, sensors, electronic components, materials, and certain unmanned systems, among many others. National security controlled items currently require a license to be exported to Russia, but the new rules will require the Commerce Department to apply a ‘presumption of denial’ to future license requests in many instances.  In a briefing announcing the new sanctions, the State Department indicated that certain exceptions will be made, including those related to joint space activities, aviation safety, and the activities of U.S. and other foreign companies in Russia.  While the scope of the sanctions has yet to finalized, the State Department suggested that up to half of all licensed exports to Russia are controlled for national security reasons.  If the sanctions are fully enforced, the impact could be substantial – based on 2016 figures over $1 billion in trade could be impacted.
Continue Reading Exports of National Security Controlled Items to Russia Could Be Banned Under New Sanctions

Today, the EC announced that it is moving forward with a package of measures to blunt the impact of renewed U.S. sanctions on Iran following the U.S. exit from the Joint Comprehensive Plan of Action (JCPOA).  Included in those measures is the planned activation of the EU blocking statute, which would bar EU companies from complying with the extraterritorial effects of U.S. sanctions requirements on Iran.  The statute is also intended to insulate EU companies from certain U.S. sanctions penalties.  Implementation of blocking statutes can create a situation in which companies must decide which country’s law they are going to violate – if they cannot find an approach that avoids the conflict.      
Continue Reading The EU & Russia Move Forward with “Blocking Statutes” in Response to U.S. Exit from Iran Nuclear Deal

Under Section 231 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), the Trump administration was due to issue secondary sanctions on non-U.S. persons that conduct significant transactions with Russia’s defense and intelligence sectors.  The Trump administration declined to issue those new sanctions, claiming that CAATSA was serving as an effective deterrent – discouraging non-U.S. entities from doing business with the Russian defense and intelligence sectors – and that no new sanctions were needed at this time. 
Continue Reading Trump Administration Declines to Issue Sanctions Related to Russia’s Military and Intelligence Sectors

Last week, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) blacklisted 21 individuals and nine entities for various reasons, including involvement in the ongoing conflict in eastern Ukraine, connections to the Crimea region (which is subject to a complete U.S. embargo), and links to the Russian government.  Several of the newly minted Specially Designated Nationals (SDNs), including Russian engineering company Technopromexport, were allegedly involved in diverting Siemens-made gas turbines to Crimea in potential violation of European Union sanctions rules.  OFAC also added twelve subsidiaries of Surgutneftegaz to the Sectoral Sanctions Identification List, clarifying that the entities are subject to the energy-sector sanctions described in Directive 4 to E.O. 13662.
Continue Reading New OFAC designations signal continued U.S. sanctions pressure on Russia

As required under recent sanctions legislation, the U.S. Office of Foreign Assets Control (OFAC) recently issued an updated Directive 4 that will expand sectoral sanctions on the Russian energy industry.

The new rules, which apply to projects initiated on or after January 29, 2018, will bar persons subject to U.S. jurisdiction from providing goods, services, or technology in support of exploration or production for deepwater, Arctic offshore, or shale oil anywhere in the world if a party subject to Directive 4 sectoral sanctions has a 33 percent or more ownership interest or owns a majority of the voting interests in the project.
Continue Reading U.S. Issues Enhanced Sanctions on Russian Energy Sector