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; oil; 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 US nationals, wherever they are; and
-Any endorsement, financing, facilitation, or guarantee by a U.S. person, wherever located, of any transaction by a non-U.S. person that would be prohibited by Executive Order 14066 if done by a U.S. person or in 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, is intended to evade or avoid, causes a breach, or attempts to violate any of the prohibitions of Executive Order 14066, as well as conspiracies to violate the prohibitions.
In a fact sheet, the Biden administration said the executive order is intended to “further deprive President Putin of the economic resources he is using to continue his wasteful war of choice.” A press release from the US Department of the Treasury also stated that “[t]he United States continues to take strong action to hold the Russian Federation accountable for its brutal and unprovoked invasion of Ukraine. The Treasury targeted infrastructure supporting President Putin’s invasion of Ukraine.
Executive Order 14066 takes effect immediately. However, the U.S. Treasury Department’s Office of the Foreign Assets Control (“OFAC”) issued General License 16 authorizing all transactions that are “customarily incidental and necessary to the importation into the United States of ‘certain products'” origin of the Russian Federation”, if performed under written contracts or written agreements concluded before March 8, 2022. Products “of origin of the Russian Federation” whose import to the States United States is licensed under General License 16 are:
-Oils and products of their distillation;
-Liquefied natural gas; and
– Coal products.
General License 16 will remain in effect until April 22, 2022, at which time all such transactions will be completely prohibited. General License 16 does not authorize any other actions prohibited by existing Russian regulations on sanctions against harmful foreign activities or transactions with persons otherwise subject to blocking sanctions, unless such actions or transactions are separately authorized by OFAC.
OFAC also released new Frequently Asked Questions (FAQ) guidelines and updated existing FAQ guidelines to clarify certain aspects of the executive order. Among other things, these FAQs establish definitions for the terms “origin from the Russian Federation”, “new investment in the energy sector in the Russian Federation” and “energy sector”. The FAQ also clarifies that the decree’s prohibitions do not extend to products that do not originate in the Russian Federation “even if such products transit through or leave the Russian Federation.”
In addition, U.S. Customs and Border Protection (“CBP”) has issued Cargo Systems Courier Service Number 51260049 stating that it “will require filers of entries or admissions in free zones for shipments of [the Russian Federation origin banned products]provide purchase orders and/or executed contracts and/or other documentation showing the effective date of the order and/or contract” until the expiration of General License 16 on April 22, 2022. CBP also said it would require the documentation before unloading and it “should include information about the conveyance, bill of lading number(s), and entry number(s) or free zone admission information”.
Anyone reviewing Executive Order 14066 should also be aware of the significant sanctions and export controls that the US government imposed on Russia prior to Executive Order 14066.
Grant leaching is an Omaha-based partner of 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 DC-based partner with the law firm Husch Blackwell LLP. She runs the firm International trade and supply chain group.
Tony Busch is an attorney in the office of Husch Blackwell LLP in Washington, D.C. and is a member of the firm International trade and supply chain practice team.