81 FR 13972 - Cuba: Revisions to License Exceptions and Licensing Policy

DEPARTMENT OF COMMERCE
Bureau of Industry and Security

Federal Register Volume 81, Issue 51 (March 16, 2016)

This rule allows vessels departing the United States on temporary sojourn to Cuba with cargo for other destinations to travel to Cuba under a license exception rather than having to obtain a license for the cargo bound for those other destinations to transit Cuba. This rule also authorizes exports of certain items to persons authorized by the Department of the Treasury to establish and maintain a physical or business presence in Cuba. Finally, the rule would adopt a licensing policy of case-by-case review for exports and reexports of items that would enable or facilitate export of items produced by the private sector in Cuba, subject to certain limitations.

[Federal Register Volume 81, Number 51 (Wednesday, March 16, 2016)]
[Rules and Regulations]
[Pages 13972-13974]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-06019]



[[Page 13972]]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 736, 740, and 746

[Docket No. 160303178-6178-01]
RIN 0694-AG86


Cuba: Revisions to License Exceptions and Licensing Policy

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: This rule allows vessels departing the United States on 
temporary sojourn to Cuba with cargo for other destinations to travel 
to Cuba under a license exception rather than having to obtain a 
license for the cargo bound for those other destinations to transit 
Cuba. This rule also authorizes exports of certain items to persons 
authorized by the Department of the Treasury to establish and maintain 
a physical or business presence in Cuba. Finally, the rule would adopt 
a licensing policy of case-by-case review for exports and reexports of 
items that would enable or facilitate export of items produced by the 
private sector in Cuba, subject to certain limitations.

DATES: Effective March 16, 2016.

FOR FURTHER INFORMATION CONTACT: Foreign Policy Division, Bureau of 
Industry and Security, Phone: (202) 482-4252.

SUPPLEMENTARY INFORMATION:

Background

    On December 17, 2014, the President announced a historic new 
approach in U.S. policy toward Cuba. This approach recognized that 
increased engagement and commerce benefits the American and Cuban 
people, and sought to make the lives of ordinary Cubans easier and more 
prosperous. On January 16, 2015, the Bureau of Industry and Security 
(BIS) amended the Export Administration Regulations (EAR) to create 
License Exception Support for the Cuban People (SCP), which authorizes 
the export and reexport, without a license, of certain items to, among 
other objectives, improve the living conditions of the Cuban people 
(see 80 FR 2286). The rule also made other changes to license 
exceptions and licensing policy. Id.
    On July 22, 2015, BIS published a rule implementing the May 29, 
2015, rescission of Cuba's designation as a state sponsor of terrorism 
(see 80 FR 43314). That rule expanded certain license exception 
availability for exports and reexports to Cuba, including making 
general aviation aircraft eligible for temporary sojourns to Cuba.
    On September 21, 2015, BIS published a rule to enhance support for 
the Cuban people (see 80 FR 56898). This rule expanded the scope of 
transactions that are eligible for License Exception SCP and made 
certain vessels on temporary sojourn to Cuba eligible for a license 
exception.
    On January 27, 2016, BIS published a rule that amended the 
licensing policy in Sec.  746.2 of the EAR to add a general policy of 
approval for certain exports and reexports previously subject to case-
by-case review and a policy of case-by-case review for exports and 
reexports of items not eligible for License Exception SCP to meet the 
needs of the Cuban people, including exports and reexports made to 
state-owned enterprises and agencies and organizations of the Cuban 
government that provide goods and services to the Cuban people, subject 
to certain restrictions (see 81 FR 4580).
    Today, BIS is taking this action in coordination with the 
Department of the Treasury, Office of Foreign Assets Control (OFAC), 
which is amending the Cuban Assets Control Regulations (31 CFR part 
515).
    This rule revises License Exception Aircraft, Vessels and 
Spacecraft (AVS) in Sec.  740.15 to authorize transit through Cuban 
territory of cargo, laden aboard a vessel on temporary sojourn to Cuba, 
that is destined for other countries rather than require a license for 
that cargo to transit Cuban territory provided that such cargo departs 
with the vessel at the end of its temporary sojourn, does not enter the 
Cuban economy and is not transferred to another vessel while in Cuba. 
This change allows for efficient use of vessels that carry cargo from 
the United States to Cuba and to other countries and allows exporter 
carriers to select efficient routes. This rule also adds a note 
reminding readers to consult Coast Guard regulations on unauthorized 
entry into Cuban territorial waters.
    This rule revises License Exception SCP to authorize export or 
reexport of EAR99 items and items controlled on the Commerce Control 
List only for anti-terrorism reasons for use by persons authorized to 
establish and maintain a physical or business presence in Cuba by the 
Department of the Treasury, Office of Foreign Assets Control pursuant 
to 31 CFR 515.573 or pursuant to a specific license issued by OFAC. 
Prior to this rule, License Exception SCP enumerated the activities for 
which OFAC had authorized such physical or business presence by general 
license. Simultaneously with the publication of this rule, OFAC is 
publishing an amendment to 31 CFR 515.573 to authorize additional 
persons subject to U.S. jurisdiction to establish a business and 
physical presence in Cuba. BIS's intent is to authorize by license 
exception the export and reexport of items needed to establish and 
maintain a physical or business presence in Cuba, to all persons 
authorized by OFAC to have such a presence. The simplest way to do this 
is to reference the applicable section in OFAC's Cuban Assets Control 
Regulations (``CACR''), i.e., 31 CFR 515.573 and specific licenses 
issued by OFAC rather than to revise the EAR to repeat any changes made 
to that CACR section.
    This rule also revises EAR licensing policy regarding Cuba to adopt 
a policy of case-by-case review of license applications to export or 
reexport items that will enable or facilitate exports from Cuba of 
items produced by Cuba's private sector. BIS is adopting this policy to 
reinforce the Cuba case-by-case licensing policy adopted prior to this 
rule, which focuses on exports and reexports that would be used in ways 
that meet the needs of the Cuban people. Enabling or facilitating 
exports of items produced by the Cuban private sector, under certain 
circumstances will also help meet the needs of the Cuban people and is 
consistent with the Administration's policy of supporting the ability 
of the Cuban people to gain greater control over their own lives and 
determine their country's future. However, BIS will conduct the case-
by-case review consistent with the policy standard set forth in Sec.  
746.2(b)(3)(i) of the EAR, which provides that ``BIS generally will 
deny applications to export or reexport items for use by state-owned 
enterprises, agencies, and other organizations that primarily generate 
revenue for the state, including those engaged in tourism and those 
engaged in the extraction or production of minerals or other raw 
materials. Applications for export or reexport of items destined to the 
Cuban military, police, intelligence or security services also 
generally will be denied.''
    This rule revises Note 1 to Sec.  746.2(b)(3)(i) of the EAR, which 
describes a condition that will generally be included on licenses to 
prohibit reexport of the items authorized by the license or use of 
those items to enable or facilitate exports from Cuba. The revision 
makes clear that the condition applies to reexports from Cuba or uses 
that enable or facilitate exports from Cuba that primarily generate 
revenue for the state. BIS is making this change because enabling or 
facilitating exports of items produced by the Cuban private sector 
under certain circumstances will

[[Page 13973]]

help meet the needs of the Cuban people and is consistent with the 
Administration's policy of supporting the ability of the Cuban people 
to gain greater control over their own lives and determine their 
country's future.

Specific Changes Made by This Rule

    This rule revises Sec.  736.2(b)(8) of the EAR, which prohibits 
shipments from transiting certain destinations, to explicitly state 
that the prohibition does not apply if a license or license exception 
authorizes the in-transit shipment.
    This rule revises Sec.  740.15(d)(6) of the EAR to authorize 
temporary sojourn to Cuba of a vessel carrying cargo destined to other 
countries provided that such cargo departs with the vessel at the end 
of its temporary sojourn to Cuba, does not enter the Cuban economy and 
is not transferred to another vessel while in Cuba.
    This rule revises Sec.  740.21(e) to remove the individual 
references to categories of persons authorized by OFAC to establish and 
maintain a physical or business presence in Cuba pursuant to 31 CFR 
515.573, and to authorize exports and reexports to all such persons and 
to persons whose physical or business presence is authorized by a 
specific license issued by OFAC.
    This rule revises Sec.  746.2(b)(3)(i), to add a paragraph 
(b)(3)(i)(D), which sets a policy of case-by-case review of items that 
will enable or facilitate export from Cuba of items produced by the 
Cuban private sector. It also revises Note 1 to clarify that the 
license condition described therein is intended to preclude use of 
items authorized by licenses bearing that condition from being 
reexported from Cuba or being used to enable or facilitate exports from 
Cuba that primarily generate revenue for the state.
    BIS is making these changes to facilitate further support of and 
engagement with the Cuban people.

Export Administration Act

    Although the Export Administration Act expired on August 20, 2001, 
the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 
2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 
8, 2013, 78 FR 16129 (March 13, 2013), and as extended by the Notice of 
August 7, 2015, 80 FR 48233 (August 11, 2015), has continued the Export 
Administration Regulations in effect under the International Emergency 
Economic Powers Act. BIS continues to carry out the provisions of the 
Export Administration Act, as appropriate and to the extent permitted 
by law, pursuant to Executive Order 13222 as amended by Executive Order 
13637.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``significant regulatory 
action,'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget (OMB).
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et 
seq.) (PRA), unless that collection of information displays a currently 
valid Office of Management and Budget (OMB) control number. This rule 
involves a collection of information approved under OMB control number 
0694-0088--Simplified Network Application Processing+ System (SNAP+) 
and the Multipurpose Export License Application, which carries an 
annual estimated burden of 31,833 hours. BIS believes that this rule 
will have no material impact on that burden. To the extent that it has 
any impact, BIS believes that the benefits of this rule justify any 
additional burden it creates. This rule does not impose any new license 
requirements, it creates less restrictive licensing policies (i.e., the 
policies under which the decision to approve or deny a license 
application is made) for exports and reexports to Cuba. These less 
restrictive policies might increase the number of license applications 
submitted to BIS because applicants might be more optimistic about 
obtaining approval. However, the benefit to license applicants in the 
form of greater likelihood of approval justifies any additional burden. 
Send comments regarding this burden estimate or any other aspect of 
this collection of information, including suggestions for reducing the 
burden, to Jasmeet K. Seehra, Office of Management and Budget, by email 
at [email protected] or by fax to (202) 395-7285 and to William Arvin 
at [email protected].
    3. This rule does not contain policies with Federalism implications 
as that term is defined under Executive Order 13132.
    4. The provisions of the Administrative Procedure Act (5 U.S.C. 
553) requiring notice of proposed rulemaking and the opportunity for 
public participation, and a delay in effective date, are inapplicable 
because this regulation involves a military or foreign affairs function 
of the United States (see 5 U.S.C. 553(a)(1)). This rule is part of a 
foreign policy initiative to change the nature of the relationship 
between Cuba and the United States announced by the President on 
December 17, 2014. Delay in implementing this rule to obtain public 
comment would undermine the foreign policy objectives that the rule is 
intended to implement. Further, no other law requires that a notice of 
proposed rulemaking and an opportunity for public comment be given for 
this rule. Because a notice of proposed rulemaking and an opportunity 
for public comment are not required to be given for this rule under 5 
U.S.C. 553, or by any other law, the requirements of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.) are not applicable.

List of Subjects

15 CFR Part 736

    Exports.

15 CFR Part 740

    Administrative practice and procedure, Exports, Reporting and 
recordkeeping requirements.

15 CFR Part 746

    Exports, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, 15 CFR Chapter VII, 
Subchapter C is amended as follows:

PART 736--[AMENDED]

0
1. The authority citation for part 736 continues to read as follows:

    Authority:  50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 
U.S.C. 2151 note; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 
950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026, 
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 
CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3 CFR, 2004 Comp., 
p. 168; Notice of May 6, 2015, 80 FR 26815 (May 8, 2015); Notice of 
August 7, 2015, 80 FR 48233 (August 11, 2015); Notice of November 
12, 2015, 80 FR 70667 (November 13, 2015).


[[Page 13974]]



0
2. Section 736.2 is amended by revising paragraph (b)(8)(i) to read as 
follows:


Sec.  736.2  General prohibitions and determination of applicability.

* * * * *
    (b) * * *
    (8) * * *
    (i) Unlading and shipping in transit. You may not export or 
reexport an item through, or transit through a country listed in 
paragraph (b)(8)(ii) of this section, unless a license exception or 
license authorizes such an export or reexport directly to or transit 
through such a country of transit, or unless such an export or reexport 
is eligible to such a country of transit without a license.
* * * * *

PART 740--[AMENDED]

0
3. The authority citation for part 740 continues to as follows:

    Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 
U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 
228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of 
August 7, 2015, 80 FR 48233 (August 11, 2015).


0
4. Section 740.15 is amended by revising paragraph (d)(6) to read as 
follows:


Sec.  740.15  Aircraft, vessels and spacecraft (AVS).

* * * * *
    (d) * * *
    (6) Cuba--(i) Eligible vessels and purposes. Only the types of 
vessels listed in this paragraph (d)(6)(i) departing for Cuba for the 
purposes listed in this paragraph (d)(6)(i) may depart for Cuba 
pursuant to this paragraph (d). Vessels used to transport both 
passengers and items to Cuba may transport automobiles only if the 
export or reexport of the automobiles to Cuba has been authorized by a 
separate license issued by BIS (i.e., not authorized by license 
exception).
    (A) Cargo vessels for hire for use in the transportation of items;
    (B) Passenger vessels for hire for use in the transportation of 
passengers and/or items; and
    (C) Recreational vessels that are used in connection with travel 
authorized by the Department of the Treasury, Office of Foreign Assets 
Control (OFAC).
    Note to paragraph (d)(6)(i)(C): Readers should also consult U.S. 
Coast Guard regulations at 33 CFR part 107 Subpart B--Unauthorized 
Entry into Cuban Territorial Waters.
    (ii) Intransit cargo. Cargo laden on board a vessel may transit 
Cuba provided:
    (A) The vessel is exported or reexported on temporary sojourn to 
Cuba pursuant to this paragraph (d) or a license from BIS; and
    (B) The cargo departs with the vessel at the end of its temporary 
sojourn to Cuba, does not enter the Cuban economy and is not 
transferred to another vessel while in Cuba.
    Note to paragraph (d). A vessel exported or reexported to a country 
pursuant to this paragraph (d) may not remain in that country for more 
than 14 consecutive days before it departs for a country to which it 
may be exported without a license or the United States.
* * * * *

0
5. Section 740.21 is amended by:
0
a. Revising paragraph (e)(1);
0
b. Removing paragraph (e)(2);
0
c. Redesignating paragraph (e)(3) as (e)(2); and
0
d. Revising the note to paragraph (e).
    The revisions read as follows:


Sec.  740.21  Support for the Cuban People (SCP).

* * * * *
    (e) * * *
    (1) The export or reexport to Cuba of items for use by persons 
authorized by the Department of the Treasury, Office of Foreign Assets 
Control (OFAC) to establish and maintain a physical or business 
presence in Cuba pursuant to 31 CFR 515.573 or pursuant to a specific 
license issued by OFAC. The items authorized pursuant to this paragraph 
(e)(1) are limited to those designated as EAR99 (i.e., items subject to 
the EAR but not specified in any ECCN) or controlled on the CCL only 
for anti-terrorism reasons.
* * * * *
    Note to paragraph (e). Any resulting payments associated with 
establishing or maintaining a physical or business presence in Cuba, 
such as lease payments, are permitted only to the extent authorized by 
31 CFR 515.573 or a specific license issued by OFAC.
* * * * *

PART 746--[AMENDED]

0
6. The authority citation for part 746 continues to read as follows:

    Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 
U.S.C. 287c; Sec 1503, Pub. L. 108-11, 117 Stat. 559; 22 U.S.C. 
6004; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 12854, 58 FR 
36587, 3 CFR, 1993 Comp., p. 614; E.O. 12918, 59 FR 28205, 3 CFR, 
1994 Comp., p. 899; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 
783; E.O. 13338, 69 FR 26751, 3 CFR, 2004 Comp., p 168; Presidential 
Determination 2003-23, 68 FR 26459, 3 CFR, 2004 Comp., p. 320; 
Presidential Determination 2007-7, 72 FR 1899, 3 CFR, 2006 Comp., p. 
325; Notice of May 6, 2015, 80 FR 26815 (May 8, 2015); Notice of 
August 7, 2015, 80 FR 48233 (August 11, 2015).


0
7. Section 746.2 is amended by:
0
a. Removing the word ``and'' from the end of paragraph (b)(3)(i)(B);
0
b. Removing the period from the end of paragraph (b)(3)(i)(C) and 
adding ``; and'' in its place;
0
c. Adding paragraph (b)(3)(i)(D); and
0
d. Revising Note 1 to paragraph (b)(3)(i).
    The addition and revision read as follows:


Sec.  746.2  Cuba.

* * * * *
    (b) * * *
    (3) * * *
    (i) * * *
    (D) Items that will enable or facilitate export from Cuba of items 
produced by the private sector.
    Note 1 to paragraph (b)(3)(i): Licenses issued pursuant to the 
policy set forth in this paragraph generally will have a condition 
prohibiting both reexports from Cuba to any other destination and uses 
that enable or facilitate the export of goods or services from Cuba, 
that primarily generate revenue for the state.
* * * * *

    Dated: March 14, 2016.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2016-06019 Filed 3-15-16; 8:45 am]
 BILLING CODE 3510-33-P