Oct

20

The UNPA Sidestep Doesn’t Allow OFAC to Shuffle Past the Berman Amendment


Posted by at 10:39 am on October 20, 2017
Category: Iran SanctionsOFAC

The House of Leaves - Burning 4 by Learning Lark [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/7iW4zL [cropped]My post two days ago on the  fourth designation of IRGC by OFAC and OFAC’s claim that this new designation would prevent the supply of informational materials to the IRGC notwithstanding the Berman Amendment has resulted in a lively debate over in the Twitter-verse.  Some are arguing that because section 105 of the Countering America’s Adversaries Through Sanctions Act (“CATSACT”) specifically directs the President to sanction IRGC under Executive Order 13224, and because Executive Order 13224 was promulgated in reliance on the United Nations Participation Act (“UNPA”), the Berman Amendment’s restriction on informational embargoes doesn’t apply.

Because a boring legal and export-geeky argument follows, here is the TL;DNR — Now that the Security Council has lifted its sanctions on the IRGC, the UNPA does not justify designation of the IRGC. That designation is properly made under IEEPA, meaning that the Berman Amendment still applies

The UNPA was passed in 1945 and, as it title implies, is the act that permitted U.S. participation in the United Nations. As part of that participation, the UNPA authorizes the President to take steps necessary to implement Security Council Resolutions. Specifically, the UNPA, in 22 U.S.C. § 287c(a), provides as follows:

Notwithstanding the provisions of any other law, whenever the United States is called upon by the Security Council to apply measures which said Council has decided, pursuant to article 41 of said Charter, are to be employed to give effect to its decisions under said Charter, the President may, to the extent necessary to apply such measures, through any agency which he may designate, and under such orders, rules, and regulations as may be prescribed by him, investigate, regulate, or prohibit, in whole or in part, economic relations or rail, sea, air, postal, telegraphic, radio, and other means of communication between any foreign country or any national thereof or any person therein and the United States or any person subject to the jurisdiction thereof, or involving any property subject to the jurisdiction of the United States.

So, although this provision does permit the President to ban any means of communication with a foreign country it does so only “to the extent neccesary to apply such measure” as the Security Council “has decided … are to be employed to give effect to its decisions.”  It is not like the International Emergency Economic Powers Act which permits the President to declare a national emergency and then apply whatever measures the President wants limited only by the Berman Amendment’s informational materials and travel exception and the other specific exceptions set forth in the Act. Instead, it is limited to implementation of specific measures adopted by the Security Council.

So the issue here is whether the designation of IRGC through an order under E.O. 13224 is necessary to implement measures set forth in a Security Council Resolution and whether it is limited to actions that are “necessary” to implement those measures. First, of course, we have to look at UNSCR 2231, which repealed all prior Security Council Resolutions regarding Iran. This means that the designation of the IRGC in UNSCR 1747 has been terminated. In addition, UNSCR requires the E.U. to remove the IRGC from its list of designated entities. So nothing in any Security Council Resolution regarding Iran authorizes designation of the IRGC under the UNPA.

Nor is there anything in the Security Council Resolutions that are the basis of E.O. 13224 that support the designation of IRGC. Those resolutions are UNSCR 1214, 1267, 1333, and 1363. All of these Security Council Resolutions authorize measures taken against the Taliban in Afghanistan and have nothing to do with, and do not justify, a designation of the IRGC. The Executive Order also cited UNSCR 1269, although it does not explicitly claim authority from that resolution. UNSCR 1269 authorizes and encourages multilateral responses to terrorism and does not authorize a unilateral designation of IRGC as a terrorist, particularly after UNSCR 2231 lifted the UN’s designation of the IRGC and requires the E.U. to remove the IRGC from its lists.

Although cited by those now arguing that OFAC is correct that orders issued under E.O. 13224 are not subject to the Berman Amendment’s exceptions, the Ninth Circuit decision in Sacks v. Office of Foreign Assets Control does not permit that conclusion. The Ninth Circuit does say “IEEPA imposes no such burden on the President’s powers when he acts under the UNPA.” But Sacks is clearly not justification for OFAC’s claim here that the Berman Amendment to IEEPA does not apply to its designation of IRGC under E.O. 13224.

Sacks involved Executive Order 12722 which imposed a travel ban to Iraq pursuant to UNSCR 661. Of course, that travel ban was specifically required by UNSCR 661, which required member states to prohibit all transactions in Iraq other than those involving “medical or humanitarian purposes.” Clearly a travel ban could be considered a measure necessary to implement the specific restrictions of UNSCR. The same cannot be said for the designation of the IRGC which is not necessary to implement the UNSCR sanctions against the Taliban or the UNSCR resolution authorizing multilateral responses to terrorism.

Even though the UNPA doesn’t authorize the designation of the IRGC under E.O. 13224, there is little question that such a designation would be authorized under IEEPA.  Of course, that means that the exceptions in IEEPA, including its restrictions on embargoes of informational materials, would apply to any such designation.

Photo Credit: The House of Leaves – Burning 4 by Learning Lark [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/7iW4zL [cropped]. Copyright 2009 Learning Lark

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Oct

18

OFAC Designates the IRGC for the Fourth Time


Posted by at 7:37 pm on October 18, 2017
Category: Iran SanctionsOFAC

Imam Khomeini by Kaymar Adl [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/kamshots/515002010/ [cropped]Last week, Iran’s Islamic Revolutionary Guard Corps (“IRGC”) was sanctioned yet again by the Office of Foreign Assets Control (“OFAC”). I say “yet again” because prior to the latest action the IRGC had already been designated and blocked under Executive Orders 13382, 13553, and 13606. At this point, OFAC has now put the IRGC on the SDN List more more times than the Washington Nationals have been in the National League Division Series (three times) and way more times than they’ve won the NLDS (that would be never).

Which leads to the legitimate question as to what’s going on here? Are OFAC and the White House just trying to stir things up? Or is there some kind of monthly designation quota at OFAC, like the police department daily ticket quotas in Arlington, Fairfax and Falls Church which make driving in Virginia so risky?

Knowing that this issue would arise, OFAC released along with the designation an FAQ to explain why this designation is unlike the other ones.

Today’s action designating the IRGC under E.O. 13224, our counterterrorism authority, carries some additional consequences that will limit certain activities with respect to the IRGC. Persons designated under E.O. 13224, which now includes the IRGC, may not avail themselves of the so called “Berman exemptions” under the International Emergency Economic Powers Act (IEEPA) relating to personal communication, humanitarian donations, information or informational materials, and travel.

That’s right. It is now a federal crime for a U.S. person to give a copy of The Bible to anyone in the IRGC.

Aside from the sheer stupidity of this result, it is not quite clear to me that it is actually the case that this new designation sidesteps the Berman Amendment. That amendment, codified in 50 U.S.C. § 1702(b)(3), restricts the actions that the President can take with respect to using the International Emergency Economic Powers Act (“IEEPA”) to limit, among other things, the import and export of informational materials.

The new designation is the result of section 105 of the Countering America’s Adversaries Through Sanctions Act (“CATSACT”) which specifically directs the President to sanction IRGC under Executive Order 13224. Now perhaps OFAC thinks that it can escape the Berman Amendment because these sanctions are under CATSACT and not under IEEPA. The problem is section 105 explicitly cites IEEPA in imposing the obligation to sanction the IRGC under Executive Order 13224. Moreover, the other three executive orders under which IRGC was previously sanctioned cite other statutory authority in addition to IEEPA, so it’s not quite clear why OFAC now says that throwing some statute other than IEEPA into the mix makes the Berman Amendment provisions on informational materials inapplicable. Finally, the result of a designation under Executive Order 13224 is to make the IRGC subject to the Global Terrorism Sanctions Regulations.  Those regulations, in section 594.305, have a definition of “informational materials,” a definition that would be completely unnecessary if OFAC thought that the Berman Amendment’s provisions on “informational materials” did not apply.

Photo Credit: Imam Khomeini by Kaymar Adl [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/kamshots/515002010/ [cropped]. Copyright 2007 Kaymar Adl

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Oct

12

Happy Sudan Day!


Posted by at 7:44 pm on October 12, 2017
Category: BISOFACSudan

Meroe (49) by joepyrek [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://https://flic.kr/p/dD4ue9 [cropped]Today, October 12, is the day on which Executive Order 13067, which repealed earlier executive orders imposing sanctions on Sudan, becomes effective. We got here by a somewhat circuitous route. Executive Order 13067, issued in the last days of the Obama administration, delayed its effective date until July 12, 2017, although OFAC issued a general license at the time the order was issued doing everything the order would do when it became more or less permanently effective on July 12, 2017. The Trump Administration extended that effective date until October 12, 2017. Since no further orders have been issued, the lifting of sanctions contemplated by the Obama executive order is now in effect, although practically nothing much has changed given that the general license issued with the Obama order, and found in section 538.540 of the Sudanese Sanctions Regulations (“SSR”), did everything the executive order itself does now that it has officially gone into effect.

Of course, when the Office of Foreign Assets Control is involved, there is always some confusion. In the FAQs issued on the revocation of the Sudan Sanctions, OFAC makes this odd statement: “OFAC expects to remove the SSR from the C.F.R.” When that will happen and why on earth it didn’t happen today is not addressed. So, technically, the rules prohibiting Sudan transactions remain on the books although fortunately so does the general license in section 538.540. Perhaps the new folks at OFAC don’t know the difference between the printed edition of the C.F.R., where removal has to wait to the next edition, and the electronic edition, where the SSR can be removed virtually immediately.

The lifting of the sanctions on Sudan, as a practical matter, means that all imports from Sudan are permitted and most EAR99 items can be exported to Sudan. Since Sudan remains a state sponsor of terrorism, section 7205 to the Trade Sanctions Reform and Export Enhancement Act of 2000 requires a license for all exports of agricultural commodities, medicine and medical devices to Sudan. These are covered by the general license in 538.540 and the new General License A, both of which permit exports of these items pursuant to a written agreement during the one-year period from the signing of the agreement. The lifting of the sanctions has no effect on the export restrictions in the Export Administration Regulations which require licenses for exports of Sudan for most items with an ECCN other than EAR99 or items listed in Supplement 2 to Part 742 (which includes some EAR99 items). And the arms embargo on Sudan in section 126.1 of the ITAR continues to remain in effect.

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Oct

6

Squid Pro Quo: CBP May Ban Imports from Chinese Factories with Nork Workers


Posted by at 12:37 pm on October 6, 2017
Category: CBPNorth Korea Sanctions

160823-NMTC-GF-0318 by Customs and Border Protection via Flickr https://flic.kr/p/SoTFxD [Public Domain - Work of U.S. Government]Customs and Border Protection, a federal agency not particularly known for its ability to analyze legal questions and follow the law, has apparently issued a statement that it will block imports of goods which were produced with any North Korean labor even though the North Korean workers were employed outside North Korea. The agency position arises from press reports that North Korean workers were employed in seafood processing plants in China that shipped salmon, squid and cod to U.S. stores, including Walmart and ALDI.

Executive Order 13570, promulgated in 2011, prohibited “the importation into the United States, directly or indirectly, of any goods, services, or technology from North Korea.” Section 510.201(c) of OFAC’s North Korea Sanctions Regulations prohibits any and all transactions that would violate Executive Order 13570 and thereby also effectively prohibits the import of goods “from North Korea” into the United States without an OFAC license. Certainly, if the squid in question were being processed in North Korea itself, the unlicensed import of the squid into the United States would violate OFAC’s rules.

But nothing in the rules or Executive Order 13570 prohibit the import of items made by North Koreans outside North Korea.  Although the North Korean Sanctions Regulations do not define “North Korea,” Section 4(d) of the Executive Order does, and that definition therefore controls.  The Executive Order defines “North Korea” as “the territory of the Democratic People’s Republic of Korea and the Government of North Korea.” It does not define North Korea to include any location where a North Korean, who is not a member of the Nork Government, just happens to be working. An item imported from China does not magically become an item from North Korea because a private Nork citizen in China touched it somewhere along the way.

This, of course, is basic Sanctions 101 and applies to all sanctions regimes. An item made in France does not come from Iran because a private Iranian citizen is employed in the French factory that produces the item. Of course, I understand the policy reasons for not wanting to import items made with Nork slave labor in China as the wages earned by these workers simply go back into Kim Jong Un’s XXXL pockets. But a new legal framework needs to be put in place to accomplish that result.

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Oct

5

OFAC Fines U.S. Paper Company for “Discussing” Exports to Sudan


Posted by at 9:34 pm on October 5, 2017
Category: OFACSudan

White Birch Paper Mill via https://whitebirchpaper.com/about-us/our-mills/papier-masson/ [Fair Use]Today the Office of Foreign Assets Control (“OFAC”) announced that it was fining White Birch Paper $372,465 to settle charges arising from exports of $354,602.26 of Canadian-origin paper from a White Birch mill in Canada to a customer in Sudan. Ah, yes, the doctrine of facilitation strikes again, although OFAC has some difficulty explaining that clearly:

Various personnel within White Birch USA and its Canadian subsidiary, White Birch Paper Canada Company NSULC (“White Birch Canada”), were actively involved in discussing, arranging, and executing the export transactions to Sudan.

This makes it appear that the violation arises equally from employees of White Birch Canada being involved in the exports, which, of course, was neither illegal nor facilitation.

The violation arises, of course, from the U.S. employees, rather than the Canadian employees being involved in the exports, certainly to the extent that the U.S. employees “arranged and executed” the exports.  However, if “discussing” the exports is facilitation, as this also seems to state, OFAC would be expanding the scope of the facilitation doctrine far beyond any prior conception of the scope of that doctrine. That would mean that if a U.S. employee said to the Canadian subsidiary “We can’t be involved in the exports to Sudan,” then that discussion would violate OFAC’s rules. Even if the employee were to stick his/her fingers in his ears and chant “la la la la la” every time a Canadian employee mentioned Sudan, that might still be a discussion as well since “la la la la la” means, of course, “I can’t be involved in these exports.”

Of course, it is more likely that this is just sloppy draftsmanship by OFAC — something we’ve seen before — than it is an effort to expand the scope of the facilitation doctrine to any discussion of the transaction whatsoever. Still, OFAC could have avoided this issue if it simply noted that the U.S. employees were actively involved in “arranging and executing” the exports, both of which can clearly constitute facilitation.

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