[Federal Register Volume 61, Number 135 (Friday, July 12, 1996)]
[Rules and Regulations]
[Pages 36627-36629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17951]
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DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 575
Iraqi Sanctions Regulations; Executory Contracts with the
Government of Iraq
AGENCY: Office of Foreign Assets Control, Treasury.
ACTION: Final rule; amendment.
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SUMMARY: This final rule amends the Iraqi Sanctions Regulations to
provide a general license authorizing U.S. persons to enter into
executory contracts with the Government of Iraq for the purchase of
Iraqi-origin petroleum and petroleum products, the sale of essential
parts and equipment for the Kirkuk-Yumurtalik pipeline system, and the
sale of humanitarian goods, with performance conditioned upon approval
by the Office of Foreign Assets Control within the framework of United
Nations Security Council Resolution 986 (1995).
EFFECTIVE DATE: July 10, 1996.
FOR FURTHER INFORMATION CONTACT: Steven I. Pinter, Chief, Licensing
Division, Tel.: 202/622-2480, or William B. Hoffman, Chief Counsel,
Tel.: 202/622-2410, Office of Foreign Assets Control, Department of the
Treasury, Washington, DC 20220.
SUPPLEMENTARY INFORMATION:
Electronic and Facsimile Availability
This document is available as an electronic file on The Federal
Bulletin Board the day of publication in the Federal Register. By
modem, dial 202/512-1387 and type ``/GO FAC,'' or call 202/512-1530 for
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fedbbs.access.gpo.gov. The document is also accessible for downloading
in ASCII format without charge from Treasury's Electronic Library
(``TEL'') in the ``Business, Trade and Labor Mall'' of the FedWorld
bulletin board. By modem, dial 703/321-3339, and select the appropriate
self-expanding file in TEL. For Internet access, use one of the
following protocols: Telnet = fedworld.gov (192.239.93.3); World Wide
Web (Home Page) = http://www.fedworld.gov; FTP = ftp.fedworld.gov
(192.239.92.205). Additional information concerning the programs of the
Office of Foreign Assets Control is available for downloading from
Office's Internet Home Page: http://www.ustreas.gov/treasury/services/
fac/fac.html, or in fax form through the Office's 24-hour fax-on-demand
service: call 202/622-0077 using a fax machine, fax modem, or touch
tone telephone.
Background
On April 14, 1995, the United Nations Security Council (the
``UNSC'') adopted Resolution 986, which creates a framework, subject to
agreement of the Government of Iraq, that would permit the Government
of Iraq to sell $2 billion worth of petroleum and petroleum products
over a 6-month period, with all proceeds placed in a UN escrow account
for designated uses. On May 20, 1996, a Memorandum of Understanding
Between the Secretariat of the United Nations and the Government of
Iraq on the Implementation of Security Council Resolution 986 (1995)
(the ``Memorandum of Understanding'') was signed by representatives of
the Government of Iraq and the United Nations (the ``UN''). The
Memorandum of Understanding contains agreements preparatory to
implementation of Resolution 986. A portion of the proceeds in the
escrow account will be
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available for Iraq's purchase of medicine, health supplies, foodstuffs,
and materials and supplies for essential civilian needs, to be
specified in a list prepared by Iraq and submitted to and approved by
the UN Secretary-General. At the UN level, this program will be
administered by the UNSC Committee established pursuant to UNSC
Resolution 661 (the ``661 Committee''), which will establish guidelines
concerning procedures for permitted Iraqi purchases and sales. Within
the United States, the Treasury Department's Office of Foreign Assets
Control (``OFAC''), in consultation with the Department of State, will
implement UNSC Resolution 986. No direct financial transactions with
the Government of Iraq are permitted.
This final rule amends the Iraqi Sanctions Regulations, 31 CFR part
575 (the ``Regulations''), to provide a general license in new
Sec. 575.522, authorizing U.S. persons to enter into executory
contracts with the Government of Iraq for the purchases of Iraqi-origin
petroleum and petroleum products, and the sales of humanitarian goods
and pipeline parts and equipment permitted pursuant to UNSC Resolution
986, provided that no contract with the Government of Iraq can be
performed except as further authorized by OFAC. New Secs. 575.323,
575.324, 575.325, and 575.326, provide definitions for the terms ``661
Committee,'' ``UNSC Resolution 986,'' ``986 Escrow Account,'' and
``executory contract.''
All executory contracts must contain terms requiring that all
proceeds of oil purchases from the Government of Iraq, including SOMO,
must be placed in the UN escrow account at Banque Nationale de Paris,
New York (the ``986 Escrow Account''), and all Iraqi payment for sales
of authorized pipeline parts and equipment, humanitarian goods, and
incidental transaction costs borne by Iraq will, upon 661 Committee
approval, be paid or payable out of the 986 Escrow Account.
The Office of Foreign Assets Control will provide further guidance
on licensing policy for purchases of Iraqi-origin petroleum and
petroleum products, and sales to Iraq of pipeline parts and equipment
essential to the safe operation of the Kirkuk-Yumurtalik pipeline and
of humanitarian goods, once the 661 Committee has provided guidance on
its requirements for contract approval.
Because the Regulations involve a foreign affairs function,
Executive Order 12886 and the provisions of the Administrative
Procedure Act, 5 U.S.C. 553, requiring notice of proposed rulemaking,
opportunity for public participation, and delay in effective date, are
inapplicable. Because no notice of proposed rulemaking is required for
this rule, the Regulatory Flexibility Act, 5 U.S.C. 601-612, does not
apply.
There is no collection of information contained herein.
List of Subjects in 31 CFR Part 575
Administrative practice and procedure, Banks, banking, Blocking of
assets, Exports, Foreign trade, Humanitarian aid, Imports, Iraq, Oil
imports, Penalties, Petroleum, Petroleum products, Reporting and
recordkeeping requirements, Specially designated nationals, Travel
restrictions.
For the reasons set forth in the preamble, 31 CFR part 575 is
amended as follows:
PART 575--IRAQI SANCTIONS REGULATIONS
1. The authority citation for part 575 continues to read as
follows:
Authority: 50 U.S.C. 1701-1706; 50 U.S.C. 1601-1651; 22 U.S.C.
287c; Pub. L. 101-513, 104 Stat. 2047-55 (50 U.S.C. 1701 Note); 3
U.S.C. 301; E.O. 12722, 55 FR 31803, 3 CFR, 1990 Comp., p. 294; E.O.
12724, 55 FR 33089, 3 CFR, 1992 Comp., p. 317.
Subpart C--General Definitions
2. Section 575.323 is added to subpart C to read as follows:
Sec. 575.323 661 Committee.
The term 661 Committee means the Security Council Committee
established by UNSC Resolution 661, and persons acting for or on behalf
of the Committee under its specific delegation of authority for the
relevant matter or category of activity, including the overseers
appointed by the UN Secretary-General to examine and approve agreements
for purchases of petroleum and petroleum products from the Government
of Iraq pursuant to UNSC Resolution 986 (1995).
3. Section 575.324 is added to subpart C to read as follows:
Sec. 575.324 UNSC Resolution 986.
The term UNSC Resolution 986 means United Nations Security Council
Resolution 986, adopted April 14, 1995.
4. Section 575.325 is added to subpart C to read as follows:
Sec. 575.325 986 Escrow Account.
The term 986 Escrow Account means the escrow account established by
the Secretary-General of the United Nations pursuant to paragraph 7 of
UNSC Resolution 986.
5. Section 575.326 is added to subpart C to read as follows:
Sec. 575.326 Executory contract.
The term executory contract means a contract which cannot be
performed according to its terms until a stated condition has been
fulfilled, such as a contract which requires the approval of a
regulatory body before the contracting parties may begin performance.
Subpart E--Licenses, Authorizations, and Statements of Licensing
Policy
6. Section 575.522 is added to subpart E to read as follows:
Sec. 575.522 Executory contracts with the Government of Iraq for trade
in petroleum, pipeline parts and equipment, and humanitarian goods
authorized.
(a) United States persons are authorized to enter into executory
contracts with the Government of Iraq for the following transactions,
the performance of which (including any preparatory activities,
payments or deposits related to such executory contracts) is contingent
upon the prior authorization of the Office of Foreign Assets Control in
or pursuant to this part:
(1) The purchase and exportation from Iraq of Iraqi-origin
petroleum and petroleum products;
(2) The trading, importation, exportation, or other dealings in or
related to Iraqi-origin petroleum and petroleum products outside Iraq;
(3) The sale and exportation to Iraq of parts and equipment that
are essential for the safe operation of the Kirkuk-Yumurtalik pipeline
system in Iraq; and
(4) The sale and exportation to Iraq of medicines, health supplies,
foodstuffs, and materials and supplies for essential civilian needs.
(b) The authorization contained in paragraph (a) of this section
applies only to executory contracts meeting both of the following
conditions:
(1) The executory contracts, including all related financing,
insurance, transportation, delivery, and other incidental contracts,
are consistent with all requirements of UNSC Resolution 986, other
applicable Security Council resolutions, the May 20, 1996 Memorandum of
Understanding Between the Secretariat of the United Nations and the
Government of Iraq on the Implementation of Security Council Resolution
986 (1995), and applicable guidance issued by the 661 Committee; and
(2) The executory contracts make any performance involving the
exportation, reexportation, transfer or supply of any goods, technology
or services that are subject to license application requirements of
another Federal agency contingent upon the prior authorization of that
agency. See Sec. 575.101(b).
(c) Nothing in this section authorizes any transaction related to a
United States person's travel to Iraq or activity
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within Iraq, or any debit to an account blocked pursuant to this part.
(d) Note: U.S. passports must be validated by the U.S. Department
of State for travel to Iraq.
(e) Attention is drawn to the recordkeeping and retention
requirements of Sec. 575.601.
Dated: July 9, 1996.
R. Richard Newcomb,
Director, Office of Foreign Assets Control.
Approved: July 9, 1996.
James E. Johnson,
Assistant Secretary (Enforcement).
[FR Doc. 96-17951 Filed 7-10-96; 2:05 pm]
BILLING CODE 4810-25-F
