2010-24211. Iranian Transactions Regulations

AGENCY:

Office of Foreign Assets Control, Treasury.

ACTION:

Final rule.

SUMMARY:

The Department of the Treasury's Office of Foreign Assets Control (“OFAC”) is amending the Iranian Transactions Regulations in the Code of Federal Regulations to remove general licenses authorizing the importation into the United States of, and dealings in, certain foodstuffs and carpets of Iranian origin and related services, and to implement the import and export prohibitions in section 103 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010.

DATES:

Effective Date: September 29, 2010.

FOR FURTHER INFORMATION CONTACT:

Assistant Director for Compliance, Outreach & Implementation, tel.: [phone], Assistant Director for Licensing, tel.: [phone], Assistant Director for Policy, tel.: [phone], Office of Foreign Assets Control, or Chief Counsel (Foreign Assets Control), tel.: [phone], Office of the General Counsel, Department of the Treasury (not toll free numbers).

SUPPLEMENTARY INFORMATION:

Electronic and Facsimile Availability

This document and additional information concerning OFAC are available from OFAC's Web site (http://www.treas.gov/​ofac). Certain general information pertaining to OFAC's sanctions programs also is available via facsimile through a 24-hour fax-on-demand service, tel.: [phone].

Background

On July 1, 2010, the President signed into law the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (Pub. L. 111-195) (“CISADA”). Subsection 103(a) of CISADA provides that, in addition to any other sanction in effect, the economic sanctions described in subsection 103(b) of CISADA shall apply with respect to Iran beginning 90 days after the date of CISADA's enactment. The economic sanctions described in subsections 103(b)(1) and (b)(2) include prohibitions on the importation of goods or services of Iranian origin directly or indirectly into the United States and on the exportation of U.S.-origin goods, services, or technology from the United States or by a United States person, wherever located, to Iran. OFAC will implement these prohibitions through an amendment to the Iranian Transactions Regulations, 31 CFR Part 560 (the “ITR”), which already implement, pursuant to, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (“IEEPA”), prohibitions similar to those set forth in subsections 103(b)(1) and (b)(2) of CISADA. Consequently, OFAC is amending the ITR by adding CISADA to the ITR's authority citations.

Notwithstanding the ITR's prohibitions of imports and exports, OFAC authorizes certain otherwise prohibited transactions through general licenses set forth in the ITR and specific licenses issued pursuant to the ITR. In addition, the ITR contain certain exemptions from its prohibitions of imports and exports. Similarly, subsections 103(b)(1) and (b)(2) of CISADA include a number of exceptions to CISADA's prohibitions of imports and exports, respectively. The exceptions to CISADA's prohibitions differ in some cases from the exemptions and authorizations contained in or issued pursuant to the ITR.

To the extent that the ITR exemptions and licenses authorize import and export transactions beyond CISADA's exceptions, subsection 103(d)(1) of CISADA provides the authority to resolve these differences. That subsection authorizes the President to prescribe regulations to carry out section 103 and specifically states that these regulations may include regulatory exceptions to the sanctions described in subsection 103(b). Therefore, except with respect to sections 560.534 and 560.535 of the ITR, which are being removed (see below), OFAC is relying on the authority of subsection 103(d)(1) of CISADA to maintain in effect the general and specific licenses set forth in or issued pursuant to the ITR, and to treat those licenses as regulatory exceptions to the import and export prohibitions in subsection 103(b) of CISADA. This extends to general and specific licenses authorizing transactions that are beyond those specified in the exceptions set forth in subsections 103(b)(1) and (b)(2) of CISADA and that otherwise would be prohibited by CISADA.

Conversely, to the extent that the transactions described in CISADA's exceptions are neither exempt from nor authorized in or pursuant to the ITR, those transactions will remain prohibited pursuant to the ITR and, inter alia, IEEPA. In an explanatory statement, the Committee of Conference on CISADA stated that notwithstanding the exceptions in CISADA, any requirement under IEEPA to seek a license for the transactions described in those exceptions remains in effect. CISADA states in subsection 103(a) that the sanctions imposed by subsection 103(b) are “in addition to any other sanction in effect.” Accordingly, a specific license from OFAC is required to engage in transactions described in CISADA's exceptions if such transactions are neither exempt from nor authorized in or pursuant to the ITR.

Subsection 103(d)(2) of CISADA strengthens the current trade embargo against Iran by providing that no exception to the import prohibition in subsection 103(b)(1) of CISADA may be made for the commercial importation of an Iranian-origin good described in section 560.534(a) of the ITR, i.e., foodstuffs intended for human consumption that are classified under chapters 2-23 of the Harmonized Tariff Schedule of the United States and carpets and other textile floor coverings and carpets used as wall hangings that are classified under chapter 57 or heading 9706.00.0060 of the Harmonized Tariff Schedule of the United States. Accordingly, as of September 29, 2010 (i.e., the date that is 90 days after the date of CISADA's enactment), sections 560.534 and 560.535 of the ITR will be revoked, and OFAC will no longer authorize, by general or specific license, the commercial importation into the United States of these foodstuffs and carpets of Iranian-origin. Any such goods imported into the United States pursuant to sections 560.534 and 560.535 of the ITR must be entered for consumption prior to that date.

In addition, section 560.306 of the ITR defines the terms goods of Iranian origin and Iranian-origin goods to include: (1) Goods grown, produced, manufactured, extracted, or processed in Iran and (2) goods which have entered into Iranian commerce. Based on this definition, foodstuffs and carpets of third-country origin that are transshipped through Iran become goods of Iranian-origin. Therefore, the revocation of the general licenses in sections 560.534 and 560.535 of the ITR also will affect the specified foodstuffs and carpets of third-country origin that are transshipped through Iran for importation into the United States.

Section 560.534 of the ITR authorized both the commercial and noncommercial importation into the United States of certain foodstuffs and carpets of Iranian origin. As a result of the revocation of sections 560.534 and 560.535 of the ITR, the noncommercial importation of certain foodstuffs and carpets of Iranian origin into the United States and related services would also be prohibited by section 560.201 of the ITR, unless otherwise authorized or exempt. One such authorization is the general license for the importation of Iranian-origin household goods and personal effects set forth in section 560.524(b) of the ITR. That general license continues in effect. OFAC notes that U.S. Customs and Border Protection (CBP) Form 3299, “Declaration for Free Entry of Unaccompanied Articles,” is used to enter Iranian-origin household and personal effects into the United States.

Public Participation

Because the Regulations involve a foreign affairs function, the provisions of Executive Order 12866 and 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.

Paperwork Reduction Act

The collections of information related to the Regulations are contained in 31 CFR part 501 (the “Reporting, Procedures and Penalties Regulations”). Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information have been approved by the Office of Management and Budget under control number 1505-0164. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

List of Subjects in 31 CFR Part 560

• Administrative practice and procedure
• Banks
• Banking
• Brokers
• Foreign trade
• Investments
• Loans
• Securities
• Iran

For the reasons set forth in the preamble, the Department of the Treasury's Office of Foreign Assets Control amends 31 CFR part 560 as follows:

PART 560—IRANIAN TRANSACTIONS REGULATIONS

1. Revise the authority citation to part 560 to read as follows:

Authority: 3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 22 U.S.C. 2349aa-9; 22 U.S.C. 7201-7211; 31 U.S.C. 321(b); 50 U.S.C. 1601-1651, 1701-1706; Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note); Pub. L. 110-96, 121 Stat. 1011 (50 U.S.C. 1705 note); Pub. L. 111-195, 124 Stat. 1312 (22 U.S.C. 8501-8551); E.O. 12613, 52 FR 41940, 3 CFR, 1987 Comp., p. 256; E.O. 12957, 60 FR 14615, 3 CFR, 1995 Comp., p. 332; E.O. 12959, 60 FR 24757, 3 CFR, 1995 Comp., p. 356; E.O. 13059, 62 FR 44531, 3 CFR, 1997 Comp., p. 217.

Subpart E—License, Authorizations, and Statements of Licensing Policy

§§ 560.534 and 560.535

[Removed and reserved]

2. Remove and reserve §§ 560.534 and 560.535.

Dated: September 22, 2010.

Adam J. Szubin,

Director, Office of Foreign Assets Control.