In late December, the Office of Foreign Assets Control (“OFAC”) updated its Cuba FAQs to add questions #57-61 on insurance issues.  Naturally, there is no explanation for why these were added but if you supposed that they were added to clarify some drafting screw-up in the Cuba regulations, you’d probably be right.  You can almost hear them saying over at OFAC:  “Don’t worry about the precise language, we can always fix it with an FAQ.  Pay no attention to that nonsense in section 552(a)(1)(D) of the Administrative Procedure Act about publishing in the Federal Register ‘interpretations of general applicability.’  That only applies to other agencies.”

The issue addressed by the new FAQs is the terrible drafting of  Note 2 to section 515.560 of the Cuba Assets Control Regulations, which says this:

This section authorizes the provision of health insurance-, life insurance-, and travel insurance-related services to authorized travelers, as well as the receipt of emergency medical services and the making of payments related thereto.

The problem here is the phrase “authorized traveler.” Who is an authorized traveler? Is it just a U.S. person traveling to Cuba under a general or specific license or does it also include a foreign person who is authorized because there is no prohibition on foreign citizens traveling to Cuba and no requirement that the foreign traveler obtain permission from OFAC for such travel? It seems to me that “authorized” can legitimately be read to include foreign travelers to Cuba.

Not so fast, according to the newly added FAQ #59

59. May U.S. insurers issue policies and pay claims related to group health, life, and travel insurance on behalf of third-country nationals traveling to or within Cuba?

Yes, provided that the insurance policy is as global policy, and not specific to the third-country national’s travel to or within Cuba.

But Note 2 says nothing about the travel insurance needing to be a global and not a specific policy. So “authorized traveler” has now effectively been redefined to exclude foreign travelers, all of whom are permitted to travel to Cuba. This was not a particularly thorny drafting issue for OFAC: the issue could have been easily and directly resolved by adding “U.S.” to “authorized travelers” when the rule was initially written and promulgated

The issue that this raises is whether OFAC, or any other agency, is entitled to regulate by Internet pronouncements notwithstanding the APA’s insistence that it use the Federal Register to publicize agency interpretations. If an insurance company reads Note 2 to cover foreign authorized travelers, is it culpable for not having scoured OFAC’s website for contrary interpretations when no such contrary interpretation appears anywhere in the Federal Register? When agencies expect those subject to their powers to respect the law, then the agencies themselves need to respect the law.

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