Client Alert 15 Mar. 2022

U.S. President Biden Imposes Fifth Tranche of Economic Sanctions Against Russia

THE FULL ALERT IS AVAILABLE FOR DOWNLOAD WITH FOOTNOTES HERE.

a. Introduction

On March 8, 2022, U.S. President Biden signed Executive Order 14066 (“E.O. 14066”), titled “Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts To Undermine the Sovereignty and Territorial Integrity of Ukraine.”

E.O. 14066 prohibits (1) U.S. imports of Russian origin oil, (2) new investment in the Russian energy sector, and (3) foreign persons from facilitating or guaranteeing transactions that U.S. persons would be prohibited from performing under this E.O. 14066.

Related to E.O. 14066, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) published Russia-Related General License 16, which authorizes, until April 22, 2022, performance under Russian oil transactions pursuant to written contracts or written agreements entered into prior to the issuance of E.O. 14066, and FAQs 1013, 1014, 1015, 1016, 1017, 1018, 1019 and 1020.

b. Prohibitions Under E.O. 14066

With mounting pressure from the U.S. Congress, the Biden administration announced a prohibition on Russian petroleum imports on March 8, 2022. Specifically, E.O. 14066 prohibits:

  1. U.S. imports of the following petroleum products: “crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products.”
  2. New investment in the energy sector in the Russian Federation by a United States person, wherever located.
  3. Any approval, financing, facilitation or guarantee by a United States person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by E.O. 14066 if performed by a United States person or within the United States.

According to a Fact Sheet released by the White House, “[l]ast year, the U.S. imported nearly 700,000 barrels per day of crude oil and refined petroleum products from Russia.”

Congress may codify further import restrictions on Russian oil. On March 10, 2022, the House of Representatives passed, by a 414-17 vote, a bill that would ban Russian oil imports into the United States. Furthermore, the bill would also “review Russia’s access to the World Trade Organization” and “reauthorize and strengthen the Global Magnitsky Human Rights Accountability Act so that the United States can impose further sanctions on Russia.” The bill will next go to the Senate.

c. General License 16 Authorizes Certain Transactions Through April 22

Under Russia-Related General License 16, OFAC authorizes transactions prohibited by E.O. 14066 that are “ordinarily incident and necessary to the importation into the United States of crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products of Russian Federation origin pursuant to written contracts or written agreements entered prior to March 8, 2022” through 12:01 a.m. Eastern Daylight Time, April 22, 2022.

Attorney advertising. The material contained in this Client Alert is only a general review of the subjects covered and does not constitute legal advice. No legal or business decision should be based on its contents.