February 2, 2007
On January 25, 2007, the Treasury Department’s Office of Foreign Assets Control (“OFAC”) made certain amendments to Part 594 of Title 31 of the Code of Federal Regulations, the Global Terrorism Sanctions Regulations (“GTSR”). OFAC administers the GTSR pursuant to the authority given to the Director of OFAC by the Secretary of the Treasury, who, in turn, was authorized to take the actions described in the GTSR by the President of the United States in Section 7 of the Executive Order 13224 of September 23, 2001, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism.” The amendments were made to clarify certain provisions of the GTSR. They became effective on January 26, 2007 and were published in the Federal Register on January 30, 2007.
The first amendment clarifies the scope of application of 31 C.F.R. § 501.807, which establishes the procedures for persons seeking administrative reconsideration of their designation, or that of their vessel, as blocked, or who wish to assert that the circumstances resulting in the designation are no longer applicable. Note 3 to 31 C.F.R. § 594.201(a) explains how the procedures set forth in Section 501.807 apply to the GTSR. Before this amendment, Note 3 was silent on whether the procedures established in Section 501.807 applied to persons seeking administrative reconsideration of their designation in the Annex to Executive Order 13224 of September 23, 2001. The revised Note 3 now explains that the procedures for administrative reconsideration of designation in the Annex to Executive Order 13224 are also determined in Section 501.807.
The second amendment, a new section 594.316, defines a person “otherwise associated with” persons whose property and interests in property are blocked pursuant to Section 594.201(a)(1), (a)(2), (a)(3), or (a)(4)(i) in order to clarify whose property and interests in property are blocked under Section 594.201(a)(4)(ii). The definition includes one who: 1) owns or controls such persons; or 2) attempts, or conspires with one or more persons, to provide financial, material, or technological support, or financial or other services, to such persons. The amendment supplements Section 594.201(a)(3) by requiring that property or interests in property of persons determined by the Secretary of the Treasury, in consultation with the Secretary of State, the Secretary of Homeland Security and the Attorney General, to own or control persons whose property or interests in property are blocked pursuant to Section 594.201(a)(1), (a)(2), (a)(3), or (a)(4)(i) become blocked when such property comes within the jurisdiction of the United States or within the possession of U.S. persons (including their overseas branches). The amendment also supplements Section 594.201(a)(4)(i)(B) by including within the scope of application of Section 594.201(a) those persons who attempt or conspire with others to conduct the activities described in Section 594.201(a)(4)(i)(B). To the extent that the added scope of application of the GTSR overlaps with the existing provisions of Section 594.201(a), OFAC determined that the benefit of greater specificity in matters that address the threat of global terrorism to national security outweighed any concerns with redundancy. The amendment is intended to broaden, not limit, the scope of Section 594.201(a).
Pursuant to Section 553(a)(1) of the Administrative Procedure Act (“APA”) (5 U.S.C. § 553(a)(1)), these amendments were not subject to the requirements of notice and comment and delay in effective date that are applicable to agency rulemaking under Section 553 of the APA.
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Gibson, Dunn & Crutcher’s International Trade Regulation and Compliance Practice Group is available to assist with any questions you may have regarding these issues. For further information, please contact the Gibson Dunn attorney with whom you work, Judith A. Lee (202-887-3591, [email protected]) in the firm’s Washington, D.C. office, or any of the firm’s International Trade attorneys.
© 2007 Gibson, Dunn & Crutcher LLP
The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.