Tomorrow, September 7, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) will issue a final rule adding 81 entities to the BIS Entity List (15 C.F.R. Part 744, Supplement No. 4) under the Export Administration Regulations (EAR). BIS is designating the companies, which are based in Russia, the Crimea region of Ukraine, India, and Hong Kong, pursuant to authorities granted to it under Executive Orders 13660, 13661, 13662, and 13685, which respectively authorize the imposition of sanctions targeting (among others) persons destabilizing Ukraine; persons operating in the Russian arms or related materiel sector; persons operating in the Russian energy sector; and persons operating in the Crimea region of Ukraine. Most of the designations target entities affiliated with Gazprom, which already is on the Entity List.

The new designations target:

  • 51 entities operating in the Russian energy industry– specifically, as mentioned above, subsidiaries of Gazprom and entities acting at the direction of Gazprom;
  • 11 entities operating in the Russian arms or related materiel sector;
  • 18 entities operating in the Crimea region of Ukraine; and
  • 1 entity involved in the destabilization of Ukraine.

With regard to the 51 Gazprom-affiliated entities, the BIS final rule establishes a license requirement for exports, re-exports, and transfers (in-country) of items subject to the EAR where the item is for use in exploration or production from Russian deepwater (greater than 500 feet), Arctic offshore, or shale oil or gas projects, or where the exporter cannot determine whether the item will be used in such projects. Where a license requirement is in place, no license exceptions are available for exports to the covered entities. For exports related to oil projects, BIS will review license applications with a policy of denial, while BIS will consider gas-related exports on a case-by-case basis.

For the other 30 entities designated, the BIS final rule establishes a license requirement for exports, re-exports, and transfers (in-country) of all items subject to the EAR, regardless of end use. No license exceptions are available, and BIS will review license applications with a policy of denial.

The BIS final rule follows last week’s designation of new Russian and Ukrainian entities by the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) under the Ukraine-Related Sanctions Regulations administered by OFAC. See our previous post summarizing those designations.