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On March 8, 2022, President Biden issued Executive Order 14066 which prohibits the following actions:

-The importation into the United States of any “crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products” of “Russian Federation origin”;

-New investment in the Russian energy sector by U.S. persons, wherever located; and

-Any approval, financing, facilitation, or guarantee by a U.S. person, wherever located, of any transaction conducted by a non-U.S. person that would be prohibited by Executive Order 14066 if performed by a U.S. person or within the United States.

The Executive Order further prohibits any transaction by anyone (whether a U.S. person or a non-U.S. person) that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of Executive Order 14066’s prohibitions, as well as conspiracies to violate the prohibitions.

In a Fact Sheet, the Biden Administration stated that the Executive Order is intended to “further deprive President Putin of the economic resources he uses to continue his needless war of choice”. A press release from the U.S. Department of the Treasury also stated that “[t]he United States continues to take severe action to hold the Russian Federation accountable for its brutal, unprovoked invasion of Ukraine. Treasury has targeted the infrastructure supporting President Putin’s invasion of Ukraine”.

Executive Order 14066 is immediately effective. However, the U.S. Treasury Department’s Office of the Foreign Assets Control (“OFAC”) has issued General License 16 authorizing all transactions that are “ordinarily incident and necessary to the importation into the United States” of certain products of “Russian Federation Origin”, if performed pursuant to written contracts or written agreements entered into prior to March 8, 2022. The products of “Russian Federation Origin” authorized for import into the U.S. under General License 16 are:

-Crude oil;

-Petroleum;

-Petroleum fuels;

-Oils, and products of their distillation;

-Liquified natural gas; and

-Coal products.

General License 16 will remain effective until April 22, 2022, at which time all such transactions will be fully prohibited. General License 16 does not authorize any other actions that are prohibited under the existing Russian Harmful Foreign Activities Sanctions Regulations or transactions with persons who are otherwise subject to blocking sanctions unless such actions or transactions are separately authorized by OFAC.

OFAC also issued new Frequently Asked Questions (FAQ) guidance and updated existing FAQ guidance in order to clarify certain aspects of the Executive Order. Among other things, these FAQs establish definitions for the terms “Russian Federation origin”, “new investment in the energy sector in the Russian Federation” and “energy sector”. The FAQs also clarify that the Executive Order’s prohibitions do not extend to products that are not of Russian Federation origin “even if such products transit through or depart from the Russian Federation”.

Additionally, U.S. Customs and Border Protection (“CBP”) issued Cargo Systems Messaging Service Number 51260049 indicating that it will “be requiring filers of entries or admissions to Foreign Trade Zones for shipments of [the Russian Federation origin banned products] to provide purchase orders and/or executed contracts and/or any other documentation showing when the order and/or contract went into effect” through the expiration of General License 16 on April 22, 2022. CBP also stated it will require the documentation prior to unlading and it “should include conveyance information, bill of lading number(s) and entry number(s) or FTZ admission information.”

Anyone reviewing Executive Order 14066 should also be aware of the significant sanctions and export controls that the U.S. government imposed on Russia prior to Executive Order 14066.

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Grant Leach is an Omaha-based partner with the law firm Husch Blackwell LLP focusing on international trade, export controls, trade sanctions and anti-corruption compliance.

Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell LLP. She leads the firm’s International Trade & Supply Chain group.

Tony Busch is an attorney in Husch Blackwell LLP’s Washington, D.C. office and is a member of the firm’s International Trade & Supply Chain practice team.

As tensions run high between Washington and Moscow over a possibly imminent Russian invasion of Ukraine, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated today four (4) current and former Ukrainian officials under Executive Order (“EO”) 14024 dated April 15, 2021. In a press release issued earlier today, OFAC asserted the Russian Federal Security Service (“FSB”) “recruit[s] Ukrainian citizens in key positions to gain access to sensitive information, threaten the sovereignty of Ukraine, and then leverage these Ukrainian officials to create instability in advance of a potential Russian invasion.” OFAC also noted that Russian agents have sought to influence U.S. elections since at least 2016.

In today’s action, OFAC added two (2) current Ukrainian Members of Parliament – Taras Kozak and Oleh Voloshyn – to the Specially Designated Nationals and Blocked Persons List (“SDN List”) and labeled them FSB “pawns”. OFAC accused Kozak of amplifying false narratives regarding the 2020 U.S. elections and Voloshyn of undermining Ukrainian government officials and advocating Russian interests. OFAC also added two (2) former Ukrainian officials to the SDN List – Volodymyr Oliynyk and Vladimir Sivkovich. OFAC asserts Oliynyk gathered information about Ukraine’s critical infrastructure for the FSB and Sivkovich engaged in influence and disinformation campaigns targeting both the Ukraine and the U.S.

All four (4) SDN designations were made pursuant to EO 14024, which authorizes OFAC to impose sanctions on persons who act or purport to act for or on behalf of, directly or indirectly, the Government of the Russian Federation. As a result of the designations, all property and interests in property of these persons in the U.S. or controlled by U.S. persons must be blocked and reported to OFAC. U.S. persons are prohibited from sending or receiving any provision of funds, goods, or services to/from these newly designated SDNs. According to OFAC’s “50% Ownership Rule,” these sanctions also extend to any entities in which these SDNs directly or indirectly hold, either individually or in the aggregate with other SDNs, an ownership interest of 50% or more.

The U.S. has also recently signaled its readiness to impose additional sanctions if Russia proceeds with an invasion of Ukraine, but has not shared many details of its plans. On January 21, 2022, Deputy Secretary of the Treasury Wally Adeyemo in a conversation with Ukraine Minister of Finance Serhiy Marchenko “emphasized that the United States and its allies and partners are prepared to inflict significant costs on the Russian economy if Russia further invades Ukraine.” Some news reports have forecasted that restrictions on semiconductor exports to Russia, sanctions against Russian financial institutions, and controls on foreign-produced goods going to Russia are among the options under consideration by the White House. However, any additional sanctions beyond the four (4) SDN designations reported in this post are purely speculative at this time.

Husch Blackwell’s Export Controls and Economic Sanctions Team continues to monitor U.S. sanctions and export controls against Russia and will provide further updates if additional developments occur.

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Tony Busch is an attorney in Husch Blackwell LLP’s Washington, D.C. office and is a member of the firm’s International Trade & Supply Chain practice team.

Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell LLP. She leads the firm’s International Trade & Supply Chain group.

Grant Leach is an Omaha-based partner with the law firm Husch Blackwell LLP focusing on international trade, export controls, trade sanctions and anti-corruption compliance.

President Biden Issues Executive Order Banning U.S. Imports of Russian Origin Oil, Gas, and Coal

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