Rule2022-04912
Expansion of Sanctions Against the Russian Industry Sector Under the Export Administration Regulations (EAR)
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 8, 2022
Effective
March 3, 2022
Issuing agencies
Commerce DepartmentIndustry and Security Bureau
Abstract
In response to the Russian Federation's (Russia's) further invasion of Ukraine, the Department of Commerce is expanding the existing sanctions against the Russian industry sector by adding a new prohibition under the Export Administration Regulations (EAR) that targets the oil refinery sector in Russia. These new export controls will further limit revenue that could support the military capabilities of Russia.
Full Text
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<title>Federal Register, Volume 87 Issue 45 (Tuesday, March 8, 2022)</title>
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[Federal Register Volume 87, Number 45 (Tuesday, March 8, 2022)]
[Rules and Regulations]
[Pages 12856-12860]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-04912]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 738 and 746
[Docket No. 220303-0068]
RIN 0694-AI76
Expansion of Sanctions Against the Russian Industry Sector Under
the Export Administration Regulations (EAR)
AGENCY: Bureau of Industry and Security, Department of Commerce.
ACTION: Final rule.
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SUMMARY: In response to the Russian Federation's (Russia's) further
invasion of Ukraine, the Department of Commerce is expanding the
existing sanctions against the Russian industry sector by adding a new
prohibition under the Export Administration Regulations (EAR) that
targets the oil refinery sector in Russia. These new export controls
will further limit revenue that could support the military capabilities
of Russia.
DATES: This rule is effective on March 3, 2022.
FOR FURTHER INFORMATION CONTACT: For questions on this final rule,
contact Eileen Albanese, Director, Office of National Security and
Technology Transfer Controls, Bureau of Industry and Security,
Department of Commerce, Phone: (202) 482-0092, Fax: (202) 482-482-3355,
Email: <a href="/cdn-cgi/l/email-protection#c8bab8acfa88aaa1bbe6aca7abe6afa7be"><span class="__cf_email__" data-cfemail="b3c1c3d781f3d1dac09dd7dcd09dd4dcc5">[email protected]</span></a>. For emails, include ``Russia Industry Sector
Sanctions Expansion'' in the subject line.
SUPPLEMENTARY INFORMATION:
I. Background
In response to Russia's February 2022 further invasion of Ukraine,
the Bureau of Industry and Security (BIS) imposed extensive sanctions
on Russia under the Export Administration Regulations (15 CFR parts
730-774) (EAR) as part of the final rule, Implementation of Sanctions
Against Russia Under the Export Administration Regulations (EAR),
effective February 24, 2022 (``Russia Sanctions rule'').\1\ As
described in the Russia Sanctions rule's preamble, Russia's invasion of
Ukraine flagrantly violates international law, is contrary to U.S.
national security and foreign policy interests, and undermines global
order, peace, and security, and consequently necessitated the
imposition of stringent sanctions.
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\1\ 87 FR 12226 (March 3, 2022).
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The export control measures implemented in this final rule build
upon the policy objectives set forth in the Russian Sanctions rule by
further restricting Russia's access to items that it needs to support
its military capabilities.
The changes made by this rule are intended to further limit the
Russian oil sector by restricting the export, reexport and transfer
(in-country) of additional items needed for oil refining. Sale of
gasoline produced from Russian oil is a major source of revenue for
Russia. Limiting the export, reexport and transfer (in-country) of
critical oil refining equipment will consequently reduce Russia's
ability to generate revenue that the country needs to support its
military capabilities.
As described below, this rule expands the scope of the sanctions
against the Russian industry sector that were originally added to the
EAR in August 2014 in response to Russia's 2014 destabilizing conduct
in Ukraine and occupation of the Crimea region of Ukraine. See 79 FR
45675 (Aug. 6, 2014). The export controls in this final rule target the
oil refinery sector in Russia. These new export controls under the EAR,
implemented in parallel with similarly stringent measures by partner
and allied countries, will further limit sources of revenue that could
support the military capabilities of Russia.
II. Overview of New Controls
This final rule amends part 746 of the EAR (Embargoes and Other
Special Controls) to expand the scope of the Russian industry sector
sanctions by adding a new general prohibition that will apply to
additional Harmonized Tariff Schedule (HTS)-6 codes and Schedule B
numbers for all exports, reexports, and transfers (in-country) to or
within Russia.
III. Amendments to the Export Administration Regulations (EAR)
A. Expansion of Russian Industry Sanctions and Conforming Change
1. Expansion of Russian Industry Sector Sanctions by Adding a New
Prohibition
Under Sec. 746.5 of the EAR (Russian industry sector sanctions),
this final rule revises paragraph (a) (License requirement) to expand
the scope of the general prohibition under paragraph (a)(1). Prior to
this rule, this general prohibition applied to the export, reexport or
transfer (in-country) of certain items in situations where a person had
``knowledge,'' for purposes of the EAR, that the item would be used
directly or indirectly in Russia's energy sector for exploration or
production from deepwater, Arctic offshore, or shale projects in Russia
that have the potential to produce oil or gas, or where a person was
unable to determine whether the item would be used in such projects in
Russia.
This final rule adds a new paragraph (a)(1)(ii) to expand the scope
of the general prohibition under this section by imposing an additional
license requirement for exports, reexports or transfers (in-country) of
any item subject to the EAR listed in new supplement no. 4 to part 746
to and within Russia. Unlike the existing prohibition (reordered to
appear in new paragraph (a)(1)(i)), the prohibition under new paragraph
(a)(1)(ii) does not include a ``knowledge'' requirement.
This final rule also adds new paragraph (a)(1)(iii) to provide
cross-references to other EAR license requirements for Russia and
guidance for submitting license applications required pursuant to this
section. Additionally, this final rule adds new
[[Page 12857]]
supplement no. 4 to part 746--HTS Codes and Schedule B Numbers that
Require a License for Export, Reexport, and Transfer (in-country) to or
within Russia pursuant to Sec. 746.5(a)(1)(ii), to identify the items
by HTS code and Schedule B number that will be subject to the
prohibition under paragraph (a)(1)(ii). Supplement no. 4 will include
four columns consisting of the HTS Code, HTS Description, Schedule B
and Schedule B Description to assist exporters, reexporters, and
transferors to identify the products in this supplement. There is no
difference in the scope of products identified in the supplement by
HTS-6 code and HTS description or by the Schedule B number and Schedule
B description. The inclusion of both the HTS-6 codes and Schedule B
numbers will assist exporters, reexporters, and transferors if they
have difficulty in identifying a product based on either the HTS codes
or Schedule B numbers alone.
Under paragraph (b) (Licensing policy), this final rule adds new
paragraph (b)(1) for the text that appeared in paragraph (b) prior to
this final rule, which will specify the licensing policy for the
license requirements under new paragraph (a)(1)(i). This rule changes
the license review policy that appeared in paragraph (b) which is now
paragraph (b)(1) in this rule from a presumption of denial to the more
restrictive policy of denial. This change in the license review policy
is made to harmonize with the license review policy in new paragraph
(b)(2) for the license requirements under paragraph (a)(1)(ii), as well
as with the license review policies that have been adopted for other
sanctions against Russia. This final rule adds a new paragraph (b)(2)
to add the review policy, a policy of denial, that will be applicable
to applications that fall within the scope of paragraph (a)(1)(ii).
However, for both the license review policies in paragraphs (a)(1)(i)
and (ii), this rule specifies that applications for export, reexport,
or transfer (in-country) of items that may be necessary for health and
safety reasons will be reviewed under a case-by case license review
policy. This inclusion of this case-by-case license review policy is
consistent with other parts of the Russia Sanctions rule, in
particular, the inclusion of a case-by-case license review policy
related to safety of flight and maritime safety. BIS also notes that
license applicants may request emergency processing of license
applications by following the procedures identified in Sec. 748.4(h)
(Emergency processing) of the EAR. Under Sec. 748.4(h), BIS will
expedite its evaluation, and attempt to expedite the evaluations of
other government agencies, of a license application when, in BIS's
judgment, the circumstances justify emergency processing.
BIS estimates that new license requirements under Sec.
746.5(a)(1)(ii) will result in an additional 20 license applications
being submitted to BIS annually.
2. Conforming Changes
Based on the foregoing changes to the EAR in Sec. 746.5(a)(1) and
the addition of supplement no. 4 to part 746, in supplement no 1 to
part 738--Commerce Country Chart, this final rule also makes one
conforming change to footnote 6 to the Commerce Country Chart to add a
reference to new supplement no. 4 to part 746. This conforming revision
is made so exporters, reexporters, and transferors are aware of the
need to review supplement no. 4 to part 746 as part of their analysis
of the license requirements in Sec. 746.5(a)(1)(ii).
This rule also adds one sentence at the end of the introductory
text of supplement no. 2 to part 746--Russian Industry Sector Sanction
List--to provide guidance on one Schedule B number that is identified
in both supplements no. 2 and no. 4 to part 746. This sentence
clarifies that Schedule B number 8479.89.9850 is listed on both
supplements no. 2 and 4, and that exporters, reexporters, and
transferors must comply with the license requirements under both Sec.
746.5(a)(1)(i) and (ii), as applicable, for Schedule B number
8479.89.9850.
3. Impact of These Changes on Entity List Entries That Reference Sec.
746.5
This rule does not change the Entity List in supplement no. 4 to
part 744. Seventy-five entries on the Entity List have a license
requirement for all items subject to the EAR when used in projects
specified in Sec. 746.5 of the EAR. BIS clarifies here that for
purposes of the Entity List entries that reference Sec. 746.5, the
license requirements set forth on the Entity List apply when items are
used in the projects specified in Sec. 746.5(a)(1)(i), but that
exporters, reexporters, or transferors must also review the transaction
against the license requirements in Sec. 746.5(a)(1)(ii), as well as
all other applicable EAR license requirements.
Savings Clause
For the changes being made in this final rule, shipments of items
removed from eligibility for a License Exception or export, reexport,
or transfer (in-country) without a license (NLR) as a result of this
regulatory action that were en route aboard a carrier to a port of
export, reexport, or transfer (in-country), on March 7, 2022, pursuant
to actual orders for export, reexport, or transfer (in-country) to or
within a foreign destination, may proceed to that destination under the
previous eligibility for a License Exception or export, reexport, or
transfer (in-country) without a license (NLR).
Export Control Reform Act of 2018
On August 13, 2018, the President signed into law the John S.
McCain National Defense Authorization Act for Fiscal Year 2019, which
included the Export Control Reform Act of 2018 (ECRA) (codified, as
amended, at 50 U.S.C. Sections 4801-4852). ECRA provides the legal
basis for BIS's principal authorities and serves as the authority under
which BIS issues this rule.
Rulemaking Requirements
1. This final rule is not a ``significant regulatory action''
because it ``pertain[s]'' to a ``military or foreign affairs function
of the United States'' under sec. 3(d)(2) of Executive Order 12866.
2. Notwithstanding any other provision of law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.) (PRA), unless that collection of information displays a currently
valid Office of Management and Budget (OMB) Control Number.
This rule involves the following OMB-approved collections of
information subject to the PRA: 0694-0088, ``Multi-Purpose
Application,'' which carries a burden hour estimate of 29.6 minutes for
a manual or electronic submission; 0694-0096 ``Five Year Records
Retention Period,'' which carries a burden hour estimate of less than 1
minute; and 0607-0152 ``Automated Export System (AES) Program,'' which
carries a burden hour estimate of 3 minutes per electronic submission.
This rule changes the respondent burden under these control numbers by
increasing the estimated number of submissions by 20 which is not
expected to exceed the current approved estimates.
3. This rule does not contain policies with federalism implications
as that term is defined in Executive Order 13132.
[[Page 12858]]
4. Pursuant to section 1762 of the Export Control Reform Act of
2018 (50 U.S.C. 4821) (ECRA), this action is exempt from the
Administrative Procedure Act (APA) (5 U.S.C. 553) requirements for
notice of proposed rulemaking, opportunity for public participation,
and delay in effective date. While section 1762 of ECRA provides
sufficient authority for such an exemption, this action is also
independently exempt from these APA requirements because it involves a
military or foreign affairs function of the United States (5 U.S.C.
553(a)(1)).
5. Because a notice of proposed rulemaking and an opportunity for
public comment are not required to be given for this rule by 5 U.S.C.
553, or by any other law, the analytical requirements of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq., are not applicable.
Accordingly, no regulatory flexibility analysis is required and none
has been prepared.
List of Subjects
15 CFR Part 738
Exports.
15 CFR Part 746
Exports, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, parts 738 and 746 of the
Export Administration Regulations (15 CFR parts 730 through 774) are
amended as follows:
PART 738--COMMERCE CONTROL LIST OVERVIEW AND THE COUNTRY CHART
0
1. The authority citation for 15 CFR part 738 continues to read as
follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; 10 U.S.C. 8720; 10 U.S.C. 8730(e); 22 U.S.C.
287c; 22 U.S.C. 2151 note; 22 U.S.C. 3201 et seq.; 22 U.S.C. 6004;
42 U.S.C. 2139a; 15 U.S.C. 1824; 50 U.S.C. 4305; 22 U.S.C. 7201 et
seq.; 22 U.S.C. 7210; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p.
228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783.
0
2. Supplement no. 1 to part 738 is amended by revising footnote 6 to
read as follows:
Supplement No. 1 to Part 738--Commerce Country Chart
* * * * *
\6\ See Sec. 746.5 of the EAR for additional license
requirements under the Russian industry sector sanctions for ECCNs
0A998, 1C992, 3A229, 3A231, 3A232, 6A991, 8A992, and 8D999 and items
identified in supplements no. 2 and no. 4 to part 746 of the EAR.
See Sec. 746.8 of the EAR for Sanctions against Russia and Belarus,
including additional license requirements for items listed in any
ECCN in Categories 3, 4, 5, 6, 7, 8, or 9 of the CCL.
* * * * *
PART 746--EMBARGOES AND OTHER SPECIAL CONTROLS
0
3. The authority citation for 15 CFR part 746 continues to read as
follows:
Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50
U.S.C. 1701 et seq.; 22 U.S.C. 287c; Sec 1503, Pub. L. 108-11, 117
Stat. 559; 22 U.S.C. 2151 note; 22 U.S.C. 6004; 22 U.S.C. 7201 et
seq.; 22 U.S.C. 7210; E.O. 12854, 58 FR 36587, 3 CFR, 1993 Comp., p.
614; E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899; E.O. 13222,
66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3
CFR, 2004 Comp., p 168; Presidential Determination 2003-23, 68 FR
26459, 3 CFR, 2004 Comp., p. 320; Presidential Determination 2007-7,
72 FR 1899, 3 CFR, 2006 Comp., p. 325; Notice of May 6, 2021, 86 FR
26793 (May 10, 2021).
0
4. Section 746.5 is amended by revising paragraphs (a)(1) and (b) to
read as follows:
Sec. 746.5 Russian industry sector sanctions.
(a) * * *
(1) General prohibition. (i) A license is required to export,
reexport or transfer (in-country) any item subject to the EAR listed in
supplement no. 2 to this part and items specified in ECCNs 0A998,
1C992, 3A229, 3A231, 3A232, 6A991, 8A992, and 8D999 when you ``know''
that the item will be used directly or indirectly in exploration for,
or production of, oil or gas in Russian deepwater (greater than 500
feet) or Arctic offshore locations or shale formations in Russia, or
are unable to determine whether the item will be used in such projects.
Such items include, but are not limited to, drilling rigs, parts for
horizontal drilling, drilling and completion equipment, subsea
processing equipment, Arctic-capable marine equipment, wireline and
down hole motors and equipment, drill pipe and casing, software for
hydraulic fracturing, high pressure pumps, seismic acquisition
equipment, remotely operated vehicles, compressors, expanders, valves,
and risers.
(ii) A license is required to export, reexport, or transfer (in-
country) any item subject to the EAR listed in supplement no. 4 to this
part to or within Russia.
(iii) You should be aware that other provisions of the EAR,
including parts 742 and 744 and Sec. 746.8, also apply to exports and
reexports to Russia. License applications submitted to BIS under this
section may include the phrase ``section 746.5(a)(1)(i)'' or ``section
746.5(a)(1)(ii)'' in Block 9 (Special Purpose) as described in
supplement no. 1 to part 748 of the EAR.
* * * * *
(b) Licensing policy. (1) Applications for the export, reexport, or
transfer (in-country) of any item pursuant to paragraph (a)(1)(i) of
this section that requires a license for Russia will be reviewed under
a policy of denial when for use directly or indirectly for exploration
or production from deepwater (greater than 500 feet), Arctic offshore,
or shale projects in Russia that have the potential to produce oil or
gas, except that applications for export, reexport, or transfer (in-
country) of items that may be necessary for health and safety reasons
will be reviewed under a case-by case license review policy.
(2) Applications for the export, reexport, or transfer (in-country)
of any item pursuant to paragraph (a)(1)(ii) of this section that
requires a license for Russia will be reviewed under a policy of
denial, except that applications for export, reexport, or transfer (in-
country) of items that may be necessary for health and safety reasons
will be reviewed under a case-by case license review policy.
* * * * *
0
5. Supplement no. 2 to part 746 is amended by adding a sentence to the
end of the introductory text to read as follows:
Supplement No. 2 to Part 746--Russian Industry Sector Sanction List
* * * Schedule B number 8479.89.9850 is listed on both supplements
no. 2 and 4 to this part, so exporters, reexporters, and transferors
must comply with the license requirements under both Sec.
746.5(a)(1)(i) and (ii) as applicable.
* * * * *
0
6. Add supplement No. 4 to part 746 to read as follows:
Supplement No. 4 to Part 746--HTS Codes and Schedule B Numbers That
Require a License for Export, Reexport, and Transfer (In-Country) to or
Within Russia Pursuant to Sec. 746.5(a)(1)(ii)
The source for the Harmonized Tariff Schedule (HTS)-6 codes and
descriptions and Schedule B numbers and descriptions in this list comes
from the Bureau of the Census's Schedule B concordance of exports 2022.
Census's Schedule B List 2022 can be found at <a href="http://www.census.gov/foreign-trade/aes/documentlibrary/#concordance">www.census.gov/foreign-trade/aes/documentlibrary/#concordance</a>. The Introduction Chapter of the
Schedule B provides important information about classifying products
and interpretations of the Schedule B, e.g., NESOI means
[[Page 12859]]
Not Elsewhere Specified or Included. In addition, important information
about products within a particular chapter may be found at the
beginning of chapters. This supplement includes four columns consisting
of the HTS Code, HTS Description, Schedule B and Schedule B Description
to assist exporters, reexporters, and transferors in identifying the
products in this supplement no. 4 to this part. For information on HTS
codes in general, you may contact a local import specialist at U.S.
Customs and Border Protection at the nearest port. Schedule B number
8479.89.9850 is listed on both supplements no. 2 and 4 to this part, so
exporters, reexporters, and transferors must comply with the license
requirements under both Sec. 746.5(a)(1)(i) and (ii) as applicable.
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Harmonized tariff schedule (HTS)--6
code HTS description Schedule B Schedule B description
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847989 or 854370..................... Alkylation and 8479.89.9850 or --Oil and gas field
isomerization units. 8479.89.9900. wire line and downhole
equipment, or
--Other.
847989 or 854370..................... Aromatic hydrocarbon 8479.89.9850 or --Oil and gas field
production units. 8479.89.9900. wire line and downhole
equipment, or
--Other.
841940............................... Atmospheric--vacuum 8419.40.0080........... --Other.
crude distillation
units (CDU).
847989 or 854370..................... Catalytic reforming/ 8543.70.9665........... --Other.
cracker units.
841989, 841989 or 841989............. Delayed cokers......... 8419.89.9585........... --For other materials.
841989, 841989 or 841989............. Flexicoking units...... 8419.89.9585........... --For other materials.
847989............................... Hydrocracking reactors. 8479.89.9850, or --Oil and gas field
8479.89.9900. wire line and downhole
equipment, or
--Other.
841989, 841989, 841989, or 847989.... Hydrocracking reactor 8419.89.9585........... --For other materials.
vessels.
847989 or 854370..................... Hydrogen generation 8479.89.9850, or --Oil and gas field
technology. 8479.89.9900. wire line and downhole
equipment, or
--Other.
842139, 842139, 842139, 842139, Hydrogen recovery and 8421.39.0140, or --Gas separation
847989 or 854370. purification 8421.39.0190. equipment, or
technology. --Other.
847989 or 854370..................... Hydrotreatment 8479.89.9850, or --Oil and gas field
technology/units. 8479.89.9900. wire line and downhole
equipment, or
--Other.
847989 or 854370..................... Naphtha isomerisation 8479.89.9850, or --Oil and gas field
units. 8479.89.9900. wire line and downhole
equipment, or
--Other.
847989 or 854370..................... Polymerisation units... 8479.89.9850, or --Oil and gas field
8479.89.9900. wire line and downhole
equipment, or
--Other.
841989, 841989, or 841989, 847989 or Refinery fuel gas 8419.89.9585........... --For other materials.
854370. treatment and sulphur
recovery technology
(including amine
scrubbing units,
sulphur recovery
units, tail gas
treatment units).
845690, 847989 or 854370............. Solvent de--asphalting 8456.90.7100, --Other --
units. 8479.89.9850, or --Oil and gas field
8479.89.9900. wire line and downhole
equipment, or
--Other.
847989 or 854370..................... Sulphur production 8479.89.9850, or --Oil and gas field
units. 8479.89.9900. wire line and downhole
equipment, or
--Other.
847989 or 854370..................... Sulphuric acid 8479.89.9850, or --Oil and gas field
alkylation and 8479.89.9900. wire line and downhole
sulphuric acid equipment, or
regeneration units. --Other.
841989, 841989, or 841989, 847989 or Thermal cracking units. 8419.89.9585, --For other materials,
854370. 8479.89.9850, or --Oil and gas field
8479.89.9900. wire line and downhole
equipment, or
--Other.
847989 or 854370..................... [Toluene and heavy 8479.89.9850, or --Oil and gas field
aromatics] 8479.89.9900. wire line and downhole
Transalkylation units. equipment, or
--Other.
847989 or 854370..................... Visbreakers............ 8479.89.9850, or --Oil and gas field
8479.89.9900. wire line and downhole
equipment, or
--Other.
847989 or 854370..................... Vacuum gas oil 8479.89.9850, or --Oil and gas field
hydrocracking units. 8479.89.9900. wire line and downhole
equipment, or
--Other.
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[[Page 12860]]
Thea D. Rozman Kendler,
Assistant Secretary for Export Administration.
[FR Doc. 2022-04912 Filed 3-3-22; 3:15 pm]
BILLING CODE 3510-33-P
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