Notice of Department of State Update to the Public Guidance for Section 232 of the Countering America's Adversaries Through Sanctions Act of 2017 (CAATSA), 44561-44563 [2020-15901]
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Federal Register / Vol. 85, No. 142 / Thursday, July 23, 2020 / Notices
establishes that the terms of the
transaction, including the consideration
to be paid or received, are reasonable
and fair and do not involve
overreaching on the part of any person
concerned, and the transaction is
consistent with the policies of the
registered investment company and the
general purposes of the Act. Section
12(d)(1)(J) of the Act provides that the
Commission may exempt any person,
security, or transaction, or any class of
persons, securities or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Applicants submit that for the reasons
stated in the Reference Order the
requested relief meets the exemptive
standards under sections 6(c), 17(b) and
12(d)(1)(J) of the Act.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–15903 Filed 7–22–20; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice: 11163]
Notice of Department of State Update
to the Public Guidance for Section 232
of the Countering America’s
Adversaries Through Sanctions Act of
2017 (CAATSA)
ACTION:
Notice.
The Department of State is
updating the public guidance for
CAATSA Section 232 on July 15, 2020
to expand the focus of implementation
of Section 232 to address certain
growing threats to U.S. national security
and foreign policy related to Russian
energy export pipelines, particularly
with respect to Nord Stream 2 and the
second line of TurkStream. The
Department of State deleted the portions
of the public guidance in effect prior to
July 15, 2020, that limited the focus of
implementation of Section 232 to
Russian energy export pipeline projects
for which a contract was signed on or
after August 2, 2017. In doing so, the
Department of State clarified that the
focus of implementation will include
Russian energy export pipelines such as
Nord Stream 2 and the second line of
TurkStream.
DATES: The update to the public
guidance for Section 232 is effective on
July 15, 2020.
ADDRESSES: The Department of State has
published the updated public guidance
jbell on DSKJLSW7X2PROD with NOTICES
SUMMARY:
VerDate Sep<11>2014
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Jkt 250001
for Section 232 on its website. https://
www.state.gov/caatsa-crieea-section232-public-guidance/
Stu
Hoffman at CAATSA_EnergySanctions@
state.gov or (202)–647–7201.
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
Background
The Department of State is updating
the public guidance for Section 232 on
July 15, 2020 to expand the focus of
implementation of Section 232 to
address certain growing threats to U.S.
national security and foreign policy
related to Russian energy export
pipelines, particularly with respect to
Nord Stream 2 and the second line of
TurkStream. Russia uses its energy
export pipelines to create national and
regional dependencies on Russian
energy supplies, leveraging these
dependencies to expand its political,
economic, and military influence and
undermining U.S. national security and
foreign policy interests. In this context,
Nord Stream 2 and the second line of
TurkStream—both of which are under
construction—could undermine
Europe’s energy security by maintaining
Russia’s dominant share in Europe’s gas
markets for decades, discouraging
investment in critical diversification
projects, and limiting the ability of
European countries to gain leverage over
Russia on issues of price, commercial
transparency, and the environment.
These projects could severely limit gas
transit revenues through Ukraine,
thereby depriving the Ukrainian
government of significant transit
revenues and reducing a large deterrent
against further Russian aggression
against Ukraine. The development of
these projects also provides Russia with
vehicles to further spread its malign
influence in Europe.
The Department of State deleted the
portions of the public guidance in effect
prior to July 15, 2020, that limited the
focus of implementation of Section 232
to Russian energy export pipeline
projects for which a contract was signed
on or after August 2, 2017. In doing so,
the Department of State clarified that
the focus of implementation will
include Russian energy export pipelines
such as Nord Stream 2 and the second
line of TurkStream.
In addition, the Department of State
deleted the portions of the public
guidance in effect prior to July 15, 2020
that stated that investments and loan
agreements made prior to August 2,
2017 would not be subject to Section
232. The Department of State has
clarified how it intends to apply Section
PO 00000
Frm 00063
Fmt 4703
Sfmt 4703
44561
232 to such investments and loan
agreements in FAQs #3–5 below.
The updated public guidance
continues to make clear that
implementation of Section 232 will not
target investments or other activities
related to the standard repair and
maintenance of pipelines in existence
on, and capable of transporting
commercial quantities of hydrocarbons,
as of August 2, 2017.
Accordingly, the Department of
State’s public guidance for Section 232
is updated as follows:
CAATSA Section 232 Public Guidance
The Department of State is committed
to fully implementing sanctions
authorities in the Countering America’s
Adversaries Through Sanctions Act
(CAATSA or the Act). We continue to
call on Russia to honor its commitments
to the Minsk agreement and to cease its
malicious cyber intrusions.
Section 232 sanctions are
discretionary. In accordance with
Sections 212 and 232 of the Act, the
Secretary of State, in consultation with
the Secretary of the Treasury, will
coordinate with allies of the United
States in imposing these sanctions. The
intent of such sanctions would be to
impose costs on Russia for its malign
behavior, such as in response to
aggressive actions against the United
States and our allies and partners.
Any implementation of Section 232
sanctions would seek to avoid harming
the energy security of our partners or
endangering public health and safety.
Consistent with the Act (Section 257), it
remains the policy of the United States
to ‘‘work with European Union Member
States and European institutions to
promote energy security through
developing diversified and liberalized
energy markets that provide diversified
sources, suppliers, and routes.’’
For the purposes of Section 232, the
focus of implementation would be on
energy export pipelines that (1)
originate in the Russian Federation, and
(2) transport hydrocarbons across an
international land or maritime border
for delivery to another country.
Pipelines that originate outside the
Russian Federation and transit through
the territory of the Russian Federation
would not be the focus of
implementation.
The focus of implementation of
Section 232 sanctions would be on
persons who the Secretary of State, in
consultation with the Secretary of the
Treasury, determines knowingly, on or
after August 2, 2017, (1) made an
investment that meets the fair market
value thresholds in Section 232(a) and
directly and significantly enhances the
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Federal Register / Vol. 85, No. 142 / Thursday, July 23, 2020 / Notices
ability of the Russian Federation to
construct energy export pipelines, or (2)
sells, leases, or provides to the Russian
Federation goods or services that meet
the fair market value thresholds in
Section 232(a) and that directly and
significantly facilitate the expansion,
construction, or modernization of
energy export pipelines by the Russian
Federation.
Implementation of Section 232
sanctions would not target investments
or other activities related to the standard
repair and maintenance of pipelines in
existence on, and capable of
transporting commercial quantities of
hydrocarbons, as of August 2, 2017.
Frequently Asked Questions
1. Why is the Department of State
issuing updated public guidance for
Section 232 on July 15, 2020?
jbell on DSKJLSW7X2PROD with NOTICES
The Department of State is updating
the public guidance for Section 232 on
July 15, 2020, to expand the focus of
implementation of Section 232 to
address certain growing threats to U.S.
national security and foreign policy
interests related to Russian energy
export pipelines, particularly with
respect to Nord Stream 2 and the second
line of TurkStream. Russia uses its
energy export pipelines to create
national and regional dependencies on
Russian energy supplies and leverages
these dependencies to expand its
political, economic, and military
influence and undermine U.S. national
security and foreign policy interests.
In this context, Nord Stream 2 and the
second line of TurkStream—both of
which are under construction—could
undermine Europe’s energy security by
maintaining Russia’s dominant share in
Europe’s gas markets for decades,
discouraging investment in critical
diversification projects, and limiting the
ability of European countries to gain
leverage over Russia on issues of price,
commercial transparency, and the
environment. These projects could
destabilize the Ukrainian economy and
government severely limiting gas transit
through Ukraine, thereby depriving the
Ukrainian government of significant
transit revenues and reducing a large
deterrent against further Russian
aggression against Ukraine. The
development of these projects also
provides Russia with vehicles to further
spread its malign influence in Europe.
2. What specific changes to the public
guidance for Section 232 did the
Department of State make on July 15,
2020?
The Department of State deleted the
portions of the public guidance in effect
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17:10 Jul 22, 2020
Jkt 250001
prior to July 15, 2020, that limited the
focus of implementation of Section 232
to Russian energy export pipeline
projects for which a contract was signed
on or after August 2, 2017. In doing so,
the Department of State clarified that
the focus of implementation will
include Russian energy export pipelines
such as Nord Stream 2 and the second
line of TurkStream.
In addition, the Department of State
deleted the portions of the public
guidance in effect prior to July 15, 2020,
that stated that investments and loan
agreements made prior to August 2,
2017, would not be subject to Section
232. The Department of State has
clarified how it intends to apply Section
232 to such investments and loan
agreements in FAQs #3–5 below.
The updated public guidance
continues to make clear that
implementation of Section 232 will not
target investments or other activities
related to the standard repair and
maintenance of pipelines in existence
on, and capable of transporting
commercial quantities of hydrocarbons,
as of August 2, 2017.
3. Will the Department of State impose
sanctions under Section 232 on a person
who made investments or engaged in
other activities prior to July 15, 2020,
that were not the focus of
implementation of Section 232
sanctions pursuant to the public
guidance in effect prior to July 15, 2020,
but are now the focus of implementation
of Section 232 sanctions pursuant to the
public guidance in effect on July 15,
2020?
No. The Department of State will not
impose Section 232 sanctions for
activity undertaken prior to July 15,
2020, that was consistent with the
public guidance in effect prior to July
15, 2020; see also FAQs 4 and 5.
4. Will the Department of State impose
sanctions under Section 232 on a person
who made investments or engaged in
other activities on or after July 15, 2020,
that are ordinarily incident and
necessary to the wind down of
operations, contracts, or other
agreements in effect prior to July 15,
2020?
No, provided that: (1) Such
investments or other activities are
consistent with the guidance in effect
prior to July 15, 2020; (2) such
investments or other activities are
undertaken pursuant to a written
contract or written agreement entered
into prior to July 15, 2020; and (3) the
person making such investments or
engaging in such activities is taking
reasonable steps to wind down the
PO 00000
Frm 00064
Fmt 4703
Sfmt 4703
operations, contracts, or other
agreements as soon as possible after July
15, 2020.
5. Will the Department of State impose
sanctions under Section 232 on a person
who made investments or engaged in
other activities on or after July 15, 2020,
that are ordinarily incident and
necessary to the maintenance of
operations, contracts, or other
agreements in effect prior to July 15,
2020?
The Department of State may impose
sanctions under Section 232 on a person
who made such investments or engaged
in such activities on or after July 15,
2020. This applies, but is not limited, to
persons facilitating the construction or
deployment of the pipelines such as
financing partners, pipe-laying vessel
operators, and related engineering
service providers. Except as provided in
FAQ #4 above, the updated guidance
does not grandfather contracts or other
agreements signed prior to July 15,
2020.
6. Does the Department of State
consider either the Nord Stream 2
pipeline or the second line of
TurkStream to be a pipeline in existence
on, and capable of transporting
commercial quantities of hydrocarbons,
as of August 2, 2017, for purposes of
Section 232?
No. As a result, investments or other
activities related to the standard repair
and maintenance of these pipelines
could be the target of sanctions.
7. How will the Department of State
interpret the term ‘‘investment’’ as used
in Section 232 of CAATSA?
For purposes of implementing Section
232 of CAATSA, the Department of
State will interpret the term
‘‘investment’’ broadly as a transaction
that constitutes a commitment or
contribution of funds or other assets or
a loan or other extension of credit to an
enterprise. For purposes of this
interpretation, a loan or extension of
credit is any transfer or extension of
funds or credit on the basis of an
obligation to repay, or any assumption
or guarantee of the obligation of another
to repay an extension of funds or credit,
including: Overdrafts, currency swaps,
purchases of debt securities issued by
the Government of Russia, purchases of
a loan made by another person, sales of
financial assets subject to an agreement
to repurchase, renewals or refinancing
whereby funds or credits are transferred
or extended to a borrower or recipient
described in the provision, the issuance
of standby letters of credit, and
drawdowns on existing lines of credit.
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Federal Register / Vol. 85, No. 142 / Thursday, July 23, 2020 / Notices
8. Does the updated public guidance
apply to the first line of TurkStream?
The first line of TurkStream, which is
designed exclusively to supply Turkey’s
domestic natural gas market, is not the
focus of our Section 232
implementation efforts.
Melissa Simpson,
Deputy Assistant Secretary, Bureau of Energy
Resources, Department of State.
[FR Doc. 2020–15901 Filed 7–22–20; 8:45 am]
BILLING CODE 4710–AE–P
OFFICE OF THE UNITED STATES
TRADE REPRESENTATIVE
Notice of Product Exclusions and
Amendments: China’s Acts, Policies,
and Practices Related to Technology
Transfer, Intellectual Property, and
Innovation
Office of the United States
Trade Representative.
ACTION: Notice of product exclusions.
AGENCY:
On August 20, 2019, at the
direction of the President, the U.S.
Trade Representative determined to
modify the action being taken in the
Section 301 investigation of China’s
acts, policies, and practices related to
technology transfer, intellectual
property, and innovation by imposing
additional duties of 10 percent ad
valorem on goods of China with an
annual trade value of approximately
$300 billion. The additional duties on
products in List 1, which is set out in
Annex A of that action, became effective
on September 1, 2019. The U.S. Trade
Representative initiated a product
exclusion process in October 2019, and
interested persons have submitted
requests for the exclusion of specific
products. This notice announces the
U.S. Trade Representative’s
determination to grant certain exclusion
requests, as specified in the Annex to
this notice, and make certain
amendments to previously announced
exclusions.
SUMMARY:
The product exclusions
announced in this notice apply as of
September 1, 2019, the effective date of
List 1 of the $300 billion action, and
extend to September 1, 2020.
FOR FURTHER INFORMATION CONTACT: For
general questions about this notice,
contact Associate General Counsels
Philip Butler or Megan Grimball, or
Director of Industrial Goods Justin
Hoffmann at (202) 395–5725. For
specific questions on customs
classification or implementation of the
product exclusions identified in the
jbell on DSKJLSW7X2PROD with NOTICES
DATES:
VerDate Sep<11>2014
17:10 Jul 22, 2020
Jkt 250001
Annex to this notice, contact
traderemedy@cbp.dhs.gov.
SUPPLEMENTARY INFORMATION:
A. Background
For background on the proceedings in
this investigation, please see prior
notices including: 82 FR 40213 (August
24, 2017), 83 FR 14906 (April 6, 2018),
83 FR 28710 (June 20, 2018), 83 FR
33608 (July 17, 2018), 83 FR 38760
(August 7, 2018), 83 FR 40823 (August
16, 2018), 83 FR 47974 (September 21,
2018), 83 FR 49153 (September 28,
2018), 84 FR 20459 (May 9, 2019), 84 FR
43304 (August 20, 2019), 84 FR 45821
(August 30, 2019), 84 FR 57144 (October
24, 2019), 84 FR 69447 (December 18,
2019), 85 FR 3741 (January 22, 2020), 85
FR 13970 (March 10, 2020), 85 FR 15244
(March 17, 2020), 85 FR 17936 (March
31, 2020), 85 FR 28693 (May 13, 2020),
85 FR 32098 (May 28, 2020), 85 FR
35975 (June 12, 2020), and 85 FR 41658
(July 10, 2020).
On August 20, 2019, the U.S. Trade
Representative, at the direction of the
President, announced a determination
to modify the action being taken in the
Section 301 investigation by imposing
an additional 10 percent ad valorem
duty on products of China with an
annual aggregate trade value of
approximately $300 billion. 84 FR
43304 (August 20, 2019) (August 20
notice). The August 20 notice contains
two lists of tariff subheadings, with two
different effective dates. List 1, which is
set out in Annex A of the August 20
notice, was effective September 1, 2019.
List 2, which is set out in Annex C of
the August 20 notice, was scheduled to
take effect on December 15, 2019.
On August 30, 2019, the U.S. Trade
Representative, at the direction of the
President, determined to modify the
action being taken in the investigation
by increasing the rate of additional duty
from 10 to 15 percent ad valorem on the
goods of China specified in Annex A
(List 1) and Annex C (List 2) of the
August 20 notice. See 84 FR 45821.
Subsequently, the U.S. Trade
Representative announced
determinations suspending until further
notice the additional duties on products
set out in Annex C (List 2) and reducing
the additional duties for the products
covered in Annex A of the August 20
notice (List 1) to 7.5 percent. See 84 FR
69447, 85 FR 3741.
On October 24, 2019, the U.S. Trade
Representative established a process by
which U.S. stakeholders could request
exclusion of particular products
classified within an eight-digit
Harmonized Tariff Schedule of the
United States (HTSUS) subheading
covered by List 1 of the $300 billion
PO 00000
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Fmt 4703
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44563
action from the additional duties. See 84
FR 57144 (October 24 notice). Under the
October 24 notice, requests for
exclusion had to identify the product
subject to the request in terms of the
physical characteristics that distinguish
the product from other products within
the relevant eight-digit subheading
covered by the $300 billion action.
Requestors also had to provide the tendigit subheading of the HTSUS most
applicable to the particular product
requested for exclusion, and could
submit information on the ability of U.S.
Customs and Border Protection to
administer the requested exclusion.
Requestors were asked to provide the
quantity and value of the Chinese-origin
product that the requestor purchased in
the last three years, among other
information. With regard to the rationale
for the requested exclusion, requests
had to address the following factors:
• Whether the particular product is
available only from China and
specifically whether the particular
product and/or a comparable product is
available from sources in the United
States and/or third countries.
• Whether the imposition of
additional duties on the particular
product would cause severe economic
harm to the requestor or other U.S.
interests.
• Whether the particular product is
strategically important or related to
‘‘Made in China 2025’’ or other Chinese
industrial programs.
The October 24 notice stated that the
U.S. Trade Representative would take
into account whether an exclusion
would undermine the objectives of the
Section 301 investigation.
The October 24 notice required
submission of requests for exclusion
from List 1 of the $300 billion action no
later than January 31, 2020, and noted
that the U.S. Trade Representative
periodically would announce decisions.
In March 2020, the U.S. Trade
Representative granted an initial set of
exclusion requests. See 85 FR 13970.
The U.S. Trade Representative granted
additional exclusions in March, May,
June and July 2020. See 85 FR 15244, 85
FR 17936, 85 FR 28693, as modified by
85 FR 32098, 85 FR 35975 and 85 FR
41658. The Office of the United States
Trade Representative regularly updates
the status of each pending request on
the Exclusions Portal at https://
exclusions.ustr.gov/s/
docket?docketNumber=USTR-20190017.
B. Determination To Grant Certain
Exclusions
Based on the evaluation of the factors
set out in the October 24 notice, which
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]]>Agencies
[Federal Register Volume 85, Number 142 (Thursday, July 23, 2020)]
[Notices]
[Pages 44561-44563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15901]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF STATE
[Public Notice: 11163]
Notice of Department of State Update to the Public Guidance for
Section 232 of the Countering America's Adversaries Through Sanctions
Act of 2017 (CAATSA)
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The Department of State is updating the public guidance for
CAATSA Section 232 on July 15, 2020 to expand the focus of
implementation of Section 232 to address certain growing threats to
U.S. national security and foreign policy related to Russian energy
export pipelines, particularly with respect to Nord Stream 2 and the
second line of TurkStream. The Department of State deleted the portions
of the public guidance in effect prior to July 15, 2020, that limited
the focus of implementation of Section 232 to Russian energy export
pipeline projects for which a contract was signed on or after August 2,
2017. In doing so, the Department of State clarified that the focus of
implementation will include Russian energy export pipelines such as
Nord Stream 2 and the second line of TurkStream.
DATES: The update to the public guidance for Section 232 is effective
on July 15, 2020.
ADDRESSES: The Department of State has published the updated public
guidance for Section 232 on its website. https://www.state.gov/caatsa-crieea-section-232-public-guidance/
FOR FURTHER INFORMATION CONTACT: Stu Hoffman at
[email protected] or (202)-647-7201.
SUPPLEMENTARY INFORMATION:
Background
The Department of State is updating the public guidance for Section
232 on July 15, 2020 to expand the focus of implementation of Section
232 to address certain growing threats to U.S. national security and
foreign policy related to Russian energy export pipelines, particularly
with respect to Nord Stream 2 and the second line of TurkStream. Russia
uses its energy export pipelines to create national and regional
dependencies on Russian energy supplies, leveraging these dependencies
to expand its political, economic, and military influence and
undermining U.S. national security and foreign policy interests. In
this context, Nord Stream 2 and the second line of TurkStream--both of
which are under construction--could undermine Europe's energy security
by maintaining Russia's dominant share in Europe's gas markets for
decades, discouraging investment in critical diversification projects,
and limiting the ability of European countries to gain leverage over
Russia on issues of price, commercial transparency, and the
environment. These projects could severely limit gas transit revenues
through Ukraine, thereby depriving the Ukrainian government of
significant transit revenues and reducing a large deterrent against
further Russian aggression against Ukraine. The development of these
projects also provides Russia with vehicles to further spread its
malign influence in Europe.
The Department of State deleted the portions of the public guidance
in effect prior to July 15, 2020, that limited the focus of
implementation of Section 232 to Russian energy export pipeline
projects for which a contract was signed on or after August 2, 2017. In
doing so, the Department of State clarified that the focus of
implementation will include Russian energy export pipelines such as
Nord Stream 2 and the second line of TurkStream.
In addition, the Department of State deleted the portions of the
public guidance in effect prior to July 15, 2020 that stated that
investments and loan agreements made prior to August 2, 2017 would not
be subject to Section 232. The Department of State has clarified how it
intends to apply Section 232 to such investments and loan agreements in
FAQs #3-5 below.
The updated public guidance continues to make clear that
implementation of Section 232 will not target investments or other
activities related to the standard repair and maintenance of pipelines
in existence on, and capable of transporting commercial quantities of
hydrocarbons, as of August 2, 2017.
Accordingly, the Department of State's public guidance for Section
232 is updated as follows:
CAATSA Section 232 Public Guidance
The Department of State is committed to fully implementing
sanctions authorities in the Countering America's Adversaries Through
Sanctions Act (CAATSA or the Act). We continue to call on Russia to
honor its commitments to the Minsk agreement and to cease its malicious
cyber intrusions.
Section 232 sanctions are discretionary. In accordance with
Sections 212 and 232 of the Act, the Secretary of State, in
consultation with the Secretary of the Treasury, will coordinate with
allies of the United States in imposing these sanctions. The intent of
such sanctions would be to impose costs on Russia for its malign
behavior, such as in response to aggressive actions against the United
States and our allies and partners.
Any implementation of Section 232 sanctions would seek to avoid
harming the energy security of our partners or endangering public
health and safety. Consistent with the Act (Section 257), it remains
the policy of the United States to ``work with European Union Member
States and European institutions to promote energy security through
developing diversified and liberalized energy markets that provide
diversified sources, suppliers, and routes.''
For the purposes of Section 232, the focus of implementation would
be on energy export pipelines that (1) originate in the Russian
Federation, and (2) transport hydrocarbons across an international land
or maritime border for delivery to another country. Pipelines that
originate outside the Russian Federation and transit through the
territory of the Russian Federation would not be the focus of
implementation.
The focus of implementation of Section 232 sanctions would be on
persons who the Secretary of State, in consultation with the Secretary
of the Treasury, determines knowingly, on or after August 2, 2017, (1)
made an investment that meets the fair market value thresholds in
Section 232(a) and directly and significantly enhances the
[[Page 44562]]
ability of the Russian Federation to construct energy export pipelines,
or (2) sells, leases, or provides to the Russian Federation goods or
services that meet the fair market value thresholds in Section 232(a)
and that directly and significantly facilitate the expansion,
construction, or modernization of energy export pipelines by the
Russian Federation.
Implementation of Section 232 sanctions would not target
investments or other activities related to the standard repair and
maintenance of pipelines in existence on, and capable of transporting
commercial quantities of hydrocarbons, as of August 2, 2017.
Frequently Asked Questions
1. Why is the Department of State issuing updated public guidance for
Section 232 on July 15, 2020?
The Department of State is updating the public guidance for Section
232 on July 15, 2020, to expand the focus of implementation of Section
232 to address certain growing threats to U.S. national security and
foreign policy interests related to Russian energy export pipelines,
particularly with respect to Nord Stream 2 and the second line of
TurkStream. Russia uses its energy export pipelines to create national
and regional dependencies on Russian energy supplies and leverages
these dependencies to expand its political, economic, and military
influence and undermine U.S. national security and foreign policy
interests.
In this context, Nord Stream 2 and the second line of TurkStream--
both of which are under construction--could undermine Europe's energy
security by maintaining Russia's dominant share in Europe's gas markets
for decades, discouraging investment in critical diversification
projects, and limiting the ability of European countries to gain
leverage over Russia on issues of price, commercial transparency, and
the environment. These projects could destabilize the Ukrainian economy
and government severely limiting gas transit through Ukraine, thereby
depriving the Ukrainian government of significant transit revenues and
reducing a large deterrent against further Russian aggression against
Ukraine. The development of these projects also provides Russia with
vehicles to further spread its malign influence in Europe.
2. What specific changes to the public guidance for Section 232 did the
Department of State make on July 15, 2020?
The Department of State deleted the portions of the public guidance
in effect prior to July 15, 2020, that limited the focus of
implementation of Section 232 to Russian energy export pipeline
projects for which a contract was signed on or after August 2, 2017. In
doing so, the Department of State clarified that the focus of
implementation will include Russian energy export pipelines such as
Nord Stream 2 and the second line of TurkStream.
In addition, the Department of State deleted the portions of the
public guidance in effect prior to July 15, 2020, that stated that
investments and loan agreements made prior to August 2, 2017, would not
be subject to Section 232. The Department of State has clarified how it
intends to apply Section 232 to such investments and loan agreements in
FAQs #3-5 below.
The updated public guidance continues to make clear that
implementation of Section 232 will not target investments or other
activities related to the standard repair and maintenance of pipelines
in existence on, and capable of transporting commercial quantities of
hydrocarbons, as of August 2, 2017.
3. Will the Department of State impose sanctions under Section 232 on a
person who made investments or engaged in other activities prior to
July 15, 2020, that were not the focus of implementation of Section 232
sanctions pursuant to the public guidance in effect prior to July 15,
2020, but are now the focus of implementation of Section 232 sanctions
pursuant to the public guidance in effect on July 15, 2020?
No. The Department of State will not impose Section 232 sanctions
for activity undertaken prior to July 15, 2020, that was consistent
with the public guidance in effect prior to July 15, 2020; see also
FAQs 4 and 5.
4. Will the Department of State impose sanctions under Section 232 on a
person who made investments or engaged in other activities on or after
July 15, 2020, that are ordinarily incident and necessary to the wind
down of operations, contracts, or other agreements in effect prior to
July 15, 2020?
No, provided that: (1) Such investments or other activities are
consistent with the guidance in effect prior to July 15, 2020; (2) such
investments or other activities are undertaken pursuant to a written
contract or written agreement entered into prior to July 15, 2020; and
(3) the person making such investments or engaging in such activities
is taking reasonable steps to wind down the operations, contracts, or
other agreements as soon as possible after July 15, 2020.
5. Will the Department of State impose sanctions under Section 232 on a
person who made investments or engaged in other activities on or after
July 15, 2020, that are ordinarily incident and necessary to the
maintenance of operations, contracts, or other agreements in effect
prior to July 15, 2020?
The Department of State may impose sanctions under Section 232 on a
person who made such investments or engaged in such activities on or
after July 15, 2020. This applies, but is not limited, to persons
facilitating the construction or deployment of the pipelines such as
financing partners, pipe-laying vessel operators, and related
engineering service providers. Except as provided in FAQ #4 above, the
updated guidance does not grandfather contracts or other agreements
signed prior to July 15, 2020.
6. Does the Department of State consider either the Nord Stream 2
pipeline or the second line of TurkStream to be a pipeline in existence
on, and capable of transporting commercial quantities of hydrocarbons,
as of August 2, 2017, for purposes of Section 232?
No. As a result, investments or other activities related to the
standard repair and maintenance of these pipelines could be the target
of sanctions.
7. How will the Department of State interpret the term ``investment''
as used in Section 232 of CAATSA?
For purposes of implementing Section 232 of CAATSA, the Department
of State will interpret the term ``investment'' broadly as a
transaction that constitutes a commitment or contribution of funds or
other assets or a loan or other extension of credit to an enterprise.
For purposes of this interpretation, a loan or extension of credit is
any transfer or extension of funds or credit on the basis of an
obligation to repay, or any assumption or guarantee of the obligation
of another to repay an extension of funds or credit, including:
Overdrafts, currency swaps, purchases of debt securities issued by the
Government of Russia, purchases of a loan made by another person, sales
of financial assets subject to an agreement to repurchase, renewals or
refinancing whereby funds or credits are transferred or extended to a
borrower or recipient described in the provision, the issuance of
standby letters of credit, and drawdowns on existing lines of credit.
[[Page 44563]]
8. Does the updated public guidance apply to the first line of
TurkStream?
The first line of TurkStream, which is designed exclusively to
supply Turkey's domestic natural gas market, is not the focus of our
Section 232 implementation efforts.
Melissa Simpson,
Deputy Assistant Secretary, Bureau of Energy Resources, Department of
State.
[FR Doc. 2020-15901 Filed 7-22-20; 8:45 am]
BILLING CODE 4710-AE-P
