On March 4, 2022, the Department of Commerce’s Bureau of Industry and Security (BIS) announced further sanctions to target Russia’s strategic oil/gas and military/defense sectors. BIS stated that the actions are intended to further restrict access to U.S. commodities, software, and technology in order to limit Russia’s “ability to raise revenue from the sale of refined products, including gasoline,” and to enhance “ongoing efforts to degrade Russia’s ability to acquire the items it needs to sustain its military aggression.”
Tightening Export Restrictions on Russian Deep-water Oil and Gas Exploration
The first Final Rule builds on existing restrictions BIS put in place on the Russian deep-water oil and gas exploration and extraction industries in 2014 (e.g., after Russia’s illegal annexation of the Crimea region of Ukraine) by imposing a policy of denial on such items and applying similarly stringent restrictions on a wide variety of items necessary for refining oil. These new export restrictions expand the scope of the Russian industry sector sanctions by adding a new general prohibition that will apply to additional Harmonized Tariff Schedule (HTS)-6 codes and Schedule B numbers for all exports, reexports, and transfers (in-country) to or within Russia. BIS has revised and updated Supplement No. 4 to Part 746 of the Export Administration Regulations (EAR) to incorporate these additional HTS codes and Schedule B numbers for items necessary needed for oil refining. These new restrictions will apply a more restrictive “policy of denial” during any export license review process.
Additions to the Entity List
BIS has also issued a Final Rule adding 91 entities to the Entity List under the destinations of Belize, Estonia, Kazakhstan, Latvia, Malta, Russia, Singapore, Slovakia, Spain and United Kingdom. These entities have been determined by the U.S. government to be acting contrary to the foreign policy or national security interests of the United States by assisting the Russian military.
Both Final Rules became effective on March 3, 2022. BIS, however, has stated that exports of items impacted by the rules that were en route aboard a carrier to a port of export, reexport, or transfer (in-country) on March 26, 2022, pursuant to actual orders for reexport, or transfer (in-country) to or within a foreign destination, may proceed to that destination under any previous eligibility for a License Exception or reexport or transfer (in-country) without a license (NLR).