Sudanese Sanctions Regulations; Iranian Transactions Regulations, 61030-61036 [E9-27979]

Agencies

• DEPARTMENT OF THE TREASURY
• Office of Foreign Assets Control
• Foreign Assets Control Office

[Federal Register Volume 74, Number 224 (Monday, November 23, 2009)]
[Rules and Regulations]
[Pages 61030-61036]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-27979]


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DEPARTMENT OF THE TREASURY

Office of Foreign Assets Control

31 CFR Parts 538 and 560


Sudanese Sanctions Regulations; Iranian Transactions Regulations

AGENCY: Office of Foreign Assets Control, Treasury.

ACTION: Interim final rule with request for comments.

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SUMMARY: The Department of the Treasury's Office of Foreign Assets 
Control (``OFAC'') is adopting an interim final rule which makes 
technical changes to certain sections of the Sudanese Sanctions 
Regulations and the Iranian Transactions Regulations, 31 CFR parts 538 
and 560, respectively, relating to the Trade Sanctions Reform and 
Export Enhancement Act of 2000, as amended (``TSRA''). The preamble to 
this interim final rule clarifies OFAC's policy with respect to the 
process for issuing one-year licenses to export agricultural 
commodities, medicine, and medical devices to Sudan and Iran pursuant 
to section 906 of TSRA.

DATES: The interim final rule is effective November 23, 2009. Written 
comments may be submitted on or before January 22, 2010.

ADDRESSES: You may submit comments by any of the following methods:
    Federal eRulemaking Portal: https://www.regulations.gov.
    Follow the instructions for submitting comments.
    Fax: Attn: Request for Comments (Trade Sanctions Reform and Export 
Enhancement Act) (202) 622-1657
    Mail: Attn: Request for Comments (Trade Sanctions Reform and Export 
Enhancement Act): Office of Foreign Assets Control, Department of the 
Treasury, 1500 Pennsylvania Avenue, NW., Washington, DC 20220.
    Instructions: All submissions received must include the agency name 
and the Federal Register Doc. number that appears at the end of this 
document. Comments received will be made available to the public via 
regulations.gov or upon request, without change and including any 
personal information provided.

FOR FURTHER INFORMATION CONTACT: Assistant Director for Compliance, 
Outreach and Implementation, tel.: 202/622-2490, Assistant Director for 
Licensing, tel.: 202/622-2480, Assistant Director for Policy, tel.: 
202/622-4855, Office of Foreign Assets Control, or Chief Counsel 
(Foreign Assets Control), tel.: 202/622-2410, 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 (https://www.treas.gov/ofac). Certain 
general information pertaining to OFAC's sanctions programs is also 
available via facsimile through a 24-hour fax-on-demand service, tel.: 
202/622-0077.

Procedural Requirements

    Because the amendment of 31 CFR parts 538 and 560 involves 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.
    Although a prior notice of proposed rulemaking is not required, 
OFAC is soliciting comments on this interim final rule in order to 
consider how it might make improvements to these sections of the 
Sudanese Sanctions Regulations and the Iranian Transactions 
Regulations, 31 CFR parts 538 and 560, respectively. Comments must be 
submitted in writing. The addresses and deadline for submitting 
comments appear near the beginning of this notice. OFAC will not accept 
comments accompanied by a request that all or part of the submission be 
treated confidentially because of its business proprietary nature or 
for any other reason. All comments received by the deadline will be a 
matter of public record and will be made available to the public via 
regulations.gov.

Background

    The Office of Foreign Assets Control (``OFAC'') today is adopting 
an interim final rule which makes technical changes to certain sections 
of the Sudanese Sanctions Regulations, 31 CFR part 538 (the ``SSR''), 
and the Iranian Transactions Regulations, 31 CFR part 560 (the 
``ITR''), relating to the Trade Sanctions Reform and Export Enhancement 
Act of 2000, as amended (22 U.S.C. 7201 et seq.) (``TSRA''). This 
interim final rule and accompanying preamble serve to clarify OFAC's 
policy with respect to the process for issuing one-year licenses to 
export agricultural commodities, medicine, and medical devices to Sudan 
and Iran, and the considerations relevant to such licensing decisions.
    TSRA provides that, with certain exceptions, the President may not 
impose a unilateral agricultural sanction or unilateral medical 
sanction against a foreign country or foreign entity unless, at least 
60 days before imposing such a sanction, the President submits a report 
to Congress describing the proposed sanction and the reasons for it and 
Congress enacts a joint resolution approving the report. Section 906 of 
TSRA, however, requires that the export of agricultural commodities, 
medicine, and medical devices to Cuba, or to the government of a 
country that has been determined by the Secretary of State, pursuant 
to, inter alia, section 6(j) of the Export Administration Act of 1979 
(50 U.S.C. App. 2405(j)), to have repeatedly provided support for acts 
of international terrorism, or to any entity in such a country, shall 
only be made pursuant to one-year licenses issued by the United States 
Government. Section 906 also requires that procedures shall be in place 
to deny licenses for exports to any entity within such country that 
promotes international terrorism.
    Effective July 26, 2001, OFAC promulgated amendments to the SSR and 
the ITR to implement section 906 of TSRA. See 66 FR 36683 (July 12, 
2001) (the ``2001 interim rule''). The preamble to the 2001 interim 
rule described an expedited process for the issuance of the one-year 
license required by section 906 for all exports and reexports of 
agricultural commodities, medicine, and medical devices to Sudan or 
Iran.
    OFAC published the 2001 interim rule describing the expedited 
licensing process in July 2001. As OFAC has stated publicly, 
circumstances developed almost immediately after publication of the 
2001 interim rule that seriously limited OFAC's ability to process 
applications as expeditiously as had been hoped. See Clarification of 
Policy With Respect to the Process for Issuing One-Year Licenses to 
Export Agricultural Commodities, Medicine, and Medical Devices to Sudan 
and Iran, 72 FR 12980 (March 20, 2007). To begin with, the terrorist 
attacks of September 11, 2001, magnified concerns about international 
terrorism and proliferation of weapons of mass destruction. These 
concerns prompted greater scrutiny on

[[Page 61031]]

the part of OFAC and other agencies of the U.S. Government of those 
entities within state sponsors of terrorism to whom agricultural 
commodities, medicine, and medical devices were being exported. 
Moreover, the volume of license requests has increased substantially 
since the inception of the TSRA program, and applications are now much 
more complicated than earlier ones, often involving dozens and 
sometimes hundreds of products and parties to the transaction.
    All of these factors have contributed to longer OFAC and 
interagency reviews of the applications, and thus longer processing 
times for the applications than indicated in the preamble to the 2001 
interim rule. This review has often been further complicated by the 
fact that these license requests are evaluated both in terms of whether 
the foreign entities involved in the transaction ``promote 
international terrorism,'' as required by section 906 of TSRA, and in 
terms of whether the products at issue implicate independent export 
control regimes involving chemical or biological weapons, missiles, or 
weapons of mass destruction, as provided in section 904(2)(C) of TSRA. 
Scrutiny of license applications on the latter ground often results in 
requests for additional information by the reviewing agencies, which 
neither the applicant nor OFAC can anticipate, further delaying the 
review process.
    While TSRA specifies that the requirements of the one-year licenses 
shall be no more restrictive than general licenses administered by the 
Department of the Treasury, it also requires that procedures be in 
place to deny licenses for exports of agricultural commodities, 
medicine, and medical devices to any entity within a country promoting 
international terrorism. In addition, TSRA itself provides that the 
restrictions on the imposition of unilateral agricultural sanctions or 
unilateral medical sanctions shall not affect any authority or 
requirement to impose a sanction to the extent such sanction applies to 
any agricultural commodity, medicine or medical device that is (1) 
controlled on the United States Munitions List (the ``USML''), (2) 
controlled on any control list established under the Export 
Administration Act of 1979 or any successor statute, or (3) used to 
facilitate the design, development or production of chemical or 
biological weapons, missiles, or weapons of mass destruction.
    Moreover, shortly after the issuance of the 2001 interim rule and 
in response to the events of September 11, Congress enacted the Uniting 
and Strengthening America by Providing Appropriate Tools Required to 
Intercept and Obstruct Terrorism Act of 2001 (Pub. L. 107-56) (the 
``USA Patriot Act''). Section 221 of the USA Patriot Act amended or 
modified the application of TSRA in several ways, including by adding a 
section, codified at 22 U.S.C. 7210, which provides:

    Nothing in the Trade Sanctions Reform and Export Enhancement Act 
of 2000 (22 U.S.C. Sec.  7201 et seq.) shall limit the application 
or scope of any law establishing criminal or civil penalties, 
including any Executive order or regulation promulgated pursuant to 
such laws (or similar or successor laws), for the unlawful export of 
any agricultural commodity, medicine, or medical device to--
    (1) A foreign organization, group, or person designated pursuant 
to Executive Order No. 12947 of January 23, 1995, as amended;
    (2) a Foreign Terrorist Organization pursuant to the 
Antiterrorism and Effective Death Penalty Act of 1996 (Public Law 
104-132);
    (3) a foreign organization, group, or person designated pursuant 
to Executive Order No. 13224 (September 23, 2001);
    (4) any narcotics trafficking entity designated pursuant to 
Executive Order No. 12978 (October 21, 1995) or the Foreign 
Narcotics Kingpin Designation Act (Public Law 106-120) (21 U.S.C. 
Sec.  1901 et seq.); or
    (5) any foreign organization, group, or persons subject to any 
restriction for its involvement in weapons of mass destruction or 
missile proliferation.

    Neither the legislative history surrounding TSRA nor the statute 
itself specifies a timeline for the issuance of the one-year licenses. 
As the TSRA and USA Patriot Act provisions cited above make clear, the 
licensing process must account for the requirements that the licensing 
and reviewing agencies take measures to ensure that (1) no agricultural 
commodity, medicine or medical device is exported to any entity, 
organization or other person designated pursuant to any law or 
Executive order sanctioning terrorists, weapons of mass destruction or 
missile proliferators, or narcotics traffickers and (2) licenses under 
section 906 of TSRA are not granted for the export of any agricultural 
commodity, medicine, or medical device that is controlled on the USML 
or the Commerce Control List in the Export Administration Regulations, 
15 CFR part 774, supplement no. 1, or that is used to facilitate the 
design, development or production of chemical or biological weapons, 
missiles, or weapons of mass destruction.
    Accordingly, OFAC is adopting an interim final rule which makes 
technical changes to the TSRA-related sections of the SSR and the ITR. 
The preamble to this interim final rule clarifies OFAC's policy with 
respect to the licensing process for TSRA-related exports. Although 
this interim final rule is effective immediately, OFAC invites comments 
on this interim final rule. OFAC will continue to conduct a review of 
applications for one-year licenses consistent with the requirements of 
section 906 of TSRA and other applicable provisions of law, which may 
include a referral to other government agencies for guidance, and will 
respond to such applications upon completion of the review. The 
specific timing with respect to any application will continue to depend 
on factors such as the nature of the goods being exported, the 
complexity of the transactions, and the need for interagency review. 
Therefore, OFAC's processing of one-year license requests may take 
significantly longer than the time periods indicated in the preamble to 
the 2001 interim rule published at the inception of the TSRA program. 
OFAC will continue to respond to such applications in as timely a 
manner as is possible under the circumstances of each individual 
license application, consistent with OFAC's obligations under TSRA, the 
SSR, the ITR, and other applicable provisions of law.

Paperwork Reduction Act

    The collections of information related to 31 CFR parts 538 and 560 
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

31 CFR Part 538

    Administrative practice and procedure, Agricultural commodities, 
Banks, Banking, Blocking of assets, Drugs, Exports, Foods, Foreign 
trade, Humanitarian aid, Imports, Information, Investments, Loans, 
Medical devices, Medicine, Penalties, Reporting and recordkeeping 
requirements, Specially designated nationals, Services, Sudan, 
Terrorism, Transportation.

31 CFR Part 560

    Administrative practice and procedure, Agricultural commodities, 
Banks, Banking, Blocking of assets, Drugs, Exports, Foods, Foreign 
trade, Humanitarian aid, Imports, Information, Investments, Iran, 
Loans, Medical

[[Page 61032]]

devices, Medicine, Penalties, Reporting and recordkeeping requirements, 
Services, Specially designated nationals, Terrorism, Transportation.

0
For the reasons set forth in the preamble, the Department of the 
Treasury's Office of Foreign Assets Control adopts an interim final 
rule amending 31 CFR parts 538 and 560, as follows:

PART 538--SUDANESE SANCTIONS REGULATIONS

0
1. The authority citation for part 538 continues to read as follows:

    Authority:  3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 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); 22 U.S.C. 7201-7211; Pub. L. 109-344, 120 
Stat. 1869; Pub. L. 110-96, 121 Stat. 1011; E.O. 13067, 62 FR 59989, 
3 CFR, 1997 Comp., p. 230; E.O. 13412, 71 FR 61369, 3 CFR, 2006 
Comp., p. 244.

Subpart E--Licenses, Authorizations, and Statements of Licensing 
Policy

0
2. Revise Sec.  538.523 to read as follows:


Sec.  538.523  Commercial sales, exportation, and reexportation of 
agricultural commodities, medicine, and medical devices.

    (a)(1) One-year specific license requirement. The exportation or 
reexportation of agricultural commodities (including bulk agricultural 
commodities listed in appendix A to this part 538), medicine, or 
medical devices to the Government of Sudan, to any individual or entity 
in an area of Sudan other than the Specified Areas of Sudan, or to 
persons in third countries purchasing specifically for resale to the 
foregoing, shall only be made pursuant to a one-year specific license 
issued by the U.S. Department of the Treasury, Office of Foreign Assets 
Control, for contracts entered into during the one-year period of the 
license and shipped within the 12-month period beginning on the date of 
the signing of the contract. No specific license will be granted for 
the exportation or reexportation of agricultural commodities, medicine, 
or medical equipment to any entity or individual in Sudan promoting 
international terrorism, to any narcotics trafficking entity designated 
pursuant to Executive Order 12978 of October 21, 1995 (60 FR 54579, 
October 24, 1995) or the Foreign Narcotics Kingpin Designation Act (21 
U.S.C. 1901-1908), or to any foreign organization, group, or persons 
subject to any restriction for their involvement in weapons of mass 
destruction or missile proliferation. Executory contracts entered into 
pursuant to paragraph (b)(2) of this section prior to the issuance of 
the one-year specific license described in this paragraph shall be 
deemed to have been signed on the date of issuance of that one-year 
specific license (and, therefore, the exporter is authorized to make 
shipments under that contract within the 12-month period beginning on 
the date of issuance of the one-year specific license).
    (2) General license for the Specified Areas of Sudan. The 
exportation or reexportation of agricultural commodities (including 
bulk agricultural commodities listed in appendix A to this part 538), 
medicine, and medical devices to the Specified Areas of Sudan and the 
conduct of related transactions, including, but not limited to, the 
making of shipping and cargo inspection arrangements, the obtaining of 
insurance, the arrangement of financing and payment, the entry into 
executory contracts, and the provision of brokerage services for such 
sales and exports or reexports, are hereby authorized, provided that 
such activities or transactions do not involve any property or 
interests in property of the Government of Sudan and do not relate to 
the petroleum or petrochemical industries in Sudan, and also provided 
that all such exports or reexports are shipped within the 12-month 
period beginning on the date of the signing of the contract for export 
or reexport.

    Note 1 to Sec.  538.523(a)(2):  Consistent with section 
906(a)(1) of the Trade Sanctions Reform and Export Enhancement Act 
of 2000 (22 U.S.C. 7205), each year by the anniversary of its 
effective date of September 9, 2009, the Office of Foreign Assets 
Control will determine whether to revoke this general license. 
Unless revoked, the general license will remain in effect.


    Note 2 to Sec.  538.523(a)(2):  See Sec. Sec.  538.417 and 
538.418 for additional requirements with respect to transshipments 
through, and financial transactions in, Sudan.

    (b) General license for arrangement of exportation or reexportation 
of covered products. (1) With respect to sales pursuant to Sec.  
538.523(a)(1), the making of shipping arrangements, cargo inspection, 
obtaining of insurance, and arrangement of financing (consistent with 
Sec.  538.525) for the exportation or reexportation of agricultural 
commodities, medicine, or medical devices to the Government of Sudan, 
to any individual or entity in an area of Sudan other than the 
Specified Areas of Sudan, or to persons in third countries purchasing 
specifically for resale to the foregoing, are authorized.
    (2) If desired, entry into executory contracts (including executory 
pro forma invoices, agreements in principle, or executory offers 
capable of acceptance such as bids in response to public tenders) for 
the exportation or reexportation of agricultural commodities, medicine, 
and medical devices to the Government of Sudan, to any individual or 
entity in an area of Sudan other than the Specified Areas of Sudan, or 
to persons in third countries purchasing specifically for resale to the 
foregoing, is authorized, provided that performance of an executory 
contract is expressly made contingent upon the prior issuance of the 
one-year specific license described in paragraph (a)(1) of this 
section.
    (c) Instructions for obtaining one-year specific licenses. In order 
to obtain the one-year specific license described in paragraph (a)(1) 
of this section, the exporter must provide to the Office of Foreign 
Assets Control:
    (1) The applicant's full legal name (if the applicant is a business 
entity, the state or jurisdiction of incorporation and principal place 
of business).
    (2) The applicant's mailing and street address (so that OFAC may 
reach a responsible point of contact, the applicant should also include 
the name of the individual(s) responsible for the application and 
related commercial transactions along with their telephone and fax 
numbers and, if available, e-mail addresses).
    (3) The names, mailing addresses, and if available, fax and 
telephone numbers of all parties with an interest in the transaction. 
If the goods are being exported or reexported to a purchasing agent in 
Sudan, the exporter must identify the agent's principals at the 
wholesale level for whom the purchase is being made. If the goods are 
being exported or reexported to an individual, the exporter must 
identify any organizations or entities with which the individual is 
affiliated that have an interest in the transaction.
    (4) A description of all items to be exported or reexported 
pursuant to the requested one-year license, including a statement that 
the item is classified as EAR 99, and, if necessary, documentation 
sufficient to verify that the items to be exported or reexported are 
classified as EAR 99 and do not fall within any of the limitations 
contained in paragraph (d) of this section.
    (5) An Official Commodity Classification of EAR 99 issued by the 
Department of Commerce, Bureau of Industry and Security (``BIS''), 
certifying that the product is EAR 99, is required to be submitted to 
OFAC with the request for a license authorizing the

[[Page 61033]]

exportation or reexportation of all fertilizers, live horses, western 
red cedar, and medical devices other than basic medical supplies, such 
as syringes, bandages, gauze and similar items, that are specifically 
listed on BIS's Web site, https://www.bis.doc.gov/policiesandregulations/tradesanctionsreformexportenhancementact.html. 
Medical supplies that are specifically listed on BIS's Web site may not 
require an Official Commodity Classification of EAR 99 from BIS. BIS 
will also provide a list on its Web site of medicines that are 
ineligible for a one-year license under these procedures. Exporters 
should seek an Official Commodity Classification of EAR 99 from BIS for 
medicines and submit a copy to OFAC. See 15 CFR 745.3 for instructions 
for obtaining Official Commodity Classification of EAR 99 from BIS.
    (d) Limitations. (1) Nothing in this section or in any license 
issued pursuant to paragraph (a) of this section relieves the exporter 
from compliance with the export license application requirements of 
another Federal agency.
    (2) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section authorizes the exportation or 
reexportation of any agricultural commodity, medicine, or medical 
device controlled on the United States Munitions List established under 
section 38 of the Arms Export Control Act (22 U.S.C. 2778); controlled 
on any control list established under the Export Administration Act of 
1979 or any successor statute (50 U.S.C. App. 2401 et seq.); or used to 
facilitate the development or production of a chemical or biological 
weapon or weapon of mass destruction.
    (3) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section affects prohibitions on the sale or 
supply of U.S. technology or software used to manufacture agricultural 
commodities, medicine, or medical devices, such as technology to design 
or produce biotechnological items or medical devices.
    (4) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section affects U.S. nonproliferation export 
controls, including end-user and end-use controls maintained under the 
Enhanced Proliferation Control Initiative.
    (5) This section does not apply to any transaction or dealing 
involving property blocked pursuant to this chapter or to any other 
activity prohibited by this chapter that is not otherwise authorized in 
this part.
    (e) Covered items. For the purposes of this part, agricultural 
commodities, medicine, and medical devices are defined below.
    (1) Agricultural commodities. For the purposes of this section, 
agricultural commodities are:
    (i) Products that are not listed on the Commerce Control List in 
the Export Administration Regulations, 15 CFR part 774, supplement no. 
1, and that fall within the term ``agricultural commodity'' as defined 
in section 102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602); 
and
    (ii) Products not listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1, that are 
intended for ultimate use in Sudan as:
    (A) Food for humans (including raw, processed, and packaged foods; 
live animals; vitamins and minerals; food additives or supplements; and 
bottled drinking water) or animals (including animal feeds);
    (B) Seeds for food crops;
    (C) Fertilizers or organic fertilizers; or
    (D) Reproductive materials (such as live animals, fertilized eggs, 
embryos, and semen) for the production of food animals.
    (2) Medicine. For the purposes of this section, the term medicine 
has the same meaning given the term ``drug'' in section 201 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) but does not 
include any item listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1 
(excluding items classified as EAR 99).
    (3) Medical device. For the purposes of this section, the term 
medical device has the meaning given the term ``device'' in section 201 
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) but does 
not include any item listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1 
(excluding items classified as EAR 99).
0
3. Revise Sec.  538.525 to read as follows:


Sec.  538.525  Payment for and financing of commercial sales of 
agricultural commodities, medicine, and medical equipment.

    (a) General license for payment terms. The following payment terms 
for sales, pursuant to Sec.  538.523(a)(1), of agricultural commodities 
and products, medicine, and medical equipment to the Government of 
Sudan, to any individual or entity in an area of Sudan other than the 
Specified Areas, or to persons in third countries purchasing 
specifically for resale to the foregoing are authorized:
    (1) Payment of cash in advance;
    (2) Sales on open account, provided that the account receivable may 
not be transferred by the person extending the credit; or
    (3) Financing by third-country financial institutions that are 
neither United States persons nor Government of Sudan entities. Such 
financing may be confirmed or advised by U.S. financial institutions.
    (b) Specific licenses for alternate payment terms. Specific 
licenses may be issued on a case-by-case basis for payment terms and 
trade financing not authorized by the general license in paragraph (a) 
of this section for sales pursuant to Sec.  538.523(a)(1). See Sec.  
501.801(b) of this chapter for specific licensing procedures.
    (c) No debits to blocked accounts. Nothing in this section 
authorizes payment terms or trade financing involving a debit to an 
account of the Government of Sudan blocked pursuant to this part.
    (d) Transfers through the U.S. financial system. Before a United 
States financial institution initiates a payment on behalf of any 
customer, or credits a transfer to the account on its books of the 
ultimate beneficiary, the United States financial institution must 
determine that the underlying transaction is not prohibited by this 
part. Any payment relating to a transaction authorized in or pursuant 
to Sec.  538.523 or Sec.  538.526 that is routed through the U.S. 
financial system must reference the relevant Office of Foreign Assets 
Control license authorizing the payment to avoid the blocking or 
rejection of the transfer.
    (e) Notwithstanding any other provision of this part, no commercial 
exportation to Sudan may be made with United States Government 
assistance, including United States foreign assistance, United States 
export assistance, and any United States credit or guarantees absent a 
Presidential waiver.
0
4. Revise Sec.  538.526 to read as follows:


Sec.  538.526  Brokering sales of agricultural commodities, medicine, 
and medical devices.

    (a) General license for brokering sales by U.S. persons. United 
States persons are authorized to provide brokerage services on behalf 
of U.S. persons for the sale and exportation or reexportation by United 
States persons of agricultural commodities, medicine, and medical 
devices to the Government of Sudan, to any individual or entity in an 
area of Sudan other than the Specified Areas of Sudan, or to persons in 
third countries purchasing specifically for resale to the foregoing, 
provided that the sale and exportation or reexportation is authorized 
by a one-

[[Page 61034]]

year specific license issued pursuant to Sec.  538.523(a)(1).
    (b) Specific licensing for brokering sales by non-U.S. persons of 
bulk agricultural commodities. Specific licenses may be issued on a 
case-by-case basis to permit United States persons to provide brokerage 
services on behalf of non-United States, non-Sudanese persons for the 
sale and exportation or reexportation of bulk agricultural commodities 
to the Government of Sudan, to any individual or entity in an area of 
Sudan other than the Specified Areas of Sudan, or to persons in third 
countries purchasing specifically for resale to the foregoing. Specific 
licenses issued pursuant to this section will authorize the brokering 
only of sales that:
    (1) Are limited to the bulk agricultural commodities listed in 
appendix A to this part 538;
    (2) Are to purchasers permitted pursuant to Sec.  538.523(a)(1); 
and

    Note to paragraph (b)(2) of Sec.  538.526:  Requests for 
specific licenses to provide brokerage services under this paragraph 
must include all of the information described in Sec.  538.523(c).

    (3) Make any performance involving the exportation or reexportation 
of any goods, technology or services (including technical data, 
software, or information) that are subject to license application 
requirements of another Federal agency contingent upon the prior 
authorization of that agency. (For example, items classified EAR 99 
under the Export Administration Regulations, 15 CFR parts 730 through 
774, may in certain instances require a license from the Department of 
Commerce, Bureau of Industry and Security. See, e.g., 15 CFR 
736.2(b)(5), 744.2 through 744.4, 744.7, and 744.10; see also 22 CFR 
123.9.)
    (c) No debit to blocked accounts. Payment for any brokerage fee 
earned pursuant to this section may not involve a debit to an account 
blocked pursuant to this part.
    (d) Recordkeeping and reporting requirements. Attention is drawn to 
the recordkeeping, retention, and reporting requirements of Sec. Sec.  
501.601 and 501.602.

PART 560--IRANIAN TRANSACTIONS REGULATIONS

0
5. The authority citation for part 560 is revised to read as follows:

    Authority:  3 U.S.C. 301; 18 U.S.C. 2339B, 2332d; 22 U.S.C. 
2349aa-9; 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); 22 U.S.C. 7201-7211; 
Pub. L. 110-96, 121 Stat. 1011; 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--Licenses, Authorizations, and Statements of Licensing 
Policy

0
6. Revise Sec.  560.530 to read as follows:


Sec.  560.530  Commercial sales, exportation, and reexportation of 
agricultural commodities, medicine, and medical devices.

    (a) One-year license requirement. The exportation or reexportation 
of agricultural commodities (including bulk agricultural commodities 
listed in appendix B to this part 560), medicine, or medical devices to 
the Government of Iran, any entity in Iran, individuals in Iran, or 
persons in third countries purchasing specifically for resale to any of 
the foregoing, shall only be made pursuant to a one-year license issued 
by the United States Department of the Treasury, Office of Foreign 
Assets Control, for contracts entered into during the one-year period 
of the license and shipped within the 12-month period beginning on the 
date of the signing of the contract. No license will be granted for the 
exportation or reexportation of agricultural commodities, medicine, or 
medical equipment to any entity or individual in Iran promoting 
international terrorism. Executory contracts entered into pursuant to 
paragraph (b)(2) of this section prior to the issuance of the one-year 
license described in this paragraph shall be deemed to have been signed 
on the date of issuance of that one-year license (and, therefore, the 
exporter is authorized to make shipments under that contract within the 
12-month period beginning on the date of issuance of the one-year 
license).
    (b) General license for arrangement of exportation and 
reexportation of covered products. (1) The making of shipping 
arrangements, cargo inspections, obtaining of insurance, and 
arrangement of financing (consistent with Sec.  560.532) for the 
exportation or reexportation of agricultural commodities, medicine, and 
medical devices to the Government of Iran, entities in Iran, 
individuals in Iran, or persons in third countries purchasing 
specifically for resale to any of the foregoing, is authorized.
    (2) If desired, entry into executory contracts (including executory 
pro forma invoices, agreements in principle, or executory offers 
capable of acceptance such as bids in response to public tenders) for 
the exportation or reexportation of agricultural commodities, medicine, 
and medical devices to the Government of Iran, entities in Iran, 
individuals in Iran, or persons in third countries purchasing 
specifically for resale to any of the foregoing, is authorized, 
provided that performance of an executory contract is expressly made 
contingent upon the prior issuance of the one-year license described in 
paragraph (a) of this section.
    (c) Instructions for obtaining one-year licenses. In order to 
obtain the one-year license described in paragraph (a), the exporter 
must provide to the Office of Foreign Assets Control:
    (1) The applicant's full legal name (if the applicant is a business 
entity, the state or jurisdiction of incorporation and principal place 
of business).
    (2) The applicant's mailing and street address (so that OFAC may 
reach a responsible point of contact, the applicant should also include 
the name of the individual(s) responsible for the application and 
related commercial transactions along with their telephone and fax 
numbers and, if available, e-mail addresses).
    (3) The names, mailing addresses, and, if available, fax and 
telephone numbers of all parties with an interest in the transaction. 
If the goods are being exported or reexported to a purchasing agent in 
Iran, the exporter must identify the agent's principals at the 
wholesale level for whom the purchase is being made. If the goods are 
being exported or reexported to an individual, the exporter must 
identify any organizations or entities with which the individual is 
affiliated that have an interest in the transaction.
    (4) A description of all items to be exported or reexported 
pursuant to the requested one-year license, including a statement that 
the item is classified as EAR 99, and, if necessary, documentation 
sufficient to verify that the items to be exported or reexported are 
classified as EAR 99 and do not fall within any of the limitations 
contained in paragraph (d) of this section.
    (5) An Official Commodity Classification of EAR 99 issued by the 
Department of Commerce, Bureau of Industry and Security (``BIS''), 
certifying that the product is EAR 99, is required to be submitted to 
OFAC with the request for a license authorizing the exportation or 
reexportation of all fertilizers, live horses, western red cedar, and 
medical devices other than basic medical supplies, such as syringes, 
bandages, gauze and similar items, that are specifically listed on 
BIS's Web site, https://www.bis.doc.govpoliciesandregulations/tradesanctionsreformexportenhancementact.html. Medical supplies that 
are specifically listed on BIS's Web site may not require

[[Page 61035]]

an Official Commodity Classification of EAR 99 from BIS. BIS will also 
provide a list on its Web site of medicines that are ineligible for a 
one-year license under these procedures. Exporters should seek an 
Official Commodity Classification of EAR 99 from BIS for medicines and 
submit a copy to OFAC. See 15 CFR 745.3 for instructions for obtaining 
Official Commodity Classification of EAR 99 from BIS.
    (d) Limitations. (1) Nothing in this section or in any license 
issued pursuant to paragraph (a) of this section relieves the exporter 
from compliance with the export license application requirements of 
another Federal agency.
    (2) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section authorizes the exportation or 
reexportation of any agricultural commodity, medicine, or medical 
device controlled on the United States Munitions List established under 
section 38 of the Arms Export Control Act (22 U.S.C. 2778); controlled 
on any control list established under the Export Administration Act of 
1979 or any successor statute (50 U.S.C. App. 2401 et seq.); or used to 
facilitate the development or production of a chemical or biological 
weapon or weapon of mass destruction.
    (3) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section affects prohibitions on the sale or 
supply of U.S. technology or software used to manufacture agricultural 
commodities, medicine, or medical devices, such as technology to design 
or produce biotechnological items or medical devices.
    (4) Nothing in this section or in any license issued pursuant to 
paragraph (a) of this section affects U.S. nonproliferation export 
controls, including end-user and end-use controls maintained under the 
Enhanced Proliferation Control Initiative.
    (5) This section does not apply to any transaction or dealing 
involving property blocked pursuant to this chapter or any other 
activity prohibited by this chapter not otherwise authorized in this 
part.
    (e) Covered items. For the purposes of this part, agricultural 
commodities, medicine, and medical devices are defined below.
    (1) Agricultural commodities. For the purposes of this section, 
agricultural commodities are:
    (i) Products not listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1, and that 
fall within the term ``agricultural commodity'' as defined in section 
102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602); and
    (ii) Products not listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1, that are 
intended for ultimate use in Iran as:
    (A) Food for humans (including raw, processed, and packaged foods; 
live animals; vitamins and minerals; food additives or supplements; and 
bottled drinking water) or animals (including animal feeds);
    (B) Seeds for food crops;
    (C) Fertilizers or organic fertilizers; or
    (D) Reproductive materials (such as live animals, fertilized eggs, 
embryos, and semen) for the production of food animals.
    (2) Medicine. For the purposes of this section, the term medicine 
has the same meaning given the term ``drug'' in section 201 of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) but does not 
include any item listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1 
(excluding items classified as EAR 99).
    (3) Medical device. For the purposes of this section, the term 
medical device has the meaning given the term ``device'' in section 201 
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) but does 
not include any item listed on the Commerce Control List in the Export 
Administration Regulations, 15 CFR part 774, supplement no. 1 
(excluding items classified as EAR 99).

0
7. Revise Sec.  560.532 to read as follows:


Sec.  560.532  Payment for and financing of exports and reexports of 
agricultural commodities, medicine, and medical devices.

    (a) General license for payment terms. The following payment terms 
for sales of agricultural commodities and products, medicine, and 
medical equipment pursuant to Sec. Sec.  560.530 and 560.531 are 
authorized:
    (1) Payment of cash in advance;
    (2) Sales on open account, provided that the account receivable may 
not be transferred by the person extending the credit; or
    (3) Financing by third-country financial institutions that are 
neither United States persons nor Government of Iran entities. Such 
financing may be confirmed or advised by U.S. financial institutions.
    (b) Specific licenses for alternate payment terms. Specific 
licenses may be issued on a case-by-case basis for payment terms and 
trade financing not authorized by the general license in paragraph (a) 
of this section for sales pursuant to Sec.  560.530. See Sec.  
501.801(b) of this chapter for specific licensing procedures.
    (c) No debits or credits to Iranian accounts on the books of U.S. 
depository institutions. Nothing in this section authorizes payment 
terms or trade financing involving debits or credits to Iranian 
accounts, as defined in Sec.  560.320.
    (d) Transfers through the U.S. financial system. Any payment 
relating to a transaction authorized in or pursuant to Sec.  560.530 or 
Sec.  560.533 that is routed through the U.S. financial system must 
reference the relevant Office of Foreign Assets Control license 
authorizing the payment to avoid the rejection of the transfer. See 
Sec.  560.516(c).
    (e) Notwithstanding any other provision of this part, no commercial 
exportation to Iran may be made with United States Government 
assistance, including United States foreign assistance, United States 
export assistance, and any United States credit or guarantees absent a 
Presidential waiver.

0
8. Revise Sec.  560.533 to read as follows:


Sec.  560.533  Brokering sales of agricultural commodities, medicine, 
and medical devices.

    (a) General license for brokering sales by U.S. persons. United 
States persons are authorized to provide brokerage services on behalf 
of U.S. persons for the sale and exportation or reexportation by United 
States persons of agricultural commodities, medicine, and medical 
devices, provided that the sale and exportation or reexportation is 
authorized by a one-year license issued pursuant to Sec.  560.530.
    (b) Specific licensing for brokering sales by non-U.S. persons of 
bulk agricultural commodities. Specific licenses may be issued on a 
case-by-case basis to permit United States persons to provide brokerage 
services on behalf of non-United States, non-Iranian persons for the 
sale and exportation or reexportation of bulk agricultural commodities 
to the Government of Iran, entities in Iran or individuals in Iran. 
Specific licenses issued pursuant to this section will authorize the 
brokering only of sales that:
    (1) Are limited to the bulk agricultural commodities listed in 
appendix B to this part 560;
    (2) Are to purchasers permitted pursuant to Sec.  560.530; and

    Note to Sec.  560.533(b)(2): Requests for specific licenses to 
provide brokerage services under this paragraph must include all of 
the information described in Sec.  560.530(c).


[[Page 61036]]


    (3) Make any performance involving the exportation or reexportation 
of any goods, technology or services (including technical data, 
software, or information) that are subject to license application 
requirements of another Federal agency contingent upon the prior 
authorization of that agency. (For example, items classified EAR 99 
under the Export Administration Regulations, 15 CFR parts 730 through 
774, may in certain instances require a license from the Department of 
Commerce, Bureau of Industry and Security. See, e.g., 15 CFR 
736.2(b)(5), 744.2 through 744.4, 744.7, and 744.10; see also 22 CFR 
123.9.)
    (c) No debits or credits to Iranian accounts on the books of U.S. 
depository institutions. Payment for any brokerage fee earned pursuant 
to this section may not involve debits or credits to Iranian accounts, 
as defined in Sec.  560.320.
    (d) Recordkeeping and reporting requirements. Attention is drawn to 
the recordkeeping, retention, and reporting requirements of Sec. Sec.  
501.601 and 501.602.

    Dated: November 17, 2009.
Adam J. Szubin,
Director, Office of Foreign Assets Control.
[FR Doc. E9-27979 Filed 11-20-09; 8:45 am]
BILLING CODE 4811-45-P