On March 14, 2019, OFAC reissued General License 7 (“GL 7”) as General License 7A (“GL 7A”) to extend the general license’s authorization for certain activities involving PDV Holding, Inc. (“PDVH”) and CITGO Holding, Inc. (“CITGO”). While the original GL 7(a) was set to expire on July 27, 2019, GL 7A(a) automatically renews on the first day of each month, and is valid for a period of 18 months from the last renewal date. GL 7A(a) authorizes certain transactions with PDVH, CITGO, and their subsidiaries that would otherwise be prohibited as a result of the designation of their parent, Petroleos de Venezuela, S.A. (“PdVSA”), on January 28, 2019 under Executive Order 13850. We note that the separate petroleum-related provision that appears in GL 7(b) has not changed, and still expires on April 28, 2019. GL 7A(b) continues to authorize PDVH, CITGO, and their subsidiaries to engage in transactions ordinarily incident and necessary to the purchase and importation of petroleum and petroleum products from PdVSA (and any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest). Our prior blog posts on the scope of GL 7 are here and here.
On March 4, 2019, Secretary of State Pompeo announced that beginning on March 19, the suspension of the right to bring private actions in US federal court against Cuban entities handling confiscated property under Title III of the 1996 Cuban Liberty and Democratic Solidarity (LIBERTAD) Act (known as the “Helms-Burton Act”) will not apply to Cuban entities or sub-entities identified on the State Department’s List of Restricted Entities and Sub-entities Associated with Cuba (the “Cuba Restricted List,” available here). The right to sue all other Cuban entities and foreign entities under Title III has been further suspended, but only for a 45 day period through April 17, 2019.
Alexandre Lamy published an article, “Supply Chain Risks Related to US Sanctions and Export Control Issues,” in the February 2019 issue of Baker McKenzie’s “Aerospace & Defense Compliance Bulletin.” The text of that article is provided below.
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Supply Chain Risks Related to US Sanctions and Export Control Issues
When companies and compliance departments think about US sanctions and export control risks, they often focus on sales to customers and exports/reexports from one country to another. In that context, the compliance focus is typically on confirming that a customer and other parties involved in a sale and shipment are not restricted parties and that the transfer of a product is authorized under applicable export-control regulations. This is only half the story. Companies can have similar risks in their supply chain, which can be disruptive to a company’s operations beyond one transaction or customer relationship if not property managed.
On January 28, 2019, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) designated Petróleos de Venezuela, S.A. (“PdVSA”) as a Specially Designated National (“SDN”) under Executive Order 13850 of November 1, 2018. As a result, US Persons are prohibited from dealing with PdVSA as of January 28, unless authorized by OFAC. (For these purposes, US Persons are entities organized under US laws and their non-US branches; individuals and entities physically located in the United States; US citizens and permanent resident aliens (“Green Card” holders) wherever located or employed.)