November 17, 2022

OFAC Provides Relief for Certain Aviation and Maritime Vessels

Holland & Knight Alert
Ronald A. Oleynik | Marina Veljanovska O'Brien | Sergio A. Fontanez

Highlights

  • The U.S. Department of the Treasury's Office of Foreign Asset Control (OFAC) on Nov. 14, 2022, issued a Russia-related General License 40C (GL 40C) aimed at ensuring the safety of civil aircraft registered outside of the Russian Federation.
  • OFAC issued General License 21 (GL 21) on Nov. 15, 2022, authorizing limited safety and environmental transactions with certain blocked maritime vessels until Dec. 15, 2022.
  • OFAC's recent actions emphasize the U.S. government's continued prioritization on maritime and aviation safety.

The U.S. Department of the Treasury's Office of Foreign Asset Control (OFAC) recently issued two general licenses related to aviation and maritime safety.

General License 40C

OFAC issued Russia-related General License 40C (GL 40C), Civil Aviation Safety, on Nov. 14, 2022. GL 40C authorizes transactions involving blocked entities listed in the Annex1 that are ordinarily incident and necessary to the provision, exportation or re-exportation of goods, technology or services necessary for the safety of civil aviation, provided that 1) the aircraft is registered outside the Russian Federation and 2) the goods, technology or services provided, exported or re-exported are for civilian aviation purposes.

This general license does not authorize transactions prohibited by the Russian Harmful Foreign Activities Sanctions Regulations (RHFASR)2, including transactions with persons blocked pursuant to the RHFASR, other than the entities identified in the Annex. Parties relying on GL 40C should be careful not to involve any foreign financial institution or Russian bank that is subject to Directives 2 and 4 under Executive Order 14024. Likewise, any transaction pursuant to GL 40C should also be evaluated for potential licensing requirements maintained by the U.S. Department of Commerce's Bureau of Industry and Security (BIS) under the Export Administration Regulations (EAR), 15 CFR parts 730–774.

In the midst of the growing uncertainty in the U.S.-Russia relationship, GL 40C shows the aviation industry that safety continues to be a United States priority.

General License 21

Guided by similar public safety concerns, OFAC also issued General License 21 (GL 21), Authorizing Limited Safety and Environmental Transactions Involving Certain Vessels, on Nov. 15, 2022. GL 21 authorizes certain safety transactions with identified blocked vessels and persons that are otherwise prohibited by the Global Terrorism Sanctions Regulations, 31 CFR part 594 (GTSR), provided that any payment to a blocked person is made into a blocked account in accordance with the GTSR.3 GL 21 applies to transactions that are ordinarily incident and necessary to:

  • safely dock and anchor in port any of the blocked vessels identified in GL 21
  • preserve the health or safety of the crew of such blocked vessels and
  • perform environmental mitigation or protection or an emergency repair relating to the blocked vessels

However, GL 21 does not authorize the offloading of any cargo onboard any of the blocked vessels, and any payment of claims to or for the benefit of any blocked persons or vessels would require a specific license from OFAC. Furthermore, GL 21 does not allow for any new commercial contracts involving the property or interest in property of any of the blocked persons or vessels. GL 21 is only valid for one month and expires on Dec. 15, 2022.

After the expiration of GL 21, U.S. persons will be prohibited from engaging in any transactions with the blocked persons or vessels listed in GL 21 unless otherwise exempt or authorized by OFAC. OFAC guidance indicates that non-U.S. persons, including foreign financial institutions, generally do not risk exposure to sanctions for engaging in transactions that a U.S. person can engage in vis-à-vis an OFAC general license.

Questions

For additional information or questions regarding these general licenses or any other trade-related matters applicable to your transaction, please contact the authors or another member of Holland & Knight's International Trade Group.

Notes

1 GL 40C is identical to and replaces General License 40B but adds Emperor Aviation LTD to the GL 40C Annex.

2 31 CFR part 587.

3 The authorized transactions apply to the blocked persons and vessels listed in paragraph (b) of GL20 or any entity in which the blocked persons own, directly or indirectly, a 50 percent or greater interest.


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.


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